Comment by slg | Hacker News Reader

Comment by slg | Hacker News Reader

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> it's people accurately recognizing that their home is the biggest purchase they will ever make in their life, it's almost completely done with debt, and most don't want to end up underwater.

What is those people's second biggest purchase which is also usually done with debt? Does anyone believe that the government should enact policies to ensure that car prices always increase so they would be a better investment? Houses obviously have a longer lifespan than cars, so I'm not suggesting they should necessarily depreciate the same way, but there is also no reason housing should always be appreciating.

We have this idea that the price you sell your home for should always be higher than the price you bought it for. There is no reason for us to preserve that idea beyond the fact that people have now internalized that idea and plan their financial lives around it. The longer we allow that to continue, the harder it becomes to change, but the idea itself is not some fundamental requirement of society.

The goal should probably be something close to price stability. If prices bounce all around, up and down, people pay more attention than if they were just kind of 'there', and you could buy or sell whenever the need arose in order to move into housing that better suits you at a given point in your life.

Exactly. True stability is likely unattainable, but I would love if it was a governmental goal like a steady small positive rate of inflation is a goal. There will be temporary changes like the last year with inflation. But for the prior 30 years there has been a very steady roughly 2-4% rate of inflation. Could you imagine if the federal, state, and local government fully committed to steadying housing costs? It would be amazing. It just seems politically impossible to get to there from here because of the people who would be hurt by that transition.

The government goal already is 2% inflation per year. That’s why this is happening ...

I'm not sure exactly what the "this" is in your comment. The government has largely accomplished their inflation goal as that has been roughly what inflation was for 30+ years, but they aren't all powerful and can fail that goal like they have in the past year.

The government could put the same energy to keeping housing costs in pace with inflation. They don't. Instead, the government tries to keep housing costs rising faster than inflation because housing is viewed as an investment. They have been successful in that goal as housing is greatly outpacing inflation.

In order to get inflation up to 2% the extreme measures of the last 15 years which drove up the cost of housing to such extreme heights in the first place were taken.

> The government could put the same energy to keeping housing costs in pace with inflation. They don't

That's exactly what they did. Not just housing, but also food, cars, ... It's just that housing costs respond a lot better to credit availability than most other things. And yes, generally it's things that are seen as an investment that respond to credit availability.

The government has no direct control over any kind of pricing except the price of money. Also known as credit availability. They raise house prices 5% per year, so that when food and fuel refuse to adjust to inflation, it averages out to 2% per year. This caused larger price rises on everything that is seen as an investment (houses, education, cars, ...) than on things that are not.

>In order to get inflation up to 2% the extreme measures of the last 15 years which drove up the cost of housing to such extreme heights in the first place were taken.

Housing costs greatly outpacing inflation is not a recent phenomena of the last 15 years. In fact, home prices increased faster in the prior 15 years than the last 15 years.

>The government has no direct control over any kind of pricing except the price of money.

I'm not interested in debating the meaning of "direct control", but one rather direct control they have is the federal government could repeal the mortgage interest deduction. That would immediately decrease the financial incentive to buy a home therefore decrease demand and lower prices.

> ... home prices increased faster in the prior 15 years ...

Only because the averages get pulled down in places where people don't want to live. Plus effective inflation going up (you know, the inflation including housing and education, not the made up government inflation number)

> I'm not interested in debating the meaning of "direct control", but one rather direct control they have is the federal government could repeal the mortgage interest deduction. That would immediately decrease the financial incentive to buy a home therefore decrease demand and lower prices.

Repealing it would create a big advantage for investing in homes rather than buying them to live in them. This sounds to me like the opposite of what you want. But maybe I'm an idiot.

Reality: for any resource there is supply X and demand Y, in specific markets.

X > Y: it matters a lot less what the exact policy is.

Y > X: someone will be very, very unhappy.

Rent prices, what we really care about, are not determined by who owns a house. They are determined by the amount of houses.

Resale value is probably one of the number one things car buyers look at when shopping.

No one expects that resale value to go up. No one suggests that the government creates programs to prop up that resale value. People understand that owning a car gives them value and they are fine paying the difference between the purchase price and the resale price for that value. Why should homeownership be different? Why should homeownership not just be free but profitable? It makes no sense other than homeowners were told it was true, demand it be true into the future, and they (now joined by institutional investors) are a powerful voting block.

> No one expects that resale value to go up.

Except until you have a chip supply crunch, and used cars are selling higher than their original buying price.

Look at what people actually do, not what they say for cheap virtue points online.

Reliability is way, way down the wish-list. People don't really consider it until all the other key features they want are very solidly satisfied. And even then the take rate is maybe 50%. For every jerk in a 4Runner or Pilot there's an equal and opposite jerk in a Landrover or Tiguan.

Cars, especially in the first few years, are extremely reliable. So a less reliable new car is still amazing when compared to a 15 year old beater.

The people in Landrovers care less about losing money than the people in Honda Pilots, because they have a lot more of it to spare. I'm not sure they're comparable consumers for this reason.

I look for something that fits my mission needs and assume I’ll drive it until the wheels fall off.

However I’m likely not to be representative.

There's two groups of people I can think of that do this:

- People who like to frequently change cars, not so frequent as to lease but still prefers to let it go between 50-100KMi. (Contrast folks who sell past 100k or drive cars into the ground, they care more about long term repair cost.)

- People who are using resale value as a proxy for reliability.

I suppose 'lease-e' may fall into this category, also by proxy (as high resale value means lower depreciation, lower lease cost.)

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