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What I don't see in these conversations is how much increasing property prices contribute to killing third places. People get excited because they bought a hou

by jmyeet 2y ago

What I don't see in these conversations is how much increasing property prices contribute to killing third places. People get excited because they bought a house for $200k and it's notionally worth $800k now. In reality they haven't gained anything because every house is $800k and you still need somewhere to live so you still only own one housing unit of wealth. Worse, people actively lobby for policies that increase housing prices. But if this house is worth $600k more where is that money coming from? It's coming from the next generation who has to pay substantially more for the same house. It's a wealth transfer from the young to the old. How does this relate to third places? Well, imagine a neighbourhood cafe. 20 years ago that cafe space might cost $200k and have a commercial rent yield of, say, 5% so it would cost $10k/year in rent for argument's sake. Well, all property has gone up in value so that cafe's space is now valued at $800k. It still demands a 5% yield so that's now $40k/year. All the cafe's customers have to pay for that with increased prices. So with increases in housing costs, people have less money to spend and that money doesn't go as far. At a certain point, volume goes down and the business has to either close or raise prices, further exacerbating the problem. Rising housing costs are strangling every aspect of society.

ec109685 2y ago
That $200k purchaser is sitting on $760k in equity and paying 1/4th in housing that their peers are, which is its own form of wealth.
- griftrejection 2y ago
  [dead]
- browningstreet 2y ago
  And then renting out for $3000/mo a thing that was renting for half that 2-3 years ago and isn’t even a good place to live.
- ssss11 2y ago
  And if they’re one of the wealthy that own more than one unit of home wealth they are most certainly cheering for the prices to go up.
griftrejection 2y ago
[dead]
carlosjobim 2y ago
> In reality they haven't gained anything because every house is $800k and you still need somewhere to live so you still only own one housing unit of wealth. They can borrow money against the extra value of their house. They don't need to move out. That's what everybody in the landed gentry has been doing for the past two decades.
- vundercind 2y ago
  You can also sell that house and buy a very nice ranch (when you’re old, you won’t want stairs) somewhere that isn’t even a middle-of-nowhere shiathole for half the price. Pocket the rest. That is why the gains really are actual, useful money for lots of people.
m463 2y ago
and lower-wage service employees cannot afford to live near work.
__MatrixMan__ 2y ago
...and one day, a younger generation is going to say "enough" because they'll have no other choice. I'm not sure what they'll do, but it probably wont involve respecting the abstractions that we've been basing our retirement savings on.
- rexpop 2y ago
  Yeah, it's confusing to me anyone expects usury of youth to be sustainable. We come into the world with nothing, and then we are saddled with debt and costs like describe above (which are, essentially, debt)? And yet, it's a system which has, so far, outlived the others. Perhaps it is stable, after all. It certainly keeps the youth honed in on the grindstone. There were some defectors in the 60s, and in 2008, but that was far less sustainable or, rather, failed to reach critical mass / escape velocity.
  - __MatrixMan__ 2y ago
    I doubt it. Even if there's enough growth to make the plight of the young survivable from a wealth standpoint, this thing we've built has no steering wheel. If it's not the youth that will say enough, it'll be the atmosphere. We need a few Hari Seldon types.
    - rexpop 2y ago
      No knowing how many Foundations are out there, already.
jonathanyc 2y ago
I find it particularly infuriating when people want their house to be an “investment” while complaining about increasing rates of homelessness. How is the price supposed to go up unless supply fails to meet demand?
- pylua 2y ago
  They want more jobs to be available at wages where they can afford to buy or build houses. I would be careful to read into these things too much.
  - jonathanyc 2y ago
    You might have replied to the wrong comment. You are talking about people wanting better paying jobs. I am talking about people wanting their house to be an investment. Perhaps you are implying that even if the price of houses increases, if wages increase at the same rate, then they will cancel out? If so you are describing inflation, and the real cost of houses will be unchanged. Alternatively, if you are implying that the solution is for everyone's wages to increase faster than the prices of houses increase, then the consequence of your solution is that houses will no longer be anywhere near as attractive of an investment. Setting aside any moral considerations, it simply does not make any rational sense to wish for the price of a necessity to increase while also wishing for it to become more available. Imagine wishing for food to become more expensive while also lamenting that people can't afford food!
    - pylua 2y ago
      The ideal situation is that people that move to the area are able to make enough wages to pay for the appreciation in the house. I reject any premise that suggests it is not a possible scenario. I will admit that it is not possible given how our economy is doing, but that should change. However, if the economy was healthier that’s what it should look like, and that’s what people should be wanting from its government. I think the problem is debt. The power of debt has outstripped any buying power of an individual worker.
rhplus 2y ago
US zoning laws are probably a much bigger factor in keeping neighborhood cafes out of residential areas. The idea of a “corner cafe” - literally a house converted into a store front - simply isn’t possible in most residentially zoned areas.
polishdude20 2y ago
Yeah the only time that wealth has a chance to transfer back to the young is then the old die and they give it to their children
cedws 2y ago
I call this “terminal capitalism.” We’re now in a state where everybody prioritises building their own wealth at everyone else’s and society’s detriment. I’m not an advocate for communism either, by the way. Just regulation and proper taxation.

by jmyeet 2y ago

ec109685 2y ago

That $200k purchaser is sitting on $760k in equity and paying 1/4th in housing that their peers are, which is its own form of wealth.

griftrejection 2y ago
[dead]
browningstreet 2y ago
And then renting out for $3000/mo a thing that was renting for half that 2-3 years ago and isn’t even a good place to live.
ssss11 2y ago
And if they’re one of the wealthy that own more than one unit of home wealth they are most certainly cheering for the prices to go up.

griftrejection 2y ago

[dead]

carlosjobim 2y ago

> In reality they haven't gained anything because every house is $800k and you still need somewhere to live so you still only own one housing unit of wealth. They can borrow money against the extra value of their house. They don't need to move out. That's what everybody in the landed gentry has been doing for the past two decades.

vundercind 2y ago
You can also sell that house and buy a very nice ranch (when you’re old, you won’t want stairs) somewhere that isn’t even a middle-of-nowhere shiathole for half the price. Pocket the rest. That is why the gains really are actual, useful money for lots of people.

m463 2y ago

and lower-wage service employees cannot afford to live near work.

__MatrixMan__ 2y ago

...and one day, a younger generation is going to say "enough" because they'll have no other choice. I'm not sure what they'll do, but it probably wont involve respecting the abstractions that we've been basing our retirement savings on.

rexpop 2y ago
Yeah, it's confusing to me anyone expects usury of youth to be sustainable. We come into the world with nothing, and then we are saddled with debt and costs like describe above (which are, essentially, debt)? And yet, it's a system which has, so far, outlived the others. Perhaps it is stable, after all. It certainly keeps the youth honed in on the grindstone. There were some defectors in the 60s, and in 2008, but that was far less sustainable or, rather, failed to reach critical mass / escape velocity.
- __MatrixMan__ 2y ago
  I doubt it. Even if there's enough growth to make the plight of the young survivable from a wealth standpoint, this thing we've built has no steering wheel. If it's not the youth that will say enough, it'll be the atmosphere. We need a few Hari Seldon types.
  - rexpop 2y ago
    No knowing how many Foundations are out there, already.

jonathanyc 2y ago

I find it particularly infuriating when people want their house to be an “investment” while complaining about increasing rates of homelessness. How is the price supposed to go up unless supply fails to meet demand?

pylua 2y ago
They want more jobs to be available at wages where they can afford to buy or build houses. I would be careful to read into these things too much.
- jonathanyc 2y ago
  You might have replied to the wrong comment. You are talking about people wanting better paying jobs. I am talking about people wanting their house to be an investment. Perhaps you are implying that even if the price of houses increases, if wages increase at the same rate, then they will cancel out? If so you are describing inflation, and the real cost of houses will be unchanged. Alternatively, if you are implying that the solution is for everyone's wages to increase faster than the prices of houses increase, then the consequence of your solution is that houses will no longer be anywhere near as attractive of an investment. Setting aside any moral considerations, it simply does not make any rational sense to wish for the price of a necessity to increase while also wishing for it to become more available. Imagine wishing for food to become more expensive while also lamenting that people can't afford food!
  - pylua 2y ago
    The ideal situation is that people that move to the area are able to make enough wages to pay for the appreciation in the house. I reject any premise that suggests it is not a possible scenario. I will admit that it is not possible given how our economy is doing, but that should change. However, if the economy was healthier that’s what it should look like, and that’s what people should be wanting from its government. I think the problem is debt. The power of debt has outstripped any buying power of an individual worker.

rhplus 2y ago

US zoning laws are probably a much bigger factor in keeping neighborhood cafes out of residential areas. The idea of a “corner cafe” - literally a house converted into a store front - simply isn’t possible in most residentially zoned areas.

polishdude20 2y ago

Yeah the only time that wealth has a chance to transfer back to the young is then the old die and they give it to their children

cedws 2y ago

I call this “terminal capitalism.” We’re now in a state where everybody prioritises building their own wealth at everyone else’s and society’s detriment. I’m not an advocate for communism either, by the way. Just regulation and proper taxation.