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If you drive down home costs in hyper inflated cities in California, where people got legitimate loans on that hyper inflation, who is left holding the bag? Som

by kodah 6y ago

If you drive down home costs in hyper inflated cities in California, where people got legitimate loans on that hyper inflation, who is left holding the bag? Someone has to pay that debt that is now worthless due to decreased inflation, right? This problem perplexes me, because it seems like it's a runaway train once it gets started.

DoreenMichele 6y ago
A place to start is simply put a stop to the hyper-inflation. Housing costs do not have to come down as your first step. Just stop having them double every other day, so to speak, and you will start easing some of these issues.
- kodah 6y ago
  Agreed, I'm just puzzled at what the end state is. Would we expect that everyone who moves in and out of this area takes a gradual loss on home prices until they normalize, do we have financial tools for mitigating it, will the tax payers pay the cost? These are some of the options I've had run through my head.
  - DoreenMichele 6y ago
    Look, no one needs to take a loss on anything, per se. First, we tend to build really huge homes. Make it possible to build small homes and that makes it possible to increase housing supply without tanking the price of the large houses. Second, remove some of the tax protections that make housing super cheap for people who have owned it a long time already. This is a major issue in California and it's one people aren't going to want fixed. It is a subsidy for The Haves who got in before prices went up and intentionally locked in their low costs and pulled the ladder up behind them. Their prices are low. It's everyone else who is paying for that. You don't have to tank the prices on real estate in California to begin remedying this. Believing you do is part of the problem. Start bringing down administrative costs and administrative barriers to building more housing. Ease up the choke hold on the supply. You can have both "more butter and more guns" if you help people make their lives work. It's amazingly hard to be a productive member of society while sleeping in a tend and dodging the police. Getting back into housing tends to bring costs down while improving ability to earn, etc. Stop flushing the lives of The Have Nots down the toilet in the name of preserving wealth for the privileged few. It does not have to be a tragedy for the already privileged to dump less on the less privileged.
    - majormajor 6y ago
      Densification definitely isn't going to hurt many people's property values in the long term. Your 5000sqft lot could now be sold to someone who's going to build 10 units on it? That's still gonna be worth a lot of money. That one's just a matter of messaging. I think you have bigger hurdles around: * people want to have the same type of housing as they do today, or the opportunity to buy one of those less-dense single family homes in the future. If it's expensive, they can save up - or at least dream about it. If it's replaced with apartments, the option is gone entirely. However, there's lots of low-density commercial and industrial that can be upzoned instead! But if you're demonizing the suburbs and the single-family homes, instead of the single-use strip mall, you're asking for a lot more political opposition. * and the biggest one to me: it takes SO LONG to build projects. You need streamlined plan approval, more labor availability, and a lot of money to do things in parallel instead of sequentially. Doing things in parallel also helps with some of the short-term property value hits you might otherwise get from a slowly-changing area. But the only way you stop the land value appreciation is if people move out of the cities and the demand evaporates. And that's more likely if homelessness continues to increase than if you start doing something about the bottom of the housing market. Otherwise, a more populous city doesn't have lower land prices - look at Manhattan, SF, LA vs the rural US.
      - DoreenMichele 6y ago
        Some decades back during a big crisis, Athens, Greece managed to solve its issues. It was a grass roots movement that the government basically rubber-stamped. https://www.reddit.com/r/HousingWorks/comments/l6im7f/why_does_athens_look_so_quirky/ https://www.reddit.com/r/HousingWorks/comments/l6im7f/why_do... https://www.reddit.com/r/CitizenPlanners/comments/lslfqg/meet_the_13yearold_guerrilla_swingbuilder_making/gqj229q/?utm_source=reddit&utm_medium=web2x&context=3 https://www.reddit.com/r/CitizenPlanners/comments/lslfqg/mee... People may well end up moving out of the big cities. But unless you are expecting a population crash for humanity globally, we just need more housing somewhere in the US. I suspect California is so hard hit in part because we actively export homelessness from other states to California because the dry, temperate weather means sleeping outside isn't much of a hardship. And then there are myriad barriers to getting back into housing that help keep people long-term homeless once you are there. It can be difficult to physically leave California on foot: https://news.ycombinator.com/item?id=21309036 https://news.ycombinator.com/item?id=21309036 Climate: https://streetlifesolutions.blogspot.com/2019/10/climate-and-unsheltered-homeless-in.html https://streetlifesolutions.blogspot.com/2019/10/climate-and... For every 100 families living in poverty on the West Coast, there are no more than 30 affordable homes https://www.geekwire.com/2018/every-100-families-living-poverty-west-coast-no-30-affordable-homes/ https://www.geekwire.com/2018/every-100-families-living-pove... Across the US we need to be resolving our housing issues rooted in decades of housing policy gone awry. That's one of the things that needs to happen here.
vkou 6y ago
It is indeed a runaway train, and there are three groups it might hit. Homeowners, lenders, or taxpayers. Pick your poison.
whimsicalism 6y ago
> This problem perplexes me, because it seems like it's a runaway train once it gets started. Buying a house that you plan to resell is an investment. You don't have a right to a profitable investment, especially not one appreciating at the price that they are in California.
- kodah 6y ago
  Agreed. That said, a huge portion of metropolitan California cities are stricken with inflation. If you drive down the cost of every home that's $3M to $800 across a majority of the city, where most people have loans for $3M then your good faith action may actually bankrupt your city and it's citizens over night. That's what we're discussing here.
  - whimsicalism 6y ago
    I have so many objections to this line of thought. 1. We are so far from building enough to even lower the price of houses, let alone depreciate them from $3m to $800k. 2. The idea that most residents in SF have outstanding debts of $3m is just.. you need to get out in this city a little more. 3. Play stupid games, win stupid prizes. If there is even a possibility that with more building, the cost of your home would go from $3m to $800k, you shouldn't be going into debt if you are planning on not living in this home for the rest of your life.
    - kodah 6y ago
      First, I'm not projecting any kind of line of thought. Trace back my comments and I'm asking questions, because I genuinely do not know. It seems like there's a lot of directions to go but no definitive answers (what I referred to as a runaway train) Not everyone is here to argue with you, some of us are here to ask some thought provoking questions that we genuinely don't know the potential answers to. Second, I don't live in SF, I live in a different area. Inflation is an issue here too, and I am genuinely concerned about how remedies would impact not only people directly but the city and the state. If California or it's cities do bad, there are implications across the country. Telling me to "get out of the city" is a confusing statement given that I know people that have these kinds of debts. Three sounds like an empathy problem, so we can skip that one.
gmadsen 6y ago
someone that can afford a 1 million dollar house, is not someone who will be financially ruined if that house drops to $700k
- andy-x 6y ago
  That someone will be ruined if her/his mortgage is $800k and house has to be sold.

by kodah 6y ago

DoreenMichele 6y ago

A place to start is simply put a stop to the hyper-inflation. Housing costs do not have to come down as your first step. Just stop having them double every other day, so to speak, and you will start easing some of these issues.

kodah 6y ago
Agreed, I'm just puzzled at what the end state is. Would we expect that everyone who moves in and out of this area takes a gradual loss on home prices until they normalize, do we have financial tools for mitigating it, will the tax payers pay the cost? These are some of the options I've had run through my head.
- DoreenMichele 6y ago
  Look, no one needs to take a loss on anything, per se. First, we tend to build really huge homes. Make it possible to build small homes and that makes it possible to increase housing supply without tanking the price of the large houses. Second, remove some of the tax protections that make housing super cheap for people who have owned it a long time already. This is a major issue in California and it's one people aren't going to want fixed. It is a subsidy for The Haves who got in before prices went up and intentionally locked in their low costs and pulled the ladder up behind them. Their prices are low. It's everyone else who is paying for that. You don't have to tank the prices on real estate in California to begin remedying this. Believing you do is part of the problem. Start bringing down administrative costs and administrative barriers to building more housing. Ease up the choke hold on the supply. You can have both "more butter and more guns" if you help people make their lives work. It's amazingly hard to be a productive member of society while sleeping in a tend and dodging the police. Getting back into housing tends to bring costs down while improving ability to earn, etc. Stop flushing the lives of The Have Nots down the toilet in the name of preserving wealth for the privileged few. It does not have to be a tragedy for the already privileged to dump less on the less privileged.
  - majormajor 6y ago
    Densification definitely isn't going to hurt many people's property values in the long term. Your 5000sqft lot could now be sold to someone who's going to build 10 units on it? That's still gonna be worth a lot of money. That one's just a matter of messaging. I think you have bigger hurdles around: * people want to have the same type of housing as they do today, or the opportunity to buy one of those less-dense single family homes in the future. If it's expensive, they can save up - or at least dream about it. If it's replaced with apartments, the option is gone entirely. However, there's lots of low-density commercial and industrial that can be upzoned instead! But if you're demonizing the suburbs and the single-family homes, instead of the single-use strip mall, you're asking for a lot more political opposition. * and the biggest one to me: it takes SO LONG to build projects. You need streamlined plan approval, more labor availability, and a lot of money to do things in parallel instead of sequentially. Doing things in parallel also helps with some of the short-term property value hits you might otherwise get from a slowly-changing area. But the only way you stop the land value appreciation is if people move out of the cities and the demand evaporates. And that's more likely if homelessness continues to increase than if you start doing something about the bottom of the housing market. Otherwise, a more populous city doesn't have lower land prices - look at Manhattan, SF, LA vs the rural US.
    - DoreenMichele 6y ago
      Some decades back during a big crisis, Athens, Greece managed to solve its issues. It was a grass roots movement that the government basically rubber-stamped. https://www.reddit.com/r/HousingWorks/comments/l6im7f/why_does_athens_look_so_quirky/ https://www.reddit.com/r/HousingWorks/comments/l6im7f/why_do... https://www.reddit.com/r/CitizenPlanners/comments/lslfqg/meet_the_13yearold_guerrilla_swingbuilder_making/gqj229q/?utm_source=reddit&utm_medium=web2x&context=3 https://www.reddit.com/r/CitizenPlanners/comments/lslfqg/mee... People may well end up moving out of the big cities. But unless you are expecting a population crash for humanity globally, we just need more housing somewhere in the US. I suspect California is so hard hit in part because we actively export homelessness from other states to California because the dry, temperate weather means sleeping outside isn't much of a hardship. And then there are myriad barriers to getting back into housing that help keep people long-term homeless once you are there. It can be difficult to physically leave California on foot: https://news.ycombinator.com/item?id=21309036 https://news.ycombinator.com/item?id=21309036 Climate: https://streetlifesolutions.blogspot.com/2019/10/climate-and-unsheltered-homeless-in.html https://streetlifesolutions.blogspot.com/2019/10/climate-and... For every 100 families living in poverty on the West Coast, there are no more than 30 affordable homes https://www.geekwire.com/2018/every-100-families-living-poverty-west-coast-no-30-affordable-homes/ https://www.geekwire.com/2018/every-100-families-living-pove... Across the US we need to be resolving our housing issues rooted in decades of housing policy gone awry. That's one of the things that needs to happen here.

vkou 6y ago

It is indeed a runaway train, and there are three groups it might hit. Homeowners, lenders, or taxpayers. Pick your poison.

whimsicalism 6y ago

> This problem perplexes me, because it seems like it's a runaway train once it gets started. Buying a house that you plan to resell is an investment. You don't have a right to a profitable investment, especially not one appreciating at the price that they are in California.

kodah 6y ago
Agreed. That said, a huge portion of metropolitan California cities are stricken with inflation. If you drive down the cost of every home that's $3M to $800 across a majority of the city, where most people have loans for $3M then your good faith action may actually bankrupt your city and it's citizens over night. That's what we're discussing here.
- whimsicalism 6y ago
  I have so many objections to this line of thought. 1. We are so far from building enough to even lower the price of houses, let alone depreciate them from $3m to $800k. 2. The idea that most residents in SF have outstanding debts of $3m is just.. you need to get out in this city a little more. 3. Play stupid games, win stupid prizes. If there is even a possibility that with more building, the cost of your home would go from $3m to $800k, you shouldn't be going into debt if you are planning on not living in this home for the rest of your life.
  - kodah 6y ago
    First, I'm not projecting any kind of line of thought. Trace back my comments and I'm asking questions, because I genuinely do not know. It seems like there's a lot of directions to go but no definitive answers (what I referred to as a runaway train) Not everyone is here to argue with you, some of us are here to ask some thought provoking questions that we genuinely don't know the potential answers to. Second, I don't live in SF, I live in a different area. Inflation is an issue here too, and I am genuinely concerned about how remedies would impact not only people directly but the city and the state. If California or it's cities do bad, there are implications across the country. Telling me to "get out of the city" is a confusing statement given that I know people that have these kinds of debts. Three sounds like an empathy problem, so we can skip that one.

gmadsen 6y ago

someone that can afford a 1 million dollar house, is not someone who will be financially ruined if that house drops to $700k

andy-x 6y ago
That someone will be ruined if her/his mortgage is $800k and house has to be sold.