2 ms·

> cars, computers because that’s also an asset that you can just rent rather than own. Those are not investment assets. They deprecate towards zero. The CPI i

by nabla9 3y ago

> cars, computers because that’s also an asset that you can just rent rather than own. Those are not investment assets. They deprecate towards zero. The CPI is not supposed to include investments, and owning a house has aspects of both investment and consumption. Until 1983, the CPI included housing costs, but it was changed because it screws up what is measured. The current method is better. The current measure takes into account owners’ equivalent rent. It's based on the trend of costs to rent a home, not to buy one.

pzo 3y ago
Houses shouldn’t be investment. Anything could be investment. We had many bubbles in the past like tulip. It’s just tulip are not essential to live. You can imagine having idea to make cars also an investment and buying all available cars as investment. Normally market will try to make up the demand and build more cars but with houses it’s more complicated because you wanna live where is infrastructure - and that takes decades to build. From recent examples when Covid started everyone was “investing” in hand sanitizers, masks, gloves - it was crazy expensive and so short in supplies that even pharmacies couldn’t get it from wholesellers - scalpers instead where making a killing . But you cannot just ramp up house production that fast.
- maxerickson 3y ago
  You can't really prevent something from being an investment. Which isn't to say I disagree with you, policy should favor direct housing affordability over things like price appreciation and subsidizing ownership. I wonder if there's a sensible way to limit how much leverage Fanny and Freddie will back, maybe by shortening the maximum allowed term of mortgages as interest rates fall below some specified point. Not sure you can do that in a way that avoids a cliff though.

2 ms·

> cars, computers because that’s also an asset that you can just rent rather than own. Those are not investment assets. They deprecate towards zero. The CPI i

by nabla9 3y ago

pzo 3y ago
Houses shouldn’t be investment. Anything could be investment. We had many bubbles in the past like tulip. It’s just tulip are not essential to live. You can imagine having idea to make cars also an investment and buying all available cars as investment. Normally market will try to make up the demand and build more cars but with houses it’s more complicated because you wanna live where is infrastructure - and that takes decades to build. From recent examples when Covid started everyone was “investing” in hand sanitizers, masks, gloves - it was crazy expensive and so short in supplies that even pharmacies couldn’t get it from wholesellers - scalpers instead where making a killing . But you cannot just ramp up house production that fast.
- maxerickson 3y ago
  You can't really prevent something from being an investment. Which isn't to say I disagree with you, policy should favor direct housing affordability over things like price appreciation and subsidizing ownership. I wonder if there's a sensible way to limit how much leverage Fanny and Freddie will back, maybe by shortening the maximum allowed term of mortgages as interest rates fall below some specified point. Not sure you can do that in a way that avoids a cliff though.