Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Making housing more affordable means your home's value will have to come down

theglobeandmail.com

Post reply on HN
Print view View original

91–100 of 192 posts

Re: Making housing more affordable means your home's value will have to come down

#91

Post by mrcode007 »

throwaway1105q wrote: post #83
mrcode007 wrote: post #81

Earlier quoted context omitted.

FASB defines an asset as: “A present right of an entity to an economic benefit”. “Essential to the definition of an asset is a right to an "economic benefit" —the capacity to provide services or benefits to the entities that use them. Generally, in a business entity, that economic benefit eventually results in potential net cash inflows to the entity. In a not-for-profit entity, that economic benefit is used to provi…

Not sure how is an accounting book relevant. I'd rather ask a tax consultant - the definitions are slightly but significantly different. Anyways, even by your book's definition - later sale for a higher price is economic benefit, protection against inflation is one too. This link considers your viewpoint too: https://www.investopedia.com/terms/a/asset.asp

I’m trying to say that under mortgage, a property isn’t your asset. It’s a bank’s asset. The mortgage is booked under asset side on the balance sheet of the bank. It cannot be booked as an asset on your side. The economy wouldn’t balance. Until you actually paid off stuff the home is a liability. You pay money on it every month (negative cash flow) and that cash flow accrues to the bank (positive cash flow). I don’t know in what definition an asset produces a negative cash flow. It’s a liability under most definitions. Maybe I’m wrong. I’m not an accountant.

Re: Making housing more affordable means your home's value will have to come down

#92

Post by voisin »

The only solution to the housing affordability crisis palatable to current homeowners is to build many new homes of a totally different type that can not be readily substituted. This is already happening where new housing tends to be denser, stacked (apartments) or closer together (row houses). Of course there is some overlap, but to the extent overlap and substitutability can be minimized, current homeowners can enjoy their high values that many have relied upon for retirement plans, and prospective homeowners can enjoy plentiful inexpensive housing to “get into the market”, which would help keep rent costs lower too (much more substitutability between small starter homes/condos and rentals).

Just my 2 cents. If we are reliant on Boomers giving up their house values (which many foolishly rely wholly on for retirement) then there’s zero chance we tackle this crisis.

Re: Making housing more affordable means your home's value will have to come down

#93

Post by seanmcdirmid »

ebiggs wrote: post #30

As a homeowner I see little benefit for me for the insane value of my home. Do I want to pay more in property taxes? No. If I sell it’s to just buy a different insanely priced home. I suppose I’m privileged in that I have other retirement plans so my kids will inherit my home - and that’s good I guess if they ever want to afford a home. Homes being an investment is the wrong mindset for a healthy society. Have cheap…

Property taxes in many states are set according to budget, so your home’s value relative to other homes is important, but if all housing prices all fall or rise, the money collected is the same.

Homes are considered an investment because people want nice ones in locations that can only support so many (either via artificial or natural restriction). In turns out homes outside of those locations can get really cheap since finding buyers is hard.

Re: Making housing more affordable means your home's value will have to come down

#94

Post by bilsbie »

hurutparittya wrote: post #48
bilsbie wrote: post #35

I think non affordable housing makes values come down too. Just I a less controlled way. Eventually people will just stop participating in the housing game and there’s no telling where that will lead.

Stop participating in the housing game? How? By becoming homeless?

Mobile homes, roommates, vans, or maybe new disruptive ideas in housing we haven’t thought of yet.

Everyone has a price they wouldn’t or couldn’t afford housing.

Re: Making housing more affordable means your home's value will have to come down

#95

Post by analognoise »

s1artibartfast wrote: post #82
ebiggs wrote: post #30

As a homeowner I see little benefit for me for the insane value of my home. Do I want to pay more in property taxes? No. If I sell it’s to just buy a different insanely priced home. I suppose I’m privileged in that I have other retirement plans so my kids will inherit my home - and that’s good I guess if they ever want to afford a home. Homes being an investment is the wrong mindset for a healthy society. Have cheap…

Homes are and should always be an investment because they are. They dont have to beat the stock market, but a well maintained home should track inflation at least. They have real and huge replacement costs in materials and labor. If my house burnt down, it would cost $1M to rebuild. Im all for cheap simple houses for those with less money. However, unless they are so cheap as to be disposable, they too will be invest…

Isn’t “so cheap they are disposable” Japan’s approach to homes?

Re: Making housing more affordable means your home's value will have to come down

#96

Post by seanmcdirmid »

s1artibartfast wrote: post #87
qeternity wrote: post #36

Earlier quoted context omitted.

The myth of home equity: most people are implicitly short the housing market for most of their lives.

I think that is exactly the opposite. Most people are long on the housing market. They have borrowed cash to purchase an asset they think will maintain or go up. Renting would be the short position. https://www.investopedia.com/ask/answers/100314/whats-differ...

There are huge transaction costs to buying and selling a home, renting could also be seen as a way to avoid those costs if you aren’t going to stay somewhere. But I rented for cheap in Beijing when housing to buy costs were super high, who wouldn’t rent a $1 million apartment for < $1000/month, buying in that market would have been dumb even without red tape to buy something.

Re: Making housing more affordable means your home's value will have to come down

#97

Post by II2II »

Samwitch wrote: post #38

Housing affordability is such a silly subject. We live in both a democracy and a capitalist economy, both in the US and Canada. Most believe those within some locality should have a say over that area. If they do not want more housing because it financially benefits them to enforce scarcity, why should they not be able to? We accept the limited availability of other luxury items, why is housing in a _specific_ locali…

> If housing affordability is a problem, live somewhere else.

There are a few problems with that statement.

Less expensive homes tend to be in regions that lack jobs. Most of these regions also lack adequate infrastructure for remote work. Many of these regions also lack the resources for people to meaningfully live off the land, never mind the resources and infrastructure to generate income off the land.

This isn't really an example of capitalism. It is extraordinarily rare for people to be compelled to surrender their property to facilitate development. It is far more common for property owners to be denied the right to develop their own property in the manner they wish due to restrictions imposed by the government.

Quite often this isn't even an example of democracy. A group going to city council to lobby against a development is not necessarily representative of the community as a whole. Zoning laws developed fifty years ago don't necessarily represent the interests of people today. Then you have complicating factors. Democratically elected representatives at the provincial and federal level may be pushing for more housing because the population as a whole is pushing for more housing, while city counsellors are opposing development since the people who voted for them oppose development. Who's voice is more important? When everyone is saying: we need more housing, but not in my neighbourhood, how do we decide where housing gets built?

Finally: while some housing is luxury housing, housing is not a luxury item. People should not be denied access to housing due to income. People should not be denied access to housing in a reasonable location due to income. By reasonable location I mean things like reasonable physical access to employment, education, transportation, and material necessities (e.g. food). The environment should also be safe. In other words, that penthouse suite on the waterfront is a luxury item. An apartment within thirty minutes of the shipyards, in a community with a grocer, a school, a low crime rate, and isn't a former toxic waste dump is not luxury housing.

Re: Making housing more affordable means your home's value will have to come down

#98

Post by analognoise »

bee_rider wrote: post #59

I can’t really imagine wanting to own a house nowadays, given how unstable everything is. I’d rather buy an RV or something like that. Using home equity as a long term store of value seems nuts, what if your town turns into the next Florida (uninsurable hurricane and flood zone).

Kids thrive best in stable environments; I don’t think moving them around a lot in an RV would be healthy or stable. It would be hard for them to form friendships, and be involved in the community.

Re: Making housing more affordable means your home's value will have to come down

#99

Post by s1artibartfast »

hammock wrote: post #90
s1artibartfast wrote: post #68

Earlier quoted context omitted.

I thought I did, but can give an example. If the median income increases from 50K to 100K (adjusting for inflation), and houses stay at 500k (adjusting for inflation), they have become more affordable without losing value.

Well that begs the question, how are you going to double income beyond the rate of inflation?

If it happens, it will be the same way it has been done for hundreds of years. Increase in productivity.

More widgets and stuff produced per worker is the only way to beat inflation. This is the fundamental economic goal of nations which seek prosperity.

Re: Making housing more affordable means your home's value will have to come down

#100

Post by s1artibartfast »

eddd-ddde wrote: post #89
s1artibartfast wrote: post #68

Earlier quoted context omitted.

I thought I did, but can give an example. If the median income increases from 50K to 100K (adjusting for inflation), and houses stay at 500k (adjusting for inflation), they have become more affordable without losing value.

But isn't money losing value then? Implicitly making the houses worth 500K also lose theirs?

I dont understand your question.
Post reply on HN