Maybe treating housing as an investment was a mistake • Hacker News Board

Re: Maybe treating housing as an investment was a mistake

#501

Post by ericmay » Mon, Mar 06, 2023, 6:45 PM UTC

lukeschlather wrote: post #470

gknapp wrote: post #435

Earlier quoted context omitted.

I know this is anecdotal, but whenever I hear these stories, I'm curious about the details. A quick search leads me to believe that head chef pay in Seattle typically ranges from about 90k-110k per year. Finding apartments off Broadway in Cap Hill, I can see that studios, though relatively expensive, range around $1.5-2k a month. An income tax calculator estimates about a 22% total tax bracket and a monthly adjusted…

In a well-functioning city, a head chef should be able to comfortably afford to rent a 2-3 bedroom apartment within walking distance of their restaurant. They should not be spending 1/3rd of their income and only getting a studio out of it.

You can, just move out of Capitol Hill in Seattle which is one of the most desirable areas in one of the most desirable cities located in one of the most desirable geographies in the wealthiest country on earth.

This place looks nice! https://www.zillow.com/homedetails/2742-Lincoln-St-NE-Minnea...

Re: Maybe treating housing as an investment was a mistake

#502

Post by s1artibartfast » Mon, Mar 06, 2023, 6:45 PM UTC

HDThoreaun wrote: post #479

s1artibartfast wrote: post #405

Earlier quoted context omitted.

I think annual land value taxes are efficient at resource allocation but unacceptably punitive on owners. You should not be penalized or motivated to sell simply because a 3rd party can get a higher return. Similarly, value gains from land appreciation are taxed at the time of sale. IF I pay annual taxes on land appreciation, I should be exempt from taxes at the point of sale, otherwise I am paying for that appreciat…

Land belongs to society, not whoever has a house on it. If you are using it ineffectively you deserve to be punished by society via taxes because you are directly making the community worse off.

If you don't believe in property ownership, I think it unlikely we will find common ground.

Re: Maybe treating housing as an investment was a mistake

#503

Post by Spivak » Mon, Mar 06, 2023, 6:45 PM UTC

giobox wrote: post #457

lolinder wrote: post #383

Earlier quoted context omitted.

> especially the 20% needed so as to not need to get mortgage insurance The mortgage insurance isn't nothing, but it's not a big enough cost to warrant waiting until you have 20% down if that's still a long way off. You can also very easily remove the mortgage insurance once you get to 20% equity, so it's not like it sticks around throughout the entire mortgage if you can't scrape enough together at the beginning.

This! I strongly advise anyone stuck thinking they can't do a thing till they hit 20% to talk to a professional, there are options, especially if you have a reasonable tech income and good credit scores. Granted, this advice was a lot easier to consume when interest rates were at record lows...

If all you care about is the monthly payment then sure but got damn it adds up now that money isn't free anymore. Even with the the projected rent increases it's significantly cheaper over my lifetime to just rent until I can basically buy a house in cash.

Re: Maybe treating housing as an investment was a mistake

#504

Post by goosedragons » Mon, Mar 06, 2023, 6:45 PM UTC

kurthr wrote: post #281

goosedragons wrote: post #177

Earlier quoted context omitted.

So why is the population of Tokyo steadily increasing while the population of Japan overall is decreasing? Is it all just foreigners explaining 2+% growth rate in recent years despite them making up less than 3% of the cities total population? Or are the people stuck in 100 year mortgages just having lots more kids than everybody else?

The pricing is set by the marginal housing. Marginal housing is older tiny apartments that would be considered deathtraps in the US or Europe. Those older 7 story buildings are torn down and replaced with 30+ story apartments (in less corrupt ways than in the past at densities that most other countries would consider too high) which are unaffordable to the people who are forced to leave and commute long distances to…

Meanwhile in western countries the prices go up for no reason! That 30 year old house? It's worth double what it was 10 years ago! And now it's a 30 year old house instead of a 20 year old house. This is reality where I grew up. Most of my peers are priced out too. And I grew up out of the city centre...

Re: Maybe treating housing as an investment was a mistake

#505

Post by nwah1 » Mon, Mar 06, 2023, 6:45 PM UTC

adverbly wrote: post #370

lalos wrote: post #116

Easily fixed with a tax system: 1) first home tax-free - the address you submit your yearly taxes on. Incentivize people to own at least one home. 2) second property you pay taxes for both homes now - no more tax free benefit since you are able to afford more than one place. 3) more than 2 properties you pay taxes for all of them times some factor 0.05*N houses. Fudge around with the factor to allow more supply for a…

I feel like I'm taking crazy pills. Georgism(LVT) would fix so many things. I'd literally vote for a single issue party to get it passed at this point.

Same.

Re: Maybe treating housing as an investment was a mistake

#506

Post by rootusrootus » Mon, Mar 06, 2023, 6:45 PM UTC

spaniard89277 wrote: post #130

pradn wrote: post #25

It's practically impossible for US society to get out of treating housing as an investment. Americans believe in home ownership as evidence of prudence (hard work + savings), acumen (housing always goes up so it's smart to buy a house!), and sense of security and achievement. These ideas aren't going to change any time soon. That's the ideological component. Home-owners also protect their investments because they're…

[flagged]

That sounds extreme. Rates go up, go down, but it does not seem quite as dire as online rhetoric would have you believe [0]. Certainly we can try to encourage the trends to head back up, but violence won't accomplish that.

[0] https://www.census.gov/housing/hvs/data/charts/fig07.pdf

Re: Maybe treating housing as an investment was a mistake

#507

Post by HDThoreaun » Mon, Mar 06, 2023, 6:45 PM UTC

majani wrote: post #406

pradn wrote: post #25

It's practically impossible for US society to get out of treating housing as an investment. Americans believe in home ownership as evidence of prudence (hard work + savings), acumen (housing always goes up so it's smart to buy a house!), and sense of security and achievement. These ideas aren't going to change any time soon. That's the ideological component. Home-owners also protect their investments because they're…

Also, aesthetically, you have to admit, most YIMBY cities are ugly AF compared to NIMBY cities. Aesthetics are very important to human beings; people love pretty things.

I don't admit. I think high density cities look much nicer than suburbia.

Re: Maybe treating housing as an investment was a mistake

#508

Post by lolinder » Mon, Mar 06, 2023, 6:45 PM UTC

politician wrote: post #456

lolinder wrote: post #383

Earlier quoted context omitted.

> especially the 20% needed so as to not need to get mortgage insurance The mortgage insurance isn't nothing, but it's not a big enough cost to warrant waiting until you have 20% down if that's still a long way off. You can also very easily remove the mortgage insurance once you get to 20% equity, so it's not like it sticks around throughout the entire mortgage if you can't scrape enough together at the beginning.

The problem appears when you try to buy a home from a seller entertaining 10 other offers, most of which are cash offers for 10-20% over listing price with escalation clauses. It can be really hard to buy a home, especially in markets like Seattle, because the seller chooses which offer to accept and, all else being equal, will accept the offer with the fewest conditions (no financing required, inspection waived, etc…

Yes, this can be a real problem.

The mortgage company that we chose had a program where they did all of the underwriting before we even started making offers, and part of our offer was a certificate entitling the seller to $5000 at the mortgage company's expense if we couldn't get financing. Kind of like extra earnest money from the mortgage company offered as a guarantee that there wouldn't be any problems in closing.

We ended up getting the first house we made an offer on in spite of an insane market, so I guess it worked!

Re: Maybe treating housing as an investment was a mistake

#509

Post by varispeed » Mon, Mar 06, 2023, 6:45 PM UTC

t-writescode wrote: post #465

gknapp wrote: post #435

Earlier quoted context omitted.

I know this is anecdotal, but whenever I hear these stories, I'm curious about the details. A quick search leads me to believe that head chef pay in Seattle typically ranges from about 90k-110k per year. Finding apartments off Broadway in Cap Hill, I can see that studios, though relatively expensive, range around $1.5-2k a month. An income tax calculator estimates about a 22% total tax bracket and a monthly adjusted…

* They're a head-chef, that seems like a high-ranking position. * That used to feed and house a whole family, easily. * They can now **only afford a studio**

I used to know a chef who worked at michelin star restaurant and he had to move to a flat share because he found himself not being able to afford much after paying rent in London.

That sent him to a severe depression and later on an unsuccessful suicide attempt that rendered him unable to work and he became homeless.

Re: Maybe treating housing as an investment was a mistake

#510

Post by agrajag » Mon, Mar 06, 2023, 6:46 PM UTC

The author is right that treating housing as an investment is a mistake, but doesn't take their analysis far enough. In the case where no new houses are built and their house appreciates significantly, after they sell their house _they still need a place to live._ Their next house will cost just as much, regardless of if they rent or buy, effectively eliminating all the gains they made selling the first house. The only real ways out of this are to move somewhere else with lower housing costs, or die. And really, it's worse than this, because their children will need housing too unless they're ok with them living at home forever.

The mentality that housing is an investment good has created a lot of perverse incentives (buy as much house as you can, you'll make more money!), that we really need to curb so that we can lower the cost of housing for everyone. Housing needs to be a consumptive good, where much like cars there's incentives to drive prices down and keep overall spending on the sector low.