7 ms·

To make housing affordable, one must make it unpalatable to investors. Lack of housing is not a problem - an excess of demand from speculative investors fueled

To make housing affordable, one must make it unpalatable to investors. Lack of housing is not a problem - an excess of demand from speculative investors fueled by too low interest rates is the problem. Affordable housing is uninvestable housing. Until advocates admit this, the walking in circles will continue. i) Price controls do not work at reducing prices, there are two millennia worth of proof for this.[1] ii) Higher interest rates lower housing prices by lowering the availability of loans. This is a good thing unless you are already bought into the ponzi of ever declining rates. iii) Affordable housing is uninvestable housing. A house is a deprecative asset, the same way cars are. A house does not produce anything. You live in it and it wears down. [1] https://en.wikipedia.org/wiki/Edict_on_Maximum_Prices https://en.wikipedia.org/wiki/Edict_on_Maximum_Prices

hrbf 4y ago
I’m going further to say that the speculative investment style itself is the problem, for many if not all areas. Once this kind of investor comes in, they want to squeeze the market for all it has, effects be damned. They may as well bet on crop failure – and they do.
- fithisux 4y ago
  Well worded.
- the_wolo 4y ago
  I'm going further to say that every investing is speculative in itself, because investing is the activity of buying an asset, speculating that there will be a return.
  - chii 4y ago
    while that's true, it's not black and white. The invested asset produces output. This output is useful, and speculative demand of that asset will, in normal circumstances, produce more of that output due to the pressure to increase the number of those assets. Housing is not different. Except that there are some people who would prefer to limit the builds of new housing.
  - johnnymorgan 4y ago
    Once investing was disconnected from P&E, you are absolutely correct. The market is just gambling at this point the company can hype their stock. >Stonks go up, we just like the stonk
  - worik 4y ago
    Capitalism is the problem, then? That is what that is. Establish ownership (of capital), exploit that ownership. Capitalism in a nutshell.
- machina_ex_deus 4y ago
  The problem as I see it, is investment without value added, a.k.a rent seeking. Buying an apartment and renting it for long duration without any value added is a problem. If you buy something without expectations of its economical value increasing, only its price, that's a problem. Buying an apartment and hosting it for short duration in Airbnb (or another way) to tourists, while providing real service, is a real investment. It created real economic value. I'm OK with these kind of investments. The root of the problem comes from the central bank. There's asset inflation that is virtually ignored, created by low rates, QE, and regulation around mortgages. That asset inflation makes "investing" without creating value a good strategy.
  - johnnymorgan 4y ago
    This...so much this!
  - mkoubaa 4y ago
    One or two steps removed from Georgianism.
  - rdtwo 4y ago
    Almost all the growth in the USA for the last decade was from rent seeking. It would be crazy not to invest in it
  - mb7733 4y ago
    I don't follow, why do you consider providing short term stays to tourists a valuable service, but not providing long term housing to residents?
    - machina_ex_deus 4y ago
      They created economic value. The tourists couldn't buy the house themselves just for few days visit, and there was economic value in the cleaning, the service, the flexibility of making the reservation in quick timing. There's no economic value in "providing long term housing to residents". You hodl the asset which someone else required and added no economic value. They could've bought the asset themselves because they wanted to be there for a long term. But they can't because everyone is hodling. When economic incentives are good, you should sell an asset or an investment when you do not expect to gain economic value from it anymore. Why do people "provide long term housing" instead of just selling their assets ? I see houses as an asset similar to cars. They decay, they break, old houses are horse trade, they require high maintenance. Their economic value only goes down, and their prices would too if there wasn't a housing cartel opposing new construction and high population growth combined with bad government housing policy, but most importantly, if the regulation around mortgages was similar to any other asset.
lifeplusplus 4y ago
All affordable housing I’ve come across require that you make less than 60k and pay 3k rent. There is almost No one who would do that.
- dhdgrygev 4y ago
  This doesn't sound very affordable to me.
  - lifeplusplus 4y ago
    From NYC
- assbuttbuttass 4y ago
  That would be spending more than 60% of your paycheck on rent
cm2187 4y ago
> Lack of housing is not a problem Even though the population has been steadily increasing? https://www.macrotrends.net/cities/23083/new-york-city/population#:~:text=New%20York%20City%20-%20Historical%20Population%20Data%20,%20%20-0.07%25%20%2069%20more%20rows%20 https://www.macrotrends.net/cities/23083/new-york-city/popul...
- goodpoint 4y ago
  Yes. Lack of housing is still not a problem. When houses are cheap people can afford buying them or have new homes built.
- johnnymorgan 4y ago
  Over all no it's not as we have population declines everywhere outside the USA and Africa. Canada is a good example of that, we have a lollipop demographic, lots of old people, not enough young. Housing is going to crash here over the next decade, I just don't see how it can't with the pop crash that is coming. Immigration isn't making up for the loss either and doesn't appear to be able to as we have trouble retaining people.
  - ac29 4y ago
    > Over all no it's not as we have population declines everywhere outside the USA and Africa. I'm not sure where you got that idea. Population is increasing nearly everywhere, including the two most populous countries (China and India): https://www.census.gov/popclock/world/ch https://www.census.gov/popclock/world/ch https://www.census.gov/popclock/world/in https://www.census.gov/popclock/world/in
    - johnnymorgan 4y ago
      India has growth, China does not. China has a median age of 67 I think now, they went from 1.8b to 1.4 or 1.2b, they are not growing in pop. Japan was just leading the way, outside of Africa, the USA, France and Mexico to a degree it's all old people.
DeathArrow 4y ago
There's an objective truth beyond Marxism. Markets, demand, offer. You seem to have the vision that my property is not my property and somebody else should decide what I do with my property, not me. This kind of vision ended up in blood and death of some many millions of people all over the world.
- attemptone 4y ago
  This got me wondering. How does one aquire property such that it your own? I'm thinking of some patch of land that doesn't belong to anybody, since nobody owns it there is noone I can aquire it from. Seems like there is some form of original sin involved in any form of owning land.
  - chii 4y ago
    > How does one aquire property such that it your own? you acquire it by fiat - and enforce that acquisition by force.
    - attemptone 4y ago
      I'm not really sure if your comment was meant ironically or not. So I will reply similarly. You're absolutely right and we need more of that.
  - DeathArrow 4y ago
    >This got me wondering. How does one aquire property such that it your own? I am sure you will find your answer if you read some history.
    - attemptone 4y ago
      Maybe I misworded that. I didn't want to ask, how it is/was done. But how it ought to be done.
  - goodpoint 4y ago
    The original sin was taking ownership by force.
qeternity 4y ago
The total demand from investors is a drop in the bucket compared to aggregate demand. Additionally, investors don’t actually consume housing, so they aren’t increasing demand. What you’re suggesting is that investors purchase housing and then somehow charge tenants more than they otherwise would be charged, which is of course absurd. Tenants will be charged as much as the landlord can charge. I agree about making housing uninvestable, but the issue is supply, not demand.
- joxel 4y ago
  It’s both and local factors are huge. Over 30% of the single family homes bought in the last two years where I live have been from investors that are turning them into short term rentals. It’s completely fucked the market.
  - qeternity 4y ago
    How has this fucked the market? Who is living in those rentals?
    - sokoloff 4y ago
      I read short-term rentals as AirBnB and similar. That does remove supply from the year-long lease market.
      - jonfw 4y ago
        Unless you live right on the beach or another heavy tourist destination, I don’t think 30% vacation/short term rentals is remotely realistic
        sokoloff 4y ago
        The figure cited was 30% of 2 years’ worth of sales of a segment of the market (SFRs) going to investors. That might be a net total of a mid-single digit percentage of the total market.
nikanj 4y ago
If there’s ample housing, landlords end up in a pricing war. It’s the underlying shortage of homes that drives high rents. Unless you believe the legends of shady foreign investors who buy scores of homes, and then leave them empty
- FuriouslyAdrift 4y ago
  Unless they are using RealPage... https://www.propublica.org/article/realpage-accused-of-collusion-in-new-lawsuit https://www.propublica.org/article/realpage-accused-of-collu...
  - fxtentacle 4y ago
    "Property managers thus held vacant rental units unoccupied for periods of time"
- fxtentacle 4y ago
  It's a well documented practice in large European cities, so it's not a stretch to assume it to be happening in the US, too
kennend3 4y ago
> A house is a deprecative asset, the same way cars are. A house does not produce anything. You live in it and it wears down. This is 100% inaccurate. Land, which is the real "value" in owning a home does not depreciate, nor can you make more of it. As more and more people mature and look to enter the real-estate market they can either: - Pay more to live where they want and convince someone to move - move further away, to a new subdivision. Next, not all cars depreciate, nor do houses. If properly maintained they last a long time. Head over to your local car show and see what it costs to buy a car from the 1960's now vs what is cost back then. I once owned a house built in 1915 and it was still in great shape. > i) Price controls do not work at reducing prices, there are two millennia worth of proof for this.[1] Strongly agree. it is insane when renters protest they want more and more rent control. It simply doesn't work and demanding more of something that has failed to do anything is odd.
- MichaelZuo 4y ago
  Land most often does not wear down, but the built structure obviously does. And even for a condo in a desirable neighbourhood in Manhattan, >50% the value of the property is likely in the value of the structure. i.e. the land value portion would be <50% So the parent is accurate.
  - kennend3 4y ago
    https://spearswms.com/10-oldest-houses-in-the-world/ https://spearswms.com/10-oldest-houses-in-the-world/ Yep, some of these homes from 1700's are just so worn out.. They must be worth absolutely nothing. Suggest you head over and offer $1 for them?
    - MichaelZuo 4y ago
      This seems like a non-sequitur?
      - kennend3 4y ago
        Hardly, it simply follows your logic. These houses are very old, and must be worn out. Therefor they would have depreciated to zero...
Der_Einzige 4y ago
Car prices may have stopped going down due to precieved rarity of engine options as emissions laws get more intense. I really think the era of "depreciation" on cars is coming to an end.
- bumby 4y ago
  I don’t think people are buying a 1960s car because of “engine options”. New engines are objectively better in both performance and emissions. If a new law allowed an old 289 design to be installed in a new mustang with no modern emission requirements, the new car would not suddenly skyrocket in value.
ouid 4y ago
Land*time is the unit that people consume, and the land produces this at an instantaneous rate of 1. So you're wrong about it not producing anything, but right about everything else, in my view. If you want to properly make land uninvestable, you have to put property taxes at the rental rate.
hnews_account_1 4y ago
This is highly inaccurate. Every boom in any market is due to it being a good investment. This is the success of capitalism and one of the reasons it is hard to beat. Saying investing will kill something is easy. The alternative is much, MUCH harder. It is easier to run a mail service like usps than create more housing and maintain it using govt money. People have like zero clue about finance smh
worik 4y ago
> i) Price controls do not work at reducing prices, there are two millennia worth of proof for this.[1] They have worked in some cities in Europe. It has to more than just a cap on price. Demand is managed too with systems of entitlement. I am unsure of the details but I know my children tangled with the system whilst on OE in Amsterdam. It was well established and functioning.
- colinmhayes 4y ago
  Which cities? I know that Berlin and I think Stockholm were utter failures that lead to zero rental availability.

hrbf 4y ago

I’m going further to say that the speculative investment style itself is the problem, for many if not all areas. Once this kind of investor comes in, they want to squeeze the market for all it has, effects be damned. They may as well bet on crop failure – and they do.

fithisux 4y ago
Well worded.
the_wolo 4y ago
I'm going further to say that every investing is speculative in itself, because investing is the activity of buying an asset, speculating that there will be a return.
- chii 4y ago
  while that's true, it's not black and white. The invested asset produces output. This output is useful, and speculative demand of that asset will, in normal circumstances, produce more of that output due to the pressure to increase the number of those assets. Housing is not different. Except that there are some people who would prefer to limit the builds of new housing.
- johnnymorgan 4y ago
  Once investing was disconnected from P&E, you are absolutely correct. The market is just gambling at this point the company can hype their stock. >Stonks go up, we just like the stonk
- worik 4y ago
  Capitalism is the problem, then? That is what that is. Establish ownership (of capital), exploit that ownership. Capitalism in a nutshell.
machina_ex_deus 4y ago
The problem as I see it, is investment without value added, a.k.a rent seeking. Buying an apartment and renting it for long duration without any value added is a problem. If you buy something without expectations of its economical value increasing, only its price, that's a problem. Buying an apartment and hosting it for short duration in Airbnb (or another way) to tourists, while providing real service, is a real investment. It created real economic value. I'm OK with these kind of investments. The root of the problem comes from the central bank. There's asset inflation that is virtually ignored, created by low rates, QE, and regulation around mortgages. That asset inflation makes "investing" without creating value a good strategy.
- johnnymorgan 4y ago
  This...so much this!
- mkoubaa 4y ago
  One or two steps removed from Georgianism.
- rdtwo 4y ago
  Almost all the growth in the USA for the last decade was from rent seeking. It would be crazy not to invest in it
- mb7733 4y ago
  I don't follow, why do you consider providing short term stays to tourists a valuable service, but not providing long term housing to residents?
  - machina_ex_deus 4y ago
    They created economic value. The tourists couldn't buy the house themselves just for few days visit, and there was economic value in the cleaning, the service, the flexibility of making the reservation in quick timing. There's no economic value in "providing long term housing to residents". You hodl the asset which someone else required and added no economic value. They could've bought the asset themselves because they wanted to be there for a long term. But they can't because everyone is hodling. When economic incentives are good, you should sell an asset or an investment when you do not expect to gain economic value from it anymore. Why do people "provide long term housing" instead of just selling their assets ? I see houses as an asset similar to cars. They decay, they break, old houses are horse trade, they require high maintenance. Their economic value only goes down, and their prices would too if there wasn't a housing cartel opposing new construction and high population growth combined with bad government housing policy, but most importantly, if the regulation around mortgages was similar to any other asset.

lifeplusplus 4y ago

All affordable housing I’ve come across require that you make less than 60k and pay 3k rent. There is almost No one who would do that.

dhdgrygev 4y ago
This doesn't sound very affordable to me.
- lifeplusplus 4y ago
  From NYC
assbuttbuttass 4y ago
That would be spending more than 60% of your paycheck on rent

cm2187 4y ago

> Lack of housing is not a problem Even though the population has been steadily increasing? https://www.macrotrends.net/cities/23083/new-york-city/population#:~:text=New%20York%20City%20-%20Historical%20Population%20Data%20,%20%20-0.07%25%20%2069%20more%20rows%20 https://www.macrotrends.net/cities/23083/new-york-city/popul...

goodpoint 4y ago
Yes. Lack of housing is still not a problem. When houses are cheap people can afford buying them or have new homes built.
johnnymorgan 4y ago
Over all no it's not as we have population declines everywhere outside the USA and Africa. Canada is a good example of that, we have a lollipop demographic, lots of old people, not enough young. Housing is going to crash here over the next decade, I just don't see how it can't with the pop crash that is coming. Immigration isn't making up for the loss either and doesn't appear to be able to as we have trouble retaining people.
- ac29 4y ago
  > Over all no it's not as we have population declines everywhere outside the USA and Africa. I'm not sure where you got that idea. Population is increasing nearly everywhere, including the two most populous countries (China and India): https://www.census.gov/popclock/world/ch https://www.census.gov/popclock/world/ch https://www.census.gov/popclock/world/in https://www.census.gov/popclock/world/in
  - johnnymorgan 4y ago
    India has growth, China does not. China has a median age of 67 I think now, they went from 1.8b to 1.4 or 1.2b, they are not growing in pop. Japan was just leading the way, outside of Africa, the USA, France and Mexico to a degree it's all old people.

DeathArrow 4y ago

There's an objective truth beyond Marxism. Markets, demand, offer. You seem to have the vision that my property is not my property and somebody else should decide what I do with my property, not me. This kind of vision ended up in blood and death of some many millions of people all over the world.

attemptone 4y ago
This got me wondering. How does one aquire property such that it your own? I'm thinking of some patch of land that doesn't belong to anybody, since nobody owns it there is noone I can aquire it from. Seems like there is some form of original sin involved in any form of owning land.
- chii 4y ago
  > How does one aquire property such that it your own? you acquire it by fiat - and enforce that acquisition by force.
  - attemptone 4y ago
    I'm not really sure if your comment was meant ironically or not. So I will reply similarly. You're absolutely right and we need more of that.
- DeathArrow 4y ago
  >This got me wondering. How does one aquire property such that it your own? I am sure you will find your answer if you read some history.
  - attemptone 4y ago
    Maybe I misworded that. I didn't want to ask, how it is/was done. But how it ought to be done.
- goodpoint 4y ago
  The original sin was taking ownership by force.

qeternity 4y ago

The total demand from investors is a drop in the bucket compared to aggregate demand. Additionally, investors don’t actually consume housing, so they aren’t increasing demand. What you’re suggesting is that investors purchase housing and then somehow charge tenants more than they otherwise would be charged, which is of course absurd. Tenants will be charged as much as the landlord can charge. I agree about making housing uninvestable, but the issue is supply, not demand.

joxel 4y ago
It’s both and local factors are huge. Over 30% of the single family homes bought in the last two years where I live have been from investors that are turning them into short term rentals. It’s completely fucked the market.
- qeternity 4y ago
  How has this fucked the market? Who is living in those rentals?
  - sokoloff 4y ago
    I read short-term rentals as AirBnB and similar. That does remove supply from the year-long lease market.
    - jonfw 4y ago
      Unless you live right on the beach or another heavy tourist destination, I don’t think 30% vacation/short term rentals is remotely realistic
      - sokoloff 4y ago
        The figure cited was 30% of 2 years’ worth of sales of a segment of the market (SFRs) going to investors. That might be a net total of a mid-single digit percentage of the total market.

nikanj 4y ago

If there’s ample housing, landlords end up in a pricing war. It’s the underlying shortage of homes that drives high rents. Unless you believe the legends of shady foreign investors who buy scores of homes, and then leave them empty

FuriouslyAdrift 4y ago
Unless they are using RealPage... https://www.propublica.org/article/realpage-accused-of-collusion-in-new-lawsuit https://www.propublica.org/article/realpage-accused-of-collu...
- fxtentacle 4y ago
  "Property managers thus held vacant rental units unoccupied for periods of time"
fxtentacle 4y ago
It's a well documented practice in large European cities, so it's not a stretch to assume it to be happening in the US, too

kennend3 4y ago

> A house is a deprecative asset, the same way cars are. A house does not produce anything. You live in it and it wears down. This is 100% inaccurate. Land, which is the real "value" in owning a home does not depreciate, nor can you make more of it. As more and more people mature and look to enter the real-estate market they can either: - Pay more to live where they want and convince someone to move - move further away, to a new subdivision. Next, not all cars depreciate, nor do houses. If properly maintained they last a long time. Head over to your local car show and see what it costs to buy a car from the 1960's now vs what is cost back then. I once owned a house built in 1915 and it was still in great shape. > i) Price controls do not work at reducing prices, there are two millennia worth of proof for this.[1] Strongly agree. it is insane when renters protest they want more and more rent control. It simply doesn't work and demanding more of something that has failed to do anything is odd.

MichaelZuo 4y ago
Land most often does not wear down, but the built structure obviously does. And even for a condo in a desirable neighbourhood in Manhattan, >50% the value of the property is likely in the value of the structure. i.e. the land value portion would be <50% So the parent is accurate.
- kennend3 4y ago
  https://spearswms.com/10-oldest-houses-in-the-world/ https://spearswms.com/10-oldest-houses-in-the-world/ Yep, some of these homes from 1700's are just so worn out.. They must be worth absolutely nothing. Suggest you head over and offer $1 for them?
  - MichaelZuo 4y ago
    This seems like a non-sequitur?
    - kennend3 4y ago
      Hardly, it simply follows your logic. These houses are very old, and must be worn out. Therefor they would have depreciated to zero...

Der_Einzige 4y ago

Car prices may have stopped going down due to precieved rarity of engine options as emissions laws get more intense. I really think the era of "depreciation" on cars is coming to an end.

bumby 4y ago
I don’t think people are buying a 1960s car because of “engine options”. New engines are objectively better in both performance and emissions. If a new law allowed an old 289 design to be installed in a new mustang with no modern emission requirements, the new car would not suddenly skyrocket in value.

ouid 4y ago

Land*time is the unit that people consume, and the land produces this at an instantaneous rate of 1. So you're wrong about it not producing anything, but right about everything else, in my view. If you want to properly make land uninvestable, you have to put property taxes at the rental rate.

hnews_account_1 4y ago

This is highly inaccurate. Every boom in any market is due to it being a good investment. This is the success of capitalism and one of the reasons it is hard to beat. Saying investing will kill something is easy. The alternative is much, MUCH harder. It is easier to run a mail service like usps than create more housing and maintain it using govt money. People have like zero clue about finance smh

worik 4y ago

> i) Price controls do not work at reducing prices, there are two millennia worth of proof for this.[1] They have worked in some cities in Europe. It has to more than just a cap on price. Demand is managed too with systems of entitlement. I am unsure of the details but I know my children tangled with the system whilst on OE in Amsterdam. It was well established and functioning.

colinmhayes 4y ago
Which cities? I know that Berlin and I think Stockholm were utter failures that lead to zero rental availability.