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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

#841

Post by khazhoux »

krferriter wrote: post #786
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.

A lot of jobs are in high cost of living areas. The reason they're high cost of living is because there are jobs there, the demand to live there is high, and they haven't built nearly enough housing. Some bay area municipalities have essentially not added any housing in the last 50 years. They made it illegal, because incumbent property owners don't want more people to be allowed to live there. And it's not just the…

I would rather Google and Facebook and the other mega-hire companies would build up outside the bay area, rather than continuing to pack more people in.

Re: Maybe treating housing as an investment was a mistake

#843

Post by graeme »

fnordpiglet wrote: post #789
BurningFrog wrote: post #688

Earlier quoted context omitted.

> How precisely does “the government” do this house price propping up? Primarily by not allowing construction of new housing supply.

All the economic research I’ve read says repealing zoning laws induced no meaningful decrease in home price. That makes sense - home builders build to maximize profit and aren’t in the business of devaluing property they buy to develop. They develop it in a way that appreciates prices to improve their margins. But like this piece there seems to be some view that market forces are shaped by immoral behavior on someone…

In virtually the whole of Canada and the United States, dense, walkable neighborhoods are illegal. Even if you get rid of one type of zoning, other types remain. For example, one of the Texas cities has no zoning laws, but it does have mandatory parking minimums, mandatory street setbacks, etc. Basically the city must be car oriented and low density, even if you can add commercial stuff in residential zones.

Japan is the one place in the world that freely allows density, and Tokyo has not seen rising prices. Note that though Japan's population is shrinking, Tokyo's is rising. Unlike North America, new housing production has kept up with population growth.

https://www.wsj.com/articles/what-housing-crisis-in-japan-ho...

Re: Maybe treating housing as an investment was a mistake

#844

Post by fnordpiglet »

dan-robertson wrote: post #801
fnordpiglet wrote: post #275

Earlier quoted context omitted.

I don’t understand this. There are a lot of places in the US, and certainly globally, where housing prices decrease. There are also plenty of folks who got soaked in 2008 and lost everything, and no one helped them. How precisely does “the government” do this house price propping up? Via loan guarantees to ensure liquidity in the mortgage market? These make houses affordable and accessible to most people. Without loa…

I think you make a good point about places in the US seeing falling prices. It is obviously incorrect to say that prices are guaranteed to rise but I don’t think that’s what anyone claims. I think the general claim is that policies around housing tend to prop prices up by restricting supply (zoning, permitting, higher building costs due to various regulations like stricter codes or safety standards as well as stuff l…

On the loans, if you make loans less liquid and less accessible then fewer people will own homes because they can’t leverage into a house the can afford over 30 years but not this year. It likely won’t decrease the cost of housing because people still need housing, and will instead have to rent. There is enough capital on earth that those with capital will want that cash flow. See my point on rent : mortgage cash flow arbitrage. This would not lead to cheaper housing, just less people owning housing vs renting and more housing owned by fewer people - mostly corporations that have vast access to leverage at rates considerably more favorable. That seems like lose lose to me.

Zoning IMO is a red herring. Developers have no interest in driving property prices down with their marginal developments. They will develop in a way that sees prices stable or rise, which is favorable to them as property investors. People betting zoning law repeals will magically result in vast Soviet style SRO arcologies housing everyone affordably will be disappointed that the Victorian single family home torn down and redeveloped as a duplex is developed as a four story duplex with twice as much space, with each duplex roughly the same price as the original single family home. There also won’t be a massive selling of existing property because, well, NIMBYs like where they live. Ultimately we will just have less Victorians that will never be rebuilt and a handful more luxury duplexes.

Re: Maybe treating housing as an investment was a mistake

#845

Post by jqr- »

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.

For those that don't know what this refers to (myself included): https://en.wikipedia.org/wiki/Land_value_tax

Re: Maybe treating housing as an investment was a mistake

#846

Post by tchaffee »

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.

You're surrounded by the intellectuals who aren't clever enough to figure out how to surround themselves with brilliant people without paying the SF premium.

Re: Maybe treating housing as an investment was a mistake

#847

Post by irrational »

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…

The solution there seems to be you only get to profit from your primary house that you can prove you have lived in for x years. Otherwise, all profit goes to the government. That would stop investments and such in a hurry.

Re: Maybe treating housing as an investment was a mistake

#848

Post by idiotsecant »

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.

>The problem is, for an intellectual, it's important to live in an environment rich with mental talent.

My eyes rolled straight into the back of my head.

I agree that an 'intellectual' (as a social class construct) might require similar socially oriented individuals to feel like they're among equals. I have no respect for such 'intellectuals'. I have a great deal of respect for people who are curious about the world around them and love to make new and wonderful things and think novel ideas.

I find that those two groups rarely overlap.

Re: Maybe treating housing as an investment was a mistake

#849

Post by [deleted] »

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…

[deleted]

Re: Maybe treating housing as an investment was a mistake

#850

Post by JenrHywy »

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…

Locking in 2.6% for 30 years, from an outsider (Aus) perspective, seems insane. That must inflate prices like no one's business.

Here, the longest easily available fixed term is 5 years, and you usually pay a decent rate premium (maybe ~2% above the current variable rate).

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