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Housing is only an investment asset in certain disfunctional housing markets (e.g., NYC, SF). The problem in these markets is that it's illegal to sell only hou

Housing is only an investment asset in certain disfunctional housing markets (e.g., NYC, SF). The problem in these markets is that it's illegal to sell only housing - you can usually only sell housing + weird quasi-property rights (rent control/stabilization, landlord isn't allowed to easily get rid of tenants, etc). In a market of renters who have leases that don't need to be renewed except via mutual consent of both parties, housing is very strictly a consumer good - you are buying X months of housing at a specific location for $Y. Houston has a very functional housing market. Their secrets? No exclusionary zoning, no NIMBYs (Houston issued 64k housing permits in 2014, California issued 83k), no rent control, just build what people want and then sell it under mutually agreeable terms.

lhopki01 11y ago
Yet ask people where they would prefer to live and more want to live in New York than Houston. A city is more than just a sprawl of houses. Much of the attraction of cities comes from other things.
- maratd 11y ago
  Even more relevant, should Houston become more preferable to New York, you'll see the same silly regulations and rules crop up to keep the riff-raff out.
- logfromblammo 11y ago
  I'd rather live in Houston than New York. Of course, I'd also rather live in a paper bag at the bottom of a wet ditch than to be subjected to the local culture, politics, and economy of some cities. (Looking at you, DC sprawl.) You just can't effectively reduce the personal appeal of cities to a single input variable. But in this case, the ratio of living expenses (incl. housing) to median salaries in the usual suspects roundup of job titles provides a clear advantage to Houston. Public transportation tips toward New York. Compatibility with local culture tips toward New York. Local politics tips toward New York. Pleasantness of the weather barely tips toward Houston. Non-homogeneity of the populace is a wash. Lower crime rate goes to New York. Availability of tasty food is a wash. Public politeness goes to Houston. Lighter tax burden goes to Houston, big time. On public education, I don't even know. You can attach an a la carte dollar value to each of the attributes of a city, and sum them up to get a rough desirability value. That's essentially the answer to the question "How much extra would I be willing to pay to live in this new place instead of where I live now?" You can establish a base value by adding differences in salary and expenses. Then you assign a value to all the subjective things, like being able to buy corn on the cob from a street vendor, or being able to escape the urban sprawl for weekends and vacations. How much is it worth to you to have the option to not drive a car, or to easily find a parking space when you do? How much would someone have to pay you to have neighbors that freak out when they see a dandelion on your lawn? How much would you have to be paid to put up with heavy pollution, or a torturous commute? Add it all up, and the highest-valued city is where you would probably be happiest. Depending on your preferences, the presence or lack of zoning might be a single factor that could cause you to prefer one city over another, but probably only to the extent that it affects your monthly housing expenses.
ZenoArrow 11y ago
> "Housing is only an investment asset in certain disfunctional housing markets (e.g., NYC, SF). The problem in these markets is that it's illegal to sell only housing" What's the reason for dysfunction in the UK housing market then? It's perfectly legal to sell only housing over here (note that this graph is adjusted for inflation, people are spending roughly 4x the amount for a house compared to 1952 after correcting for inflation): http://www.jackpeppercampbell.com/wp-content/uploads/2014/07/UK-real-house-prices-since-1952.png http://www.jackpeppercampbell.com/wp-content/uploads/2014/07...
- yummyfajitas 11y ago
  I'm confused by your link, which describes the price of a speculative investment rather than a consumption good. What dysfunction are you referring to?
  - ZenoArrow 11y ago
    Property prices in the UK have risen rapidly at least in part because they are seen as a long term investment. You previously implied that housing 'is only an investment asset in certain disfunctional housing markets (e.g., NYC, SF). The problem in these markets is that it's illegal to sell only housing'. I am providing a counter-example.
    - yummyfajitas 11y ago
      "Only housing" means a rental of a flat to live in for a fixed term. It's a consumption good. Buying property is a speculative investment. Similarly, buying an iPad is consumption while buying AAPL is investment.
      - ZenoArrow 11y ago
        I don't understand what you mean by '"Only housing" means a rental of a flat to live in for a fixed term.'. Are you referring to investment in the rental market?
eli_gottlieb 11y ago
>Housing is only an investment asset in certain disfunctional housing markets (e.g., NYC, SF). We don't have rent-control in Boston, but we do have a housing bubble.

lhopki01 11y ago

Yet ask people where they would prefer to live and more want to live in New York than Houston. A city is more than just a sprawl of houses. Much of the attraction of cities comes from other things.

maratd 11y ago
Even more relevant, should Houston become more preferable to New York, you'll see the same silly regulations and rules crop up to keep the riff-raff out.
logfromblammo 11y ago
I'd rather live in Houston than New York. Of course, I'd also rather live in a paper bag at the bottom of a wet ditch than to be subjected to the local culture, politics, and economy of some cities. (Looking at you, DC sprawl.) You just can't effectively reduce the personal appeal of cities to a single input variable. But in this case, the ratio of living expenses (incl. housing) to median salaries in the usual suspects roundup of job titles provides a clear advantage to Houston. Public transportation tips toward New York. Compatibility with local culture tips toward New York. Local politics tips toward New York. Pleasantness of the weather barely tips toward Houston. Non-homogeneity of the populace is a wash. Lower crime rate goes to New York. Availability of tasty food is a wash. Public politeness goes to Houston. Lighter tax burden goes to Houston, big time. On public education, I don't even know. You can attach an a la carte dollar value to each of the attributes of a city, and sum them up to get a rough desirability value. That's essentially the answer to the question "How much extra would I be willing to pay to live in this new place instead of where I live now?" You can establish a base value by adding differences in salary and expenses. Then you assign a value to all the subjective things, like being able to buy corn on the cob from a street vendor, or being able to escape the urban sprawl for weekends and vacations. How much is it worth to you to have the option to not drive a car, or to easily find a parking space when you do? How much would someone have to pay you to have neighbors that freak out when they see a dandelion on your lawn? How much would you have to be paid to put up with heavy pollution, or a torturous commute? Add it all up, and the highest-valued city is where you would probably be happiest. Depending on your preferences, the presence or lack of zoning might be a single factor that could cause you to prefer one city over another, but probably only to the extent that it affects your monthly housing expenses.

ZenoArrow 11y ago

> "Housing is only an investment asset in certain disfunctional housing markets (e.g., NYC, SF). The problem in these markets is that it's illegal to sell only housing" What's the reason for dysfunction in the UK housing market then? It's perfectly legal to sell only housing over here (note that this graph is adjusted for inflation, people are spending roughly 4x the amount for a house compared to 1952 after correcting for inflation): http://www.jackpeppercampbell.com/wp-content/uploads/2014/07/UK-real-house-prices-since-1952.png http://www.jackpeppercampbell.com/wp-content/uploads/2014/07...

yummyfajitas 11y ago
I'm confused by your link, which describes the price of a speculative investment rather than a consumption good. What dysfunction are you referring to?
- ZenoArrow 11y ago
  Property prices in the UK have risen rapidly at least in part because they are seen as a long term investment. You previously implied that housing 'is only an investment asset in certain disfunctional housing markets (e.g., NYC, SF). The problem in these markets is that it's illegal to sell only housing'. I am providing a counter-example.
  - yummyfajitas 11y ago
    "Only housing" means a rental of a flat to live in for a fixed term. It's a consumption good. Buying property is a speculative investment. Similarly, buying an iPad is consumption while buying AAPL is investment.
    - ZenoArrow 11y ago
      I don't understand what you mean by '"Only housing" means a rental of a flat to live in for a fixed term.'. Are you referring to investment in the rental market?

eli_gottlieb 11y ago

>Housing is only an investment asset in certain disfunctional housing markets (e.g., NYC, SF). We don't have rent-control in Boston, but we do have a housing bubble.