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

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

theglobeandmail.com

Post reply on HN
Print view View original

171–180 of 192 posts

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

#171

Post by r0ckarong »

sys_64738 wrote: post #158
r0ckarong wrote: post #20

I really don't give a shit about the financial value of my home to someone else. Sure, my mortgage is calculated on it and I'll be paying that for the rest of my life but the true "value" of my home is the quality of life my family and I can enjoy here. What you're talking about is how much money some investor can make off of the desire of people to have this quality of life value for themselves. And quite honestly i…

Not caring is foolish. If you lose your job and are foreclosed on then you’ll be bankrupt.

And if I live in a rented place and lose my job I'm just as bankrupt, aren't I?

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

#172

Post by jjav »

grecy wrote: post #160
jjav wrote: post #144

Earlier quoted context omitted.

> The most simple of all - It goes down in price. I mean yes, of course, tautologically. But can you at least attempt to explain how something that has a lot of value and can last for centuries, is realistically going to go down in price given inflation? In general the only scenario where housing can go down in value is if the area/city is decaying. But then you don't want to live there so that's not a useful solutio…

OK, so it can appreciate with inflation. So it doesn't go up or down, it just stays the same. This can be done by changing who is even allowed to own them, and what they're allowed to do with them. Make it unbelievably unattractive to have "investment properties" - massive taxes, extremely high interest rates, very restrictive rental laws, and all of them go up by an order of magnitude for each successive residential…

> OK, so it can appreciate with inflation. So it doesn't go up or down, it just stays the same.

And how would you implement that?

So basically there needs to be a government agency which tracks the inflation adjusted price of your home. Ok that's easy. But this agency now also must have the power to prohibit you from selling your home for any price other than their official inflation-adjusted price. If they don't have this power, then someone could offer you more for your home and thus you made a profit, and your goal fails.

Would you expect to have voter support for such a price fixing scheme from any side of the aisle? Would you even want to live in such a world?

I keep asking because often these threads go into something like "Oh you just stop making homes an investment and problem solved.", but that word "just" is moving some pretty big mountains there. If you drill down on what that really might mean, it never comes out to something realistic to implement.

> So now demand has gone WAAAAY down.

Demand does not go down. Your scheme just favors owners living in their home as opposed to corporations buying them to rent them out (which I fully and enthusiastically support!). But actual number of homes and actual number of families wanting to live in them didn't change, so demand didn't change.

> We wouldn't let a couple of private companies buy all the drinking water

(Off topic to this thread but this is happening, scarily enough.)

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

#173

Post by RhysU »

Fire-Dragon-DoL wrote: post #166
happytoexplain wrote: post #124

I can't speak for the urban situation, but I don't care about my home value (to a point). I care about the quality of my community. I care about that a lot . Dense housing put in an area that isn't dense just because the area is high-demand is often not productive in the long run, as the effects it can have on the existing community range from nothing (a net positive though, since now there's more housing) to abject…

Yeah, that's how we got here though. The solution is taking that high demand area and replace all low density homes with high density ones

The problem with the local basketball team is there aren't enough positions for everyone who would like to be on the local basketball team.

We could fix that problem by 10X-ing the number of players on the court at once. So, rather than 5 players per team the court would have 50.

45 more people would be starters!

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

#174

Post by grecy »

jjav wrote: post #172
grecy wrote: post #160

Earlier quoted context omitted.

OK, so it can appreciate with inflation. So it doesn't go up or down, it just stays the same. This can be done by changing who is even allowed to own them, and what they're allowed to do with them. Make it unbelievably unattractive to have "investment properties" - massive taxes, extremely high interest rates, very restrictive rental laws, and all of them go up by an order of magnitude for each successive residential…

> OK, so it can appreciate with inflation. So it doesn't go up or down, it just stays the same. And how would you implement that? So basically there needs to be a government agency which tracks the inflation adjusted price of your home. Ok that's easy. But this agency now also must have the power to prohibit you from selling your home for any price other than their official inflation-adjusted price. If they don't hav…

> And how would you implement that?I keep asking because often these threads go into something like "Oh you just stop making homes an investment and problem solved.", but that word "just" is moving some pretty big mountains there. If you drill down on what that really might mean, it never comes out to something realistic to implement.

Only humans can buy residential property, and only one residential property for one human.

>Demand does not go down. Your scheme just favors owners living in their home as opposed to corporations buying them to rent them out (which I fully and enthusiastically support!). But actual number of homes and actual number of families wanting to live in them didn't change, so demand didn't change.

Number of entities that want to purchase residential property has now gone WAY down. No corporations, nobody owning multiples. There are not more homes total, and there are not less people needing a place to live, but there are less entities trying to buy homes.

The price WILL go down.

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

#175

Post by grecy »

jjav wrote: post #161
grecy wrote: post #159

Earlier quoted context omitted.

> This is one of those meme-phrases that no longer really means anything. It means exactly what it says it means. You can either making residential housing something that regular people earning regular salaries can afford to purchase, or you make it a vehicle for investment to grow money, so that rich people, and companies and brokerages and all the rest want to park their money there so that it will grow rapidly. >…

> Policymakers could decide to implement laws to limit how much of an "investment" housing can be. How, exactly? > Obvious choices are limiting houses to only be owned by humans, limiting how many each human can have These are great and I fully support such rules. They will not make houses depreciate though. They'll make more of them owned by regular people instead of rental conglomerates, which is a wonderful outcom…

> These are great and I fully support such rules. They will not make houses depreciate though. They'll make more of them owned by regular people instead of rental conglomerates, which is a wonderful outcome. But it won't make them depreciate.

So there are cities in the US where 40% of all residential properties are owned by investment firms. Now they can't own them. So they sell them. Now you have a LOT of residential properties on the market, and a lot less entities that are legally allowed to purchase them than before. Of course prices will come down.

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

#176

Post by tlb »

grecy wrote: post #174
jjav wrote: post #172

Earlier quoted context omitted.

> OK, so it can appreciate with inflation. So it doesn't go up or down, it just stays the same. And how would you implement that? So basically there needs to be a government agency which tracks the inflation adjusted price of your home. Ok that's easy. But this agency now also must have the power to prohibit you from selling your home for any price other than their official inflation-adjusted price. If they don't hav…

> And how would you implement that?I keep asking because often these threads go into something like "Oh you just stop making homes an investment and problem solved.", but that word "just" is moving some pretty big mountains there. If you drill down on what that really might mean, it never comes out to something realistic to implement. Only humans can buy residential property, and only one residential property for one…

What will people who want to rent do? Who will they rent from?

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

#177

Post by s1artibartfast »

tlb wrote: post #176
grecy wrote: post #174

Earlier quoted context omitted.

> And how would you implement that?I keep asking because often these threads go into something like "Oh you just stop making homes an investment and problem solved.", but that word "just" is moving some pretty big mountains there. If you drill down on what that really might mean, it never comes out to something realistic to implement. Only humans can buy residential property, and only one residential property for one…

What will people who want to rent do? Who will they rent from?

Ive heard this argument several times from people, and I dont think it is very coherent.

It doesnt account for renters, it doesnt account for down payments, and it doesnt account for the cost of new construction.

There wont be anywhere for people with no down payment and no credit to rent, and new housing wont be built.

When pressed on this, people in the past have resorted to the idea that then the government will provide low income rental market.

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

#178

Post by yterdy »

s1artibartfast wrote: post #141
yterdy wrote: post #138

Earlier quoted context omitted.

>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

Strongly disagree. That is an additional factor, but doesnt change most of the factors I mentioned. It doesnt change population or urbanization. It doesnt change the cost of labor or materials. Underutilized RE is a red herring. As long as construction costs remain high, supply remains low, and there are enough buyers that afford the price, you wont see changes.

Monetary expansion underlies and significantly influences if not drives, everything you mentioned (save the nature of US mortgages, which is still related in the sense of it being a part of financialization of as much of American life as possible). The QE boom drove immigration, and low interest rates drove hiring and wage inflation; the COVID bust dampening immigration, and the extremely low interest rates driving a hiring frenzy that was itself followed by mass layoffs when the FRF was raised, essentially proved this.

>Underutilized RE is a red herring.

So you've stated. Please prove it, at the very least showing how RE isn't underutilized (this is going to be difficult, because it is).

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

#179

Post by yterdy »

rickydroll wrote: post #154
yterdy wrote: post #139

Earlier quoted context omitted.

>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 c…

I tried to edit my original comment, but the editing was turned off. My comment was not intentionally snarky but based on my experiences in 2008. At that time, there were many subprime mortgages floating around that should've never been written. Those taking the risk (financial institutions) should've taken the fall, but instead, they pushed the losses onto the homeowners. Your last paragraph needs more nuance becaus…

You've given individual solutions to try to fix a systemic problem, which of course does not work. They are good ideas; they are also not enough, and don't even begin to address the issue at-scale.

What does is recognizing that the "be realistic" bluster is just that: a bluff, from people who hold real power in the status-quo, but who realize that that status-quo can be changed, if only the walls would fall and nature could take its course. The reality is that older generations have created a zero-sum situation, and the only way for the younger ones to thrive is for the older ones to give up some (many) of their advantages. The reality is that this happens when political and economic forces are finally incentivized to stop protecting them.

One last thing I feel the need to mention whenever it comes up:

>At that time, there were many subprime mortgages floating around that should've never been written.

This is true, but not because they were written for people who were financially unfit to be homeowners. It's because these loans were written intentionally to fail, knowing that banks could steal the homes back in illegal foreclosure proceedings, knowing that the mortgages would be wrapped up in financial vehicles and sold off at profit, knowing that the government would backstop them when it all came crashing down. Given fair loans, most of these mortgage-seekers would have been able to keep up their payments - but that woukd have been less profitable for banks than what ended up happening. Instead, these financial institutions were able to siphon billions from the middle class, and buy up the remains of their failed rivals for pennies on the dollar. Which is despicable, of course. But to understand this, you have to reject the notion that we're living in a just world whose past mistakes can't be corrected. It isn't and they can be.

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

#180

Post by grecy »

tlb wrote: post #176
grecy wrote: post #174

Earlier quoted context omitted.

> And how would you implement that?I keep asking because often these threads go into something like "Oh you just stop making homes an investment and problem solved.", but that word "just" is moving some pretty big mountains there. If you drill down on what that really might mean, it never comes out to something realistic to implement. Only humans can buy residential property, and only one residential property for one…

What will people who want to rent do? Who will they rent from?

I believe renting is the weakest part of my idea, but I don't see why it can't be solved.

Maybe humans are allowed to own some maximum number of properties for the purposes of renting it out, and that number will decrease over time.

Maybe banks can own houses and rent them out at some capped amount.

Maybe the government can own houses and rent them out with the express purpose of "rent to own", with absolutely no intention of "earning a profit".

I don't have all the answers, but I think it's pretty clear that companies owning 40% of ALL residental homes in a city and making massive profit renting them out does not make housing affordable, and it does not allow people to have their basic human needs met. Therefore something needs to change.

Post reply on HN