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Comment by Lendal | Hacker News Reader

This story reminds me of when I was a kid and the school bus would come. Often there were no seats because every seat was taken--one kid each. There was plenty of room there, but the kids who got on the bus first would ban together to prevent new kids from sitting.

Today these kids have grown up and own homes in the suburbs. New kids need to move in, but the kids who got there first refuse to let them build. That's what this story is about.

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I'm a renter but please, this is about families protecting the value of the primary asset that they hope to live on in retirement. Home assets don't skyrocket in value when there is lots of supply. If we frame this thing as reasonable-needs-of-renters vs unreasonable-wants-of-homeowners, then everyone is going to remain at loggerheads.

Since when is homeownership a requirement for retirement savings? What about IRA's, 401ks? That they chose to stake so much on a more volatile asset is not the fault of the people around them. Should cities sacrifice their urban well-being, pushing people out on the streets and guaranteeing lower-income people can never live there, for the sake of some elderly residents who put their eggs in one basket?

Investment in the market is incredibly volatile compared to real estate. That's why it's called "real" estate.

No, it's not. In 2008 we saw that that is really not the case. Housing is awful because it's relatively difficult to find an owner and transaction fees are extremely high.

You think that because there isn’t a ticker to tell you your home price every moment from 930-4pm on business days.

The house that the owner lives in is not an asset. It's a durable consumer good.

Wanting your home to appreciate in value forever is like expecting your 20-year-old car to sell for more than its sticker price. It really only works for art installations, created by a collaboration of architect, engineer, and builder, with some living space inside.

Framed in these terms, most families do not have any significant assets, and a hefty chunk of their resources dedicated to maintaining their gigantic shelter-providing consumer appliance.

If I'm not mistaken, most of the value of the home in places like the Bay area is not the house itself, but the land it sits on. In that case, it's super reasonable to expect it to appreciate in value, just like any other commodity. Arguably more so.

Location, location, location.

So you're saying that a house is not a good investment? That despite a trend in increasing property values over the long term, as we have seen in the data since .. the beginning of cities, that a price correction is coming where homes will return to ... prehistoric levels? I don't see it. Instead look at a sample of home prices in the last twenty years in the Bay Area for example, and graph it against the value of a sample of cars bought in 2000.

I suppose it's no surprise that tax laws everywhere do not classify homes as durable goods that depreciate in value.

It's the distinction between the building and the land. Buildings usually depreciate over time, but the land appreciates. In the bay area, the value of the land is significantly more than the building which is why so many people tear down houses and rebuild. Where land is cheaper people don't tear down and rebuild houses that have more life in them when they buy a house.

Residences are mainly exempted from depreciation, but commercial real estate is allowed to be depreciated because buildings do have a useful life.

Although recently in the Bay Area construction costs have skyrocketed so much that in the last 5 years my home replacement cost (for insurance) has about doubled causing the land value to actually drop.

Housing returns are so location dependent it's hard to generalize if housing is a "good investment". Historically, buying in the SFBA clearly netted a good return, but what about Flint, Michigan? On the whole, re-invested dividends in an S&P index fund would have better returns than nearly all housing markets -- about 11% annually. The math is more nuanced, since homes mortgages require interest payments, but also offer leverage (only ~20% down payment).

I think the point of the argument is that this trend is abnormal, and the increases we see are the result of (decades of) govt policies distorting the housing market.

The house sits on land and that is in a good school district or otherwise desirable location. That is worth something to someone and why properties become more valuable. When land and development is constrained you have to go up to support the density or out. All new communities are basically townhome communities across the US except in some places where land is not constrained... even then the homes are very similar and sit next to each other. It increases the affordability.. This makes existing homes on larger lots worth more b/c you get space despite needing to remodel the 1960s decor. But you get a nice view.

Wait, what? My regular family house in the Bay Area has almost tripled in 20 years. I'm not banking on that for retirement, but homes can definitely appreciate in value.

I think it's silly to try to separate the home from the land it sits on, unless you're suggesting that people buy homes with nothing beneath them.

"Do you get to the Cloud District very often? Oh, what am I saying, of course you don't."

> The house that the owner lives in is not an asset. It's a durable consumer good.

Thank you. I had already figured that considering one's house to be an asset is the wrong way to think about it, but lacked the words for how to then accurately describe what it actually is. "Durable consumer good" captures what a house is and does much better, IMO.

Getting this attitude more widespread is going to be difficult, sadly. The land that the house rests upon absolute is an asset, and the house thereupon can't be readily decoupled from the land (trailers and double-wides not withstanding). Thus conflating the actual asset, the land, with the consumer good it is presently being used to produce, the house, is a reasonable mental shortcut.

The location is an asset. But it's one whose value is largely dependent on the value of other nearby locations, and its connectedness to them. As that is something the owner cannot do much to influence individually, that's more a speculation than an investment.

I don't think the US will even be able to start on a tear-down-and-rebuild attitude until there is already a sufficiency of housing. As it is now, it appears to be in a cycle of new development, then decline, then revitalization, where redevelopment only occurs when property values in a place have already collapsed, and ruined those who weren't able to move before the wave hit.

The house is absolutely an asset and it will appreciate in completely different terms than a car.

Land entails a totally separate kind of economics than 'durable goods'.

Possibly, the physical home itself might be considered a 'durable good'.

See my comment above, but the economics of increasing supply are actually much more nuanced, and the majority of current owners would probably not see the value of their assets eroded.

I think this is the best point to shout out, in the Bay Area. Show how building projects can alleviate supply concerns for demographics who can't afford your suburban home, and how the increase in population will still help your home price because it will make your fat suburban land parcel look even more exclusive. Everybody wins something.

Rent seeking is bad for society, by economic definition. People relying on appreciating prices of their homes instead of investing into their productivity growth indicate a bug in the system that needs to be fixed (via increasing supply and possibly LVT).

That analogy isn't exactly accurate. To make it accurate, the kids sitting in the current seats would have to have paid a significant amount to purchase those seats. Also, throw in some kids who, for neurological reasons, become extremely distressed if they're forced to sit next to very loud kids. Because of this, they (or their parents) made a big sacrifice to secure single seats for them at great expense.

You're right, and I feel like this is something that is frequently either downplayed or willfully ignored.

If I live in California where home prices are sky-high, and I've saved up for nearly a decade for a house, why would I be willing to allow legislation that would likely devalue my biggest asset (by far) that I saved and sacrificed so diligently for?

This is a legitimate question, not trying to be a jerk. I'm genuinely curious what the argument against this is.

Increased development wouldn't necessarily devalue you asset, particularly if it's a single family house or a condo in a relatively low-density development.

Right now, the high cost of housing in the Bay Area is largely due to a couple of factors: 1 - high cost of labor. Rezoning won't change that. 2 - restrictions on right to build. Rezoning will reduce this. 3 - high cost of land. Rezoning will increase this, by making it possible to build more units of housing on a given area of land.

For most current homeowners, it's likely that 3 will outweigh 2. Developers will buy up some portion of single family housing stock (and low-density multifamily stock) to rebuild the lots with denser housing. That process will both increase demand and reduce supply of those types of housing, resulting in price increases.

At the same time, the average unit of housing will cost less, because there will be many more condos/apartments available. Owners of high-density condos would be the most vulnerable to seeing their asset values decrease. However, building big condo buildings is still going to be a complicated endeavor, so price adjustments will happen slowly over time. No one's going to get hosed, although their asset prices might go up more slowly over time than otherwise, or even be eroded by inflation in the long term.

At the same time, many of those condo owners will still come out ahead. They may be able to upgrade to a nicer condo than they otherwise could have afforded. They may also benefit from the second-order effects of lower average housing prices, in the form of reduced costs for non-housing items. If they run a business, it will be easier for them to attract and retain workers. Schools and other public services will also be better able to attract and retain quality staff, at a lower wage bill. Etc.

This is the type of detailed reply that I come here for, and definitely has reframed how I think about this situation.

Thank you!

The tough thing is of course you are right. It's obviously in your best interest to vote against new housing if you own a house. But it's not in society's best interest.

But it's really not. Homelessness and destitution also reduce property value. Lots of people leaving California because it's so awful.

> But it's not in society's best interest.

1. why are you so sure? What makes you an authority on the whole society's interests? 2. even if so, are you saying that collective interests trump individual rights? This is socialism 101. Government will decide who should live (and work) where, and who should own what.

1. I am not sure. This is all just my layman's interpretation. I'll admit I could be very wrong and have no expertise. I'm just discussing. 2. No, in general I believe there's a difficult balance to be struck between individual rights and collective interests. I tend to lean more toward individual rights actually.

I would love it if local governments would stop restricting the rights of local developers and allow the free market to determine what is built where more often.

> If I live in California where home prices are sky-high, and I've saved up for nearly a decade for a house, why would I be willing to allow legislation that would likely devalue my biggest asset (by far) that I saved and sacrificed so diligently for?

Rezoning would not devalue your house. You'd get more money for it in the long run. Better yet, you'd be able to instantly become a landlord (convert your house into a plex) and move somewhere else that satisfied your desire for a single-family home. Or you'd be able to market to a developer.

Plus, if you just kept living in your house, the value would go up anyway, as it always does.

Same reason people are willing to argue for any tax raises that will cost them money? Because they think the value of a functioning society is greater than the value of the personal assets they will lose.

Except the school bus is a public good. Are you saying that we should reframe housing as a public good as well and provide it as such?

There's no need to assume this. Even if you treat land & housing as a private good, you're entitled to decide what you do with your own land. You're not entitled to decide what other people do with their land. Zoning laws, development restrictions, and HOAs violate this principle - they give existing homeowners a collective power to decide what other homeowners can do with their private property. This makes housing a weird sort of public/private hybrid where you have the private right to protect yourself from change but also the public right to prevent change within your neighborhood, which biases everything towards the status quo.

(Importantly, no such restriction exists on population: within the U.S. at least, nobody has the right to prevent their neighbors or fellow citizens from having kids, while they do have the right to prevent their neighbors from building more housing units. There's an inevitable mismatch between reality here...)

Which is the fundamental problem with the whole YIMBY business: solving California's housing crisis requires dense housing, which is much more severely affected by what other homeowners and land-owners do than low density housing with large plots. The only way to avoid loud music blaring from the neighbouring units all day and night, or someone building a wall right in front of all your windows and removing all daylight, or an art gallery setting up shop across the street with an endless stream of visitors looking right into your home, or any of the endless other possible issues is through collective control over what others do with their property. Making everyone personally own the land needed to stop this happening is so inefficient that anything denser than American-style suburbs is impossible.

So long as this idea is a a fundamental plank of YIMBY-ism, all of the pretty claims about how high-density living doesn't have to be a dystopian hellscape are literally worthless, because every one of them relies totally on things outside the residents' control that the YIMBYs will be first in line to try and destroy.

It’s pretty simple. If I own property, I should be allowed to build a home for myself on it, subject to relevant zoning. You, and adjacent property owner, should not be able to deny my private property use.

Yet this is not the case in California.

That is the case in California. If you own property zoned residential and apply for a fully compliant building permit then it will almost always be approved (although fees may be high). Developers and property owners generally only run into long delays and battles with neighbors when they request variances or zoning changes.

It'll be approved although sometimes you get neighbors who would get upset that your house shades their lawn. Typically you want to design your house to be compatible with the neighbors and the neighborhood. Los Angeles is an exception generally which is amazing b/c you get these great wonders of architecture that appear out of nowhere. These tend to be on bigger lots though.

Oh, my sweet summer child...

https://twitter.com/eean/status/1228182747149025280

https://twitter.com/neversassylaura/status/96939949395841843...

https://reason.com/2019/01/16/san-francisco-property-owner-f...

I could go on for days.

This particular story is about a development which did comply with existing zoning but the neighbors try to stop it anyway, forcing local govt into a negotiation.

If you look at the photo of the lot you can see why: Beautiful rolling green hills. They didn't own the lot so they didn't have any right to stop the development. Nevertheless that's human nature.

That's why I chose the school bus example. You're supposed to get the part of the seat that your butt sits on, not the whole seat. But from childhood to adulthood, people just never change.

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