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)

#671

Post by ChrisLomont » Wed, Aug 17, 2022, 11:35 PM UTC

dcolkitt wrote: post #625

ChrisLomont wrote: post #455

Earlier quoted context omitted.

>Fannie Mae guaranteeing mortgages FM does not guarantee most mortgages, only certain govt types like FHA and VA loans, which the govt decided to back in order to help low income people get loans (otherwise the rates would be even higher for them). FM buys up a lot of mortgages and sells them to investors, then turns around and puts the money back into productive use. >taxing home owners on the imputed value of rent…

> FM does not guarantee most mortgages, What? Of course Fannie and Freddie guarantee the MBS they issue. Which is an implicitly a guarantee from the US government. Otherwise they'd trade at much wider credit spreads, which would in turn lead to higher rates for home buyers. You don't have to take my word for it, here's the New York Fed's own words: For agency MBS, the GSEs and Ginnie Mae promise full and timely payme…

>> FM does not guarantee most mortgages,

>What? Of course Fannie and Freddie guarantee the MBS they issue

Yes, they guarantee the MBS they issue, which is on a minority of all loans. The fact remains they do NOT guarantee most mortgages. They guarantee conforming loans, which are around 40% of all mortgage loans. And of all conforming loans, they only end up buying ~60% of them. So they at most guarantee around 24% of all mortgages, which is certainly not most mortgages.

>Alice, who ....

Ignoring the other side where landlords write stuff off and renters get tax breaks. On the ownership side, you're also missing lots of tax changes.

So not identical.

Also, the govt has an interest in property ownership as they have solid evidence that people owning property in a region make them less more stable. So there's very good reason to provide tax incentives for policy reasons. It's been shown that tax incentives, dollar for dollar, are pretty good incentives compared to most other forms of government spending to affect policy.

>The IRS already taxes tons of benefits based on the imputed income, even if no cash changes hand.

And they have tons the other way too - all because they desire to affect outcomes. So that they can do it is not really strong evidence to if they should do it, unless you address all the reasons they desire to do it.

>Not if the supply of housing is completely inelastic.

Which it is not [1]. "most areas that are widely regarded as supply-inelastic are, in fact, severely land-constrained by their topography" which is not most of the country.

[1] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1193422

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

#672

Post by joveian » Wed, Aug 17, 2022, 11:36 PM UTC

yrgulation wrote: post #568

lotsofpulp wrote: post #555

Earlier quoted context omitted.

It is the same in the US. While labor and materials do cost more, the greatest increase in costs is for the land. But since the US is big, there are huge disparities in land cost. While a laborer or materials might cost 2x or 3x more in a popular area than in an unpopular area, land will be 10x more. Actually, the labor and land costs invert if you go to really unpopular areas, where the land is much cheaper, but no…

“the US is big” Thats what puzzles me. What changed in the dynamics of the american society in such way that new cities are no longer built? I get it in europe there barely and land left to develop, but the us and canada have plenty.

They are being built, just sort this list by % change and look at population over the past few decades:

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

A bunch of places towards the top of the list (not just a few) have doubled or more in population over the past 30 years. It is just that in the US people have a death wish and often flock to places like Phoenix and Las Vegas and San Bernardino rather than some place sensible and organize cities into the same endless sprawl everywhere.

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

#673

Post by bcherry » Wed, Aug 17, 2022, 11:37 PM UTC

dionidium wrote: post #264

wldcordeiro wrote: post #152

Earlier quoted context omitted.

One thing that's missed in the renter vs homeowner thing is that the rules of election systems favors the homeowner too. Renters move more and will need to register to vote over again and the added inconvenience will stop plenty from even bothering.

A commonsense way to describe what you just said is that homeowners are more stable and stationary and therefore more invested in the long-term future of their communities than renters are, which is an argument that urbanists laugh at, but one that seems very clearly to be true. I think people basically know this, if they're allowed to be honest with themselves. Nobody who ever lived in a college dorm and then spent…

Even if this is true, those communities always have the class of people moving through and that class deserves a vote, even if the individuals within it are changing. For instance, take a university town with population of 100k, 25k of whom are students. The students themselves come and go, lasting about 4 years each, but it still makes sense that 25% of the vote each election should go to the student community overall. This doesn't happen for a variety of reasons, but some of them are the sorts of artificial barriers like voter registration that depress the vote of these sorts of communities.

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

#674

Post by black_13 » Wed, Aug 17, 2022, 11:38 PM UTC

The root of rich countries problems is the rich.

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

#675

Post by ChrisLomont » Wed, Aug 17, 2022, 11:39 PM UTC

jjav wrote: post #614

DubiousPusher wrote: post #582

Earlier quoted context omitted.

Here is a starter list of things a house will need over the course of 30 years. - a new roof (maybe two if they are 15 year rooves) -new siding (unless fiber cement siding was installed originally) -new exterior paint -new windows -major repairs to the driveway -2 new furnaces -2 to 3 new water heaters -2 to 3 full new sets of appliances -1 cosmetic kitchen remodel -1 cosmetic remodel of each bathroom -1 to 2 cosmeti…

> Here is a starter list of things a house will need over the course of 30 years. My house is 25 years old (bought it new) and from your list, the only things I've done is exterior paint and water heater. I've also done cosmetic landscaping but that was strictly optional, as I like to work on the yard.

Factors also depend on the age of the house and your location - harsher climates are much worse on various house factors.

A new house will have much less costs to maintain over 25 years than a 50 years old house.

Having owned a few houses (both relatively new), and having gfs with houses and seeing the stuff they've done, and with helping my mom and sister with their house decisions and fixing, the list above is not far off.

State Farm says to budget 1-4% of the value of a house for annual upkeep costs. You're significantly below that it sounds.

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

#676

Post by jjav » Wed, Aug 17, 2022, 11:39 PM UTC

Kalium wrote: post #537

idkyall wrote: post #122

Housing in the US has gotten to where it is due to horrible laws effectively allowing total tax avoidance for landlords. Take some investment property. You buy it at some basis price, let's say 500k. You rent it out for 15k a year. Each year you can offset your rental income against deprecation of the property and property taxes - meaning, you pay no income tax on your rental income. ~30 years later, you've deprecate…

If you're in California, your children also get to inherit your price-controlled tax assessment.

Only if they live in it.

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

#677

Post by QuarterReptile » Wed, Aug 17, 2022, 11:39 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…

>Housing has never been this much of a problem up until the past decade or two.

>You gotta reach back to over a hundred years ago to find an example?

So, by 'never', you meant somewhere around 60 years? 75 years? I ask because you discount my 80 year-old example (chosen by availability because I'm reading an interesting book on the economics of Nazi Germany right now) as if it couldn't possibly be relevant because it's so long ago, while appealing to 'never' to attempt a weighty claim.

>The population in the US is the highest it's been in history.

And I hope that will continue, though things look bleak in that regard.

>You're using a bullshit metric like growth rate which is a percentage of constantly increasing number? 1% of 100 is the same as 50% of 2. Of course the growth rate goes down as the population goes up.

Yes, I'm using a percentage term for growth rate because it is appropriate for the comparison, unless you believe in some immutable constant carrying capacity for the US. Adding 1 million people to 10 million is not remotely similar to adding a million to 330 million, but that's the version you're arguing for.

>The natives to the country have a declining birthrate. This is the responsible thing to do.

Responsible to what? It's suicide by an entire species, not to mention dooming your descendants to lower standards of living as the viability of specialization gradually decays.

I'm out of time to respond to this comment, but your remaining points are equally in need of correction.

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

#678

Post by ChrisLomont » Wed, Aug 17, 2022, 11:42 PM UTC

lovich wrote: post #579

ChrisLomont wrote: post #477

Earlier quoted context omitted.

>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.

Why would it not be rentable? That’s an assumption that doesn’t stand on its face when you look at the unmaintained crackhouses landlords will rent easily because demand is so high for housing.

Are you claiming zero money was spent on those properties for 30 years? I don't think that claim would stand on it's face.

Over 30 years all sorts of things would break, pipes, leaks, batteries corroding and leaking out, animals move in, windows broken, doors removed....

Detroit ruins show what zero money put into a building for 30 years looks like - gutted shells.

Show me an ad for a rentable place that has had zero money spent on the building for any maintenance for 30 years and I'll believe you.

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

#679

Post by ChrisLomont » Wed, Aug 17, 2022, 11:43 PM UTC

MarcelOlsz wrote: post #572

commandlinefan wrote: post #565

Earlier quoted context omitted.

> any enrichment in this case is "silly", and that landlords don't tend to do much - or any - work Hm - the same could be said about your 401(k), but you probably expect to live off of it at some point in your life, right? At worst, buying and renting properties is a (risky) investment.

Nobody pays me for the privilege of living inside of my 401k though.

Where do you think some of your 401k returns come from?

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

#680

Post by jjav » Wed, Aug 17, 2022, 11:43 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…

> The math makes sense.

If you really feel that way, I recommend getting loans to buy some rental properties and become rich.

Personally whenever I run the numbers on purchasing a rental property, it never has made sense economically so I haven't.