4 ms·

Is lowering property values a favorable outcome?

by nrr 3y ago

JumpCrisscross 3y ago
> Is lowering property values a favorable outcome? It's probably untenable alongside local democracy. Instead, zero real appreciation seems like a reasonable target.
bluGill 3y ago
For individuals no. For society long term to a point. Lower property values allow young people to get an affordable place to live and leaves them money leftover for other things they want to do. However it is negative for those who already own. There is probably some minimum value as well that you don't want to go below - but I don't know how you would figure that out.
- nrr 3y ago
  I think my hangup is that there's a conflation between a property's value (which, right now, is some appraisal of a parcel given nearby comparable parcels by some metric) and a home's acquisition price. In the SFH case, they might be inexorably linked, but for justifying more dense options, it's the ever increasing value of land that makes the case to densify. It's mostly a matter of how densely you can continue rebuilding in order to hit a price target at that point. This is roughly the Japanese model.
  - bluGill 3y ago
    Only partially. Building a 100 story high rise is only reasonable if property values are very high - there is presumably high demand for that area and thus density, and the high values mean you have to spread the cost across a lot of people to make it affordable for anyone. Even in very low demand small towns though there is demand for some density - a 3 story apartment will often exist in those towns and have no problem renting to people who want/need to live in the small town but don't want a single family for whatever reason. These smaller low rise buildings are the cheapest housing possible - they are small enough that they don't need expensive elevators and the like, though of course they don't make sense in high property value areas. Which is to say that even on the low end of property value density can be justified to some extent.
scottyah 3y ago
Yes, it is completely necessary for growth.
- nrr 3y ago
  Is it? I can see lower acquisition prices being necessary for growth, but property values as we know them presently are tied to land, the increased value of which is the push to densify. You also want the natural increase (well, Prop 13 permitting) in tax revenue for city amenities.
gen220 3y ago
From present values? I think the answer for "society" is definitively yes, because present values exclude all but top, idk, 5% earners from homeownership in urban and suburban areas. It's extra pronounced in CA because of prop 13, but we face this problem all around the country. It would be a not-minor hiccup for the segment of retirees and near-retirees who depend on rental cash flow for their retirement. They could sell their 2nd and 3rd properties for reduced values, buy an annuity, and live an appropriately downscaled lifestyle. IDK, my main goal is to restore our communities with 70+% residential homeownership. I think the emergent socioeconomic & cultural effects of communities where the majority of people are long-term committed to their locale are more valuable to society than the effects of rent-seeking.
- nrr 3y ago
  It's mostly that I find property values as a proxy for acquisition prices somewhat disingenuous because it perpetuates thinking of single-family houses as the housing model given that's what presently exists to be valued. If you're concerned about what it will cost someone to acquire someplace to live, come out and say that. Don't couch it in language that opens the conversation for devaluing what we already have.
  - gen220 3y ago
    Can you elaborate more on the distinction between property values and acquisition price, and how that relates to housing prices? I wish I knew enough to consent to or refute your statement, alas here I am! I'm interested in having urban and suburban communities of homeowners. I do think most people prefer the autonomy that comes with single-family and (occasionally cooperatively-owned) multi-family homes when it comes to long-term residential-use ownership, fwiw.
    - nrr 3y ago
      Sure. The long and short of it comes down to how appraisals work, especially in the context of supply-constrained housing markets. Buyers with means in supply-constrained markets don't really care about a seller's asking price (read: their acquisition price as a buyer) beyond having a lower bound, and a pattern of buyers just throwing money at sellers has the knock-on effect of increasing property values. Acquisition prices drive values.

Is lowering property values a favorable outcome?

by nrr 3y ago

Is lowering property values a favorable outcome?

> Is lowering property values a favorable outcome? It's probably untenable alongside local democracy. Instead, zero real appreciation seems like a reasonable target.

bluGill 3y ago

For individuals no. For society long term to a point. Lower property values allow young people to get an affordable place to live and leaves them money leftover for other things they want to do. However it is negative for those who already own. There is probably some minimum value as well that you don't want to go below - but I don't know how you would figure that out.

nrr 3y ago
I think my hangup is that there's a conflation between a property's value (which, right now, is some appraisal of a parcel given nearby comparable parcels by some metric) and a home's acquisition price. In the SFH case, they might be inexorably linked, but for justifying more dense options, it's the ever increasing value of land that makes the case to densify. It's mostly a matter of how densely you can continue rebuilding in order to hit a price target at that point. This is roughly the Japanese model.
- bluGill 3y ago
  Only partially. Building a 100 story high rise is only reasonable if property values are very high - there is presumably high demand for that area and thus density, and the high values mean you have to spread the cost across a lot of people to make it affordable for anyone. Even in very low demand small towns though there is demand for some density - a 3 story apartment will often exist in those towns and have no problem renting to people who want/need to live in the small town but don't want a single family for whatever reason. These smaller low rise buildings are the cheapest housing possible - they are small enough that they don't need expensive elevators and the like, though of course they don't make sense in high property value areas. Which is to say that even on the low end of property value density can be justified to some extent.

scottyah 3y ago

Yes, it is completely necessary for growth.

nrr 3y ago
Is it? I can see lower acquisition prices being necessary for growth, but property values as we know them presently are tied to land, the increased value of which is the push to densify. You also want the natural increase (well, Prop 13 permitting) in tax revenue for city amenities.

gen220 3y ago

From present values? I think the answer for "society" is definitively yes, because present values exclude all but top, idk, 5% earners from homeownership in urban and suburban areas. It's extra pronounced in CA because of prop 13, but we face this problem all around the country. It would be a not-minor hiccup for the segment of retirees and near-retirees who depend on rental cash flow for their retirement. They could sell their 2nd and 3rd properties for reduced values, buy an annuity, and live an appropriately downscaled lifestyle. IDK, my main goal is to restore our communities with 70+% residential homeownership. I think the emergent socioeconomic & cultural effects of communities where the majority of people are long-term committed to their locale are more valuable to society than the effects of rent-seeking.

nrr 3y ago
It's mostly that I find property values as a proxy for acquisition prices somewhat disingenuous because it perpetuates thinking of single-family houses as the housing model given that's what presently exists to be valued. If you're concerned about what it will cost someone to acquire someplace to live, come out and say that. Don't couch it in language that opens the conversation for devaluing what we already have.
- gen220 3y ago
  Can you elaborate more on the distinction between property values and acquisition price, and how that relates to housing prices? I wish I knew enough to consent to or refute your statement, alas here I am! I'm interested in having urban and suburban communities of homeowners. I do think most people prefer the autonomy that comes with single-family and (occasionally cooperatively-owned) multi-family homes when it comes to long-term residential-use ownership, fwiw.
  - nrr 3y ago
    Sure. The long and short of it comes down to how appraisals work, especially in the context of supply-constrained housing markets. Buyers with means in supply-constrained markets don't really care about a seller's asking price (read: their acquisition price as a buyer) beyond having a lower bound, and a pattern of buyers just throwing money at sellers has the knock-on effect of increasing property values. Acquisition prices drive values.