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> You don't build affordable cars, you just build cars, which end up becoming "affordable" in the used car market. Ditto for housing. The problem I see with th

> You don't build affordable cars, you just build cars, which end up becoming "affordable" in the used car market. Ditto for housing. The problem I see with this analogy is that housing is an investment (which is part of the problem when you want to build affordable housing), but cars are not. I don’t think anyone decides to buy a “used house” vs a “new house”. Houses are houses, you buy the one you can afford.

harambae 5y ago
>I don’t think anyone decides to buy a “used house” vs a “new house” You're correct that this distinction is minor to most native-born Americans, but is much more important to some other cultures.
tjr225 5y ago
I’m being annoying, but I know, but maybe there is some relevance here; my last 3 cars have been vintage and I’ve turned a profit on all of them.
- ddingus 5y ago
  Right now, cars are a minor league investment. The chip shortage has driven used car prices way up.
  - bluGill 5y ago
    Only if you already bought and are selling today. If you are buying today you should assume. The chip issues will be solved in a few months and cars return back to normal.
    - ddingus 5y ago
      Yes, doh! I am not sure we will go back to normal that quickly however. We may see a permanent change in used car value perception. A lot of people just got a look at how generally great the value proposition has become over the years of ongoing improvement.
- pixelatedindex 5y ago
  If only I bought an S2000 instead of my NC Miata in 2015, and if only my E30 didn’t get T-boned while parking… Even an NA Miata in good condition is getting up there in price. Oh well, life goes on :)
- gambiting 5y ago
  I don't think that's relevant at all - yes, there are cars which do actually appreciate and you can make profit on them - I'd generously estimate that's like 0.0001% of all cars on the roads though. Similarly, I'm sure there are houses which actually depreciate from the moment they are built - weird unusual houses with guaranteed structural issues the longer they stand, I'm reminded of a house mentioned on HN, which was built entirely underground and which started leaking everywhere after ~20 years. That house was basically worth maybe 1/10th of the original price because it was so hard to sell.
chongli 5y ago
A house isn’t an investment, it’s a depreciating asset just like a car. Land is the investment. You can witness this phenomenon every day just by driving around residential neighbourhoods: people tearing down newly purchased houses and building new ones on the lot. What did they spend all that money on if they were planning to tear the house down from the outset? It wasn’t the building, that’s for sure.
- akomtu 5y ago
  I don't think it's true. Value of materials depreciate, but good luck finding a builder who would rebuild the same house for the same price it cost 10 years ago. Labor and new materials go up in value, and new regulations add costs too. There are exceptions, like those you've described, but those are exceptions.
  - chongli 5y ago
    That’s a mixture of inflation (in the price of building materials) and cost disease [1] (for the labour). A lot of other things have gotten way cheaper (computers, TVs, etc) because of advances in technology whereas houses have not. It still takes roughly the same amount of labour for framers, drywallers, painters, and roofers to build a house today as it did 20 years ago but the cost of living for all those workers has gone up so you need to pay more for the same amount of work. This is not labour going up in value, it’s labour going up in price. On the other hand, an old poorly maintained house is worth a lot less in real value terms than a brand new house on the same lot. This is why houses are a depreciating asset. That may be hard to see, though, because the land may be going up in value a lot more than the house may be declining. And of course, just like a car, if you maintain a house and keep it in good shape you can preserve more of its value. [1] https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...
  - nextaccountic 5y ago
    > good luck finding a builder who would rebuild the same house for the same price it cost 10 years ago Inflation-adjusted?
  - 5y ago
enaaem 5y ago
Houses do not go up in value. It is the land. Land should go up in value if the city or town develops. Housing prices can still remain stable if you are allowed to break it down and built something denser. Tokyo is an example where housing prices are far more stable compared to the west despite being the most populous metropolis on earth.
- kmonsen 5y ago
  But the land goes up in value because it is all single family homes so it becomes a limiting resource. If you put up high quality high density apartment complexes next to Caltrain stations land cost would go down. Which is why the voters do not want that under any circumstance.
  - pixelatedindex 5y ago
    Good insights, thanks for that. I do wish there were a ton more high density housing around the Bay though
  - nostrademons 5y ago
    Land cost still goes up as density increases. A 30-unit multifamily building on a half-acre goes for $10M+; the same lot with a SFH would go for about $3-4M. Even subtracting out structure value, dense housing is worth significantly more on a per-acre basis. This is how developers turn a profit, and how they get SFH owners to sell to them in the first place. Land cost per unit goes down as density goes up, because the amount of land used by each unit goes down. That 30-unit apartment building uses about 700 ft^2/unit, at an amortized cost of about $600K/acre. The SFH uses a 1/2 are (20,000 ft^2), at an amortized cost of about $6M/acre.
    - kmonsen 5y ago
      My point is that right now there can only live x amount of people close to FAANG headquarters due to traffic and SFH. If significantly more people could live here the value of the remaining SFH would go down, at least I think so. My theory is that SFH value is high because some people just want to live here, and some people want a SFH, and some want to invest. For the first group other forms of housing would be OK, and when they stop competing for SFH value at some point it stops growing so insane. At that point the third group might quit as well. I am not talking about land value/unit, but land value on average in the bay area. Or other places with zoning restrictions.
daniel-cussen 5y ago
The building itself, on an individual basis, depreciates over time. The investment component is about the land, or more accurately, the volume of space above (and to a certain extent below) the surface that is inescapably necessary for human existence, which can be enclosed by walls and a door for additional dignity. It is a claim on the sky.
Nasrudith 5y ago
The problem is that people have confused speculation and investment frankly. An investment generates value over time. Speculation is based upon an asset's value appreciating. When dealing with "pures" look at how they would perform in a hypothetical long term stable priced market.

harambae 5y ago

>I don’t think anyone decides to buy a “used house” vs a “new house” You're correct that this distinction is minor to most native-born Americans, but is much more important to some other cultures.

tjr225 5y ago

I’m being annoying, but I know, but maybe there is some relevance here; my last 3 cars have been vintage and I’ve turned a profit on all of them.

ddingus 5y ago
Right now, cars are a minor league investment. The chip shortage has driven used car prices way up.
- bluGill 5y ago
  Only if you already bought and are selling today. If you are buying today you should assume. The chip issues will be solved in a few months and cars return back to normal.
  - ddingus 5y ago
    Yes, doh! I am not sure we will go back to normal that quickly however. We may see a permanent change in used car value perception. A lot of people just got a look at how generally great the value proposition has become over the years of ongoing improvement.
pixelatedindex 5y ago
If only I bought an S2000 instead of my NC Miata in 2015, and if only my E30 didn’t get T-boned while parking… Even an NA Miata in good condition is getting up there in price. Oh well, life goes on :)
gambiting 5y ago
I don't think that's relevant at all - yes, there are cars which do actually appreciate and you can make profit on them - I'd generously estimate that's like 0.0001% of all cars on the roads though. Similarly, I'm sure there are houses which actually depreciate from the moment they are built - weird unusual houses with guaranteed structural issues the longer they stand, I'm reminded of a house mentioned on HN, which was built entirely underground and which started leaking everywhere after ~20 years. That house was basically worth maybe 1/10th of the original price because it was so hard to sell.

chongli 5y ago

A house isn’t an investment, it’s a depreciating asset just like a car. Land is the investment. You can witness this phenomenon every day just by driving around residential neighbourhoods: people tearing down newly purchased houses and building new ones on the lot. What did they spend all that money on if they were planning to tear the house down from the outset? It wasn’t the building, that’s for sure.

akomtu 5y ago
I don't think it's true. Value of materials depreciate, but good luck finding a builder who would rebuild the same house for the same price it cost 10 years ago. Labor and new materials go up in value, and new regulations add costs too. There are exceptions, like those you've described, but those are exceptions.
- chongli 5y ago
  That’s a mixture of inflation (in the price of building materials) and cost disease [1] (for the labour). A lot of other things have gotten way cheaper (computers, TVs, etc) because of advances in technology whereas houses have not. It still takes roughly the same amount of labour for framers, drywallers, painters, and roofers to build a house today as it did 20 years ago but the cost of living for all those workers has gone up so you need to pay more for the same amount of work. This is not labour going up in value, it’s labour going up in price. On the other hand, an old poorly maintained house is worth a lot less in real value terms than a brand new house on the same lot. This is why houses are a depreciating asset. That may be hard to see, though, because the land may be going up in value a lot more than the house may be declining. And of course, just like a car, if you maintain a house and keep it in good shape you can preserve more of its value. [1] https://slatestarcodex.com/2017/02/09/considerations-on-cost-disease/ https://slatestarcodex.com/2017/02/09/considerations-on-cost...
- nextaccountic 5y ago
  > good luck finding a builder who would rebuild the same house for the same price it cost 10 years ago Inflation-adjusted?
- 5y ago

enaaem 5y ago

Houses do not go up in value. It is the land. Land should go up in value if the city or town develops. Housing prices can still remain stable if you are allowed to break it down and built something denser. Tokyo is an example where housing prices are far more stable compared to the west despite being the most populous metropolis on earth.

kmonsen 5y ago
But the land goes up in value because it is all single family homes so it becomes a limiting resource. If you put up high quality high density apartment complexes next to Caltrain stations land cost would go down. Which is why the voters do not want that under any circumstance.
- pixelatedindex 5y ago
  Good insights, thanks for that. I do wish there were a ton more high density housing around the Bay though
- nostrademons 5y ago
  Land cost still goes up as density increases. A 30-unit multifamily building on a half-acre goes for $10M+; the same lot with a SFH would go for about $3-4M. Even subtracting out structure value, dense housing is worth significantly more on a per-acre basis. This is how developers turn a profit, and how they get SFH owners to sell to them in the first place. Land cost per unit goes down as density goes up, because the amount of land used by each unit goes down. That 30-unit apartment building uses about 700 ft^2/unit, at an amortized cost of about $600K/acre. The SFH uses a 1/2 are (20,000 ft^2), at an amortized cost of about $6M/acre.
  - kmonsen 5y ago
    My point is that right now there can only live x amount of people close to FAANG headquarters due to traffic and SFH. If significantly more people could live here the value of the remaining SFH would go down, at least I think so. My theory is that SFH value is high because some people just want to live here, and some people want a SFH, and some want to invest. For the first group other forms of housing would be OK, and when they stop competing for SFH value at some point it stops growing so insane. At that point the third group might quit as well. I am not talking about land value/unit, but land value on average in the bay area. Or other places with zoning restrictions.

daniel-cussen 5y ago

The building itself, on an individual basis, depreciates over time. The investment component is about the land, or more accurately, the volume of space above (and to a certain extent below) the surface that is inescapably necessary for human existence, which can be enclosed by walls and a door for additional dignity. It is a claim on the sky.

Nasrudith 5y ago

The problem is that people have confused speculation and investment frankly. An investment generates value over time. Speculation is based upon an asset's value appreciating. When dealing with "pures" look at how they would perform in a hypothetical long term stable priced market.