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Lets, for the sake of argument, say you could solve the housing crisis instantly. Suddenly, homes in major cities drop to $100,000, thanks to some hypothetical

Lets, for the sake of argument, say you could solve the housing crisis instantly. Suddenly, homes in major cities drop to $100,000, thanks to some hypothetical government backed program. The part of the problem that nobody ever seems able to solve, is what you do for existing owners who are locked into a 30 year mortgage on their $1,000,000+ property. You would effectively be wiping out their life savings. There would need to be some way of appeasing the existing owner base, before you can ever solve the housing crisis.

DoreenMichele 8y ago
That's not what I am suggesting at all. I am suggesting we need more small spaces, like SROs (I have already linked to the Wikipedia article on that in a different comment). In the 1950s, most new homes were around 1200 square feet and held about 4.5 people. Today, the typical new home is over 2400 square feet and holds about 3.5 people (IIRC). I see zero reason why 2400 square foot homes would lose any value whatsoever if we built more small homes so people who can't afford a house that big can still afford a place of their own.
- RestlessMind 8y ago
  > I see zero reason why 2400 square foot homes would lose any value whatsoever if we built more small homes One factor why house prices are high is that demand exceeds supply. By building small homes, a lot of demand would be catered to by a new pool of housing. Heck, even those who could afford bigger houses but prefer smaller houses for whatever reasons (eg. frugality) would be removed from demand side. So now there would be a downward pressure on house prices.
  - DoreenMichele 8y ago
    In much of the US, homes are gaining value at better than minimum wage rates per hour. Given that people working minimum wage jobs cannot work 24/7, owning a home is putting money in your pocket faster than a minimum wage job. This means that downward pressure on home prices amounts to slowing hyperinflation to a more reasonable rate. This isn't remotely the same as gutting the equity for existing homeowners (much less putting them "upside down," where they owe more than the house is worth). http://www.worldpropertyjournal.com/real-estate-news/united-states/seattle/2018-zillow-group-consumer-housing-trends-report-2018-minimum-wage-report-home-appreciation-report-for-2018-real-estate-news-10834.php http://www.worldpropertyjournal.com/real-estate-news/united-...

DoreenMichele 8y ago

That's not what I am suggesting at all. I am suggesting we need more small spaces, like SROs (I have already linked to the Wikipedia article on that in a different comment). In the 1950s, most new homes were around 1200 square feet and held about 4.5 people. Today, the typical new home is over 2400 square feet and holds about 3.5 people (IIRC). I see zero reason why 2400 square foot homes would lose any value whatsoever if we built more small homes so people who can't afford a house that big can still afford a place of their own.

RestlessMind 8y ago
> I see zero reason why 2400 square foot homes would lose any value whatsoever if we built more small homes One factor why house prices are high is that demand exceeds supply. By building small homes, a lot of demand would be catered to by a new pool of housing. Heck, even those who could afford bigger houses but prefer smaller houses for whatever reasons (eg. frugality) would be removed from demand side. So now there would be a downward pressure on house prices.
- DoreenMichele 8y ago
  In much of the US, homes are gaining value at better than minimum wage rates per hour. Given that people working minimum wage jobs cannot work 24/7, owning a home is putting money in your pocket faster than a minimum wage job. This means that downward pressure on home prices amounts to slowing hyperinflation to a more reasonable rate. This isn't remotely the same as gutting the equity for existing homeowners (much less putting them "upside down," where they owe more than the house is worth). http://www.worldpropertyjournal.com/real-estate-news/united-states/seattle/2018-zillow-group-consumer-housing-trends-report-2018-minimum-wage-report-home-appreciation-report-for-2018-real-estate-news-10834.php http://www.worldpropertyjournal.com/real-estate-news/united-...