4 ms·

I'm not entirely sure why models are necessary. It's basic math. if (job_pay < food + rent + basic_living_expenses){ ++homelessness } else{ sustain

I'm not entirely sure why models are necessary. It's basic math. if (job_pay < food + rent + basic_living_expenses){ ++homelessness } else{ sustainable_society() } Real basic logical shit honestly.

nly 5y ago
In reality there are way more loops than this, since markets tend to be self correcting. One problem right now is some wealth variables are being incremented in loops that you can only break in to if you have assets, like in the property market.
- imtringued 5y ago
  If you are talking about land prices, that's not wealth, that's the ability to extort wealth out of other people.
  - nly 5y ago
    No, I'm referring to this: - Person A and Person B have the same income and live in similar properties. - Person A rents at $1800/mo and is able to save $1000/mo - Person B owns a $700K property, has $140K of equity (20%), and therefore pays down a mortgage of $560K at a rate of ~3.6% (makes the numbers work, and pretty accurate), totaling repayments of ~$2,800/mo over 25 years. On paper these two have the same disposable income and it seems that Person B's net worth is 'only' $140K higher. But, consider what happens over 5 years, even without house prices going up - Person A will have saved $60K overall - Person B will have have $74K in additional equity (now owe $486K), and can now refinance at 70% LTV instead of 80% LTV. This gain is because they saved interest on the debt repaid over 5 years. Person A would have had to invest their $1000/mo savings in to something yielding a massive 8%/year and pay no tax on their returns to reach a $74K balance in that time. Now consider that if house prices even go up 2%/year over that 5 years (inline with inflation), that Person B will also have an additional $70K of equity. Meanwhile Person A is only $60K to $70K (depending on the performance of their own investments) of their way to a $150K deposit, on a now $770K property. Once you have hard assets and leverage, you have a huge engine of wealth behind you.
    - tehwebguy 5y ago
      Also, Person A's rent will increase every year no matter what happens
      - nly 5y ago
        Yep, potentially contractually by some measure of inflation.
    - grawprog 5y ago
      The problem is, both person A and Person B have more money than the original $15-$20/h wage earner I spoke of in my original post. The amount of money you are describing >Person A rents at $1800/mo and is able to save $1000/mo Is unimaginable for someone making $15-$20/h. Sometimes the people on HN really don't seem to grasp the reality of being an average working person. Everything you said in your post is nonsense that means nothing to a person literally living pay cheque to pay cheque with unchangeable expenses greater than income.
      - nly 5y ago
        No, it's not nonsense. The person earning $15-20/h is 100% affected by this, since it leads to even greater inequality. These people you describe are renting and landlords want a certain yield on their properties. Higher demand for houses (or reduced supply) push prices up, which in turn push up rents.
        runarberg 5y ago
        I really don’t understand what people mean when they talk about the law of supply and demand with housing. What exactly does it mean for a demand of housing to go up? Population growth? Immigration? Or is it speculative buying and landlording? What about supply of housing? Does public housing mean increased supply? More shelters? What about squats? Or are just talking about municipal zoning? How does the economic law of supply and demand apply here? Everybody needs a house, lest they get homeless. By applying the law of supply and demand to housing you will inevitably get speculators and landlords—that is unless you regulate the market heavily—and with that you get stakeholders to the market and lobbying to policy makers. Then there is a serious power dynamics in favor landlords. So regulations are most likely not gonna favor tenants, who risk becoming homeless. Or does demand here refer to favorable neighborhoods (as OP hints at). So a new light rail station connecting to work sites increase demands for housing in that particular neighborhood at the cost of other neighborhoods who will now see reduced housing prices and increased vacancy? How is that good either? This seems like you (and OP) are willing throw some neighborhoods under the bus to gentrify some neighborhoods while impoverishing others. If not then what kind of demand are you talking about? No. What I want is for the market to stay away from housing... Or at the very least give me the option of public housing so that I personally have the choice of opting out of this silly game. Housing is far to important to my well being for the rich folks to play their silly games over.

I'm not entirely sure why models are necessary. It's basic math. if (job_pay < food + rent + basic_living_expenses){ ++homelessness } else{ sustainable_society() } Real basic logical shit honestly.

nly 5y ago

In reality there are way more loops than this, since markets tend to be self correcting. One problem right now is some wealth variables are being incremented in loops that you can only break in to if you have assets, like in the property market.

imtringued 5y ago
If you are talking about land prices, that's not wealth, that's the ability to extort wealth out of other people.
- nly 5y ago
  No, I'm referring to this: - Person A and Person B have the same income and live in similar properties. - Person A rents at $1800/mo and is able to save $1000/mo - Person B owns a $700K property, has $140K of equity (20%), and therefore pays down a mortgage of $560K at a rate of ~3.6% (makes the numbers work, and pretty accurate), totaling repayments of ~$2,800/mo over 25 years. On paper these two have the same disposable income and it seems that Person B's net worth is 'only' $140K higher. But, consider what happens over 5 years, even without house prices going up - Person A will have saved $60K overall - Person B will have have $74K in additional equity (now owe $486K), and can now refinance at 70% LTV instead of 80% LTV. This gain is because they saved interest on the debt repaid over 5 years. Person A would have had to invest their $1000/mo savings in to something yielding a massive 8%/year and pay no tax on their returns to reach a $74K balance in that time. Now consider that if house prices even go up 2%/year over that 5 years (inline with inflation), that Person B will also have an additional $70K of equity. Meanwhile Person A is only $60K to $70K (depending on the performance of their own investments) of their way to a $150K deposit, on a now $770K property. Once you have hard assets and leverage, you have a huge engine of wealth behind you.
  - tehwebguy 5y ago
    Also, Person A's rent will increase every year no matter what happens
    - nly 5y ago
      Yep, potentially contractually by some measure of inflation.
  - grawprog 5y ago
    The problem is, both person A and Person B have more money than the original $15-$20/h wage earner I spoke of in my original post. The amount of money you are describing >Person A rents at $1800/mo and is able to save $1000/mo Is unimaginable for someone making $15-$20/h. Sometimes the people on HN really don't seem to grasp the reality of being an average working person. Everything you said in your post is nonsense that means nothing to a person literally living pay cheque to pay cheque with unchangeable expenses greater than income.
    - nly 5y ago
      No, it's not nonsense. The person earning $15-20/h is 100% affected by this, since it leads to even greater inequality. These people you describe are renting and landlords want a certain yield on their properties. Higher demand for houses (or reduced supply) push prices up, which in turn push up rents.
      - runarberg 5y ago
        I really don’t understand what people mean when they talk about the law of supply and demand with housing. What exactly does it mean for a demand of housing to go up? Population growth? Immigration? Or is it speculative buying and landlording? What about supply of housing? Does public housing mean increased supply? More shelters? What about squats? Or are just talking about municipal zoning? How does the economic law of supply and demand apply here? Everybody needs a house, lest they get homeless. By applying the law of supply and demand to housing you will inevitably get speculators and landlords—that is unless you regulate the market heavily—and with that you get stakeholders to the market and lobbying to policy makers. Then there is a serious power dynamics in favor landlords. So regulations are most likely not gonna favor tenants, who risk becoming homeless. Or does demand here refer to favorable neighborhoods (as OP hints at). So a new light rail station connecting to work sites increase demands for housing in that particular neighborhood at the cost of other neighborhoods who will now see reduced housing prices and increased vacancy? How is that good either? This seems like you (and OP) are willing throw some neighborhoods under the bus to gentrify some neighborhoods while impoverishing others. If not then what kind of demand are you talking about? No. What I want is for the market to stay away from housing... Or at the very least give me the option of public housing so that I personally have the choice of opting out of this silly game. Housing is far to important to my well being for the rich folks to play their silly games over.