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Comment by jdoliner | Hacker News Reader

Here's a little thought experiment that I like to conduct about housing. Suppose you had two politicians in a race. Politician A gets up in front of the crowd and says:

> If you elect me I'm going to work for the people of this community, I'm going to make sure that your most valuable asset, your home, keeps its value. In fact not only is it going to stay valuable, if you elect me it's going to get more valuable, under me your house will appreciate 5% every year.

Politician B then gets up and says:

> If you elect me I'm going to make sure that you have to be rich to buy a home in our community. In fact I'm going to raise the bar and make sure that every year you need to be 5% richer to afford a home than you needed to be the year before.

Based just on these two snippets, most people I've asked would vote for Pol A, but what they're saying is essentially the same thing. And that gets at the very difficult issue we're broaching here. Our concept of housing as an investment can't coexist with a concept of housing as a commodity that should be affordable to the majority of the population. We need to let go of one of them to achieve the other.

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While I agree that we need abandon the idea of home value appreciation, there are many things that make home ownership an attractive investment even in a zero real dollar appreciation environment

1) Inflation hedge 2) Mortgage= Forced savings plan. Lots of HNers are good with money, but it turns out for the general pop this really is a good savings vehicle (provided you don’t increase your debt via refinancing). 3) Sweat equity- you can invest labor into your home, often in a somewhat enjoyable way. 4) You “should” save money over renting in most scenarios that don’t involve changing households often, as you get the recapture the value a landlord would have to charge to cover vacancies, management, minor repairs (sweat equity), and profit margin. Obviously the real world might be distorted, but the theory holds in many markets still.

So really, you can have both, just with a slightly different lens and set of expectations.

Number four is the most important. Even if it depreciates over time, a house's expected service lifetime is measured in decades, if not centuries in some areas, and it makes sense to get as much good use out of a home as you can if you own one. I know people who flip their PCs every few months or so, so they can get back most of their old PC's value in order to buy this month's new hotness. I don't understand this mindset, and I use computer equipment until it stops working. And then I try to find ways to repair/revive it.

Well, if the majority of a community are renters, politician A's pitch theoretically would fall short also, compared to "elect me and I will create lots of affordable housing, rent will fall or stay stable and you will get more of your most valuable possession - disposable income"

The problem is even in that situation, the money of the home owner and apartment house owner speaks more loudly than the interests of the apartment dwellers.

The problem is what actually happens when there are a lot of renters is that politicians promise the existing renters they'll impose rent control, which is basically a cross-subsidy that transfers money from newer renters to older ones while increasing average rents. Tomorrow's new renters don't live in the jurisdiction yet, so they can't vote against it, and enough of a minority of existing renters can be convinced they'll come out ahead that way that when you combine them with the minority of land owners they achieve 51% of the vote.

Then the land owners can push through whatever price-exploding rules they want as long as they can maintain that 51% by promising the Judas tenants that their rents will stay the same.

I don't really have anything constructive to add to this conversation, but I wanted to drop a comment here to let you know how brilliant the term "Judas tenants" is - I am definitely going to find a way to use that (or something similar) in conversation on occasion.

That doesn't accurately characterize voter motivations. Many long-term renters also oppose loosening zoning rules due to quality of life concerns (traffic, noise, crime, pollution). It's not always just a money issue.

Furthermore, many renters believe that if more housing is built it will only be luxury housing that they couldn't afford anyway. Sure basic economics tells us that increasing supply ought to drive down prices for everyone, but at the individual level it's tough for people to make the connection.

>Many long-term renters also oppose loosening zoning rules due to quality of life concerns (traffic, noise, crime, pollution). It's not always just a money issue.

Most people who moved into a neighborhood because they liked it don't want it to change. Enjoying where you live gets you labelled as a NIMBY though. It's easier to dismiss people if you give them a sweet nickname I guess.

> Sure basic economics tells us that increasing supply ought to drive down prices for everyone, but at the individual level it's tough for people to make the connection.

It should be telling that the "housing crisis" only exists in the most desirable places to live. I don't believe there is a practical amount of supply that can be built to satisfy the demand for housing in these places. The supply of upper middle class people who want to live in SV, Manhattan or San Diego is more than enough to make sure the poor can never afford it. In fact, the only people I ever see overly concerned with it are the middle class who are just on the cusp of affordability.

There's no housing crisis in Blythe.

I mean we're pretty much all going to want to live as close as possible to the mountain of gold that is the jobs in those areas, poor or rich. A poorer person can more easily get a replacement job in SV than anywhere else. In fact when it was still somewhat affordable (I've moved away from SV) I've had a friend that was just a terrible employee, they couldn't hold a job - but they were NEVER unemployed, they stayed with some hotel or waitress position for about a month - got fired, hired again somewhere else before you could blink. Her husband, after living there long enough eventually got a software QA position and they finally moved up - poor to middle overnight. Mountain of gold.

In fact more housing will always be luxury. In 30 years it will be old and affordable, but only if the rich who buy new all the time move on which they will only do if they are allowed to build something new that is more luxurious.

Well, the question is how many of the host of worries US voters express (fear of XYZ evil-doers) are effectively just devices conveniently maintained and manipulated by media, consults and other moneyed interests.

> Sure basic economics tells us that increasing supply ought to drive down prices for everyone, but at the individual level it's tough for people to make the connection.

Basic economics tells us that more supply lowers prices if everything else remains the same. Which it won't if the area becomes more popular.

"The assumption behind a demand curve or a supply curve is that no relevant economic factors, other than the product’s price, are changing. Economists call this assumption ceteris paribus, a Latin phrase meaning 'other things being equal'. If all else is not held equal, then the laws of supply and demand will not necessarily hold."

https://www.khanacademy.org/economics-finance-domain/microec...

But even in the case where the area becomes more popular, a larger supply will result in lower prices than if the area had become more popular and did not increase supply.

Not necessarily and not from an economic perspective. One can argue that, but it depends on how building affects the market. For example by shifting demographics. But even so renters, without rent control, are only interested in the part of the market they can afford where they live. That is, the quantity supplied at their income level. Which is even more susceptible to changes. The assumption people are making about "basic economics" just aren't true. More supply just isn't a solid argument for affordability without supporting evidence, and especially not when it comes to housing.

Also, people associate neighborhoods in which there is lots of new luxury housing with neighborhoods in which prices rise fast. And they are not wrong, there is a correlation. Nobody builds new luxury housing in dying towns! But the causation is, of course, mostly not from the buildings to the prices.

Or, it would be low-income housing, and who wants /those/ kind of people around, anyway?

Gentrifiers want to live near the culture of low income people (restaurants, bars) while they push low income people out.

Yea i'd prefer all artists please

I've lived in a place with a significant number of Section 8 renters, and I would definitely have supported measures to require people in the area to be wealthier. No, wealthier people are not better people — but at the very least they have more to lose if, for example, they pass out drunk in one's front yard or burn down one's building.

And yes, of course, poor folks deserve to have homes to. But there was a period of several years where it was a nightmare to live where I was. The police were constantly present, one couldn't walk up to one's own front door without being accosted. It was terrible.

Who is going to build those low income houses if it's not an investment? Only the government?

Most of the modern world was built on the of ROI, industry and investing in the future to better one's life and family. I don't see what correlation it has to low income housing or anything else. Housing will always be a thing of value which people with invest and trade in.

As long as there's people who want it there will people willing to build it. They can get a valuable return, even if it's a modest one, but making those buildings. The interest isn't the problem.

When you artificially constrain supply and massively increase cost/risk of those investments then the only buildings that get built will be expensive ones where the margins are higher. While simultaneously reducing construction and related jobs, reduce utility of a limited supply of land, significantly increasing the cost of living for people of lesser means who still need to work where the jobs are, create urban ghettos by only allowing gov to the feasible creator of low income housing in large centralized areas. It's not rocket science.

We don’t seem to have trouble producing any number of things that depreciate in value: cars, furniture, computer. The ROI is in the difference between the cost of the inputs and the cost of the finished product.

The problem with housing is that efficient use of one of the inputs (land) is illegal. Fix this and housing will be available at a variety of price points, just like cars are.

Well, of course people aren't going to tell you they'd vote for Politician B, because that makes them look like jerks. But subconsciously, a lot of people do agree with Politician B. If you have a job in Palo Alto, do you genuinely want "Cletus the Slack-Jawed Yokel" to be able to move in next door? Have you seriously considered what sort of problems that would have on you and your fellow workers who want to get to sleep at a reasonable hour so you can be productive at work, when Cletus wants to shoot off fireworks all night?

>Have you seriously considered what sort of problems that would have on you and your fellow workers who want to get to sleep at a reasonable hour so you can be productive at work, when Cletus wants to shoot off fireworks all night?

i cant tell if this is satire or if you actually agree with it

You think this is satire until you live in a neighborhood where people do shoot off fireworks all night.

Well when are they supposed to shoot them off? They don't look nearly as impressive in the daytime. ;)

People always say "oh well if your neighbor did X you'd want zoning too". I've lived in those kinds of places and I mind the end-game of escalating lower class trashiness a lot less than I mind the endgame of upper middle class conformity. Bring on the fireworks, the ATVs, the loud music in languages I don't even speak and the drunken arguments.

I currently live in such a neighborhood that checks all those boxes. Honestly it doesn't bother me that much. An interior bedroom and solid brick exterior walls mean I don't hear much from outside while I'm asleep.

I agree zoning is the wrong way to address this. What's needed is a responsive police force that will address noise complaints. Unfortunately police in areas where these things tend to be a problem have more important things to attend to most of the time.

My dog almost pulled out of his harness and took off a few weeks ago because of some random evening fireworks. It's not a harmless thing.

someone's dog pulled out of their harness and attacked me because it didnt like the sound of my skateboard

it seems like people should be buying better harnesses

If you know of any, let me know. The problem is that any harness you buy will get more loose as it is warn, and panicked dogs can get out of a harness the same way you can get out of a t-shirt: line your head and arms up along the same axis and back up. A harness is only really effective if the dog is moving forward and away from you, not if they are backing away from you in a desperate panic.

A few weeks ago was the fourth of July, maybe it wasn't that random.

On the 4th, it wasn't random. The days following? I can't predict when fireworks are going to go off. (That's irrelevant anyway, as the dog needs to go out regardless of the date.)

Sounds like your dog is the problem here.

My dog is a 1 year old animal. Of course he is a problem. But he isn't the one exploding shit to amuse himself.

nah, i choose to live in a city with 3 million people. sometimes there's noise. sometimes the noise is inconvenient to me personally.

that's life

Rich people throw loud parties too.

The fact that he chooses the hypothetical bad neighbor Cletus makes me think he's satirizing the people who consider "devoid of any visible or audible evidence of people lower class than me" a prerequisite of a "good " neighborhood. See also: Poe's Law.

That said, his point is totally valid. When you say "affordable" most upper middle class people hear "poor people".

> Cletus the Slack-Jawed Yokel

Just wanted to point out that Cletus the Slack-Jawed Yokel is a character from The Simpsons who satirizes the type of person that people generally refer to as "hillbilly".

That was the first person I thought of when he said Cletus. I didn't know that was his full name. TIL

I don't know, but I will say that it's easy to indignant about these things when they don't happen to you.

When I grew up, we lived in an unincorporated area with minimal noise and other ordinances. A new neighbor moves in next store and basically spends 20-40 hours a week shooting at a bell and fixed targets from 7AM-?. They would use everything from .22s ("ding, ding, ..., ding") to various pistols, AK-47/SKS rifles, to hunting rifles daily. After church on Sunday most summers consisted of watermelon demolition via shotgun. My mom worked nights, and it made her life miserable.

Fast forward to my recent past. I live in a city, in a mixed neighborhood of 1-4 family houses. Some asshole decides to illegally convert his 2-family flat into a 10 unit SRO. So now we're stuck with people who are willing to live in that kind of situation (ie. mostly drug addicts and drunks) hanging around yucking it up all night. We were only able to shut it down when the slumlord guy decided to illegally convert the front porches into two more units, and when cited by the code officer chose to assault him.

I get the pushback to zoning, but it exists because of substantial minority of the population are assholes. My dad ran subsidized housing programs for years and built personal relationships with many of the stakeholders that I got to be a small part of -- the narrative on HN is that poor people are fighting zoning, the reality is that poor people are often the biggest advocates for it, but are denied due process. Nobody wants to live around slumlord apartments, or have industrial activity in their backyard -- but the most vulnerable people have the worst ability to secure representation and demand attention.

Background: I grew up and spent my young adulthood in poverty. I used a hypothetical character from The Simpsons, but I have in mind some very much non-hypothetical characters, including some who threatened my family after I complained about their playing loud music with a subwoofer in the wee hours of the morning. Nowadays, I've clawed my way out of poverty, and I pay a (very large) premium to have a house where I don't have to worry about that kind of stuff any more. I'm sympathetic to the problem of housing affordability (duh: I've been on the other side), but before you address that, you have to come up with a reasonable alternative solution to make sure the people who like partying all night go in one place and the people who like sleeping all night go in another place. Nothing to do with race or class, and it's super unfortunate that in our capitalist society, class is the only proxy for accomplishing that cultural distribution.

There was backlash about buildings in New York having two different entrances, one for the posh people in the penthouses and one for the other schmoes. I thought it was rather a good idea, everybody gets to live downtown but don't have to run into each other. Sometimes liberals aren't realistic about how people actually live life. https://nypost.com/2013/08/18/upper-west-side-condo-has-sepa...

I can sleep at Burning Man with ear splitting sound camps blaring mere feet from my tent. It's called earplugs, they work well and they're very cheap. I've used them to equal success at home on the Fourth of July, too. It simply isn't a big deal. Let Cletus light firecrackers and work on his car in his own drive way. Who the hell are you to tell him otherwise? Go live in an HOA if you want to tell your neighbors how they can and can't behave on their own property.

Just because something works for you, it doesn't mean it works for everyone else, or that everyone else would even find it tolerable.

I have a lot of difficulty falling asleep (exacerbated by even the most comfortable of earplugs), and a decent amount of difficulty staying asleep once I do. It is absolutely not unreasonable to expect that people adhere to low noise levels at night. If you want to stay in a place where people are exploding things outside your house, knock yourself out. You are certainly in the minority.

It is unreasonable. People comply with the law which set these noise levels, and you'll find is your not ganna be happy

There are those of us for whom 32db NRR earplugs are a necessity when sleeping in a normal house in a normal neighborhood, where we don't have such extremes of noise coming from the outside world.

We would be completely unable to survive in the world that you so casually dismiss.

I would encourage you to be very careful in choosing the kind of world that would be turned into your own personal hell.

>Go live in an HOA if you want to tell your neighbors how they can and can't behave on their own property.

Err, right, that's pretty much what I said in my post. Please don't run to legislators and banning HOAs.

Wait 'til they wake up your baby and toddler at OMG o'clock. At this point you value how considerate your neighbours are, because confrontation or police calls are inevitable if you don't have a good relationship with them.

Or your could tell your partner to stick earplugs in the baby's ears and see what happens...

The only actual choice being offered in this experiment is between having a guilty conscience or not, since A and B are substantively the same thing. As such, of course people are going to choose politician A. The choice of not treating housing as an investment wasn't even offered.

I think the point was to examine just these two politicians to show that the two messages are the same in different clothing. It wasn't to suggest that there wasn't alternatives.

I would even say that the alternatives have the same issue.

Politician C: I will make sure that housing remains affordable.

Politician D: I will make sure that your housing investment does grow.

But C is (loosely) the negation of B and D is (loosely) the negation of A. While there are other choices, the likely ones people vote are are the first group (A, B) verses the second group (C, D), normally with the options appearing in their nicer forms.

In short, affordable housing and having homes be worthwhile investments are at odds with each other in most issues.

That's what I was getting at. Politician C is making an argument similar to what the original article is making. If you tried to make the D argument: I would make sure that your housing investment doesn't (I think that's what you meant) grow. The NYTimes would probably have no interest in publishing it, but for all intents and purposes it's the same argument with different optics.

So just like real US elections. What's that got to do with it?

I'd be happy with my home value simply remaining stable at this point. Around here (Florida), home appraisals seem completely random - either granting large amounts of "free" equity to buyers, or destroying equity and killing deals for sellers.

One small point - these may be identical positions, but the wording aims at two different groups. Homeowners, and those who wish to become homeowners.

Of course, those who wish to become homeowners also want those traits the moment they sign on the dotted line. Often, if you're purchasing a (first) home, it's for stability. Steady or increasing home value provides stability. Decreasing home value only causes instability (for example, should your mortgage go underwater you will lose that home).

> should your mortgage go underwater you will lose that home

How did you arrive at that conclusion? I'm no expert in that field, but an underwater mortgage really means a decrease in mobility for a mortgage borrower (example: if they want to sell their home and relocate, then their sale proceeds will not cover their full liability). It should have no bearing on the ongoing affordability of that mortgage which is the primary cause of a mortgage borrower losing a home. What am I missing?

You're exactly right. You will not lose a home if the value of the house becomes less than you paid for it.

What happened during the crash was people bought homes they couldn't afford on "teaser rates" and assumed they could keep refinancing using the existing equity from the appreciating value as a way of getting a conforming mortgage at a better rate, or taking the equity out as a loan. When this didn't happen, they walked away from the home.

Many of these people who "lost their homes" didn't really lose anything! They were living in a house above their means, that they often bought with no money down, paying interest-only, or a "teaser" rate (sometimes with negative amortization!). Then when the house went underwater, they walked away, not owing a penny. _Then_ they declared: "woe is me--I lost my home!" when in reality they got a sweet deal.

Many even lived mortgage free for the year or two it took the bank to foreclose. Congress forgave the income tax on forgiven debt (normally taxable) and nobody was made to pay income tax on the imputed income of living rent/mortgage free while waiting for the bank to kick them out.

This is really unfair to those people who experienced it. From a financial sense you are of course right- they got use of a house for “free”. In a human sense, many people lost their homes- they were forced out of the places where the lived, where they’d invested their identity in, time, money, and emotion in decorating and “making their own.” Children were forced to change schools, and adults were essentially publicly shamed.

There were some people who definitely behaved the way you described, but many if not most experienced true suffering in a way that deserves compassion.

Nobody else can make you feel bad. That's one's personal psychological state.

I want my home to keep pace with inflation exactly. Since the only reason I would sell it would be to move to a different house I don't expect to get anything out of moving.

I agree. I recall being amazing at a speech by Obama where he was bragging about his efforts to “raise the price of your homes”. As a potential home buyer at the time, I was flabbergasted that a president would brag about increased prices. Clearly he had chosen a side between the home owner and the home renters-who-would-like-to-own-one-day.

I recall thinking, “would a president ever say such a thing about a gallon of milk? Or a loaf of bread?”

Thank you, now I understand why politicians are always only talking about subsidize housing!

They could get both sides votes, increase the price of houses and claim to do something for affordability without actually attacking the problem of supply and demand.

I'd comment there's a third politician, who might assert that your home is NOT your most valued asset, and proceed with ideas accordingly, considering politicians A and B were equivalent.

You could ask: Will you pursue policies that will make the cost of shelter higher or lower? In many areas the government is trying to do both simultaneously.

>Our concept of housing as an investment can't coexist with a concept of housing as a commodity that should be affordable to the majority of the population.

That doesn't have to be true. The old story is that existing areas go from rural to middle to urban, rising in price. Everyone keeps moving further out, so there are always new houses. This story depends on constant urbanization and population growth in all wealth levels. "All wealth levels" is the important part, there has to be a year-by-year increase in the number of rich people so that the acres of expensive land bought by rich people can also increase. This will fail if population growth or social mobility fails, and from what I've heard both are in the process of shutting down.

That was the model of LA and plenty of working class people retired with a considerable nest egg at the end of the process - in the 60s through the 90s.

The problem is you run out of rings. The three hour commute ring is unsustainable, unlivable and the trend-setters try to move into the center again, city size reaches a maximum and quickly thrown-up roads and bridges start to decay.

But this is the model the US set up and now it has painted itself into a corner in this fashion and many others.

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