Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The economy is going great, except for the housing market

investopedia.com

Post reply on HN
Print view View original

21–30 of 84 posts

Re: The economy is going great, except for the housing market

#21

Post by wussboy »

AnimalMuppet wrote: post #18
the_gipsy wrote: post #11

Earlier quoted context omitted.

Increasing supply in population centers also raises demand. Think about why it's in demand in the first place: it's because there is high density (and more opportunities).

Barring unlimited immigration, we could build enough high-density housing in cities to meet demand. (At least, we could if we fixed zoning.) (Or, we could in most cities. A few, like New York and San Francisco, are very limited in terms of available land.)

Zoning and parking minimums are the real problem. Ensure houses are safe (fire, collapse, etc.) and let the market decide where, when and what should be built.

Re: The economy is going great, except for the housing market

#22

Post by Dalewyn »

I think the economy is doing decently in aggregate, but doing either extremely great or extremely bad depending on which specific part of the economy you look at. Kind of like how the US Air Force will tell you there is no such thing as The Average Man.

Looking at the securities market (stocks and bonds) they're basically a statistical anomaly with how good they're doing. Inflation is irrelevant with luxury goods and bad with life's necessities. Cost of housing is too high in the metros and reasonable in rural regions. Wages and salaries for the rank and file are stagnant but are going up for management. etc. et al.

Re: The economy is going great, except for the housing market

#23

Post by mistursinistur »

bachmeier wrote: post #5
jeffbee wrote: post #2

Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.

> kick existing owners in the teeth to fix this crisis You're assuming a definition of "crisis". 2/3 of households own their own homes, and a big chunk of those that don't aren't looking to buy in any circumstances. As much as we hear about the high cost of housing, it's only an issue for an extremely vocal minority. That's not to say I don't view it as a problem (clearly it is) but I'm skeptical it's going to win an…

> 2/3 of households own their own homes

1. "Household" is not the right unit of analysis, since a household is defined as the set of people in an existing home. Some of these include adults who would like to move out, creating a new household not accounted for in your denominator.

2. According to the U.S. Census Bureau, the average American moves approximately 11.7 times throughout their lifetime. In other words, current homeowners generate demand for housing just as non-homeowners do.

Re: The economy is going great, except for the housing market

#24

Post by AnimalMuppet »

kylebenzle wrote: post #8
jeffbee wrote: post #2

Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.

Governments will choose the path of least pain everytime and that means EVERY SINGLE TIME they will choose to hyperinflate the money supply rather than pay their debts. No one is going to purposfully crash the single largest market in the world. Hyperinflation is comming.

Been hearing that since the 1970s, with more reason. 1979 looked a lot more like hyperinflation than 2023 did, with 14% inflation.

By the way, hyperinflation doesn't just mean "large inflation". It's defined as 50% increase in prices per month. Yes, governments often (not always) choose to inflate the money supply rather than pay their debts. No, nobody deliberately chooses hyperinflation.

Mind you, you could be right this time. It could be that the next government will overspend enough (no matter who wins) and Congress will be irresponsible enough that we do in fact wind up in a hyperinflation. But so far, naysayers have predicted ten of the last zero hyperinflations.

Re: The economy is going great, except for the housing market

#25

Post by carom »

jeffbee wrote: post #2

Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.

As someone who wants higher density, I see very little progress of this happening. Voters consistently vote against it. The one exception is California state has passed some good laws around ADUs and parking minimums. People will keep voting for rent control and affordable units to prevent construction.

The other side of the equation is that wages could increase relative to the price of housing.

Re: The economy is going great, except for the housing market

#26

Post by ta_1138 »

jeffbee wrote: post #2

Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.

If you can avoid population loss, it's still going to work out, because a great approach to increasing housing supply is more density. Grab 3 adjacent houses, demolish, turn them into 24 condos that are only a little bit cheaper, and once you account for the costs of construction, it still works out for everyone.

So what happened to the owners of those three houses? Well, their land, which before could only had 3 dwellings, has 24. So while the value of the built houses they had dropped to zero, the value of the land they were built on went up spectacularly, so their investment paid off anyway.

Barring the craziest of regulatory situations, no house is ever a good investment. They degrade and get worse! But most homeowners end up ahead, because they own the land, and it appreciated faster than the house depreciated. And as a city gets bigger and more prosperous all land near it gets more valuable.

So all in all, in cities that aren't shinking, it's likely most homeowners end up way ahead, and the closer to downtown, the more they gain. It's only when a city shrinks that the homeowner really loses money.

Re: The economy is going great, except for the housing market

#27

Post by lr4444lr »

smileysteve wrote: post #4

The 2017 tax act had an obfuscated impact on corporate ownership of houses. Capping the personal SALT deduction while simultaneously lowering the corporate tax rate made local tax policies to increase local ownership ineffective.

What do federal corporate tax rates have to do with municipalities setting their own property taxes? Nothing stops them from giving preferential treatment either to primary residence homeowners.

Municipalities are their own worst enemies with restrictive zoning and small-minded inability to consolidate services with neighboring districts that don't need so much duplication.

Re: The economy is going great, except for the housing market

#28

Post by damiankennedy »

kylebenzle wrote: post #8
jeffbee wrote: post #2

Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.

Governments will choose the path of least pain everytime and that means EVERY SINGLE TIME they will choose to hyperinflate the money supply rather than pay their debts. No one is going to purposfully crash the single largest market in the world. Hyperinflation is comming.

Do you think it will get as high as %50 per month or something like %25 a year and would this inflation have any effect on future US Federal liabilities?

Re: The economy is going great, except for the housing market

#29

Post by brailsafe »

bachmeier wrote: post #5
jeffbee wrote: post #2

Any way you look at it, the government has to kick existing owners in the teeth to fix this crisis. Housing prices need to return to a reasonable multiple of wages, and that can only be done with supply. Everyone is going to have to get over the idea that they are "building wealth" and "getting ahead" by merely owning a box.

> kick existing owners in the teeth to fix this crisis You're assuming a definition of "crisis". 2/3 of households own their own homes, and a big chunk of those that don't aren't looking to buy in any circumstances. As much as we hear about the high cost of housing, it's only an issue for an extremely vocal minority. That's not to say I don't view it as a problem (clearly it is) but I'm skeptical it's going to win an…

It's only a political battle to win as long as the disenfranchised accept arguing about it is the only framework for dealing with it. People who consistently oppose change are lucky everyone else is relatively chill—so far—about losing access to a certain kind agency over one's future in their community. One could imagine a tipping point whereby the disenfranchised start approaching the situation more directly.

Re: The economy is going great, except for the housing market

#30

Post by infotainment »

wussboy wrote: post #21
AnimalMuppet wrote: post #18

Earlier quoted context omitted.

Barring unlimited immigration, we could build enough high-density housing in cities to meet demand. (At least, we could if we fixed zoning.) (Or, we could in most cities. A few, like New York and San Francisco, are very limited in terms of available land.)

Zoning and parking minimums are the real problem. Ensure houses are safe (fire, collapse, etc.) and let the market decide where, when and what should be built.

Exactly -- Tokyo has kept housing costs under control for this reason.

There are zoning codes in Tokyo, but they're quite flexible compared to what people in the US are used to. In addition, perhaps most importantly, it's not possible to oppose construction, as opposed to the the US, where literally anyone can halt a construction project indefinitely for literally any bogus reason. "It might cast shade on 1 square foot of the street!"

Post reply on HN