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)

#471

Post by cuteboy19 » Wed, Aug 17, 2022, 7:45 PM UTC

reillyse wrote: post #426

People in the comments here seem stuck in the weeds around various laws and tax incentives. The overarching issue is that housing (something everyone needs) is being treated as an asset class. As an asset class people who own it want it to increase in price which gives the government an incentive to maintain and increase this value. Unfortunately this makes it more and more expensive for people who need housing. Deco…

Land is finite, but housing is basically infinite. If I can get 2 houses to fit on the same piece of land, I would be willing to tolerate a 30% discount per house and still be up on my investment. It's a win win. Cheaper houses for the buyers and more profit for me

So clearly, the problem cannot simply be that housing is an asset.

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

#472

Post by timidiceball » Wed, Aug 17, 2022, 7:48 PM UTC

japanuspus wrote: post #389

foobarian wrote: post #254

Earlier quoted context omitted.

Now the US is way ahead of the game here compared to Europe. There are no property taxes in most of Europe and families hang on to their homes for generations.

This appears to differ across Europe. I know for a fact (through living here) that Denmark and probably the rest of Scandinavia has property tax and inheritance tax -- holding on to family property is almost as expensive as buying new property. Which part of Europe are you referring to? I once had Greek colleague who complained about having to maintain three generations worth of houses, so that might be one place whe…

Norway has no inheritance tax at all; property taxes are microscopic (relative to other places that levy property taxes with intended market effects).

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

#473

Post by namlem » Wed, Aug 17, 2022, 7:48 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…

Then why did Japan face a massive housing bubble in the 1980s, despite low immigration? And why did their housing problem only go away when they reformed their zoning laws to allow people to build? Population is a negligible factor. Laws restricting land use are artificially constraining the supply of housing, and these laws have grown more common and more popular.

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

#474

Post by flakeoil » Wed, Aug 17, 2022, 7:50 PM UTC

dcolkitt wrote: post #262

datacruncher01 wrote: post #132

It's a simple problem, we turned housing into an investment. Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. The simple solution is we need more housing in cities and suburbs. How we get there is an exercise that's taken on by local housing authorities and they are not incentivized to solve the problem. That's because they work for voters who…

> this cannot be solved from the federal level. I disagree. The federal government invests enormous resources into subsidizing home ownership. Everything from Fannie Mae guaranteeing mortgages to not taxing home owners on the imputed value of rent. And I think that's all well and good, home ownership has many positive externalities. But there's zero point subsidizing demand for something when supply in inelastic. In…

OP doesn't talk about subcidies, but instead about the fact that the federal level needs to force the city level to build for example smaller apartments/houses, or build denser or whatever. However, cities and the ones already living there don't like it because it will bring in poorer people, which drives down the tax income and increases the costs, makes the neighborhood less attractive etc.

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

#475

Post by ChrisLomont » Wed, Aug 17, 2022, 7:50 PM UTC

reillyse wrote: post #426

People in the comments here seem stuck in the weeds around various laws and tax incentives. The overarching issue is that housing (something everyone needs) is being treated as an asset class. As an asset class people who own it want it to increase in price which gives the government an incentive to maintain and increase this value. Unfortunately this makes it more and more expensive for people who need housing. Deco…

>is being treated as an asset class

It always has been and likely always will be an assert class - it can be sold later so it's an asset.

For well over 100 years the inflation adjusted price of new housing has been a quite similar rate per sq foot, despite the quality and safety having increased many fold over that time.

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

#476

Post by bern4444 » Wed, Aug 17, 2022, 7:52 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…

Most of the people renting in a large city are doing so because buying is so expensive and unattainable. Not because they prefer renting.

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

#477

Post by ChrisLomont » Wed, Aug 17, 2022, 7:52 PM UTC

wonnor wrote: post #443

ChrisLomont wrote: post #439

Earlier quoted context omitted.

>you pay no income tax on your rental income And are losing value on the property, which is the point of depreciation. >~30 years later, you've deprecated it down to an effective value of $0 An no one will now rent, since your building has an effective value of $0 since it has become crap. All throughout your list you ignore all the costs involved in being a landlord. Have any friends that have tried it? (I do). Did…

>>~30 years later, you've deprecated it down to an effective value of $0 >An no one will now rent, since your building has an effective value of $0 since it has become crap. Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old?

>Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old?

Nope, pointing out that in order to keep the house rentable, the landlord has in put money into over all those years, which the OP left out.

A house that has had no money spent on for 30 years would not be rentable, right?

So depreciation is not a free ride.

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

#478

Post by saiya-jin » Wed, Aug 17, 2022, 7:53 PM UTC

wonnor wrote: post #443

ChrisLomont wrote: post #439

Earlier quoted context omitted.

>you pay no income tax on your rental income And are losing value on the property, which is the point of depreciation. >~30 years later, you've deprecated it down to an effective value of $0 An no one will now rent, since your building has an effective value of $0 since it has become crap. All throughout your list you ignore all the costs involved in being a landlord. Have any friends that have tried it? (I do). Did…

>>~30 years later, you've deprecated it down to an effective value of $0 >An no one will now rent, since your building has an effective value of $0 since it has become crap. Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old?

I'd say the truth is somewhere in between. It is really, really not that great unless you have some superbly well located shiny great apartment in Manhattan or some other center center which gets 100% short term rental ie airbnb. But then this is multi-million $$ property.

Long term rentals - the gains are minimal given how much capital is completely locked in that property and not doing anything else. If you are lucky, you have long term nice tenants and stuff generally doesn't break (ie heating/wash machine bursting and flooding everything, including 5 apartments below). If unlucky, 1 bad accident that needs to be fixed asap will wipe out any income you have for given month, if not more.

Utterly random example - I got locked out (if thats the proper term) last sunday evening, went for a walk and big weird key wasn't turning in our old very massive (15cm thick & heavy) doors that look like they could handle a nuclear blast. Called some emergency services for this and they opened it, but showed me the lock basically disintegrated and I was lucky they didn't have to drill huge hole in those doors to get in and pay tripple the cost. The cost for new lock in those doors with all work? 2400 Swiss francs (cca 2500$), and that was work week rate of one of the cheaper agencies doing this, albeit in Geneva, one of the most expensive places to live. For a freaking lock that is just old design, fitting some 50 years old doors. Guess who pays that? Well me but I will get 100% reimbursement from agency who will get it from owner.

Properties are great if you inherit them and suddenly have a nice passive income (and management worries). Or if you are lucky with timing and in 10 years they jump 3x with value. Thats over now. I wouldn't invest in properties now unless its for primary residence and then a lot of emotions and other concerns come into equation, but financially its not great.

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

#479

Post by namlem » Wed, Aug 17, 2022, 7:53 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…

One, chipmakers are indeed building new factories to increase production of chips, so your entire premise is incorrect. Two, the people criticizing the scalpers are wrong. NVIDIA and AMD were simply generous enough to not raise the price of their products even though they could have, demand was high enough to justify it. Scalping GPUs is fair game. Three, the number of houses being bought by investment firms is negligible. It's not having a significant effect on prices. It's the land use restrictions that make building housing difficult or impossible that are the problem. Particularly those that restrict multifamily housing.

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

#480

Post by namlem » Wed, Aug 17, 2022, 7:55 PM UTC

heresie-dabord wrote: post #52

Here's the point of the article: > since the second world war, governments across the rich world have made three big mistakes. They have made it too difficult to build the accommodation that their populations require; they have created unwise economic incentives for households to funnel more money into the housing market; and they have failed to design a regulatory infrastructure to constrain housing bubbles. The mon…

Speculation is not the cause, rent-seeking regulations are the cause. And these regulations are driven by the demands of ordinary homeowners seeking to protect their investment by artificially constraining new supply.