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Comment by jeffbee | Hacker News Reader

No, investors bought 100% of U.S. homes in 2021. The entire housing economy is structured around expected zero-risk capital gains. Every buyer is an investor.

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Housing as an investment is in direct contention with affordable housing. If housing is going up faster than inflation, it will forever be more and more out of reach.

We need massive zoning reform, cut back on NIMBY enabling policies, and massively reduced mortgage financing. People hate on them, but 5+1 housing can enable large walkable cities, which are much better for the environment and allow people to build roots in their community through property ownership, families, and long term residency.

I get your point, but the house you live in is an expense, not an investment. The fact that for a long period of time it seemed like an investment because home values kept outpacing inflation made this common thinking, but there's no reason to assume that it will go on forever. We know the line doesn't only go up because we saw it crash in 2008 and it wiped out a lot of paper wealth. The government has done everything it can think of to continue pumping those numbers higher but we don't know yet if those actions have completely changed the economic fundamentals of home ownership.

Sure you can argue this is how it should be and society would benefit (I’d agree), but it’s not how it is.

Housing is scarce and kept scarce by owners through NIMBY legislation.

That scarcity drives prices up.

Plus 30yr fixed rate interest in the US makes it a decent leveraged bet and has weird market effects in addition to that.

This sounds ridiculous at first, but there some truth to it. Even for first time home buyers, the debate between buying and renting typically is about how good an investment buying is. If housing prices remain stable or even drop slightly every year, renting would be much more prudent choice in current market conditions.

> Even for first time home buyers, the debate between buying and renting typically is about how good an investment buying is.

I think this is true, but is missing some nuance that changes the equation. The conversation is /and should be/ about the fact that buying w/ a mortgage means that the payments you make every month create equity (ownership percentage) and have an end date where you fully and outrightly own the property you live in. Rent is a situation where the payment never ends, you never gain any ownership or equity, and you will never own the property no longer how long you rent. Classifying this as an "investment" is true, even if home values don't outpace inflation, because its an equity asset you can later sell and recoup your equity.

But that conversation is not remotely the same thing as foreign investors using Western real estate to launder money they smuggled out of corrupt dictatorial regimes and Wall Street colluding with each other to buy up housing stock in a rent-seeking bid to extract as many pennies as possible, even if it puts working citizens on the streets.

I think making the false equivalence between them does a disservice to home buyers. While it is absolutely true that resident home buyers should value a property primarily /as a place to live/, their understanding of the economics of renting vs buying does not make them part of the problem. The problem is systemic and starts with allowing foreign corporations or foreign-directed corporations to buy real estate and the existence of REITs.

You're not entirely wrong, but some people just want a house and are less interested in the investment aspect.

>>You're not entirely wrong, but some people just want a house and are less interested in the investment aspect.

I agree - I personally never thought of my house as an investment, doesn't really do me any good that it went up in value unless I plan on selling it - and then I just need to plow the money into something equally inflated value since I will still need a place to live. Maybe when I die and my kids benefit, but what my house is 'worth' doesn't mean much to me while I am alive.

I get what you're saying and you're right but that's overstating it. There's no expectation of zero-risk gains. By definition that doesn't exist.

Of course, but the government will do absolutely everything in its power to make homevoters whole, including, if they get the chance, inflating the entire economy to catch up with bloated home prices, thereby devaluing the savings of people who don't own their homes.

You could say that by definition there’s no zero-risk capital gains, but that doesn’t mean that people don’t expect it.

I've said this before in another thread. The way I square this conundrum is with the notion that you are born short housing. Your parents cover your short position when you're growing up. But as an adult, renting is also continuing to short the market. Buying your first house is therefore just covering your short position.

Its buying a second house that makes your position long.

This is a good way to quantify the mechanics of it

Yes.

It'd be great if Gordon Gecko were the boogyman but the fact is that Mom and Pop petite bourgeoisie are the ones responsible for the disaster we're facing.

> No, investors bought 100% of U.S. homes in 2021.

Clearly that's not true. A lot of people bought homes on the desire to live in them and for their children to have a stable place to grow up.

Investor means someone who bought the house strictly as a means to make money with no other motivation. Like buying a share of stock.

Most individual homebuyers don't view it that way.

What gp is saying is that buying a house is a investment regardless of intention, which is true from a financial perspective.

There's a fundamental between someone who is living in a home they buy and someone (or some company) who is renting it out.

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