Housing is at the root of many of the rich world’s problems (2020) • Hacker News Board

Re: Housing is at the root of many of the rich world’s problems (2020)

#361

Post by JamesBarney » Wed, Aug 17, 2022, 6:07 PM UTC

rhacker wrote: post #279

throwaway908724 wrote: post #214

Earlier quoted context omitted.

Wow, I wish. I'm speaking as someone who put all his retirement savings into index funds year after year, but then married someone whose job is related to real estate. Real estate feels more concrete and understandable to her than finance, so that's where our money goes now. It's not easy free money, and I don't know why you would think that any high-profile, low-barrier-to-entry investment would be easy free money.…

It sounds like you're landlords, but you didn't explicitly state it. But isn't your tenant basically paying off each property, over the next 30 years. So right now your debt load may be high, but you're not experiencing that. You're just paying off the loans from rental income and handling the overage (prop tax and fixes) with the dev job. So in 30 years the two of you will have like 40M dollars paid over the backs o…

I know 6 people who all got into real estate including myself. Almost all of us exited because it's way too much work for very little gains. I just invest in an index fund, much closer to free money, and no calls at 2 am in the morning about a busted pipe.

Re: Housing is at the root of many of the rich world’s problems (2020)

#362

Post by ralston3 » Wed, Aug 17, 2022, 6:08 PM UTC

axg11 wrote: post #311

datacruncher01 wrote: post #154

Earlier quoted context omitted.

It's true but the reason people are moving to cities are jobs. Rural locations do not have the job market to support the costs to live there. It's a lower cost, but a much, much lower income outlook as well. If you have the money to outright buy a rural property and build a house there, it's not a bad place to live. But you don't want to have to depend on the limited job market with an expensive mortgage and limited…

Remote work is commonplace now. Perhaps in the next few years we’ll test the theory that jobs and house prices are linked. It’s now possible (for tech workers at least) to work from almost anywhere for decent wages. My hunch is that the housing crisis is simple supply and demand. People want to live in cities because of the better access to entertainment, amenities, and services. There aren’t enough houses to fill th…

Remote work is commonplace to a very few privileged folks. HN seems to forget that.

Re: Housing is at the root of many of the rich world’s problems (2020)

#363

Post by colinmhayes » Wed, Aug 17, 2022, 6:11 PM UTC

infogulch wrote: post #357

A couple ideas for how to fix some real estate problems: 1. A zoning rule that requires home owners to live in the owned home. This would prevent remote/foreign money from meddling with local housing in particular areas, and prevents big corps from buying up all the homes and forcing people to lease them out. Some people want to lease though, so that's why I think it's more appropriate as a zoning tool for particular…

1. The foreign owner thing is really overblown. They mostly invest in extreme luxury apartment, not lots of cheaper ones. The mega reit buying residential properties is also overblown. 70% of rental properties are owned by individual investors.

4. Empty units isn't really a big problem. 4.5% of NYC apartments are vacant, the majority of those due to structural reasons such as tenants moving or repairs. The historical rate is around 3%, it's quite hard to get below that.

The solution is simple. Build more units. Relax zoning requirements, incentivize density where it makes sense.

Re: Housing is at the root of many of the rich world’s problems (2020)

#364

Post by TaylorAlexander » Wed, Aug 17, 2022, 6:13 PM UTC

pdonis wrote: post #302

dont__panic wrote: post #257

Earlier quoted context omitted.

> Many people do not want to own a home I hate to go all "citation needed" on you, but I'm not sure this is true. Do I want to pay for upkeep of a property? Probably not. But since renting is basically equivalent to burning money in our economy, any responsible renter will eventually feel a pull towards ownership if only to stop the bleeding. I think we need a society where renting isn't so expensive AND owning a pro…

> I hate to go all "citation needed" on you, but I'm not sure this is true. Given the number of people that rent in large cities all over the world for their entire lives, I don't know why you would find my claim doubtful. Many people seem to want to live in large, densely populated areas, and for most people that is always going to mean renting. > Much like freedom of car-free movement, housing ought to be a fundame…

> Many people seem to want to live in large, densely populated areas, and for most people that is always going to mean renting.

The "for most people that is always going to mean renting" is that part that we could change through large scale collective policy. That's what Singapore has done for example. No one doubts whether people want to live in cities. We are asking whether the model of private landlords is the best way to manage large quantities of housing in cites. Look at Singapore:

"Eighty-two percent of Singapore’s residents live in HDB-built (Housing Development Board) apartments, of which there are more than 900,000. In contrast to both New York and Vienna, HDB encourages public housing residents to purchase their apartments. Nine out of ten HDB residents own their homes. The 50,000 rental units are, according to the HDB website, 'for the truly needy who have no other viable housing options.'" [1]

So yes, people want to live in dense cities. It does NOT automatically follow that they will have to rent. This is a policy choice.

[1] https://charterforcompassion.org/shareable-community-ideas/p...

Re: Housing is at the root of many of the rich world’s problems (2020)

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Post by llbeansandrice » Wed, Aug 17, 2022, 6:13 PM UTC

Supermancho wrote: post #309

adamsmith143 wrote: post #243

Earlier quoted context omitted.

Give me a break. You'd need a down payment of ~400K to have a mortgage low enough to barely break even at $15,000 in rent per year. None of his math makes sense. Of course you would really rent a 500k property at something more like 2500 a month but even then you'd need a down payment near 200k to start making a profit.

Here's a mortgage calculator: https://www.google.com/search?q=mortgage+calculator 500k property at 2.75% is $200k down gets you under 15k (this is very similar to my current mortgage) Now you're going to object that the interest rate isn't that anymore, which is irrelevant. There are numbers that will work which are simply an example to illustrate how depreciation works, and you just don't like the arbitrary scenario…

Where on earth can you find a 2.75% rate?

Re: Housing is at the root of many of the rich world’s problems (2020)

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Post by Atheros » Wed, Aug 17, 2022, 6:15 PM UTC

jason0597 wrote: post #298

When AMD or NVIDIA sell GPUs to scalpers, and those scalpers resell the GPUs and keep the profit, there's outrage about it. Nobody ever says to "build more GPUs" to fix the problem. When houses and new developments get snatched up by investors and landlords as buy-to-lets (or even by Blackrock and pension funds), there is little outrage and calls for restricting who can buy them. The same argument is rehashed over an…

Building more GPUs requires billions of dollars of investment and many years to build a new fab. Building more houses requires only several hundred thousand dollars to form a new construction company and train some workers. So it's not a good analogy. It is physically possible to just build more housing in high-demand markets.

Separately, GPU scalping is (was) only happening because of cryptocurrency booms which everyone knew were temporary. Not many people are naive enough to scream for AMD or NVIDIA to spend billions of dollars on new fabs because of a temporary trend. The housing supply issues, on the other hand, have been brewing for decades and are not temporary.

Re: Housing is at the root of many of the rich world’s problems (2020)

#367

Post by 29athrowaway » Wed, Aug 17, 2022, 6:16 PM UTC

reedjosh wrote: post #163

29athrowaway wrote: post #107

Earlier quoted context omitted.

My point is that the system is overcapacity, that's the reality you like it or not. If you want to watch Netflix and forget about what's happening outside, that's your choice. But we are completely destroying this planet in every way. There are lots of mouths to feed every day depending on systems that are not sustainable and may collapse. https://www.youtube.com/watch?v=RjsThobgq7Q If you go camping and have limited…

I find it funny that I agree with you in some ways that others might not. For example, I agree people should ditch the dumb super hero movies and do something better. Maybe garden or learn to weld or something. But I completely disagree with you that humans are destroying the planet in an unsustainable way. Sure, there are huge challenge and excesses, but the human spirit should also bring solutions. Particularly in…

If we are not destroying the planet as you claim, then animal species would be flourishing. In reality, insects, fish, and many species of animals, especially animals above certain weight, they're all dying off and going extinct.

As we humans advance, we destroy the habitat of other species. As industrial agriculture expands, we consume all the topsoil (soil with microorganisms, worms, etc. in it.), we extract dietary micronutrients from it, we pump all of the groundwater, kill all the pollinators and insects, then cause collateral damage to all migratory species that cross those territories.

We dump trash everywhere, we pollute the atmosphere, we pollute the oceans, we make the oceans more acidic, we are raising the temperature of the planet, our industrial plants dump toxic chemicals everywhere... and the list goes on and on and on.

You, on the other hand, are heavily influenced by an alternate reality which is a combination of television and Internet content, documentaries, and uplifting stories about how some experimental technology 50 years away from mass production that is prohibitively expensive and makes things 1% better for the environment, while things get 10% worse each year. You are completely out of touch with reality and the hunter gatherers from the future hunting contaminated vermin will hate you.

Re: Housing is at the root of many of the rich world’s problems (2020)

#368

Post by onlyrealcuzzo » Wed, Aug 17, 2022, 6:16 PM UTC

infogulch wrote: post #357

A couple ideas for how to fix some real estate problems: 1. A zoning rule that requires home owners to live in the owned home. This would prevent remote/foreign money from meddling with local housing in particular areas, and prevents big corps from buying up all the homes and forcing people to lease them out. Some people want to lease though, so that's why I think it's more appropriate as a zoning tool for particular…

> You can only deprecate the improved value, not the value of the land. "The land beneath a building does not deprecate, whereas the value of the building should." -- a good idea by huevosabio that I saw in this thread.

At least for residential R/E in the US - you cannot depreciate land from taxable income.

> Owners pay taxes on the claimed lease value, regardless of current occupancy. This would disincentivize owners from just sitting on dozens of properties refusing to lease because nobody wants to pay their unrealistic exorbitant rates.

You're misunderstanding the point.

From an accounting perspective, you can pretend unleased units have revenue - and that vacancy is an expense.

You can get loans on your revenues (imaginary money in the case of R/E).

R/E speculators want as much debt as possible - because they know that debt (especially leveraged) at interest rates typical of the last 12 years was the free money cheat code.

This incentives them to have empty units at 100% above market rates - because they can qualify for twice as much debt to buy more properties to do the same thing - to speculate further on leveraged appreciation.

It's also the reason you regularly see building with outrageous rents yet they're giving you 3+ months free. Why not just lower the rent by 25%? Because then you qualify for 25% less new debt (which in many cases they need new debt just to cover their deeply negative cash-flow).

Re: Housing is at the root of many of the rich world’s problems (2020)

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Post by notch656a » Wed, Aug 17, 2022, 6:17 PM UTC

Jiro wrote: post #337

dionidium wrote: post #328

Earlier quoted context omitted.

That sounds reasonable to me, but it didn't stop the cost of used cars from skyrocketing during the pandemic, due to the supply-chain-induced shortage of new cars. When the car market started looking a lot more like the housing market, so did its prices.

In that situation, the value of all cars went up, both new and used. The value of a used car was still much less than the value of a new car, you just didn't notice this because new cars didn't have their prices raised to correspond to the increased value.

That's not true, I could show you offers of my used truck being worth more than a brand new truck of the exact same generation of model in the exact same configuration. Used vehicle prices went insane during covid as the irrational market and places like Carvana paid more for your used car once it's off the lot.

I almost wonder if people overbought into the "new car must be more expensive" paradigm so they forgot new cars were competing against used cars, and the prices of used cars became irrationally high.

Re: Housing is at the root of many of the rich world’s problems (2020)

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Post by Apocryphon » Wed, Aug 17, 2022, 6:17 PM UTC

edmcnulty101 wrote: post #239

QuarterReptile wrote: post #115

Earlier quoted context omitted.

>Housing has never been this much of a problem up until the past decade or two. This is certainly untrue. Possibly housing has never been this particular problem in this particular place . Housing affordability plagued Germany of the early 20th century. Low quality housing of the type not possible to obtain in the US was widespread in US cities before the last 50-70 years. >Population is the problem. Misanthropic non…

> Housing affordability plagued Germany of the early 20th century You gotta reach back to over a hundred years ago to find an example? > Can you list these rich countries with 'population explosion[s]'? What the hell are you talking about? The population in the US is the highest it's been in history. You're using a bullshit metric like growth rate which is a percentage of constantly increasing number? 1% of 100 is th…

Before you indulge in bargain bin Malthusianism and nativism, first consider the vacancy rates of housing in expensive metros.

https://www.sfgate.com/bayarea/article/how-many-vacant-homes...

https://sfist.com/2022/02/01/report-10-of-san-franciscos-hou...

Next, the housing shortages in other previously-afforded cities are being bought up by... other Americans, some moving from such expensive metros. That boom that happened during the pandemic might finally be reversing:

https://fortune.com/2022/08/16/bubbly-housing-markets-are-sh...