4 ms·

Where do you think all the money comes from due to the huge rise in housing costs between now and 1990? It comes from the next generation paying more of their l

Where do you think all the money comes from due to the huge rise in housing costs between now and 1990? It comes from the next generation paying more of their labour for the same house someone had to work far less for 20 years back. And this is because banks have financialised housing. Prices are set by available credit. We all have no choice in a world where land is financialised. You can't float in the air. You either live miles away from the source of most jobs (cities) and pay in commute time or you live nearer in and give someone a huge slice of your wages whilst they cream it in. And in our current system it will always be like this. Productivity up? More wages to spend on rent!

tsotha 11y ago
If your argument is the government should be far less involved in housing and stop monkeying with the currency so much, then I'm with you. But unless you're an absolute dictator you have to live in the environment in which you find yourself. People who buy real assets risk the possibility they'll go down in value, too - a lot of people where I live got wiped out in 2008.
- branchless 11y ago
  Yes but it's better to not think "ah I see we are in a bad situation let me try to get on the side of the exploiters and get me a piece of the pie". It's just wrong, they are exploiting people. Some did get wiped out in 2008 - those who got in late. Not MMM blog man who has "retired" but still takes rental income based on the differential between buying back before 2000 or so before housing was financialised and the cost of renting now. This doesn't take finance knowledge you just have to be born at the right time. So many blogs have "yeah I saved a bit and my 3 houses quintupled in value and I wasn't handing over half my pay to a landlord like kids now...so let me give you some advice!" For too many for too long housing has been a one way bet. And because they are creating nothing that money comes from the labour of others. The more productive we become the greater the economic advantage of the land and therefore the greater the rent. If we all work harder and/or smarter the landlord gets it. And if we all try to get our slice of the pie we go to hell in a handcart. Together.
  - tsotha 11y ago
    I don't see that anyone is being exploited here. Pre-2008 in my area rents were far below the equivalent house payment because there were more people who wanted to own property and rent it out than there were people who wanted to rent. In effect the renters were subsidized by buyers who were betting on rising home prices. Historically, in the US at least, as a land owner your appreciation tracks the CPI pretty closely. It will go out of whack for a few years, but then there's a correction. I just can't buy into your exploiter-exploited mindset.
  - zrail 11y ago
    I don't understand your argument. Everyone has to live somewhere. For some people, that means renting. Someone has to own the building they live in. It's not like the person who owns the building does nothing to earn their rent. Building maintenance, loan servicing, taxes, insurance, vacancies, all of that and more has a cost (just ask a homeowner). From what I understand, 4% annually is a good return after expenses. If you're arguing specifically about rents in the Bay Area, then sure that's a problem that needs to be fixed. But blaming the property owners for high rents is sort of blaming the messenger, no? No additional land and laws that prevent building upwards directly leads to higher rents because of increased competition, and high salaries at tech companies (combined with a bunch of other externalities like private buses) just makes it worse.
    - branchless 11y ago
      hah - suddenly the reply button appears - i guess it's a timeout to stop rage replies. I replied above. Take it or leave it :-)
    - hkmurakami 11y ago
      >But blaming the property owners for high rents is sort of blaming the messenger, no? In the Bay Area, property owners directly influence the community rules and laws that restrict the construction of high density developments. This is the case in both SV and SF. I don't blame the land owners -- they are acting in their self interest, as they have the right to be doing.

tsotha 11y ago

If your argument is the government should be far less involved in housing and stop monkeying with the currency so much, then I'm with you. But unless you're an absolute dictator you have to live in the environment in which you find yourself. People who buy real assets risk the possibility they'll go down in value, too - a lot of people where I live got wiped out in 2008.

branchless 11y ago
Yes but it's better to not think "ah I see we are in a bad situation let me try to get on the side of the exploiters and get me a piece of the pie". It's just wrong, they are exploiting people. Some did get wiped out in 2008 - those who got in late. Not MMM blog man who has "retired" but still takes rental income based on the differential between buying back before 2000 or so before housing was financialised and the cost of renting now. This doesn't take finance knowledge you just have to be born at the right time. So many blogs have "yeah I saved a bit and my 3 houses quintupled in value and I wasn't handing over half my pay to a landlord like kids now...so let me give you some advice!" For too many for too long housing has been a one way bet. And because they are creating nothing that money comes from the labour of others. The more productive we become the greater the economic advantage of the land and therefore the greater the rent. If we all work harder and/or smarter the landlord gets it. And if we all try to get our slice of the pie we go to hell in a handcart. Together.
- tsotha 11y ago
  I don't see that anyone is being exploited here. Pre-2008 in my area rents were far below the equivalent house payment because there were more people who wanted to own property and rent it out than there were people who wanted to rent. In effect the renters were subsidized by buyers who were betting on rising home prices. Historically, in the US at least, as a land owner your appreciation tracks the CPI pretty closely. It will go out of whack for a few years, but then there's a correction. I just can't buy into your exploiter-exploited mindset.
- zrail 11y ago
  I don't understand your argument. Everyone has to live somewhere. For some people, that means renting. Someone has to own the building they live in. It's not like the person who owns the building does nothing to earn their rent. Building maintenance, loan servicing, taxes, insurance, vacancies, all of that and more has a cost (just ask a homeowner). From what I understand, 4% annually is a good return after expenses. If you're arguing specifically about rents in the Bay Area, then sure that's a problem that needs to be fixed. But blaming the property owners for high rents is sort of blaming the messenger, no? No additional land and laws that prevent building upwards directly leads to higher rents because of increased competition, and high salaries at tech companies (combined with a bunch of other externalities like private buses) just makes it worse.
  - branchless 11y ago
    hah - suddenly the reply button appears - i guess it's a timeout to stop rage replies. I replied above. Take it or leave it :-)
  - hkmurakami 11y ago
    >But blaming the property owners for high rents is sort of blaming the messenger, no? In the Bay Area, property owners directly influence the community rules and laws that restrict the construction of high density developments. This is the case in both SV and SF. I don't blame the land owners -- they are acting in their self interest, as they have the right to be doing.