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Wouldn’t this dissuade private individuals from purchasing homes and make new home building a government endeavor.

by mortureb 3y ago

aperson_hello 3y ago
Building new inventory and making housing more affordable would dissuade individuals from buying new homes?
- zamalek 3y ago
  Real estate is often seen as a safe investment. If property prices fall then it is no longer an investment.
  - drekk 3y ago
    It's a "safe investment" because people need a place to live and the supply is artificially constrained. Personally don't see why the barrier to having a place to live for new generations should be raised just so that boomers can guarantee returns on an asset.
  - HWR_14 3y ago
    So the harm is people will invest in the stock market instead of buying real estate to rent out?
  - polygamous_bat 3y ago
    > If property prices fall then it is no longer an investment. So people who want to park their money in a house rather than living in it are discouraged to buy up the available housing. Yup, good. Seems like it should be going exactly as expected.
    - mortureb 3y ago
      Good if it’s nationwide but that’s not the case here. You’re just going to have a city with no development besides the one carried out by government.
    - deleted 3y ago
      [deleted]
- mortureb 3y ago
  Why buy now when prices will be lower in six months, or a year from now. Why develop new housing blocks (as a private developer) if it is a depreciating asset.
  - bondarchuk 3y ago
    >Why buy now when prices will be lower in six months, or a year from now. To live in the house. >Why develop new housing blocks (as a private developer) if it is a depreciating asset. To sell to people who want to live in the house.
    - mortureb 3y ago
      >to live in a house I’ll just rent until the price bottoms out >To sell to people who want to live in the house. People won’t buy and you’ll be stuck renting.
      - bondarchuk 3y ago
        Either renting is so bad that people will still rather buy the house, or renting is actually not that bad and then it's not an issue if people rent instead of buying the house. It can't be both at the same time. Also I think your calculation of "rent until price bottoms out" only makes sense if the price is dropping by more, each month, than a month's rent. Idk but that seems like a dramatic drop.
      - polygamous_bat 3y ago
        > I’ll just rent until the price bottoms out Rent what inventory? If everyone wants to rent the monthly rent goes up until the market reaches equilibrium. Once again, look at cars. Do you see a majority of the people renting cars because "prices will be lower for the same model next year"?
        mortureb 3y ago
        Not if the government keeps building new housing like this article is mentioning. There will always be supply. Like I mentioned in another comment it’s different if the housing is being built simultaneously nationwide, like Japan, then people don’t have an option. That represents a nationwide shift in mentality where housing is no longer an investment. Cars are pretty evenly priced across the nation (within a few thousand) so people don’t have an alternative. But that’s not the case here.
Baader-Meinhof 3y ago
The supply for renters are large apartment buildings while the supply for buyers are single family homes. Some major caveats to this model, like condos. Would be interested to see condo prices during this timeframe.
tootie 3y ago
It will make home buying a less attractive investment but people need to live somewhere.
- mortureb 3y ago
  Or move to a different city.
- readthenotes1 3y ago
  I do not believe that it is a bad thing for the home to be a less attractive investment. Certainly, having something like one out of five homes being bought up by investors simply for the investment seems to be very skewed - something along the lines of old coin collecting or acquiring art. Housing has a specific purpose and if the supply is so downregulated that it is losing that purpose something has gone wrong...
  - tootie 3y ago
    It definitely needs to stop being a thing. For housing to be a worthwhile investment it has to become less affordable to future buyers. That applies not just to institutional investors but families as well.
polygamous_bat 3y ago
> Wouldn’t this dissuade private individuals from purchasing homes People who need a place to live? Why? Do you think all housing in Tokyo is built by the government? People who were buying homes because they can? Yup, absolutely. That's the whole freaking point.
- mortureb 3y ago
  It’s different when it’s a nationwide thing. You can’t just have one city do it because people have options.
CogitoCogito 3y ago
Why is housing magically different from from the innumerable other things we regularly buy even though their value depreciates after purchase?
- jjav 3y ago
  > Why is housing magically different from from the innumerable other things we regularly buy even though their value depreciates after purchase? It might be good or bad, but clearly it is very different simply due to price. If a relatively cheap trinket depreciates to zero, hardly anyone cares. Cars are generally the second most expensive thing people will ever buy and they depreciate, which does bother most people from a financial perspective. But they last a long time and while they are very expensive they're not life-changing expensive. A house though, is going to cost decades of your labor, so having that depreciate too fast is going to scare a lot of people.

Wouldn’t this dissuade private individuals from purchasing homes and make new home building a government endeavor.

aperson_hello 3y ago

Building new inventory and making housing more affordable would dissuade individuals from buying new homes?

zamalek 3y ago
Real estate is often seen as a safe investment. If property prices fall then it is no longer an investment.
- drekk 3y ago
  It's a "safe investment" because people need a place to live and the supply is artificially constrained. Personally don't see why the barrier to having a place to live for new generations should be raised just so that boomers can guarantee returns on an asset.
- HWR_14 3y ago
  So the harm is people will invest in the stock market instead of buying real estate to rent out?
- polygamous_bat 3y ago
  > If property prices fall then it is no longer an investment. So people who want to park their money in a house rather than living in it are discouraged to buy up the available housing. Yup, good. Seems like it should be going exactly as expected.
  - mortureb 3y ago
    Good if it’s nationwide but that’s not the case here. You’re just going to have a city with no development besides the one carried out by government.
  - deleted 3y ago
    [deleted]
mortureb 3y ago
Why buy now when prices will be lower in six months, or a year from now. Why develop new housing blocks (as a private developer) if it is a depreciating asset.
- bondarchuk 3y ago
  >Why buy now when prices will be lower in six months, or a year from now. To live in the house. >Why develop new housing blocks (as a private developer) if it is a depreciating asset. To sell to people who want to live in the house.
  - mortureb 3y ago
    >to live in a house I’ll just rent until the price bottoms out >To sell to people who want to live in the house. People won’t buy and you’ll be stuck renting.
    - bondarchuk 3y ago
      Either renting is so bad that people will still rather buy the house, or renting is actually not that bad and then it's not an issue if people rent instead of buying the house. It can't be both at the same time. Also I think your calculation of "rent until price bottoms out" only makes sense if the price is dropping by more, each month, than a month's rent. Idk but that seems like a dramatic drop.
    - polygamous_bat 3y ago
      > I’ll just rent until the price bottoms out Rent what inventory? If everyone wants to rent the monthly rent goes up until the market reaches equilibrium. Once again, look at cars. Do you see a majority of the people renting cars because "prices will be lower for the same model next year"?
      - mortureb 3y ago
        Not if the government keeps building new housing like this article is mentioning. There will always be supply. Like I mentioned in another comment it’s different if the housing is being built simultaneously nationwide, like Japan, then people don’t have an option. That represents a nationwide shift in mentality where housing is no longer an investment. Cars are pretty evenly priced across the nation (within a few thousand) so people don’t have an alternative. But that’s not the case here.

Baader-Meinhof 3y ago

The supply for renters are large apartment buildings while the supply for buyers are single family homes. Some major caveats to this model, like condos. Would be interested to see condo prices during this timeframe.

tootie 3y ago

It will make home buying a less attractive investment but people need to live somewhere.

mortureb 3y ago
Or move to a different city.
readthenotes1 3y ago
I do not believe that it is a bad thing for the home to be a less attractive investment. Certainly, having something like one out of five homes being bought up by investors simply for the investment seems to be very skewed - something along the lines of old coin collecting or acquiring art. Housing has a specific purpose and if the supply is so downregulated that it is losing that purpose something has gone wrong...
- tootie 3y ago
  It definitely needs to stop being a thing. For housing to be a worthwhile investment it has to become less affordable to future buyers. That applies not just to institutional investors but families as well.

polygamous_bat 3y ago

> Wouldn’t this dissuade private individuals from purchasing homes People who need a place to live? Why? Do you think all housing in Tokyo is built by the government? People who were buying homes because they can? Yup, absolutely. That's the whole freaking point.

mortureb 3y ago
It’s different when it’s a nationwide thing. You can’t just have one city do it because people have options.

CogitoCogito 3y ago

Why is housing magically different from from the innumerable other things we regularly buy even though their value depreciates after purchase?

jjav 3y ago
> Why is housing magically different from from the innumerable other things we regularly buy even though their value depreciates after purchase? It might be good or bad, but clearly it is very different simply due to price. If a relatively cheap trinket depreciates to zero, hardly anyone cares. Cars are generally the second most expensive thing people will ever buy and they depreciate, which does bother most people from a financial perspective. But they last a long time and while they are very expensive they're not life-changing expensive. A house though, is going to cost decades of your labor, so having that depreciate too fast is going to scare a lot of people.