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A big problem is that homeowners understand that for the value of their "nest-egg" to appreciate, this implicitly relies on housing scarcity, and this influence

A big problem is that homeowners understand that for the value of their "nest-egg" to appreciate, this implicitly relies on housing scarcity, and this influences the outcome of elections, which influences the outcome of government housing policy. As home valuations become more important and critical to the wellbeing of the "middle class", any policy that would even indirectly hinder valuations comes under great criticism. There were a number of issues in my recent municipal council election, but I cannot help but notice that the candidates suggesting to build rental housing everywhere, which would have empowered renters and hurt homeowning minor landlords that benefit from high rents, lost, and those that won suggested the status quo that would protect detached home areas, with their main housing policy suggestion being around faster renovation permitting, useful of course for those minor home owning landlords wanting to create a secondary suite to get a renter to pay off their massive mortgages.

nerdponx 4y ago
You could also come at the problem the other way. If incomes were keeping up with productivity and cost-of-living, people wouldn't be relying so heavily on their homes appreciating in order to have enough money to retire.
- chordalkeyboard 4y ago
  I agree but there is another factor, that is the ability for income earners to effectively save for retirement. Artificially low interest rates forced savers into the stock market, which caused equities to be artificially high relative to their yields, creating a positive feedback cycle where there was no alternative to 'saving' via stock investments and causing corporations to be able to ride a tidal wave of investment without justifying it via dividends. This is all downstream from cheap credit and a lack of incentive to save money (defer consumption) and now we are faced with the unintended consequences of decades of short-sighted monetary policy.
- WalterBright 4y ago
  > If incomes were keeping up with productivity and cost-of-living Something's got to pay for all that increase in government spending. With all the government spending and government pensions and all the people on the government payroll, sometimes I'm surprised the economy isn't a complete basket case.
  - nerdponx 4y ago
    Why do you think government spending specifically is the problem? I strongly doubt there is a crowding-out effect going on with the things that the US government has been spending money on lately. And all that spending has been financed by debt; it's not like income taxes have been going up. The big increases to cost of living have come in the form of energy, housing, and healthcare. I'm not sure how government spending would cause that, unless you are arguing that the spending has been misallocated.
    - WalterBright 4y ago
      > Why do you think government spending specifically is the problem? There's no such thing as a free lunch. Government spending always gets sucked out of the economy one way or another. Ultimately, everyone pays for it with a lower standard of living, directly or indirectly. As for the government financed by debt spending, the cost to you is inflation.
      - Tiktaalik 4y ago
        No spending is not sucked out of the economy. The government doesn't take your taxes and light the money on fire. They pay for public works that you use every day. They hire people to create such works and maintain them. Those people take their wages and spend it in the economy and support private businesses.
  - ok_dad 4y ago
    The extra productivity isn’t going to the government via taxes on the common person, it’s going to those who already own most of the capital and can leverage that. Maybe the government also spends too much, but that’s not the root cause of the lack of the common person sharing in productivity gains.
bsenftner 4y ago
Now just anticipate the number of private equity firms betting on appreciation of their house portfolios in addition to the rents they charge that fewer and fewer can afford... private equity may be forced to liquidate their sizable home portfolios.
- nerdponx 4y ago
  Are they? I am curious what % of private equity holdings are intended for renting, rather than flipping.
  - bsenftner 4y ago
    If they are intended for flipping and the housing market dips - then they will sell them off even faster.
deleted 4y ago
[deleted]
biomcgary 4y ago
In the scenario you described, the majority of voters in those areas must be land owners, based on how they voted. Assuming that the elections you are describing are genuinely democratic, why should people vote counter to their own interests? In general, candidates that promise to do things that benefit people who are not their constituency don't get elected. Personally, I want to live in an area where most of the residents own their own property rather than renting it. Why? Because people who own their own property are more invested (literally) in maintaining it than renters. I live in an area with recent massive flooding (in areas that are not historically flood zones). Lots of people are outside fixing their own properties but also hiring people to fix the problems, both functional and aesthetic. If they were all rental properties, the motivation of the landowner to fix the aesthetics would not exist until the current renter left. The problems in real estate are not primarily property ownership vs rental, but the financialization of the real estate market.
- woodruffw 4y ago
  This is overly simplistic: people regularly vote against their own interests in all domains, all the time. There are even semi-rational reasons for doing so: many Americans consider themselves "temporarily embarrassed millionaires," and vote in the interest of their hypothetical, wealthy future self rather than their current self.
  - nerdponx 4y ago
    On the other hand, it's also perfectly rational to "altruistically" vote in favor of policies that decrease your financial wealth in the short term, but that benefit society as a whole, and/or benefits you in the long term.
- lmm 4y ago
  It's a race to the bottom, because the costs are concentrated and the benefits are distributed. If we allowed each district to vote their own income tax rate, everyone would vote for 0; what's happening with house-building is the equivalent for that. We need state- or national-level housing policy with no ability to override it locally, or at least to enforce some minimums. (Interestingly California at least already has that law on the books, although so far they're only enforcing it against towns they don't like rather than the general enforcement that we need).
pcthrowaway 4y ago
This pretty much describes the political situation where I live (Vancouver) as well
- Tiktaalik 4y ago
  congrats u guessed which municipal campaign I was alluding to! :)

nerdponx 4y ago

You could also come at the problem the other way. If incomes were keeping up with productivity and cost-of-living, people wouldn't be relying so heavily on their homes appreciating in order to have enough money to retire.

chordalkeyboard 4y ago
I agree but there is another factor, that is the ability for income earners to effectively save for retirement. Artificially low interest rates forced savers into the stock market, which caused equities to be artificially high relative to their yields, creating a positive feedback cycle where there was no alternative to 'saving' via stock investments and causing corporations to be able to ride a tidal wave of investment without justifying it via dividends. This is all downstream from cheap credit and a lack of incentive to save money (defer consumption) and now we are faced with the unintended consequences of decades of short-sighted monetary policy.
WalterBright 4y ago
> If incomes were keeping up with productivity and cost-of-living Something's got to pay for all that increase in government spending. With all the government spending and government pensions and all the people on the government payroll, sometimes I'm surprised the economy isn't a complete basket case.
- nerdponx 4y ago
  Why do you think government spending specifically is the problem? I strongly doubt there is a crowding-out effect going on with the things that the US government has been spending money on lately. And all that spending has been financed by debt; it's not like income taxes have been going up. The big increases to cost of living have come in the form of energy, housing, and healthcare. I'm not sure how government spending would cause that, unless you are arguing that the spending has been misallocated.
  - WalterBright 4y ago
    > Why do you think government spending specifically is the problem? There's no such thing as a free lunch. Government spending always gets sucked out of the economy one way or another. Ultimately, everyone pays for it with a lower standard of living, directly or indirectly. As for the government financed by debt spending, the cost to you is inflation.
    - Tiktaalik 4y ago
      No spending is not sucked out of the economy. The government doesn't take your taxes and light the money on fire. They pay for public works that you use every day. They hire people to create such works and maintain them. Those people take their wages and spend it in the economy and support private businesses.
- ok_dad 4y ago
  The extra productivity isn’t going to the government via taxes on the common person, it’s going to those who already own most of the capital and can leverage that. Maybe the government also spends too much, but that’s not the root cause of the lack of the common person sharing in productivity gains.

bsenftner 4y ago

Now just anticipate the number of private equity firms betting on appreciation of their house portfolios in addition to the rents they charge that fewer and fewer can afford... private equity may be forced to liquidate their sizable home portfolios.

nerdponx 4y ago
Are they? I am curious what % of private equity holdings are intended for renting, rather than flipping.
- bsenftner 4y ago
  If they are intended for flipping and the housing market dips - then they will sell them off even faster.

deleted 4y ago

[deleted]

biomcgary 4y ago

In the scenario you described, the majority of voters in those areas must be land owners, based on how they voted. Assuming that the elections you are describing are genuinely democratic, why should people vote counter to their own interests? In general, candidates that promise to do things that benefit people who are not their constituency don't get elected. Personally, I want to live in an area where most of the residents own their own property rather than renting it. Why? Because people who own their own property are more invested (literally) in maintaining it than renters. I live in an area with recent massive flooding (in areas that are not historically flood zones). Lots of people are outside fixing their own properties but also hiring people to fix the problems, both functional and aesthetic. If they were all rental properties, the motivation of the landowner to fix the aesthetics would not exist until the current renter left. The problems in real estate are not primarily property ownership vs rental, but the financialization of the real estate market.

woodruffw 4y ago
This is overly simplistic: people regularly vote against their own interests in all domains, all the time. There are even semi-rational reasons for doing so: many Americans consider themselves "temporarily embarrassed millionaires," and vote in the interest of their hypothetical, wealthy future self rather than their current self.
- nerdponx 4y ago
  On the other hand, it's also perfectly rational to "altruistically" vote in favor of policies that decrease your financial wealth in the short term, but that benefit society as a whole, and/or benefits you in the long term.
lmm 4y ago
It's a race to the bottom, because the costs are concentrated and the benefits are distributed. If we allowed each district to vote their own income tax rate, everyone would vote for 0; what's happening with house-building is the equivalent for that. We need state- or national-level housing policy with no ability to override it locally, or at least to enforce some minimums. (Interestingly California at least already has that law on the books, although so far they're only enforcing it against towns they don't like rather than the general enforcement that we need).

pcthrowaway 4y ago

This pretty much describes the political situation where I live (Vancouver) as well

Tiktaalik 4y ago
congrats u guessed which municipal campaign I was alluding to! :)