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Maybe treating housing as an investment was a mistake

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Re: Maybe treating housing as an investment was a mistake

#701

Post by lumb63 »

This idea is well over one hundred years old (closer to two!) [0]. Back when it was conceived of, solutions were proposed alongside the problem.

To use more in-vogue economic terms, the increase in value of housing is typically a result of positive externalities. The government adding taxes to the system to allow it to account for the externality is a very reasonable method of dealing with this problem.

It doesn’t solve the problem for everyone who bought into the pyramid scheme, though. Personally, though, I don’t have much sympathy for people using homes as more than a home.

[0]: https://en.m.wikipedia.org/wiki/Unearned_increment

Re: Maybe treating housing as an investment was a mistake

#702

Post by cwkoss »

mjr00 wrote: post #10

> While the rich are more likely to own homes, tons of middle class and poor people also bought homes and planned their lives under the assumption that housing prices would go up. Tanking housing prices would destroy their trust in the system that they bet everything on. This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their ho…

Make a multiplier on property tax based on number of properties owned. Make it robust against corporations spinning off one-shell-per-properly. Make it revenue neutral so the increased tax revenue from landlord-companies and airbnb superhosts subsidizes tax rates for homes that are full time primary residence.

Re: Maybe treating housing as an investment was a mistake

#703

Post by distrill »

pb7 wrote: post #683
distrill wrote: post #672

Earlier quoted context omitted.

idk why this position is so offensive. yes i think most of the population can sub into most tech work. honestly a bootcamp will make most people ready to perform at an acceptable level for your average FAANG swe role. admittedly the interview process is a tougher experience and keeps many people out but does not reflect the actual work. your being tired of this "cliche" does not make it untrue and this response is as…

I don't know if I would call it offensive, maybe misguided? Naive? Most of the population could not sub into most tech work. I know this because a large portion of the population can hardly even use tech, beyond the lowest hanging fruit like social media and other ultra-refined experiences. You have a high opinion of the average person and that's fine but it will stick out in conversations like this. Your attempts to…

i did not allude to some great injustice, i shared an observation that gives me pause when i interact with people outside of this bubble.

i don't have a particularly high opinion of the average person, i think this community has particularly high opinions of themselves, and does not like the idea that we are not differentiated other than having interests that pay well.

Re: Maybe treating housing as an investment was a mistake

#704

Post by olyjohn »

vjk800 wrote: post #644
bityard wrote: post #625

Earlier quoted context omitted.

I don't mean to be blunt, but if modest homes in your area are $1m, then you are in a VERY high-cost-of-living area and what you see here is not at all typical of the rest of the country. Where I live, a charming 1200sqft starter home in a blue collar neighborhood goes for $150-$200k.

Indeed. If your complaint is that you need to be a millionaire to get basic housing, it's because you live with other rich people. Since the overwhelming majority of humanity lives in houses with value far below 1M$, we can conclude that no-one really has to live in a place with only 1M$ houses, but you, for some reason, want to do so. Living in a posh neighbourhood is a luxury, like Ferrari (which, by the way, costs…

Dude, this guy isn't talking about some posh high end part of Seattle. I just sold my "quaint 1200sqft starter house" in a remote South Seattle neighborhood for $675,000. It's 45+ minutes by transit to downtown. You know what I paid for that just 5 years earlier? $350,000.

This is the part of town where the grocery store has security guards all over the place, and the bank has thick bulletproof glass between you and the teller, and the transit options such big time. If you want to live anywhere remotely near where the jobs are, every house is near $1m+ now.

Conclude what you want, you're completely wrong and out of touch with current housing prices in a lot cities.

Re: Maybe treating housing as an investment was a mistake

#705

Post by tstrimple »

horsawlarway wrote: post #542
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…

The push to spread further out makes no sense to me. Suburban communities are already unsustainable, rural communities even worse. Economies of scale matter a whole lot here. The number of miles of road needed to service a rural community is exponentially higher than urban areas. This cost is not borne by those communities, but rather is subsidized heavily by urban workers. Rural areas also have a higher carbon footprint per-capita because of all of these different services which now have to be pushed dozens of miles out to support a handful of people. Pushing more people into areas with few opportunities just exacerbates this problem.

https://www.smartcitiesdive.com/ex/sustainablecitiescollecti...

> “What we have found is that the underlying financing mechanisms of the suburban era -- our post-World War II pattern of development -- operates like a classic Ponzi scheme, with ever-increasing rates of growth necessary to sustain long-term liabilities . . .

> “In each of these mechanisms, the local unit of government benefits from the enhanced revenues associated with new growth. But it also typically assumes the long-term liability for maintaining the new infrastructure. This exchange -- a near-term cash advantage for a long-term financial obligation -- is one element of a Ponzi scheme.

> “The other is the realization that the revenue collected does not come near to covering the costs of maintaining the infrastructure. In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance . . .

> “We’ve done this because, as with any Ponzi scheme, new growth provides the illusion of prosperity. In the near term, revenue grows, while the corresponding maintenance obligations -- which are not counted on the public balance sheet -- are a generation away.”

Re: Maybe treating housing as an investment was a mistake

#706

Post by narrator »

bityard wrote: post #625
angarg12 wrote: post #551

Earlier quoted context omitted.

I'm a new immigrant to the US, and housing is my single biggest worry together with my work visa. Our household income is north of 300k, but housing still seems unaffordable. It might sound like whining, but we only achieve this level of income recently, so our lifelong savings are in the low 6 figures. We got no assets or property abroad, and no family that can help us to get in the property ladder. Even old, basic…

I don't mean to be blunt, but if modest homes in your area are $1m, then you are in a VERY high-cost-of-living area and what you see here is not at all typical of the rest of the country. Where I live, a charming 1200sqft starter home in a blue collar neighborhood goes for $150-$200k.

[flagged]

Re: Maybe treating housing as an investment was a mistake

#707

Post by petsfed »

bityard wrote: post #625
angarg12 wrote: post #551

Earlier quoted context omitted.

I'm a new immigrant to the US, and housing is my single biggest worry together with my work visa. Our household income is north of 300k, but housing still seems unaffordable. It might sound like whining, but we only achieve this level of income recently, so our lifelong savings are in the low 6 figures. We got no assets or property abroad, and no family that can help us to get in the property ladder. Even old, basic…

I don't mean to be blunt, but if modest homes in your area are $1m, then you are in a VERY high-cost-of-living area and what you see here is not at all typical of the rest of the country. Where I live, a charming 1200sqft starter home in a blue collar neighborhood goes for $150-$200k.

Great, if only there were adequate jobs in those places, so we could all own homes without needing $300K annual family income.

The dissonance comes from the fact that a lot of hackernews readers make apparently high incomes, but the cost of living in their areas keeps them squarely working class.

The best example I can give is in the Bay Area. I lucked out with $2850/month to rent a 1400 square foot house in San Leandro. Except that I worked in South San Francisco, and my commute was 45 minutes to 90 minutes each way, every day. I looked into it, even did the math with average commute times and Health and Human Services housing cost data, and found that if I wanted to cut 15 minutes off of that commute would cost me an extra $1000 a month, or I'd lose the yard and the other bedroom. With a kid, a stay-at-home spouse (a lot cheaper than child care given wages for my wife's field in the bay area) and a dog, that was just a non-starter. I knew people who drove in from Vacaville or Tracey, every day, just to keep the housing prices within their means.

Prior to that experience, I honestly thought $140K a year was the best I could ever hope for. I was top 15% of individual wage earners in the country but I was considerably more stressed out than when I was making minimum wage at an office supply store in suburban Oregon.

Re: Maybe treating housing as an investment was a mistake

#708

Post by horsawlarway »

agrajag wrote: post #510

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 on…

I think you'll find it really tricky to remove the idea of land as an investment.

And that's what we're really talking about when we talk about housing as an investment (the land is appreciating, the house is a pile of goods that's slowly rotting)

There are lots of houses (and lots of land) that no one wants and is dirt cheap.

There is lots of land that is very attractive because of the investment made in it (structural improvements, clearings, landscaping)

There is also lots of land that is very attractive because of the investment made in the areas surrounding it (hospitals, entertainment, jobs, infrastructure).

The problem is that at some point, people actually invested time/money/resources/energy/etc into making those areas "attractive". So now those areas are in high demand and the number of dollars seeking them out is far in excess of the amount of the space available, so prices rise.

As a side note - if people can't make land an investment through housing, it absolutely does not guarantee that folks will lower the price of houses in those areas. It may well mean that they remove the housing and make the investment something else (industrial/agricultural/power).

---

So really - to remove the idea that land is an investment, you have to remove the population growth in an area. Otherwise it's unavoidable. There is a limited amount of land, and more people competing for it.

When people say things like "Housing isn't an investment in [area]" most times they really mean population is decreasing in that market (japan is a perfect example).

Re: Maybe treating housing as an investment was a mistake

#709

Post by distrill »

pc86 wrote: post #639
CobrastanJorji wrote: post #518

Earlier quoted context omitted.

I'm with them. "Earned" is really the big question. If I feel I earned my pay, and then I see someone else who's working harder and getting paid much less, it follows that I must also feel that they are receiving less than they have earned.

This assumes that pay is correlated to how hard you work, which it isn't and never has been.

it does not assume that pay is or ever was correlated to how hard you work. it suggests that maybe it should be.
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