4 ms·

It's not inflation alone that is the problem with housing. It's housing being seen as an investment. People discourage new builds or high-density due to trying

by Klinky 4y ago

It's not inflation alone that is the problem with housing. It's housing being seen as an investment. People discourage new builds or high-density due to trying to preserve their existing asset value. Quick flip schemes juice the price up, for an often shoddy asset. Then hedge funds swoop in with cash, paying above market, to then flip, rent out, AirBnB or just let houses sit idle. There's a lot of bubble-like behavior still occurring in the housing market, and easy money has likely contributed, but I don't think that it all falls in line with classical inflation. It feels more like artificially constricted/restricted supply with high demand. Housing as an investment is problematic, because it disincentivizes new builds, people want to keep seeing their asset value go up, never down, and constraining supply is an easy way to do that. Renting out can also be more lucrative than selling if you have the capital. Also the ability for markets to offer housing at commodity prices seems like it would require a drastic oversupply of a very resource intensive asset. How sustainable is that really in the long run?

TuringNYC 4y ago
>> It's not inflation alone that is the problem with housing. It's housing being seen as an investment. People discourage new builds or high-density due to trying to preserve their existing asset value. You're right that the issue is multi-factor, but i'd argue that the factor at play in the past two decades specifically was ZIRP+QE. That is the new factor at play. Houses being seen as an investment has been an issue for a long time, I remember even in the 80s this was a big topic of discussion. Same for NIMBYism -- that has been an issue ever since forever (step into any home owner's shoes -- once you've put all your life savings into a house, most people dont want to dilute value.) I'll agree that the more leveraged you are to finally purchase a home, the more vehement the NIMBYism is...because now more housing is ruinous to existing owners' giant investment. The whole system is @#%!@#% I think ZIRP/QE made things worse because houses started going up in value faster than incomes. This encouraged yet more leverage and lesser house. And now we're all left with a shell of the dreams our grandparents enjoyed with normal jobs. https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-much-faster-than-incomes-studies-show.html#:~:text=In%20the%20last%20decade%2C%20the,difference%20is%20even%20more%20striking https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-m....

by Klinky 4y ago

TuringNYC 4y ago

>> It's not inflation alone that is the problem with housing. It's housing being seen as an investment. People discourage new builds or high-density due to trying to preserve their existing asset value. You're right that the issue is multi-factor, but i'd argue that the factor at play in the past two decades specifically was ZIRP+QE. That is the new factor at play. Houses being seen as an investment has been an issue for a long time, I remember even in the 80s this was a big topic of discussion. Same for NIMBYism -- that has been an issue ever since forever (step into any home owner's shoes -- once you've put all your life savings into a house, most people dont want to dilute value.) I'll agree that the more leveraged you are to finally purchase a home, the more vehement the NIMBYism is...because now more housing is ruinous to existing owners' giant investment. The whole system is @#%!@#% I think ZIRP/QE made things worse because houses started going up in value faster than incomes. This encouraged yet more leverage and lesser house. And now we're all left with a shell of the dreams our grandparents enjoyed with normal jobs. https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-much-faster-than-incomes-studies-show.html#:~:text=In%20the%20last%20decade%2C%20the,difference%20is%20even%20more%20striking https://www.cnbc.com/2021/11/10/home-prices-are-now-rising-m....