4 ms·

> If you're borrowing at a fixed interest rate (or buying outright), you're also locking in price for housing against future rent increases.. and, currently in

> If you're borrowing at a fixed interest rate (or buying outright), you're also locking in price for housing against future rent increases.. and, currently in CA, against uncontrolled property tax increases too. Again, that's irrelevant from a financial perspective. The rates are priced to account for the risk of increase, and in this case the markets are liquid and competitive enough to allow correct market pricing. > It doesn't really prevent you from moving to another job, one could always rent out the owned property and rent in your new location. (Though if the area you own in has crashed in prices that's a more difficult proposition...) There is a large overhead cost to renting out, which is significantly higher than the overhead cost of renting a home. Renting out is essentially a part-time job.

dv_dt 9y ago
> Again, that's irrelevant from a financial perspective. The rates are priced to account for the risk of increase, and in this case the markets are liquid and competitive enough to allow correct market pricing. The markets can be irrational for longer than you can stay solvent. You can pull out silly tropes like some concept of "correct market pricing". Which means "correct" according to some group of concerns vs some other group of concerns. Rarely do we get to directly design markets, and designed changes often go vastly wrong with unintended side effects. It's not irrelevant from a life stability perspective if you get priced out of your domicile for rent increases, vs keeping it for an owned property. People can individually value that stability or not, but it's a real consideration. There is also large overhead in not choosing the time that one wants to move if rents increase uncontrollably.
- ucaetano 9y ago
  > The markets can be irrational for longer than you can stay solvent. Cute quote, now show me the data. > You can pull out silly tropes like some concept of "correct market pricing". Which means "correct" according to some group of concerns vs some other group of concerns. Rarely do we get to directly design markets, and designed changes often go vastly wrong with unintended side effects. Correct market prices are the cost plus risk-adjusted returns. Essentially, the point at which economic profits are zero. > It's not irrelevant from a life stability perspective if you get priced out of your domicile for rent increases, vs keeping it for an owned property. People can individually value that stability or not, but it's a real consideration. That only happens if there is an artificial constraint in supply, generated by NIMBY policies. > here is also large overhead in not choosing the time that one wants to move if rents increase uncontrollably. Again, with freedom to build, prices won't move like that.

dv_dt 9y ago

> Again, that's irrelevant from a financial perspective. The rates are priced to account for the risk of increase, and in this case the markets are liquid and competitive enough to allow correct market pricing. The markets can be irrational for longer than you can stay solvent. You can pull out silly tropes like some concept of "correct market pricing". Which means "correct" according to some group of concerns vs some other group of concerns. Rarely do we get to directly design markets, and designed changes often go vastly wrong with unintended side effects. It's not irrelevant from a life stability perspective if you get priced out of your domicile for rent increases, vs keeping it for an owned property. People can individually value that stability or not, but it's a real consideration. There is also large overhead in not choosing the time that one wants to move if rents increase uncontrollably.

ucaetano 9y ago
> The markets can be irrational for longer than you can stay solvent. Cute quote, now show me the data. > You can pull out silly tropes like some concept of "correct market pricing". Which means "correct" according to some group of concerns vs some other group of concerns. Rarely do we get to directly design markets, and designed changes often go vastly wrong with unintended side effects. Correct market prices are the cost plus risk-adjusted returns. Essentially, the point at which economic profits are zero. > It's not irrelevant from a life stability perspective if you get priced out of your domicile for rent increases, vs keeping it for an owned property. People can individually value that stability or not, but it's a real consideration. That only happens if there is an artificial constraint in supply, generated by NIMBY policies. > here is also large overhead in not choosing the time that one wants to move if rents increase uncontrollably. Again, with freedom to build, prices won't move like that.