Ask HN: Anyone else feels the commoditization of real estate is unethical? • Hacker News Board

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#541

Post by missedthecue » Sat, Aug 13, 2022, 4:37 PM UTC

feet wrote: post #441

missedthecue wrote: post #371

Earlier quoted context omitted.

Nestle gets all the water they want for a $200 permit. That's not water commodification. They sell bottled water, but that's also not commodification of water. Almost 0% of US water consumption comes from a plastic bottle, and you can't commodify a market with ~0% market share.

Your statement is false, what Nestlé does is literally the definition of commodification Commodification definition: the act or fact of turning something into an item that can be bought and sold: The commodification of water means that access is available only to those who can pay. > https://www.dictionary.com/browse/commodification Nobody mentioned the US. Nestlé does this in various other countries. > https://www.t…

Nestle sells portable bottles. That's what differentiates their product from the tap.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#542

Post by _8j50 » Sat, Aug 13, 2022, 4:38 PM UTC

jefftk wrote: post #489

_8j50 wrote: post #350

Earlier quoted context omitted.

Sellers themselves would be incentivized to make their house in good condition to sell it at a profit. If all they do is renovate then that should be a service to the original seller. If your house is devalued by 20% when selling, you pay a renovator to fix it up and take 50% of profits so instead you only lose 10%. Like you said they provide a service, they could handle the sale as a real estate agent and get more p…

In your proposal the 'flipper' owns the house for 20 years, which is a completely different model and makes standard flipping uneconomical

That wouldn't be flipping just a side-effect of ownership. Flippers should provide renovation/real-estate as a service with the original owner maintaining ownership until the sale to someone else.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#543

Post by picsao » Sat, Aug 13, 2022, 4:39 PM UTC

No post body was provided.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#544

Post by jackcosgrove » Sat, Aug 13, 2022, 4:39 PM UTC

unlikelymordant wrote: post #194

ramesh31 wrote: post #150

Earlier quoted context omitted.

>I definitely do. It's something that turns a basic necessity into a speculative asset, with a price distorted by the money poured into it The 30 year mortgage is one of the greatest inventions in the history of mankind. Being able to swing hundreds of thousands of dollars of margin on a near-zero-down investment that requires nothing more than proof of income and has a manageable monthly payment is the single most p…

I disagree somewhat. I think the 30 year mortgage has pushed prices up much higher than they would have been, because of the leverage, and people only look at the monthly repayment. The fact that it has led to intergenerational wealth (among the rich who can afford houses) is a direct side effect of the fact that houses are so expensive. It seems like saying it has generated wealth is begging the question.

Canada has shorter mortgage terms that require multiple mortgages to pay off a house at different times, transferring interest rate risk to the buyer. Canada also has higher house prices than the US. Mortgage term length may contribute to price growth to some extent, but I think the supply of and demand for housing swamp any effects of financing.

Being able to lock in a low interest rate for thirty years, the probable lifetime of the amortization period, is very advantageous. Combine this with a lack of a prepayment penalty and American mortgage holders get a great deal.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#545

Post by eternalban » Sat, Aug 13, 2022, 4:39 PM UTC

> a basic human right to have a roof over one's head?

I had a homeless friend that very much insisted on this. And I happen to agree.

As for degeneration of American capitalism to rentier capitalism, this is also something we need to address. I don't mind e.g. Henry Ford getting filthy rich -- at least he built something.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#546

Post by sokoloff » Sat, Aug 13, 2022, 4:40 PM UTC

cesarvarela wrote: post #279

thepasswordis wrote: post #132

>a basic human right You do not have a basic human right to the labor of the people who build and maintain these houses. This is where this entire discussion collapses for me. Yes, I agree there needs to be more access to housing. And it’s frustrating to me that our government is too inept to simply provide it. For instance: we have committed to about 45 Billion to Ukraine. At a cost of $100k/unit (achievable at scal…

Do you think humans have a right to own a peace of land on planet earth? (Not the labor just the land) I find it very unjust being forced to buy land from someone else that the only thing they did was being born before.

Being born earlier is not nearly the only thing they did. They also (almost always) bought that land, (almost always) paid continual rent to the local government for the use of that land, improved and maintained that land, and finally, reached a decision that they needed to sell that land and improvements to someone else.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#547

Post by bombcar » Sat, Aug 13, 2022, 4:41 PM UTC

sbrother wrote: post #492

MontyCarloHall wrote: post #451

Earlier quoted context omitted.

>For national policies prices should drop nation wide, ergo people would still be able to move inside the same country No. Suppose I buy a million dollar house at 20% down. I thus owe $800k in principal to the bank. I live in the house for a few years, and build up $100k in additional equity beyond my down payment. If housing prices stayed the same, I could sell the house for $1M, use $700k of that to pay off my rema…

Are there any financial products to help with this situation; ie allowing you to take out an $800k loan on the new house? Presumably this wouldn’t be any riskier for the bank than simply continuing to own the old underwater loan. Possibly less risky since the homeowner, living where they wanted to live, would have less incentive to simply walk away.

The whole situation is confused; banks often have quite the ability to "go after you" for deficiency but in actuality they rarely do.

And in some states, such as California, on the original purchase loan they cannot; it's non-recourse.

But they sold your loan long ago, and trying to "do the math" and resell a new underwater one doesn't work.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#548

Post by raintrees » Sat, Aug 13, 2022, 4:43 PM UTC

Our property business (side hustle) provides nice places for people to live, where they do not have to worry about the larger maintenance and upkeep that comes with all property, not to mention the financing arrangements now required due to how our economy has (d)evolved.

I see it kind of like a what friend of mine, who was a pretty decent software engineer, said about going out on his own, rather than working for others (I am an entrepreneurial-type thinker, have run my own businesses for the last 30+ years, although not completed them in a buy-out process, just use them for cash flow).

Paraphrased: He didn't want the work of the overhead of running a business, he just wanted to work on software, then do other things in his life.

It is up to each person in life to do what they do as ethically as they think best for them, and up to each of us to choose whether we care to interact with others or not, with others' values/ethics in mind. And in that way, we get to benefit from others' expertise in areas we may not be as proficient.

Software can do great good, and it can do great harm. It is us humans that make the difference. Same with providing housing or commercial space. It is yet another tool, judge for yourself how that tool is being wielded by each practitioner.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#549

Post by allisdust » Sat, Aug 13, 2022, 4:43 PM UTC

Many answers here seem to come from wishful thinking bordering on financial illiteracy.

Money has a cost. Whether you use it to build houses or indirectly invest in companies through stock markets or your own business or treasury bonds, all expect yield vs risk to match other investment opportunities. If you make it tough for new investors to enter housing markets, then new money will stop flowing into housing markets as they can find better yields else where. That means lower new supply and higher rents. If you assume your toothpaste company is ripping you off by increasing prices, then the answer is not to make it difficult for new toothpaste companies to enter the market (or add more taxes to the existing ones). The answer is to make it easy for other companies to enter the market and ensure its profitable for them to do so.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#550

Post by bombcar » Sat, Aug 13, 2022, 4:44 PM UTC

carom wrote: post #513

elevatortrim wrote: post #374

Earlier quoted context omitted.

That would be true if rent was a percentage on top of cost. But it is not, it is whatever maximum renters are willing to pay.

If this is true how do investors drive up price?

The main way if you look at it is investors willing to run on empty - buying houses and then failing to rent them at the amounts they're trying to get, where they sit empty for some time before the investor goes belly up.

This reduces the supply of housing in use.