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I agree that the sort of investment you are describing makes sense - but in practice those kinds of investments are out-competed by ones with better yields. If

I agree that the sort of investment you are describing makes sense - but in practice those kinds of investments are out-competed by ones with better yields. If you are a developer, there is simply no financial incentives to choosing a lower yield financial vehicle. You'll just have more trouble finding funding and have less of a cushion for cost overruns. I also think there's a strong economies of scale argument that "we" (society) would prefer most people rent (and use some sort of fixed or low-profit system that does maintenance at scale) as it'll result in lower overall costs. However it's absolutely true that home ownership is the best vehicle we've found for building inter-generational wealth so I'm not against it. Also one can simply prefer a society with more individual owners and slightly higher overall costs - reasonable people can disagree.

s1artibartfast 4y ago
>I agree that the sort of investment you are describing makes sense - but in practice those kinds of investments are out-competed by ones with better yields. I think that is a an advantage, not a disadvantage. There is no need for housing investments to have competitive yields. If you can make a profit building houses which have more value to buyers than your cost of inputs, someone will make them. It just won't be a speculative investment good. I don't worry that people will stop making socks, shoes, or food because the profit margin in that business is lower than the market yield. If there is on opportunity for profit, someone will want do it. They just might not be funded by some massive financial hedge fund, which again, I think is an advantage. Historically, home ownership has been a vehicle for intergeneration wealth building because it means taking on more responsibility, work, and risk instead of paying a 3rd party to do so. I would argue that most people renting would not result in the lowest cost, because it turns responsibilities that a homeowner can do for free into 3rd party services which must be paid for. It is like saying that city run food kitchens would be more efficient than people cooking at home. Maybe it is "more efficient" if you count the homeowners implicit labor, but the dollar cost to the cooker is still going up. I think most people would agree the goal is higher ownership and lower costs than now. I think this is actually reasonable if we fix some of the conditions that lead to house exorbitant growth in house value
- aeturnum 4y ago
  > There is no need for housing investments to have competitive yields I personally agree but you are not describing the economic system we live in. > I don't worry that people will stop making socks, shoes, or food because the profit margin in that business is lower than the market yield. This happens all of the time - but the market finds another equilibrium and continues to provide the good. > It is like saying that city run food kitchens would be more efficient than people cooking at home. Generally agreed - this would be more efficient. I also do not want it. It's more efficient in every way. There are significant economies of scale. There is a reason armies do not have each individual soldier cook their meals. > I think most people would agree the goal is higher ownership and lower costs than now. 100% agree - but my point is that this is a local maxima. If we wish to globally minimize "total resource expenditure" then the Platonic best system is some perfectly managed hyper-apartment arrangement with the "optimal" allocation of affordances. Though, as I said, reasonable people can value things other than costs. We are generally always in a local maxima - but it's good to remember it.
  - s1artibartfast 4y ago
    >I personally agree but you are not describing the economic system we live in... This happens all of the time - but the market finds another equilibrium and continues to provide the good I just dont think we are on the same page here or think this is accurate for our system. The 1% profitable sock factory doesn't shut down because some investor somewhere starts making 100% ROI on bitcoins or tech stock. A carpenter doesn't lay down his tools because fund manager somewhere is making big bucks. I agree the prevailing rates on capital can have impacts on new growth in capital intensive industries, but that doesn't mean you wont be able to find a homebuilder if you have cash in your pocket. >Generally agreed - this would be more efficient. I also do not want it. It's more efficient in every way. There are significant economies of scale. There is a reason armies do not have each individual soldier cook their meals. I don't think resources like labor and time are truly fungible and can be treated as interchangeable. Efficiency is relative to the measure of value and the person making the valuation. If I don't value my time or even enjoy cooking, paying someone to do it is not efficient for me, even if there are huge economies of scale. It might be efficient in terms of total hours to some central planner, but their valuation of my time and labor is not the same as mine. I am still paying money for labor that would otherwise be free. It may be horribly inefficient. There is no maximally efficient platonic system without a universally imposed definition of the measures being optimized.

s1artibartfast 4y ago

>I agree that the sort of investment you are describing makes sense - but in practice those kinds of investments are out-competed by ones with better yields. I think that is a an advantage, not a disadvantage. There is no need for housing investments to have competitive yields. If you can make a profit building houses which have more value to buyers than your cost of inputs, someone will make them. It just won't be a speculative investment good. I don't worry that people will stop making socks, shoes, or food because the profit margin in that business is lower than the market yield. If there is on opportunity for profit, someone will want do it. They just might not be funded by some massive financial hedge fund, which again, I think is an advantage. Historically, home ownership has been a vehicle for intergeneration wealth building because it means taking on more responsibility, work, and risk instead of paying a 3rd party to do so. I would argue that most people renting would not result in the lowest cost, because it turns responsibilities that a homeowner can do for free into 3rd party services which must be paid for. It is like saying that city run food kitchens would be more efficient than people cooking at home. Maybe it is "more efficient" if you count the homeowners implicit labor, but the dollar cost to the cooker is still going up. I think most people would agree the goal is higher ownership and lower costs than now. I think this is actually reasonable if we fix some of the conditions that lead to house exorbitant growth in house value

aeturnum 4y ago
> There is no need for housing investments to have competitive yields I personally agree but you are not describing the economic system we live in. > I don't worry that people will stop making socks, shoes, or food because the profit margin in that business is lower than the market yield. This happens all of the time - but the market finds another equilibrium and continues to provide the good. > It is like saying that city run food kitchens would be more efficient than people cooking at home. Generally agreed - this would be more efficient. I also do not want it. It's more efficient in every way. There are significant economies of scale. There is a reason armies do not have each individual soldier cook their meals. > I think most people would agree the goal is higher ownership and lower costs than now. 100% agree - but my point is that this is a local maxima. If we wish to globally minimize "total resource expenditure" then the Platonic best system is some perfectly managed hyper-apartment arrangement with the "optimal" allocation of affordances. Though, as I said, reasonable people can value things other than costs. We are generally always in a local maxima - but it's good to remember it.
- s1artibartfast 4y ago
  >I personally agree but you are not describing the economic system we live in... This happens all of the time - but the market finds another equilibrium and continues to provide the good I just dont think we are on the same page here or think this is accurate for our system. The 1% profitable sock factory doesn't shut down because some investor somewhere starts making 100% ROI on bitcoins or tech stock. A carpenter doesn't lay down his tools because fund manager somewhere is making big bucks. I agree the prevailing rates on capital can have impacts on new growth in capital intensive industries, but that doesn't mean you wont be able to find a homebuilder if you have cash in your pocket. >Generally agreed - this would be more efficient. I also do not want it. It's more efficient in every way. There are significant economies of scale. There is a reason armies do not have each individual soldier cook their meals. I don't think resources like labor and time are truly fungible and can be treated as interchangeable. Efficiency is relative to the measure of value and the person making the valuation. If I don't value my time or even enjoy cooking, paying someone to do it is not efficient for me, even if there are huge economies of scale. It might be efficient in terms of total hours to some central planner, but their valuation of my time and labor is not the same as mine. I am still paying money for labor that would otherwise be free. It may be horribly inefficient. There is no maximally efficient platonic system without a universally imposed definition of the measures being optimized.