7 ms·

I still find it strange that housing is expected to be an appreciating asset class, rather than a depreciating one that requires continual investment to counter

I still find it strange that housing is expected to be an appreciating asset class, rather than a depreciating one that requires continual investment to counteract wear and tear etc. I understand that this is largely by design, but it seems odd to me how much this is accepted as fundamental to properties, rather than something that’s been constructed.

cm2187 4y ago
Population growth. The city centre doesn't expand but the demand for it does. And logically it should also be a hedge against inflation. I am not sure that our modern economies have the stomach for what it takes to rein in inflation (too leveraged).
- arcticbull 4y ago
  Zoning. The city center is free to expand upward just about as much as we let it, but the problem is we don't let it so that we can enrich the existing landholders (they are the voting class after all). The city of San Francisco is a prime example. The city makes is utterly impossible to build anything. From 2012 to 2016, SF metro added 373,000 jobs and only 58,000 new houses. The entire western half the city is hard-capped at 4 stories for no reason. There's a whole wikipedia page on it. [1] If you let supply meet demand, the cost of housing converges around the cost of construction give or take, just like in Japan which has seen ~0% inflation-adjusted housing price growth since the mid-90s. [2] This is a simple problem to solve. Allow construction, invest in transit. SF is so obstinate that it's short 82,000 units in its submission of a conforming housing element to the state. [3] The fun part is if they fail to produce a conforming element, the builder's remedy kicks in and the city loses its ability to deny housing (and new builds don't have to go through CEQA). [4] Really in my opinion the Builder's Remedy should the default state. We should do what Japan did and federalize zoning. The federal government does have precedent. At least according to the "trillion-dollar coin" guy, Carlos Mucha. [5] [1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage [2] https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI [3] https://www.sfchronicle.com/sf/article/housing-California-construction-17368517.php https://www.sfchronicle.com/sf/article/housing-California-co... [4] https://www.hklaw.com/en/insights/publications/2022/10/builders-remedy-bay-area-will-soon-face-a-powerful-housing-tool https://www.hklaw.com/en/insights/publications/2022/10/build... [5] https://twitter.com/mucha_carlos/status/1420815462342959105?s=20&t=v7r1edQH9ZFY3i97W9ejKw https://twitter.com/mucha_carlos/status/1420815462342959105?...
  - cm2187 4y ago
    Well, Japan hasn't seen population growth. I have a lot of sympathy for deregulation and think it should be the primary tool, though many cities also have a character and you can't replace every construction with a high rise building without destroying the city. Think of Paris or London.
    - arcticbull 4y ago
      > Well, Japan hasn't seen population growth. I don't know why this is everyone's immediate reaction. I'm saying housing is governed by supply and demand. If you want to drop prices you can either increase supply or decrease demand. They allowed supply to meet demand by increasing supply into flat... ish demand. ([edit] SF and Tokyo both grew ~10% from the mid 90s). So the system works :) > I have a lot of sympathy for deregulation and think it should be the primary tool. Great me too. > ... though many cities also have a character and you can't replace every construction with a high rise building without destroying the city. Think of Paris or London. Think of Hong Kong. A wonderful city. It's very different from the 50s when it was basically the same height as SF. I don't think anyone misses that. ([1] before, [2] after - I'd hardly call that ruined). Yes, construction will change the character. But so what? Look at SOMA. Do you miss the old warehouses? I don't. And I certainly wouldn't miss the mishmash of almost identical 4 story buildings in the Sunset. They ain't no painted ladies is all I'm saying. Or much of the Mission. Honestly the entire SF affordability crisis would disappear if the Sunset was zoned 6 story instead of 4. Embrace change! [1] https://www.mardep.gov.hk/theme/port_hk/en/p1ch6_1.html# https://www.mardep.gov.hk/theme/port_hk/en/p1ch6_1.html# [2] https://en.wikipedia.org/wiki/Victoria_Peak#/media/File:Hong_Kong_Harbour_Night_2019-06-11.jpg https://en.wikipedia.org/wiki/Victoria_Peak#/media/File:Hong...
      - ericmay 4y ago
        Hong Kong is a fragile anti pattern of artificially high density enabled by fossil fuels. We don’t want that (though it’s less bad than the suburbs, but just barely). What we need to continue to strive for is medium density, where you have a mix of housing types and transit options, and also work options. In this mode you have a good density level that is in harmony with the surrounding environment, but you can also do things like fix your own house or make changes or improvements. These types of neighborhoods also offer multi-generational living and better social interactions.
baxtr 4y ago
It's mainly about the location and property value and not so much about the asset built on that property.
wiseowise 4y ago
People are infinite resource (relatively speaking), land and houses are not. Also, some places disproportionately attract more people. (Just like attractive people are disproportionately attracting more attention than “uglies”)

cm2187 4y ago

Population growth. The city centre doesn't expand but the demand for it does. And logically it should also be a hedge against inflation. I am not sure that our modern economies have the stomach for what it takes to rein in inflation (too leveraged).

arcticbull 4y ago
Zoning. The city center is free to expand upward just about as much as we let it, but the problem is we don't let it so that we can enrich the existing landholders (they are the voting class after all). The city of San Francisco is a prime example. The city makes is utterly impossible to build anything. From 2012 to 2016, SF metro added 373,000 jobs and only 58,000 new houses. The entire western half the city is hard-capped at 4 stories for no reason. There's a whole wikipedia page on it. [1] If you let supply meet demand, the cost of housing converges around the cost of construction give or take, just like in Japan which has seen ~0% inflation-adjusted housing price growth since the mid-90s. [2] This is a simple problem to solve. Allow construction, invest in transit. SF is so obstinate that it's short 82,000 units in its submission of a conforming housing element to the state. [3] The fun part is if they fail to produce a conforming element, the builder's remedy kicks in and the city loses its ability to deny housing (and new builds don't have to go through CEQA). [4] Really in my opinion the Builder's Remedy should the default state. We should do what Japan did and federalize zoning. The federal government does have precedent. At least according to the "trillion-dollar coin" guy, Carlos Mucha. [5] [1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage https://en.wikipedia.org/wiki/San_Francisco_housing_shortage [2] https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI https://fred.stlouisfed.org/series/JPNCPIHOUAINMEI [3] https://www.sfchronicle.com/sf/article/housing-California-construction-17368517.php https://www.sfchronicle.com/sf/article/housing-California-co... [4] https://www.hklaw.com/en/insights/publications/2022/10/builders-remedy-bay-area-will-soon-face-a-powerful-housing-tool https://www.hklaw.com/en/insights/publications/2022/10/build... [5] https://twitter.com/mucha_carlos/status/1420815462342959105?s=20&t=v7r1edQH9ZFY3i97W9ejKw https://twitter.com/mucha_carlos/status/1420815462342959105?...
- cm2187 4y ago
  Well, Japan hasn't seen population growth. I have a lot of sympathy for deregulation and think it should be the primary tool, though many cities also have a character and you can't replace every construction with a high rise building without destroying the city. Think of Paris or London.
  - arcticbull 4y ago
    > Well, Japan hasn't seen population growth. I don't know why this is everyone's immediate reaction. I'm saying housing is governed by supply and demand. If you want to drop prices you can either increase supply or decrease demand. They allowed supply to meet demand by increasing supply into flat... ish demand. ([edit] SF and Tokyo both grew ~10% from the mid 90s). So the system works :) > I have a lot of sympathy for deregulation and think it should be the primary tool. Great me too. > ... though many cities also have a character and you can't replace every construction with a high rise building without destroying the city. Think of Paris or London. Think of Hong Kong. A wonderful city. It's very different from the 50s when it was basically the same height as SF. I don't think anyone misses that. ([1] before, [2] after - I'd hardly call that ruined). Yes, construction will change the character. But so what? Look at SOMA. Do you miss the old warehouses? I don't. And I certainly wouldn't miss the mishmash of almost identical 4 story buildings in the Sunset. They ain't no painted ladies is all I'm saying. Or much of the Mission. Honestly the entire SF affordability crisis would disappear if the Sunset was zoned 6 story instead of 4. Embrace change! [1] https://www.mardep.gov.hk/theme/port_hk/en/p1ch6_1.html# https://www.mardep.gov.hk/theme/port_hk/en/p1ch6_1.html# [2] https://en.wikipedia.org/wiki/Victoria_Peak#/media/File:Hong_Kong_Harbour_Night_2019-06-11.jpg https://en.wikipedia.org/wiki/Victoria_Peak#/media/File:Hong...
    - ericmay 4y ago
      Hong Kong is a fragile anti pattern of artificially high density enabled by fossil fuels. We don’t want that (though it’s less bad than the suburbs, but just barely). What we need to continue to strive for is medium density, where you have a mix of housing types and transit options, and also work options. In this mode you have a good density level that is in harmony with the surrounding environment, but you can also do things like fix your own house or make changes or improvements. These types of neighborhoods also offer multi-generational living and better social interactions.

baxtr 4y ago

It's mainly about the location and property value and not so much about the asset built on that property.

wiseowise 4y ago

People are infinite resource (relatively speaking), land and houses are not. Also, some places disproportionately attract more people. (Just like attractive people are disproportionately attracting more attention than “uglies”)