6 ms·

People made vastly more money just sitting around in their houses in the past couple years than I made in my job as an "essential" worker over the past decade.

People made vastly more money just sitting around in their houses in the past couple years than I made in my job as an "essential" worker over the past decade. This is not an accident. It’s a result of deliberate policy choices. The incumbent homeowners voted themselves massive returns. And they felt self righteous while they were doing it to boot.

e40 5y ago
What are you talking about?
- mindslight 5y ago
  The Federal Reserve's overt mission is to dump new money into the economy to create inflation. But since they only pump it into the overgrown financial sector, we get asset inflation rather than general price inflation. Every time interest rates are lowered, land prices go up, because the monthly (financial) rent remains the same. Similarly with down payments (20% -> 5%). The next step will be lengthening mortgage terms past 30 years. Each of these steps is aimed at making it more affordable to buy a house, but economic feedback makes sure that is only temporary. Meanwhile as asset valuations go up, one's ability to ever pay off that mortgage goes down.
  - duped 5y ago
    Their dual mandate is to maximize employment and manage inflation. Their mission is exactly not to create inflation (or at least, too much of it).
    - mindslight 5y ago
      "Manage" inflation means to create it. An economy naturally tends towards price deflation, through optimization and technological progress. Business looking for ways to cut costs to compete is intrinsic to a market.
      - warkdarrior 5y ago
        Maybe a competitive economy tends towards deflation. In economies dominated by monopolies/oligopolies, price deflation is not a given.
  - bradleyjg 5y ago
    Each step is aimed at increasing the wealth of incumbent homeowners, not making housing more affordable. The economists at the Fed and GSEs are not stupid.
    - imtringued 5y ago
      The Fed mostly wants to decrease unemployment via 2% inflation. The conventional wisdom is that supply side stimulus will create companies that hire workers. So handing out loans should do the trick. Yeah, except building housing which is one of the easiest ways to employ people is illegal.
      - bradleyjg 5y ago
        Why buy specifically mortgage linked instruments? There are lots of other ways to drop money from helicopters. I don’t think that choice was an accident.
  - imtringued 5y ago
    The problem with relying on interest rates is that cash provides a lower bound of 0%. It's simply impossible to go negative on deposits without at least abolishing cash. Relying on the federal government doesn't work because the republicans are uncooperative. So the only measure left is to just bypass everything and hand out money directly. I'm actually hoping that the pandemic raises the inflation rate to 2% over the long term and that no intervention becomes necessary in the future. Given enough inflation, interest rates will go up and then we can start getting rid of zombie companies, increase productivity growth and have growing wages again.
    - mindslight 5y ago
      I see where you're coming from and it would be great if it happened that way. But the deflationary pull is getting ever stronger with technology - the more productive we are, the cheaper things should become. So the Fed's actions are the result of having a mandate that is directly incompatible with the technological goal of working less. If we switched to embracing deflation, then people could retire earlier knowing their savings would definitively appreciate in value, rather than having to hope on faux bubble "investments" that are mainly whims of more centralized government policy. But that seems to be politically impossible. So another way to approach it would be to drastically reduce the legal definition of full time work. It should be under 20 hours already, considering that women entering the workforce nearly doubled overall hours worked. But instead, all of that overproduction got dumped into the hedonic treadmill and bullshit jobs.
- hn_throwaway_99 5y ago
  Presumably restrictive zoning policies that make it incredibly difficult to build the amount of additional housing that is needed in many areas.
  - bradleyjg 5y ago
    That, but also the entire GSEs edifice, the Fed’s MBS purchases, and lots more.
    - imtringued 5y ago
      Overpriced houses make construction arbitrage easier. It's easier to build a new house than to buy an existing one.
      - bradleyjg 5y ago
        The places I’ve lived all my life have few or no empty lots. To build a new house you need to buy and tear down an existing one.
- mechagodzilla 5y ago
  There are a lot of 'deliberate' policy decisions which both depress low-skilled workers' wages, and lead to higher property prices. On the wage side, good examples are that: 1) the minimum wage doesn't get increased with inflation 2) many jobs require a higher degree (which takes capital to pay for), or effectively require working for free via internships (which requires capital or someone else subsidizing you) 3) many higher paying jobs preclude you from working there if you have a criminal history (which is very disproportionately likely to be true for some demographics than others, in many cases just due to disparate enforcement), which effectively suppresses wages for many millions of people. On the housing side, any policy that restricts the building of new housing in order to limit supply (and there are a lot of them) will drive up housing prices. This includes things like minimum lot sizes, enforced parking requirements, etc. It's pretty much universally accepted in the US for local politicians to talk about 'protecting home values', which usually has a subtext of [by keeping poor people out of our town]. This is probably the _most_ common policy topic in my well-off suburban community - every proposal for multi-family housing gets fought tooth and nail, it's virtually impossible to build more than 1-bedroom apartments 'lest our schools become overcrowded [by poor people]', etc.
  - throwaway1777 5y ago
    It’s not only a supply issue these days. Even areas that have basically unlimited land and building in Texas have prices going up massively. How do you explain that?
    - frankbreetz 5y ago
      Building supplies have grown at an insane rate. A lot of builders went out of business because of 2008. It is still a supply issue, just not a land supply issue.
      - Ericson2314 5y ago
        Single family homes cannot meet demand, period.
      - 5y ago
an_opabinia 5y ago
> The incumbent homeowners voted themselves massive returns. And they felt self righteous while they were doing it to boot. We'll see. They're millionaires on paper. If there's one thing about unsophisticated people and investments, they always cash out when it's too late.
- mschuster91 5y ago
  > If there's one thing about unsophisticated people and investments, they always cash out when it's too late. There is no such thing as "too late" in urban housing. Rural areas are so far "left behind" that it will take about ten times the investment that Biden wants to put up to bring it to civilized level, and he's already getting massive resistance... no way that the rural flight trend will be reversed.
  - an_opabinia 5y ago
    > no such thing as too late Go ahead and buy some homes for investment! Go buy some Dogecoin! Some GME! What a low information take, to say something about rural homes and Biden or whatever. In the service of curiosity: maybe if you sold your $185,000 home from 1986 for $1.5m today, you’ll walk away a millionaire. A lot of people are looking at that arithmetic in San Francisco. And yet they do not sell! The index for months on market is at record lows. What’s going to really happen? They will watch the market fall, and then say to themselves “guess I should just wait until it goes back up in 10 years.”
    - mschuster91 5y ago
      > They will watch the market fall The market won't fall, that is the entire point. It reasonably cannot fall, since the only politics that could make it fall (buildout of rural infrastructure, overriding NIMBY shit) won't ever pass. Inertia is massive.
      - xupybd 5y ago
        The debt in the current world economy is unheard of, and the cost of housing is getting out of reach of first home buyers. Something has to give at some point. If interest rates rise in the next 10 years then I suspect many will be left with mortgage payments they can't afford.
jjav 5y ago
> The incumbent homeowners voted themselves massive returns. This is a popular meme in these threads, but could you be more specific to back that up? In >20 years owning a home, it has never come up that I've been asked to vote on anything related to giving me any returns. Where are these votes happening?
- screye 5y ago
  house owners vote in large numbers against up zoning, against densificatjon and against public transportation funding. (2 sides of the same coin)
  - bradleyjg 5y ago
    Also they’ve been supportive of the GSEs. Even the Republicans only pay lip service to dismantling government domination of the residential lending non-market.

e40 5y ago

What are you talking about?

mindslight 5y ago
The Federal Reserve's overt mission is to dump new money into the economy to create inflation. But since they only pump it into the overgrown financial sector, we get asset inflation rather than general price inflation. Every time interest rates are lowered, land prices go up, because the monthly (financial) rent remains the same. Similarly with down payments (20% -> 5%). The next step will be lengthening mortgage terms past 30 years. Each of these steps is aimed at making it more affordable to buy a house, but economic feedback makes sure that is only temporary. Meanwhile as asset valuations go up, one's ability to ever pay off that mortgage goes down.
- duped 5y ago
  Their dual mandate is to maximize employment and manage inflation. Their mission is exactly not to create inflation (or at least, too much of it).
  - mindslight 5y ago
    "Manage" inflation means to create it. An economy naturally tends towards price deflation, through optimization and technological progress. Business looking for ways to cut costs to compete is intrinsic to a market.
    - warkdarrior 5y ago
      Maybe a competitive economy tends towards deflation. In economies dominated by monopolies/oligopolies, price deflation is not a given.
- bradleyjg 5y ago
  Each step is aimed at increasing the wealth of incumbent homeowners, not making housing more affordable. The economists at the Fed and GSEs are not stupid.
  - imtringued 5y ago
    The Fed mostly wants to decrease unemployment via 2% inflation. The conventional wisdom is that supply side stimulus will create companies that hire workers. So handing out loans should do the trick. Yeah, except building housing which is one of the easiest ways to employ people is illegal.
    - bradleyjg 5y ago
      Why buy specifically mortgage linked instruments? There are lots of other ways to drop money from helicopters. I don’t think that choice was an accident.
- imtringued 5y ago
  The problem with relying on interest rates is that cash provides a lower bound of 0%. It's simply impossible to go negative on deposits without at least abolishing cash. Relying on the federal government doesn't work because the republicans are uncooperative. So the only measure left is to just bypass everything and hand out money directly. I'm actually hoping that the pandemic raises the inflation rate to 2% over the long term and that no intervention becomes necessary in the future. Given enough inflation, interest rates will go up and then we can start getting rid of zombie companies, increase productivity growth and have growing wages again.
  - mindslight 5y ago
    I see where you're coming from and it would be great if it happened that way. But the deflationary pull is getting ever stronger with technology - the more productive we are, the cheaper things should become. So the Fed's actions are the result of having a mandate that is directly incompatible with the technological goal of working less. If we switched to embracing deflation, then people could retire earlier knowing their savings would definitively appreciate in value, rather than having to hope on faux bubble "investments" that are mainly whims of more centralized government policy. But that seems to be politically impossible. So another way to approach it would be to drastically reduce the legal definition of full time work. It should be under 20 hours already, considering that women entering the workforce nearly doubled overall hours worked. But instead, all of that overproduction got dumped into the hedonic treadmill and bullshit jobs.
hn_throwaway_99 5y ago
Presumably restrictive zoning policies that make it incredibly difficult to build the amount of additional housing that is needed in many areas.
- bradleyjg 5y ago
  That, but also the entire GSEs edifice, the Fed’s MBS purchases, and lots more.
  - imtringued 5y ago
    Overpriced houses make construction arbitrage easier. It's easier to build a new house than to buy an existing one.
    - bradleyjg 5y ago
      The places I’ve lived all my life have few or no empty lots. To build a new house you need to buy and tear down an existing one.
mechagodzilla 5y ago
There are a lot of 'deliberate' policy decisions which both depress low-skilled workers' wages, and lead to higher property prices. On the wage side, good examples are that: 1) the minimum wage doesn't get increased with inflation 2) many jobs require a higher degree (which takes capital to pay for), or effectively require working for free via internships (which requires capital or someone else subsidizing you) 3) many higher paying jobs preclude you from working there if you have a criminal history (which is very disproportionately likely to be true for some demographics than others, in many cases just due to disparate enforcement), which effectively suppresses wages for many millions of people. On the housing side, any policy that restricts the building of new housing in order to limit supply (and there are a lot of them) will drive up housing prices. This includes things like minimum lot sizes, enforced parking requirements, etc. It's pretty much universally accepted in the US for local politicians to talk about 'protecting home values', which usually has a subtext of [by keeping poor people out of our town]. This is probably the _most_ common policy topic in my well-off suburban community - every proposal for multi-family housing gets fought tooth and nail, it's virtually impossible to build more than 1-bedroom apartments 'lest our schools become overcrowded [by poor people]', etc.
- throwaway1777 5y ago
  It’s not only a supply issue these days. Even areas that have basically unlimited land and building in Texas have prices going up massively. How do you explain that?
  - frankbreetz 5y ago
    Building supplies have grown at an insane rate. A lot of builders went out of business because of 2008. It is still a supply issue, just not a land supply issue.
    - Ericson2314 5y ago
      Single family homes cannot meet demand, period.
    - 5y ago

an_opabinia 5y ago

> The incumbent homeowners voted themselves massive returns. And they felt self righteous while they were doing it to boot. We'll see. They're millionaires on paper. If there's one thing about unsophisticated people and investments, they always cash out when it's too late.

mschuster91 5y ago
> If there's one thing about unsophisticated people and investments, they always cash out when it's too late. There is no such thing as "too late" in urban housing. Rural areas are so far "left behind" that it will take about ten times the investment that Biden wants to put up to bring it to civilized level, and he's already getting massive resistance... no way that the rural flight trend will be reversed.
- an_opabinia 5y ago
  > no such thing as too late Go ahead and buy some homes for investment! Go buy some Dogecoin! Some GME! What a low information take, to say something about rural homes and Biden or whatever. In the service of curiosity: maybe if you sold your $185,000 home from 1986 for $1.5m today, you’ll walk away a millionaire. A lot of people are looking at that arithmetic in San Francisco. And yet they do not sell! The index for months on market is at record lows. What’s going to really happen? They will watch the market fall, and then say to themselves “guess I should just wait until it goes back up in 10 years.”
  - mschuster91 5y ago
    > They will watch the market fall The market won't fall, that is the entire point. It reasonably cannot fall, since the only politics that could make it fall (buildout of rural infrastructure, overriding NIMBY shit) won't ever pass. Inertia is massive.
    - xupybd 5y ago
      The debt in the current world economy is unheard of, and the cost of housing is getting out of reach of first home buyers. Something has to give at some point. If interest rates rise in the next 10 years then I suspect many will be left with mortgage payments they can't afford.

jjav 5y ago

> The incumbent homeowners voted themselves massive returns. This is a popular meme in these threads, but could you be more specific to back that up? In >20 years owning a home, it has never come up that I've been asked to vote on anything related to giving me any returns. Where are these votes happening?

screye 5y ago
house owners vote in large numbers against up zoning, against densificatjon and against public transportation funding. (2 sides of the same coin)
- bradleyjg 5y ago
  Also they’ve been supportive of the GSEs. Even the Republicans only pay lip service to dismantling government domination of the residential lending non-market.