5 ms·

That perception bears almost no relation to reality. The most reliable path to building a modicum of wealth has remained the same for generations: start a small

by nradov 4mo ago

That perception bears almost no relation to reality. The most reliable path to building a modicum of wealth has remained the same for generations: start a small business in some boring field and work your ass off for 80 hrs/wk. Building wealth through real estate is also still totally possible outside of the HCOL metro areas. Try unfashionable areas like Cleveland or Oklahoma City. And let's not have any low-effort comments claiming that there are no good jobs available in those places: the actual economic data on median income to housing price ratios tells another story.

Analemma_ 4mo ago
“Building wealth through real estate” should not be possible, and it’s half the reason we’re in this mess: people treating their homes as a store of wealth and blocking new construction to protect the value of their investment has locked young people out of the housing market. Hence all the gambling. What you should be hoping is that YIMBY policies carry the day in the end and “building wealth through real estate” is eliminated as a thing.
- throwitaway222 4mo ago
  > Building wealth through real estate should not be possible I am sympathetic to this argument, but there are problems. How do you get homes built if you make this change?
  - Analemma_ 4mo ago
    Construction companies can still turn a profit building and selling them. The idea is that houses should be depreciating assets, like cars. If houses are appreciating in value it means you're not building enough of them.
    - s1artibartfast 4mo ago
      or that the cost to build them is going up.
    - nradov 4mo ago
      Most houses do depreciate, or they require frequent expenses just to maintain their value which amounts to the same thing. There are occasionally exceptions to this rule in times of rapid construction price inflation but that's rare. It's the land under the house that typically appreciates. Land is unlikely to depreciate unless the broader regional economy declines.
      - mothballed 4mo ago
        It's the actual house in many areas. Where I live a burned out, unusable trailer only good for rebuilding the whole thing (that is, negative value based on purely structural value) on a piece of land is worth ~100k+ whereas the land itself (unmortgagable) is only worth about $35k. When you have a house you get basically a special token to have a house built under the codes, zoning, and other restrictions that were in place when it was built. And possibly the permission to build it all. Also a token that includes getting utilities, etc under the old rules. In many places this may have been done back in the 60s when "a guy and his pickup truck" could just build a house with almost no questions asked, and many of them were done that way. These tokens are generally appreciating (NIMBYism, increasing regulatory challenge, etc), commonly faster than the actual physical materials in the house are depreciating. Coming back to why the burnt out trailers are worth $100k+ on $35k land where I'm at even though you'll just have to pay to raze them 1) It includes planning/zoning pre-approval, just re-do the same structure on the standing foundation and you won't have to spend a gazillion dollars doing everything back to the new rules. 2) The presence of the house includes the ability to use debt to mortgage the land up to a gazillion dollars. The exact same piece of land magically becomes mortgageable with the burnt out unusuable trailer on it, which let people bid the price to infinity during the covid era, then locked into high rates no one will give up. Meanwhile, I got one of these pieces of land for ~1/3 the price the exact equivalent raw land value was rolled into on mortgageable properties. Think about it this way. If I build a house with the cheapest, shittiest, materials and the most illegalist of Mexicans 30 years ago. And then pass a bunch of laws that say nobody gets to do the thing I did, and now you need code-magic expensive materials and deport all the Mexicans, require expensive environmental reviews, and maybe even make it harder to legally build. That appreciates the value of my house -- because to substitute my cheap house you have to build an expensive house, so I can just charge almost as much as the expensive house and the market will bear it. Thus you end up with stuff like raw land value prices in my area not appreciating at all, yet house prices massively appreciating.
  - myrmidon 4mo ago
    By people paying for houses they actually want to live in? Real estate as "investment" is not helping anything here; it hurts home availability, first because prospective homeowners have to compete with capital that just wants to use those as store of value/for rentseeking (driving up demand/prices) and secondly because this creates incentives against building more houses (because that hurts those real estate "investors").
taurath 4mo ago
Just start a small business, or build wealth through real estate is a take that indicates some severe divorce from the reality of poverty in America. You need both capital (which folks don’t have access to) and the ability to absorb risk (which folks don’t have access to). Similar advice is in the vein of just stay with your parents for free, have a relative invest $50,000 in your business to start it up. This runs counter to your internal narrative as a self made person I’m sure, but have you ever worked for 40 hours a week and not had anything left after paying for your share of rent, food and utilities? This is the reality that doesn’t seep into forums like this, where the majority is wealthy, college educated, and broadly privileged in some way either through exceptional talent or background. > let's not have any low-effort comments claiming that there are no good jobs available in those places I will bite - homeownership is indeed higher in the rust belt, but many folks struggle to find jobs that meet the median without giving up their health and bodies, if they can find steady work at all.
- giantrobot 4mo ago
  I don't know what you mean, I mean I made a million dollars with only a small hundred million dollar loan from my dad! This sort of entrepreneurship is available to anyone in America.¹ ¹ Terms and conditions apply.
  - scottyah 4mo ago
    The propagation of this type of mindset is more damaging than the gambling.
    - romanhounds 4mo ago
      how so? because people don't like when you move into their area and buy your way into everything? Displacing the people around? The "artisanal farmer" with 100M cap investment into gear. People who don't shun and humiliate these silverspooners are more damaging than the gambling.
- jcranmer 4mo ago
  Upward mobility still occurs in the US, at all levels. While the advice is difficult, almost impossible, for most to apply, it is sometimes applicable. One of the main issues is that a lot of advice is presented as an unconditional, absolute guarantee to success. A college degree was never a guarantee of future success (contrary to great-grandparent's assertion), but the push to get everyone to get a college degree has rendered its utility as a helpful marker much more useless. Similarly, the ability to start your own business is difficult for most people, but even for poorer individuals, it is possible to start, say, a cleaning service with very little assets. (At the same time, such businesses are unlikely to make a whole lot of money at the end, but you might be able to move from working class to middle class, e.g.). A lot of contractor businesses--your plumbers and the like--are going to be from the lower middle class or middle class, and you can make some good money there, although that is also likely to be at the cost of your health much sooner than you expect.
lenerdenator 4mo ago
> The most reliable path to building a modicum of wealth has remained the same for generations: start a small business in some boring field and work your ass off for 80 hrs/wk. Hardly. My grandfather was working under union rules as a machinist. No education beyond the 8th grade and what he learned in the US Navy during WWII. He was able to afford a house in a Lower Midwestern city (one that would be considered LCOL) and five kids. I have a bachelor's degree that's paid for, a decent paying software job, and no wife/kids. Wanna guess how many homes I own in the same city?

by nradov 4mo ago

Analemma_ 4mo ago

“Building wealth through real estate” should not be possible, and it’s half the reason we’re in this mess: people treating their homes as a store of wealth and blocking new construction to protect the value of their investment has locked young people out of the housing market. Hence all the gambling. What you should be hoping is that YIMBY policies carry the day in the end and “building wealth through real estate” is eliminated as a thing.

throwitaway222 4mo ago
> Building wealth through real estate should not be possible I am sympathetic to this argument, but there are problems. How do you get homes built if you make this change?
- Analemma_ 4mo ago
  Construction companies can still turn a profit building and selling them. The idea is that houses should be depreciating assets, like cars. If houses are appreciating in value it means you're not building enough of them.
  - s1artibartfast 4mo ago
    or that the cost to build them is going up.
  - nradov 4mo ago
    Most houses do depreciate, or they require frequent expenses just to maintain their value which amounts to the same thing. There are occasionally exceptions to this rule in times of rapid construction price inflation but that's rare. It's the land under the house that typically appreciates. Land is unlikely to depreciate unless the broader regional economy declines.
    - mothballed 4mo ago
      It's the actual house in many areas. Where I live a burned out, unusable trailer only good for rebuilding the whole thing (that is, negative value based on purely structural value) on a piece of land is worth ~100k+ whereas the land itself (unmortgagable) is only worth about $35k. When you have a house you get basically a special token to have a house built under the codes, zoning, and other restrictions that were in place when it was built. And possibly the permission to build it all. Also a token that includes getting utilities, etc under the old rules. In many places this may have been done back in the 60s when "a guy and his pickup truck" could just build a house with almost no questions asked, and many of them were done that way. These tokens are generally appreciating (NIMBYism, increasing regulatory challenge, etc), commonly faster than the actual physical materials in the house are depreciating. Coming back to why the burnt out trailers are worth $100k+ on $35k land where I'm at even though you'll just have to pay to raze them 1) It includes planning/zoning pre-approval, just re-do the same structure on the standing foundation and you won't have to spend a gazillion dollars doing everything back to the new rules. 2) The presence of the house includes the ability to use debt to mortgage the land up to a gazillion dollars. The exact same piece of land magically becomes mortgageable with the burnt out unusuable trailer on it, which let people bid the price to infinity during the covid era, then locked into high rates no one will give up. Meanwhile, I got one of these pieces of land for ~1/3 the price the exact equivalent raw land value was rolled into on mortgageable properties. Think about it this way. If I build a house with the cheapest, shittiest, materials and the most illegalist of Mexicans 30 years ago. And then pass a bunch of laws that say nobody gets to do the thing I did, and now you need code-magic expensive materials and deport all the Mexicans, require expensive environmental reviews, and maybe even make it harder to legally build. That appreciates the value of my house -- because to substitute my cheap house you have to build an expensive house, so I can just charge almost as much as the expensive house and the market will bear it. Thus you end up with stuff like raw land value prices in my area not appreciating at all, yet house prices massively appreciating.
- myrmidon 4mo ago
  By people paying for houses they actually want to live in? Real estate as "investment" is not helping anything here; it hurts home availability, first because prospective homeowners have to compete with capital that just wants to use those as store of value/for rentseeking (driving up demand/prices) and secondly because this creates incentives against building more houses (because that hurts those real estate "investors").

taurath 4mo ago

Just start a small business, or build wealth through real estate is a take that indicates some severe divorce from the reality of poverty in America. You need both capital (which folks don’t have access to) and the ability to absorb risk (which folks don’t have access to). Similar advice is in the vein of just stay with your parents for free, have a relative invest $50,000 in your business to start it up. This runs counter to your internal narrative as a self made person I’m sure, but have you ever worked for 40 hours a week and not had anything left after paying for your share of rent, food and utilities? This is the reality that doesn’t seep into forums like this, where the majority is wealthy, college educated, and broadly privileged in some way either through exceptional talent or background. > let's not have any low-effort comments claiming that there are no good jobs available in those places I will bite - homeownership is indeed higher in the rust belt, but many folks struggle to find jobs that meet the median without giving up their health and bodies, if they can find steady work at all.

giantrobot 4mo ago
I don't know what you mean, I mean I made a million dollars with only a small hundred million dollar loan from my dad! This sort of entrepreneurship is available to anyone in America.¹ ¹ Terms and conditions apply.
- scottyah 4mo ago
  The propagation of this type of mindset is more damaging than the gambling.
  - romanhounds 4mo ago
    how so? because people don't like when you move into their area and buy your way into everything? Displacing the people around? The "artisanal farmer" with 100M cap investment into gear. People who don't shun and humiliate these silverspooners are more damaging than the gambling.
jcranmer 4mo ago
Upward mobility still occurs in the US, at all levels. While the advice is difficult, almost impossible, for most to apply, it is sometimes applicable. One of the main issues is that a lot of advice is presented as an unconditional, absolute guarantee to success. A college degree was never a guarantee of future success (contrary to great-grandparent's assertion), but the push to get everyone to get a college degree has rendered its utility as a helpful marker much more useless. Similarly, the ability to start your own business is difficult for most people, but even for poorer individuals, it is possible to start, say, a cleaning service with very little assets. (At the same time, such businesses are unlikely to make a whole lot of money at the end, but you might be able to move from working class to middle class, e.g.). A lot of contractor businesses--your plumbers and the like--are going to be from the lower middle class or middle class, and you can make some good money there, although that is also likely to be at the cost of your health much sooner than you expect.

lenerdenator 4mo ago

> The most reliable path to building a modicum of wealth has remained the same for generations: start a small business in some boring field and work your ass off for 80 hrs/wk. Hardly. My grandfather was working under union rules as a machinist. No education beyond the 8th grade and what he learned in the US Navy during WWII. He was able to afford a house in a Lower Midwestern city (one that would be considered LCOL) and five kids. I have a bachelor's degree that's paid for, a decent paying software job, and no wife/kids. Wanna guess how many homes I own in the same city?