This is basically the argument for buying into a co-op rather than buying an apartment. You aren't allowed to flip them for a profit, which means they're less expensive because you're giving up optionality. (At least when they actually are implemented as originally intended.)
To me this makes a ton of sense, because there are a lot of benefits to home ownership for both the individual and society, but real estate generally isn't a good place to put investible dollars unless you're super wealthy and just want some (relatively) predictable income from renters.
What we really need though is public housing for the middle class and upper middle class, rather than just for low-income families. Right now public housing is basically just a scam to transfer money from the middle class to the super wealthy by using money from the middle class to subsidize labor at below a living wage, when in reality everyone needs a house so it's a textbook example of a market where there should be a public option.
The purpose of a coop is to be able to choose your neighbors in the building.
The reasons for doing so could be indefensible, like keeping out blacks and Jews, or they could be things like ensuring the financial health of the building, blocking people who will engage in endless construction, or avoiding drama by excluding celebrities that draw paparazzi.
You most definitely are! At least in New York City. There tends to be a flip tax, but that is just a mechanism of funding the corporation, and it's not the reason prices are lower. (Prices are lower because coops tend to be much less flexible about renting. Many forbid it entirely, and those that allow it will have limits like at most two years out of every five. That basically means there's a class of buyer -- real estate investors -- who have no use for coop units. Lower demand at a fixed level of supply leads to lower price.)
But that can take the form of 90% of any increase over the purchase price if you sell within the first five years, which effectively removes any economic reason to purchase for short term speculation.
This is a very long way from how the West does things, but I've got to say that it works exceedingly well there.
(Disclaimer: not an endorsement of All Things Singapore.)
You can sell it and prices are somewhat market driven but with complicated taxes and limitations to prevent speculation (flipping). It's affordable because, as public housing, there are numerous subsidies, incentives, etc that the government provides to make the initial down payment and subsequent installments as easy as possible.
it still exists, and you avoid it by claiming to be a relative visiting. Just make sure you don't bring large amounts of luggage thru the front lobby, or make a nuisance in the building.
Besides, Singapore is a nation where you probably don't want to break any laws a foreigner. Abetting fraud often is a punishable offence, and you might just become part of a crack-down on illegal subletting to set an example.
That is not an argument for implementing it at home.
In short all flats/apartments are cooperatives, but still profit occurs when they're bought and sold. The structure and profit/loss are unrelated.
(I suspect I'm going to find out a lot more about this stuff soon, as I own a studio which is due for some pipe-work .. Joy!)
The only solution I see is state level zoning standardization around pro-density zoning and limitations on NIMBY power.
Some mid-rise condos down the block are far better than another suburban subdivision a few miles down the road, as traffic goes.
Assuming this quiet neighbourhood is near an urban area with nice jobs/schools/amenities etc, the value of the 'hood is created by the network effects of the city. Growth of the city means growth in the value of that 'hood. The people living there usually aren't doing a lot to increase the value of their properties. But as property assessments lag market values, or the way taxes are structures, those owners can see flat costs for their housing while their values rise. Meanwhile by refusing to add density to their neighbourhood they are driving up the costs for others. When they eventually sell or move they get all of the gains in property value all the while having very low carrying costs.
If they wanted a quiet neighbourhood they could move to a smaller town or further out from the city centre, but I don't think they do. If the market were better organized then their behaviour would be dampened by higher taxes as their property values rise. Owners would then have an economic choice: resist density in your 'hood and pay more for that privilege, move somewhere cheaper, or allow more density which will keep costs flat.
Well, I did move out to a smaller town, pretty much as far away from the regional megapolis as I could while still being within reach of its metro area. But it seems that demand for "moving out" is such that it turns small towns into big towns pretty quickly, which kinda defeats the purpose. I'm not opposed to paying higher property taxes to keep the neighborhood low-density, but it's not like we even get that option.
In your case it's sounds like you're paying it to some extent: longer and/or more expensive commute.
Would you defend segregationists, who tried desperately to preserve the racial makeup of their neighborhoods, schools, and buses?
It's a rhetorical question of course -- I know you would not. My point is just that your logic can be (and is) used to defend any number of despicable causes. There's no reason our civil society has to put up with with this nonsense.
I agree with your example and agree that people wanting an explicitly racially segregated community are cynical and racist. But an similarly conservatively principled person may simply prefer a low-density lifestyle and act in ways that resist change for that reason. There may even be scenarios where we can look back and correlate responsible, well meaning, application of certain principles with undesirable social trends, but I don't think that alone invalidates the principle.
I don't know if I misread your comment, but it was odd to see a broad critique on conservatives and their principles:
> My point is just that your logic can be (and is) used to defend any number of despicable causes.
I could use plenty of sound logic to defend despicable causes, but fact that the cause is despicable does not alone invalidate the logic if the logic is sound. When sound logic argues for despicable things (which it often does) we introduce ethics and morality to judge whether we should actually act on the logical conclusion.
I think a better way to phrase your comment would be, "We shouldn't have to put up with despicable causes, period". I'm being a little pedantic, yes.
EDIT: clarification
People paint them as no zoning, but that's only on one specific measure.
https://marketurbanismreport.com/tokyos-affordable-housing-s...
> According to the website RealEstate.co.jp, average housing prices throughout Greater Tokyo have actually decreased since 2006. In 2014, the average price of second-hand condos was 27,890,000 yen, or about $232,914. This is above the U.S. median of $187,000, but is a steal when considering that average housing prices in many destination U.S. cities are triple or quadruple this amount.
http://www.newgeography.com/content/002923-the-evolving-urba...
Other way around. Zoning encourages horizontal growth by constraining vertical growth. Once supply has reached horizontal and vertical limits, prices skyrocket to reach equilibrium with demand.
> Otherwise, even if you build up to get more dense ala NYC, HK, Tokyo, or Shanghai, the area will just become more attractive and more people will want to live there.
Density implies noise, pollution, traffic, people, and a certain type of urban lifestyle... all of which decrease attractiveness.
Prices in big dense cities say otherwise, there is plenty of demand to be where all the economic action is, many people also prefer urban lifestyles.
The lack of zoning doesn't encourage density at all, if there is land to build out instead of up, everyone will prefer the former because its cheaper and can provide amenities like free parking. Zoning can prevent that, it can also discourage vertical growth but at the same time discouraging horizontal growth as well.
Prices just show urban areas are highly valued, there is no proof those areas defy supply and demand.
Density increases attractiveness for some people, but the trade-offs are clearly not for everyone given NIMBYism and higher prices outside some urban areas. Increasing supply may increase demand to a point, but there is still an equilibrium - density is still part of the solution.
> The lack of zoning doesn't encourage density at all, if there is land to build out instead of up, everyone will prefer the former because its cheaper and can provide amenities like free parking. Zoning can prevent that, it can also discourage vertical growth but at the same time discouraging horizontal growth as well.
Moot point, this entire discussion is about urban areas where land has already run out.
> if there is land to build out instead of up, everyone will prefer the former because its cheaper and can provide amenities like free parking.
"Everyone", except people that care about the time cost of commuting and the financial obligation of car ownership.
That isn't true. Houston is still sprawling, many cities off the coat have plenty of land to grow, and they do.
> "Everyone", except people that care about the time cost of commuting and the financial obligation of car ownership.
Of course. But property developers can make more money off the former than they can off the latter, if given the choice.
Price doesn't strongly correlate to density.
Prices are very high in low density areas like Los Angeles, Silicon valley, North Virginia, Palm Beach, etc.
Before Manhattan got "nice" 20 years ago, it was dense, and there was cheap real estate to be had. It was the gentrification that drive the price increase, not the density.
That is an incredible amount of personal opinion injected as fact.
The problem with this theory is that it's zero sum. If density attracts people and prices there rise, those people will have come from some other place. Then the prices in that place will fall and we still serve the goal of giving people an affordable place to live.
You can't increase demand in every place at the same time. It has to come from somewhere. And if you increase density everywhere at once, it also can't move from everywhere to everywhere. If one city increases density it attracts new people from other cities. If every city does it there is no net migration because the benefits accrue everywhere, so the demand in each place stays the same and the greater supply lowers prices.
The people can't come from rural areas because they aren't there to begin with, or because they can't leave (e.g. because they're farmers and that's where the farms are, or they don't have the money). To get a large enough influx for the demand to overcome the increase in supply, it has to come from places that already have a lot of people, i.e. suburbs or other cities. Which is where housing costs are a problem.
> This seems like a variation of the "luxury apartments are actually good for affordable housing" argument. Which of course is popular on HN, but not particularly true.
[citation needed]
If you build more housing then people move into it. Those people used to live somewhere else. The place they used to live opens up for someone else.
If the new place is above-average that means everybody gets to move up -- new supply lowers cost of luxury apartments from $3000/month to $2500, which means the previous $2500 apartments fall to $2200, which means the previous $2200 apartments fall to $2000 etc.
On the one hand, this means the effect on $750 apartments is relatively small because some of the benefit of increased supply is also going to people with $1500 apartments and $2000 apartments. On the other hand, that's actually what we need. It's absurd to have a giant cliff between regulated "affordable housing" and market rate housing. People at the 50th percentile need to be able to afford housing too.
And affordable housing away from a high demand urban center is no use to anyone and not going to attract anyone if there aren’t good jobs there.
But where is the extra population coming from? If you're talking about any other place, it reduces housing costs in that place. If you're talking about a rise in birthrates, that's theoretically possible (though by no means guaranteed), but the timescale is so long that there is plenty of time to build even more housing by then.
> And affordable housing away from a high demand urban center is no use to anyone and not going to attract anyone if there aren’t good jobs there.
Where do you expect the people to be coming from? If it's another city, that's still an urban center with jobs. If it's the suburbs, people can still live there and work in the city as they do now.
And they can't be from the middle of farm country because there aren't enough people there to be a major source of demand, even before accounting for the fact that they would have to both want to move to the city and be able to afford to.
As for where people are moving from other than farm country, there are plenty of economically struggling cities, towns, and suburbs.
The relevant numbers are relative to the status quo, not relative to zero. If we are expecting rising housing costs due to rising population, a method of lowering hosting costs is productive even if it only reduces the rate of price growth, since the alternative would be for prices to be even higher.
The only problem is if the method can itself cause population growth, e.g. by short-term lower housing costs allowing more people to afford to start a family. But that's the thing we have plenty of time to stay ahead of by continuing to build more housing.
> As for where people are moving from other than farm country, there are plenty of economically struggling cities, towns, and suburbs.
Except that they're in the same position as farm country. There aren't that many people there anymore -- Detroit has already lost more than 60% of its population since 1950 -- and the people who are there can't afford the cost of living in an expensive urban center.
The people who move into the city center when new housing opens up are predominantly the people who used to live in that city's suburbs.
Your argument would also imply a strong case for "economically struggling cities, towns, and suburbs" to eliminate density restrictions and attract economy-boosting density-preferring people to locations where housing is already more affordable.
The goal isn't lowering the housing price. If one person moves in and the price stays the same that alone is already a success.
That feedback mechanism is called a market and it coordinates via price signals and a desire to achieve equilibrium.
The breakthrough is using higher-level entities to constrain lower-level entities. What creates the problem is that you have a neighborhood zoned only for low density and the only people with a vote to change it are the existing homeowners whose collective voting sentiment is "screw you, got mine."
What's needed is a law at the state or federal level that any given fifty mile radius has to have a certain percentage of area zoned for unrestricted density.
Here me out.
I work from home. Yay.
I live in a residential area in US, near an elementary school across the street, with an apartment building in the way. I can hear kids out running around and playing in the yard. They get pretty noisy, but I'm fine with it.
Right next to the elementary school is an apartment complex where a guy seems to be running a motorcycle repair business based out of his apartment's garage. The garage faces the street, facing my home.
He tests the loud motorcycle engines about 1 - 2 times running a few minutes each time, about 3 - 5 times a week. One of these days, I'm going to super glue his garage shut so that he can't get the motorcycles in and out of the garage.
Ok, well, just kidding. I will just have to deal with it. But still, it is dang annoying to hear the motorcycle engines revving up as described above. I can't imagine how I can deal with a motorcycle/car repair shop across from my home.
Zoning laws are often used as a tool by people who practice NIMBYism, but the laws were introduced for a reason, and I support zoning laws because it would mean keeping certain types of businesses bit placed away from homes.
In one neighborhood I lived in... each building was 4 stories, with 5 apartments facing the road. There are two sides of the road. There were four apartment buildings per block.
5 * 4 * 5 * 2 * 4 = 800 homes being affected! Yikes!
But this case is more than that. So, this particular neighbor is not riding a motorcycle through the neighborhood. Other riders do and I'm ok with that. But this particular neighbor revs the motorcycle engines "while standing still to test them". A few minutes at a time, about 3 - 5 times a week.
Now imagine zoning law was gone. It might mean a user car mechanic moving in to operate a repair business, while leaving numerous unused cars on the street. It could mean someone opening a hair salon a door down from me. Or maybe another person opening a martial arts studio above me.
Zoning laws used as a tool by NIMBYers is not good. But the laws have a valid place in our society.
Housing is going to correct in a serious way, and soon.
Quantitative easing artificially keeping lending rates low screwed the housing market. That's in the process of correcting in a major way.
At the same time, the increasing rates are going to hit the stock market in a bad way, decreasing general liquidity for down payments.
The real headline is: "you can't keep high prices and increase mortgage rates amidst stagnant incomes."
A few other considerations:
Baby boomers are a huge population. The generations afterwards simply don't match their numbers. That generation is still primarily homeowners. As they age, that's no longer going to be the case, and the supply constrained market is going to reverse as houses get handed down or put on the market.
New developments and construction/renovation are targeting higher-end buyers, which makes affordable housing hard to find. But as everyone races to chase the higher end buyer, eventually there's going to be an over-supply and the market will tank. This was in part one of the contributing factors to the 2008 crash - new developments ended up as wastelands that eventually ended up as "affordable" housing because the buyers disappeared.
Personally, even though I'm open to buying a house at the moment, I'm staying the heck away from the market. I'm already seeing properties in my area sold a few months ago put back on the market initially for more, but then dropping the price below what they bought at.
We're approaching the cusp of the upward wave, and as rates increase, a lot of people that bought in the past two years are going to be stuck with whatever they bought into for a good while.
Millennials, as a group, have significantly less buying power than their Baby Boomer peers at the same point in their lives.
One source, but eye-opening if you can believe/trust the underlying data:
"Only a third of millennials own their own home, compared with almost two-thirds of baby boomers at the same age. It will take a millennial on average 19 years to save for a deposit, compared[0] with three years in the 1980s. A third of millennials will, it is predicted, have a lifetime of renting with less space, poorer conditions, longer commutes and more insecurity than the baby boomers experienced."[1]
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[0] https://www.resolutionfoundation.org/publications/home-impro...
[1] https://www.theguardian.com/society/2018/apr/29/millennials-....
Now, I see the market at a peak again and I'm not going _anywhere near_ this thing. I also contemplate whether I will ever afford a family sized place in a nice location. I am not sure but I wonder if I may have missed the boat on this.
I don't see a social adjustment to housing happening in my lifetime so at this point I'm just hoping that a major downturn happens during a time I'm not having a startup fail but instead on a rise from time off consulting or a successful company.
I wouldn't give up what I've done to have worked corporate for the past decade, but I'm also completely beholden to macro trends in housing with timing that feels completely like luck to me.
Houses at this point are owned by Boomers, some Gen Xers, and the richest subset of Millenials.
But this is quite an unstable situation. Everyone needs somewhere to live, but vanishingly small parts of the population need two places. As the Boomers either die or move to retirement homes they will need to liquidate their real estate in massive numbers, largely all at once thanks to the tight clustering of the Boomers.
There’s simply no way that this glut of housing will be absorbed by the richest groups of Millenials without sudden and deep price shocks, especially since Boomers appear to prefer suburban homes that the childless Millenials don’t typically want.
What’s interesting to me is what will happen politically. Boomer house owners have been very adept at using local politics to prop up their property values, the only notable failure was 2008. What kind of bailout will they ask for when their home is worth 1/5 what they expected?
I love my Baby Boomer parents, my aunts and uncles, and their friends -- but from a purely economic standpoint they've had their way for too long (extending to politics and societal-norms) and ultimately have hurt those of us in the later generations more than they've helped us.
You can see it in the movies of the time, too, starting with "A Summer Place".
To make your comment explicit, you are cheering on the death and decrepitude of millions of people. I hope your children are kinder to you.
Economically, I’ll consider it from a Machiavellian perspective:
The sooner limited, choice, resources are freed up for the younger generations the better. The Old were useful because they spawned, and raised, the young. As replacements, knowingly.
Taxes yes, but I am not so sure about death.
Are we about to venture into a trans-humanist discussion, or a spiritual one?
I’m open to either, but I’d like to set the preliminary scope to narrow the available attack surface.
They aren't mutually exclusive.
Boomers are an unusually large cohort that arrived basically at once. They are a much larger group compared to their parents and children. That alone guarantees economic and political distortions, as it means that an unusually high percentage of the population would be in a very narrow range of ages.
They also lived unusually longer than their parents too, by about 20 years so far. Their parents had to share power with the Boomers because they started to die out, with the Boomers this hasn’t happened at all. This means they took the mantle of power in unusually large numbers, didn’t need to share with their children, and lived so long that they’ve stunted the political and economic growth of younger generations. That Boomers are still clogging up the lower rungs of power is literally stunting the growth of Gen X and Millenials, which will be a problem when that cohort is forced to take over due to mortality.
Under normal circumstances no generation is ever in the majority, and the mortality of their parents and themselves ensures that they cycle into and out of power smoothly. This gives every generation the ability to transfer social and economic power smoothly, as well as maintaining a good worker to retiree ratio. The Boomers however have basically upset that balance by existing in a tight cohort and living unusually long.
So yes, parents shitting on “kids these days” is as old as humanity, but what we’re seeing with Boomers is actually quite new.
You know, in direct contrast to Millennials, whom they enjoy criticizing so much.
Both the expansion after the 2001 recession and the one after the Great Recession were strong in aggregate terms but unimpressive unless you were in a narrow slice at the top when you look at distribution; this is very different from the post-WWII expansion (even the 1980s and 1990s expansions were better distributionally than the later ones, though worse than earlier ones.)
The expansion that centered the Boomer experience and provides the experiential basis for the belief that effort is sufficient for success was different than anything Millennials (and even, to a lesser extent, Gen X) experienced.
In inflation adjusted terms, Millenials are far poorer than their parents for their phase in life on average. The latest number I can find is 20% less earnings than their parents at a comparable age.
Now Forbes argues that that’s because Millenials are extremely educated, their parents were working 4-8 longer than they were in their late 20s, giving Boomers more time to earn wealth.
While that’s certainly part of it, I don’t think it explains it all. The social contract around who gets the spoils of a growing economy seem to have shifted significantly since the 1980s. That an uneducated factory worker Boomer earned more in inflation adjusted money than a colleges educated Millenial indicates that something is up.
I don't think so:
https://www.thebalance.com/us-gdp-by-year-3305543 https://www.nber.org/chapters/c1565.pdf
The most spectacular rise in the standard of living in the US was in the 19th century.
Life expectancy hasn't increased by 20 years. Maybe 1 year.
Baby booms after terrible wars are common. I read that when the end of WW1 was declared, people were copulating in the streets of London.
The USA: https://data.worldbank.org/indicator/SP.DYN.LE00.MA.IN?locat...
And US life expectancy has dropped 1.5 years recently due to opioid deaths. Drop that from the equation and you’re looking at nice even 80.
I’m sure there’s a lot of legitimate quibbling to be done over my numbers. Obviously 20 wasnt the right number, but also obviously the general point stands: Boomers have lived a lot longer than anyone expected them to. If they lived as long as their parents had on average, we would be running out of them already.
As an aside. The above numbers really explain why social security and other pensions are in so much trouble. The greatest generation expected to receive only a few years of benefits on average, 1.4 for men and 4.4 for women. A tiny proportion of a worker’s lifetime wages would be required to cover these costs, better still since multiple workers would exist per retiree. Boomers on the other hand are legally entitled to a solid decade or more worth of benefits, an increase of an order of magnitude in time, not to mention increasing health costs. This combined with the unusually high ratio of retirees to workers, again caused by the unusual size of the Boomers, is a recipe for disaster.
A realistic figure for your position would be life expectancy at age 20.
You are correct in that infant mortality rates have had a huge impact on life expectancy as a whole. An infant in 1900-1902 could expect 49.24 years, while one born in 2003 can expect 77.4.
But non-infant life expectancy has risen pretty dramatically too. A 20 year old in 1900-1902 could expect to live another 42.79 years, while a 20 year old in 2003 could expect another 58.4 years.
This trend continues the further up the age bracket you go. A 30 year old in 1939 could expect another 39.67 years, while that's up to 48.9 by 2003, a solid gain of 9 years.
Of course, Boomers are not 20 in 2003, they were 20 somewhere between 1966 and 1984. So the gap between the Boomers and their parents is a bit smaller than that (although the gap between Millenials and the Greatest Generation is huge). By my very rough estimate, the gap between the Boomers and their parents life expectancy hovers around 4-7 years, depending on how large the age gap between the Boomer and their parent. The gap appears to get the biggest around middle age, presumably because of improvements to medicine and reductions in Tobacco usage.
I tried to list out the data points I'm looking at, but it just didn't work in sentence form. Instead look at the raw data at [0]. Table 11 is my source, but I was just looking at all races and genders. Presumably one would see different results once you start breaking it down by demographics.
I don’t follow your logic there at all
>...ultimately have hurt those of us in the later generations more than they've helped us.
That seems to be saying the things they have done have made the world a worse place to live in.
The trick is that the baby boomers made a lot of progressive changes when they were younger, and we shouldn't take that away from them. However those changes were largely made since they benefitted the younger baby boomers.
As they get older, they are still influencing society in a way that largely benefits them over others, and sine they are wealthier, that tends to be in the direction of wealth creation.
Of course, every generation does this, the baby boomers just have an oversized representation, they have a better ability to "distort" the market/political landscape.
Of course this is all about generalisations, there are plenty of anecdotes that will refute parts of these stories, but anecdotes are not trends.
You make it sound as being conservative is a bad thing. Alternatively, you could phrase it as, people become more conservative as they gain more responsibilities and experiences. Overall, I think it's a good thing, because it means that change happens slowly, which makes it easier to undo bad changes.
Welcome to Hacker News!
This is the project we’ve been working on for the last month or so: https://zerodown.com/
Housing land (houses are a deprecating asset) should be an asset class that mirrors population and economic growth.
The obstacle to building new housing is not the availability of land, it is the zoning laws. Even a geographically constrained place like San Francisco, surrounded by water on three sides, could accommodate far more housing units simply by building taller structures.
Or if we love constantly increasing prices so much, why not have it on food, computers and everything else?
We do have that, via inflation.
Replace housing, with salary and you will see why your argument isn't entirely right.
Should salaries/wages increase over time? yes. Should labor and employees remain affordable to employers? yes. Are both possible? yes.
The right question is who is paying, and what are they paying for.
Plus at the end housing is subject to the same laws of economics. Demand, supply equations, timing, value with regards to location and proximity to city enters, school districts etc.
You can't talk of home prices from one dimension alone.
The same is the case with housing. Its not like the entire USA has the same housing prices as Bay Area, CA. In fact its not even the whole Bay Area, CA itself.
The thing is there is something always available for everybody. But one might not get what they want. Just like how every one wants to be a employee at Netflix and earn $500K but can't.
Sure you can, as long as you have enough overall economic growth. It won't be a particularly great investment in the sense of growing at a faster pace than the surrounding economy, but it will at least keep pace, and you can live in it meanwhile, and you can borrow money for it, so it's leveraged, unlike most of your investments.
Overall economic growth may be "real" in the sense that is it growing organically, or it may be a complete fiction based on quantitative easing and manipulated stock prices. It is likely both, but like Bernie Madoff's scheme, the question will be whether you're someone who made a profit during the "good" years or those who took a bath once the scheme unraveled.
Edit for clarity: You’re probably right. I thought it would be an apropos time to slip in a blockchain joke. :)