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It's a false equivalency. Effective discretionary income for the vast majority of people has shrunk significantly due to how expensive housing has become. Yea

It's a false equivalency. Effective discretionary income for the vast majority of people has shrunk significantly due to how expensive housing has become. Yeah, people can sacrifice but folks are sacrificing MUCH more now than they've had to in the last 30+ years.

bugglebeetle 3y ago
It’s pretty much a textbook example of why Adam Smith (of all people) hated landlords and saw them as a parasitic drag on market economies. We’ve allowed people speculating on real estate to wildly distort every aspect of our economy to the point that it’s destroying actually productive sectors.
- AnthonyMouse 3y ago
  The speculation is mostly irrelevant and wouldn't even be happening if the expectation wasn't that the cost of housing would rise faster than the overall market. The real problem is laws that make it impossible or prohibitively expensive to build new housing, which constrains supply. The speculators are going to lose their shirts when the unsustainability of housing costs growing faster than wages forces a response, and they're going to deserve to.
  - bugglebeetle 3y ago
    You have the causality backwards here. Speculators pay politicians to enact laws that preserve the value of their investments, which results in the shortages. Given that most of the political class are also real estate speculators, I wouldn’t bet on them losing their shirts any time soon. They’ll let many more people die on the streets and sic cops on them before they’ll cave to popular pressure.
    - AnthonyMouse 3y ago
      The speculators people are referring to are investment funds, which are a relatively recent development. The original source of these laws was ordinary homeowners who bought a home to live in but then enacted local regulations to raise housing prices now that they own one. Right now housing costs are high because the market is gridlocked. Existing owners can't sell because they can't buy, because the interest rate on the new mortgage would be much higher than their existing one. No inventory on the market keeps prices high. But it also promotes construction and promotes political change to enable construction, because both the buyer and the gridlocked seller want something to change. Then some time passes and the combination of new construction and the low interest loans deterring sales getting paid off and reticent sellers being forced to move because they can't hold out any longer brings inventory back to the market. Which at prevailing interest rates ordinary buyers can't pay today's prices for, so prices go down and speculators lose. The theory is that speculators with political power will prevent this and keep prices going up because they historically have, but that is unsustainable because then people can't afford housing and people owning housing is what creates the political demand for high housing prices. As soon as it starts to shift to being owned by non-occupants, local voters have no interest in raising the value of their landlord's investment and the laws change.
      - bugglebeetle 3y ago
        It’s doesn’t really matter the source of the law, only whom leverages or extends them to serve their specific ends. The same institutional investors you cite are also buying up construction capacity with the express purpose of building rentals vs. homes to purchase. Perpetually siphoning off the wealth of workers is being turned into a highly-financialized, internationalized asset. I would also say your assessment of how politicians respond to people with money vs. those without is fairly naive.
        AnthonyMouse 3y ago
        > The same institutional investors you cite are also buying up construction capacity with the express purpose of building rentals vs. homes to purchase. That still increases the housing supply and ultimately lowers prices. > Perpetually siphoning off the wealth of workers is being turned into a highly-financialized, internationalized asset. Which is exactly the mistake they're making, because the laws that prop up the value of those "assets" are local laws which hold because they're supported by local voters who are homeowners. Make the local voters tenants and the property owners non-constituents and what do the local politicians do? > I would also say your assessment of how politicians respond to people with money vs. those without is fairly naive. Politicians respond to things that get them reelected. That's often donors because money lets them buy advertising and get more votes. But that mainly applies to two kinds of issues. The kind that affect most people only a trivial amount but the donors a lot, in which case it won't change many votes. And the kind that affect a small number of people a lot, but they don't have many votes to change. In each of these cases the donor's money buys them more votes through advertising than they lose through screwing people. Housing is an issue that affects most people by a significant amount. And the structure of how it got the way it is isn't amenable to the way they exercise power. Supply is limited because local jurisdictions all have a similar incentive structure. The people who can vote there already live there, so when the people who live there are homeowners, they vote to raise local housing prices. The same obtains everywhere so housing prices go up everywhere. But a single locality can reduce regional housing prices by enabling a large amount of construction, because people will move there from any place within an hour's drive if it will save them a quarter of a million dollars on housing. The status quo is only enabled by nearly every locality having the same incentives. It only takes a small fraction where a majority of local residents want housing prices to go down. The normal way monied interests prevent this kind of local diversity breaking their monopoly is by capturing the regional or national government. But the only reason the local government could be captured in this way is that you had to be a local resident (and so, historically, already be a local homeowner) before you get a vote there. So they didn't have to overcome the interests of all the prospective buyers who are in some nearby but different jurisdiction. Which is what they would have to do to get a law passed at the state or national level -- which is why the bills proposed at the state and national level on this issue are trending to disrupt rather than uphold the status quo here.

bugglebeetle 3y ago

It’s pretty much a textbook example of why Adam Smith (of all people) hated landlords and saw them as a parasitic drag on market economies. We’ve allowed people speculating on real estate to wildly distort every aspect of our economy to the point that it’s destroying actually productive sectors.

AnthonyMouse 3y ago
The speculation is mostly irrelevant and wouldn't even be happening if the expectation wasn't that the cost of housing would rise faster than the overall market. The real problem is laws that make it impossible or prohibitively expensive to build new housing, which constrains supply. The speculators are going to lose their shirts when the unsustainability of housing costs growing faster than wages forces a response, and they're going to deserve to.
- bugglebeetle 3y ago
  You have the causality backwards here. Speculators pay politicians to enact laws that preserve the value of their investments, which results in the shortages. Given that most of the political class are also real estate speculators, I wouldn’t bet on them losing their shirts any time soon. They’ll let many more people die on the streets and sic cops on them before they’ll cave to popular pressure.
  - AnthonyMouse 3y ago
    The speculators people are referring to are investment funds, which are a relatively recent development. The original source of these laws was ordinary homeowners who bought a home to live in but then enacted local regulations to raise housing prices now that they own one. Right now housing costs are high because the market is gridlocked. Existing owners can't sell because they can't buy, because the interest rate on the new mortgage would be much higher than their existing one. No inventory on the market keeps prices high. But it also promotes construction and promotes political change to enable construction, because both the buyer and the gridlocked seller want something to change. Then some time passes and the combination of new construction and the low interest loans deterring sales getting paid off and reticent sellers being forced to move because they can't hold out any longer brings inventory back to the market. Which at prevailing interest rates ordinary buyers can't pay today's prices for, so prices go down and speculators lose. The theory is that speculators with political power will prevent this and keep prices going up because they historically have, but that is unsustainable because then people can't afford housing and people owning housing is what creates the political demand for high housing prices. As soon as it starts to shift to being owned by non-occupants, local voters have no interest in raising the value of their landlord's investment and the laws change.
    - bugglebeetle 3y ago
      It’s doesn’t really matter the source of the law, only whom leverages or extends them to serve their specific ends. The same institutional investors you cite are also buying up construction capacity with the express purpose of building rentals vs. homes to purchase. Perpetually siphoning off the wealth of workers is being turned into a highly-financialized, internationalized asset. I would also say your assessment of how politicians respond to people with money vs. those without is fairly naive.
      - AnthonyMouse 3y ago
        > The same institutional investors you cite are also buying up construction capacity with the express purpose of building rentals vs. homes to purchase. That still increases the housing supply and ultimately lowers prices. > Perpetually siphoning off the wealth of workers is being turned into a highly-financialized, internationalized asset. Which is exactly the mistake they're making, because the laws that prop up the value of those "assets" are local laws which hold because they're supported by local voters who are homeowners. Make the local voters tenants and the property owners non-constituents and what do the local politicians do? > I would also say your assessment of how politicians respond to people with money vs. those without is fairly naive. Politicians respond to things that get them reelected. That's often donors because money lets them buy advertising and get more votes. But that mainly applies to two kinds of issues. The kind that affect most people only a trivial amount but the donors a lot, in which case it won't change many votes. And the kind that affect a small number of people a lot, but they don't have many votes to change. In each of these cases the donor's money buys them more votes through advertising than they lose through screwing people. Housing is an issue that affects most people by a significant amount. And the structure of how it got the way it is isn't amenable to the way they exercise power. Supply is limited because local jurisdictions all have a similar incentive structure. The people who can vote there already live there, so when the people who live there are homeowners, they vote to raise local housing prices. The same obtains everywhere so housing prices go up everywhere. But a single locality can reduce regional housing prices by enabling a large amount of construction, because people will move there from any place within an hour's drive if it will save them a quarter of a million dollars on housing. The status quo is only enabled by nearly every locality having the same incentives. It only takes a small fraction where a majority of local residents want housing prices to go down. The normal way monied interests prevent this kind of local diversity breaking their monopoly is by capturing the regional or national government. But the only reason the local government could be captured in this way is that you had to be a local resident (and so, historically, already be a local homeowner) before you get a vote there. So they didn't have to overcome the interests of all the prospective buyers who are in some nearby but different jurisdiction. Which is what they would have to do to get a law passed at the state or national level -- which is why the bills proposed at the state and national level on this issue are trending to disrupt rather than uphold the status quo here.