Making housing more affordable means your home's value will have to come down • Hacker News Board

Re: Making housing more affordable means your home's value will have to come down

#131

Post by s1artibartfast » Sat, Jun 01, 2024, 6:41 PM UTC

fragmede wrote: post #129

s1artibartfast wrote: post #47

Earlier quoted context omitted.

I think you are an outlier if resale value doesnt matter. It matters to me for many reasons I doubt you find sickening or sinister. It matters because my family might want or need to move for work. It also forms a major part of my retirement, and how I will feed and take care of myself in advanced age It makes perfect sense that it has financial value to someone else, because it would take a tremendous amount of mate…

what part of your house are you going to eat in your advanced age? if you sell your house, you no longer have a house. What is your plan? Sell your house for money, move to somewhere cheaper, and use that money to live? What will you do when housing is too expensive elsewhere as well? Is uprooting your life near the end when you need the most care really the ultimate plan?

That is a pretty normal cycle for most people and it makes perfect sense.

You buy a house, use it to save on rent and protect your retirement from inflation. Come to old age, you reverse mortgage or sell and go back to renting. Many people need to downsize anyways as their energy and capability decreases.

It is pretty unrealistic to expect that everyone can die without breaking into what is their largest expense in life.

Re: Making housing more affordable means your home's value will have to come down

#132

Post by fragmede » Sat, Jun 01, 2024, 6:41 PM UTC

bee_rider wrote: post #49

bilsbie wrote: post #32

I think it’s weird we haven’t made any new cities in what, 100 years? We just keep trying to crowd into existing places.

Apparently the population of Las Vegas was ~2k people in 1920. I think cities just take a while to grow.

Downtown Las Vegas was Tony Hsieh's baby and he sunk hundreds of millions of dollars into it to make it what it is today, and that's as part of an existing city. Cities take a lot of money to grow.

Re: Making housing more affordable means your home's value will have to come down

#133

Post by fragmede » Sat, Jun 01, 2024, 6:51 PM UTC

s1artibartfast wrote: post #65

mrcode007 wrote: post #54

Earlier quoted context omitted.

An asset produces cash flow. Primary residence can only be a speculation device because for a majority of people it does not produce a cash flow. Instead it produces expenses.

nonsense. A primary residence obviously provides utility in the form of shelter for the owner. No assets directly produce cashflow, whether they are factories, tractors, or tools.

an investment property with a renter in it produces rental income for the landlord, and cash is currently giving me 5% returns for just sitting in the bank.

Re: Making housing more affordable means your home's value will have to come down

#134

Post by neogodless » Sat, Jun 01, 2024, 6:52 PM UTC

CuriouslyC wrote: post #109

neogodless wrote: post #5

Earlier quoted context omitted.

I love the power of the word "just." It pairs well with armchair pundits who can simply wave a wand and solve major problems that lots of heavily motivated people who have resources and would profit nicely from solving these problems... still struggle to solve. Can you answer your own questions in reverse? Why aren't new developments built wholesale, complete with shopping and services somewhere out of the way (and c…

People do intentional communities all the time, and that's small groups of grassroots folks solving the problem. I have no doubt that a company could set up intentional communities much more efficiently, and provide more services to them so they were closer to parity with typical suburbs.

That's important to note.

Ideas are already being tried. They are also not solving the (entire) problem. But to suggest "just" doing this one thing is a solution to the (entire) problem is easy to say, but how much does it contribute to actually solving things?

(Notably, me discussing this on the internet isn't a solution. It's just entertainment, and hopefully I learn something along the way!)

Re: Making housing more affordable means your home's value will have to come down

#135

Post by s1artibartfast » Sat, Jun 01, 2024, 6:53 PM UTC

seanmcdirmid wrote: post #96

s1artibartfast wrote: post #87

Earlier quoted context omitted.

I think that is exactly the opposite. Most people are long on the housing market. They have borrowed cash to purchase an asset they think will maintain or go up. Renting would be the short position. https://www.investopedia.com/ask/answers/100314/whats-differ...

There are huge transaction costs to buying and selling a home, renting could also be seen as a way to avoid those costs if you aren’t going to stay somewhere. But I rented for cheap in Beijing when housing to buy costs were super high, who wouldn’t rent a $1 million apartment for < $1000/month, buying in that market would have been dumb even without red tape to buy something.

Sure, I don't think many would disagree. Especially in places with large agent commissions and capital gains taxes

Re: Making housing more affordable means your home's value will have to come down

#136

Post by s1artibartfast » Sat, Jun 01, 2024, 7:12 PM UTC

happytoexplain wrote: post #115

voisin wrote: post #92

The only solution to the housing affordability crisis palatable to current homeowners is to build many new homes of a totally different type that can not be readily substituted. This is already happening where new housing tends to be denser, stacked (apartments) or closer together (row houses). Of course there is some overlap, but to the extent overlap and substitutability can be minimized, current homeowners can enj…

>homes of a totally different type that can not be readily substituted Can you explain what this means? What does "substituted" mean in this context?

The kind of person who wants a 3000sqft suburban home is in a different market than someone that needs to keep the rain off their head and shower before work.

Building dense urban dwellings, especially cheap ones, shouldn't impact the price for better housing much.

This is the same reason the availability of paddle boats doesn't impact the price of megayachts.

Re: Making housing more affordable means your home's value will have to come down

#137

Post by s1artibartfast » Sat, Jun 01, 2024, 7:43 PM UTC

fragmede wrote: post #133

s1artibartfast wrote: post #65

Earlier quoted context omitted.

nonsense. A primary residence obviously provides utility in the form of shelter for the owner. No assets directly produce cashflow, whether they are factories, tractors, or tools.

an investment property with a renter in it produces rental income for the landlord, and cash is currently giving me 5% returns for just sitting in the bank.

I guess I wasnt very clear. I meant that generating income isnt the definition of an asset.

A house is an asset if you have a renter in it or not. It can also be utilized to generate income.

Re: Making housing more affordable means your home's value will have to come down

#138

Post by yterdy » Sat, Jun 01, 2024, 7:45 PM UTC

s1artibartfast wrote: post #120

leereeves wrote: post #105

Earlier quoted context omitted.

So am I. The median home price rose from 221k in Q4 2011 to 442k in Q4 2022. That's doubling in 11 years, thus rising 6.5% per year on average over the long term. https://fred.stlouisfed.org/series/MSPUS Over the same time period, the value of existing homes, as measured by the Case-Shiller U.S. National Home Price Index (which measures the price of repeat same home sales) more than doubled. https://fred.stlouisfed.o…

I still don't know what point you are trying to make or refute. If you asking why I think it is completely unrealistic to expect a 50% decline on a short timeline, there are tons of reasons. You have to ask why housing prices doubled, and ask how easy or likely those underlying conditions are to reverse. 1) First, US GDP/capita went up by 60% in those 11 years.[1] 2) Similarly, US inflation in those 11 years was 40%…

>You have to ask why housing prices doubled, and ask how easy or likely those underlying conditions are to reverse.

Massive monetary expansion via QE and low interest rates. Resolved by raising interest rates and taxes on wealth holders (and particularly those holding unused or underutilized real estate) to deflate the asset bubble.

https://fred.stlouisfed.org/series/M2SL

Re: Making housing more affordable means your home's value will have to come down

#139

Post by yterdy » Sat, Jun 01, 2024, 8:01 PM UTC

rickydroll wrote: post #72

jackcosgrove wrote: post #24

> To raise housing affordability, we have to lower prices, or at least get price increases consistently below the rate of inflation. I'll pick door number two, Monty. Not because that's what I actually want, but because I'm pretty certain that's how it will play out. Lowering nominal asset prices is almost as hard as lowering nominal wages. It only happens when policymakers screw up. That's what inflation is for.

Lowering housing prices will put many mortgages underwater. We are seeing the fallout from this today in CRE and across all properties in 2008. Today, affordable housing means someone takes a loss. In new housing, the builder or the lender could take the loss but they won't start a project unless they are guaranteed to make a profit, which means the property owner takes the loss. Deflating prices on existing housing…

>Deflating prices on existing housing means either the lender (ha!) or the homeowner takes the loss.

Okay.

(Expand or they're going to flag you for snark.)

The cohort that is currently at prime home-buying age (and, really, most people under the age of 50) have had the wealth that was generated by their labor and productivity systematically siphoned to mostly-older higher-earners, in order to shore up unsustainable compensation and retirement funding for the professional managerial/executive class and Silent Gen, Baby Boomer, and Gen X workers. The value of the overbuilt, low-density, transit-access/amenity-access-poor housing that they've built or speculated on plummeting would be not only economically healthy (as it would act as a stimulus for non-asset-speculation activity and finally incentivize density and transit access, while disincentivizing the socioeconomic/racial exclusion that characterizes most American suburbs and which drives so many of our objectively terrible NIMBY-focused municipal planning decisions), but also just deserts.

Re: Making housing more affordable means your home's value will have to come down

#140

Post by fragmede » Sat, Jun 01, 2024, 8:06 PM UTC

s1artibartfast wrote: post #137

fragmede wrote: post #133

Earlier quoted context omitted.

an investment property with a renter in it produces rental income for the landlord, and cash is currently giving me 5% returns for just sitting in the bank.

I guess I wasnt very clear. I meant that generating income isnt the definition of an asset. A house is an asset if you have a renter in it or not. It can also be utilized to generate income.

oh that makes sense