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Props to Redfin. If there’s one area I’d love to see Silicon Valley actually disrupt, it’s real estate. There’s too many middlemen in this process— personally I

Props to Redfin. If there’s one area I’d love to see Silicon Valley actually disrupt, it’s real estate. There’s too many middlemen in this process— personally I don’t even think houses should be investments. I’ve never bought the argument by hedge funds that “we add valuable liquidity to the market (*for only a few billion dollars in fees!)”, but perhaps that argument might hold water for real estate.

steve_adams_86 3y ago
I recently bought a house that has increased in value by around 10% since I bought it. I’d be happy about it, but all I can think about what a struggle it was to find, bid on, and buy a home at the prices the market demanded at the time. Now it’s worse, and I profit from it for doing effectively nothing (assuming I sell when it is still valued higher). That’s not good. Not like this, at least. Maybe this was more appealing to people in the past because it wasn’t so overtly bad for communities and society.
- willcipriano 3y ago
  [flagged]
  - sli 3y ago
    Shortsightedness like this tends to backfire spectacularly in the long-term.
    - goalonetwo 3y ago
      It is amazing how once someone becomes a homeowner, they become cheerleaders for unsustainable home prices (and vice versa). And I understand where it comes from. The mistake was to make housing an investment.
      - jacurtis 3y ago
        People tend to be really shortsighted when it comes to home prices. People get excited with the thought of selling their home and "extracting profit". But how do you extract profit? You still need another home, right? Unless you plan on downsizing then you are going to buy similar or larger to what you just sold. If your house value went up 30%, then likely the rest of your area did too. So if you want to buy something new, then all your profits go back to something that is the same as you already have. In the end you just end up in a similar home, but now with a worse interest rate. So where's that value extraction that everyone gets so excited about. Thats why home sales aren't happening right now. People fantisize about their home value but when they go to sell they realize they will probably end up worse off than when they started. For example. Let's say you bought a home for $300k and now it is worth $400k. Let's say they owe $250k on it. Nice 30% value, huh? Great, sell it. Now you have a cool $150k burning a hole in your pocket. But then you remember, oh i don't have anywhere to sleep tonight. So you go and buy a home that is similar to what you just sold. Well all those houses now cost $400k, thats why you were able to sell yours for that price in the first place. So now you use the $150k of money that you "extracted" as a downpayment on another $400k home and guess what, you're back to a $250k loan, which is exactly where you started. You didn't gain anything. Just now you are paying 6.5% interest on it instead of 3.5% interest. Which means your monthly mortgage actually increased by ~$650 a month for the same house. Great deal, huh?
      - bigstrat2003 3y ago
        Nobody was "cheering" that I saw. The person above was simply pointing out that there's nothing to feel bad about. My house also went up in theoretical value (by a lot more than 10%, too). Why on God's green earth should I feel guilty over something I had no control over whatever? I am neither happy (since I haven't realized any gains and so it would be premature to celebrate), nor do I feel bad (since I had no responsibility in causing the current state of the housing market).
  - 15457345234 3y ago
    Your analogy falls apart because the 'train' you are 'on' is not moving. The people you are 'leaving behind' are still right there next to you. You don't live on Elysium. You have to go outside and interact with the people you're so smugly 'leaving behind.' Do you think Do Kwon is still telling people that they're NGMI? I somehow think not.
    - willcipriano 3y ago
      Economically speaking the train is moving. If you have only a high school degree your wages have declined in real terms[0], they continue to fall. With interest rates what they are now home ownership is a impossibility for most people who aren't going to inherit one or who didn't buy when rates were much lower. I'm not driving this train, I dont want it to be this way, what good will blaming myself do here? Should I apologize for seeing this coming? [0]https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7745920/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7745920/
      - 15457345234 3y ago
        > I dont want it to be this way Okay, but the smug tone of your prior post kinda contradicts that, which is why me and others responded the way they did. Hard to know how to have the conversation when you're responding like a completely different person from one comment to another really. Weird.
        willcipriano 3y ago
        The "you can make more money renting and investing" crowd should consider my remarks smug. People too poor to afford homes who are now cut off from doing so for probably the next half decade, mainly because central banks would perfer they stave than asset prices fall, should probably riot.
        15457345234 3y ago
        Ah okay, the smug tone is because you want people to get frustrated and riot. Yeah, I kinda figured that already. Wrecker.
  - steve_adams_86 3y ago
    If my actions benefit me and not my neighbour to such a degree, the train will cease to function at all. And I don’t enjoy my comfort when I’m surrounded by people struggling. It’s poisonous to my community.
- mulmen 3y ago
  The only way to profit is to sell, if you do that where would you live?
  - usefulcat 3y ago
    Somewhere where housing is less expensive, perhaps?
  - steve_adams_86 3y ago
    Many people here have sold and moved to one of the many beautiful towns on our island that are closer to nature, cheaper, and easy to “buy up” in terms of lifestyle. In turn, that has dramatically boosted prices in those towns. Hypothetically (I expect the inverse to happen), if my value increases at this rate until my kids are moved out, I can sell this place for $1.5M. That would get me a LOT of house in one of those towns. But why? Who does that benefit? And does it push locals out of those towns, over time? I don’t want to maintain some kind of housing homeostasis where values remain the same and no one moves. But the time scale here is ridiculous and it’s dramatically changing my region in bad ways, and I don’t see any net positives outside of very few people’s bank accounts. Yet like I said, I do expect it to go the other way. I expected to lose 10% by now, not gain it. There should be a correction at some point, or things are going to be radically different where I live very soon. People are really at their limits.
    - mulmen 3y ago
      Housing is a necessity. It shouldn’t outpace changes in the price of milk or gasoline. That it does should scare the hell out of us. The fact is we have painted ourselves into a corner by propping up insane housing valuations. I’m not sure what to even do about it at this point. Houses cost an order of magnitude more than they should but any correction will destroy the middle class.
- Aurornis 3y ago
  Don't be too sure about that 10% increase in value. Online estimates are generally not great and may simply be guessing from past momentum. Even if it really did increase 10%, you'd be giving up a lot of that difference in all of the various costs involved with selling a house and moving, even if you could cut agent costs to $0. I have some friends who became real estate agents and thought they'd use their position to flip houses while being their own agents to save on costs. They're learning the hard way that even when you're not paying agent fees, buying, selling, and holding homes is expensive.
  - goalonetwo 3y ago
    Most people don't understand opportunity cost or time-value of money. How good an investment is it after you remove the realtor fees, closing fees, HOA, taxes, repair and compare it to a steady 7% on average on the SP500? At a minimum your house MUST go up 10% over a couple years to get even.
    - ethbr1 3y ago
      The key point here is leveraging, given that an average US mortgage is 6.5x to 20x. And that leverage is broadly available to most people, supported (and funded) by government policies.
      - lotsofpulp 3y ago
        And it is a non-callable loan, unlike borrowing $300k from your brokerage to invest in VOO. And many states require it to be a non recourse loan. And due to the backing of the federal government, it offers a 30 year fixed rate. The public subsidies are insane.
        ethbr1 3y ago
        Non-callable, can be refinanced at buyer's discretion, broadly standardized so there's a competitive mortgage originator/refinancing market, and can be borrowed against by using that same market (HELOC or home equity loan) There's a lot of mortgage features that make it attractive to "I'm not an Accredited Investor" types.
- goalonetwo 3y ago
  It is unsustainable. Currently housing is priced as if it was going to increase 10% a year forever (and if that is not the case, you are almost always better off renting right now). There are multiple factors that pushed the prices artificially up since 2020. They will look retrospectively obvious (as the 2008 subprime crisis seem obvious now). I'm usually not in favor of timing the market but I believe we are currently in the single worst time to buy a house in history.
  - breckenedge 3y ago
    Why is it unsustainable? Housing starts are at the lowest since 2019, and people couldn’t afford them if they did build them. People who bought a home before 18mo ago will have very little incentive to sell until interest rates decline, which doesn’t seem to be on the horizon as long as inflation stays higher than 2%.
    - 01100011 3y ago
      Multifamily is being built like crazy. Just got back from Sacramento and they were building units for as far as I could see. Same thing in many markets. Go back and read articles from 2006. They said housing prices were fine because we were lacking supply and had underbuilt for years. Then suddenly we had too many houses. Affordability matters appreciation expectations matter. Credit matters. Employment matters. People will always sell. They can only hold off so long.
      - breckenedge 3y ago
        Multi-family is overbuilt in many markets, including here in Dallas. It’s just not the same market as homes. I was around in 2006. We didn’t have too many houses then, we had people granted credit on dubious applications, ARMs bundled up as AAA credit. That’s not going to repeat. And if it does, it’ll be nationwide all at once, rather than market-by-market like last time. Certainly if there is a major jobs crash, then people cannot afford their mortgage. But the government doesn’t like this and they’ll step in again like they always do.
- LeifCarrotson 3y ago
  Just 10%? Eight years ago, I bought a house that has increased in value from $120k to $350k (validated both by Zillow and by recent sales in the neighborhood of nearly-identical houses). And for a mortgage whose interest has been less than the price of inflation! I'd be happy about it too, but am overwhelmed by guilt when talking to my intern, our newly hired engineer, my younger siblings, and many of my friends who rent at ever-increasing rates. That $230,000 was taken from the pockets of my non-homeowning friends. I don't understand how so many seem to be cheering the rising prices, oblivious to what it's doing to our society.
  - 6502nerdface 3y ago
    > That $230,000 was taken from the pockets of my non-homeowning friends. Nope! First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper. Second of all, when you do sell it, the money will come from the pockets of your willing buyer :-) Edit: if you still want to feel bad about something, let it be this: that the rise in your home's value represents wealth that has been created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and your ability to capture all of that increase via your untaxed monopoly on the ground rent creates a deadweight loss for the broader economy. But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
    - pj_mukh 3y ago
      This is a house, presumably close to a job. Not an optional night out. It’s by no means a “willing” buyer. Mostly a “I need this to survive” buyer. Homeowners with this much gain based on artificial supply constraints should definitely feel bad.
      - thghtihadanacct 3y ago
        Again, if they sell ... my house has doubled in value ... its still the same house I bought. I would only realize some gain if I put it on the market. What it is now is just another house not for sale and I happen to live in it. This is the same uneducated statement people make about prop 13 in California ... 'oh your house is worth a million so youre a millionaire' ... oh?
- Simulacra 3y ago
  Ours has increased by 30% but the thought of selling and then, having to enter this market, is nuts. I won't say it's not tempting to extract some of that value, but not now
  - chasd00 3y ago
    Mine has increased in the neighborhood, maybe around 40%. I have no desire to sell until my boys move out in about 6-7 years.
- jacurtis 3y ago
  eh... don't pop the Champaign on your 10% value increase just yet It's only worth 10% more when you sell it for 10% more. Right now home closings (the finalized deals) are 50% lower than before the pandemic and lower than in 2007. So selling your house to get that 10% increase is going to be hard. But even if you did sell it, then it isn't quite worth celebrating yet, because it is likely that your 10% increase estimate is because the entire market is selling 10% higher. So the problem with this is that if you sell your house and take your handsome 10% profit, you still can't pop the champaign because as it turns out... having a home is one of those sort of necessary things of survival. So if you want to go out and buy another home that is roughly similar to the one you previously had, then it will cost you 10% more than the last time you bought a house, which just so happens to be roughly the same price that you just sold for, so you end up not really making anything. But wait, there's more. Because you sold you need to pay closing fees, which includes generally 6% (see article) in agent fees, plus various closing costs which generally come out to around 10-15% of the home price. So you gained 10% in the sale price of your home, but you lose 10% or more when you close the deal, which wipes out your "profits". Oh, but you only bought a house "recently" which means you probably lost 10-20% in closing fees when you bought it. So your investment is actually more like 110% - 120% of the value of the home. So again, gaining 10% value just brings you up to even. But add the seller closing fees (mentioned above) and it pulls you back down, to losing money. Oh, and now with the cash in hand you buy the next house which is 10% more than before and interest rates are probably several percentages points higher than before as well. So not only is the house 10% more, plus you lost 10% in your last deal, but now your payment will be higher even on the same loan amount thanks to higher interest rates. People underestimate interest rates all the time too. Let's say you had a $400k loan before at 4.5% interest. Well the 30yr fixed payment on that is around $2,500 /mo. Now lets say you do all the shenanigans above and end up with another $400k loan again in 2023, but it is 6.5% interest. It is only a 2 point increase in interest, not a big deal right? Wrong. The same loan amount but on 6.5% interest is $3,000 /mo. So you are now paying $500 a month more for the same loan and home value as just 18 months ago and you would pay 20% more over the lifetime of the loan. Just to instill the shock and awe effectively, I will use the same real numbers as above. Let's say you had a $400k loan at 4.5% interest before (the early 2022 rate). You would have paid $851,626.85 over the lifetime of your loan on that. Now the same loan ($400k) but at the late 2023 rate of 6.5%, because you wanted to sell your house for that 10% profit, remember? Now the same loan amount will cost you $1,036,344.62 over the lifetime of the loan. The house just got $150k more expensive even though the sticker price on Zillow looks like it has been flat since 2022. So... still excited about your 10% home value?
- chii 3y ago
  > for doing effectively nothing you're not doing labour. You're injecting capital into the system. The person who sold the house to you, presumably, is using the proceeds of their sale (and profit) to do something else productive. I don't get why so many people consider taking asset risk as "doing nothing".
  - moomoo11 3y ago
    I’m a capitalist but housing, like a place of shelter for you and your family, should be in a separate asset class. Just lock up housing so that a single individual can’t own more than 3 homes. Get married you get six houses you can own. If that’s not enough maybe you need to reassess whether it makes sense to dump money into a house or put it to some actual better use. Like creating jobs or new products.
  - rcpt 3y ago
    You forgot about land. Land is different from capital. A competition where we all try to outbid each other on land does nothing for the economy.
    - chii 3y ago
      it does, just more round-a-bout. The land does not have infinite value. If you overpaid for the land, you will have lost that value to the seller. Therefore, these bidding is really just a price discovery mechanism. Unfortunately, because the transaction costs are high, and land being quite illiquid, the price doesn't rapidly converge to the "correct" one (aka, the true price might've moved faster than the bidding can catches up). > does nothing for the economy. Unless if the seller only ever reinvest into more land (and that seller also only reinvest into more land, ad-infinitum), the capital freed up from a sale will lubricate another sector of the economy.
- seanmcdirmid 3y ago
  That 10% probably barely covers sell/buy commissions, let alone maintenance, inflation, and interest. If you sold now, it would actually be at an effective loss. You don’t need to feel guilty about a 10% increase, you aren’t really profiting at that point.
  - steve_adams_86 3y ago
    The thing is, I haven’t even lived in it yet. It’s increasing in value at a rate that doesn’t make sense for the community where it was built. I don’t think I’m getting rich or something, it’s just bizarre to me that a home can increase in value before it’s even built and continue to as it’s built. On paper I bought it for more than 10% less than identical neighbouring builds, but nothing has changed about the homes.
    - seanmcdirmid 3y ago
      It isn't built yet? The price of a house is simply a matter of supply and demand. If you buy when supply is more abundant and demand less so, you'll get a better price. Right now, there is a supply crunch in housing (because interest rates are high, the second hand market is really low volume), that means available inventory has a higher price. If you want a year later, the dynamic will be different.
- artursapek 3y ago
  The sad part is, you didn't really "profit" if the broader area you live in is up 10%.
  - steve_adams_86 3y ago
    You’re right, and this is why so many people sold in my area and moved to cheaper areas. That has had a dramatic negative impact on those small towns, and their values (and property taxes) have exploded as a result. It’s a concerning situation. I don’t plan to sell or leave to another place. I’m just disconcerted by buying a home and having the value increase before I ever set foot in it. That’s not normal, and it signals bad things are coming (to me).
- m463 3y ago
  > struggle it was to find, bid on, and buy a home I would REALLY hate to do this electronically. We might replace people with something like ticketmaster or the "get a flight/hotel/car" mess.
- vidarh 3y ago
  My house has more than doubled in value, and I'm not at all happy about it, because apart from the moral issues of access to housing, on a purely selfish note, I, as most people, are more interested in trading up than down, and as my house has doubled, so have the more expensive houses I might want to move to. Effectively, rising house prices harm me too, not just first time buyers House prices increasing are only a benefit to people treating it as an investment, and if it's your primary home, then that means planning for trading down.
iisan7 3y ago
Silicon valley has if anything made real estate more of an investment, look at fractional ownership schemes. The costs of transacting business through an agent is a holdover from another time when those costs weren't that significant given how infrequently a home would transact (and lower real prices). I agree realtors generally don't provide value for the money anymore. However, all else being equal, removing realtors will itself make it more profitable to invest in real estate.
- klysm 3y ago
  > removing realtors will itself make it more profitable to invest in real estate Perhaps this statement should be restricted to just say the costs of investing in real estate would be reduced. Small difference I know, but I think it’s an important distinction.
  - matt-attack 3y ago
    They seem like equivalent statements. What was the point of rephrasing?
    - Mtinie 3y ago
      I suspect it’s because profits only exist in an “up” market while reduced costs provide benefits whether the market is up or down.
    - klysm 3y ago
      Profit is up to other factors. Lower costs means you need less revenue to make a profit, but of course it does not guarantee it
  - koolba 3y ago
    Lower transaction costs lead to a more liquid market as the cost of entry and exit are both reduced. Every body wins except the middle men.
    - klysm 3y ago
irrational 3y ago
We both sold our last house and purchased our current house with anyone using a realtor at any point. It was so easy. All the forms can be printed out from the Internet. Fill them out, the buyer gives a check for the earnest money, turn it over to a title company and they take care of the rest. Simple and trouble free.
- brd529 3y ago
  How did you market it and do you think listing on mls, having an agent show the house, or paying a buyers broker fee would have gotten you more and higher offers?
  - ethbr1 3y ago
    6% higher?
  - irrational 3y ago
    We didn’t market it. My found our current house through a friend. The wife of the couple that owned the house and my wife hit it off. They sold the house to use at well below market rate (in fact, afterwards we got a letter from the county tax office basically asking “uh… you bought this house well below the market rate… how did that happen?”). We figured out how much we needed to sell our old house for everything to work out. We told friends that we were looking for a buyer for our house and someone had a coworker that was interested. They came and looked at it and bought it for what we wanted. Everyone was happy at the end of the day.
    - brd529 3y ago
      That’s a great story! Do you know why your friend was willing to sell below market? Was it just 6% below market - what they would have spent on fees anyway?
      - irrational 3y ago
        Well, they built the house (the husband was a contractor). It’s an integrated concrete form (ICF) house. They raised their family in the house and had lived in it long enough that it was all paid off. They didn’t want it to go to just anyone, so they asked us how much we wanted to pay and we came to an agreement on a number. They wanted to build a smaller retirement house and were just looking for enough to build that house (as in, they planned on building it themselves).
gonzo41 3y ago
SV has already disrupted real estate. SV figured out that you can keep raising rents each year on rentals, and people who can pay will wear the hit and the people you make homeless don't matter because you make more money overall even if there's empty apartments every where. TA DA! SV helps the world again!
eru 3y ago
> I’ve never bought the argument by hedge funds that “we add valuable liquidity to the market (*for only a few billion dollars in fees!)”, but perhaps that argument might hold water for real estate. I think you might be mixing up hedge funds and market makers (commonly knows as high frequency traders)?
- lmm 3y ago
  Both defend themselves with liquidity arguments; with hedge funds (some of them, famously they're a compensation scheme not an an asset class) it's about medium- or long-term liquidity (buying assets that are going to pay off but only months, years or decades down the line), with market-makers it's about short term.
  - eru 3y ago
    You might be right about that. Though liquidity arguments are a bit rarer for hedge funds. I hear more about claims of efficient capital allocation. In any case, I agree that hedge funds are more of a compensation scheme. My opinion of them is relatively low, but that's from the point of that investing in them is a bad idea. I don't think on net they have any bad effects on the rest of the market.
    - lmm 3y ago
      I think if anything they're a force for good on the rest of the market - someone needs to be there to buy assets that are both illiquid and risky, and both broker-dealers and (more recently) pension funds have been gradually regulated out of being that buyer.
plagiarist 3y ago
Why is the buyer's agent's incentive to rush the buyer into whatever house as fast as possible? The industry is completely misaligned.
blacksmith_tb 3y ago
Hmm, seems like Airbnb has caused plenty of 'disruption' but I can't give them too many props for it. I agree that broadly the mass of realtors, title companies, etc. that pile on to extract their cut of the sale of a home seem unnecessary, or at most should be getting a fraction of what they now take.
kelnos 3y ago
I sort of agree: primary homes should not be considered an investment, but there's nothing wrong with owning real estate in general as an investment. I'd prefer real estate investors drive for their properties to generate regular income, though, rather than the common practice of buying property with the main goal of selling it later at a decent profit. That latter activity is one of the factors that drive up housing costs.
- seretogis 3y ago
  This seems so backwards to me. One invests in the home they live in, to improve their quality of life and the value of their own property. Buying more properties than you need to live is what drives up housing costs, because other people need those homes to live in and you're using that core basic human need as a method to extract capital from them.
  - bigstrat2003 3y ago
    > you're using that core basic human need as a method to extract capital from them. This isn't really an argument against doing it. People also need to eat (more than they need a house, in fact). Farmers still should be able to get paid for helping to meet that need. People need to drink water. If you sell them water, there's nothing wrong with that. Just because something is a basic human need doesn't somehow mean that it's wrong to profit from filling it.
    - larsiusprime 3y ago
      The main issue is that we can make more food, but we can't make more land. We can make more buildings though. You'll notice that most of the appreciation in house prices lately has to do with land, not the buildings. The fundamental error in our understanding of economics is treating non-produced goods like land as if they were "capital." There's nothing wrong with investing in producible goods -- in fact that's ideal. But when people gatekeep nonproduced goods, especially nonproduced goods that everybody needs to live (ie, land) - that's where everything breaks down.
    - 3y ago
diogenes4 3y ago
> personally I don’t even think houses should be investments Sadly, this has been the cornerstone of american culture for the last seventy years. AirBNB & the chase of "passive income" are only exacerbating this.
- afterburner 3y ago
  400 years. A huge part of the allure of expansion was land speculation. The biggest corporate colonial players pushed to expand west in order to be able to take land that would later develop into new settlements, making it far more valuable.
pfannkuchen 3y ago
What is the alternative to making real estate an investment? For most of history land was allocated via violence. Allocation via money seems to be an improvement.
- hnGuyReaderDude 3y ago
  Making housing a commodity - I.e if you buy a house for 300k, you should expect to sell the house for 300k. Many people buy houses with the intent they they appreciate
  - pfannkuchen 3y ago
    How do you propose to implement this? In the past, living on the better land meant others would be more likely to try to take it by force. If you attempt to suppress this dynamic entirely instead of transforming it into some other dimension (e.g. violence to money), you will fail and it will be replaced by either a money black market or violence or both.
    - TylerE 3y ago
      Also would seem to encourage slumlords - if it's worth what it's worth, why bother with things like "maintenance", "repairs", or god forbid "upgrades"?
  - Maxion 3y ago
    They tried to do this in Stockholm, but in the end it completely messed up the apartment market. People end up queing for years, or you buy on the black market for vastly inflated prices. Demand creates supply, but not necessarily at the price point you want. The best housing policies work with the market, and use regulation to keep NIMBYs in check, update zoning as necessary and allow builders to build enough m2 to satisfy demand.
  - cscurmudgeon 3y ago
    You can't wish or legislate away the law of supply and demand for basic needs and physical goods. E.g., even in North Korea there are black markets where prices go to the equilibrium value.
ryanSrich 3y ago
How could real estate not be an investment? Land is scarce. You would have to prevent people from buying it. Not to mention updates, improvements, etc. People would have almost zero incentive to improve their property, and then who is left with the massive repair bills when those people vacate? Real estate by nature is an investment (good or bad).
- mjevans 3y ago
  Land Value Taxes
corethree 3y ago
Don't give too much props to redfin. What's going on here isn't justice. It's competition. One middle man wants more power from other middle man so they fight. As an outsider we don't want any side to win. If RedFin wins they could become the new NAR.
listenallyall 3y ago
Silicon Valley did disrupt real estate -- AirBnB. Made every property more valuable and thus, expensive. Moving? No need to sell, your previous house can now be a passive income vehicle. Even if you don't participate as a host, the reduction of supply augments your home's selling price. "Disrupt" doesn't always mean, for the benefit of consumers.
jeffreyrogers 3y ago
The way to drive out middlemen is to allow competition to make the market more efficient, which will cause people to get outraged at the people who profit from making it more efficient (same thing that happens to HFT firms, which have demonstrably reduced spreads). The real problem is a lack of supply which is mostly political (although some areas have geographical constraints that make it harder to build... but that's largely solvable by building vertically)
psunavy03 3y ago
A house should be an investment in the sense that it is a vehicle to build equity. The whole point of paying a mortgage for 30 years is so when you retire, you own your house free and clear and don't have a house payment. Which means you can retire on a comparatively smaller nest egg. Now if you want to say that you should buy a house betting on significant capital gains over inflation, that's foolish.
maest 3y ago
> for only a few billion dollars in fees Market makers don't charge fees. (I mean, maybe they charge their LPs, but that's a different matter)
j-a-a-p 3y ago
Small contradiction there on the role of realtors and investors. Add drag to trade really hits the investors. Look at the Netherlands, recently the buying tax has increased from 6 to 10%+ when buy to let or flip. Consumers buying a home pay only 2% tax. After this (+current interest rates, +some other factors), the professional home investment market in NL completely dried up. For the rest totally agree, disrupt the middle man in real estate is OK++.
- scns 3y ago
  I like this solution a lot.
bananapub 3y ago
> If there’s one area I’d love to see Silicon Valley actually disrupt, it’s real estate. There’s too many middlemen in this process when has silicon valley ever actually disrupted anything, rather than creating a new, well-funded middleman?
poulsbohemian 3y ago
>There’s too many middlemen in this process Realtor here - if you believe that, don't use Redfin or Zillow or their competitors, because they are yet another middleman adding friction. I'm not going to go into a monologue here, but both are leeches on the system that add more cost. Yes, it's wonderful that they have made more info available to the public - for that they are to be commended. But if you understand how they actually make money they are adding more friction and contentiousness and I do not believe they are actually saving your, the consumer, money. >I don’t even think houses should be investments It's a sensitive and emotional topic certainly, but I would encourage you that if you feel that way, try to imagine what set of laws or social changes would need to happen in order for that to not be the case - like what would that world look like? Because each time I try to do that thought exercise with people, I continue to come back to a belief that the alternatives are not superior to the system we have. Real estate is an asset. Cars, bennie babies, stocks, bonds, gold - there are lots of types of assets in the world, but real estate with its permanence and immovability is a very, very special type of asset. Thus, it is very difficult to separate the asset from its investment potential.

steve_adams_86 3y ago

I recently bought a house that has increased in value by around 10% since I bought it. I’d be happy about it, but all I can think about what a struggle it was to find, bid on, and buy a home at the prices the market demanded at the time. Now it’s worse, and I profit from it for doing effectively nothing (assuming I sell when it is still valued higher). That’s not good. Not like this, at least. Maybe this was more appealing to people in the past because it wasn’t so overtly bad for communities and society.

willcipriano 3y ago
[flagged]
- sli 3y ago
  Shortsightedness like this tends to backfire spectacularly in the long-term.
  - goalonetwo 3y ago
    It is amazing how once someone becomes a homeowner, they become cheerleaders for unsustainable home prices (and vice versa). And I understand where it comes from. The mistake was to make housing an investment.
    - jacurtis 3y ago
      People tend to be really shortsighted when it comes to home prices. People get excited with the thought of selling their home and "extracting profit". But how do you extract profit? You still need another home, right? Unless you plan on downsizing then you are going to buy similar or larger to what you just sold. If your house value went up 30%, then likely the rest of your area did too. So if you want to buy something new, then all your profits go back to something that is the same as you already have. In the end you just end up in a similar home, but now with a worse interest rate. So where's that value extraction that everyone gets so excited about. Thats why home sales aren't happening right now. People fantisize about their home value but when they go to sell they realize they will probably end up worse off than when they started. For example. Let's say you bought a home for $300k and now it is worth $400k. Let's say they owe $250k on it. Nice 30% value, huh? Great, sell it. Now you have a cool $150k burning a hole in your pocket. But then you remember, oh i don't have anywhere to sleep tonight. So you go and buy a home that is similar to what you just sold. Well all those houses now cost $400k, thats why you were able to sell yours for that price in the first place. So now you use the $150k of money that you "extracted" as a downpayment on another $400k home and guess what, you're back to a $250k loan, which is exactly where you started. You didn't gain anything. Just now you are paying 6.5% interest on it instead of 3.5% interest. Which means your monthly mortgage actually increased by ~$650 a month for the same house. Great deal, huh?
    - bigstrat2003 3y ago
      Nobody was "cheering" that I saw. The person above was simply pointing out that there's nothing to feel bad about. My house also went up in theoretical value (by a lot more than 10%, too). Why on God's green earth should I feel guilty over something I had no control over whatever? I am neither happy (since I haven't realized any gains and so it would be premature to celebrate), nor do I feel bad (since I had no responsibility in causing the current state of the housing market).
- 15457345234 3y ago
  Your analogy falls apart because the 'train' you are 'on' is not moving. The people you are 'leaving behind' are still right there next to you. You don't live on Elysium. You have to go outside and interact with the people you're so smugly 'leaving behind.' Do you think Do Kwon is still telling people that they're NGMI? I somehow think not.
  - willcipriano 3y ago
    Economically speaking the train is moving. If you have only a high school degree your wages have declined in real terms[0], they continue to fall. With interest rates what they are now home ownership is a impossibility for most people who aren't going to inherit one or who didn't buy when rates were much lower. I'm not driving this train, I dont want it to be this way, what good will blaming myself do here? Should I apologize for seeing this coming? [0]https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7745920/ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7745920/
    - 15457345234 3y ago
      > I dont want it to be this way Okay, but the smug tone of your prior post kinda contradicts that, which is why me and others responded the way they did. Hard to know how to have the conversation when you're responding like a completely different person from one comment to another really. Weird.
      - willcipriano 3y ago
        The "you can make more money renting and investing" crowd should consider my remarks smug. People too poor to afford homes who are now cut off from doing so for probably the next half decade, mainly because central banks would perfer they stave than asset prices fall, should probably riot.
        15457345234 3y ago
        Ah okay, the smug tone is because you want people to get frustrated and riot. Yeah, I kinda figured that already. Wrecker.
- steve_adams_86 3y ago
  If my actions benefit me and not my neighbour to such a degree, the train will cease to function at all. And I don’t enjoy my comfort when I’m surrounded by people struggling. It’s poisonous to my community.
mulmen 3y ago
The only way to profit is to sell, if you do that where would you live?
- usefulcat 3y ago
  Somewhere where housing is less expensive, perhaps?
- steve_adams_86 3y ago
  Many people here have sold and moved to one of the many beautiful towns on our island that are closer to nature, cheaper, and easy to “buy up” in terms of lifestyle. In turn, that has dramatically boosted prices in those towns. Hypothetically (I expect the inverse to happen), if my value increases at this rate until my kids are moved out, I can sell this place for $1.5M. That would get me a LOT of house in one of those towns. But why? Who does that benefit? And does it push locals out of those towns, over time? I don’t want to maintain some kind of housing homeostasis where values remain the same and no one moves. But the time scale here is ridiculous and it’s dramatically changing my region in bad ways, and I don’t see any net positives outside of very few people’s bank accounts. Yet like I said, I do expect it to go the other way. I expected to lose 10% by now, not gain it. There should be a correction at some point, or things are going to be radically different where I live very soon. People are really at their limits.
  - mulmen 3y ago
    Housing is a necessity. It shouldn’t outpace changes in the price of milk or gasoline. That it does should scare the hell out of us. The fact is we have painted ourselves into a corner by propping up insane housing valuations. I’m not sure what to even do about it at this point. Houses cost an order of magnitude more than they should but any correction will destroy the middle class.
Aurornis 3y ago
Don't be too sure about that 10% increase in value. Online estimates are generally not great and may simply be guessing from past momentum. Even if it really did increase 10%, you'd be giving up a lot of that difference in all of the various costs involved with selling a house and moving, even if you could cut agent costs to $0. I have some friends who became real estate agents and thought they'd use their position to flip houses while being their own agents to save on costs. They're learning the hard way that even when you're not paying agent fees, buying, selling, and holding homes is expensive.
- goalonetwo 3y ago
  Most people don't understand opportunity cost or time-value of money. How good an investment is it after you remove the realtor fees, closing fees, HOA, taxes, repair and compare it to a steady 7% on average on the SP500? At a minimum your house MUST go up 10% over a couple years to get even.
  - ethbr1 3y ago
    The key point here is leveraging, given that an average US mortgage is 6.5x to 20x. And that leverage is broadly available to most people, supported (and funded) by government policies.
    - lotsofpulp 3y ago
      And it is a non-callable loan, unlike borrowing $300k from your brokerage to invest in VOO. And many states require it to be a non recourse loan. And due to the backing of the federal government, it offers a 30 year fixed rate. The public subsidies are insane.
      - ethbr1 3y ago
        Non-callable, can be refinanced at buyer's discretion, broadly standardized so there's a competitive mortgage originator/refinancing market, and can be borrowed against by using that same market (HELOC or home equity loan) There's a lot of mortgage features that make it attractive to "I'm not an Accredited Investor" types.
goalonetwo 3y ago
It is unsustainable. Currently housing is priced as if it was going to increase 10% a year forever (and if that is not the case, you are almost always better off renting right now). There are multiple factors that pushed the prices artificially up since 2020. They will look retrospectively obvious (as the 2008 subprime crisis seem obvious now). I'm usually not in favor of timing the market but I believe we are currently in the single worst time to buy a house in history.
- breckenedge 3y ago
  Why is it unsustainable? Housing starts are at the lowest since 2019, and people couldn’t afford them if they did build them. People who bought a home before 18mo ago will have very little incentive to sell until interest rates decline, which doesn’t seem to be on the horizon as long as inflation stays higher than 2%.
  - 01100011 3y ago
    Multifamily is being built like crazy. Just got back from Sacramento and they were building units for as far as I could see. Same thing in many markets. Go back and read articles from 2006. They said housing prices were fine because we were lacking supply and had underbuilt for years. Then suddenly we had too many houses. Affordability matters appreciation expectations matter. Credit matters. Employment matters. People will always sell. They can only hold off so long.
    - breckenedge 3y ago
      Multi-family is overbuilt in many markets, including here in Dallas. It’s just not the same market as homes. I was around in 2006. We didn’t have too many houses then, we had people granted credit on dubious applications, ARMs bundled up as AAA credit. That’s not going to repeat. And if it does, it’ll be nationwide all at once, rather than market-by-market like last time. Certainly if there is a major jobs crash, then people cannot afford their mortgage. But the government doesn’t like this and they’ll step in again like they always do.
LeifCarrotson 3y ago
Just 10%? Eight years ago, I bought a house that has increased in value from $120k to $350k (validated both by Zillow and by recent sales in the neighborhood of nearly-identical houses). And for a mortgage whose interest has been less than the price of inflation! I'd be happy about it too, but am overwhelmed by guilt when talking to my intern, our newly hired engineer, my younger siblings, and many of my friends who rent at ever-increasing rates. That $230,000 was taken from the pockets of my non-homeowning friends. I don't understand how so many seem to be cheering the rising prices, oblivious to what it's doing to our society.
- 6502nerdface 3y ago
  > That $230,000 was taken from the pockets of my non-homeowning friends. Nope! First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper. Second of all, when you do sell it, the money will come from the pockets of your willing buyer :-) Edit: if you still want to feel bad about something, let it be this: that the rise in your home's value represents wealth that has been created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and your ability to capture all of that increase via your untaxed monopoly on the ground rent creates a deadweight loss for the broader economy. But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)
  - pj_mukh 3y ago
    This is a house, presumably close to a job. Not an optional night out. It’s by no means a “willing” buyer. Mostly a “I need this to survive” buyer. Homeowners with this much gain based on artificial supply constraints should definitely feel bad.
    - thghtihadanacct 3y ago
      Again, if they sell ... my house has doubled in value ... its still the same house I bought. I would only realize some gain if I put it on the market. What it is now is just another house not for sale and I happen to live in it. This is the same uneducated statement people make about prop 13 in California ... 'oh your house is worth a million so youre a millionaire' ... oh?
Simulacra 3y ago
Ours has increased by 30% but the thought of selling and then, having to enter this market, is nuts. I won't say it's not tempting to extract some of that value, but not now
- chasd00 3y ago
  Mine has increased in the neighborhood, maybe around 40%. I have no desire to sell until my boys move out in about 6-7 years.
jacurtis 3y ago
eh... don't pop the Champaign on your 10% value increase just yet It's only worth 10% more when you sell it for 10% more. Right now home closings (the finalized deals) are 50% lower than before the pandemic and lower than in 2007. So selling your house to get that 10% increase is going to be hard. But even if you did sell it, then it isn't quite worth celebrating yet, because it is likely that your 10% increase estimate is because the entire market is selling 10% higher. So the problem with this is that if you sell your house and take your handsome 10% profit, you still can't pop the champaign because as it turns out... having a home is one of those sort of necessary things of survival. So if you want to go out and buy another home that is roughly similar to the one you previously had, then it will cost you 10% more than the last time you bought a house, which just so happens to be roughly the same price that you just sold for, so you end up not really making anything. But wait, there's more. Because you sold you need to pay closing fees, which includes generally 6% (see article) in agent fees, plus various closing costs which generally come out to around 10-15% of the home price. So you gained 10% in the sale price of your home, but you lose 10% or more when you close the deal, which wipes out your "profits". Oh, but you only bought a house "recently" which means you probably lost 10-20% in closing fees when you bought it. So your investment is actually more like 110% - 120% of the value of the home. So again, gaining 10% value just brings you up to even. But add the seller closing fees (mentioned above) and it pulls you back down, to losing money. Oh, and now with the cash in hand you buy the next house which is 10% more than before and interest rates are probably several percentages points higher than before as well. So not only is the house 10% more, plus you lost 10% in your last deal, but now your payment will be higher even on the same loan amount thanks to higher interest rates. People underestimate interest rates all the time too. Let's say you had a $400k loan before at 4.5% interest. Well the 30yr fixed payment on that is around $2,500 /mo. Now lets say you do all the shenanigans above and end up with another $400k loan again in 2023, but it is 6.5% interest. It is only a 2 point increase in interest, not a big deal right? Wrong. The same loan amount but on 6.5% interest is $3,000 /mo. So you are now paying $500 a month more for the same loan and home value as just 18 months ago and you would pay 20% more over the lifetime of the loan. Just to instill the shock and awe effectively, I will use the same real numbers as above. Let's say you had a $400k loan at 4.5% interest before (the early 2022 rate). You would have paid $851,626.85 over the lifetime of your loan on that. Now the same loan ($400k) but at the late 2023 rate of 6.5%, because you wanted to sell your house for that 10% profit, remember? Now the same loan amount will cost you $1,036,344.62 over the lifetime of the loan. The house just got $150k more expensive even though the sticker price on Zillow looks like it has been flat since 2022. So... still excited about your 10% home value?
chii 3y ago
> for doing effectively nothing you're not doing labour. You're injecting capital into the system. The person who sold the house to you, presumably, is using the proceeds of their sale (and profit) to do something else productive. I don't get why so many people consider taking asset risk as "doing nothing".
- moomoo11 3y ago
  I’m a capitalist but housing, like a place of shelter for you and your family, should be in a separate asset class. Just lock up housing so that a single individual can’t own more than 3 homes. Get married you get six houses you can own. If that’s not enough maybe you need to reassess whether it makes sense to dump money into a house or put it to some actual better use. Like creating jobs or new products.
- rcpt 3y ago
  You forgot about land. Land is different from capital. A competition where we all try to outbid each other on land does nothing for the economy.
  - chii 3y ago
    it does, just more round-a-bout. The land does not have infinite value. If you overpaid for the land, you will have lost that value to the seller. Therefore, these bidding is really just a price discovery mechanism. Unfortunately, because the transaction costs are high, and land being quite illiquid, the price doesn't rapidly converge to the "correct" one (aka, the true price might've moved faster than the bidding can catches up). > does nothing for the economy. Unless if the seller only ever reinvest into more land (and that seller also only reinvest into more land, ad-infinitum), the capital freed up from a sale will lubricate another sector of the economy.
seanmcdirmid 3y ago
That 10% probably barely covers sell/buy commissions, let alone maintenance, inflation, and interest. If you sold now, it would actually be at an effective loss. You don’t need to feel guilty about a 10% increase, you aren’t really profiting at that point.
- steve_adams_86 3y ago
  The thing is, I haven’t even lived in it yet. It’s increasing in value at a rate that doesn’t make sense for the community where it was built. I don’t think I’m getting rich or something, it’s just bizarre to me that a home can increase in value before it’s even built and continue to as it’s built. On paper I bought it for more than 10% less than identical neighbouring builds, but nothing has changed about the homes.
  - seanmcdirmid 3y ago
    It isn't built yet? The price of a house is simply a matter of supply and demand. If you buy when supply is more abundant and demand less so, you'll get a better price. Right now, there is a supply crunch in housing (because interest rates are high, the second hand market is really low volume), that means available inventory has a higher price. If you want a year later, the dynamic will be different.
artursapek 3y ago
The sad part is, you didn't really "profit" if the broader area you live in is up 10%.
- steve_adams_86 3y ago
  You’re right, and this is why so many people sold in my area and moved to cheaper areas. That has had a dramatic negative impact on those small towns, and their values (and property taxes) have exploded as a result. It’s a concerning situation. I don’t plan to sell or leave to another place. I’m just disconcerted by buying a home and having the value increase before I ever set foot in it. That’s not normal, and it signals bad things are coming (to me).
m463 3y ago
> struggle it was to find, bid on, and buy a home I would REALLY hate to do this electronically. We might replace people with something like ticketmaster or the "get a flight/hotel/car" mess.
vidarh 3y ago
My house has more than doubled in value, and I'm not at all happy about it, because apart from the moral issues of access to housing, on a purely selfish note, I, as most people, are more interested in trading up than down, and as my house has doubled, so have the more expensive houses I might want to move to. Effectively, rising house prices harm me too, not just first time buyers House prices increasing are only a benefit to people treating it as an investment, and if it's your primary home, then that means planning for trading down.

iisan7 3y ago

Silicon valley has if anything made real estate more of an investment, look at fractional ownership schemes. The costs of transacting business through an agent is a holdover from another time when those costs weren't that significant given how infrequently a home would transact (and lower real prices). I agree realtors generally don't provide value for the money anymore. However, all else being equal, removing realtors will itself make it more profitable to invest in real estate.

klysm 3y ago
> removing realtors will itself make it more profitable to invest in real estate Perhaps this statement should be restricted to just say the costs of investing in real estate would be reduced. Small difference I know, but I think it’s an important distinction.
- matt-attack 3y ago
  They seem like equivalent statements. What was the point of rephrasing?
  - Mtinie 3y ago
    I suspect it’s because profits only exist in an “up” market while reduced costs provide benefits whether the market is up or down.
  - klysm 3y ago
    Profit is up to other factors. Lower costs means you need less revenue to make a profit, but of course it does not guarantee it
- koolba 3y ago
  Lower transaction costs lead to a more liquid market as the cost of entry and exit are both reduced. Every body wins except the middle men.
  - klysm 3y ago

irrational 3y ago

We both sold our last house and purchased our current house with anyone using a realtor at any point. It was so easy. All the forms can be printed out from the Internet. Fill them out, the buyer gives a check for the earnest money, turn it over to a title company and they take care of the rest. Simple and trouble free.

brd529 3y ago
How did you market it and do you think listing on mls, having an agent show the house, or paying a buyers broker fee would have gotten you more and higher offers?
- ethbr1 3y ago
  6% higher?
- irrational 3y ago
  We didn’t market it. My found our current house through a friend. The wife of the couple that owned the house and my wife hit it off. They sold the house to use at well below market rate (in fact, afterwards we got a letter from the county tax office basically asking “uh… you bought this house well below the market rate… how did that happen?”). We figured out how much we needed to sell our old house for everything to work out. We told friends that we were looking for a buyer for our house and someone had a coworker that was interested. They came and looked at it and bought it for what we wanted. Everyone was happy at the end of the day.
  - brd529 3y ago
    That’s a great story! Do you know why your friend was willing to sell below market? Was it just 6% below market - what they would have spent on fees anyway?
    - irrational 3y ago
      Well, they built the house (the husband was a contractor). It’s an integrated concrete form (ICF) house. They raised their family in the house and had lived in it long enough that it was all paid off. They didn’t want it to go to just anyone, so they asked us how much we wanted to pay and we came to an agreement on a number. They wanted to build a smaller retirement house and were just looking for enough to build that house (as in, they planned on building it themselves).

gonzo41 3y ago

SV has already disrupted real estate. SV figured out that you can keep raising rents each year on rentals, and people who can pay will wear the hit and the people you make homeless don't matter because you make more money overall even if there's empty apartments every where. TA DA! SV helps the world again!

eru 3y ago

> I’ve never bought the argument by hedge funds that “we add valuable liquidity to the market (*for only a few billion dollars in fees!)”, but perhaps that argument might hold water for real estate. I think you might be mixing up hedge funds and market makers (commonly knows as high frequency traders)?

lmm 3y ago
Both defend themselves with liquidity arguments; with hedge funds (some of them, famously they're a compensation scheme not an an asset class) it's about medium- or long-term liquidity (buying assets that are going to pay off but only months, years or decades down the line), with market-makers it's about short term.
- eru 3y ago
  You might be right about that. Though liquidity arguments are a bit rarer for hedge funds. I hear more about claims of efficient capital allocation. In any case, I agree that hedge funds are more of a compensation scheme. My opinion of them is relatively low, but that's from the point of that investing in them is a bad idea. I don't think on net they have any bad effects on the rest of the market.
  - lmm 3y ago
    I think if anything they're a force for good on the rest of the market - someone needs to be there to buy assets that are both illiquid and risky, and both broker-dealers and (more recently) pension funds have been gradually regulated out of being that buyer.

plagiarist 3y ago

Why is the buyer's agent's incentive to rush the buyer into whatever house as fast as possible? The industry is completely misaligned.

blacksmith_tb 3y ago

Hmm, seems like Airbnb has caused plenty of 'disruption' but I can't give them too many props for it. I agree that broadly the mass of realtors, title companies, etc. that pile on to extract their cut of the sale of a home seem unnecessary, or at most should be getting a fraction of what they now take.

kelnos 3y ago

I sort of agree: primary homes should not be considered an investment, but there's nothing wrong with owning real estate in general as an investment. I'd prefer real estate investors drive for their properties to generate regular income, though, rather than the common practice of buying property with the main goal of selling it later at a decent profit. That latter activity is one of the factors that drive up housing costs.

seretogis 3y ago
This seems so backwards to me. One invests in the home they live in, to improve their quality of life and the value of their own property. Buying more properties than you need to live is what drives up housing costs, because other people need those homes to live in and you're using that core basic human need as a method to extract capital from them.
- bigstrat2003 3y ago
  > you're using that core basic human need as a method to extract capital from them. This isn't really an argument against doing it. People also need to eat (more than they need a house, in fact). Farmers still should be able to get paid for helping to meet that need. People need to drink water. If you sell them water, there's nothing wrong with that. Just because something is a basic human need doesn't somehow mean that it's wrong to profit from filling it.
  - larsiusprime 3y ago
    The main issue is that we can make more food, but we can't make more land. We can make more buildings though. You'll notice that most of the appreciation in house prices lately has to do with land, not the buildings. The fundamental error in our understanding of economics is treating non-produced goods like land as if they were "capital." There's nothing wrong with investing in producible goods -- in fact that's ideal. But when people gatekeep nonproduced goods, especially nonproduced goods that everybody needs to live (ie, land) - that's where everything breaks down.
  - 3y ago

diogenes4 3y ago

> personally I don’t even think houses should be investments Sadly, this has been the cornerstone of american culture for the last seventy years. AirBNB & the chase of "passive income" are only exacerbating this.

afterburner 3y ago
400 years. A huge part of the allure of expansion was land speculation. The biggest corporate colonial players pushed to expand west in order to be able to take land that would later develop into new settlements, making it far more valuable.

pfannkuchen 3y ago

What is the alternative to making real estate an investment? For most of history land was allocated via violence. Allocation via money seems to be an improvement.

hnGuyReaderDude 3y ago
Making housing a commodity - I.e if you buy a house for 300k, you should expect to sell the house for 300k. Many people buy houses with the intent they they appreciate
- pfannkuchen 3y ago
  How do you propose to implement this? In the past, living on the better land meant others would be more likely to try to take it by force. If you attempt to suppress this dynamic entirely instead of transforming it into some other dimension (e.g. violence to money), you will fail and it will be replaced by either a money black market or violence or both.
  - TylerE 3y ago
    Also would seem to encourage slumlords - if it's worth what it's worth, why bother with things like "maintenance", "repairs", or god forbid "upgrades"?
- Maxion 3y ago
  They tried to do this in Stockholm, but in the end it completely messed up the apartment market. People end up queing for years, or you buy on the black market for vastly inflated prices. Demand creates supply, but not necessarily at the price point you want. The best housing policies work with the market, and use regulation to keep NIMBYs in check, update zoning as necessary and allow builders to build enough m2 to satisfy demand.
- cscurmudgeon 3y ago
  You can't wish or legislate away the law of supply and demand for basic needs and physical goods. E.g., even in North Korea there are black markets where prices go to the equilibrium value.

ryanSrich 3y ago

How could real estate not be an investment? Land is scarce. You would have to prevent people from buying it. Not to mention updates, improvements, etc. People would have almost zero incentive to improve their property, and then who is left with the massive repair bills when those people vacate? Real estate by nature is an investment (good or bad).

mjevans 3y ago
Land Value Taxes

corethree 3y ago

Don't give too much props to redfin. What's going on here isn't justice. It's competition. One middle man wants more power from other middle man so they fight. As an outsider we don't want any side to win. If RedFin wins they could become the new NAR.

listenallyall 3y ago

Silicon Valley did disrupt real estate -- AirBnB. Made every property more valuable and thus, expensive. Moving? No need to sell, your previous house can now be a passive income vehicle. Even if you don't participate as a host, the reduction of supply augments your home's selling price. "Disrupt" doesn't always mean, for the benefit of consumers.

jeffreyrogers 3y ago

The way to drive out middlemen is to allow competition to make the market more efficient, which will cause people to get outraged at the people who profit from making it more efficient (same thing that happens to HFT firms, which have demonstrably reduced spreads). The real problem is a lack of supply which is mostly political (although some areas have geographical constraints that make it harder to build... but that's largely solvable by building vertically)

psunavy03 3y ago

A house should be an investment in the sense that it is a vehicle to build equity. The whole point of paying a mortgage for 30 years is so when you retire, you own your house free and clear and don't have a house payment. Which means you can retire on a comparatively smaller nest egg. Now if you want to say that you should buy a house betting on significant capital gains over inflation, that's foolish.

maest 3y ago

> for only a few billion dollars in fees Market makers don't charge fees. (I mean, maybe they charge their LPs, but that's a different matter)

j-a-a-p 3y ago

Small contradiction there on the role of realtors and investors. Add drag to trade really hits the investors. Look at the Netherlands, recently the buying tax has increased from 6 to 10%+ when buy to let or flip. Consumers buying a home pay only 2% tax. After this (+current interest rates, +some other factors), the professional home investment market in NL completely dried up. For the rest totally agree, disrupt the middle man in real estate is OK++.

scns 3y ago
I like this solution a lot.

bananapub 3y ago

> If there’s one area I’d love to see Silicon Valley actually disrupt, it’s real estate. There’s too many middlemen in this process when has silicon valley ever actually disrupted anything, rather than creating a new, well-funded middleman?

poulsbohemian 3y ago

>There’s too many middlemen in this process Realtor here - if you believe that, don't use Redfin or Zillow or their competitors, because they are yet another middleman adding friction. I'm not going to go into a monologue here, but both are leeches on the system that add more cost. Yes, it's wonderful that they have made more info available to the public - for that they are to be commended. But if you understand how they actually make money they are adding more friction and contentiousness and I do not believe they are actually saving your, the consumer, money. >I don’t even think houses should be investments It's a sensitive and emotional topic certainly, but I would encourage you that if you feel that way, try to imagine what set of laws or social changes would need to happen in order for that to not be the case - like what would that world look like? Because each time I try to do that thought exercise with people, I continue to come back to a belief that the alternatives are not superior to the system we have. Real estate is an asset. Cars, bennie babies, stocks, bonds, gold - there are lots of types of assets in the world, but real estate with its permanence and immovability is a very, very special type of asset. Thus, it is very difficult to separate the asset from its investment potential.