5 ms·

Both parents working is a trap. We used to need one parent working, then they changed mortgage lending to incorporate two incomes and surprise: land prices doub

Both parents working is a trap. We used to need one parent working, then they changed mortgage lending to incorporate two incomes and surprise: land prices doubled. Now two people work instead of one and they are no better off. Who is the second parent working for? The banks. Who pays? The kids. The financialisation of land is a disaster, we are not more free we are enslaved by debt.

morley 11y ago
Do you have a source to confirm that the change to mortgage lending caused land prices to double? It seems like the opposite is equally plausible.
- branchless 11y ago
  Yes: http://www.amazon.com/Progress-Poverty-Industrial-Depressions-Increase/dp/0911312587 http://www.amazon.com/Progress-Poverty-Industrial-Depression... Prices are related to available credit. Wages (and rent) have hardly budged but land prices have rocketed.
  - throwaway1979 11y ago
    This is going off on a tangent but I think you are spot on. It isn't just two incomes fueling the credit increase but also the insanely low interest rates. I don't think female workforce participation will/should go down, but I wonder if interest rates will ever go up to reasonable levels and pop the real-estate bubble (e.g. in Canada)? I have friends with crappy income situations buying houses for 600K+. I've been trying to hold off for as long as possible but we would really like to plant our roots somewhere (poor immigrant to the Western world so owning land in my new homeland was a dream from childhood). In places like Toronto and Vancouver, buying a home for people of modest means seems financial suicide (perhaps only if you have taken Econ courses). We live in messed up times.
  - branchless 11y ago
    can't reply to the throwaway dude as HN threading is nuts so replying here. Low interest rates allows banks to more efficiently financialise housing (that is to say price housing at the optimal point to extract as much economic rent as possible). You get to spread your repayments over a long time and end up paying lots of lovely interest. Higher rates (and therefore more wage inflation) quickly erodes the debt whilst putting a ceiling on the asset price bounded by wages at the time you sign the mortgage deeds. The west has been utterly captured by banks. We've seen politicians walk rates down to zero to allow the asset price bubble to continue to extract value from labour. This is the issue. It's not off-topic for this - all families are working two jobs for the banks. ps also dude as you are in Canada (so am I): http://www.greaterfool.ca/ http://www.greaterfool.ca/ Vancouver is nuts. Calgary: timber
- jseliger 11y ago
  We used to need one parent working, then they changed mortgage lending to incorporate two incomes and surprise: land prices doubled. I'm not convinced this is as true as a separate issues: many desirable cities and first-tier suburbs have implemented severe land-use controls that force families who want better school districts to pay for housing. This is a point Avent makes in The Gated City (http://www.amazon.com/Gated-City-Kindle-Single-ebook/dp/B005KGATLO http://www.amazon.com/Gated-City-Kindle-Single-ebook/dp/B005...) and Yglesias makes in The Rent is Too Damn High (http://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO http://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0...). I read Progress and Poverty: An Inquiry in the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth but am worried that land-use controls weren't really even on George's radar for obvious reasons; in the 19th C the U.S. was a different place. I don't think the book is bad exactly but much has changed. think the causal issue runs from "land use restriction" -> "higher prices" rather than "dual income" -> "higher prices."
  - ptaipale 11y ago
    That doesn't sound sensible to me. Land use controls don't force families who want better school districts to pay for housing. It's the differences in schools that make families to seek housing in the most-wanted areas, and most-wanted areas are naturally more expensive. So, people don't pay for housing or land use, they pay for school district. Perhaps, in the US, there are indirect ways that land use impacts school quality, but it wouldn't have to be that way.
    - prostoalex 11y ago
      Yeah, if the school quality is correlated to school financing, and school financing is correlated to property taxes paid, then existing homeowners must have paid a high amount of property taxes to propel their school district into a wealthy one. Anybody who's overpaying for good school district is chasing home ownership in the area that's expensive to begin with.
jp555 11y ago
Why can't it simply be that as most households moved from 1 to 2 income, the market adapted? What policies and/or regulations can we make to incentivize a market where house prices reduce over time? Is that the goal? Houses are on average twice as big as they were not too long ago. How much of the increase is due to people wanting bigger homes?
- branchless 11y ago
  You can't have a free market in land. There are too many constraints such as planning permissions and the fact that the supply is fixed overall. Therefore to have a free market in credit with these constraints it's inevitable that it will be used for speculation. We should have land value tax to win back our right to exist instead of credit fueled full land enclosure. It's an unmitigated disaster - the defining issue of our times. Credit is near infinite as thanks to fractional reserve banking banks can create as much of it as demand requires. They are not constrained by savings. Most bank lending is against land, it's how money is being printed. How has the market adapted when we are working 25 times 2 years for the same pile of bricks our parents worked for 15 years for? It's simply the banks taking more of a share of your labour. You get nothing else back. There is no point in being more productive. It will feed through into land prices as disposable income (briefly) increases and then land prices go up and we are back where we started. This is how banks capture all productivity. Read http://www.amazon.com/Progress-Poverty-Industrial-Depressions-Increase/dp/0911312587 http://www.amazon.com/Progress-Poverty-Industrial-Depression... ps in the UK house sizes are falling, in part because of smaller families / divorces but mostly because of land price ramping
- pjmorris 11y ago
  I once owned a townhouse in South Florida. Here are the sale prices over time: 1999 (built): 99,000 2001: 140,000 2005: 309,000 2010 230,000 I drove by it recently, and can say that the square footage hasn't changed. Don't take anecdote for data, only illustration, but my scenario was repeated hundreds of thousands of times in South Florida alone. (Some) houses are getting bigger, but that doesn't explain house prices.
  - 11y ago
ende 11y ago
Traditionally the split was 100/0 (man/woman) Now the split is 100/100. I feel like there's a healthier (both physically and economically) balance somewhere around 50/50.
prostoalex 11y ago
The land is only part of the equation, as with dense housing you can stack apartments on top of one another and amortize the land cost among larger number of buyers. Average square footage of a single-family dwelling in 1950 was 983 sq. ft. http://www.npr.org/templates/story/story.php?storyId=5525283 http://www.npr.org/templates/story/story.php?storyId=5525283 and guess what happened to the square footage once two incomes came into the equation.

morley 11y ago

Do you have a source to confirm that the change to mortgage lending caused land prices to double? It seems like the opposite is equally plausible.

branchless 11y ago
Yes: http://www.amazon.com/Progress-Poverty-Industrial-Depressions-Increase/dp/0911312587 http://www.amazon.com/Progress-Poverty-Industrial-Depression... Prices are related to available credit. Wages (and rent) have hardly budged but land prices have rocketed.
- throwaway1979 11y ago
  This is going off on a tangent but I think you are spot on. It isn't just two incomes fueling the credit increase but also the insanely low interest rates. I don't think female workforce participation will/should go down, but I wonder if interest rates will ever go up to reasonable levels and pop the real-estate bubble (e.g. in Canada)? I have friends with crappy income situations buying houses for 600K+. I've been trying to hold off for as long as possible but we would really like to plant our roots somewhere (poor immigrant to the Western world so owning land in my new homeland was a dream from childhood). In places like Toronto and Vancouver, buying a home for people of modest means seems financial suicide (perhaps only if you have taken Econ courses). We live in messed up times.
- branchless 11y ago
  can't reply to the throwaway dude as HN threading is nuts so replying here. Low interest rates allows banks to more efficiently financialise housing (that is to say price housing at the optimal point to extract as much economic rent as possible). You get to spread your repayments over a long time and end up paying lots of lovely interest. Higher rates (and therefore more wage inflation) quickly erodes the debt whilst putting a ceiling on the asset price bounded by wages at the time you sign the mortgage deeds. The west has been utterly captured by banks. We've seen politicians walk rates down to zero to allow the asset price bubble to continue to extract value from labour. This is the issue. It's not off-topic for this - all families are working two jobs for the banks. ps also dude as you are in Canada (so am I): http://www.greaterfool.ca/ http://www.greaterfool.ca/ Vancouver is nuts. Calgary: timber
jseliger 11y ago
We used to need one parent working, then they changed mortgage lending to incorporate two incomes and surprise: land prices doubled. I'm not convinced this is as true as a separate issues: many desirable cities and first-tier suburbs have implemented severe land-use controls that force families who want better school districts to pay for housing. This is a point Avent makes in The Gated City (http://www.amazon.com/Gated-City-Kindle-Single-ebook/dp/B005KGATLO http://www.amazon.com/Gated-City-Kindle-Single-ebook/dp/B005...) and Yglesias makes in The Rent is Too Damn High (http://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO http://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0...). I read Progress and Poverty: An Inquiry in the Cause of Industrial Depressions and of Increase of Want with Increase of Wealth but am worried that land-use controls weren't really even on George's radar for obvious reasons; in the 19th C the U.S. was a different place. I don't think the book is bad exactly but much has changed. think the causal issue runs from "land use restriction" -> "higher prices" rather than "dual income" -> "higher prices."
- ptaipale 11y ago
  That doesn't sound sensible to me. Land use controls don't force families who want better school districts to pay for housing. It's the differences in schools that make families to seek housing in the most-wanted areas, and most-wanted areas are naturally more expensive. So, people don't pay for housing or land use, they pay for school district. Perhaps, in the US, there are indirect ways that land use impacts school quality, but it wouldn't have to be that way.
  - prostoalex 11y ago
    Yeah, if the school quality is correlated to school financing, and school financing is correlated to property taxes paid, then existing homeowners must have paid a high amount of property taxes to propel their school district into a wealthy one. Anybody who's overpaying for good school district is chasing home ownership in the area that's expensive to begin with.

jp555 11y ago

Why can't it simply be that as most households moved from 1 to 2 income, the market adapted? What policies and/or regulations can we make to incentivize a market where house prices reduce over time? Is that the goal? Houses are on average twice as big as they were not too long ago. How much of the increase is due to people wanting bigger homes?

branchless 11y ago
You can't have a free market in land. There are too many constraints such as planning permissions and the fact that the supply is fixed overall. Therefore to have a free market in credit with these constraints it's inevitable that it will be used for speculation. We should have land value tax to win back our right to exist instead of credit fueled full land enclosure. It's an unmitigated disaster - the defining issue of our times. Credit is near infinite as thanks to fractional reserve banking banks can create as much of it as demand requires. They are not constrained by savings. Most bank lending is against land, it's how money is being printed. How has the market adapted when we are working 25 times 2 years for the same pile of bricks our parents worked for 15 years for? It's simply the banks taking more of a share of your labour. You get nothing else back. There is no point in being more productive. It will feed through into land prices as disposable income (briefly) increases and then land prices go up and we are back where we started. This is how banks capture all productivity. Read http://www.amazon.com/Progress-Poverty-Industrial-Depressions-Increase/dp/0911312587 http://www.amazon.com/Progress-Poverty-Industrial-Depression... ps in the UK house sizes are falling, in part because of smaller families / divorces but mostly because of land price ramping
pjmorris 11y ago
I once owned a townhouse in South Florida. Here are the sale prices over time: 1999 (built): 99,000 2001: 140,000 2005: 309,000 2010 230,000 I drove by it recently, and can say that the square footage hasn't changed. Don't take anecdote for data, only illustration, but my scenario was repeated hundreds of thousands of times in South Florida alone. (Some) houses are getting bigger, but that doesn't explain house prices.
- 11y ago

ende 11y ago

Traditionally the split was 100/0 (man/woman) Now the split is 100/100. I feel like there's a healthier (both physically and economically) balance somewhere around 50/50.

prostoalex 11y ago

The land is only part of the equation, as with dense housing you can stack apartments on top of one another and amortize the land cost among larger number of buyers. Average square footage of a single-family dwelling in 1950 was 983 sq. ft. http://www.npr.org/templates/story/story.php?storyId=5525283 http://www.npr.org/templates/story/story.php?storyId=5525283 and guess what happened to the square footage once two incomes came into the equation.