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Maybe treating housing as an investment was a mistake

goodreason.substack.com

921–930 of 1001 posts

Re: Maybe treating housing as an investment was a mistake

#921
post #626

Earlier quoted context omitted.

>maybe betting against human lives doesn’t feel right This is an inappropriate emotional appeal. Real estate is dependent upon the price/value of labor. It's betting for/against labor prices. Labor is not your life. You are more than your job.

Warning, uncomfortable honesty ahead. I'd be betting against labor. With all the automation going on, and the "Huge" technological advancements I foresee probably Of course, I won't step on others, and I'll help where my conscience requires me. But at the end of the day (or the end of the world) I am here to provide a safe future for my children, and perhaps secondary, my culture's children... but definitely not to s…

> I also don't see violent revolutions being a possibility with all the societal level monitoring and controls all countries are putting in place

In the world you're describing, they're not just possible, they're inevitable.

Consider the implications of automation taken to the extreme. Today, we have capitalists who own the means of production, and workers who use them to produce value. Workers don't get a fair slice of the pie that they make, but they get some of it at least because labor is needed for capital to be useful. The system is unfair overall and popularly perceived as such, but most people aren't pushed far enough that violent revolt would be rational and feasible.

But if means of production that don't require workers to operate them become dominant, and lots of workers become outright economically redundant, it will literally be a question of what do their children eat tomorrow. And, well, there's a lot more labor; whatever societal monitoring and control tech you devise, it won't help you if 90% of the population realize that the only way they won't starve is if they forcibly take what the other 10% has hoarded.

Not only that, but should that happen, the torches-and-pitchforks mob will target the people on the bottom of the upper class first, simply because they are more prominent in day-to-day interactions, live closer, can afford less security, and don't have ready access to escape routes (like a private plane or yacht). For some vivid descriptions of how this works out for the people who can't escape, read about the 1917 Russian revolution.

So unless you're already comfortably upper class - enough so to afford a bunker in New Zealand or similar arrangements - this doesn't sound like a good long-term survival strategy to me. Indeed, I would argue that, among white collar workers, it's precisely the high middle class people that have the most vested interest in "saving the world", in a sense of coming up with a new economic consensus that would prevent the above scenario - we have to, if we want a safe future for our families. And I don't think it is at all impossible for a political alliance of all labor across the board to push this change. Our societies are bad at democracy, generally speaking, but supermajorities still matter.

Re: Maybe treating housing as an investment was a mistake

#922
post #425

Earlier quoted context omitted.

Do you believe your income is unearned? Or are you just virtue signaling about what the labor market values?

Bah, "virtue signaling" accusations are such a toxic thought-terminating cliche :/

Yeah, I find claiming "virtue signaling" to be a kind of virtue signaling in itself.

Re: Maybe treating housing as an investment was a mistake

#923

Earlier quoted context omitted.

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 bet…

I totally agree but do think it's true in terms of averages and probably true more often than not that a given individual falls within the range. After all, you can't have an industry-wide average for most roles that's higher than the value they bring in. There's also a myriad of roles that don't produce directly and are either supportive, compliance, or simply unnecessary.

Re: Maybe treating housing as an investment was a mistake

#924

Earlier quoted context omitted.

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.

If you consider the relatively low density, mostly restrictively zoned Bay Area to be "packed in", I'd hate to hear what you think of e.g. New York.

As posted above the Bay Area is second in density only to NYC.

Re: Maybe treating housing as an investment was a mistake

#925
post #757

Earlier quoted context omitted.

I don't admit. I think high density cities look much nicer than suburbia.

Maybe some look good in high density cities in select areas of Europe which are helped by well preserved ancient architecture, but that's not replicable elsewhere. Go to more modern, large, genuine YIMBY cities where anything goes like Tokyo and Lagos and they are quite an eyesore

I don't think anybody has ever described Lagos as a "YIMBY city" with a straight face.

the imposition of an American context doesn't even make any sense in the first place, considering how differently land and land ownership works in Nigeria.

Re: Maybe treating housing as an investment was a mistake

#926
post #368

Earlier quoted context omitted.

There is lots of boring housing in the US. It is not going to be in the Willamette Valley in Oregon. Just like houses in the Alps in Italy versus less desirable places in Italy.

"Just go somewhere else" is causing even the 'boring' places to have problems: https://www.nytimes.com/2022/02/20/business/economy/spokane-... We need some more fundamental reforms.

I’m not surprised Spokane real estate market popped. Expect that in every small town surrounded by beautiful mountains …

Re: Maybe treating housing as an investment was a mistake

#927
post #58

Earlier quoted context omitted.

What sucks is a lot of young renters with steady jobs can afford to pay off a mortgage month to month, but they just can't afford that down payment (especially the 20% needed so as to not need to get mortgage insurance)! I was in that position for a while. Every time it seemed like I could afford to put that money down, the housing prices went up! It took a handful of years of renting cheap places (with roommates), l…

> 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.

For me it was like $80 a month for a couple years until I refi-ed and it saved me a couple hundred thousand. I wouldn’t do it now, though.

Re: Maybe treating housing as an investment was a mistake

#928
post #872

Earlier quoted context omitted.

Don’t you think the amount of remote work has changed that? I think part of the problem is the presumed loss aversion of moving from a $300k salary to, say, a $175k one that is remote but allows for a better standard of living (particularly for families).

You say this as if getting a fully remote job that pays $175k is easy to come by… I’d guess that most people making $300k in high-priced areas would take this paycut to $175k every day of the week and twice on sunday if they were offered

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Re: Maybe treating housing as an investment was a mistake

#929

Earlier quoted context omitted.

What I think would help at least is if prices stopped increasing. That way, people who buy now at least won't lose money, but the expectation that valuations will continue to go up will have to taper off. Also, in the case of high-cost coastal cities, I don't think the issue is trust in government propping up prices, as much as it's trust that demand will continue to outpace supply for the next several years at least…

That isn't an equilibrium. If the market formed the expectations that property values were going to stop increasing, then property values would drop - because the current price bakes in the assumption that they're going to keep increasing.

In the short term, sure. I'm being a little idealistic, but I don't think it's impossible for housing markets to find a new stable-ish level without lots of people losing their shirts in the process.

Re: Maybe treating housing as an investment was a mistake

#930
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…

Doesn't fix it. People end up buying bigger homes just as a place to park money. The root of the problem is that housing is a subsidized investment; you're getting free money from the government by taking out a mortgage, and the market will figure out ways to take advantage of that with silly results.

Why does this matter? The problem stated is lack of supply generally, not that people want bigger homes, right? Who cares if people are parking their money in a bigger home if they only have a single home?
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