5 ms·

I think there are some factors missing in this piece: 1. Values go up because of density changes related to location desirability. My house is more valuable be

I think there are some factors missing in this piece: 1. Values go up because of density changes related to location desirability. My house is more valuable because more people want to live here, but space is finite. This should lead to it being worthwhile to pay me to leave so an apartment complex can replace the single family homes on my block. But it's more likely that someone will pay a lot to have the single family experience at a larger price. 2. The value of location has increased. I could buy a nice home for $350k in a small town that would go for $650k in my city. But we can't move there because the downsides of working there for my SO are too large. 3. Not being adjacent to a major urban area is in many respects like going back in time some proportion to your distance from one. Finding appropriate doctors is harder. Finding employment that has modern working conditions is harder. Etc. That said, I think it's reasonable to expect housing to be stable relative to inflation rather than being a high performance asset. And retaining wealth at the rate of inflation minus borrowing costs should beat just renting at the rate of inflation without a need for tremendous price growth. But there's obviously a big issue with supply.

horsawlarway 4y ago
> Not being adjacent to a major urban area is in many respects like going back in time some proportion to your distance from one. This whole conversation devolves into this single point, in my opinion. There is land out there that is cheap as fuck-all. Lots of places will flat out hand you the deed if you promise to live there and build a house. Some places will subsidize you moving into a house for $1. You just have to do it. Vermont and Ohio will literally PAY YOU to have you move into some areas (10k). The problem is that young folks generally don't want to live in those locations. So while I'm certainly a fan of increasing housing supply in existing metros, I think as long as metro populations keep rising, prices in those areas will continue to to beat inflation because demand is rising. --- If the US wants to alleviate housing costs, the most effective route I think we could go is to simply make it more appealing to live in rural areas. (ex: force those cable companies we paid billions to for rural broadband to go actually install rural broadband) The whole "Californian diaspora" effect we got during covid is actually a wonderful example of the right way to do this. If the high price metro is roughly equal in appeal to the lower cost areas, people will exist the high price metro in favor of the lower cost areas, working to equalize costs across the two (prices fall in SF, prices rise in the small towns around it).
- krisroadruck 4y ago
  I've lived all over the country (35ish moves in 41 years). There are a lot of things you can do to make other areas more appealing vs California (or the west coast in genera), but one thing you can't really fix is the weather. A lot of people really hate super cold winters or super hot humid summers, and for them there is no replacement for the rather unique climate conditions that exist along the west coast. Here is a map of the world which shows where that relatively mild west coast climate exists - it exceedingly rare: https://en.wikipedia.org/wiki/Mediterranean_climate#/media/File:Koppen-Geiger_Map_Csb_present.svg https://en.wikipedia.org/wiki/Mediterranean_climate#/media/F...
- tstrimple 4y ago
  The push to spread further out makes no sense to me. Suburban communities are already unsustainable, rural communities even worse. Economies of scale matter a whole lot here. The number of miles of road needed to service a rural community is exponentially higher than urban areas. This cost is not borne by those communities, but rather is subsidized heavily by urban workers. Rural areas also have a higher carbon footprint per-capita because of all of these different services which now have to be pushed dozens of miles out to support a handful of people. Pushing more people into areas with few opportunities just exacerbates this problem. https://www.smartcitiesdive.com/ex/sustainablecitiescollective/how-sprawl-bernie-madoff/26448/ https://www.smartcitiesdive.com/ex/sustainablecitiescollecti... > “What we have found is that the underlying financing mechanisms of the suburban era -- our post-World War II pattern of development -- operates like a classic Ponzi scheme, with ever-increasing rates of growth necessary to sustain long-term liabilities . . . > “In each of these mechanisms, the local unit of government benefits from the enhanced revenues associated with new growth. But it also typically assumes the long-term liability for maintaining the new infrastructure. This exchange -- a near-term cash advantage for a long-term financial obligation -- is one element of a Ponzi scheme. > “The other is the realization that the revenue collected does not come near to covering the costs of maintaining the infrastructure. In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance . . . > “We’ve done this because, as with any Ponzi scheme, new growth provides the illusion of prosperity. In the near term, revenue grows, while the corresponding maintenance obligations -- which are not counted on the public balance sheet -- are a generation away.”

horsawlarway 4y ago

> Not being adjacent to a major urban area is in many respects like going back in time some proportion to your distance from one. This whole conversation devolves into this single point, in my opinion. There is land out there that is cheap as fuck-all. Lots of places will flat out hand you the deed if you promise to live there and build a house. Some places will subsidize you moving into a house for $1. You just have to do it. Vermont and Ohio will literally PAY YOU to have you move into some areas (10k). The problem is that young folks generally don't want to live in those locations. So while I'm certainly a fan of increasing housing supply in existing metros, I think as long as metro populations keep rising, prices in those areas will continue to to beat inflation because demand is rising. --- If the US wants to alleviate housing costs, the most effective route I think we could go is to simply make it more appealing to live in rural areas. (ex: force those cable companies we paid billions to for rural broadband to go actually install rural broadband) The whole "Californian diaspora" effect we got during covid is actually a wonderful example of the right way to do this. If the high price metro is roughly equal in appeal to the lower cost areas, people will exist the high price metro in favor of the lower cost areas, working to equalize costs across the two (prices fall in SF, prices rise in the small towns around it).

krisroadruck 4y ago
I've lived all over the country (35ish moves in 41 years). There are a lot of things you can do to make other areas more appealing vs California (or the west coast in genera), but one thing you can't really fix is the weather. A lot of people really hate super cold winters or super hot humid summers, and for them there is no replacement for the rather unique climate conditions that exist along the west coast. Here is a map of the world which shows where that relatively mild west coast climate exists - it exceedingly rare: https://en.wikipedia.org/wiki/Mediterranean_climate#/media/File:Koppen-Geiger_Map_Csb_present.svg https://en.wikipedia.org/wiki/Mediterranean_climate#/media/F...
tstrimple 4y ago
The push to spread further out makes no sense to me. Suburban communities are already unsustainable, rural communities even worse. Economies of scale matter a whole lot here. The number of miles of road needed to service a rural community is exponentially higher than urban areas. This cost is not borne by those communities, but rather is subsidized heavily by urban workers. Rural areas also have a higher carbon footprint per-capita because of all of these different services which now have to be pushed dozens of miles out to support a handful of people. Pushing more people into areas with few opportunities just exacerbates this problem. https://www.smartcitiesdive.com/ex/sustainablecitiescollective/how-sprawl-bernie-madoff/26448/ https://www.smartcitiesdive.com/ex/sustainablecitiescollecti... > “What we have found is that the underlying financing mechanisms of the suburban era -- our post-World War II pattern of development -- operates like a classic Ponzi scheme, with ever-increasing rates of growth necessary to sustain long-term liabilities . . . > “In each of these mechanisms, the local unit of government benefits from the enhanced revenues associated with new growth. But it also typically assumes the long-term liability for maintaining the new infrastructure. This exchange -- a near-term cash advantage for a long-term financial obligation -- is one element of a Ponzi scheme. > “The other is the realization that the revenue collected does not come near to covering the costs of maintaining the infrastructure. In America, we have a ticking time bomb of unfunded liability for infrastructure maintenance . . . > “We’ve done this because, as with any Ponzi scheme, new growth provides the illusion of prosperity. In the near term, revenue grows, while the corresponding maintenance obligations -- which are not counted on the public balance sheet -- are a generation away.”