5 ms·

I think it is properties again. And harder this time. Except this time it is worse. It's not about the rising prices of properties, but the idea that there isn

• tjr225 4y ago
  Property is intrinsically limited. Property in desirably places is especially intrinsically limited. You’re basically lucky if you own any property at all at this point. Just take a gander and how much property in Hong Kong or Amsterdam costs and you’ll start to think it is cheap in the US. It’s only going to get worse. Do you think that people are going to desire living in Santa Monica or Queen Anne less over the next few hundred years? Our planet is getting smaller relative to the amount of people that live on it and relative to the habitable places that exist.
  • ReptileMan 4y ago
    Except why is no one asking the question why so few places are desirable and doing something to alleviate it.
    • tjr225 4y ago
      Most of the time it’s because you get to live in a city and then also get to drive an hour and go hiking/skiing in the mountains or go to the beach. It isn’t very complicated.
    • socialismisok 4y ago
      Plenty of folks are, but if the thing you want to do about it is decommidify housing you get a whole lot of people saying, "that'll never work!" Without actually engaging with the ideas. Plenty of ideas and people trying out there, just not much interest from the every day person.
    • lmm 4y ago
      Because housing policy is set up so that homeowners in desirable places are the ones who have control over whether more housing gets built there, and unsurprisingly they vote to enrich themselves at the cost of everyone else. The only way to fix it is to set planning rules strictly at the national level, but who's going to vote for that?
      • DocTomoe 4y ago
        And - in all fairness - enriching yourself only is the side-effect, the major other output being "there now is a (more) desirable place". People want to live at increasingly more desirable places, and that is true even more so for people who cannot afford to: If such desirability was no object in their quest, Detroit would be full of people, the Bay Area wouldn't have so many issues with housing, and housing prices would be a non-issue. If the alternative is "everywhere sucks equally", which is the likely outcome of a national-level central planning, I doubt you will find many takers.
        • lmm 4y ago
          I live somewhere with national-level planning rules and it's brilliant (indeed it's the most populous metropolitan area in the world, and I don't think that's coincidence).
          • DocTomoe 4y ago
            Without going too deep in Japanese real estate planning laws, iirc most I am aware of are more a "national guideline" and are frequently overridden by prefectures and cities. That's hardly on the level of actual national-planning, communist-style 5-year-plans.
      • prottog 4y ago
        > The only way to fix it is to set planning rules strictly at the national level You don't even need centralized planning. Just implement a proper land value tax [0] so that the desirability of a plot of land has to be commensurately paid for by the owner. [0]: https://en.wikipedia.org/wiki/Land_value_tax https://en.wikipedia.org/wiki/Land_value_tax
  • silisili 4y ago
    > Property in desirably places is especially intrinsically limited. Yes...but property values are way up all over. Boise, Phoenix, Nashville...even middle of nowhere Kansas. El Paso is having it rough. They've always had super cheap houses to the point of unbelievable...what most would consider a decked out mansion for 300k or so, and a 3+ percent property tax. Guess what's happening now that everyone's regular ol 150k house is now worth 400k? Valuable property will always have value, but the vast majority of US property is not so desirable. It's already stalled, and it's going to be a bloodbath next year. The real question is what happens when all the buyers of the last 3 or so years are underwater? We either end up in 2008 again, or tons of bailouts which just pushes inflation further towards the houses being worth it again.
    • DSingularity 4y ago
      Why would they sell? They live there now. Why also would builders not keep prices high buy produce less? 2008 was bad loans coming to head. I don’t think it’s going to be the same.
      • silisili 4y ago
        > Why would they sell In many cases, they don't, they just walk away. Would you stay in a 500k 2000sqft house that you have no equity in, when a 300k 2000sqft house was for sale next door? In a non-recourse state? And even for principled people, when you lose your job or fall behind on something you overpaid for, it's really easy to just walk away.
        • thebradbain 4y ago
          Even in non-recourse states, walking away from your mortgage will decimate your credit score and preclude you from getting a mortgage on a cheaper property in practice, even if theoretically it pencils out on paper.
        • yawnr 4y ago
          Because you have a 2.5% mortgage and your monthly payment is still smaller than than 300k house at current rates. This is going to be the main issue to me. People are just going to sit in all these houses with bloated prices because the rates they pay are so low, and prices are going to have a very hard time returning to anything close to what they were with inventory so low.
  • kortilla 4y ago
    > Do you think that people are going to desire living in Santa Monica or Queen Anne less over the next few hundred years? Milwaukee and Detroit were pretty desirable not that long ago. Cuba was quite nice 80+ years ago. Hong Kong was desirable globally just 10 years ago. What is “desirable” changes from many other factors so property investments absolutely aren’t a given. Land in the middle of nowhere barely beats inflation and has varying degrees of ongoing costs depending on the jurisdiction.
    • peteradio 4y ago
      I doubt arable farmland has generally gone down over the long view.
    • mickdeek86 4y ago
      The campesinos may disagree about Cuba being "quite nice" 80 years ago, what with all the slavery and rape. But yes, a seemingly good real estate investment for foreigners.
• throwaway290 4y ago
  I think it's scarcity (or to be precise scarcity mentality, which would probably extend into post-scarcity). The very reason for trying to find profit in the first place, real estate crypto or whatever, arises from wanting to outcompete someone else for resources.
  • eftychis 4y ago
    That is the definition of an economy.
    • throwaway290 4y ago
      That's a weird definition of economy you have, but you do you.
      • stuxnet79 4y ago
        It is hardly a "weird" definition. Economics and "the economy" as a whole fundamentally deal with scarcity. Figuring out the most appropriate use of a good or service given that its scarce and has a multitude of "other" uses is the core problem that capitalism tries to solve.
        • powerapple 4y ago
          That's the definition of value storage. The economy works on greeds, realization of greeds, and creation of new greeds. Scarcity would lead to the greed of owning it.
          • peteradio 4y ago
            Intro economics class our teacher posed a question "Would economics exist if everyone had a magic wand that could get them whatever they wanted?" I said "ya, cause someone would magic other peoples wands away then there would be an economy to restore peoples wands or grant wishes on behalf of people." Apparently that wasn't the answer they were looking for, but he said I might have some point. I think people just like messing with other people and that is inalienable.
• imtringued 4y ago
  If you own land you own a piece of the planet. How much is permanent ownership over a given plot of land worth? Millions? Billions? Trillions? Infinite? Why would any sane person even run a business if the government pays massive subsidies (public services) to make your land more valuable? Just buy more land.
  • axiolite 4y ago
    > How much is permanent ownership over a given plot of land worth? > the government pays massive subsidies (public services) to make your land more valuable Most of us have to pay taxes on property we own every year, pay for many of the public services (water, sewer, trash, etc.), and the benefits returned from taxes (like roads and police) are generally not worth the amount paid in a strict sense. If you think a plot of land is oh so valuable, may I suggest you invest in some remote plots in Nevada, as there is no shortage, and they are quite inexpensive...
    • andromeduck 4y ago
      It's not the land that's valuable but the lands proximity to goods and services - in that sense, it's not fair that the value created by those goods and services is accrued by a private property that did not pay a proportionate fraction of the revenue sustaining it as the bulk of revenue is raise from other means. This is where the Georgist idea of land value tax comes in.
      • nopenopenopeno 4y ago
        Georgism now
    • neilparikh 4y ago
      > Most of us have to pay taxes on property we own every year, pay for many of the public services (water, sewer, trash, etc.), and the benefits returned from taxes (like roads and police) are generally not worth the amount paid in a strict sense. If you don't think the benefits aren't worth it, why do you keep owning the property? Choosing to continue to own the property implies a revealed preference that the benefits outweigh the costs. The biggest benefit from owning property is the right to exclusive use of a certain location for infinite time [0]. And the value of this right is proportional to how desirable living there is, which is made up of factors like economic liveness, proximity to nature, government services etc. The thing to note here is that while not all of these are due to government subsidy, all of these are the result of "other people's work"; you can just sit there and if other people do good work, the gains go to you. Also, as a sidenote, most local services are not funded exclusively by property taxes: there's usually funding from things like sales and income taxes (either from that area, or transferred from higher levels of govt). [0] - Minus property tax of course, but property tax is rarely equal to the benefit you get; if it was, the purchase price of the property would be 0.
• just_boost_it 4y ago
  I think when people forget that the crisis in 07/08 wasn't just a dip in property values. The entire financial system had managed to get itself propped up on extreme leverage against the single bet that mortgages would almost never default. That extreme leverage put the whole system in a highly unstable state, and it took just a little stress to pull the whole thing down. It collapsed the entire risk management systems of banks, funds and companies across the entire economy. That meant that there was nobody in the market that could lend, and everyone needed to borrow to try and plug the gaping hole that was ripped in their balance sheets. The financial system just isn't completely levered to housing that way today. Today, an economic slowdown might lead to a dip in property prices, but to find an event that would cause widespread and long-lasting damage to the financial system I think you're going to have to look elsewhere.