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I am not even sure if I find that good or bad. There are other things people invest into that have more problematic consequences. For example I'd like to have

by atoav 3y ago

I am not even sure if I find that good or bad. There are other things people invest into that have more problematic consequences. For example I'd like to have someone explain me how housing can be both a good investment for rich people and a commodity people can afford — the way I see it these are fundamentally incompatible goals. One is about making housing prices go up, so your one investment gives you more profit, the other is about building enough to keep the prices stable (or even going down).

flakeoil 3y ago
The problem is that currently (at least until the interest rates went up to a reasonable level) housing was a (too) good investment for the rich. Prices just went up and up without any added value. This made houses expensive for the ones who wanted to buy a house to live in. The main profit should instead only come from the actual building of the house, by a construction company, and selling it the first time to someone who wants to live there. This is where value add comes from. Higher interest rates fixes this.
- consp 3y ago
  > Higher interest rates fixes this Yet prices keep going up and up and up and up. Just slap a massive fine (I mean tax of course but that is just semantics) on any profits from a second or higher house. And dont start with the "you can't change the rules of the game in play"; sure you can, you just dont like it.
  - flakeoil 3y ago
    > Yet prices keep going up and up and up and up. The thing is that the interest rates need to stay higher for a long time (many years). Many home owners and speculators have fixed interests on their loans. It is not until they have to be renewed that they feel the effect of the higher interest rates. So unfortunately it will take time.
  - atoav 3y ago
    I always wondered why law didn't rely more in mathematics to regulate such dynamics. It is trivially easy to describe a formula which gives you a tax that doesn't impact the many have-nots while preventing perverse accumulation and still leaving enough slack in the middle to incentivise people to take part in a market. And anyone who disagrees: you can tweak the formula to any cutoff point, you can make it grow linear, logarithmic or exponential etc. That being said, things like your solutions should always come with thorough check by a red team. E.g. what about the rich guy just forming a new company per property to evade that tax? So maybe it is smarter to bind that to an actual owner person. How will the shape of houses change if their count gets important (that could be how we get these cyberpunk-megabuildings)? Maybe it should be about rental units instead (or some other clever definition)? Sometimes I wonder if the best solution wouldn't be to prevent companies from owning housing alltogether..
- chgs 3y ago
  Higher interest rates doesn’t fix this at all. The supply shortage is in available land (with the right permission/zoning/etc) Higher rates will reduce the profit the land owner can take, but they also increase the costs to the builder who has to pay the bank more to borrow to build (before repaying after selling). It doesn’t affect the affordability for the purchaser which is set as a given percentage of their monthly income.
hnbad 3y ago
Funny you'd say that, that's exactly the conclusion (the housing market, i.e. investment opportunities, being the cause of the housing crisis, i.e. lack of affordability) in this video essay from Philosophy Tube 5 years ago: https://www.youtube.com/watch?v=qihG6AGjkRk https://www.youtube.com/watch?v=qihG6AGjkRk

by atoav 3y ago

flakeoil 3y ago

The problem is that currently (at least until the interest rates went up to a reasonable level) housing was a (too) good investment for the rich. Prices just went up and up without any added value. This made houses expensive for the ones who wanted to buy a house to live in. The main profit should instead only come from the actual building of the house, by a construction company, and selling it the first time to someone who wants to live there. This is where value add comes from. Higher interest rates fixes this.

consp 3y ago
> Higher interest rates fixes this Yet prices keep going up and up and up and up. Just slap a massive fine (I mean tax of course but that is just semantics) on any profits from a second or higher house. And dont start with the "you can't change the rules of the game in play"; sure you can, you just dont like it.
- flakeoil 3y ago
  > Yet prices keep going up and up and up and up. The thing is that the interest rates need to stay higher for a long time (many years). Many home owners and speculators have fixed interests on their loans. It is not until they have to be renewed that they feel the effect of the higher interest rates. So unfortunately it will take time.
- atoav 3y ago
  I always wondered why law didn't rely more in mathematics to regulate such dynamics. It is trivially easy to describe a formula which gives you a tax that doesn't impact the many have-nots while preventing perverse accumulation and still leaving enough slack in the middle to incentivise people to take part in a market. And anyone who disagrees: you can tweak the formula to any cutoff point, you can make it grow linear, logarithmic or exponential etc. That being said, things like your solutions should always come with thorough check by a red team. E.g. what about the rich guy just forming a new company per property to evade that tax? So maybe it is smarter to bind that to an actual owner person. How will the shape of houses change if their count gets important (that could be how we get these cyberpunk-megabuildings)? Maybe it should be about rental units instead (or some other clever definition)? Sometimes I wonder if the best solution wouldn't be to prevent companies from owning housing alltogether..
chgs 3y ago
Higher interest rates doesn’t fix this at all. The supply shortage is in available land (with the right permission/zoning/etc) Higher rates will reduce the profit the land owner can take, but they also increase the costs to the builder who has to pay the bank more to borrow to build (before repaying after selling). It doesn’t affect the affordability for the purchaser which is set as a given percentage of their monthly income.

hnbad 3y ago

Funny you'd say that, that's exactly the conclusion (the housing market, i.e. investment opportunities, being the cause of the housing crisis, i.e. lack of affordability) in this video essay from Philosophy Tube 5 years ago: https://www.youtube.com/watch?v=qihG6AGjkRk https://www.youtube.com/watch?v=qihG6AGjkRk