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I'm a renter but please, this is about families protecting the value of the primary asset that they hope to live on in retirement. Home assets don't skyrocket i

I'm a renter but please, this is about families protecting the value of the primary asset that they hope to live on in retirement. Home assets don't skyrocket in value when there is lots of supply. If we frame this thing as reasonable-needs-of-renters vs unreasonable-wants-of-homeowners, then everyone is going to remain at loggerheads.

starpilot 7y ago
Since when is homeownership a requirement for retirement savings? What about IRA's, 401ks? That they chose to stake so much on a more volatile asset is not the fault of the people around them. Should cities sacrifice their urban well-being, pushing people out on the streets and guaranteeing lower-income people can never live there, for the sake of some elderly residents who put their eggs in one basket?
- bbarn 7y ago
  Investment in the market is incredibly volatile compared to real estate. That's why it's called "real" estate.
  - tathougies 7y ago
    No, it's not. In 2008 we saw that that is really not the case. Housing is awful because it's relatively difficult to find an owner and transaction fees are extremely high.
  - throwaway100773 7y ago
    You think that because there isn’t a ticker to tell you your home price every moment from 930-4pm on business days.
logfromblammo 7y ago
The house that the owner lives in is not an asset. It's a durable consumer good. Wanting your home to appreciate in value forever is like expecting your 20-year-old car to sell for more than its sticker price. It really only works for art installations, created by a collaboration of architect, engineer, and builder, with some living space inside. Framed in these terms, most families do not have any significant assets, and a hefty chunk of their resources dedicated to maintaining their gigantic shelter-providing consumer appliance.
- jsharf 7y ago
  If I'm not mistaken, most of the value of the home in places like the Bay area is not the house itself, but the land it sits on. In that case, it's super reasonable to expect it to appreciate in value, just like any other commodity. Arguably more so.
  - _arvin 7y ago
    Location, location, location.
- riazrizvi 7y ago
  So you're saying that a house is not a good investment? That despite a trend in increasing property values over the long term, as we have seen in the data since .. the beginning of cities, that a price correction is coming where homes will return to ... prehistoric levels? I don't see it. Instead look at a sample of home prices in the last twenty years in the Bay Area for example, and graph it against the value of a sample of cars bought in 2000. I suppose it's no surprise that tax laws everywhere do not classify homes as durable goods that depreciate in value.
  - JMTQp8lwXL 7y ago
    Housing returns are so location dependent it's hard to generalize if housing is a "good investment". Historically, buying in the SFBA clearly netted a good return, but what about Flint, Michigan? On the whole, re-invested dividends in an S&P index fund would have better returns than nearly all housing markets -- about 11% annually. The math is more nuanced, since homes mortgages require interest payments, but also offer leverage (only ~20% down payment).
  - trianglesphere 7y ago
    It's the distinction between the building and the land. Buildings usually depreciate over time, but the land appreciates. In the bay area, the value of the land is significantly more than the building which is why so many people tear down houses and rebuild. Where land is cheaper people don't tear down and rebuild houses that have more life in them when they buy a house. Residences are mainly exempted from depreciation, but commercial real estate is allowed to be depreciated because buildings do have a useful life.
lthornberry 7y ago
See my comment above, but the economics of increasing supply are actually much more nuanced, and the majority of current owners would probably not see the value of their assets eroded.
- riazrizvi 7y ago
  I think this is the best point to shout out, in the Bay Area. Show how building projects can alleviate supply concerns for demographics who can't afford your suburban home, and how the increase in population will still help your home price because it will make your fat suburban land parcel look even more exclusive. Everybody wins something.
avocado4 7y ago
Rent seeking is bad for society, by economic definition. People relying on appreciating prices of their homes instead of investing into their productivity growth indicate a bug in the system that needs to be fixed (via increasing supply and possibly LVT).

starpilot 7y ago

Since when is homeownership a requirement for retirement savings? What about IRA's, 401ks? That they chose to stake so much on a more volatile asset is not the fault of the people around them. Should cities sacrifice their urban well-being, pushing people out on the streets and guaranteeing lower-income people can never live there, for the sake of some elderly residents who put their eggs in one basket?

bbarn 7y ago
Investment in the market is incredibly volatile compared to real estate. That's why it's called "real" estate.
- tathougies 7y ago
  No, it's not. In 2008 we saw that that is really not the case. Housing is awful because it's relatively difficult to find an owner and transaction fees are extremely high.
- throwaway100773 7y ago
  You think that because there isn’t a ticker to tell you your home price every moment from 930-4pm on business days.

logfromblammo 7y ago

The house that the owner lives in is not an asset. It's a durable consumer good. Wanting your home to appreciate in value forever is like expecting your 20-year-old car to sell for more than its sticker price. It really only works for art installations, created by a collaboration of architect, engineer, and builder, with some living space inside. Framed in these terms, most families do not have any significant assets, and a hefty chunk of their resources dedicated to maintaining their gigantic shelter-providing consumer appliance.

jsharf 7y ago
If I'm not mistaken, most of the value of the home in places like the Bay area is not the house itself, but the land it sits on. In that case, it's super reasonable to expect it to appreciate in value, just like any other commodity. Arguably more so.
- _arvin 7y ago
  Location, location, location.
riazrizvi 7y ago
So you're saying that a house is not a good investment? That despite a trend in increasing property values over the long term, as we have seen in the data since .. the beginning of cities, that a price correction is coming where homes will return to ... prehistoric levels? I don't see it. Instead look at a sample of home prices in the last twenty years in the Bay Area for example, and graph it against the value of a sample of cars bought in 2000. I suppose it's no surprise that tax laws everywhere do not classify homes as durable goods that depreciate in value.
- JMTQp8lwXL 7y ago
  Housing returns are so location dependent it's hard to generalize if housing is a "good investment". Historically, buying in the SFBA clearly netted a good return, but what about Flint, Michigan? On the whole, re-invested dividends in an S&P index fund would have better returns than nearly all housing markets -- about 11% annually. The math is more nuanced, since homes mortgages require interest payments, but also offer leverage (only ~20% down payment).
- trianglesphere 7y ago
  It's the distinction between the building and the land. Buildings usually depreciate over time, but the land appreciates. In the bay area, the value of the land is significantly more than the building which is why so many people tear down houses and rebuild. Where land is cheaper people don't tear down and rebuild houses that have more life in them when they buy a house. Residences are mainly exempted from depreciation, but commercial real estate is allowed to be depreciated because buildings do have a useful life.

lthornberry 7y ago

See my comment above, but the economics of increasing supply are actually much more nuanced, and the majority of current owners would probably not see the value of their assets eroded.

riazrizvi 7y ago
I think this is the best point to shout out, in the Bay Area. Show how building projects can alleviate supply concerns for demographics who can't afford your suburban home, and how the increase in population will still help your home price because it will make your fat suburban land parcel look even more exclusive. Everybody wins something.

avocado4 7y ago

Rent seeking is bad for society, by economic definition. People relying on appreciating prices of their homes instead of investing into their productivity growth indicate a bug in the system that needs to be fixed (via increasing supply and possibly LVT).