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Maybe treating housing as an investment was a mistake

goodreason.substack.com

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Re: Maybe treating housing as an investment was a mistake

#141

Post by Drunk_Engineer »

zachthewf wrote: post #69

Lately I've been thinking that perhaps the solution to the housing shortage is a technology that makes it easy, cheap, and extremely fast to build housing that is both attractive and illegal. Uber and Airbnb were both pretty much illegal from the get go, but ultimately worked because they were incredibly popular. They forced the laws to change to accommodate what people actually wanted. Similarly, living in tents and…

In San Francisco (and other big metros) landlords build illegal/unpermitted units all the time.

Re: Maybe treating housing as an investment was a mistake

#142

Post by anonymouskimmer »

notyourday wrote: post #74
oldstrangers wrote: post #28

Earlier quoted context omitted.

Rental payments are higher than mortgages in most large cities. And those renters usually can't even qualify for a mortgage, despite paying more in rent.

There's a very simple solution to this problem: * any and every landlord immediately pays taxes based on the asking rent, no matter what rent it is. If a landlord is asking $2500/mo for something, the government immediately values the property based on whatever the formula is based off the asking rent, even if the landlord cannot fill the space.

> any and every landlord immediately pays taxes based on the asking rent, no matter what rent it is.

To work to decrease or cap rents this would have to be a dramatically increasing progressive tax. It would have to be a complicated progressive tax to work with both small, less desirable residences and mansions.

Re: Maybe treating housing as an investment was a mistake

#143

Post by sangnoir »

Why does author ignore home equity in scenario 3 (when house prices track with inflation). Paying $1.75M to own a house is more savvy than paying $1.3M to rent over 18 years as you can still sell the house for $1M.

I didn't buy a home as an investment with the hope that the value will appreciate: I bought it so that I can build equity instead of paying rent every month and getting nothing.

The only way home owners truly lose money over renting is when their total expenses[1] after selling the house is greater than the rent they would have paid for the same home over the same period. My home could lose value by a significant amount over the course of my mortgage, and I'd still come out ahead of renters because of equity.

1. Maintenance can get expensive

Re: Maybe treating housing as an investment was a mistake

#144

Post by jpollock »

I believe that allowing people to refinance a house without it becoming a taxable event is the problem.

If getting a second mortgage on the higher valuation required the valuation to be used for both property and income tax purposes, people would be much less willing to extract value from their houses. That would then slow down the price increases and lower the inflationary feedback loop.

Using the valuation used for loan collateral as a taxable event would also close the "shares/options as collateral" tax loophole.

Re: Maybe treating housing as an investment was a mistake

#146

Post by lotsofpulp »

uoaei wrote: post #135
lotsofpulp wrote: post #20

Earlier quoted context omitted.

Cognitive dissonance means harboring contradicting thoughts. The difference in you and your friend’s situation is caused by the fact that they are selling labor which has a much lower price than the labor you are selling. This is not contradictory, just a consequence of supply and demand.

"It is the way it is" is technically true and profoundly uninsightful.

My comment was about incorrect use of the term “cognitive dissonance”.

https://en.wikipedia.org/wiki/Cognitive_dissonance

Re: Maybe treating housing as an investment was a mistake

#147

Post by georgelyon »

One thing this doesn't cover is that while we've gotten much better at making cars and TVs, but haven't really gotten all that much better at building houses. In fact, we seem to have only gotten better at using with cheaper, worse materials to build houses in ways that the average housing consumer doesn't really understand and thus can't properly price.

Re: Maybe treating housing as an investment was a mistake

#148

Post by latchkey »

falcolas wrote: post #9

This doesn't even touch on the fact that you will always require housing, so you can never truly liquidate your primary residence. At best, you can borrow against it. At worst, you sell it once and rejoin the rental market.

> At best, you can borrow against it.

Borrowing against it is a fantastic idea, what's wrong with that? People really need to learn that their assets can be used to generate additional returns. Otherwise you just have money sitting there, not doing anything. Where is the fun in that?

Re: Maybe treating housing as an investment was a mistake

#149

Post by distrill »

tempsy wrote: post #107
photon12 wrote: post #6

> Meanwhile, renters are desperate. They’re begging for housing prices not just to slow, but to fall. I have a friend who is a head chef at a decently popular bar and restaurant on Broadway in Capitol Hill, Seattle (very trendy part of town if you aren't familiar, steep commercial rent). He lives in a 400 sq ft studio and is barely, barely making it from one paycheck to the next. I am sitting on a 2.6% interest rate…

This is an absurd statement. Median rent in Seattle for a 1 bedroom is $2k. Using the 40x rule someone who makes $80k could easily afford this, which is a low bar for someone with a moderately decent job. Locking in a low rate alone has nothing to do with whether owning is more affordable than renting. The rate could be 0% but with a sales price high ala 2021-2022 buying mania and then adding property taxes, insuranc…

80K is a lot for restaurant work. While $40 an hour is not unheard of in the seattle restaurant area, I would not consider this a low bar to reach in that industry (or many others outside of tech tbh).
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