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Housing used to be both affordable and a good investment. That is how it worked for a long time. What's new is that it is harder to build housing than it used

Housing used to be both affordable and a good investment. That is how it worked for a long time. What's new is that it is harder to build housing than it used to be. The escape valve for an overpressured market used to be building new housing -- and if the new housing meets demand it does not cause the prices of existing housing to tank. The market simply reaches an equilibrium. That's what is not functioning today. We don't need land value taxes or weird rules about rentals or discouraging investment or any of that -- we need to make it easier to supply new housing. Any solution that does not involve making it easier to build new housing is just not going to work.

twiceaday 4y ago
Housing cannot be both affordable and a good investment indefinitely. Obviously. A good investment means the price goes up quickly and at some point the price is higher than what most people can afford. Whatever solution you propose must stop housing from being such a good investment. If you say the approach is to build more, the answer to "how much more?" is "until housing is not a good investment," so the point stands. A lot of people will agree with you on "build more" but I bet only with an explicit caveat of "as long as housing continues to be a good investment for me" and so the agreement is completely useless. There is no agreement to actually fix anything.
- twblalock 4y ago
  > A good investment means the price goes up quickly and at some point the price is higher than what most people can afford. No, a good investment is something that increases in value over time. Not "quickly." That's a get-rich-quick expectation, not an investment expectation. You also seem to be assuming that housing prices increase but incomes do not. That is not the case in a healthy economy. (And growth in an economy is normal and expected and good, not unsustainable.) This is not a theoretical situation. We know, for sure, that housing can both be a good investment and affordable because it worked that way for a long time. And we also know what changed -- barriers to building new housing have increased.
  - sagarm 4y ago
    For housing to be a good investment it has to be competitive with other investments, meaning much higher than inflation. Since housing is a large and increasing portion of CPI, this is mathematically impossible. As housing increasingly dominated the inflation calculation it determines inflation. QED.
    - twblalock 4y ago
      > For housing to be a good investment it has to be competitive with other investments, meaning much higher than inflation. You could make the same argument to say that bonds are a bad investment. It's not true, depending on what the investor expects. Raw performance is not the only criteria by which investments are evaluated. Another aspect of investment vehicles is the risk:reward ratio. Bonds are low-risk and thus expected to have lower returns than a higher-risk investment like stocks. That does not mean that bonds are a bad investment. It simply means they have a risk:reward ratio suitable for some investment purposes but not others. Before the current supply crunch, housing was a reasonably safe investment that resulted in a reasonable return over the lifetime of a homeowner -- and it did tend to keep up with inflation. It was not a "bad" investment. It was not growing over 10% a year like it is today, but that's a recent phenomenon caused by shortages.
      - bradlys 4y ago
        > You could make the same argument to say that bonds are a bad investment. It's not true, depending on what the investor expects. This is truly semantics and is quite pedantic. I’d highly recommend avoiding these types of arguments. You’re digging in for a very specific and weird reason - I’d suggest not.
        pnutjam 4y ago
        classic whataboutism.
  - bwestergard 4y ago
    "And growth in an economy is normal and expected and good, not unsustainable" So far, we have not seen economic growth without proportional growth in material inputs, including energy. https://en.wikipedia.org/wiki/Dematerialization_(economics) https://en.wikipedia.org/wiki/Dematerialization_(economics) "We know, for sure, that housing can both be a good investment and affordable because it worked that way for a long time." You are referring to a period (the 20th century) that saw tremendous urbanization due to one-time advances in technology. Those will not be repeated. For details, see "Rise and Fall of American Growth" (Gordon).
pessimizer 4y ago
> Housing used to be both affordable and a good investment. That is how it worked for a long time. Housing rose with inflation for 400 years. This bullshit is a 21st century thing when housing became a bitcoin-like financial scam.

twiceaday 4y ago

Housing cannot be both affordable and a good investment indefinitely. Obviously. A good investment means the price goes up quickly and at some point the price is higher than what most people can afford. Whatever solution you propose must stop housing from being such a good investment. If you say the approach is to build more, the answer to "how much more?" is "until housing is not a good investment," so the point stands. A lot of people will agree with you on "build more" but I bet only with an explicit caveat of "as long as housing continues to be a good investment for me" and so the agreement is completely useless. There is no agreement to actually fix anything.

twblalock 4y ago
> A good investment means the price goes up quickly and at some point the price is higher than what most people can afford. No, a good investment is something that increases in value over time. Not "quickly." That's a get-rich-quick expectation, not an investment expectation. You also seem to be assuming that housing prices increase but incomes do not. That is not the case in a healthy economy. (And growth in an economy is normal and expected and good, not unsustainable.) This is not a theoretical situation. We know, for sure, that housing can both be a good investment and affordable because it worked that way for a long time. And we also know what changed -- barriers to building new housing have increased.
- sagarm 4y ago
  For housing to be a good investment it has to be competitive with other investments, meaning much higher than inflation. Since housing is a large and increasing portion of CPI, this is mathematically impossible. As housing increasingly dominated the inflation calculation it determines inflation. QED.
  - twblalock 4y ago
    > For housing to be a good investment it has to be competitive with other investments, meaning much higher than inflation. You could make the same argument to say that bonds are a bad investment. It's not true, depending on what the investor expects. Raw performance is not the only criteria by which investments are evaluated. Another aspect of investment vehicles is the risk:reward ratio. Bonds are low-risk and thus expected to have lower returns than a higher-risk investment like stocks. That does not mean that bonds are a bad investment. It simply means they have a risk:reward ratio suitable for some investment purposes but not others. Before the current supply crunch, housing was a reasonably safe investment that resulted in a reasonable return over the lifetime of a homeowner -- and it did tend to keep up with inflation. It was not a "bad" investment. It was not growing over 10% a year like it is today, but that's a recent phenomenon caused by shortages.
    - bradlys 4y ago
      > You could make the same argument to say that bonds are a bad investment. It's not true, depending on what the investor expects. This is truly semantics and is quite pedantic. I’d highly recommend avoiding these types of arguments. You’re digging in for a very specific and weird reason - I’d suggest not.
      - pnutjam 4y ago
        classic whataboutism.
- bwestergard 4y ago
  "And growth in an economy is normal and expected and good, not unsustainable" So far, we have not seen economic growth without proportional growth in material inputs, including energy. https://en.wikipedia.org/wiki/Dematerialization_(economics) https://en.wikipedia.org/wiki/Dematerialization_(economics) "We know, for sure, that housing can both be a good investment and affordable because it worked that way for a long time." You are referring to a period (the 20th century) that saw tremendous urbanization due to one-time advances in technology. Those will not be repeated. For details, see "Rise and Fall of American Growth" (Gordon).

pessimizer 4y ago

> Housing used to be both affordable and a good investment. That is how it worked for a long time. Housing rose with inflation for 400 years. This bullshit is a 21st century thing when housing became a bitcoin-like financial scam.