5 ms·

I think for a good functioning economy we do want housing prices to generally go up, but in a much more modest and controlled way - so in that way it should be

I think for a good functioning economy we do want housing prices to generally go up, but in a much more modest and controlled way - so in that way it should be viewed as an appreciating asset. What it shouldn't be is a speculative investment for companies, non residents or wealthy individuals.

Denvercoder9 4y ago
Up with respect to what? They can't go up relative to wages forever without making housing unaffordable.
- mupuff1234 4y ago
  Probably tied to local economical growth/wages. Which means it could still be relatively affordable for people who live in the area (minus income inequality issues) while also being a good investment compared to national average.
Ekaros 4y ago
Also maybe we need to ask if houses get better. Or bigger. And by how much. In good functioning economy, building a same house with same features and such should get cheaper as efficiency gets better. Materials should be at least cheaper. Ofc, we want bigger and more efficient housing with more features so that counteracts it, but how much should it counteract?
- Falkon1313 4y ago
  Labor costs are a bigger percentage than materials. Those have been going down relative to efficiency for many years now, but there are limits to how much you can cut people's pay. Both relative to inflation and in absolute terms.
qeternity 4y ago
> I think for a good functioning economy we do want housing prices to generally go up In nominal terms it's inevitable. In real terms, this should not be the case. Housing is a commodity. It's the only commodity which has increased in price in real terms over time. This is because we've turned it into a retirement account.
- quonn 4y ago
  How about this alternative explanation: Unlike a real commodity such as fruit, people compete for houses and look carefully. This is because houses are in different locations, generally unique, limited and perhaps most importantly because they are the largest expense most buyers will every have. Because there is competition a certain premium is paid. And if we assume further economical growth, the premium that an individual is capable of paying likewise should increase. Therefore, all things being equal, the prices should increase.
  - qeternity 4y ago
    A primary input to the pricing function of a commodity is location. This applies to fruit, and it changes nothing about housing. Source: career hedge fund commodities trader.
qntmfred 4y ago
it can go up as long as it goes up roughly in line with incomes, GDP, etc. basically, as long as the housing affordability index stays in the healthy zone. also, in Japan housing is a depreciating asset and while their economy has well known challenges over the last few decades, they're still an advanced economy that the majority of nations on Earth would probably be happy to trade places with. an outlier for sure, but worth mentioning
- nemo44x 4y ago
  Japanese houses are built to last 20 years and be thrown away. Japanese houses are better compared to trailer homes in the USA in terms of lifespan and depreciation. Also they have a declining population.
JasserInicide 4y ago
Corporations of any type should just be banned from buying most domiciles. Should be a legal name on the deed. Will never happen though.
- tekknik 4y ago
  A corporation is a legal entity capable of owning things

Denvercoder9 4y ago

Up with respect to what? They can't go up relative to wages forever without making housing unaffordable.

mupuff1234 4y ago
Probably tied to local economical growth/wages. Which means it could still be relatively affordable for people who live in the area (minus income inequality issues) while also being a good investment compared to national average.

Ekaros 4y ago

Also maybe we need to ask if houses get better. Or bigger. And by how much. In good functioning economy, building a same house with same features and such should get cheaper as efficiency gets better. Materials should be at least cheaper. Ofc, we want bigger and more efficient housing with more features so that counteracts it, but how much should it counteract?

Falkon1313 4y ago
Labor costs are a bigger percentage than materials. Those have been going down relative to efficiency for many years now, but there are limits to how much you can cut people's pay. Both relative to inflation and in absolute terms.

qeternity 4y ago

> I think for a good functioning economy we do want housing prices to generally go up In nominal terms it's inevitable. In real terms, this should not be the case. Housing is a commodity. It's the only commodity which has increased in price in real terms over time. This is because we've turned it into a retirement account.

quonn 4y ago
How about this alternative explanation: Unlike a real commodity such as fruit, people compete for houses and look carefully. This is because houses are in different locations, generally unique, limited and perhaps most importantly because they are the largest expense most buyers will every have. Because there is competition a certain premium is paid. And if we assume further economical growth, the premium that an individual is capable of paying likewise should increase. Therefore, all things being equal, the prices should increase.
- qeternity 4y ago
  A primary input to the pricing function of a commodity is location. This applies to fruit, and it changes nothing about housing. Source: career hedge fund commodities trader.

qntmfred 4y ago

it can go up as long as it goes up roughly in line with incomes, GDP, etc. basically, as long as the housing affordability index stays in the healthy zone. also, in Japan housing is a depreciating asset and while their economy has well known challenges over the last few decades, they're still an advanced economy that the majority of nations on Earth would probably be happy to trade places with. an outlier for sure, but worth mentioning

nemo44x 4y ago
Japanese houses are built to last 20 years and be thrown away. Japanese houses are better compared to trailer homes in the USA in terms of lifespan and depreciation. Also they have a declining population.

JasserInicide 4y ago

Corporations of any type should just be banned from buying most domiciles. Should be a legal name on the deed. Will never happen though.

tekknik 4y ago
A corporation is a legal entity capable of owning things