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Maybe treating housing as an investment was a mistake

goodreason.substack.com

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Re: Maybe treating housing as an investment was a mistake

#541

Post by hahla »

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.

I just pulled up plenty of 2bd rentals on zillow for under $2,500 with a short commute. Am I missing something here? Or does being a head chef mean you should be able to afford rent on top of the restaurant you serve?

Re: Maybe treating housing as an investment was a mistake

#542

Post by horsawlarway »

Glyptodon wrote: post #411

I think there are some factors missing in this piece: 1. Values go up because of density changes related to location desirability. My house is more valuable because more people want to live here, but space is finite. This should lead to it being worthwhile to pay me to leave so an apartment complex can replace the single family homes on my block. But it's more likely that someone will pay a lot to have the single fam…

> Not being adjacent to a major urban area is in many respects like going back in time some proportion to your distance from one.

This whole conversation devolves into this single point, in my opinion.

There is land out there that is cheap as fuck-all. Lots of places will flat out hand you the deed if you promise to live there and build a house.

Some places will subsidize you moving into a house for $1. You just have to do it. Vermont and Ohio will literally PAY YOU to have you move into some areas (10k).

The problem is that young folks generally don't want to live in those locations.

So while I'm certainly a fan of increasing housing supply in existing metros, I think as long as metro populations keep rising, prices in those areas will continue to to beat inflation because demand is rising.

---

If the US wants to alleviate housing costs, the most effective route I think we could go is to simply make it more appealing to live in rural areas. (ex: force those cable companies we paid billions to for rural broadband to go actually install rural broadband)

The whole "Californian diaspora" effect we got during covid is actually a wonderful example of the right way to do this.

If the high price metro is roughly equal in appeal to the lower cost areas, people will exist the high price metro in favor of the lower cost areas, working to equalize costs across the two (prices fall in SF, prices rise in the small towns around it).

Re: Maybe treating housing as an investment was a mistake

#543

Post by readingnews »

>> Alice is much, much worse off for buying. In total, buying costs ~$1.75M, where renting would have cost her ~$1.3M. Because her finances were tied up in the house while the home value has gone up so little, Alice has minimal savings.

The only fallacy here is that most renters I know do not pocket "all that money I am saving renting not buying", AND, the article assumes in 18 years the rent price does not change. But the fixed mortgage would have _not_ changed. Interesting.

Re: Maybe treating housing as an investment was a mistake

#544

Post by [deleted] »

llbeansandrice wrote: post #530
gambiting wrote: post #455

Earlier quoted context omitted.

Sure but obviously that number needs some common sense, right. To make a clearly ridiculous example - if you were making 100k a month and paying 25k for rent you wouldn't be poor in any possible meaning of that word. If you bring home 6k a month after taxes, and after rent you're left with 4.5k, I'd also argue that's not "barely making ends meet". That leaves a very comfortable breathing room that is unimaginable lux…

Now add on: - All forms of insurance - saving for retirement - Rising food costs - Any Healthcare expenses - Car costs - Child care - Subscriptions (phone, internet) - Utilities All in Seattle

[deleted]

Re: Maybe treating housing as an investment was a mistake

#545

Post by nemo44x »

lotsofpulp wrote: post #353
nemo44x wrote: post #339

Earlier quoted context omitted.

> This is completely ignoring the increase in house prices Guess what, the small and lower cost place you bought 10 years ago went up in price too. So you have equity and you've been in the rising market. > The fact is, in many areas, buying any house at all is not feasible for the vast majority of young adults. 100% untrue. Buying a house in the place they feel they deserve to live is. You can buy a home that is a 3…

While I agree with the sentiment of your comment, I would need proof of this: > You can buy a home that is a 30m commute by train or bus to NYC for Even a door to door commute from Secaucus, NJ station, one stop from Midtown is 20min+. I would say 60min is at least the commute you would need for housing at $400k.

Clifton, NJ is 30m by bus. You can get a Cape Cod there for 400k. Harrison,NJ and other places around Newark are cheap and close. Maybe not door to door but you’re at Penn or WTC by then. Most people that live in NYC aren’t 30m door to door to work.

Re: Maybe treating housing as an investment was a mistake

#546

Post by thepasswordis »

Forgeties79 wrote: post #534
ericmay wrote: post #501

Earlier quoted context omitted.

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...

The people who build, own, and operate the very luxury services (such as culinary destinations) that contribute to an area's reputation as "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" should be able to afford living there.

>should

Why?

Re: Maybe treating housing as an investment was a mistake

#547

Post by majani »

davidw wrote: post #341
spaniard89277 wrote: post #130

Earlier quoted context omitted.

[flagged]

Before you go smashing things, you could do some of the basics like electing pro-housing people, show up at public hearings to say 'yes!' to housing, write letters to the editor and all that kind of thing. It's pretty effective.

This is one of those areas where the "proper channels" are heavily compromised though

Re: Maybe treating housing as an investment was a mistake

#548

Post by Godel_unicode »

xapata wrote: post #173
highwaylights wrote: post #140

Earlier quoted context omitted.

This astonishes me about the US real estate market and is something I was only educated to on HN in the last week or so. I had absolutely no idea that 30 year fixed mortgages were not only widely available but the common standard there.

I'm an economist, yet I only recently realized that adjustable-rate mortgages are economists' consensus best choice for consumers. Based on the expectation that personal economics are well-correlated with broad market economics, and that interest rates will decline when the economy struggles.

That math is my favorite example of economists not living in the real world. It doesn’t account for the ability to refinance.

Re: Maybe treating housing as an investment was a mistake

#549

Post by hot_gril »

atemerev wrote: post #85
arberx wrote: post #5

That implies housing has risks. Since 2009, that risk has been eliminated by the FED owning 30% of all mortgages on its balance sheet. We've nationalized housing risk and privatized the gains.

And the fed is absolutely, 100% riskless, right? Nothing ever will happen to it?

"Risk-free" is a common term you'll hear in finances that basically means, no risk aside from a governmental collapse. That's still a risk but falls outside their scope.

Re: Maybe treating housing as an investment was a mistake

#550

Post by whiddershins »

chadlavi wrote: post #306
whiddershins wrote: post #285

Earlier quoted context omitted.

First time homeowners have many special loan options available to them, which you might be aware of if you weren't directing your thoughts towards threats of violence against millions of people.

ah yes, my errant comment on the internet is the cause of my woes, thanks mate, cheers

Your comment is murderous, I don't care particularly about your woes.
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