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> While the rich are more likely to own homes, tons of middle class and poor people also bought homes and planned their lives under the assumption that housing

by mjr00 4y ago

> While the rich are more likely to own homes, tons of middle class and poor people also bought homes and planned their lives under the assumption that housing prices would go up. Tanking housing prices would destroy their trust in the system that they bet everything on. This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their house is the single biggest investment they will ever make in their life. You'd be destroying everyone's retirement plans and there'd be major economic repercussions. But there's also the second-order problem which is the people who realize that governments will never let the value of housing decrease because of the above, so you have upper middle class people owning "investment homes", or foreign investors buying homes they never intend to live in (or, in many cities, never even bother renting out), or even corporations like BlackRock buying up houses because they know it's such a safe investment.

blurbleblurble 4y ago
Doesn't lack of affordable housing kinda destroy everyone's retirement plans too? So it's kind of a losing situation.
last_responder 4y ago
>You'd be destroying everyone's retirement plans Everyone?
- reocha 4y ago
  I presume by "everyone" they mean upper middle class folks
  - sgt101 4y ago
    "everyone that counts" There - fixed it.
- goosedragons 4y ago
  The majority homeowner class. Which is why politicians enabling it keep getting voted in.
  - hinkley 4y ago
    [flagged]
    - bmitc 4y ago
      My property taxes are about a third of my total payment every month, where the other two thirds are the actual mortgage. The property taxes are over 50% of what my total rent was before I got a house, which was not low. I'm happy with my town's management, who seems to use their budget quite well, but property taxes can really get you. I think taxes should be increased on those with investment homes, second homes, mansions, and the income and wealth of the wealthy rather than just nickel and diming the middle class.
      - ascagnel_ 4y ago
        Does your local government provide a breakdown of property taxes? If they do, it's well worth checking, because it can become one of those things where you don't like the total amount, but you find each element of it to be reasonable. Just looking at my latest report on my property tax bill (which was about $3k USD for 2022): - about 45% of the amount went to local city administration, which includes civic services like police, fire, etc.; the city had a nearly balanced budget for the year (<$1k US away from balanced) - about 55% of the amount went to the local school board (who are directly voted on by the city's populace and can directly levy property taxes) for teachers, administrators, building maintenance, etc.; the school board did not have a balanced budget on account of bond issues for new construction in anticipation of ongoing new housing construction - 3% went to the local library (whose board is partially appointed by the mayor and partially self-selected), which had a small budget surplus
        bmitc 4y ago
- sgt101 4y ago
  yes I agree. I was always told, and believed "a house is for living in, not an investment". It figures in my retirement plans in the sense of not having to pay rent on my house as I will own it. That is really positive because it also means not having to pay tax on the money that I would have to have to pay rent. But I bought it because I wanted to own it and live in it, not to sell and make money off. Having said that it's obvious that the availability of cheap money has jacked up housing costs to a stupid level, and it's obvious that when it unwinds there is going to be a big mess. What stops it from unwinding - immigration... because as soon as immigration stops the pressure will go out of the housing market and a-la Japan houses will get cheap.
  - danuker 4y ago
    > when it unwinds Don't underestimate the inflationary potential of fiat currency. Maybe it'll just stay the same price, but everything else still gets relatively more expensive.
- baloki 4y ago
  I assume it’s more people who’ve bought a house, sell it to downsize once the kids have moved out and use the excess towards their retirement (to make up the difference between the low amount they’ve been able to scrape together over the years)
- n00shie 4y ago
  everyone that matters...
nerdponx 4y ago
What I think would help at least is if prices stopped increasing. That way, people who buy now at least won't lose money, but the expectation that valuations will continue to go up will have to taper off. Also, in the case of high-cost coastal cities, I don't think the issue is trust in government propping up prices, as much as it's trust that demand will continue to outpace supply for the next several years at least.
- NovemberWhiskey 4y ago
  That isn't an equilibrium. If the market formed the expectations that property values were going to stop increasing, then property values would drop - because the current price bakes in the assumption that they're going to keep increasing.
  - nerdponx 4y ago
    In the short term, sure. I'm being a little idealistic, but I don't think it's impossible for housing markets to find a new stable-ish level without lots of people losing their shirts in the process.
davidw 4y ago
> every citizen of the first world Where I lived in Italy, people certainly purchase houses, but they don't expect them to have crazy returns like in the US. It's just a way to not pay rent and have something that you can hang on to even if there's inflation or other funny business (something that Italy has seen a lot of). People even invest in, say, apartments, but it's a similar story: they expect them to hold their value and pay themselves off over a number of years. There are certainly returns on it, but they are seen as steady, long term investments. Where I live in Oregon, during the most recent boom, there were houses "earning" more than 100,000 a year, just sitting there. That's more than the median household. Yeah, it's a bit apples to oranges, but still, it's really out of kilter. Long term, it'd be healthiest if housing were 'boring', neither gaining or losing much. That'd also facilitate people swapping out different housing at different stages of their lives without worrying about timing the market. For instance, there are a lot of people getting older in the town I live in. Are they always going to want to or be able to shovel snow? Mow their lawns? Maybe a townhouse or a condo would be a better alternative that lets them stay in their general neighborhood.
- lotsofpulp 4y ago
  There is lots of boring housing in the US. It is not going to be in the Willamette Valley in Oregon. Just like houses in the Alps in Italy versus less desirable places in Italy.
  - davidw 4y ago
    "Just go somewhere else" is causing even the 'boring' places to have problems: https://www.nytimes.com/2022/02/20/business/economy/spokane-housing-expensive-cities.html https://www.nytimes.com/2022/02/20/business/economy/spokane-... We need some more fundamental reforms.
    - mywittyname 4y ago
      Such as what? The merging of Seattle and Tacoma was inevitable. The same thing has happened to a lot of cities that are separate by <1hr commutes via highways.
kevin_thibedeau 4y ago
s/retirement plans/state endorsed pyramid schemes/ It's going to collapse one way or another.
andrewmutz 4y ago
> You'd be destroying everyone's retirement plans and there'd be major economic repercussions I think that exaggerates it. Most retirees aren't profiting from the home they own if they live in it. The "income" from it is just imputed rent. So if the housing supply increases dramatically, that imputed rent drops, but it doesn't matter since the cost of housing drops as well.
- eloisant 4y ago
  The problem isn't retirees who paid out their house already, it's the households who still have a big mortgage on their house.
  - luckylion 4y ago
    What would change for them? They still need to pay that down in either case, don't they? Granted, they can sell at some point and make a 3x their investment. But by then, buying another house will also be 3x, and rent will be 5x, so they're kind of back where they started.
    - s1artibartfast 4y ago
      The point is that if housing prices tank, they won't have made 3x on their investment. They are talking about the case where you sell below what you paid.
      - luckylion 4y ago
        But they'd also pay much less for their next house, making up for it. If we all take a 90% pay cut but all products now cost 90% less, nothing really changes, does it? I guess the exception would be if they sold and then moved to a different area with a very different housing market (or left the country), but at least for domestic migration, I suppose the more rural and the cheaper the houses are, the worse the necessities for the elderly will be, e.g. doctors will be far away, no home nursing services, no local shopping.
wellthisisgreat 4y ago
> Tanking housing prices would destroy their trust in the system that they bet everything on. rip the bandaid and cut the losses. The house as investment is the blight on modern society
tablespoon 4y ago
> This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their house is the single biggest investment they will ever make in their life. You'd be destroying everyone's retirement plans and there'd be major economic repercussions. I wonder if one way out would be to 1) build government rental-housing projects again, to fill the immediate housing need, and 2) implement other policies to increase home-building (but only enough to keep price increases below inflation). One serious problem would be the association of housing projects with crime and poverty, but maybe that could be addressed by putting police stations on the first floor (or something) and eminent-domaining them into upscale areas over luxury housing.
- mjmahone17 4y ago
  Yes but 1 is a huge, massive, often insurmountable political battle because there are enough single-issue voters who will turn on any politician who threatens to enable “undesirable” types to share their neighborhood. And 2 is blocked by people who think their aesthetic preferences are more important than others ability to survive (often the same people as blocking 1). It’s not really the crime that matters, at the core, but rather the perception of “other”. The single-issue anti-housing people don’t want police in their neighborhoods, they want police in other people’s neighborhoods keeping those people out of the “nice” neighborhoods. Sadly, most people do in fact want more housing for people who are less well off than them, even if it means they have to run shoulders with strangers. But these are the people who work and don’t have time to show up to community meetings about a new apartment going up, and don’t usually decide who to vote for based on neighborhood aesthetics. Because the problem is mostly political, most of the solution is political as well: identify, train and support local politicians who will vote to build more housing, and help them write new laws that do so. And convince them (by consistently winning at the ballot box) that the anti-housing crowd is loud but not actually large, so there’s little danger in losing their votes.
- j_heffe 4y ago
  > build government rental-housing projects again It's a cultural thing too. We're brainwashed to look down on government housing simply because of the racist practices of the past. It wouldn't even have to be government funded necessarily. The problem could be fixed with non-market housing similar to Europe, where the building costs are fulfilled by a loan, and the HOA or housing entity is setup without the goal of making a profit off the rent, setting rental rates at a margin to cover only the loan and necessary expenses.
tgv 4y ago
> You'd be destroying everyone's retirement plans Not where I live. Housing prices have exploded, like everywhere else, but it's not people's retirement plan. We've got state and employer pensions (from a fund not owned by the employer). So it's not that. Look elsewhere. E.g. at AirBnB, and at ridiculous (both low and high) salaries.
rcme 4y ago
> This is pretty much the crux of it. High housing prices could be "fixed" almost overnight This is a crazy thing to state with almost no justification. How could housing prices be fixed overnight? Please don't say "zoning changes." Plenty of places without zoning issues have really expensive real estate.
- riku_iki 4y ago
  high enough property tax.
  - rcme 4y ago
    Wouldn't that make homes less affordable and increase rents?
    - riku_iki 4y ago
      it will make houses less attractive investment vehicle: people will start selling rental houses and downsize to smaller units, which will create additional supply on the market. Also, in case of California for example, if prop13 got eliminated, it will hit mostly existing house owners, and not new ones.
- missingrib 4y ago
  What's an example of a place without "zoning issues" with really expensive real estate?
  - rcme 4y ago
    NYC
88913527 4y ago
How is it exactly a retirement plan if your house goes up 200% over N years, but so do all of your neighbor's homes? You aren't changing your relative position to them.
- NovemberWhiskey 4y ago
  If all homes increase in value by the same percentage, you generate a lot of cash by owning for a long time and then downsizing, or moving to a location which started out with cheaper property (historically, this is the "retire to Florida" strategy). Or, you're going to pass on your home to your children, so it becomes part of the value of your estate. Or if you don't have any children, you can just reverse mortgage and get cash out that way. It's just like any other illiquid asset.
- s1artibartfast 4y ago
  You sell your house and go back to renting or get a reverse mortgage.
highwaylights 4y ago
Tax on non-primary properties solves this if you can get it past vested interests. Reasonable tax breaks for your primary or only home, and none for second homes / investments you let out. That gives a valve to perform qualitative easing on the housing market whenever you need to, and is not uncommon in other parts of the world. EDIT: Having read the responses below I’ve realised I didn’t clearly word what I meant here, that’s my bad. I mean a holding taxation rather than CGT. Essentially, an elevated annual property tax on non-primary properties that would have the effect of penalising investors relative to those seeking a home to live in.
- kwhitefoot 4y ago
  You mean that in the US you don't pay tax on the capital gain when you sell a property that is not your home? It's a great country to be rich in!
  - dirck 4y ago
    There is definitely capital gains tax on non-primary residence homes. Only primary homes are exempt up to certain dollar.
  - deleted 4y ago
    [deleted]
  - redmorphium 4y ago
    You do pay tax on that. However, you don't have to if you die and pass the property down to your spouse and/or children. This is the step-up in basis and is key to building generational wealth in the US.
    - mywittyname 4y ago
      > This is the step-up in basis and is key to building generational wealth in the US. Yes, but for most people, that's not really a benefit. It's possible to exclude the first few hundred thousand of capital gains taxes on a primary residence anyway. So even without the step-up basis, the tax burden on these properties would be tiny. Property taxes are a much more significant form of taxation than capital gains. And would be even without any preferential treatment.
piqi 4y ago
> ...their house is the single biggest investment Is it really anyone's fault but their own? I don't recall housing being offered as a low/no-risk investment with guaranteed profits. Financial blogs, podcasts, and Reddit commenters might have shared that view. Are there any examples of mortgage issuers or home builders advertising housing as an investment?
- yCombLinks 4y ago
  If most people in the system are making similar mistakes, then the system is directing them there. Saying it's their fault does nothing but ensure it keeps happening.
  - piqi 4y ago
    Whether or not they make the mistake isn't the point. If they were encouraged by a specific entity to treat it as an investment, then the blame should be placed on that entity. Regulations should be put in place to prevent that (I suspect they already are). Otherwise, they have to take the L. I expect banks and home builders are careful with how they communicate with customers. It's less about placing fault on the purchaser. It's more that there is no one else to blame. Never-ending bail-outs only hurt future generations. I wish I went into deep debt to buy a house a lot sooner. I didn't because I knew I couldn't afford it.
- riku_iki 4y ago
  > low/no-risk investment foreclosure makes it no-risk leveraged investment modulo downpayment.
  - NovemberWhiskey 4y ago
    That depends significantly on state law w.r.t anti-deficiency rules and so on. California is a non-recourse state where a mortgage lender can only repossess the home, but there are other states where the lender can foreclose and then come after you for the difference in case of a short sale.
fnordpiglet 4y ago
I don’t understand this. There are a lot of places in the US, and certainly globally, where housing prices decrease. There are also plenty of folks who got soaked in 2008 and lost everything, and no one helped them. How precisely does “the government” do this house price propping up? Via loan guarantees to ensure liquidity in the mortgage market? These make houses affordable and accessible to most people. Without loan guarantees people would still be buying houses all cash, and through loans for high credit quality, but primarily by high value entities who can afford to buy and rent many properties. In this world housing would largely be corporate owned rental units. Prices alone wouldn’t be keeping people out, but rather lack of loan liquidity would ensure a lack of lending. What keeps housing values high isn’t loan liquidity, it’s the ability to convert property into cash flow via rentals. Ultimately to stay risk neutral in pricing the cash flow option for renting is what supports home values. But I’ve seen nothing that guarantees anyone pricing continues to rise or that their home investment will make them rich. What it does do is force savings by allocating a portion of their loan to principal growth. Even if it doesn’t grow at all or even declines, it’ll be worth a lot more later than the latte they forwent 20 years ago. If you want guaranteed returns, buy treasuries.
- BurningFrog 4y ago
  > How precisely does “the government” do this house price propping up? Primarily by not allowing construction of new housing supply.
  - fnordpiglet 4y ago
    All the economic research I’ve read says repealing zoning laws induced no meaningful decrease in home price. That makes sense - home builders build to maximize profit and aren’t in the business of devaluing property they buy to develop. They develop it in a way that appreciates prices to improve their margins. But like this piece there seems to be some view that market forces are shaped by immoral behavior on someone’s part, rather than simply that’s how things work in a world of scarcity. We will see how things go in California! Maybe the anti NIMBY dream of style sky high SRO arcologies will come true and everyone will be living in communal peace in their bleak windowless cement efficiency. My bet is prices continue to rise for as long as people move into the region and developers don’t buy into the egalitarian view of affordable housing any more than they ever have.
grumple 4y ago
This misses the two biggest problems with prices going down: 1) if losses are small, people will refuse to move / sell, reducing housing stock. 2) the really, really big problem is if prices go down enough that people have to start taking big losses when selling, or if it stops making sense to pay the mortgage. People would instead default on the mortgages, sending our economy into a 2008-like crash. This would lead to less construction (again) and more housing capture by the wealthiest people and corporations. The biggest problem we have right now is insufficient supply. Builders won't build if they can't profit; if they can't sell at relatively high prices, they can't profit.
paxys 4y ago
That's the problem isn't it? In most countries in the world (including many in the "first world") a house is something that solidifies your place in the community and is handed down from one generation to the next. What dollar value it can command isn't even a concern for people living in them.
snapetom 4y ago
And it's not just the home you own. For decades now, the tax and financial system, at least in the US, has incentivized being a landlord even if you are below middle class. Everything you put into a rental is deductible, low down payments, rising rents made it very, very easy to at least break even against a mortgage payment.
cwkoss 4y ago
Make a multiplier on property tax based on number of properties owned. Make it robust against corporations spinning off one-shell-per-properly. Make it revenue neutral so the increased tax revenue from landlord-companies and airbnb superhosts subsidizes tax rates for homes that are full time primary residence.
93po 4y ago
> You'd be destroying everyone's retirement plans and there'd be major economic repercussions. Investments have risks. If you invested most of your net worth into something that's a necessity for decent life without any thought into how shifting societal priorities may impact that investment, then you made a poor investment choice.
- deleted 4y ago
  [deleted]
irrational 4y ago
The solution there seems to be you only get to profit from your primary house that you can prove you have lived in for x years. Otherwise, all profit goes to the government. That would stop investments and such in a hurry.
stewx 4y ago
This fact cannot be ignored, but we must also grapple with the question of whether betting your retirement on rising home prices is a decision that should be underwritten by the public at large. My answer is no. I want to live in a world where goods and services are abundant and cheap, including housing. I own a house and benefit from the rise in prices but I'm under no illusion that this is beneficial to society. On the contrary, the rising prices are a calamity. If we care about the wellbeing of our fellow people, we should desire that homes become cheap.

by mjr00 4y ago

blurbleblurble 4y ago

Doesn't lack of affordable housing kinda destroy everyone's retirement plans too? So it's kind of a losing situation.

last_responder 4y ago

>You'd be destroying everyone's retirement plans Everyone?

reocha 4y ago
I presume by "everyone" they mean upper middle class folks
- sgt101 4y ago
  "everyone that counts" There - fixed it.
goosedragons 4y ago
The majority homeowner class. Which is why politicians enabling it keep getting voted in.
- hinkley 4y ago
  [flagged]
  - bmitc 4y ago
    My property taxes are about a third of my total payment every month, where the other two thirds are the actual mortgage. The property taxes are over 50% of what my total rent was before I got a house, which was not low. I'm happy with my town's management, who seems to use their budget quite well, but property taxes can really get you. I think taxes should be increased on those with investment homes, second homes, mansions, and the income and wealth of the wealthy rather than just nickel and diming the middle class.
    - ascagnel_ 4y ago
      Does your local government provide a breakdown of property taxes? If they do, it's well worth checking, because it can become one of those things where you don't like the total amount, but you find each element of it to be reasonable. Just looking at my latest report on my property tax bill (which was about $3k USD for 2022): - about 45% of the amount went to local city administration, which includes civic services like police, fire, etc.; the city had a nearly balanced budget for the year (<$1k US away from balanced) - about 55% of the amount went to the local school board (who are directly voted on by the city's populace and can directly levy property taxes) for teachers, administrators, building maintenance, etc.; the school board did not have a balanced budget on account of bond issues for new construction in anticipation of ongoing new housing construction - 3% went to the local library (whose board is partially appointed by the mayor and partially self-selected), which had a small budget surplus
      - bmitc 4y ago
sgt101 4y ago
yes I agree. I was always told, and believed "a house is for living in, not an investment". It figures in my retirement plans in the sense of not having to pay rent on my house as I will own it. That is really positive because it also means not having to pay tax on the money that I would have to have to pay rent. But I bought it because I wanted to own it and live in it, not to sell and make money off. Having said that it's obvious that the availability of cheap money has jacked up housing costs to a stupid level, and it's obvious that when it unwinds there is going to be a big mess. What stops it from unwinding - immigration... because as soon as immigration stops the pressure will go out of the housing market and a-la Japan houses will get cheap.
- danuker 4y ago
  > when it unwinds Don't underestimate the inflationary potential of fiat currency. Maybe it'll just stay the same price, but everything else still gets relatively more expensive.
baloki 4y ago
I assume it’s more people who’ve bought a house, sell it to downsize once the kids have moved out and use the excess towards their retirement (to make up the difference between the low amount they’ve been able to scrape together over the years)
n00shie 4y ago
everyone that matters...

nerdponx 4y ago

What I think would help at least is if prices stopped increasing. That way, people who buy now at least won't lose money, but the expectation that valuations will continue to go up will have to taper off. Also, in the case of high-cost coastal cities, I don't think the issue is trust in government propping up prices, as much as it's trust that demand will continue to outpace supply for the next several years at least.

NovemberWhiskey 4y ago
That isn't an equilibrium. If the market formed the expectations that property values were going to stop increasing, then property values would drop - because the current price bakes in the assumption that they're going to keep increasing.
- nerdponx 4y ago
  In the short term, sure. I'm being a little idealistic, but I don't think it's impossible for housing markets to find a new stable-ish level without lots of people losing their shirts in the process.

davidw 4y ago

> every citizen of the first world Where I lived in Italy, people certainly purchase houses, but they don't expect them to have crazy returns like in the US. It's just a way to not pay rent and have something that you can hang on to even if there's inflation or other funny business (something that Italy has seen a lot of). People even invest in, say, apartments, but it's a similar story: they expect them to hold their value and pay themselves off over a number of years. There are certainly returns on it, but they are seen as steady, long term investments. Where I live in Oregon, during the most recent boom, there were houses "earning" more than 100,000 a year, just sitting there. That's more than the median household. Yeah, it's a bit apples to oranges, but still, it's really out of kilter. Long term, it'd be healthiest if housing were 'boring', neither gaining or losing much. That'd also facilitate people swapping out different housing at different stages of their lives without worrying about timing the market. For instance, there are a lot of people getting older in the town I live in. Are they always going to want to or be able to shovel snow? Mow their lawns? Maybe a townhouse or a condo would be a better alternative that lets them stay in their general neighborhood.

lotsofpulp 4y ago
There is lots of boring housing in the US. It is not going to be in the Willamette Valley in Oregon. Just like houses in the Alps in Italy versus less desirable places in Italy.
- davidw 4y ago
  "Just go somewhere else" is causing even the 'boring' places to have problems: https://www.nytimes.com/2022/02/20/business/economy/spokane-housing-expensive-cities.html https://www.nytimes.com/2022/02/20/business/economy/spokane-... We need some more fundamental reforms.
  - mywittyname 4y ago
    Such as what? The merging of Seattle and Tacoma was inevitable. The same thing has happened to a lot of cities that are separate by <1hr commutes via highways.

kevin_thibedeau 4y ago

s/retirement plans/state endorsed pyramid schemes/ It's going to collapse one way or another.

andrewmutz 4y ago

> You'd be destroying everyone's retirement plans and there'd be major economic repercussions I think that exaggerates it. Most retirees aren't profiting from the home they own if they live in it. The "income" from it is just imputed rent. So if the housing supply increases dramatically, that imputed rent drops, but it doesn't matter since the cost of housing drops as well.

eloisant 4y ago
The problem isn't retirees who paid out their house already, it's the households who still have a big mortgage on their house.
- luckylion 4y ago
  What would change for them? They still need to pay that down in either case, don't they? Granted, they can sell at some point and make a 3x their investment. But by then, buying another house will also be 3x, and rent will be 5x, so they're kind of back where they started.
  - s1artibartfast 4y ago
    The point is that if housing prices tank, they won't have made 3x on their investment. They are talking about the case where you sell below what you paid.
    - luckylion 4y ago
      But they'd also pay much less for their next house, making up for it. If we all take a 90% pay cut but all products now cost 90% less, nothing really changes, does it? I guess the exception would be if they sold and then moved to a different area with a very different housing market (or left the country), but at least for domestic migration, I suppose the more rural and the cheaper the houses are, the worse the necessities for the elderly will be, e.g. doctors will be far away, no home nursing services, no local shopping.

wellthisisgreat 4y ago

> Tanking housing prices would destroy their trust in the system that they bet everything on. rip the bandaid and cut the losses. The house as investment is the blight on modern society

tablespoon 4y ago

> This is pretty much the crux of it. High housing prices could be "fixed" almost overnight, but for almost every citizen of the first world, their house is the single biggest investment they will ever make in their life. You'd be destroying everyone's retirement plans and there'd be major economic repercussions. I wonder if one way out would be to 1) build government rental-housing projects again, to fill the immediate housing need, and 2) implement other policies to increase home-building (but only enough to keep price increases below inflation). One serious problem would be the association of housing projects with crime and poverty, but maybe that could be addressed by putting police stations on the first floor (or something) and eminent-domaining them into upscale areas over luxury housing.

mjmahone17 4y ago
Yes but 1 is a huge, massive, often insurmountable political battle because there are enough single-issue voters who will turn on any politician who threatens to enable “undesirable” types to share their neighborhood. And 2 is blocked by people who think their aesthetic preferences are more important than others ability to survive (often the same people as blocking 1). It’s not really the crime that matters, at the core, but rather the perception of “other”. The single-issue anti-housing people don’t want police in their neighborhoods, they want police in other people’s neighborhoods keeping those people out of the “nice” neighborhoods. Sadly, most people do in fact want more housing for people who are less well off than them, even if it means they have to run shoulders with strangers. But these are the people who work and don’t have time to show up to community meetings about a new apartment going up, and don’t usually decide who to vote for based on neighborhood aesthetics. Because the problem is mostly political, most of the solution is political as well: identify, train and support local politicians who will vote to build more housing, and help them write new laws that do so. And convince them (by consistently winning at the ballot box) that the anti-housing crowd is loud but not actually large, so there’s little danger in losing their votes.
j_heffe 4y ago
> build government rental-housing projects again It's a cultural thing too. We're brainwashed to look down on government housing simply because of the racist practices of the past. It wouldn't even have to be government funded necessarily. The problem could be fixed with non-market housing similar to Europe, where the building costs are fulfilled by a loan, and the HOA or housing entity is setup without the goal of making a profit off the rent, setting rental rates at a margin to cover only the loan and necessary expenses.

tgv 4y ago

> You'd be destroying everyone's retirement plans Not where I live. Housing prices have exploded, like everywhere else, but it's not people's retirement plan. We've got state and employer pensions (from a fund not owned by the employer). So it's not that. Look elsewhere. E.g. at AirBnB, and at ridiculous (both low and high) salaries.

rcme 4y ago

> This is pretty much the crux of it. High housing prices could be "fixed" almost overnight This is a crazy thing to state with almost no justification. How could housing prices be fixed overnight? Please don't say "zoning changes." Plenty of places without zoning issues have really expensive real estate.

riku_iki 4y ago
high enough property tax.
- rcme 4y ago
  Wouldn't that make homes less affordable and increase rents?
  - riku_iki 4y ago
    it will make houses less attractive investment vehicle: people will start selling rental houses and downsize to smaller units, which will create additional supply on the market. Also, in case of California for example, if prop13 got eliminated, it will hit mostly existing house owners, and not new ones.
missingrib 4y ago
What's an example of a place without "zoning issues" with really expensive real estate?
- rcme 4y ago
  NYC

88913527 4y ago

How is it exactly a retirement plan if your house goes up 200% over N years, but so do all of your neighbor's homes? You aren't changing your relative position to them.

NovemberWhiskey 4y ago
If all homes increase in value by the same percentage, you generate a lot of cash by owning for a long time and then downsizing, or moving to a location which started out with cheaper property (historically, this is the "retire to Florida" strategy). Or, you're going to pass on your home to your children, so it becomes part of the value of your estate. Or if you don't have any children, you can just reverse mortgage and get cash out that way. It's just like any other illiquid asset.
s1artibartfast 4y ago
You sell your house and go back to renting or get a reverse mortgage.

highwaylights 4y ago

Tax on non-primary properties solves this if you can get it past vested interests. Reasonable tax breaks for your primary or only home, and none for second homes / investments you let out. That gives a valve to perform qualitative easing on the housing market whenever you need to, and is not uncommon in other parts of the world. EDIT: Having read the responses below I’ve realised I didn’t clearly word what I meant here, that’s my bad. I mean a holding taxation rather than CGT. Essentially, an elevated annual property tax on non-primary properties that would have the effect of penalising investors relative to those seeking a home to live in.

kwhitefoot 4y ago
You mean that in the US you don't pay tax on the capital gain when you sell a property that is not your home? It's a great country to be rich in!
- dirck 4y ago
  There is definitely capital gains tax on non-primary residence homes. Only primary homes are exempt up to certain dollar.
- deleted 4y ago
  [deleted]
- redmorphium 4y ago
  You do pay tax on that. However, you don't have to if you die and pass the property down to your spouse and/or children. This is the step-up in basis and is key to building generational wealth in the US.
  - mywittyname 4y ago
    > This is the step-up in basis and is key to building generational wealth in the US. Yes, but for most people, that's not really a benefit. It's possible to exclude the first few hundred thousand of capital gains taxes on a primary residence anyway. So even without the step-up basis, the tax burden on these properties would be tiny. Property taxes are a much more significant form of taxation than capital gains. And would be even without any preferential treatment.

piqi 4y ago

> ...their house is the single biggest investment Is it really anyone's fault but their own? I don't recall housing being offered as a low/no-risk investment with guaranteed profits. Financial blogs, podcasts, and Reddit commenters might have shared that view. Are there any examples of mortgage issuers or home builders advertising housing as an investment?

yCombLinks 4y ago
If most people in the system are making similar mistakes, then the system is directing them there. Saying it's their fault does nothing but ensure it keeps happening.
- piqi 4y ago
  Whether or not they make the mistake isn't the point. If they were encouraged by a specific entity to treat it as an investment, then the blame should be placed on that entity. Regulations should be put in place to prevent that (I suspect they already are). Otherwise, they have to take the L. I expect banks and home builders are careful with how they communicate with customers. It's less about placing fault on the purchaser. It's more that there is no one else to blame. Never-ending bail-outs only hurt future generations. I wish I went into deep debt to buy a house a lot sooner. I didn't because I knew I couldn't afford it.
riku_iki 4y ago
> low/no-risk investment foreclosure makes it no-risk leveraged investment modulo downpayment.
- NovemberWhiskey 4y ago
  That depends significantly on state law w.r.t anti-deficiency rules and so on. California is a non-recourse state where a mortgage lender can only repossess the home, but there are other states where the lender can foreclose and then come after you for the difference in case of a short sale.

fnordpiglet 4y ago

I don’t understand this. There are a lot of places in the US, and certainly globally, where housing prices decrease. There are also plenty of folks who got soaked in 2008 and lost everything, and no one helped them. How precisely does “the government” do this house price propping up? Via loan guarantees to ensure liquidity in the mortgage market? These make houses affordable and accessible to most people. Without loan guarantees people would still be buying houses all cash, and through loans for high credit quality, but primarily by high value entities who can afford to buy and rent many properties. In this world housing would largely be corporate owned rental units. Prices alone wouldn’t be keeping people out, but rather lack of loan liquidity would ensure a lack of lending. What keeps housing values high isn’t loan liquidity, it’s the ability to convert property into cash flow via rentals. Ultimately to stay risk neutral in pricing the cash flow option for renting is what supports home values. But I’ve seen nothing that guarantees anyone pricing continues to rise or that their home investment will make them rich. What it does do is force savings by allocating a portion of their loan to principal growth. Even if it doesn’t grow at all or even declines, it’ll be worth a lot more later than the latte they forwent 20 years ago. If you want guaranteed returns, buy treasuries.

BurningFrog 4y ago
> How precisely does “the government” do this house price propping up? Primarily by not allowing construction of new housing supply.
- fnordpiglet 4y ago
  All the economic research I’ve read says repealing zoning laws induced no meaningful decrease in home price. That makes sense - home builders build to maximize profit and aren’t in the business of devaluing property they buy to develop. They develop it in a way that appreciates prices to improve their margins. But like this piece there seems to be some view that market forces are shaped by immoral behavior on someone’s part, rather than simply that’s how things work in a world of scarcity. We will see how things go in California! Maybe the anti NIMBY dream of style sky high SRO arcologies will come true and everyone will be living in communal peace in their bleak windowless cement efficiency. My bet is prices continue to rise for as long as people move into the region and developers don’t buy into the egalitarian view of affordable housing any more than they ever have.

grumple 4y ago

This misses the two biggest problems with prices going down: 1) if losses are small, people will refuse to move / sell, reducing housing stock. 2) the really, really big problem is if prices go down enough that people have to start taking big losses when selling, or if it stops making sense to pay the mortgage. People would instead default on the mortgages, sending our economy into a 2008-like crash. This would lead to less construction (again) and more housing capture by the wealthiest people and corporations. The biggest problem we have right now is insufficient supply. Builders won't build if they can't profit; if they can't sell at relatively high prices, they can't profit.

paxys 4y ago

That's the problem isn't it? In most countries in the world (including many in the "first world") a house is something that solidifies your place in the community and is handed down from one generation to the next. What dollar value it can command isn't even a concern for people living in them.

snapetom 4y ago

And it's not just the home you own. For decades now, the tax and financial system, at least in the US, has incentivized being a landlord even if you are below middle class. Everything you put into a rental is deductible, low down payments, rising rents made it very, very easy to at least break even against a mortgage payment.

cwkoss 4y ago

Make a multiplier on property tax based on number of properties owned. Make it robust against corporations spinning off one-shell-per-properly. Make it revenue neutral so the increased tax revenue from landlord-companies and airbnb superhosts subsidizes tax rates for homes that are full time primary residence.

93po 4y ago

> You'd be destroying everyone's retirement plans and there'd be major economic repercussions. Investments have risks. If you invested most of your net worth into something that's a necessity for decent life without any thought into how shifting societal priorities may impact that investment, then you made a poor investment choice.

deleted 4y ago
[deleted]

irrational 4y ago

The solution there seems to be you only get to profit from your primary house that you can prove you have lived in for x years. Otherwise, all profit goes to the government. That would stop investments and such in a hurry.

stewx 4y ago

This fact cannot be ignored, but we must also grapple with the question of whether betting your retirement on rising home prices is a decision that should be underwritten by the public at large. My answer is no. I want to live in a world where goods and services are abundant and cheap, including housing. I own a house and benefit from the rise in prices but I'm under no illusion that this is beneficial to society. On the contrary, the rising prices are a calamity. If we care about the wellbeing of our fellow people, we should desire that homes become cheap.