5 ms·

When was housing not an investment? Throughout history, people have always wanted to drive up the value of their land and properties. There are still plenty of

by axg11 4y ago

When was housing not an investment? Throughout history, people have always wanted to drive up the value of their land and properties. There are still plenty of places in the US/Canada/UK where housing is cheap. The problem is that nobody wants to live in those areas.

Cederfjard 4y ago
So do you have a solution in mind?
- davidf18 4y ago
deleted 4y ago
[deleted]
datacruncher01 4y ago
It's true but the reason people are moving to cities are jobs. Rural locations do not have the job market to support the costs to live there. It's a lower cost, but a much, much lower income outlook as well. If you have the money to outright buy a rural property and build a house there, it's not a bad place to live. But you don't want to have to depend on the limited job market with an expensive mortgage and limited buyer pool.
- ch4s3 4y ago
  > If you have the money to outright buy a rural property and build a house there That's if there are available builders. It took my mother the better part of a year to get her roof replaced, because there was no one available to do the job. I'd also argue that the place she lives in rural VA is pretty awful in most respects other than having space and she's not all that far from a town.
- axg11 4y ago
  Remote work is commonplace now. Perhaps in the next few years we’ll test the theory that jobs and house prices are linked. It’s now possible (for tech workers at least) to work from almost anywhere for decent wages. My hunch is that the housing crisis is simple supply and demand. People want to live in cities because of the better access to entertainment, amenities, and services. There aren’t enough houses to fill that demand. There’s no great city on earth that has a glut of housing. If there were, people would flock to that city to fill the housing. I think that’s the very nature of a city. In some sense, the more people that want to live in a city, the higher the quality of the city. That’s also directly correlated with housing cost, sadly.
  - ralston3 4y ago
    Remote work is commonplace to a very few privileged folks. HN seems to forget that.
goodpoint 4y ago
Almost never. Housing has always been a basic necessity for survival. Only when feudal societies developed you had landlords and serfs and that's hardly something to be proud about.
- horsawlarway 4y ago
  > feudal societies developed Sooo... the last thousand some years, given that feudalism was widespread by the 11th century (and housing was absolutely an investment before that). Basically - half of recorded history (~400bc for Europe), and longer than the United States has existed. I don't understand what you think this comment means...
  - finiteseries 4y ago
    - The last thousand some years (in Europe) - Widespread (in Europe) - Half of recorded (European) history An exclusively European phenomenon, the bulk of which came and went while it was a backwater region with limited effect on the rest of the world.
    - tristor 4y ago
      > An exclusively European phenomenon, the bulk of which came and went while it was a backwater region with limited effect on the rest of the world. Weird that it had limited effect on the rest of the world, since basically history from now back to about the 15th century represents a European hegemony, now a US hegemony that extends European Western philosophy to the world. Seems that "limited effect" is pretty big. So much so that we're /literally discussing it now in 2022/.
      - finiteseries 4y ago
        The bulk of feudalism took place between the 5th and 12th centuries, ~400 years before 1491.
        4y ago
horsawlarway 4y ago
I genuinely don't understand why you're getting down-voted. Not only has it been true historically - there's a real reason to allow it: it incentivizes owners to maintain and improve their properties. Further... maintenance of that property requires investment, both in time and labor. If you make it so that owners have no reward or incentive for improving their properties, they WON'T DO IT. Why invest money into fixing your place if the price of the house is capped anyways? Trying to prevent this style of investment has almost always failed, and generally makes neighborhoods that are nice/attractive places to live much less nice and attractive - because people stop maintaining and improving them. I think the real question right now that needs to be answered is: Why are we not able to create new urban areas in low cost areas? What has changed so that we no longer create towns? Because frankly - right now the issue isn't housing, it's housing in areas where economic opportunities exist. Why are economic opportunities so exclusive to high population centers? What can we do to change that?
- deleted 4y ago
  [deleted]
- fleddr 4y ago
  This positive effect goes far beyond just maintaining the house and land. Governments love home owners. They are typically stable citizens in the work-force, law-abiding, reliable, etc. They have a high time preference and have every interest in maintaining the status quo, safety, anything that makes society pleasant.
pessimizer 4y ago
> When was housing not an investment? Housing was never an investment before recent decades, with an emphasis on the housing bubble. Housing tracked inflation for 400 years. https://thegoldobserver.substack.com/p/amsterdam-real-housing-prices-highest https://thegoldobserver.substack.com/p/amsterdam-real-housin... edit: the history of US house prices is that they strictly tracked inflation, then with government subsidy right after WWII, housing prices jumped up, then stayed flat at that new level for the next 50 years, then the turn of the millennium happens and housing becomes an investment (after a stock market crash.)
- kgwgk 4y ago
  “In terms of total returns, residential real estate and equities have shown very similar and high real total gains, on average about 7% per year. Housing outperformed equity before WW2. Since WW2, equities have outperformed housing on average, but only at the cost of much higher volatility and higher synchronicity with the business cycle. The observation that housing returns are similar to equity returns, yet considerably less volatile, is puzzling.” https://www.frbsf.org/wp-content/uploads/sites/4/wp2017-25.pdf https://www.frbsf.org/wp-content/uploads/sites/4/wp2017-25.p...
- carom 4y ago
  The US was a brand new country that was mostly empty. Look at England for some historical data.
  - smcl 4y ago
    Ok but they also provided a link showing how this also applied in Amsterdam, in The Netherlands - a much older and less-empty country.
    - kgwgk 4y ago
      That link doesn't show that housing was not an investment for centuries, does it? Why wouldn't you consider an investment something that has a relatively stable value in real terms - at least over a long enough period - and also provides a yield?
Tiktaalik 4y ago
It's always been an investment, but the difference is the shift from being a stable asset that appreciated at or above inflation, to the sort of incredible hyper inflation that we now see.

by axg11 4y ago

Cederfjard 4y ago

So do you have a solution in mind?

davidf18 4y ago

deleted 4y ago

[deleted]

datacruncher01 4y ago

It's true but the reason people are moving to cities are jobs. Rural locations do not have the job market to support the costs to live there. It's a lower cost, but a much, much lower income outlook as well. If you have the money to outright buy a rural property and build a house there, it's not a bad place to live. But you don't want to have to depend on the limited job market with an expensive mortgage and limited buyer pool.

ch4s3 4y ago
> If you have the money to outright buy a rural property and build a house there That's if there are available builders. It took my mother the better part of a year to get her roof replaced, because there was no one available to do the job. I'd also argue that the place she lives in rural VA is pretty awful in most respects other than having space and she's not all that far from a town.
axg11 4y ago
Remote work is commonplace now. Perhaps in the next few years we’ll test the theory that jobs and house prices are linked. It’s now possible (for tech workers at least) to work from almost anywhere for decent wages. My hunch is that the housing crisis is simple supply and demand. People want to live in cities because of the better access to entertainment, amenities, and services. There aren’t enough houses to fill that demand. There’s no great city on earth that has a glut of housing. If there were, people would flock to that city to fill the housing. I think that’s the very nature of a city. In some sense, the more people that want to live in a city, the higher the quality of the city. That’s also directly correlated with housing cost, sadly.
- ralston3 4y ago
  Remote work is commonplace to a very few privileged folks. HN seems to forget that.

goodpoint 4y ago

Almost never. Housing has always been a basic necessity for survival. Only when feudal societies developed you had landlords and serfs and that's hardly something to be proud about.

horsawlarway 4y ago
> feudal societies developed Sooo... the last thousand some years, given that feudalism was widespread by the 11th century (and housing was absolutely an investment before that). Basically - half of recorded history (~400bc for Europe), and longer than the United States has existed. I don't understand what you think this comment means...
- finiteseries 4y ago
  - The last thousand some years (in Europe) - Widespread (in Europe) - Half of recorded (European) history An exclusively European phenomenon, the bulk of which came and went while it was a backwater region with limited effect on the rest of the world.
  - tristor 4y ago
    > An exclusively European phenomenon, the bulk of which came and went while it was a backwater region with limited effect on the rest of the world. Weird that it had limited effect on the rest of the world, since basically history from now back to about the 15th century represents a European hegemony, now a US hegemony that extends European Western philosophy to the world. Seems that "limited effect" is pretty big. So much so that we're /literally discussing it now in 2022/.
    - finiteseries 4y ago
      The bulk of feudalism took place between the 5th and 12th centuries, ~400 years before 1491.
      - 4y ago

horsawlarway 4y ago

I genuinely don't understand why you're getting down-voted. Not only has it been true historically - there's a real reason to allow it: it incentivizes owners to maintain and improve their properties. Further... maintenance of that property requires investment, both in time and labor. If you make it so that owners have no reward or incentive for improving their properties, they WON'T DO IT. Why invest money into fixing your place if the price of the house is capped anyways? Trying to prevent this style of investment has almost always failed, and generally makes neighborhoods that are nice/attractive places to live much less nice and attractive - because people stop maintaining and improving them. I think the real question right now that needs to be answered is: Why are we not able to create new urban areas in low cost areas? What has changed so that we no longer create towns? Because frankly - right now the issue isn't housing, it's housing in areas where economic opportunities exist. Why are economic opportunities so exclusive to high population centers? What can we do to change that?

deleted 4y ago
[deleted]
fleddr 4y ago
This positive effect goes far beyond just maintaining the house and land. Governments love home owners. They are typically stable citizens in the work-force, law-abiding, reliable, etc. They have a high time preference and have every interest in maintaining the status quo, safety, anything that makes society pleasant.

pessimizer 4y ago

> When was housing not an investment? Housing was never an investment before recent decades, with an emphasis on the housing bubble. Housing tracked inflation for 400 years. https://thegoldobserver.substack.com/p/amsterdam-real-housing-prices-highest https://thegoldobserver.substack.com/p/amsterdam-real-housin... edit: the history of US house prices is that they strictly tracked inflation, then with government subsidy right after WWII, housing prices jumped up, then stayed flat at that new level for the next 50 years, then the turn of the millennium happens and housing becomes an investment (after a stock market crash.)

kgwgk 4y ago
“In terms of total returns, residential real estate and equities have shown very similar and high real total gains, on average about 7% per year. Housing outperformed equity before WW2. Since WW2, equities have outperformed housing on average, but only at the cost of much higher volatility and higher synchronicity with the business cycle. The observation that housing returns are similar to equity returns, yet considerably less volatile, is puzzling.” https://www.frbsf.org/wp-content/uploads/sites/4/wp2017-25.pdf https://www.frbsf.org/wp-content/uploads/sites/4/wp2017-25.p...
carom 4y ago
The US was a brand new country that was mostly empty. Look at England for some historical data.
- smcl 4y ago
  Ok but they also provided a link showing how this also applied in Amsterdam, in The Netherlands - a much older and less-empty country.
  - kgwgk 4y ago
    That link doesn't show that housing was not an investment for centuries, does it? Why wouldn't you consider an investment something that has a relatively stable value in real terms - at least over a long enough period - and also provides a yield?

Tiktaalik 4y ago

It's always been an investment, but the difference is the shift from being a stable asset that appreciated at or above inflation, to the sort of incredible hyper inflation that we now see.