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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

#811

Post by alistairSH »

avmich wrote: post #793
vel0city wrote: post #738

Earlier quoted context omitted.

Ever thought about maybe not living in California? You don't need to be on the West Coast to have a tech job.

This is the thought which comes around often. The problem is, for an intellectual, it's important to live in an environment rich with mental talent. Bay Area is the intellectual capital of the world, and while Einstein could maintain his patent clerkship and have famous physicists visit him in Bern ( http://norvig.com/performance-review.html ) for the lesser minds in another era settling on another place is a loss.

Bay Area is the intellectual capital of the world

Say what?

Switzerland (or possibly Slovenia) has the highest STEM PhDs per capita.

There are many counties and cities in the US with higher PhD rates than any of the Bay Area counties. Most have major R1 unis, but not all.

SV is the VC capital of the world. I'll give you that. But, that's not even remotely the same as being the intellectual capital.

Re: Maybe treating housing as an investment was a mistake

#812

Post by notlukesky »

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…

The irony is that the influx of millions of foreigners to urban areas increases the demand for existing housing stock whilst the same people who are for millions of immigrants are against new housing built. The price pressure will only be upwards and benefits the existing landlords (and the big funds who own property like Carlyle and BlackRock and are big political donors).

Re: Maybe treating housing as an investment was a mistake

#813

Post by mulmen »

djent wrote: post #648
acabal wrote: post #460

Indeed, and the article is right in saying there isn't really a way out. Humanity paints itself into these kinds of corners fairly frequently over the course of history: entrenched systems where many suffer, but where too many powerful people benefit for it to be able to change. Traditionally, the solution has been violent revolution. That's really the only way to (for example) tell 66% of Americans that their bigges…

Suggesting that the conclusion is telling homeowners that their asset is now "worthless" is extreme hyperbole. Homeowners live in their house. You need only apply the same metaphor from the article. Nobody might be willing to pay money for my couch, but I still keep it in my living room and use it.

Yep. Even if I bought a house at the peak and the market tanks I can still sell it (at a loss) and buy a comparable house because those are cheaper too. The people who get screwed are the multiple-home-owning rent seekers and I'm ok with that.

Treating your primary residence as an investment has been bad financial philosophy for all of time.

Re: Maybe treating housing as an investment was a mistake

#814

Post by Michaelfonzolo »

s1artibartfast wrote: post #749
NineStarPoint wrote: post #420

Earlier quoted context omitted.

While you’re right that how hard someone works doesn’t determine their pay, how much money someone brings in at best loosely correlates to their pay as well. I think a lot of people have dissonance there as well, thinking “well surely if it’s not how hard the work is, it’s how much value they bring in!” But no, all that matters from a business perspective is that the sum of all paychecks is less than is needed to mak…

How much you bring in makes an upper bound on comp. How much you can be replaced for makes a lower bound.

In theory sure, but in practice the internal complexity of organizations leave plenty of room for obfuscating that ideal. Throw in nepotism, favoritism, corruption, and an inflated valuation of upper management roles and you've got plenty of jobs that pay well past what they "bring in", which is itself nebulously defined at best, especially in white collar industries. Hell I know some companies that would've been better off just axing some of their c-level suite.

Re: Maybe treating housing as an investment was a mistake

#815

Post by highwaylights »

thatfrenchguy wrote: post #286
ska wrote: post #166

Earlier quoted context omitted.

I can't think of another country that has anything like it, and it's largely because of the government market interference (via Fannie/Freddy especially) It's going to continue to have some weird knock on effects.

France has fixed rate mortgages

That are fixed to 30 years out?

This is legitimately fascinating to me that someone would offer that deal.

Re: Maybe treating housing as an investment was a mistake

#816

Post by petsfed »

vel0city wrote: post #738
petsfed wrote: post #707

Earlier quoted context omitted.

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 Lean…

Ever thought about maybe not living in California? You don't need to be on the West Coast to have a tech job.

I was living happily in Wyoming when my employer said "move to California, or find another job" which, if you don't know the Wyoming economy, translated to "leave Wyoming for us, leave Wyoming for somebody else, or go work in a coal mine".

Re: Maybe treating housing as an investment was a mistake

#817

Post by marcus_holmes »

Nemo_bis wrote: post #746
marcus_holmes wrote: post #640

I love this, but it missed out one factor: the banks. Mortgages before the 80's were tied to your income, and for most households that was a single income. House prices couldn't rise beyond a fairly low point because no-one could get a mortgage for them. Then in the 90's this broke two ways: most households had 2 incomes as the norm became that married women also worked, and the banks started giving mortgages on much…

Hence in many countries in Europe, e.g. in the Nordics, there's one simple way to gradually reduce prices: reduce the supply of mortgages for more expensive housing. The state backstops most mortgages, but by the same mechanism (or with the help of the banking regulator) also sets the rules on how to give them. When prices get too hot, the regulators simply decrease, or refuse to increase, the nominal amount of the m…

This is great. I wish Australia did this

Re: Maybe treating housing as an investment was a mistake

#818

Post by carlosjobim »

asoneth wrote: post #651
carlosjobim wrote: post #299

Earlier quoted context omitted.

The restaurateurs might be raking it if they own the real estate. If you pay rent for your location you are probably scraping by, and whipping your staff to bring in the money for your landlord. A chef's pay is a function of the market, and that's why everybody is exiting the industry right now. Head chefs and restaurant owners are used to decades of low wages and think it's quite insulting that anybody would dare as…

A restaurateur who only makes money because they own real estate seems like a landlord with a side hobby.

I don't understand exactly what you mean? He would be his own landlord.

Re: Maybe treating housing as an investment was a mistake

#819

Post by fiftyfifty »

nickelcitymario wrote: post #314

I may be wrong, but it seems to me like this is a simple supply/demand issue. Increase the supply. Yes, that's detrimental to those who already have homes (like me). But if I were a dispassionate judge-of-the-world, and I were weighing these two groups needs, I'd err on the side of supporting those without homes over those who have them. Also, increase the supply of SMALL homes. Why is every new house a McMansion? Wh…

It's more than just supply and demand. There are a lot of companies and private investors buying up multiple residential properties to rent out. There are a significant amount of properties simply being rented out on Airbnb/VRBO and their ilk. This is having a measurable impact on housing prices, and making additional housing unavailable to local residents. We need to increase tax penalties on companies and individuals buying up residential properties that aren't their primary residence and municipalities need to do a better enforcing zoning laws that are probably already on the books that should prevent short term rentals in residential areas.

https://www.forbes.com/sites/garybarker/2020/02/21/the-airbn...

Re: Maybe treating housing as an investment was a mistake

#820

Post by dinvlad »

notlukesky wrote: post #812
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…

The irony is that the influx of millions of foreigners to urban areas increases the demand for existing housing stock whilst the same people who are for millions of immigrants are against new housing built. The price pressure will only be upwards and benefits the existing landlords (and the big funds who own property like Carlyle and BlackRock and are big political donors).

I think the positive net affect of immigration on the economy far outweighs any negatives associated with it.
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