8 ms·

Like it or not, Bob is an investor. He had a choice to rent or stay in his current residence. He is not compelled by any force to participate in an inflated h

Like it or not, Bob is an investor. He had a choice to rent or stay in his current residence. He is not compelled by any force to participate in an inflated housing market. He should do his due diligence and not assume risky bets that he is unable to handle.

Spivak 5y ago
Ehhhh like I get where you’re coming from but it would be fantastically bad policy for a nation to treat housing like this. A person’s primary residence needs to play by different rules if you’re gonna crash the market semi purposely. When the forces that cause the market to crash are the feds monetary policy it’s a tough sell that it’s actually a free market. To first order individuals should be able to purchase shelter assured that it’s fairly priced. The concerns should be like “the foundation is cracked” not “JP Morgan is pumping house prices.”
- 01100011 5y ago
  If you cause Bob's house to go back to being $200k then it only screws the Bobs. It doesn't screw the Mary's who bought at or below $200k. Your logic is what gets us into these messes, because it removes moral hazard by telling speculators that housing is special and therefore immune to risk. Of course it's not a free market. Has America ever had a free market? When is the last time that the real estate market hasn't been manipulated in some way?
- ClumsyPilot 5y ago
  How could housing be a free market if no-one produces land? Land is a zero sum game, you can't pretend same laws apply to it and iPhones
  - Spivak 5y ago
    Markets for a fixed number of goods work fine in general; concert tickets, limited edition shoes, rare antiques. The housing market is heavily absolutely distorted but not because land is a fixed quantity.
    - chii 5y ago
      > The housing market is heavily absolutely distorted i still don't understand what these distortions being claimed are. "artificially low" interest rates isn't a distortion - it affects everything, and the rates may not be that low, compared to the growth. As for taxation, real estate isn't treated too differently from any other forms of investment.
      - stickfigure 5y ago
        The 30-year fixed-rate mortgage is pretty unique to real estate.
      - zajio1am 5y ago
        Ability of third parties (politicians, bureocracy, NIMBY groups) to block or retard production of new assets. From what i heard from developers, getting permissions for a new appartment complex takes many years, several times longer than actually building the complex.
        ClumsyPilot 5y ago
        Inability of third party to capture value they create - an apartment complex in the middle of the forest is worthless. It needs utilities, shopping centre, major metro line, highway, arts, jobs, good schools, and general 'nice area' vibes created by artists on the verge of bankruptcy. None of those things area created by the construction company. In fact randomly building houses leads to congestion, lack of places in schools and other facilities, and miserable living conditions.
    - ClumsyPilot 5y ago
      "concert tickets, limited edition shoes, rare antiques" What have you measured to determine that these markets 'work fine'? These are terrible markets, speculation is higher than productivity, fraud is endemic, prices are volatile and liquidity is low. Antiques and arts are infamous for fraud and enabling tax evasion. People don't need limited edition shoes to survive, so we can just ignore the problem.
  - mattnewton 5y ago
    This would make sense if we were running out of land, or if we were anywhere near housing density limits, but we are not. Housing can be created by running utilities and roads to land without it or building higher on land with it.
brandmeyer 5y ago
Bob's first house wasn't an investment. He was covering his short position. Bob was born short. Bob's N+1th house is an investment.
- mccorrinall 5y ago
  While I like this comment since it’s concise and pretty accurate in some way, I’d like to point out that you don’t have to buy a house to cover your „short“ (a roof over your head). You can rent it instead. When buying a house, bob becomes heavily invested.
  - pempem 5y ago
    This does ignore the fact that rents are also, in fact, going up. Before the interest rate rose most people could not afford their own place in most cities on minimum wage. In SF we've been living with roommates well into our 30s. Lovely but not exactly how it used to be generally. At the same time some of us salaried folks have gotten small windfalls this year, but most jobs haven't seen a comparable rise in salaries. All of this leads me to be on team taxation.
    - mccorrinall 5y ago
      I‘m from Europe and never been to SF, but imo taxation isn’t necessarily needed. Instead the „american dream“ should be adjusted. Not every human needs their own family home. Build more apartment complexes. I’ve recently seen in a youtube video by the NYT that there are actual lobbies against changing low density housing zones to high density housing zones: https://youtu.be/hNDgcjVGHIw?t=253 https://youtu.be/hNDgcjVGHIw?t=253 I’d recommend to give it a watch :) Imo the soviet apartment complexes are a good idea. I live in one as well (Germany), and I can afford rent without hassle.
      - mccorrinall 5y ago
        To be clear: the lobby against such high density buildings is the neighborhood itself.
barbazoo 5y ago
Not if the market does not offer rental properties. Unless you're in the big city, the rental market can get very small.
endorphine 5y ago
> He is not compelled by any force to participate in an inflated housing market. But he _is_ forced to participate in that market, even if he doesn't know it; whether that's by renting or buying is another question. Renting is less risky but it's still a bet, no? I'm not sure.

Spivak 5y ago

Ehhhh like I get where you’re coming from but it would be fantastically bad policy for a nation to treat housing like this. A person’s primary residence needs to play by different rules if you’re gonna crash the market semi purposely. When the forces that cause the market to crash are the feds monetary policy it’s a tough sell that it’s actually a free market. To first order individuals should be able to purchase shelter assured that it’s fairly priced. The concerns should be like “the foundation is cracked” not “JP Morgan is pumping house prices.”

01100011 5y ago
If you cause Bob's house to go back to being $200k then it only screws the Bobs. It doesn't screw the Mary's who bought at or below $200k. Your logic is what gets us into these messes, because it removes moral hazard by telling speculators that housing is special and therefore immune to risk. Of course it's not a free market. Has America ever had a free market? When is the last time that the real estate market hasn't been manipulated in some way?
ClumsyPilot 5y ago
How could housing be a free market if no-one produces land? Land is a zero sum game, you can't pretend same laws apply to it and iPhones
- Spivak 5y ago
  Markets for a fixed number of goods work fine in general; concert tickets, limited edition shoes, rare antiques. The housing market is heavily absolutely distorted but not because land is a fixed quantity.
  - chii 5y ago
    > The housing market is heavily absolutely distorted i still don't understand what these distortions being claimed are. "artificially low" interest rates isn't a distortion - it affects everything, and the rates may not be that low, compared to the growth. As for taxation, real estate isn't treated too differently from any other forms of investment.
    - stickfigure 5y ago
      The 30-year fixed-rate mortgage is pretty unique to real estate.
    - zajio1am 5y ago
      Ability of third parties (politicians, bureocracy, NIMBY groups) to block or retard production of new assets. From what i heard from developers, getting permissions for a new appartment complex takes many years, several times longer than actually building the complex.
      - ClumsyPilot 5y ago
        Inability of third party to capture value they create - an apartment complex in the middle of the forest is worthless. It needs utilities, shopping centre, major metro line, highway, arts, jobs, good schools, and general 'nice area' vibes created by artists on the verge of bankruptcy. None of those things area created by the construction company. In fact randomly building houses leads to congestion, lack of places in schools and other facilities, and miserable living conditions.
  - ClumsyPilot 5y ago
    "concert tickets, limited edition shoes, rare antiques" What have you measured to determine that these markets 'work fine'? These are terrible markets, speculation is higher than productivity, fraud is endemic, prices are volatile and liquidity is low. Antiques and arts are infamous for fraud and enabling tax evasion. People don't need limited edition shoes to survive, so we can just ignore the problem.
- mattnewton 5y ago
  This would make sense if we were running out of land, or if we were anywhere near housing density limits, but we are not. Housing can be created by running utilities and roads to land without it or building higher on land with it.

brandmeyer 5y ago

Bob's first house wasn't an investment. He was covering his short position. Bob was born short. Bob's N+1th house is an investment.

mccorrinall 5y ago
While I like this comment since it’s concise and pretty accurate in some way, I’d like to point out that you don’t have to buy a house to cover your „short“ (a roof over your head). You can rent it instead. When buying a house, bob becomes heavily invested.
- pempem 5y ago
  This does ignore the fact that rents are also, in fact, going up. Before the interest rate rose most people could not afford their own place in most cities on minimum wage. In SF we've been living with roommates well into our 30s. Lovely but not exactly how it used to be generally. At the same time some of us salaried folks have gotten small windfalls this year, but most jobs haven't seen a comparable rise in salaries. All of this leads me to be on team taxation.
  - mccorrinall 5y ago
    I‘m from Europe and never been to SF, but imo taxation isn’t necessarily needed. Instead the „american dream“ should be adjusted. Not every human needs their own family home. Build more apartment complexes. I’ve recently seen in a youtube video by the NYT that there are actual lobbies against changing low density housing zones to high density housing zones: https://youtu.be/hNDgcjVGHIw?t=253 https://youtu.be/hNDgcjVGHIw?t=253 I’d recommend to give it a watch :) Imo the soviet apartment complexes are a good idea. I live in one as well (Germany), and I can afford rent without hassle.
    - mccorrinall 5y ago
      To be clear: the lobby against such high density buildings is the neighborhood itself.

barbazoo 5y ago

Not if the market does not offer rental properties. Unless you're in the big city, the rental market can get very small.

endorphine 5y ago

> He is not compelled by any force to participate in an inflated housing market. But he _is_ forced to participate in that market, even if he doesn't know it; whether that's by renting or buying is another question. Renting is less risky but it's still a bet, no? I'm not sure.