5 ms·

Anytime the finance industry get involved and sell tailored loans then prices rise astronomically. Housing? Yep mortgages, people can rarely afford a house wit

Anytime the finance industry get involved and sell tailored loans then prices rise astronomically. Housing? Yep mortgages, people can rarely afford a house without a large mortgage Cars? Yep, most cars are bought on finance, people couldn’t buy new cars without the finance. Health? In the us, insurance companies provide the finance. I really wish society would have stopped this in its tracks.

delfinom 2y ago
>Housing? Yep mortgages, people can rarely afford a house without a large mortgage Bad example, mortgages keep jumping because property values keep increasing. Property values keep increasing because demand is exceeding supply. As more people can access mortgages due to lower rates, the demand shoots up and so does the property value which leads to a race to the top (bottom). Lol >Cars? Yep, most cars are bought on finance, people couldn’t buy new cars without the finance. Yea here we don't have a real lack of car supply. People are financing based on _wants_ rather than needs.
- yterdy 2y ago
  >Property values keep increasing because demand is exceeding supply. Not quite. Property values keep increasing because the monetary supply keeps increasing, one effect of which is that large property owners can corner markets by buying up properties and warehousing them until they see the prices they want to sell for. This appears as a lack of supply (not enough houses) when it's really a lack of market forces forcing sales (not enough houses on the market). The remedies to these two situations are very different.
bko 2y ago
A mortgage and car loan is credit (borrow money). Overall it's a net good for consuners IMO because I can't afford to buy a house cash and rates are artificially low for mortgages bc most are guaranteed by Fannie Freddie. Even private mortgages are competitive. You can borrow money for 30 years, non recourse, no prepayment penalty and get 4:1 leverage and the rate you pay is a few points higher than the government pays? Insanely good value. What credit do insurance companies provide? You pay them and they pay the doctor based on some negotiated rate. They don't front you the money and you have to pay them back. What are you talking about?
robertlagrant 2y ago
> Housing? Yep mortgages, people can rarely afford a house without a large mortgage What does this mean? Are you saying mortgages are recent? Prices are a function of supply and demand, not of access to capital. > I really wish society would have stopped this in its tracks People didn't own houses before. They were serfs or renters. Mortgages meant people could access a lifetime of money now and afford a house.
- torstenvl 2y ago
  > Prices are a function of supply and demand Demand for living and having somewhere to live are inelastic. As a result, these markets are especially prone to distortionary effects caused by monopolies, price fixing, and price non-transparency.
  - balderdash 2y ago
    What are the monopolies, price fixing, and price non transparency in housing?
    - programjames 2y ago
      In many areas, all landlords use one of two or three management companies, which use the same pricing software. I do think prices are usually pretty transparent though.
  - robertlagrant 2y ago
    What's this got to do with mortgages?
- CuriouslyC 2y ago
  I think the main point to take from OP is that houses have gotten much more expensive because builders presuppose the existence of a pool of people who can afford them given mortgages. If mortgages weren't a thing a lot of building code wouldn't exist and houses would be built smaller and simpler because otherwise they wouldn't sell.
- 2y ago
bradleyjg 2y ago
Eh, don’t think this is the strongest argument. If you plot housing, healthcare, and cars on a chart in real term dollars since, say 1980, cars are going show way way less real growth.
- adolph 2y ago
  Arnold Kling: The New Commanding Heights are education and health care, which are rapidly expanding sectors where credentials and regulation are important sources of rents. http://www.arnoldkling.com/blog/klassic-klingisms/ http://www.arnoldkling.com/blog/klassic-klingisms/ In Marxian economics, the "commanding heights of the economy" are certain strategically important economic sectors. https://en.wikipedia.org/wiki/Commanding_heights_of_the_economy https://en.wikipedia.org/wiki/Commanding_heights_of_the_econ...
axus 2y ago
Well in theory the inflated prices should then encourage more supply of these things; more housing/cars/healthcare would be good. Unnecessary limits on the supply and barriers to competition let the prices inflate away from equilibrium.
- presentation 2y ago
  The reasons for a lack of supply aren’t for lack of funding, so that points to the real problems.
- pyuser583 2y ago
  Supply creates demand.
  - noitpmeder 2y ago
    Forgive me, but I fail to see how the supply of quality medical care crates a demand for it.
    - GartzenDeHaes 2y ago
      By diagnosing more things, performing more procedures, and prescribing more pharmaceuticals. The opioid crisis, for example.
    - bluGill 2y ago
      If you put you in a time machine to 1860 ago you would be a fool to go to your local doctor (this was before doctors got scientific, or did basic things like wash their hands - as a result people who went to the doctor had worse results than people who didn't). Now that we have quality medical care people who go to the doctor have better results than people who do not and so that creates demand of people who want a better life. The people in 1860 (and before) would love to have access to the type of medical care we have today.
    - pyuser583 2y ago
      Medical care keeps people alive longer. Living people require medical care, while corpses do not. I know lots of people who would be dead without medical care. Instead they are making lots of doctors appointments, and buying lots of drugs.
lr4444lr 2y ago
Mortgages are quite old. The rapid relative unaffordability of houses relative to median household income is fairly new. I suspect other factors are at play.
- dartos 2y ago
  Yeah, I think there are a lot of complex factors that’s causing the housing problems. Private equity, sure, but also the inflated cost of construction materials, realtor and land lord collusion, automated rent fixing, incentives for landlords to keep empty units rather than budge on rent. It’s a big mess
- ClumsyPilot 2y ago
  UK has reliable economic data for hundreds of years, housing is the most unaffordable it has been relative to income since the times of the Plague
mandmandam 2y ago
I don't mind people not understanding how the finance industry has fucked up housing all over the Western world. It's complicated. But the immediate illiterate defenses in the short time this comment has been posted are wild, if sadly expected. Yes, for the love of all that's holy: private equity has fucked up housing across the planet. Learn about it a little before insisting otherwise! This isn't simple supply and demand, nor is it all a big mystery. It's certainly not a 'bad example' of the finance industry fucking up a life essential to profit off it at our expense; it's a core, fundamental example. People have done huge amounts of work exposing these shenanigans. All the information needed to educate yourselves is a few clicks away. Here's some titles to get you started: "Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream" by Aaron Glantz "Private Equity at Work: When Wall Street Manages Main Street" by Eileen Appelbaum and Rosemary Batt "The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class – and What We Can Do About It" by Richard Florida Stop letting the industry off the hook for the unimaginable damage they've inflicted on the heart of society. Step one: gtfo out of denial.

delfinom 2y ago

>Housing? Yep mortgages, people can rarely afford a house without a large mortgage Bad example, mortgages keep jumping because property values keep increasing. Property values keep increasing because demand is exceeding supply. As more people can access mortgages due to lower rates, the demand shoots up and so does the property value which leads to a race to the top (bottom). Lol >Cars? Yep, most cars are bought on finance, people couldn’t buy new cars without the finance. Yea here we don't have a real lack of car supply. People are financing based on _wants_ rather than needs.

yterdy 2y ago
>Property values keep increasing because demand is exceeding supply. Not quite. Property values keep increasing because the monetary supply keeps increasing, one effect of which is that large property owners can corner markets by buying up properties and warehousing them until they see the prices they want to sell for. This appears as a lack of supply (not enough houses) when it's really a lack of market forces forcing sales (not enough houses on the market). The remedies to these two situations are very different.

bko 2y ago

A mortgage and car loan is credit (borrow money). Overall it's a net good for consuners IMO because I can't afford to buy a house cash and rates are artificially low for mortgages bc most are guaranteed by Fannie Freddie. Even private mortgages are competitive. You can borrow money for 30 years, non recourse, no prepayment penalty and get 4:1 leverage and the rate you pay is a few points higher than the government pays? Insanely good value. What credit do insurance companies provide? You pay them and they pay the doctor based on some negotiated rate. They don't front you the money and you have to pay them back. What are you talking about?

robertlagrant 2y ago

> Housing? Yep mortgages, people can rarely afford a house without a large mortgage What does this mean? Are you saying mortgages are recent? Prices are a function of supply and demand, not of access to capital. > I really wish society would have stopped this in its tracks People didn't own houses before. They were serfs or renters. Mortgages meant people could access a lifetime of money now and afford a house.

torstenvl 2y ago
> Prices are a function of supply and demand Demand for living and having somewhere to live are inelastic. As a result, these markets are especially prone to distortionary effects caused by monopolies, price fixing, and price non-transparency.
- balderdash 2y ago
  What are the monopolies, price fixing, and price non transparency in housing?
  - programjames 2y ago
    In many areas, all landlords use one of two or three management companies, which use the same pricing software. I do think prices are usually pretty transparent though.
- robertlagrant 2y ago
  What's this got to do with mortgages?
CuriouslyC 2y ago
I think the main point to take from OP is that houses have gotten much more expensive because builders presuppose the existence of a pool of people who can afford them given mortgages. If mortgages weren't a thing a lot of building code wouldn't exist and houses would be built smaller and simpler because otherwise they wouldn't sell.
2y ago

bradleyjg 2y ago

Eh, don’t think this is the strongest argument. If you plot housing, healthcare, and cars on a chart in real term dollars since, say 1980, cars are going show way way less real growth.

adolph 2y ago
Arnold Kling: The New Commanding Heights are education and health care, which are rapidly expanding sectors where credentials and regulation are important sources of rents. http://www.arnoldkling.com/blog/klassic-klingisms/ http://www.arnoldkling.com/blog/klassic-klingisms/ In Marxian economics, the "commanding heights of the economy" are certain strategically important economic sectors. https://en.wikipedia.org/wiki/Commanding_heights_of_the_economy https://en.wikipedia.org/wiki/Commanding_heights_of_the_econ...

axus 2y ago

Well in theory the inflated prices should then encourage more supply of these things; more housing/cars/healthcare would be good. Unnecessary limits on the supply and barriers to competition let the prices inflate away from equilibrium.

presentation 2y ago
The reasons for a lack of supply aren’t for lack of funding, so that points to the real problems.
pyuser583 2y ago
Supply creates demand.
- noitpmeder 2y ago
  Forgive me, but I fail to see how the supply of quality medical care crates a demand for it.
  - GartzenDeHaes 2y ago
    By diagnosing more things, performing more procedures, and prescribing more pharmaceuticals. The opioid crisis, for example.
  - bluGill 2y ago
    If you put you in a time machine to 1860 ago you would be a fool to go to your local doctor (this was before doctors got scientific, or did basic things like wash their hands - as a result people who went to the doctor had worse results than people who didn't). Now that we have quality medical care people who go to the doctor have better results than people who do not and so that creates demand of people who want a better life. The people in 1860 (and before) would love to have access to the type of medical care we have today.
  - pyuser583 2y ago
    Medical care keeps people alive longer. Living people require medical care, while corpses do not. I know lots of people who would be dead without medical care. Instead they are making lots of doctors appointments, and buying lots of drugs.

lr4444lr 2y ago

Mortgages are quite old. The rapid relative unaffordability of houses relative to median household income is fairly new. I suspect other factors are at play.

dartos 2y ago
Yeah, I think there are a lot of complex factors that’s causing the housing problems. Private equity, sure, but also the inflated cost of construction materials, realtor and land lord collusion, automated rent fixing, incentives for landlords to keep empty units rather than budge on rent. It’s a big mess
ClumsyPilot 2y ago
UK has reliable economic data for hundreds of years, housing is the most unaffordable it has been relative to income since the times of the Plague

mandmandam 2y ago

I don't mind people not understanding how the finance industry has fucked up housing all over the Western world. It's complicated. But the immediate illiterate defenses in the short time this comment has been posted are wild, if sadly expected. Yes, for the love of all that's holy: private equity has fucked up housing across the planet. Learn about it a little before insisting otherwise! This isn't simple supply and demand, nor is it all a big mystery. It's certainly not a 'bad example' of the finance industry fucking up a life essential to profit off it at our expense; it's a core, fundamental example. People have done huge amounts of work exposing these shenanigans. All the information needed to educate yourselves is a few clicks away. Here's some titles to get you started: "Homewreckers: How a Gang of Wall Street Kingpins, Hedge Fund Magnates, Crooked Banks, and Vulture Capitalists Suckered Millions Out of Their Homes and Demolished the American Dream" by Aaron Glantz "Private Equity at Work: When Wall Street Manages Main Street" by Eileen Appelbaum and Rosemary Batt "The New Urban Crisis: How Our Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle Class – and What We Can Do About It" by Richard Florida Stop letting the industry off the hook for the unimaginable damage they've inflicted on the heart of society. Step one: gtfo out of denial.