In the future you will live in a tiny little house
io9.com
io9.com
Sigh. Moral suasion does not work and has never worked to promote environmental objectives. What works is a rebalanced system of incentives and disincentives in which consumers make decisions.
The median house size went down over the past couple of years because we've been in a sharp, deep recession triggered in part by the collapse of an overheated housing bubble, not because "people are starting to get a clue" that they don't need 4,000 square foot houses.
Um, no. A balloon payment or variable APR would not hurt you if you bought a smaller house that you could afford. Neither would short term (read: 1-2 years) job loss [1].
It's fun to blame the banks, but real estate speculators (aka "homeowners", as the media calls them) are just as culpable.
[1] There are likely to be several recessions over the next 30 years, and you have a reasonable chance of losing your job. If you don't plan for this, it's your fault.
So lets say I bought a house during part of the bubble well within my means at the time. I put 20% down, and then had a fixed rate mortgage. I had 6 months to a year of living expenses in cash in my bank on top of the cash I had to put down on the house.
I lose my job, 1 year goes by, 18 months goes by. I have no more emergency fund, and the house is now worth less than I bought it. I'm fucked. I have no money left and I owe a huge amount, my mortgage is under water, and up until that moment I made completely responsible decisions except that I bought the house at the top of a bubble that I didn't know existed. I hypothetically had not only 20% down, but an emergency fund equal to 2 years mortgage payments plus food and utilities (which at that point you have close to 40% of the value of the house in cash, who had that?)
Compare that to somebody who had no money in the bank, put no money down, lost their job, but the house had appreciated in value. You sell the house quickly, net about no money gained or lost, and move back into a rental apartment. Really its not that big a deal. I could even move in with a friend for free while I find a job.
The big assumption that screwed so many people was that house prices always rise. You can be perfectly responsible on every move, assume house prices always rise and don't realize there is a bubble, and be completely screwed.
You can also be completely irresonsible, luck out on your timing of when you buy and when you sell, and come out ahead like a bandit.
Actually the conclusion I come to from that is the "safest" option is to put nothing down, take the longest mortgage you can at the lowest rate, and have heaps and heaps of cash in the bank. Take the 20% you could have put down on the house and just keep it safe. You will pay more money over the life of your mortgage but if shit hits the fan you can survive for months or years without going bankrupt, which is counter to the advice of minimizing the cost of your mortgage over the lifetime of it (i.e. lots of cash down, shorter term)
(Notice how virtually all my investments are now strongly correlated with each other? My investment, revenue stream, and ability to make margin calls will all tank simultaneously?)
Would you also describe me as making "completely responsible decisions"?
Replace $MY_COMPANY's share price with some variable describing the local economy, and you've just described a mortgage. Buying a house is a really bad investment strategy for most people. The only exception is if your goal is to lock in a fixed rent on a fixed address for 30 years into the future.
I find it hard not to blame the bankers, when you have a party that clearly lacks the knowledge to understand the realities of the market and a party that clearly knows that they are inflating the market then you have to place blame on the party that willfully acted while possessing full knowledge. Where the homeowners greedy sure, and I would venture to guess that the number of homeowners that did so out of greed where high but they where also making decisions on information that was reinforced over years of indoctrination information that the bankers willfully exploited with full knowledge that the realities of the market where in sharp contrast to the homeowner perceived reality of what homeownership meant.
So while you logic is correct it omits some very important facts the biggest one being that the product was not sold to an investor but the average person.
Your analogy just doesn't factor in that you have to pay for housing in some manner. Then the argument is rent vs buy, I'm currently on the rent side of that fence, but for plenty of people the rational, responsible, decision is to buy.
You haven't actually addressed my original point, which is that blaming the people who got screwed in the housing market ignores any facts about how they got into forclosure. You had plenty of people that put 0 down and their income could never possibly pay for the loan they took out, those people are cupable. There were other people that had a mortgage they could pay for, a large amount of cash in the bank, and were trying to pay off the loan in good faith and got screwed by circumstances outside of their control. I don't blame the people who got screwed by a black swan event they didn't see coming. A lot of people whose job is to invest every day all day missed it coming.
Should people who signed ridiculous deals be blamed? Absolutely, but that's not the majority of cases.
Make up reasonable numbers and apply the Kelly Criterion to evaluate whether buying call options on a home is reasonable. Wikipedia even gives you code: http://en.wikipedia.org/wiki/Kelly_criterion
From 2007-2009 I lived in a tiny ~180 square foot apartment on Saint Botolph's Street in Boston. It was fairly well laid out fortunately, and I was able to fit a ton in there, including a desk with 36 rack spaces, several keyboards, a 5-piece drumkit, 8 guitars, two guitar amps, a 700 piece vinyl collection, a few hundred books, a wine rack, a twin bed, filing cabinet, an aeron chair, etc.
When it was clean and together it was very nice and didn't feel crowded or cluttered at all. Fitting more than 4 people in there though was exceedingly tight.
I'm actually always impressed when I go to Ikea. The 'rooms' they have setup on the floor seem highly functional and spacious, but are actually pretty small.
The worst thing that kills most small apartments is poor layouts, too many doors/windows, all the footage being in the wallway, poorly placed radiators, inaccessible electrical outlets (only one in the room or something silly like that), or random pipes right in the middle of the room. One of my friends has a random 4 inch pipe in the middle of her bathroom in her NYC apartment, and another in the hallway. Worst architect ever. You just have to squeeze around it.
I absolutely abhor these. Even with the insulation wrapped around it you would still risk getting burned pretty badly if you were to mistakenly brush your hand across it.
They took what was a great amount of space for a loft and turned it into an oversized place to put my bed and a smaller place for where I spent 90% of my time. Without the arbitrary wall to make it a "one bedroom" the place would have been fantastic, even if people saw that I had a bed.
Quote:
“People’s reasons for living small vary a lot, but there seems to be a common thread of sustainability,” Shafer said. “A lot of people don’t want to use many more resources or put out more emissions than they have to.”
If we can get these classified as temporary dwellings, it could be both an energy efficient way to house people who are currently being stiffed by society/the economy, as well as a great big fuck-you to the housing market.
True that. People in Hongkong or Japan are already living in teeny tiny house/apartments. And some go to extreme lengths to maximise their space. (http://www.youtube.com/watch?v=Lg9qnWg9kak - Apartment with movable modules in Hongkong )
Even further into the future, people might spend their entire days in virtual environments so 'real space' will start to matter less.