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This ignores the inherent contradiction in current housing policy: housing cannot be both a good investment and affordable. If housing is a good investment, th

This ignores the inherent contradiction in current housing policy: housing cannot be both a good investment and affordable. If housing is a good investment, that means it's appreciating faster than inflation, which will make it increasingly unaffordable as time passes. If housing is affordable, and remains so, then it is not appreciating enough to make a good investment. For decades, governments have made policies to make housing into a good investment. Things like government guarantees on mortgages to reduce the interest rate, mortgage interest deductions, property tax limits, and (yes) restricting the supply of housing through permits and zoning are all policies that serve to make housing a good investment, at the expense of affordability.

ch4s3 5y ago
Housing is multiple markets even within narrow geographic bounds. We could produce a lot of apartments and they would be affordable, but a single family home a mile away may still gain value faster than inflation. Making the ownership of a single family home affordable is in contradiction with making that a good investment vehicle.
civilized 5y ago
It would be great if cryptocurrency moved people's irrational fetish for artificially scarce, low-risk, rapidly appreciating assets into the digital sphere. Then we could be rid of this curse in the real world, where it ruins lives and societies.
tptacek 5y ago
It doesn't ignore the contradiction; it acknowledges it very early on in the article, in a paragraph dedicated to the point. "Would my net worth suffer if housing was affordable?" the paragraph opens. "Yes."
- rsj_hn 5y ago
  Yes, this is like a breath of fresh air. A lot of people think we have what seem to be intractable problems because a shadowy group is sobatoging The Popular Will. But the truth of the matter is we have intractable problems because there are tough trade offs, and having frank conversations about these trade offs is unpleasant, thus we focus on the Shadowy Group.
  - jjj123 5y ago
    Yep. I’d rather we have political conversations that were frank about the trade offs and focused on material change. An example: Medicare for all. Bottom 90% will save money, top 10% will lose money, healthcare system will be free at point of service and won’t be tied to employment. Doctors will still be rich but will make less money. Anyone invested in insurance industries will certainly lose here. I’d argue that discussing policy in material terms is only unpleasant for the powerful, because they are a minority trying to convince the majority to vote against their interests. When it’s all laid out it’s clear where the majority’s interests lie.
    - tptacek 5y ago
      You should be careful about the assumption that you've got this stuff all worked out and that there's a clear set of tradeoffs. There's a strong case to be made against M4A that has nothing to do with "the minority trying to convince the majority to vote against their interests". That sentiment has a name: it's called "populism". It's the opposite of reasoned consideration of policy.
shalmanese 5y ago
You can simultaneously make land a good investment and housing affordable by supporting infill densification.
- sudosysgen 5y ago
  Only for a while. Eventually density starts becoming just as expensive as land.
bitcuration 5y ago
You're confused about affordability with inflation vs. affordable house. Sounds like your real question should be can anything is affordable in a hyper-inflation time. Housing is anchored in inflation, no better or worse. Therefore housing built in with wealth as inflation doesn't hurt housing. By destroying wealth it doesn't make house affordable, only make worse hyper-inflation. Come on, thought this is ecom 101. What do colleges teach these days?
- ianai 5y ago
  Agree. I seem to remember RE being “on average” an inflation hedge. Though locality of course matters hugely. RE somewhere a lot of people want to be will be bid up. RE in the middle of nowhere can be built and sold pretty much at whatever it cost.
- mindslight 5y ago
  Well they certainly haven't been teaching system dynamics. The price of manufactured goods has dropped significantly, thanks to technological progress and offshoring. The Fed has a mandate that average consumer prices must always be going up. Housing is one of the few areas where the Fed can create monetary inflation that reaches consumers, since instead of giving away newly-created money it generally has to be in the form of loans. Therefore, the price of housing will shoot up to compensate for manufactured goods dropping. And the more efficient technology becomes, the worse the effect will be.
  - cyber_kinetist 5y ago
    Why does the Fed has a mandate to make average consumer prices increase in the first place? What does the increase of CPI have to do anything with the growth of an economy? And why is the Fed including housing (which is not a consumer good) to calculate CPI?
fredophile 5y ago
Housing prices don't need to beat inflation to be a good investment. If I don't own, I pay rent. Rent will go up with inflation but my mortgage is a fixed cost. By paying a mortgage instead of rent I save money long term. Since buying a house comes with a large opportunity cost it may not be the best investment even if it is a decent one.
- jseliger 5y ago
  https://affordanything.com/is-renting-better-than-buying-should-i-rent-or-buy/ https://affordanything.com/is-renting-better-than-buying-sho...
  - sudosysgen 5y ago
    Oh come on, that's assuming a 30 year mortgage with 5% interests and not taking into account inflation of rent. Take into account rent inflation and use 2.5% interest rates and then we'll see...
adverbly 5y ago
Owning and then selling a house should not be a good investment. What you do with it is supposed to make it a good investment. This idea that investing means squatting valuable assets needs to die. Save on rent, farm, rent to others, make a shop... preventing others who would put the land to better use is doing more harm than good.
frankbreetz 5y ago
Houses can definitely be an investment and only increase with inflation. If I buy a house as an investment, I get rent every month. If the house appreciates 0%, it could still be a good investment if the rent is good enough returns. Your premise only holds true if you buy a house and keep it empty, and are only getting returns by the appreciation of the property, but this should be illegal anyway.
otabdeveloper4 5y ago
> housing cannot be both a good investment and affordable Yes it can, if you let people invest into development projects at the venture stage. (This carries inherent risk, of course, but not as much as you think.)
- ibeckermayer 5y ago
  Is this currently illegal?

ch4s3 5y ago

Housing is multiple markets even within narrow geographic bounds. We could produce a lot of apartments and they would be affordable, but a single family home a mile away may still gain value faster than inflation. Making the ownership of a single family home affordable is in contradiction with making that a good investment vehicle.

civilized 5y ago

It would be great if cryptocurrency moved people's irrational fetish for artificially scarce, low-risk, rapidly appreciating assets into the digital sphere. Then we could be rid of this curse in the real world, where it ruins lives and societies.

tptacek 5y ago

It doesn't ignore the contradiction; it acknowledges it very early on in the article, in a paragraph dedicated to the point. "Would my net worth suffer if housing was affordable?" the paragraph opens. "Yes."

rsj_hn 5y ago
Yes, this is like a breath of fresh air. A lot of people think we have what seem to be intractable problems because a shadowy group is sobatoging The Popular Will. But the truth of the matter is we have intractable problems because there are tough trade offs, and having frank conversations about these trade offs is unpleasant, thus we focus on the Shadowy Group.
- jjj123 5y ago
  Yep. I’d rather we have political conversations that were frank about the trade offs and focused on material change. An example: Medicare for all. Bottom 90% will save money, top 10% will lose money, healthcare system will be free at point of service and won’t be tied to employment. Doctors will still be rich but will make less money. Anyone invested in insurance industries will certainly lose here. I’d argue that discussing policy in material terms is only unpleasant for the powerful, because they are a minority trying to convince the majority to vote against their interests. When it’s all laid out it’s clear where the majority’s interests lie.
  - tptacek 5y ago
    You should be careful about the assumption that you've got this stuff all worked out and that there's a clear set of tradeoffs. There's a strong case to be made against M4A that has nothing to do with "the minority trying to convince the majority to vote against their interests". That sentiment has a name: it's called "populism". It's the opposite of reasoned consideration of policy.

shalmanese 5y ago

You can simultaneously make land a good investment and housing affordable by supporting infill densification.

sudosysgen 5y ago
Only for a while. Eventually density starts becoming just as expensive as land.

bitcuration 5y ago

You're confused about affordability with inflation vs. affordable house. Sounds like your real question should be can anything is affordable in a hyper-inflation time. Housing is anchored in inflation, no better or worse. Therefore housing built in with wealth as inflation doesn't hurt housing. By destroying wealth it doesn't make house affordable, only make worse hyper-inflation. Come on, thought this is ecom 101. What do colleges teach these days?

ianai 5y ago
Agree. I seem to remember RE being “on average” an inflation hedge. Though locality of course matters hugely. RE somewhere a lot of people want to be will be bid up. RE in the middle of nowhere can be built and sold pretty much at whatever it cost.
mindslight 5y ago
Well they certainly haven't been teaching system dynamics. The price of manufactured goods has dropped significantly, thanks to technological progress and offshoring. The Fed has a mandate that average consumer prices must always be going up. Housing is one of the few areas where the Fed can create monetary inflation that reaches consumers, since instead of giving away newly-created money it generally has to be in the form of loans. Therefore, the price of housing will shoot up to compensate for manufactured goods dropping. And the more efficient technology becomes, the worse the effect will be.
- cyber_kinetist 5y ago
  Why does the Fed has a mandate to make average consumer prices increase in the first place? What does the increase of CPI have to do anything with the growth of an economy? And why is the Fed including housing (which is not a consumer good) to calculate CPI?

fredophile 5y ago

Housing prices don't need to beat inflation to be a good investment. If I don't own, I pay rent. Rent will go up with inflation but my mortgage is a fixed cost. By paying a mortgage instead of rent I save money long term. Since buying a house comes with a large opportunity cost it may not be the best investment even if it is a decent one.

jseliger 5y ago
https://affordanything.com/is-renting-better-than-buying-should-i-rent-or-buy/ https://affordanything.com/is-renting-better-than-buying-sho...
- sudosysgen 5y ago
  Oh come on, that's assuming a 30 year mortgage with 5% interests and not taking into account inflation of rent. Take into account rent inflation and use 2.5% interest rates and then we'll see...

adverbly 5y ago

Owning and then selling a house should not be a good investment. What you do with it is supposed to make it a good investment. This idea that investing means squatting valuable assets needs to die. Save on rent, farm, rent to others, make a shop... preventing others who would put the land to better use is doing more harm than good.

frankbreetz 5y ago

Houses can definitely be an investment and only increase with inflation. If I buy a house as an investment, I get rent every month. If the house appreciates 0%, it could still be a good investment if the rent is good enough returns. Your premise only holds true if you buy a house and keep it empty, and are only getting returns by the appreciation of the property, but this should be illegal anyway.

otabdeveloper4 5y ago

> housing cannot be both a good investment and affordable Yes it can, if you let people invest into development projects at the venture stage. (This carries inherent risk, of course, but not as much as you think.)

ibeckermayer 5y ago
Is this currently illegal?