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To me it feels like home prices are the single most important bug in the economy. If we filter out skilled IT professionals (and other high-paid jobs), fundame

To me it feels like home prices are the single most important bug in the economy. If we filter out skilled IT professionals (and other high-paid jobs), fundamentally rich people and also extremely poor (homeless in developed countries and those living in stick/garbage huts in the "3-rd world"), the rest mostly spend almost all their income on paying for their home. We invent new technologies but average homes become neither more affordable nor more perdurable. The fact most of the ordinary people can never afford buying/building a home without taking a loan they will have to pay for decades to come seems outrageously absurd to me.

SilverRed 5y ago
Seems to me that there are two problems. As jobs and facilities are becoming more centralized. Cities are expanding and rural towns are shrinking. So even without any population growth, houses that people actually want become more expensive. And the second problem is the expectation that a piece of land near a city will always be more in demand tomorrow than it is today. This is almost certainly true based on the first point and doubled by the fact that populations are still expanding. This expectation means you can buy a house for way more than you believe it is worth since you know it will be worth even more later. The only solution I can possibly see is moving more people from single family houses in to apartment buildings which allows virtually infinite supply within close range to jobs and facilities that people demand.
- noahtallen 5y ago
  The main problem with that solution is that most young-ish people know that if they ever want to own a house, they need to get into the game early so they can build equity. Besides that, rentals are often way too expensive (matching or exceeding a mortgage payment in big cities) without providing a similar amount of value: - Can’t do what you like to the interior, like painting walls. - Not built with the same sort of layout homes have. For examples, loads of three bed/three bath rentals meant to be split by roommates, but not many with a nice room for a home office. - Often does not provide an important amenity (like AC). - Almost definitely less space. - Likely less peaceful, especially if noise insulation between units is poor. (Getting bothered by a neighbor is a lot easier.) If we want to attract the type of people who want to buy a home to instead rent for the long term, those aspects need to become better. Apartments need to be more desirable than houses. And that means the folks building apartments and the apartment management companies need to offer a lot more for less. And since apartment buildings are also investments, that will never happen, because the ultimate goal is profit. I feel like in both cases, it comes back to the fact that property is an investment. It doesn’t make sense for anyone to loose value on an investment, which means there is an inherent pressure to make prices go up over time
- qwerty456127 5y ago
  > The only solution I can possibly see is moving more people from single family houses in to apartment buildings which allows virtually infinite supply within close range to jobs This is convenient in a lot of ways (e.g. apartment-first cities have better public transport and less segregation) but doesn't really solve this particular problem. The apartments still are very expensive and the prices grow rapidly. Again nobody except rich entrepreneurs can afford buying them without a mortgage and the rent still is everyone's single biggest expense. I even suspect even Hongkongers living in "cage homes" still spend the most of their income on these.
  - SilverRed 5y ago
    Apartments are still expensive but they are affordable. The average person could realistically buy one while house/land prices are rising much faster than savings so if you aren't already able to buy, you become further and further behind. The HK problem seems to be that they are so overpopulated that even apartments have run out of space. Most of the world does not have this problem and will never have this problem because the enviornment would collapse before the population of Australia or the US fills apartments on every block of land available.
- qwerty456127 5y ago
  I would add government requirements to the list of problems. You can't just build a house the way you like/can and live there like you could in the past. Today you have to get the authorities approve every detail in your house construction design, hire licensed builders, use certified materials etc. This makes sense in cities but is required in rural areas too, all over the developed world. As a kid I spent some time in a number of houses built by their owners out of scrap and "hobby market" materials with just their hands, simple tools and no serious design and that was great.
Valakas_ 5y ago
It's not a bug, it's a feature. - How do you keep so big part of the population working all their lives otherwise in jobs they don't like if not by necessity? - How can you earn as much passive income as possible (landlords, investors)?
- qwerty456127 5y ago
  > How do you keep so big part of the population working all their lives otherwise in jobs they don't like if not by necessity? Why do you need this? I always expected working time to keep decreasing but it doesn't. Humanity generally achieved 8x5 work week but doesn't seem progressing any further. If I had more spare time with same income I would continue my education and spend more time on hobbies, side projects, leisure, fitness and family (all these can still keep people busy contributing to the economy). > How can you earn as much passive income as possible (landlords, investors)? Why do you need this? As every normal person I would love to have passive income covering all my needs but "as much passive as possible" sounds like a waste of effort. I only want as much as I can reasonably spend without wasting my time on inventing new problems.

SilverRed 5y ago

Seems to me that there are two problems. As jobs and facilities are becoming more centralized. Cities are expanding and rural towns are shrinking. So even without any population growth, houses that people actually want become more expensive. And the second problem is the expectation that a piece of land near a city will always be more in demand tomorrow than it is today. This is almost certainly true based on the first point and doubled by the fact that populations are still expanding. This expectation means you can buy a house for way more than you believe it is worth since you know it will be worth even more later. The only solution I can possibly see is moving more people from single family houses in to apartment buildings which allows virtually infinite supply within close range to jobs and facilities that people demand.

noahtallen 5y ago
The main problem with that solution is that most young-ish people know that if they ever want to own a house, they need to get into the game early so they can build equity. Besides that, rentals are often way too expensive (matching or exceeding a mortgage payment in big cities) without providing a similar amount of value: - Can’t do what you like to the interior, like painting walls. - Not built with the same sort of layout homes have. For examples, loads of three bed/three bath rentals meant to be split by roommates, but not many with a nice room for a home office. - Often does not provide an important amenity (like AC). - Almost definitely less space. - Likely less peaceful, especially if noise insulation between units is poor. (Getting bothered by a neighbor is a lot easier.) If we want to attract the type of people who want to buy a home to instead rent for the long term, those aspects need to become better. Apartments need to be more desirable than houses. And that means the folks building apartments and the apartment management companies need to offer a lot more for less. And since apartment buildings are also investments, that will never happen, because the ultimate goal is profit. I feel like in both cases, it comes back to the fact that property is an investment. It doesn’t make sense for anyone to loose value on an investment, which means there is an inherent pressure to make prices go up over time
qwerty456127 5y ago
> The only solution I can possibly see is moving more people from single family houses in to apartment buildings which allows virtually infinite supply within close range to jobs This is convenient in a lot of ways (e.g. apartment-first cities have better public transport and less segregation) but doesn't really solve this particular problem. The apartments still are very expensive and the prices grow rapidly. Again nobody except rich entrepreneurs can afford buying them without a mortgage and the rent still is everyone's single biggest expense. I even suspect even Hongkongers living in "cage homes" still spend the most of their income on these.
- SilverRed 5y ago
  Apartments are still expensive but they are affordable. The average person could realistically buy one while house/land prices are rising much faster than savings so if you aren't already able to buy, you become further and further behind. The HK problem seems to be that they are so overpopulated that even apartments have run out of space. Most of the world does not have this problem and will never have this problem because the enviornment would collapse before the population of Australia or the US fills apartments on every block of land available.
qwerty456127 5y ago
I would add government requirements to the list of problems. You can't just build a house the way you like/can and live there like you could in the past. Today you have to get the authorities approve every detail in your house construction design, hire licensed builders, use certified materials etc. This makes sense in cities but is required in rural areas too, all over the developed world. As a kid I spent some time in a number of houses built by their owners out of scrap and "hobby market" materials with just their hands, simple tools and no serious design and that was great.

Valakas_ 5y ago

It's not a bug, it's a feature. - How do you keep so big part of the population working all their lives otherwise in jobs they don't like if not by necessity? - How can you earn as much passive income as possible (landlords, investors)?

qwerty456127 5y ago
> How do you keep so big part of the population working all their lives otherwise in jobs they don't like if not by necessity? Why do you need this? I always expected working time to keep decreasing but it doesn't. Humanity generally achieved 8x5 work week but doesn't seem progressing any further. If I had more spare time with same income I would continue my education and spend more time on hobbies, side projects, leisure, fitness and family (all these can still keep people busy contributing to the economy). > How can you earn as much passive income as possible (landlords, investors)? Why do you need this? As every normal person I would love to have passive income covering all my needs but "as much passive as possible" sounds like a waste of effort. I only want as much as I can reasonably spend without wasting my time on inventing new problems.