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A major issue with housing is that it is a primary driver of wealth for many Americans. Obviously, this comes at the expense of our fellow Americans who do not

by tnel77 3y ago

A major issue with housing is that it is a primary driver of wealth for many Americans. Obviously, this comes at the expense of our fellow Americans who do not own a home. I was able to buy shortly out of college (1% down loan) so rising home prices don’t impact me as much since my home has also gone up in value. I was able to sell the first house and roll that equity into the next house. As long as it’s the main store of wealth for your average citizen, there will be very little incentive to change that.

smallmancontrov 3y ago
[flagged]
tptacek 3y ago
Upzoning is a win-win for existing homeowners. Land doesn't get expropriated to build multifamily; it's purchased. Multifamily is a more efficient use of a lot than SFH, so it's purchased at a premium. NIMBYs worry that the mere existence of nearby multifamily will decrease their home value. In rare and unsympathetic cases (places like Winnetka in Illinois) that may be true. But in the bedroom neighborhoods of big cities and their inner ring suburbs, it's not; allowing missing-middle multifamily will revitalize neighborhoods and help shift the cost burden from SFH property taxes to sales tax (retail follows rooftops).
- PheonixPharts 3y ago
  > NIMBYs worry that the mere existence of nearby multifamily will decrease their home value. In rare and unsympathetic cases ... that may be true. It's not rare. I've known multiple people, myself included, who have decided not to make an offer on a single family home because it neighbors a gross apartment building. The vast majority of home buyers want single family homes. I don't know where HN obsession with vertical housing comes from, maybe because the majority are young and still live in apartments, but this isn't reflective of most home buyers The only adults I know who will even consider purchasing a condo are single with no pets and no intention of having a family. Even among most childless couples, once they live in a single family home they would never go back.
  - tptacek 3y ago
    You're allowed to have preferences! You don't have to live next to a "gross apartment building". You can achieve your preferences by (a) paying more or (b) accepting a larger commute from the nearest urban center. Property values don't scale with your particular preference. Among many things, they're a function of: * (Probably foremost, in IL at least) the perceived quality of the school districts * The property tax burden * The diversity and quality of amenities Missing-middle multifamily improves all of these things. SFZ neighborhoods and munis are locked into a death spiral on property taxes and schools: residents are incentivized to plow money into schools (attract new residents -> increase home prices; you "get the money back" you put into schools) which quickly gets you across a threshold where the only rational buyer of property in your muni is a family with children. Multifamily allows for aging-in-place (rather than moving out when your kids graduate, a phenomenon sometimes called "renting the schools") and diversifies the tax base. Amenities scale with foot traffic and usage. Expensive bedroom communities tend to be commercially moribund. In addition to not being fun to live in, it also shift the levy towards property taxes and away from sales tax and licensing fees, which in turn depresses home prices. The first answers you get on this policy question always seem to come from people who think it's dispositive that they and people like them don't want to live near apartments. Municipalities make policy decisions for the welfare of the entire mix of people who will reside there. When you do the math on overwhelmingly SFZ munis you sometimes realize that the people loudly complaining about multifamily are a minority interest to begin with.
    - robocat 3y ago
      Your list of drivers of property values is missing the single most important factor: • how much can one borrow? Mortgages drive house prices so long as demand outstrips supply: which it always does in desirable places. Demand can always increase in a healthy city - I want to have multiple houses in different parts of the city and I could even AirBnB them out to defray costs or make a profit. I live in Christchurch, where we had a lot of houses selling at below ½-price for a while because the bank rules forbade giving mortgages on those houses. This was after our 2010 earthquake and banks would not lend on uninsurable houses. The houses were often safe and liveable but uninsurable due to fine print (e.g. require even floors <50mm drop across entire footprint). They were often economically fixable, but to fix them needed money or a mortgage! There are still "as-is" uninsurable houses on the market - the price discrepancy isn't because of demand per se but because of mortgage/insurance restrictions - although the pricing gap has significantly narrowed (flippers and cash-buyers create enough demand for the very few as-is properties that now go on the market). I bought a spare as-is property and there's reasons not to sell it (even though I can't insure against say fire). Christchurch zoning rules were relaxed for a while plus our government was committed to more housing so Christchurch now has many more houses than a decade ago. House prices are going up even though you can effectively only get variable mortgages in New Zealand at 7%. We have more house supply but demand is outpacing that because we also have high immigration (30% of NZ population was born overseas and we still encourage immigration). As an individual buying a house the market dynamic is visible - I borrowed as much as I possibly could to buy the best place I could afford for my home. Bank lending rules drove my pricing. The "market" price for the house did not set my price (low competition blind deadline bid - I could not know what others bid and a price could not be accurately calculated for my property). Market price is set by competition between buyers - most buyers are borrowing as much as they can. The economically worst part is that it is a zero-sum game with everybody competing for how much money they can give to banks for interest payments. We all lose. The graph of sold house prices in a city looks strange - a severe cut-off just below the median price. Investigate the underlying cause for that and everything will be revealed?
- baggy_trough 3y ago
  I don't want to live next to a huge building, so I selected a town where that was not allowed. So don't tell me changing this is a win win for me. It isn't.
  - jachee 3y ago
    I’m genuinely curious: Why not? What difference does it make to you what’s next door?
    - baggy_trough 3y ago
      sound, privacy, views, for example.
  - tptacek 3y ago
    I'm speaking only to overall property values, because that's the argument I was replying to. I don't care about your preferences.
    - baggy_trough 3y ago
      I am responding to your first sentence, which is "Upzoning is a win-win for existing homeowners", which is not true in general.
      - tptacek 3y ago
        It is true in the sense that I meant it, about property values.
    - lolinder 3y ago
      Nor do you apparently care about the fact that "NIMBYs worry that the mere existence of nearby multifamily will decrease their home value" is a false stereotype. A NIMBY straight-up told you that their motivations are about lifestyle and not money and your response is "I don't care about your preferences".
  - ihaveajob 3y ago
doctorpangloss 3y ago
Well but aren’t you giving a great example of how that wealth is illusory? The purpose of this comment is to make this conversation interesting instead of rehashing BS about NIMBYs. Don’t get me wrong, measuring billionaires’ wealth by multiplying stock price and stock count is flawed too, for a different reason. But both your wealth and that wealth are really measuring “taxable wealth in the marginal transaction case.” Not a super interesting measurement IMO. If you were an immigrant from the Soviet Union like my parents were for example, sure you were dirt poor but you might have an education, which turned out to be much more valuable in every sense, in most cases, than a house, for baby boomers this century. Like isn’t being educated being “wealthy?” On the flip side, Russia today has 30 percentage points more higher educated people than the US, so tell me Obama, what did that education get them? There’s no reductive lens for this stuff. One POV is that maybe the average American is myopic, their house value number goes up and they regard that as real wealth, just like billionaires do. But it’s not just a matter of understanding what house values are because “that number going up and therefore you become wealthier” isn’t strictly speaking flawed. IMO what we lack is leadership: politicians who have the patience and motivation to figure these things out and inform the public, as opposed to merely being reactive to the hottest crisis on social media.
- littlestymaar 3y ago
  > Well but aren’t you giving a great example of how that wealth is illusory? It is mostly, since your purchasing power doesn't increase because all house prices rise. But: people don't live forever, and when your home-owning parents die, you now have two homes instead of one, and you'll get much more than if housing price was half the price. Same when your in-laws die too. Obviously this is entirely unsustainable and is a huge driver for the political despair that is spreading in Western countries.
  - betaby 3y ago
    > and when your home-owning parents die, you now have two homes instead of one While I absolutely believe it's a thing for someone. It's not a thing for anyone I know. Two factors there. People live longer. An then parents die (70+), they kids ( avg. 2) are at the age of 55+. At that point they housing situation is figured out. Also if ( big if in Canada) house was paid off you inherit half of it ( unless you are single kid which was rare 50+ years ago in Canada). However in Canada what I see is that houses were reverse-mortgaged to supply income on pension and/or live in a retirement home, and thus my friends got trivial inheritances in a tune of tens thousands of CAD dollars after estate liquidation.
ska 3y ago
> A major issue with housing is that it is a primary driver of wealth for many Americans. This was a very unfortunate trap that many western governments fell into in the latter part of 20th century. It's not really about wealth per se. but forced saving for retirement (i.e. reducing government responsibility for elder care).
- robocat 3y ago
  > reducing government responsibility for elder care That's a bit of a non-sequitur. The economy pays for elder care no matter what, and mostly our governments remain responsible if people haven't saved. Plus we get emergent outcomes in our economies for systemic reasons - blaming our governments as though they are effective at controlling everything makes little sense. Even if true it seems unlikely to be a primary reason, although it could be a partial reason.
  - ska 3y ago
    > and mostly our governments remain responsible if people haven't saved. That's the point of it being "forced saving". Look, I'm not saying the government steered everything or even that they thought it through very far. I'm saying that they constructed a bunch of programs (in US, Fannie/Freddy, mortgage tax break, etc. similar other countries) to subsidize and incentivize house ownership in ways that economists hate (creates market distortions). Couple this with policies that support growth of houses as an asset class effectively has people saving pretty aggressively in a way that will typically be available to them in retirement. Less people with no assets upon retiring means less load on government programs. Implicit in this is left to their own devices, most people don't save as effectively. The trap part is this: once this system has momentum any abrupt policy change will result in a lot more people being directly dependent, or more directly dependent on government programs in their old age. This will have massive budget impacts and governments know it. The second part of the trap, which we are seeing now, is that if you make housing too effective as an investment vehicle, it will be financialized and further distorted away from effectively functioning as housing. It's not just financialization of housing - as you note there are emergent outcomes in complex systems. For example, end of life care would probably look a lot different if it wasn't often effectively drawing down some of these savings.
lolinder 3y ago
This is a common refrain from the YIMBY crowd, but I'm skeptical that the driving force of NIMBYism is wealth. My own experience is that I couldn't care less about my property value: I view my mortgage as mostly a locked-in monthly payment, a guard against rent increases and against being forced to move if the landlord decides to do something different. However, I would actively campaign against a large multi-family housing development being built within a few blocks of me. I don't want the added traffic it would bring, I don't want the added noise, and I don't want the more frequent turnover. I enjoy being able to recognize all of my neighbors, not just because it's nice but because it makes me feel safer. If you actually went out and interviewed NIMBYs instead of just reading the stereotypes on the internet, I suspect that the motivations I describe above are much more common than wealth. It's not as exciting or provocative as "the upper-middle class just wants to get richer", but it's the reality that many of us live in.
- J_Shelby_J 3y ago
  You can live in what ever reality you want, but NIMBY behavior is inherently rent-seeking. That being said, I don't hold it against people from paying themselves rent and taking a profit when they sell. But if you have kids, you do have to come to terms with the fact that you're creating a situation where they likely won't be able to afford to live in the neighborhood where they grew up or near you at all.

by tnel77 3y ago

smallmancontrov 3y ago

[flagged]

tptacek 3y ago

Upzoning is a win-win for existing homeowners. Land doesn't get expropriated to build multifamily; it's purchased. Multifamily is a more efficient use of a lot than SFH, so it's purchased at a premium. NIMBYs worry that the mere existence of nearby multifamily will decrease their home value. In rare and unsympathetic cases (places like Winnetka in Illinois) that may be true. But in the bedroom neighborhoods of big cities and their inner ring suburbs, it's not; allowing missing-middle multifamily will revitalize neighborhoods and help shift the cost burden from SFH property taxes to sales tax (retail follows rooftops).

PheonixPharts 3y ago
> NIMBYs worry that the mere existence of nearby multifamily will decrease their home value. In rare and unsympathetic cases ... that may be true. It's not rare. I've known multiple people, myself included, who have decided not to make an offer on a single family home because it neighbors a gross apartment building. The vast majority of home buyers want single family homes. I don't know where HN obsession with vertical housing comes from, maybe because the majority are young and still live in apartments, but this isn't reflective of most home buyers The only adults I know who will even consider purchasing a condo are single with no pets and no intention of having a family. Even among most childless couples, once they live in a single family home they would never go back.
- tptacek 3y ago
  You're allowed to have preferences! You don't have to live next to a "gross apartment building". You can achieve your preferences by (a) paying more or (b) accepting a larger commute from the nearest urban center. Property values don't scale with your particular preference. Among many things, they're a function of: * (Probably foremost, in IL at least) the perceived quality of the school districts * The property tax burden * The diversity and quality of amenities Missing-middle multifamily improves all of these things. SFZ neighborhoods and munis are locked into a death spiral on property taxes and schools: residents are incentivized to plow money into schools (attract new residents -> increase home prices; you "get the money back" you put into schools) which quickly gets you across a threshold where the only rational buyer of property in your muni is a family with children. Multifamily allows for aging-in-place (rather than moving out when your kids graduate, a phenomenon sometimes called "renting the schools") and diversifies the tax base. Amenities scale with foot traffic and usage. Expensive bedroom communities tend to be commercially moribund. In addition to not being fun to live in, it also shift the levy towards property taxes and away from sales tax and licensing fees, which in turn depresses home prices. The first answers you get on this policy question always seem to come from people who think it's dispositive that they and people like them don't want to live near apartments. Municipalities make policy decisions for the welfare of the entire mix of people who will reside there. When you do the math on overwhelmingly SFZ munis you sometimes realize that the people loudly complaining about multifamily are a minority interest to begin with.
  - robocat 3y ago
    Your list of drivers of property values is missing the single most important factor: • how much can one borrow? Mortgages drive house prices so long as demand outstrips supply: which it always does in desirable places. Demand can always increase in a healthy city - I want to have multiple houses in different parts of the city and I could even AirBnB them out to defray costs or make a profit. I live in Christchurch, where we had a lot of houses selling at below ½-price for a while because the bank rules forbade giving mortgages on those houses. This was after our 2010 earthquake and banks would not lend on uninsurable houses. The houses were often safe and liveable but uninsurable due to fine print (e.g. require even floors <50mm drop across entire footprint). They were often economically fixable, but to fix them needed money or a mortgage! There are still "as-is" uninsurable houses on the market - the price discrepancy isn't because of demand per se but because of mortgage/insurance restrictions - although the pricing gap has significantly narrowed (flippers and cash-buyers create enough demand for the very few as-is properties that now go on the market). I bought a spare as-is property and there's reasons not to sell it (even though I can't insure against say fire). Christchurch zoning rules were relaxed for a while plus our government was committed to more housing so Christchurch now has many more houses than a decade ago. House prices are going up even though you can effectively only get variable mortgages in New Zealand at 7%. We have more house supply but demand is outpacing that because we also have high immigration (30% of NZ population was born overseas and we still encourage immigration). As an individual buying a house the market dynamic is visible - I borrowed as much as I possibly could to buy the best place I could afford for my home. Bank lending rules drove my pricing. The "market" price for the house did not set my price (low competition blind deadline bid - I could not know what others bid and a price could not be accurately calculated for my property). Market price is set by competition between buyers - most buyers are borrowing as much as they can. The economically worst part is that it is a zero-sum game with everybody competing for how much money they can give to banks for interest payments. We all lose. The graph of sold house prices in a city looks strange - a severe cut-off just below the median price. Investigate the underlying cause for that and everything will be revealed?
baggy_trough 3y ago
I don't want to live next to a huge building, so I selected a town where that was not allowed. So don't tell me changing this is a win win for me. It isn't.
- jachee 3y ago
  I’m genuinely curious: Why not? What difference does it make to you what’s next door?
  - baggy_trough 3y ago
    sound, privacy, views, for example.
- tptacek 3y ago
  I'm speaking only to overall property values, because that's the argument I was replying to. I don't care about your preferences.
  - baggy_trough 3y ago
    I am responding to your first sentence, which is "Upzoning is a win-win for existing homeowners", which is not true in general.
    - tptacek 3y ago
      It is true in the sense that I meant it, about property values.
  - lolinder 3y ago
    Nor do you apparently care about the fact that "NIMBYs worry that the mere existence of nearby multifamily will decrease their home value" is a false stereotype. A NIMBY straight-up told you that their motivations are about lifestyle and not money and your response is "I don't care about your preferences".
- ihaveajob 3y ago

doctorpangloss 3y ago

Well but aren’t you giving a great example of how that wealth is illusory? The purpose of this comment is to make this conversation interesting instead of rehashing BS about NIMBYs. Don’t get me wrong, measuring billionaires’ wealth by multiplying stock price and stock count is flawed too, for a different reason. But both your wealth and that wealth are really measuring “taxable wealth in the marginal transaction case.” Not a super interesting measurement IMO. If you were an immigrant from the Soviet Union like my parents were for example, sure you were dirt poor but you might have an education, which turned out to be much more valuable in every sense, in most cases, than a house, for baby boomers this century. Like isn’t being educated being “wealthy?” On the flip side, Russia today has 30 percentage points more higher educated people than the US, so tell me Obama, what did that education get them? There’s no reductive lens for this stuff. One POV is that maybe the average American is myopic, their house value number goes up and they regard that as real wealth, just like billionaires do. But it’s not just a matter of understanding what house values are because “that number going up and therefore you become wealthier” isn’t strictly speaking flawed. IMO what we lack is leadership: politicians who have the patience and motivation to figure these things out and inform the public, as opposed to merely being reactive to the hottest crisis on social media.

littlestymaar 3y ago
> Well but aren’t you giving a great example of how that wealth is illusory? It is mostly, since your purchasing power doesn't increase because all house prices rise. But: people don't live forever, and when your home-owning parents die, you now have two homes instead of one, and you'll get much more than if housing price was half the price. Same when your in-laws die too. Obviously this is entirely unsustainable and is a huge driver for the political despair that is spreading in Western countries.
- betaby 3y ago
  > and when your home-owning parents die, you now have two homes instead of one While I absolutely believe it's a thing for someone. It's not a thing for anyone I know. Two factors there. People live longer. An then parents die (70+), they kids ( avg. 2) are at the age of 55+. At that point they housing situation is figured out. Also if ( big if in Canada) house was paid off you inherit half of it ( unless you are single kid which was rare 50+ years ago in Canada). However in Canada what I see is that houses were reverse-mortgaged to supply income on pension and/or live in a retirement home, and thus my friends got trivial inheritances in a tune of tens thousands of CAD dollars after estate liquidation.

ska 3y ago

> A major issue with housing is that it is a primary driver of wealth for many Americans. This was a very unfortunate trap that many western governments fell into in the latter part of 20th century. It's not really about wealth per se. but forced saving for retirement (i.e. reducing government responsibility for elder care).

robocat 3y ago
> reducing government responsibility for elder care That's a bit of a non-sequitur. The economy pays for elder care no matter what, and mostly our governments remain responsible if people haven't saved. Plus we get emergent outcomes in our economies for systemic reasons - blaming our governments as though they are effective at controlling everything makes little sense. Even if true it seems unlikely to be a primary reason, although it could be a partial reason.
- ska 3y ago
  > and mostly our governments remain responsible if people haven't saved. That's the point of it being "forced saving". Look, I'm not saying the government steered everything or even that they thought it through very far. I'm saying that they constructed a bunch of programs (in US, Fannie/Freddy, mortgage tax break, etc. similar other countries) to subsidize and incentivize house ownership in ways that economists hate (creates market distortions). Couple this with policies that support growth of houses as an asset class effectively has people saving pretty aggressively in a way that will typically be available to them in retirement. Less people with no assets upon retiring means less load on government programs. Implicit in this is left to their own devices, most people don't save as effectively. The trap part is this: once this system has momentum any abrupt policy change will result in a lot more people being directly dependent, or more directly dependent on government programs in their old age. This will have massive budget impacts and governments know it. The second part of the trap, which we are seeing now, is that if you make housing too effective as an investment vehicle, it will be financialized and further distorted away from effectively functioning as housing. It's not just financialization of housing - as you note there are emergent outcomes in complex systems. For example, end of life care would probably look a lot different if it wasn't often effectively drawing down some of these savings.

lolinder 3y ago

This is a common refrain from the YIMBY crowd, but I'm skeptical that the driving force of NIMBYism is wealth. My own experience is that I couldn't care less about my property value: I view my mortgage as mostly a locked-in monthly payment, a guard against rent increases and against being forced to move if the landlord decides to do something different. However, I would actively campaign against a large multi-family housing development being built within a few blocks of me. I don't want the added traffic it would bring, I don't want the added noise, and I don't want the more frequent turnover. I enjoy being able to recognize all of my neighbors, not just because it's nice but because it makes me feel safer. If you actually went out and interviewed NIMBYs instead of just reading the stereotypes on the internet, I suspect that the motivations I describe above are much more common than wealth. It's not as exciting or provocative as "the upper-middle class just wants to get richer", but it's the reality that many of us live in.

J_Shelby_J 3y ago
You can live in what ever reality you want, but NIMBY behavior is inherently rent-seeking. That being said, I don't hold it against people from paying themselves rent and taking a profit when they sell. But if you have kids, you do have to come to terms with the fact that you're creating a situation where they likely won't be able to afford to live in the neighborhood where they grew up or near you at all.