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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

#711

Post by Nemo_bis »

keerthiko wrote: post #609
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.

In NYC, a lot of the affordable housing stock are part of co-ops, where the board has to approve your finances before you can move forward with a purchase. If your monthly income is less than a certain multiple (you would think 3x, but it's usually 5x - 10x depending on the co-op) of your monthly payments ie maintenance + mortgage + insurance, they can reject your application. And even if you found a condo (usually 2…

"A lot"? I've been researching this earlier in another place and didn't come up with much, do you have a link on how to list them?

Re: Maybe treating housing as an investment was a mistake

#712

Post by [deleted] »

davidw wrote: post #52
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…

> every citizen of the first world Where I lived in Italy, people certainly purchase houses, but they don't expect them to have crazy returns like in the US. It's just a way to not pay rent and have something that you can hang on to even if there's inflation or other funny business (something that Italy has seen a lot of). People even invest in, say, apartments, but it's a similar story: they expect them to hold thei…

[deleted]

Re: Maybe treating housing as an investment was a mistake

#713

Post by Scoundreller »

triceratops wrote: post #452
jalk wrote: post #343

Earlier quoted context omitted.

Don't forget that the interest rate was around 10% in the early 1990ies

Yeah that's one reason why houses in the 90s were more affordable.

Affordable for people planning on paying down the mortgage, but horrible for investors expecting to just refi and refi while maintaining a constant high double-digit LTV. Think about them! /s

Re: Maybe treating housing as an investment was a mistake

#714

Post by cwkoss »

sbarre wrote: post #449
bmitc wrote: post #236

Earlier quoted context omitted.

I agree with that. Investment homes, second or maybe just third homes, etc. should be taxed rather extremely aggressively.

The problem with this approach is the impact it has on areas that have availability problems, and where there is more demand than supply for housing (think big cities that are experiencing condo booms). In those high-demand areas, owners will simply pass those tax costs down to their tenants, and the rents prices will go up, leading to even less affordability.

Make the tax scale with number of homes the entity owns.

Re: Maybe treating housing as an investment was a mistake

#715

Post by turtlebits »

angarg12 wrote: post #551
photon12 wrote: post #6

> Meanwhile, renters are desperate. They’re begging for housing prices not just to slow, but to fall. I have a friend who is a head chef at a decently popular bar and restaurant on Broadway in Capitol Hill, Seattle (very trendy part of town if you aren't familiar, steep commercial rent). He lives in a 400 sq ft studio and is barely, barely making it from one paycheck to the next. I am sitting on a 2.6% interest rate…

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'm not sure if I believe this. The places you "want" to live may cost 1M+, but I refuse to believe that if you just go another 15 minutes out (or add 15 mins to your commute), you can't get something for 2/3 of the price.

Re: Maybe treating housing as an investment was a mistake

#716

Post by fallingknife »

angarg12 wrote: post #551
photon12 wrote: post #6

> Meanwhile, renters are desperate. They’re begging for housing prices not just to slow, but to fall. I have a friend who is a head chef at a decently popular bar and restaurant on Broadway in Capitol Hill, Seattle (very trendy part of town if you aren't familiar, steep commercial rent). He lives in a 400 sq ft studio and is barely, barely making it from one paycheck to the next. I am sitting on a 2.6% interest rate…

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…

So don't buy. $300K is enough to easily afford rent. And if you compare what you pay to rent vs cost to own equivalent in the Bay Area, in most places renting is actually cheaper.

https://www.nytimes.com/2022/06/23/realestate/owning-renting...

Re: Maybe treating housing as an investment was a mistake

#717

Post by lumb63 »

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…

“Rich” is highly relative. If someone lives in an area where everything costs on average twice as much as somewhere else, their money is effectively equivalent to half of what it would be somewhere else. The reality is they’re probably looking to afford a upper middle class lifestyle and make an upper middle class household income. They don’t sound “rich”.

Re: Maybe treating housing as an investment was a mistake

#718

Post by fallingknife »

eddsh1994 wrote: post #642
angarg12 wrote: post #610

Earlier quoted context omitted.

Nope, Greater Seattle Area. Still, we are a couple nearing our 40s, it seems insane to me that we need to "settle down" for a 1 bedroom flat while making ~3x the median local income.

Oh I agree! But better to avoid renting in general imo, if it’s a possibility.

Not correct. In most HCOL cities in the US, you can rent space for less than the equivalent cost to own.

https://www.nytimes.com/2022/06/23/realestate/owning-renting...

Re: Maybe treating housing as an investment was a mistake

#719

Post by Nemo_bis »

hnuser847 wrote: post #210
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.

It’s because our federal government purchases the majority of residential mortgages, and therefore indirectly sets the standard for the entire market. It’s a major reason why real estate is such an attractive investment.

Yes. The problem with the article is that it focuses on the value of the asset but forgets the costs. The entire system is stacked in favor of home-ownership by means of tax and bank subsidies.

Re: Maybe treating housing as an investment was a mistake

#720

Post by HWR_14 »

BurningFrog wrote: post #679
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.

Well, the jobs that pay the high incomes are in the very high-cost-of-living areas. This is a huge problem for economic growth. If housing costs in the Bay Area were at US average, easily 10M more people could live here and get high paying jobs. But that path to a better life is very constrained.

Alternatively, those jobs are only high paying because the red are very people who can fill them solely because of housing and far less so about skill. If 10M people could move to the Bay Area tomorrow, those jobs would pay a lot less.

Also why people insisting on teleworking as a permanent option haven't really thought it through.

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