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Comment by betwixthewires | Hacker News Reader

Why do these people always frame a reduction in housing prices as a bad thing and a turnaround to upward price pressure as a good thing? This housing market has been crazy for over a decade and progressively so, a cool down is much needed and IMO the only way to avoid future collapse. A place to live and throw a ball around with your kids should not be out of reach for average people on an open market, prices are distorted and if the forces causing the distortion don't get fixed there will be a crisis.

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I think it's a psychological quirk related to loss aversion[0]. Essentially, we view a house as belonging to the owner the moment the ink dries on the mortgage papers and losing a house is objectively a painful thing. Most people don't see the other side: people like me who never owned a home to begin with. I've likely missed out on 100's of thousands in gains by not buying homes with low fixed rates in 2008-2020, but nobody writes sob stories about that. The prevailing narrative is that all the gains from the crazy housing market belong (in some just sense) to the people who happened to buy at the right time.

[0] https://en.wikipedia.org/wiki/Loss_aversion

According to most media outlets:

Rising house prices = good

Rising food prices = bad

But both are necessities for life.

Because there aren't generations of people betting their retirements on nachos.

Maybe they shouldn't be doing it on houses, either.

> A place to live and throw a ball around with your kids should not be out of reach for average people on an open market, prices are distorted and if the forces causing the distortion don't get fixed there will be a crisis.

One of the major forces that causes inflation in the market for single family homes is the broadly held desire for "A place to live and throw a ball around with your kids".

This is especially the case in cities that saw huge price increases during the pandemic and now are seeing major price declines as demand dries up.

The medicine, however much it may be needed, is being delivered by making the very people who have the aforementioned desire less able to purchase because of higher rates. It will be a great opportunity for all or mostly-cash buyers, though.

It's a bit more complicated though, interest rates are part of that function too.

Low prices & low interest rates: great for new entries to homeownership, but would require a surplus of housing Low prices & high interest rates: great for those who buy property with cash (wealthy people and corporations) High prices & low interest rates: great for existing owners High prices & high interest rates: generally bad for everyone except those able to offload existing housing thy own

It's because for many Americans their house is by far their largest asset. For some it's their only meaningful asset and basically is their net worth. A decline in housing prices is a decline in wealth.

Now I am not saying that is a good thing, quite the opposite. Many many problems stem from this reality. But that's where the fear comes from, and fear gets clicks and eyeballs.

It is because fear sells, frame it as a bad thing and you get more clicks, anyone else complaining about it being the fault of capitalism or blame it on the NIMBYs or whatever just have an axe to grind.

I agree on a personal level as someone hoping to buy a home at a reasonable price in the near future, but you have to remember that most of the wealth of middle America is in the form of real estate. Sure, it's good that we're undoing excess, but that process will be painful for the economy as wealth effects are removed. It is a bad thing in the short term, even if it is better in the long term.

In capitalism, growth is the only meaningful metric. Housing has now been commercialized, too, after all.

Rapidly rising housing prices is a sign of impeded growth.

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