4 ms·

Unfortunately, this conflicts with basic tenets of how capital and free markets work: if you deny capital a market competitive return then the capital quickly m

by asah 3y ago

Unfortunately, this conflicts with basic tenets of how capital and free markets work: if you deny capital a market competitive return then the capital quickly moves elsewhere. For private housing, that means squalor and slums. Market competitive returns for housing need to account for taxes, maintenance and management, vacancies and risk. This needs to EXCEED stock market returns or prospective landlords put their capital into the market. Already, the US quietly subsidizes housing returns with tax policy including 1031 exchange, tax deductions for every conceivable expense and more -- and even then, residential real estate is risky, illiquid and a hassle vs just buying ETFs. This also affects builders: if they're starved of returns, they're quickly starved of capital, which means no new housing. Public housing can be a nice solution: compete with the free market by offering a low cost option devoid of the capital constraints. When this works, you get Swedish housing, when it doesn't you get NYCHA. It's worth nothing that neither one has kept up with demand, with very long waitlists. Neither system supports transfers out of region, which destroys social mobility i.e. great inventors/etc are not able to develop themselves and do great work because they can't afford to move. All of these is theoretically fixable, but extremely hard in practice. https://www.google.com/search?q=swedish+public+housing https://www.google.com/search?q=swedish+public+housing https://www.google.com/search?q=swedish+public+housing+waiting+list https://www.google.com/search?q=swedish+public+housing+waiti... https://www.google.com/search?q=nycha+assessment https://www.google.com/search?q=nycha+assessment --- Overall Findings Overall, the NYSDOH inspection teams found hazardous environmental and health conditions throughout the NYCHA system. Approximately 83 percent (212 out of 255) of all units inspected contained at least one high severity environmental quality hazard. Inspection teams found similar issues in building common areas with 75 percent (48 out of 64) containing at least one high severity hazard. The top three high severity issues found in NYCHA units were insect infestation (mostly cockroach infestations), issues with walls and/or floors and the presence of mold growth. https://www.governor.ny.gov/sites/default/files/atoms/files/FINAL_Assessment_of_NYCHA_Report.pdf https://www.governor.ny.gov/sites/default/files/atoms/files/...

rich_sasha 3y ago
In the UK, there is a similar mechanism, but also with a perverse twist. Housing is very expensive, and buying your first house is often a titanic effort. It requires years of saving, often ain informal loan from family and then a substantial mortgage. So once you buy this thing, your biggest fear is that it will depreciate. Never mind making money out of it. This creates a lot of very strong local NIMBYism, and in the UK it's not that hard for the local population to stop housing projects. When phrased like this, I do sympathise, even if it's "selfish". A mere announcement of new housing projects in the vicinity can cut your house value by 10%, or easily more. So we created a world where house owning club is super expensive to join, and once you're in, it is your existential imperative to keep house prices high. All this before you even say "appreciation". I posit that most people in the UK would be quite happy with affordable housing whose price is linked to inflation or sth.
- asah 3y ago
  This is a very good point! Thanks for adding. This is definitely also true in the US and homeowners will explicitly discuss "real estate value": X increases RE value and Y hurts RE value. It's a big deal.

by asah 3y ago

rich_sasha 3y ago

In the UK, there is a similar mechanism, but also with a perverse twist. Housing is very expensive, and buying your first house is often a titanic effort. It requires years of saving, often ain informal loan from family and then a substantial mortgage. So once you buy this thing, your biggest fear is that it will depreciate. Never mind making money out of it. This creates a lot of very strong local NIMBYism, and in the UK it's not that hard for the local population to stop housing projects. When phrased like this, I do sympathise, even if it's "selfish". A mere announcement of new housing projects in the vicinity can cut your house value by 10%, or easily more. So we created a world where house owning club is super expensive to join, and once you're in, it is your existential imperative to keep house prices high. All this before you even say "appreciation". I posit that most people in the UK would be quite happy with affordable housing whose price is linked to inflation or sth.

asah 3y ago
This is a very good point! Thanks for adding. This is definitely also true in the US and homeowners will explicitly discuss "real estate value": X increases RE value and Y hurts RE value. It's a big deal.