Stopped reading at "In that sense, having a child amidst this corrupt corporatocracy is part of our act of resistance. It’s our declaration of hope against chance."
This real estate bubble won't pop
11–20 of 110 posts
Re: This real estate bubble won't pop
#12The price of the average house in the USA is based primarily on the government-guaranteed 30 year fixed rate mortgage. For a given interest rate and income, the house will cost exactly the maximum amount of loan the borrower can get. Banks no longer have any skin in the game - they go through a massive checklist, gather tons of documents, and once they can fulfill their legal mandates they immediately approve the loa…
> The price of the average house in the USA is based primarily on the government-guaranteed 30 year fixed rate mortgage. For a given interest rate and income, the house will cost exactly the maximum amount of loan the borrower can get.
This implies that very poor people can buy houses for very cheap. The price of a particular house is not set by reference to the person purchasing it. The price comes first, and the buyer second.
Re: This real estate bubble won't pop
#13Not a bad overview, but misses some things (1) political instability (2) $10M/home as sticker price wouldn't happen. Apartments and row homes would be more common substitutes (and already have sopped up demand in the starter home markets) (3) what inflation measures show 10% inflation?
Shadowstats[1] shows more than 10% in '80s-based measure.
1. http://www.shadowstats.com/alternate_data/inflation-charts
Re: This real estate bubble won't pop
#14I've always thought the solution to this was exponentialy increasing property taxes beyond the first property you (or whatever legal entity you create to horde properties) own. I'm dumb, so I'm sure there are reasons this won't work, but it seems like it should.
Well apartment buildings is one. Is rented out real estate really ‘hoarded’?
Re: This real estate bubble won't pop
#15So wrong.
1. Population is growing -> sure worldwide, but projected to start declining by mid century. In addition, Japan, Italy and other places are already in decline. Japanese home prices have been almost flat for 30 years. Tokyo has no zoning and you can build what you want. If you live in the developed world, East Asia, China, etc you are going to witness declines if you don't have immigration
2. People are moving to cities -> Were. Covid has allowed a lot more flexibility. First tier city residents moving to second tier and rural areas with good internet service. Real reversal of the last twenty years.
3. More people are living alone -> sure because there are fewer of them. Direct contradiction of point 1 by the way.
4. Multiple house ownership. So what?
5. Housing construction isn't keeping up. Sure. But that can be fixed if there is political willpower.
6. Material shortages and building costs. -> We were just in oversupply of materials post '08 financial crisis. We could be again. Just focused investment on production of materials. Land.. If you have Hong Kong density, the entire US population could squeeze into a corner of the state of Texas.
7. Sure inflation is soaring, but can come down again, with higher interest rates, which would also absolutely slaughter leveraged real estate investors.
8 Weird thing on the monopolists... They were already financing 90% of house anyway with debt. You were paying a rental equivalent called a mortgage. Now they're financing 100%, and you still pay a rental equivalent.
9 Outrageous leverage - individual homeowners have way better leverage. 30 year fixed mortgage with the option to refi to lower interest rates if they are available. Corporates don't get to access that. What's really happened is that post '08 financing disappeared for buyers with low credit scores.
The Solution is Simple 1. Get rid of most single family zoning 2. Create incentives and penalties such that cities with higher real estate prices build more housing of all kinds 3. More supply everywhere
Re: This real estate bubble won't pop
#16One aspect of articles like this that I've noticed is the absolute certainty the author seems to have that these terrible outcomes are inevitable, with no expression of a confidence interval or possible less world-ending alternatives.
I just... can't take articles like this seriously. It's the political equivalent of gore porn, and it feels like a waste of time to think about.
When Nassim Taleb wrote about "Black Swan events", he more or less ended circumspect skepticism, because now everyone is trying to find the next "black swan event" that they can predict, and have discovered calling out hundreds of them is the most effective way to get one right, with minimal/zero consequences for being wrong.
Re: This real estate bubble won't pop
#17I've always thought the solution to this was exponentialy increasing property taxes beyond the first property you (or whatever legal entity you create to horde properties) own. I'm dumb, so I'm sure there are reasons this won't work, but it seems like it should.
I had a similar conversation here: https://news.ycombinator.com/item?id=28595027
Re: This real estate bubble won't pop
#18I've always thought the solution to this was exponentialy increasing property taxes beyond the first property you (or whatever legal entity you create to horde properties) own. I'm dumb, so I'm sure there are reasons this won't work, but it seems like it should.
LLCs are cheap. It's not uncommon to form separate holding companies for each property. Not impossible to write a law that pierces the corporate veil for taxation purposes, of course.
Doing it in reverse (give a credit / deduction against real estate taxes for an individual who owns and lives in their own home) works fine.
Re: This real estate bubble won't pop
#19A couple pieces of legislation can shift the equation drastically. Incentives carved out for the home you live in (versus investment properties) are a common way to squeeze more out of a state run property subsidy program without making too many constituents mad.
For now, probably not, as the the the majority of the US Speaker of the House's wealth comes from real estate holdings across California.
Re: This real estate bubble won't pop
#20I've always thought the solution to this was exponentialy increasing property taxes beyond the first property you (or whatever legal entity you create to horde properties) own. I'm dumb, so I'm sure there are reasons this won't work, but it seems like it should.
LLCs are cheap. It's not uncommon to form separate holding companies for each property. Not impossible to write a law that pierces the corporate veil for taxation purposes, of course.
Sure, I figured that there'd be lots of clever tricks around that. I figure you just make the law trace it up to the person at the top and have them as "owner" for exponential purposes.