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)

#681

Post by reillyse » Wed, Aug 17, 2022, 11:47 PM UTC

ChrisLomont wrote: post #650

reillyse wrote: post #586

Earlier quoted context omitted.

Right. But let us pretend that the we all decided to treat shoes as an asset class. Everyone (with shoes) is counting on their shoes increasing in value. So the government becomes focused on raising the prices of everyone's shoes. It institutes restrictions on the amount of shoes that can be made (so as not to crash the market). Supports the market by subsidizing mortgages so people can purchase shoes at high prices…

>Everyone (with shoes) is counting on their shoes increasing in value. So the government becomes focused on raising the prices of everyone's shoes That is not how reality works. Prices go up because people are paying them - it has nothing to do with government. A seller wants the highest price, no matter what the govt or local markets do, and a buyer wants the lowest price, no matter what govt or local markets do. Ea…

Are you trying to claim that the government (let's pick the US government) doesn't get involved in regulating the housing market?

Do you think they don't attempt to keep the house prices from crashing ? (also known as getting more affordable).

I think it's obvious that the US government is very interested in maintaining and increasing the monetary value of homes and real estate.

Here are some ways they influence them off the top of my head

1) monetary policy (Changing interest rates to encourage borrowing) 2) Subsidizing mortgages (Fannie mae, Freddie mac) - allows people to borrow more and so spend more 3) Zoning (reduces the amount of available land) 4) Bailing out banks involved in real estate 5) Tax relief for home ownership 6) Mortgage interest relief for home owners etc etc

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

#682

Post by ChrisLomont » Wed, Aug 17, 2022, 11:53 PM UTC

cheriot wrote: post #600

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…

> And are losing value on the property, which is the point of depreciation. The house depreciates while the land appreciates. In the US for the last 50 years has been net appreciation for most homes. > If it were so profitable, then tons of capital currently being spent on other uses (tech, medical, finance) would instead go into buying up more housing. Hedge funds have been buying houses at scale since the great rec…

>Hedge funds have been buying houses at scale since the great recession.

Zillow tried that and lost over a billion dollars - I'd expect lots of those purchases are not the money makers you think they are.

>Which increases faster than incomes.

Not for the same size houses - the median house now is many times the size of a median house from 1950, and a few times the size of a median house from 1970. If you buy the same house previous generations bought, you'd find prices relatively the same.

>Hence the way each generation has a declining rate of home ownership.

That's not what historical data shows [1,2], going all the way back to 1900. Each generation has had higher ownership rates at equal points in life than each previous one, except perhaps a recent one due to the 2008 crash, but they're catching back up again.

Certainly there is no way you can claim each generation declines and see the same data FRED and Census post.

For example, FRED shows that Q2, 2022, at 65.8% is higher than all of history except the decade before the crash, and it is trending up again.

[1] https://fred.stlouisfed.org/series/RHORUSQ156N

[2] https://www2.census.gov/programs-surveys/decennial/tables/ti...

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

#683

Post by jjav » Wed, Aug 17, 2022, 11:57 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…

> Exempting the implicit value of rent is a subsidy favoring owner occupied housing.

When I go kayaking it costs me $35/hr for renting the kayak, which is income for the rental store and (presumably) they pay income tax on that.

Except I don't really pay because I bought my own kayak so I get to go for free whenever.

Your proposal amounts to abolishing the whole concept of property ownership.

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

#684

Post by ChrisLomont » Wed, Aug 17, 2022, 11:57 PM UTC

bps4484 wrote: post #632

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…

"An no one will now rent, since your building has an effective value of $0 since it has become crap." This isn't true. You will have put money into the property to keep its value up, also writing off all of those expenses , so that you can still rent it out.

>You will have put money into the property to keep its value up

You're ignoring what was written: if the building has value 0, then it is not maintained to keep the value up. Of you kept the value up, then it would not have an effective price of 0.

Of course most people put money into properties exactly to keep value up.

>also writing off all of those expenses

Writing off expenses does not make them free - you are still paying for them - out of otherwise profit. It just means you get taxed on net profit instead of taxed on property gross income. But you are still losing money.

Writing off expenses is not some free money giveaway.

The point was to illustrate that OP ignored costs involved for landlords in the thought experiment.

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

#685

Post by fleddr » Wed, Aug 17, 2022, 11:57 PM UTC

pochekailov wrote: post #14

Nothing will change while the homeowners have more political power than the renters. Even in the cities where the renter population is bigger than the homeowners, such as in Seattle, half of the votes come from people of > 65 years old (all of whom are homeowners, likely more than one home). Young people simply won't vote at all. There is very little incentives for the young people to vote. Even if you cancel all the…

Lol, 2-3 years of salary: https://www.longtermtrends.net/home-price-median-annual-inco...

That would be half of the 70-year average. 5 is the norm, and it never got below 4. And you opt for half of the lowest point ever?

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

#686

Post by ChrisLomont » Thu, Aug 18, 2022, 12:02 AM UTC

fwip wrote: post #623

commandlinefan wrote: post #551

Earlier quoted context omitted.

> once it became clear that tenants destroy things Or/and just refuse to pay rent for years while you try to evict them.

Then you're not trying very hard. https://rentprep.com/evictions/when-can-i-evict-a-tenant-for...

That's a list of how long until the landlord can file an eviction, not how long an eviction takes.

"Thus, the eviction process can take from five weeks to three months, assuming there are no delays. If there are delays, the process can take as much as a year."

[1] https://www.findlaw.com/realestate/landlord-tenant-law/how-l...

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

#687

Post by jjav » Thu, Aug 18, 2022, 12:06 AM UTC

dionidium wrote: post #275

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…

> It's a simple problem, we turned housing into an investment. People are not natural economists and will basically dig in to support the status quo until that status quo changes, at which point they'll support the new one. Americans, for example, buy new cars at an average new price of $40k and for most of my life accepted uncritically that the value of those cars would plummet the second they were driven off the lo…

> They would do the same with housing, if they weren't already conditioned not to.

That's a pretty unrealistic comparison, housing doesn't hold its value (or go up) because people are conditioned, there are real reasons.

There is an effectively infinite supply of new cars, as factories can much more easily ramp up production if there's more demand. (Sure, recent supply chain issues have made that problematic, but in normal times.)

Second, cars do inherently depreciate faster. A ten year old house is basically brand new whereas a ten year old car is probably mechanically sound but cosmetically often looking its age and a lot of people like new and shiny.

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

#688

Post by fleddr » Thu, Aug 18, 2022, 12:09 AM UTC

strikelaserclaw wrote: post #33

throwaway22032 wrote: post #27

Our economic system is set up such that you either hit a bar at which you accumulate capital forever unless you make a mistake, or you're loss-making forever. Once you hit that bar, your job becomes buying up housing like it's a Monopoly board. As an individual you can either choose to win or lose this game. We're not going to change it, at least not within our lifetimes.

the fatal flaw in capitalism imo, a lot of wealth gets created which is good for everyone but eventually, a lot of that wealth also gets held by a smaller and smaller minority while the rest try to desperately compete over whatever is left over. After a certain point a certain portion of any new wealth created somehow trickles up to the capital owning class (think your VC's, fund owners, other rich investors), this c…

You're missing a very important aspect: demographics.

In several nations, we're in a unique moment in time as the majority of the population is old-ish. Old people are conservative in that they're looking for the exit, they've worked longer (more time to save/invest) and they've benefited from favorable macro conditions.

So you might as well say the opposite: a lot (most) wealth is locked up in an enormous group of people (the majority), so not in a tiny group of people.

On top of that, yes, there's also a small group of super rich.

The other aspect you didn't mention is globalization. The former middle class is now the lower class. The "mail man" in the 60s that could own a home and run a family on unskilled labor no longer exists, nor will it return.

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

#689

Post by cesarvarela » Thu, Aug 18, 2022, 12:10 AM UTC

Not just the rich world, here in the third world it is the same.

Housing insecurity drains people's life energy. People can't take risks, learn new things, etc. The smallest mistake has them living on the streets. Hundreds of millions of potential scientists, artists, etc. that we loose because they can't afford giving up their minimum wage job and face homelessnes.

The article seems to be focused on politics, but I think it is not a political problem, it's a philosophical one, or even moral.

Speculating with housing should be seen as badly as speculating with water, too basic of a thing to play with, I'm not sure people that haven't experienced housing insecurity understand this.

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

#690

Post by jjav » Thu, Aug 18, 2022, 12:18 AM UTC

dont__panic wrote: post #257

pdonis wrote: post #223

Earlier quoted context omitted.

> You only need one house to live in. Many people do not want to own a home, they would rather rent. Someone has to be the landlord for all those people, and to all those someones, the home is an investment. You can only get rid of homes as investments if you get rid of renting.

> 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.

I don't have a paper to link to, but reading all the housing threads on HN for years there are always many people who sing the praises of renting for all kinds of reasons that make sense to them.