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It's less of a ladder than a Ponzi scheme. In SF housing prices have grown at a compound growth rate of 6% for over 50 years. Older generation squats on propert

It's less of a ladder than a Ponzi scheme. In SF housing prices have grown at a compound growth rate of 6% for over 50 years. Older generation squats on property paid for by debt, low taxes, and then retires at 60 -- all paid for by a younger generation that doesn't have jobs and can't afford housing.

dragontamer 10y ago
> In SF housing prices have grown at a compound growth rate of 6% for over 50 years. When a good chunk of those years had interest rates in the 10%+ range, and when the years that were lower than 10% ended with "The Housing Bubble Pop" and "Great Recession", that 6% compounded growth is actually kinda awful. In any case, compound growth is the center of most economies. Being the owner of things entitles you to profits, be it in stocks, bonds, or real estate. The "buying on debt" depends on the rate that you got in at. If you're complaining that people in the 1970s were able to get 15% mortgages to earn lol 6% on Real Estate, then I don't think you fully appreciate the history of Stagflation and the 80s bond market. --------- All in all, housing prices have rose because interest rates have fallen. More people can afford a house when mortgages are at 4% instead of at 15%, and the price of homes go up to compensate.
- shostack 10y ago
  Surely refinancing impacts this equation some though, right?
  - dragontamer 10y ago
    Yeah, go spend 3% of the loan amount to purchase a new 30-year loan, instead of paying off the house you already have... stay on debt perpetually. Unless rates drop dramatically in a short-period of time (like in 2012), refinancing opportunities are rare. From the 1980s, you wouldn't have had a refinance opportunity until the mid 90s.
- rdlecler1 10y ago
  Housing is only a good financial investment if supply outstrips demand. The high cost of housing is less a function of low interest rates than zoning laws that restrict new development.
shostack 10y ago
Don't forget that Prop 13 disproportionately favors buyers who bought closer to when it was rolled out. Their rates were locked in a long time ago. I'm not sure how repeatable this will be for new buyers.
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dragontamer 10y ago

> In SF housing prices have grown at a compound growth rate of 6% for over 50 years. When a good chunk of those years had interest rates in the 10%+ range, and when the years that were lower than 10% ended with "The Housing Bubble Pop" and "Great Recession", that 6% compounded growth is actually kinda awful. In any case, compound growth is the center of most economies. Being the owner of things entitles you to profits, be it in stocks, bonds, or real estate. The "buying on debt" depends on the rate that you got in at. If you're complaining that people in the 1970s were able to get 15% mortgages to earn lol 6% on Real Estate, then I don't think you fully appreciate the history of Stagflation and the 80s bond market. --------- All in all, housing prices have rose because interest rates have fallen. More people can afford a house when mortgages are at 4% instead of at 15%, and the price of homes go up to compensate.

shostack 10y ago
Surely refinancing impacts this equation some though, right?
- dragontamer 10y ago
  Yeah, go spend 3% of the loan amount to purchase a new 30-year loan, instead of paying off the house you already have... stay on debt perpetually. Unless rates drop dramatically in a short-period of time (like in 2012), refinancing opportunities are rare. From the 1980s, you wouldn't have had a refinance opportunity until the mid 90s.
rdlecler1 10y ago
Housing is only a good financial investment if supply outstrips demand. The high cost of housing is less a function of low interest rates than zoning laws that restrict new development.

shostack 10y ago

Don't forget that Prop 13 disproportionately favors buyers who bought closer to when it was rolled out. Their rates were locked in a long time ago. I'm not sure how repeatable this will be for new buyers.

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