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A lot of people here are playing semantics and ignoring the message of the article just to be "clever". The message of the article is we can't have our "housin
by corysama 8y ago
A lot of people here are playing semantics and ignoring the message of the article just to be "clever". The message of the article is we can't have our "housing values are always increasing" cake and eat our "housing is always affordable" dream too. If we want to keep housing affordable, we'll have to settle for valuations staying pretty much constant in real dollars forever and resign ourselves to be happy with only the savings opportunities everyone here are so cleverly pointing out.
- christophilus 8y agoI’ve been thinking about this a lot lately. I want my children to be able to afford to live near me if they want. I own a house and would gladly relinquish my ability to sell it at a profit if it meant keeping prices affordable for young folks. I’m not sure what the real solution is, though.
- api 8y agoThe instant someone signs a mortgage it becomes in their (cynical) economic best interest to try to keep others from being able to do the same. The only solution I see is state level zoning standardization around pro-density zoning and limitations on NIMBY power.
- i_am_nomad 8y agoPeople choose to buy in neighborhoods they like (if they have a choice). It doesn’t make them cynical schemers if they then don’t want the neighborhood to change.
- romed 8y agoIs there another part of the market where you apply this twisted reasoning? I thought 1992 was a pretty good year for Japanese sports cars. I think building new cars after 1992 should have been illegal. We can keep 1992 cars affordable through price controls.
- api 8y agoThat's the best analogy to NIMBY housing policy I've ever read.
- megablast 8y agoThat says more about you than the analogy.
- trevelyan 8y agoBad analogy. A 1992 car does not change when new models are released to others. But changes to neighbourhoods from increased density can be negative to quality of life, such as having a quiet road suddenly become a connector road for large amounts of commuter traffic (kids no longer playing outside), or schools get overcrowded, or there is standing-room only on the subway for a long commute into town.
- closeparen 8y agoTraffic is a consequence of segregated uses and insufficient density. Densification is how a quiet residential neighborhood might come to support pedestrian life, service its resident’s need without making them get on a collector road, fund additional public transit capacity, etc. Some mid-rise condos down the block are far better than another suburban subdivision a few miles down the road, as traffic goes.
- int_19h 8y agoWhat about all the people who would prefer lower density over all those other things that you mention?
- kspaans 8y agoThe problem is that due to the way most property taxes and house prices work those people are getting a free ride off of the prosperity of the city: a tragedy of the commons. Assuming this quiet neighbourhood is near an urban area with nice jobs/schools/amenities etc, the value of the 'hood is created by the network effects of the city. Growth of the city means growth in the value of that 'hood. The people living there usually aren't doing a lot to increase the value of their properties. But as property assessments lag market values, or the way taxes are structures, those owners can see flat costs for their housing while their values rise. Meanwhile by refusing to add density to their neighbourhood they are driving up the costs for others. When they eventually sell or move they get all of the gains in property value all the while having very low carrying costs. If they wanted a quiet neighbourhood they could move to a smaller town or further out from the city centre, but I don't think they do. If the market were better organized then their behaviour would be dampened by higher taxes as their property values rise. Owners would then have an economic choice: resist density in your 'hood and pay more for that privilege, move somewhere cheaper, or allow more density which will keep costs flat.
- nate_meurer 8y agoThe nature of a NIMBY is to label any change as bad, regardless of the benefits to other people. If that isn't cynical, I don't know what is. Would you defend segregationists, who tried desperately to preserve the racial makeup of their neighborhoods, schools, and buses? It's a rhetorical question of course -- I know you would not. My point is just that your logic can be (and is) used to defend any number of despicable causes. There's no reason our civil society has to put up with with this nonsense.
- dcow 8y agoJust because a certain principle can be used destructively does not mean the principle itself is flawed.
- nate_meurer 8y agoThat's kind of a strange thing to say. I'd argue it's clearly not true in this case. Do you disagree? Can you maybe explain why?
- dcow 8y agoI read your comment as arguing that people who structure their social systems based on conservative principles e.g. we like our neighborhood a certain way so we resist rapid change (barring explicit racism, of course) are a tax on society. I agree with your example and agree that people wanting an explicitly racially segregated community are cynical and racist. But an similarly conservatively principled person may simply prefer a low-density lifestyle and act in ways that resist change for that reason. There may even be scenarios where we can look back and correlate responsible, well meaning, application of certain principles with undesirable social trends, but I don't think that alone invalidates the principle. I don't know if I misread your comment, but it was odd to see a broad critique on conservatives and their principles: > My point is just that your logic can be (and is) used to defend any number of despicable causes. I could use plenty of sound logic to defend despicable causes, but fact that the cause is despicable does not alone invalidate the logic if the logic is sound. When sound logic argues for despicable things (which it often does) we introduce ethics and morality to judge whether we should actually act on the logical conclusion. I think a better way to phrase your comment would be, "We shouldn't have to put up with despicable causes, period". I'm being a little pedantic, yes.
- ajmurmann 8y agoI don't think it's even in their own economic interest. I think it's just fear of the unknown and nostalgia. I'd love it if my neighborhood were to become popular enough for someone deciding that they want to build a skyscraper next to my house. It would mean the land value alone would allow me to retire.
- OpieCunningham 8y agoSure, but before you had a chance to cash out, they tore down the skyscraper and built a fracking well.
- drb91 8y agoWanting to live in your house is not (just, or even primarily) an economic interest. EDIT: clarification
- closeparen 8y agoThe presence of other people on neighboring lots does not stop you from living in your house.
- drb91 8y agoI think I misunderstood. Why would having a mortgage make it desirable to stop others from getting one? Surely you want to fill the neighborhood as much as possible and create public services—this increases the value of everything. NIMBY on the other hand is completely irrational.
- closeparen 8y agoAllowing supply to catch up with demand might crater housing prices to quasi-normal levels, destroying ~70% of most Bay Area homeowners’ net worth.
- wycs 8y agoThe solution is to get rid of zoning laws. Baring some breakthrough in public choice theory allowing us to break out of this mess, I predict we are stuck with this until the robots take over.
- seanmcdirmid 8y agoGetting rid of zoning laws only works if you have a lot of extra land to sprawl out onto. Otherwise, even if you build up to get more dense ala NYC, HK, Tokyo, or Shanghai, the area will just become more attractive and more people will want to live there. No easy solutions here.
- wycs 8y agoYou say that like vastly increasing the productivity of our largest cities is neutral at best. This would create an extraordinary surplus, and other cities that can build out would compete for citizens, just like Texas is doing right now.
- seanmcdirmid 8y agoNo city in Texas is dense, its all sprawl, even in liberal Austin.
- graeme 8y agoI looked into this and Texas still has a lot of pro-sprawl policies, such as mandatory parking minimums. People paint them as no zoning, but that's only on one specific measure.
- barry-cotter 8y agoHousing prices have been more or less flat in Tokyo for 30 years. https://marketurbanismreport.com/tokyos-affordable-housing-strategy-build/ https://marketurbanismreport.com/tokyos-affordable-housing-s... > According to the website RealEstate.co.jp, average housing prices throughout Greater Tokyo have actually decreased since 2006. In 2014, the average price of second-hand condos was 27,890,000 yen, or about $232,914. This is above the U.S. median of $187,000, but is a steal when considering that average housing prices in many destination U.S. cities are triple or quadruple this amount.
- kromem 8y agoLuckily you don't have to do anything to make that happen. Housing is going to correct in a serious way, and soon. Quantitative easing artificially keeping lending rates low screwed the housing market. That's in the process of correcting in a major way. At the same time, the increasing rates are going to hit the stock market in a bad way, decreasing general liquidity for down payments. The real headline is: "you can't keep high prices and increase mortgage rates amidst stagnant incomes." A few other considerations: Baby boomers are a huge population. The generations afterwards simply don't match their numbers. That generation is still primarily homeowners. As they age, that's no longer going to be the case, and the supply constrained market is going to reverse as houses get handed down or put on the market. New developments and construction/renovation are targeting higher-end buyers, which makes affordable housing hard to find. But as everyone races to chase the higher end buyer, eventually there's going to be an over-supply and the market will tank. This was in part one of the contributing factors to the 2008 crash - new developments ended up as wastelands that eventually ended up as "affordable" housing because the buyers disappeared. Personally, even though I'm open to buying a house at the moment, I'm staying the heck away from the market. I'm already seeing properties in my area sold a few months ago put back on the market initially for more, but then dropping the price below what they bought at. We're approaching the cusp of the upward wave, and as rates increase, a lot of people that bought in the past two years are going to be stuck with whatever they bought into for a good while.
- pfooti 8y agoWhile I don't disagree with a lot of your argument, according to some preliminary research it seems like there's about as many millennials as boomers. Like 77 million boomers, 65 million gen x, 75 million gen y.
- Mtinie 8y agoThe count is less important than the buying power. Millennials, as a group, have significantly less buying power than their Baby Boomer peers at the same point in their lives. One source, but eye-opening if you can believe/trust the underlying data: "Only a third of millennials own their own home, compared with almost two-thirds of baby boomers at the same age. It will take a millennial on average 19 years to save for a deposit, compared[0] with three years in the 1980s. A third of millennials will, it is predicted, have a lifetime of renting with less space, poorer conditions, longer commutes and more insecurity than the baby boomers experienced."[1] ----- [0] https://www.resolutionfoundation.org/publications/home-improvements-action-to-address-the-housing-challenges-faced-by-young-people/ https://www.resolutionfoundation.org/publications/home-impro... [1] https://www.theguardian.com/society/2018/apr/29/millennials-struggling-is-it-fault-of-baby-boomers-intergenerational-fairness https://www.theguardian.com/society/2018/apr/29/millennials-....
- madengr 8y agoThen why don’t you do just that? Sell it cheaply to young folks.
- Alex3917 8y ago> If we want to keep housing affordable, we'll have to settle for valuations staying pretty much constant in real dollars forever This is basically the argument for buying into a co-op rather than buying an apartment. You aren't allowed to flip them for a profit, which means they're less expensive because you're giving up optionality. (At least when they actually are implemented as originally intended.) To me this makes a ton of sense, because there are a lot of benefits to home ownership for both the individual and society, but real estate generally isn't a good place to put investible dollars unless you're super wealthy and just want some (relatively) predictable income from renters. What we really need though is public housing for the middle class and upper middle class, rather than just for low-income families. Right now public housing is basically just a scam to transfer money from the middle class to the super wealthy by using money from the middle class to subsidize labor at below a living wage, when in reality everyone needs a house so it's a textbook example of a market where there should be a public option.
- bko 8y agoCo ops are just apartments whose land is owned by a corporation. The corporation usually has a perpetual interest only loan on the land. So when you buy a co op you are leasing the land and own a share in the apartment. You tend to give up options but no one really benefits. I don’t know other markets but condos in nyc are prob 30-50% more valuable in part due to these options. It’s cheaper but only because it’s objectively worse as anyone who had to deal with a co op board can attest. You can make things cheaper by making hem less valuable sure, but that’s just destroying value for no reason. Imagine you don’t like how expensive cars are so you make it so that you need a background check and waiting period to buy a car. Will new car prices go down? Probably, but that’s not a good thing
- quadrangle 8y agoA cohousing community done well can be a dramatically superior quality of life worth extra cost. https://www.youtube.com/watch?v=DmWrx0ntATU https://www.youtube.com/watch?v=DmWrx0ntATU
- 8y ago
- ggggtez 8y agoExcept that governments are free to create arbitrary laws. So there certainly are a number of schemes the government can use to balance these two things, though most people would claim they are "socialist" because many revolve around subsidizing first time homeowners.
- twblalock 8y agoSubsidizing homeowners does not hold prices down. It may actually help prices to increase, as everyone knows that they will be able to sell homes at higher prices because the government will continue to help people pay for them.
- ggggtez 8y agoI don't see the problem. You are adding in this extra "hold prices down" that isn't required.
- kamaal 8y ago>> The message of the article is we can't have our "housing values are always increasing" cake and eat our "housing is always affordable" dream too. Replace housing, with salary and you will see why your argument isn't entirely right. Should salaries/wages increase over time? yes. Should labor and employees remain affordable to employers? yes. Are both possible? yes. The right question is who is paying, and what are they paying for. Plus at the end housing is subject to the same laws of economics. Demand, supply equations, timing, value with regards to location and proximity to city enters, school districts etc. You can't talk of home prices from one dimension alone.
- shrimpx 8y agoI think you're basically saying that for housing to stay affordable, entry level housing should lower in quality over time. If you buy an entry level house today for price X, and you expect it to be worth X*k at some future time, and you expect other people to still buy houses for X at that future time, then those houses have to be lower quality.
- nadezhda18 8y agoOr maybe just smaller?
- twblalock 8y agoIf X is adjusted for inflation then the quality can stay the same as long as the supply/demand curve doesn't shift. As population increases, you need to increase supply to achieve that.
- ccostes 8y agoReplacing housing with salary, it doesn't seem obvious that the answer is yes, though. Quick Google for wage vs inflation came up with this, which appears to show that real wages actually haven't increased when you account for inflation. Maybe I'm missing something, but your point doesn't feel quite as self-evident as you imply. http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades http://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-...
- philwelch 8y ago> The message of the article is we can't have our "housing values are always increasing" cake and eat our "housing is always affordable" dream too. Sure you can, as long as you have enough overall economic growth. It won't be a particularly great investment in the sense of growing at a faster pace than the surrounding economy, but it will at least keep pace, and you can live in it meanwhile, and you can borrow money for it, so it's leveraged, unlike most of your investments.
- Mtinie 8y ago"Net positive" works only as long as it works...until it doesn't. Overall economic growth may be "real" in the sense that is it growing organically, or it may be a complete fiction based on quantitative easing and manipulated stock prices. It is likely both, but like Bernie Madoff's scheme, the question will be whether you're someone who made a profit during the "good" years or those who took a bath once the scheme unraveled.
- philwelch 8y agoThe only hard ceiling on real economic growth is Kardashev II at the very least, if not Kardashev III; until then, the material wealth of the human race is either going to continue to grow, or else we will have big enough problems that canned beans and water purification tablets are the only meaningful investments anyway. And those beans and tablets are going to be a lot easier to hold onto if you own a house ;)
- Mtinie 8y agoThat’s brilliant. Can I count you in as a de-anonymized co-founder of the all-important, infinitely-divisible “Strategic Water Purification Tablet Reserves”-backed cryptotoken ICO? Edit for clarity: You’re probably right. I thought it would be an apropos time to slip in a blockchain joke. :)
- BurningFrog 8y agoYes, and that would be a wonderful thing. Or if we love constantly increasing prices so much, why not have it on food, computers and everything else?
- twblalock 8y ago> Or if we love constantly increasing prices so much, why not have it on food, computers and everything else? We do have that, via inflation.
- BurningFrog 8y agoI take it you don't follow the used computer market closely.
- danieltillett 8y agoGiven the supply of land is fixed (the old real estate joke about their not making any more) while the population and the economy are both growing, we should expect to see a rise in land values over time in real terms. Housing land (houses are a deprecating asset) should be an asset class that mirrors population and economic growth.
- drb91 8y agoThere are millions of empty houses. We need remote work more than anything.
- twblalock 8y agoThe supply of land is fixed but it's not full yet, and filling it up with single-story buildings is a practice that can certainly be improved upon. The obstacle to building new housing is not the availability of land, it is the zoning laws. Even a geographically constrained place like San Francisco, surrounded by water on three sides, could accommodate far more housing units simply by building taller structures.
- drb91 8y agoAt this point the car centric nature of the city and relatively poor public transit are far bigger barriers to growth.
- 8y ago
- a_d 8y agoThis is exactly right - infact, because some people might consider housing in Bay Area to be a good investment, we can try to make it affordable for others. This is the project we’ve been working on for the last month or so: https://zerodown.com/ https://zerodown.com/
- rv-de 8y ago> A lot of people here are playing semantics and ignoring the message of the article just to be "clever". Welcome to Hacker News!