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Generational Luck in the Housing Market

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Re: Generational Luck in the Housing Market

#71

Post by SoftTalker »

enlyth wrote: post #28
bryanlarsen wrote: post #11

Earlier quoted context omitted.

Why blame the Fed? The low interest rates that made it easy to buy homes (driving up the price) also should have made it cheap to build homes which would have driven down the price. It was local regulations that prevented building homes.

Among other things, I think interest only mortgages are a completely degenerate financial product that shouldn't exist, the only purpose is so someone can leverage themselves to the tits on housing

Disagree. A mortgage is responsible debt, if you plan to live in the house for 30 years why not pay for it over that timeframe? And the house itself will usually appreciate if you take reasonably good care of it.

Zero-down, no-income-no-credit-check mortgages, OK yeah those were a problem.

Credit cards are the degenerate financial product that shouldn't exist, if anything is.

Re: Generational Luck in the Housing Market

#72

Post by smallmancontrov »

JumpCrisscross wrote: post #70
smallmancontrov wrote: post #68

Earlier quoted context omitted.

Increasing available leverage provides an immediate windfall to asset-holders. This is why our economy errs so heavily on the side of encouraging too much leverage: the world is run by asset-holders, for asset-holders. The most obscene part of this is when asset-holders try to blame the problem on their victims (the people who must pay higher prices for the pumped assets). The leverage is not generosity, it is a curs…

> when asset-holders try to blame the problem on their victims (the people who must pay higher prices for the pumped assets) How are the latter, those procuring assets, not also asset holders?

They become asset holders on worse terms. Now they must maintain their predecessor's degeneracy to simply not lose money. If they want to gain money, they must figure out how to impose even more degenerate terms on those beneath them. Ratchet goes click.

Eventually it implodes. People who got in early on the ponzi walk away with windfalls but the last generation is the largest generation and it gets to hold the bags.

Re: Generational Luck in the Housing Market

#73

Post by nickpp »

CharlieDigital wrote: post #13
nickpp wrote: post #12

Earlier quoted context omitted.

> it cost $300,000+ more. Have you try to inflation-adjust that? You may find the price jump is not that great for the last ~10 years.

It's well, well above the rate of inflation.

Official inflation from 2015 to 2024 was around 33%. If the house cost 1mil, then the entire appreciation of 300k was due to inflation. If the house cost 500k - over half of the appreciation was due to inflation.

Re: Generational Luck in the Housing Market

#74

Post by Ekaros »

Workaccount2 wrote: post #59
landedgentry wrote: post #10

Calling it luck makes it sound like there are uncontrollable forces at work. However, these consequences are entirely downstream of artificial, man-made policies.

A fixed 30 yr mortgage is insane. Insanely good if you have a home and a low rate (or refi into one) Insanely bad if you don't have a home. It's not a natural construct, it's an artificial loan that only exists because the fed is the counter party. In an natural economy, mortgages would all be variable rate, or fixed rate but much higher than what is available today. This would also mean that the housing rush of 2021…

Fixed rate is reasonable product. But there should be cost involved in paying it back in higher interest rate environment. So if you payback early you would need to pay the delta between current fixed rate and one you have.

Re: Generational Luck in the Housing Market

#75

Post by benterix »

Avicebron wrote: post #50
Der_Einzige wrote: post #35

Earlier quoted context omitted.

Buddhists at least believe this to be controllable. It's the ultimate victim blaming religion - you're poor because you were a bad person in a previous life. Very awkward to jokingly say "I wish I were a puppy" when I play with my dog and to see the look of abject horror on my Buddhist partners face. I'm told even wishing for something like that significantly increases my chances of becoming a dog in the next life -…

Huh, have you asked them if saying "I wish I was an enlightened super-being" carries similar fate-affixing virtues? Because if so it seems like a neat short circuit

Actuallu, Buddhists form that though very often as a part of their practice. The basic idea is that an action follows intention, so making this intention explicit helps.

Re: Generational Luck in the Housing Market

#76

Post by Ctyra »

Avicebron wrote: post #50
Der_Einzige wrote: post #35

Earlier quoted context omitted.

Buddhists at least believe this to be controllable. It's the ultimate victim blaming religion - you're poor because you were a bad person in a previous life. Very awkward to jokingly say "I wish I were a puppy" when I play with my dog and to see the look of abject horror on my Buddhist partners face. I'm told even wishing for something like that significantly increases my chances of becoming a dog in the next life -…

Huh, have you asked them if saying "I wish I was an enlightened super-being" carries similar fate-affixing virtues? Because if so it seems like a neat short circuit

yes, it does. It's essentially like reinforcement, where you keep telling yourself what you want, and learn how to get that. Eventually you work to get that. It all starts with your wish.

Re: Generational Luck in the Housing Market

#77

Post by benterix »

Der_Einzige wrote: post #35
bluefirebrand wrote: post #20

Earlier quoted context omitted.

The year you are born is absolutely an uncontrollable force

Buddhists at least believe this to be controllable. It's the ultimate victim blaming religion - you're poor because you were a bad person in a previous life. Very awkward to jokingly say "I wish I were a puppy" when I play with my dog and to see the look of abject horror on my Buddhist partners face. I'm told even wishing for something like that significantly increases my chances of becoming a dog in the next life -…

> It's the ultimate victim blaming religion

As a free person, I can choose my religion and blame God for a change. The difference is that if you place locus of control further to yourself, that gives you (and not an external entity) enormous power. Yes, you might not be able to change what happened, but you can influence what is going to happen, even if it's not immediately obvious and if some links of the casual chain are hidden.

Re: Generational Luck in the Housing Market

#78

Post by ilamont »

I wish that articles like this would talk about the fact that many people are living in vastly oversized houses for their needs, and incentives (beyond property tax) could be better aligned for older empty nesters to sell. The neighborhood where I grew up is mostly made up of the same single family homeowners who moved there 30 or 40 or 50 years ago to raise a family, and whose kids are now long gone.

Re: Generational Luck in the Housing Market

#79

Post by Ekaros »

enlyth wrote: post #28
bryanlarsen wrote: post #11

Earlier quoted context omitted.

Why blame the Fed? The low interest rates that made it easy to buy homes (driving up the price) also should have made it cheap to build homes which would have driven down the price. It was local regulations that prevented building homes.

Among other things, I think interest only mortgages are a completely degenerate financial product that shouldn't exist, the only purpose is so someone can leverage themselves to the tits on housing

I remember this one landlady complaining how her variable rate interest-only loan had rates going up so she had to increase the rent to cover it, and wasn't entirely possible...

Like why that sort of insanity was possible in first place. There should be something going towards principle. As not doing it means that increasing rates can be destruction.

Re: Generational Luck in the Housing Market

#80

Post by mountainb »

The 30-year-fixed mortgage combined with the many federal backstops on house prices is the real American social security program. This is also accentuated by the lavish pro-borrower policies at the state and federal level that make foreclosure very difficult. And the asset is protected in bankruptcy.

If you do not buy in to the housing market, you are on the wrong end of every fiscal and monetary policy operating in the US.

One way to reduce the pressure on the housing market to act as a secret pension is to reform social security. It's ridiculous that such a heavy tax on workers pays out such a pathetic amount at the end. The way that it works, the payroll tax money just gets embezzled by Congress, and then a tiny amount is squirted back into the accounts of the taxpayers once they are done embezzling it. Housing is important for reasons beyond just providing a pension-equivalent combined with shelter.

However, there is little pressure to fix these things because the hidden housing benefit is so extravagant and so broadly held by so many voters. It really flips the switch on life to make it EZMode at the cost of mobility. There are still ways to screw up your life, of course, but you kind of have to go out of your way to do it.

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