6 ms·

I'm an American and it's dawned on me recently how absolutely bonkers it is that we see housing--a basic human need--as something to make a profit from. Foreig

I'm an American and it's dawned on me recently how absolutely bonkers it is that we see housing--a basic human need--as something to make a profit from. Foreign-owned houses/land left vacant for most of the year is definitely a symptom of this problem.

JMTQp8lwXL 7y ago
Housing held for investment, which is usually rented out, is tied to the economic realities (e.g., wages) of a given area. People can only afford to pay so much. You can always choose to rent or buy. Prices to buy are quite high in hot markets. But the cost to rent will be tied to wages. So, the basic human need should still be getting met. Ownership, though, is becoming a smaller and smaller pool-- which meets the ongoing trend of progressively growing income inequality.
- alexgmcm 7y ago
  This is a timebomb though - how is a generation that hasn't been able to buy a house and accumulate equity/wealth, meant to be able to retire?
  - JMTQp8lwXL 7y ago
    Compare the delta between what you'd spend on rent versus a mortgage (all in costs-- principal, interest, taxes, and insurance. "PITI", they are collectively called). Take the difference and invest it. I'll admit this won't work for everybody, since behaviorally most people spend their whole paycheck (without saving any of it), but there are plenty of low-cost index fund providers that have minimum investment requirements far below the cost of putting 20% down on a house.
    - asdff 7y ago
      There is no house in LA where you can't take an arbitrary 10 year period and make money even if you bought in 2007 on the eve of the recession. We've reached the point where even putting 5% down on the median house is unaffordable to massive swaths of the population in southern california. The median is 600k now, who the hell can afford to drop 30k in a world where the median student loan debt is 40k? Not to mention something like 40% of americans can't come up with $400 cash without selling something or taking out a loan. Of course you save on a mortgage, in LA you profit on nearly every mortgage no matter what. But that benefit is limited to the class of people who can afford to put money down, and that class is a minority in CA.
      - alexgmcm 7y ago
        Exactly, in my European city that delta he talks about would be negative. Plus since the crisis the banks will only lend with 20% deposit, plus 10% taxes - so you need a 30% downpayment. Given a flat will cost you around 180k euros you can see why home ownership is in decline, because no-one has 60k euros lying around when the average tech salary is 30-40k euros and the average normal salary around 20k.
- linkregister 7y ago
  This is only the case if everyone has to stay in their city. We are already seeing jobs migrate to smaller metros in the United States in order to reduce wage costs. Employees will follow, and pressure will reduce. We see this with the large investment banks and internet companies. Before this, we saw this with the large manufacturers. Believe it or not, cars used to actually be manufactured in Detroit city limits. Baltimore was full of canneries, etc. I'll be the first to admit it sucks, and I don't feel like moving ---I selfishly want other people to move. I also selfishly want other people to buy condos so I can live in a single family house. But life is full of such tradeoffs for those making less than the top 99% or so of their region's income.
- pixl97 7y ago
  Being that rents have dramatically increased in the US in almost all places while wages have not seems to put some dents in your theory. Also rent is becoming an ever larger expense in almost everyone's budget. I have a feeling we are playing the "market can remain irrational longer than an individual can remain solvent" game yet again, especially propped up by low rates of borrowing that's going to explode in our face yet again.
  - JMTQp8lwXL 7y ago
    Rents increased because people can afford it, at the expense of everything else in their budget. If it was "too much", they wouldn't pay it-- the sacrifices would become too big, to the point where living on the street or sleeping in their car would look like a better option. For that to happen, rents would have to be so high you might be deciding between food and a place to a sleep. We're far from that.
    - asdff 7y ago
      We aren't in LA which has 60k people living on the streets and many more on the brink. What happens when rents get too high is that you ultimately grind your city to a halt because you start making the apartment disproportionately available to certain occupations. Sure, the software engineers move into the apartment and the janitors move out, but you still need janitors, you still need service workers, you still need these low wage jobs to actually make a city function. So now the janitor moves to a place that's 2 hours away and still needs that job where he used to live, so he buys a dirt cheap car and commutes from where it is affordable (which doesn't have any jobs for him) to where he works. Roads get clogged, road maintenance costs increase, pollution increases, the costs to repair things increases because you gotta pay people more to spend more time getting to the job site, services are hindered, goods deliveries are hindered because now everyone is spread out across a 500mi suburban area instead of being close together in a dense and sustainable urban area, and we end up with the LA we see today: a hellhole for the working class, but a boon for the few people with capital to grow. There is a limit for lateral growth and it's already been reached in LA in the 40s. They built highways which were a temporary reprieve for the traffic, but now those are clogged as badly as the avenues were in the 40s (and still are today). It's been time for vertical growth and transit, which is how much of the city was originally planned, with a vast interurban rail network spanning the entire basin and the valleys that made the NYC subway seem paltry.
elgenie 7y ago
It's just as bonkers as people profiting from providing food--a basic human need-- … which is to say not at all. There's no difference between somebody 3000 miles away in the US owning property and renting it out and somebody in China owning that property and renting it out. The problem is housing stock being underused, but that (a) can be addressed via taxation and (b) is no different from stuff like empty nesters keeping their 4 bedroom house after the kids move away.
- chillacy 7y ago
  Food is at least a healthy market, look to other human needs which are regulated like pharmaceuticals and you’d see that people get very upset about it.
  - fulafel 7y ago
    A major way in which pharmaceuticals are regulated is to enforce western monopolies internationally so that poor people are priced out of getting them.
- blub 7y ago
  There's a big difference: it's more likely that someone from your community shares cultural values and is interested in building a sustainable community. To the person living at the other end of the world you're just a source of income.
swebs 7y ago
>how absolutely bonkers it is that we see housing--a basic human need--as something to make a profit from The concept of restaurants must really blow your mind.
- rwmj 7y ago
  Do you know that food and farming is heavily regulated and subsidised?
  - swebs 7y ago
    Sure, same with housing
CalRobert 7y ago
We're human. We see _everything_ as something to make a profit from, and will do so if the system allows it. Even if you don't want to, _somebody_ will, so you're a chump if you don't. The solution here is to fix the system allowing it (after all, the above logic could apply to slavery just as easily). For starters, break up the housing cartels, also known as "community planning boards".
basementcat 7y ago
People also manage to make a profit from food, water, electricity, employment, medicine and so on.
- pixl97 7y ago
  If you've not noticed that with the rapid increase in the costs of medicine and its exploitation people are starting to die. Unless you want to go back to a world where some percentage of people die from lack of shelter of the rich can make massive profits it might take a little rethinking of your position.

JMTQp8lwXL 7y ago

Housing held for investment, which is usually rented out, is tied to the economic realities (e.g., wages) of a given area. People can only afford to pay so much. You can always choose to rent or buy. Prices to buy are quite high in hot markets. But the cost to rent will be tied to wages. So, the basic human need should still be getting met. Ownership, though, is becoming a smaller and smaller pool-- which meets the ongoing trend of progressively growing income inequality.

alexgmcm 7y ago
This is a timebomb though - how is a generation that hasn't been able to buy a house and accumulate equity/wealth, meant to be able to retire?
- JMTQp8lwXL 7y ago
  Compare the delta between what you'd spend on rent versus a mortgage (all in costs-- principal, interest, taxes, and insurance. "PITI", they are collectively called). Take the difference and invest it. I'll admit this won't work for everybody, since behaviorally most people spend their whole paycheck (without saving any of it), but there are plenty of low-cost index fund providers that have minimum investment requirements far below the cost of putting 20% down on a house.
  - asdff 7y ago
    There is no house in LA where you can't take an arbitrary 10 year period and make money even if you bought in 2007 on the eve of the recession. We've reached the point where even putting 5% down on the median house is unaffordable to massive swaths of the population in southern california. The median is 600k now, who the hell can afford to drop 30k in a world where the median student loan debt is 40k? Not to mention something like 40% of americans can't come up with $400 cash without selling something or taking out a loan. Of course you save on a mortgage, in LA you profit on nearly every mortgage no matter what. But that benefit is limited to the class of people who can afford to put money down, and that class is a minority in CA.
    - alexgmcm 7y ago
      Exactly, in my European city that delta he talks about would be negative. Plus since the crisis the banks will only lend with 20% deposit, plus 10% taxes - so you need a 30% downpayment. Given a flat will cost you around 180k euros you can see why home ownership is in decline, because no-one has 60k euros lying around when the average tech salary is 30-40k euros and the average normal salary around 20k.
linkregister 7y ago
This is only the case if everyone has to stay in their city. We are already seeing jobs migrate to smaller metros in the United States in order to reduce wage costs. Employees will follow, and pressure will reduce. We see this with the large investment banks and internet companies. Before this, we saw this with the large manufacturers. Believe it or not, cars used to actually be manufactured in Detroit city limits. Baltimore was full of canneries, etc. I'll be the first to admit it sucks, and I don't feel like moving ---I selfishly want other people to move. I also selfishly want other people to buy condos so I can live in a single family house. But life is full of such tradeoffs for those making less than the top 99% or so of their region's income.
pixl97 7y ago
Being that rents have dramatically increased in the US in almost all places while wages have not seems to put some dents in your theory. Also rent is becoming an ever larger expense in almost everyone's budget. I have a feeling we are playing the "market can remain irrational longer than an individual can remain solvent" game yet again, especially propped up by low rates of borrowing that's going to explode in our face yet again.
- JMTQp8lwXL 7y ago
  Rents increased because people can afford it, at the expense of everything else in their budget. If it was "too much", they wouldn't pay it-- the sacrifices would become too big, to the point where living on the street or sleeping in their car would look like a better option. For that to happen, rents would have to be so high you might be deciding between food and a place to a sleep. We're far from that.
  - asdff 7y ago
    We aren't in LA which has 60k people living on the streets and many more on the brink. What happens when rents get too high is that you ultimately grind your city to a halt because you start making the apartment disproportionately available to certain occupations. Sure, the software engineers move into the apartment and the janitors move out, but you still need janitors, you still need service workers, you still need these low wage jobs to actually make a city function. So now the janitor moves to a place that's 2 hours away and still needs that job where he used to live, so he buys a dirt cheap car and commutes from where it is affordable (which doesn't have any jobs for him) to where he works. Roads get clogged, road maintenance costs increase, pollution increases, the costs to repair things increases because you gotta pay people more to spend more time getting to the job site, services are hindered, goods deliveries are hindered because now everyone is spread out across a 500mi suburban area instead of being close together in a dense and sustainable urban area, and we end up with the LA we see today: a hellhole for the working class, but a boon for the few people with capital to grow. There is a limit for lateral growth and it's already been reached in LA in the 40s. They built highways which were a temporary reprieve for the traffic, but now those are clogged as badly as the avenues were in the 40s (and still are today). It's been time for vertical growth and transit, which is how much of the city was originally planned, with a vast interurban rail network spanning the entire basin and the valleys that made the NYC subway seem paltry.

elgenie 7y ago

It's just as bonkers as people profiting from providing food--a basic human need-- … which is to say not at all. There's no difference between somebody 3000 miles away in the US owning property and renting it out and somebody in China owning that property and renting it out. The problem is housing stock being underused, but that (a) can be addressed via taxation and (b) is no different from stuff like empty nesters keeping their 4 bedroom house after the kids move away.

chillacy 7y ago
Food is at least a healthy market, look to other human needs which are regulated like pharmaceuticals and you’d see that people get very upset about it.
- fulafel 7y ago
  A major way in which pharmaceuticals are regulated is to enforce western monopolies internationally so that poor people are priced out of getting them.
blub 7y ago
There's a big difference: it's more likely that someone from your community shares cultural values and is interested in building a sustainable community. To the person living at the other end of the world you're just a source of income.

swebs 7y ago

>how absolutely bonkers it is that we see housing--a basic human need--as something to make a profit from The concept of restaurants must really blow your mind.

rwmj 7y ago
Do you know that food and farming is heavily regulated and subsidised?
- swebs 7y ago
  Sure, same with housing

CalRobert 7y ago

We're human. We see _everything_ as something to make a profit from, and will do so if the system allows it. Even if you don't want to, _somebody_ will, so you're a chump if you don't. The solution here is to fix the system allowing it (after all, the above logic could apply to slavery just as easily). For starters, break up the housing cartels, also known as "community planning boards".

basementcat 7y ago

People also manage to make a profit from food, water, electricity, employment, medicine and so on.

pixl97 7y ago
If you've not noticed that with the rapid increase in the costs of medicine and its exploitation people are starting to die. Unless you want to go back to a world where some percentage of people die from lack of shelter of the rich can make massive profits it might take a little rethinking of your position.