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People in the comments here seem stuck in the weeds around various laws and tax incentives. The overarching issue is that housing (something everyone needs) is

People in the comments here seem stuck in the weeds around various laws and tax incentives. The overarching issue is that housing (something everyone needs) is being treated as an asset class. As an asset class people who own it want it to increase in price which gives the government an incentive to maintain and increase this value. Unfortunately this makes it more and more expensive for people who need housing. Decoupling housing from investment is the solution but it is politically unpalatable now given the state we are in. That is the real problem. Everything else is just a symptom of it.

cuteboy19 4y ago
Land is finite, but housing is basically infinite. If I can get 2 houses to fit on the same piece of land, I would be willing to tolerate a 30% discount per house and still be up on my investment. It's a win win. Cheaper houses for the buyers and more profit for me So clearly, the problem cannot simply be that housing is an asset.
ChrisLomont 4y ago
>is being treated as an asset class It always has been and likely always will be an assert class - it can be sold later so it's an asset. For well over 100 years the inflation adjusted price of new housing has been a quite similar rate per sq foot, despite the quality and safety having increased many fold over that time.
- reillyse 4y ago
  I think you are misunderstanding me. I didn’t say it was an asset. The majority of physical things you purchase are assets. I said it was an “asset class” in the financial use of the term. “ An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations.” It is being treated as an asset class as opposed to say a service or a utility. We need housing and clothing, but we don’t treat or normal clothing as an asset class. We buy it and use it, we don’t expect it to appreciate in value.
  - ChrisLomont 4y ago
    >“ An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations.” Yes, I got that. Housing has been such for well over 100 years, right? It is not treated as a service or utility because, well it is neither of those things at all. Even if you somehow forced it into such a market, the value would still likely be the same cost to a homeowner, since there is not going to be some free lunch here. People willing to pay $X to live at Y will continue to be willing to do that. Services and utilities do not mean free or low cost. >treat or normal clothing as an asset class Because it is cheap, it wears out, and goes to zero value. You really don't want the value of your house to be zero, meaning it has no utility to anyone, including you.
    - reillyse 4y ago
      Right. But let us pretend that the we all decided to treat shoes as an asset class. Everyone (with shoes) is counting on their shoes increasing in value. So the government becomes focused on raising the prices of everyone's shoes. It institutes restrictions on the amount of shoes that can be made (so as not to crash the market). Supports the market by subsidizing mortgages so people can purchase shoes at high prices (note that people will always be able to buy shoes, they just might not have the money that the market is asking and so the market would need to adjust their price - hence why mortgages are important. They give everyone tax breaks on the income they make from renting out shoes to people without shoes and places restrictions on everyone so that everyone must have a complete set of shoes (no sandals allowed) and forces everyone to always wear shoes. So now, the people who own shoes are happy. They decide the government is a great government because they are protecting their shoe interest and we have a situation where shoes are very expensive and always must be increasing in value for everyone (with shoes) to be happy. Lots of people start investing money in shoes (driving up the value of shoes) because everyone knows the government are actively protecting the price of shoes. Which in turn drives up the "value" of shoes and the cost of shoes for people without shoes. So, are shoes and houses that much different. Houses also require upkeep. You can resole your shoe, you can reroof your house. Some would say houses require much more upkeep. Sure, houses are a little more permanent and hard to steal. But a shoe very rarely burns down.
NotYourLawyer 4y ago
Anything capable of being owned is an asset class. How would housing become not an asset class? Government owns all the land and we just rent? Seems worse.
- reillyse 4y ago
  Read my shoe example in the other thread, it's the difference between something being an asset and an investment.

cuteboy19 4y ago

Land is finite, but housing is basically infinite. If I can get 2 houses to fit on the same piece of land, I would be willing to tolerate a 30% discount per house and still be up on my investment. It's a win win. Cheaper houses for the buyers and more profit for me So clearly, the problem cannot simply be that housing is an asset.

ChrisLomont 4y ago

>is being treated as an asset class It always has been and likely always will be an assert class - it can be sold later so it's an asset. For well over 100 years the inflation adjusted price of new housing has been a quite similar rate per sq foot, despite the quality and safety having increased many fold over that time.

reillyse 4y ago
I think you are misunderstanding me. I didn’t say it was an asset. The majority of physical things you purchase are assets. I said it was an “asset class” in the financial use of the term. “ An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations.” It is being treated as an asset class as opposed to say a service or a utility. We need housing and clothing, but we don’t treat or normal clothing as an asset class. We buy it and use it, we don’t expect it to appreciate in value.
- ChrisLomont 4y ago
  >“ An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations.” Yes, I got that. Housing has been such for well over 100 years, right? It is not treated as a service or utility because, well it is neither of those things at all. Even if you somehow forced it into such a market, the value would still likely be the same cost to a homeowner, since there is not going to be some free lunch here. People willing to pay $X to live at Y will continue to be willing to do that. Services and utilities do not mean free or low cost. >treat or normal clothing as an asset class Because it is cheap, it wears out, and goes to zero value. You really don't want the value of your house to be zero, meaning it has no utility to anyone, including you.
  - reillyse 4y ago
    Right. But let us pretend that the we all decided to treat shoes as an asset class. Everyone (with shoes) is counting on their shoes increasing in value. So the government becomes focused on raising the prices of everyone's shoes. It institutes restrictions on the amount of shoes that can be made (so as not to crash the market). Supports the market by subsidizing mortgages so people can purchase shoes at high prices (note that people will always be able to buy shoes, they just might not have the money that the market is asking and so the market would need to adjust their price - hence why mortgages are important. They give everyone tax breaks on the income they make from renting out shoes to people without shoes and places restrictions on everyone so that everyone must have a complete set of shoes (no sandals allowed) and forces everyone to always wear shoes. So now, the people who own shoes are happy. They decide the government is a great government because they are protecting their shoe interest and we have a situation where shoes are very expensive and always must be increasing in value for everyone (with shoes) to be happy. Lots of people start investing money in shoes (driving up the value of shoes) because everyone knows the government are actively protecting the price of shoes. Which in turn drives up the "value" of shoes and the cost of shoes for people without shoes. So, are shoes and houses that much different. Houses also require upkeep. You can resole your shoe, you can reroof your house. Some would say houses require much more upkeep. Sure, houses are a little more permanent and hard to steal. But a shoe very rarely burns down.

NotYourLawyer 4y ago

Anything capable of being owned is an asset class. How would housing become not an asset class? Government owns all the land and we just rent? Seems worse.

reillyse 4y ago
Read my shoe example in the other thread, it's the difference between something being an asset and an investment.