5 ms·

I'm not clear on when the house as investment began. It seems clear that from the quality of the 50s era construction I live in that housing was though of in mo

I'm not clear on when the house as investment began. It seems clear that from the quality of the 50s era construction I live in that housing was though of in more utilitarian terms (ie put up cheaply and quickly). It seems like it was in the 80s in my area that you start to see much more custom and luxurious homes, but I'm not sure if the transition was more a cultural or economic one.

yobbo 5y ago
They became speculative assets (not investments) when prices started appreciating faster than incomes. Government subsidised mortgages are the cause of this. The technical implementation varies in different countries. House prices are "levered" on mortgage interest rates.
Lammy 5y ago
> I'm not clear on when the house as investment began. https://fred.stlouisfed.org/series/OEHRENWBSHNO https://fred.stlouisfed.org/series/OEHRENWBSHNO :)
- sillysaurusx 5y ago
  Good lord, that graph looks far scarier than the 2008 bubble.
  - arcticbull 5y ago
    It probably shouldn't, that's total real estate equity - not real estate equity per capita, and it doesn't look like it's even adjusted for inflation? You can make any graph look scary if you try hard enough haha.
  - wahern 5y ago
    Among OECD countries, the United States is mostly middle of the pack. See https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=ECO/WKP(2019)58&docLanguage=En https://www.oecd.org/officialdocuments/publicdisplaydocument... IOW, these trends are basically global, not specific to the U.S. (Americans always think they're exceptional....) For example, the U.S. is slightly below average in mortgage debt-to-income. One of the few places that the U.S. stands out is the percentage of home owners--we're second from the top at 40-50%.
- bagels 5y ago
  Needs log scale. Inflation is exponential.
  - wtallis 5y ago
    It might also (or instead?) need to be expressed on a per-capita/per-household basis: the portion of growth in that graph that is merely the result of the country having higher population doesn't represent any change in the importance or value of home equity to an individual household.
    - em500 5y ago
      The great thing about FRED graphs is that you can easily DIY with the "Edit Graph" button: in log scale: https://fred.stlouisfed.org/graph/?g=ImYV https://fred.stlouisfed.org/graph/?g=ImYV divided by households: https://fred.stlouisfed.org/graph/?g=ImZ1 https://fred.stlouisfed.org/graph/?g=ImZ1
  - deleted 5y ago
    [deleted]
bobthepanda 5y ago
The '50s was a bit of an aberration, because the massive influx of soldiers coming home caused an extreme housing crunch, especially if you consider that there wasn't a whole lot of housing being built in the decade before the war due to the Great Depression. It was also exacerbated by moving from multigenerational living in the 30s to the nuclear family in the 50s.
- loeg 5y ago
  Also, the boom of affordable, basic amenity new construction post-war was subsidized for (white) veterans by the federal government[1]. [1]: e.g., https://en.wikipedia.org/wiki/Levittown https://en.wikipedia.org/wiki/Levittown
WalterBright 5y ago
> I'm not clear on when the house as investment began. It began when boomers entered the housing market. I.e. suddenly a lot more people wanted houses. Before then, houses depreciated over time, like your car.
- bombcar 5y ago
  Homes still depreciate - but once you’ve passed the “no empty lots” point in an are houses start to diverge from “build cost” (when there are empty lots it’s unlikely you’ll pay me more for my house than “cost of empty lot next to me + cost to build”).
unityByFreedom 5y ago
Owning your own property goes back further than our founding. It has to do with staking out your rights. Quite the opposite of what some comments here suggest, encouraging home ownership keeps life affordable. It is one way to stave off an oligarchy of property owners. See, for example, Fannie Mae's mission, > Our mission is to facilitate equitable and sustainable access to homeownership and quality affordable rental housing across America. We continue to innovate and promote a stronger, safer, and more efficient housing finance system to support more opportunities for homebuyers and renters in communities throughout the nation. https://www.fanniemae.com/about-us/who-we-are https://www.fanniemae.com/about-us/who-we-are Finance people who make loans take issue with this since they have to match prices with a "government-backed" business, although it's only a charter which isn't the same as govt-backed. Plus, tons of businesses were supported by government in 2008 and 2020-2021 so that point is moot.
- SilasX 5y ago
  >Quite the opposite of what some comments here suggest, encouraging home ownership keeps life affordable. It is one way to stave off an oligarchy of property owners. A better way would be to ensure that supply can continue to increase with demand, rather than encourage speculative buying and holding of land off the market in the hopes of making a fortune flipping it to the next generation and slowing down any attempt to redevelop. "Oh at least you're locked in" is at best a patch. >See, for example, Fannie Mae's mission, Yes, that's what they say but that translates into making housing an investment, which (see the several other comments on this point) goes directly contrary to it being affordable. I don't see what's better about mom-and-pops milking the next generation rather than a big conglomerate -- the result is the same. >Finance people who make loans take issue with this since they have to match prices with a "government-backed" business, although it's only a charter which isn't the same as govt-backed. Plus, tons of businesses were supported by government in 2008 and 2020-2021 so that point is moot. Wait, what? Finance people love Fannie Mae and the like because it means they can dump mortgages on a government agency merely because they meet some ossified standard rather than being legitimately below risk thresholds by a realistic assessment. And then not have to worry about fixing a rate that's too low for 30 years.
- DeathArrow 5y ago
jimbob45 5y ago
I don't know when it began but AirBNB weaponized it to a ridiculous degree. The ability to basically automate the process of renting out your house at absurdly inflated prices is actively removing inventory from the housing market in addition to removing customers from the hotel industry. I've never found agreement when speaking out against renting on HN. Empty houses outnumber the homeless 6 to 1 [0] and yet somehow it's more important that we ensure landlords can protect their effortless investments and waste more and more land on non-dense, temporary housing. [0]https://www.reddit.com/r/CapitalismVSocialism/comments/agbo4u/capitalists_empty_homes_outnumber_homeless_people/ https://www.reddit.com/r/CapitalismVSocialism/comments/agbo4...

yobbo 5y ago

They became speculative assets (not investments) when prices started appreciating faster than incomes. Government subsidised mortgages are the cause of this. The technical implementation varies in different countries. House prices are "levered" on mortgage interest rates.

Lammy 5y ago

> I'm not clear on when the house as investment began. https://fred.stlouisfed.org/series/OEHRENWBSHNO https://fred.stlouisfed.org/series/OEHRENWBSHNO :)

sillysaurusx 5y ago
Good lord, that graph looks far scarier than the 2008 bubble.
- arcticbull 5y ago
  It probably shouldn't, that's total real estate equity - not real estate equity per capita, and it doesn't look like it's even adjusted for inflation? You can make any graph look scary if you try hard enough haha.
- wahern 5y ago
  Among OECD countries, the United States is mostly middle of the pack. See https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=ECO/WKP(2019)58&docLanguage=En https://www.oecd.org/officialdocuments/publicdisplaydocument... IOW, these trends are basically global, not specific to the U.S. (Americans always think they're exceptional....) For example, the U.S. is slightly below average in mortgage debt-to-income. One of the few places that the U.S. stands out is the percentage of home owners--we're second from the top at 40-50%.
bagels 5y ago
Needs log scale. Inflation is exponential.
- wtallis 5y ago
  It might also (or instead?) need to be expressed on a per-capita/per-household basis: the portion of growth in that graph that is merely the result of the country having higher population doesn't represent any change in the importance or value of home equity to an individual household.
  - em500 5y ago
    The great thing about FRED graphs is that you can easily DIY with the "Edit Graph" button: in log scale: https://fred.stlouisfed.org/graph/?g=ImYV https://fred.stlouisfed.org/graph/?g=ImYV divided by households: https://fred.stlouisfed.org/graph/?g=ImZ1 https://fred.stlouisfed.org/graph/?g=ImZ1
- deleted 5y ago
  [deleted]

bobthepanda 5y ago

The '50s was a bit of an aberration, because the massive influx of soldiers coming home caused an extreme housing crunch, especially if you consider that there wasn't a whole lot of housing being built in the decade before the war due to the Great Depression. It was also exacerbated by moving from multigenerational living in the 30s to the nuclear family in the 50s.

loeg 5y ago
Also, the boom of affordable, basic amenity new construction post-war was subsidized for (white) veterans by the federal government[1]. [1]: e.g., https://en.wikipedia.org/wiki/Levittown https://en.wikipedia.org/wiki/Levittown

WalterBright 5y ago

> I'm not clear on when the house as investment began. It began when boomers entered the housing market. I.e. suddenly a lot more people wanted houses. Before then, houses depreciated over time, like your car.

bombcar 5y ago
Homes still depreciate - but once you’ve passed the “no empty lots” point in an are houses start to diverge from “build cost” (when there are empty lots it’s unlikely you’ll pay me more for my house than “cost of empty lot next to me + cost to build”).

unityByFreedom 5y ago

Owning your own property goes back further than our founding. It has to do with staking out your rights. Quite the opposite of what some comments here suggest, encouraging home ownership keeps life affordable. It is one way to stave off an oligarchy of property owners. See, for example, Fannie Mae's mission, > Our mission is to facilitate equitable and sustainable access to homeownership and quality affordable rental housing across America. We continue to innovate and promote a stronger, safer, and more efficient housing finance system to support more opportunities for homebuyers and renters in communities throughout the nation. https://www.fanniemae.com/about-us/who-we-are https://www.fanniemae.com/about-us/who-we-are Finance people who make loans take issue with this since they have to match prices with a "government-backed" business, although it's only a charter which isn't the same as govt-backed. Plus, tons of businesses were supported by government in 2008 and 2020-2021 so that point is moot.

SilasX 5y ago
>Quite the opposite of what some comments here suggest, encouraging home ownership keeps life affordable. It is one way to stave off an oligarchy of property owners. A better way would be to ensure that supply can continue to increase with demand, rather than encourage speculative buying and holding of land off the market in the hopes of making a fortune flipping it to the next generation and slowing down any attempt to redevelop. "Oh at least you're locked in" is at best a patch. >See, for example, Fannie Mae's mission, Yes, that's what they say but that translates into making housing an investment, which (see the several other comments on this point) goes directly contrary to it being affordable. I don't see what's better about mom-and-pops milking the next generation rather than a big conglomerate -- the result is the same. >Finance people who make loans take issue with this since they have to match prices with a "government-backed" business, although it's only a charter which isn't the same as govt-backed. Plus, tons of businesses were supported by government in 2008 and 2020-2021 so that point is moot. Wait, what? Finance people love Fannie Mae and the like because it means they can dump mortgages on a government agency merely because they meet some ossified standard rather than being legitimately below risk thresholds by a realistic assessment. And then not have to worry about fixing a rate that's too low for 30 years.
DeathArrow 5y ago

jimbob45 5y ago

I don't know when it began but AirBNB weaponized it to a ridiculous degree. The ability to basically automate the process of renting out your house at absurdly inflated prices is actively removing inventory from the housing market in addition to removing customers from the hotel industry. I've never found agreement when speaking out against renting on HN. Empty houses outnumber the homeless 6 to 1 [0] and yet somehow it's more important that we ensure landlords can protect their effortless investments and waste more and more land on non-dense, temporary housing. [0]https://www.reddit.com/r/CapitalismVSocialism/comments/agbo4u/capitalists_empty_homes_outnumber_homeless_people/ https://www.reddit.com/r/CapitalismVSocialism/comments/agbo4...