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Comment by hayst4ck | Hacker News Reader

Housing can not be both an investment and affordable.

This might sound like a complex or intricate statement, but it is deceptively simple.

If you graph housing price over time, is the graph increasing or decreasing? If it is increasing then housing is a good investment and therefore becoming less affordable, if it's decreasing then housing is not a good investment because it is becoming cheaper and therefore more affordable.

It is supply and demand. As long as supply is restricted homes will increase in value, and if homes increase in value, that's a pretty good indicator supply is not increasing.

This is in aggregate, of course.

Homeowners want their homes to appreciate in value, and many, particularly old people, are using homes as their main vehicles of investment, so of course any policy to increase supply is bad for them. This creates an incredibly powerful political force.

How do you fight that political force?

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> Housing can not be both an investment and affordable.

Mathematically this isn’t true, as housing (even owner-occupied housing) pays a dividend [0]. So a house whose price tracks inflation (0% real price return) that pays a 4% dividend in net operating income still has a respectable 4% real return. Juice that return way up with a fixed-rate mortgage and you still have a great investment without home prices racing past affordability for normal people.

But that’s just the theoretical perspective. I don’t know if housing can be a good investment and affordable in practice.

[0] https://earlyretirementnow.com/2017/11/15/that-house-over-th...

This is something that only makes sense in the lunacy of housing-based-investment.

Your house might pay a dividend, but it has immense maintenance cost.

If the dividend from your house, on average, is enough to pay this cost, we’re in this hellscape.

This can be solved with subdivision, sure grandmas land is now worth 3M. But we will build a mid rise apartment building on it that regular people can afford.

Why do we need to lower our expectations now? Single family homes are what most people want. Why jam people into apartments if they don’t want to live in them? All houses should be cheap imo - it is just a few cheap sticks and some plastic after all.

Some cities obviously have no room to expand so the only option is higher density. Where that is not the case, build single family homes en mass until anyone can afford one. I’m a home owner now but would rather see people be able to afford what they want than to see my own 2x4s appreciate.

To clarify the issue isn't really shortage of single family homes by itself but single family homes nearby amenities (jobs etc...) Which while one can build massive freeways (Los Angeles, Atlanta etc...) eventually you'll run out of land a circular radius or end up having to build ever larger freeways to reach those suburbs.

I'm not sure if the massive freeways will really be needed. If a significant portion of people can work from home, I don't see much reason for it. I think the ideal future for many is single family homes in a resort like setting. If you are already where you want to be, there are fewer reasons to drive to other places.

That’s miserable for kids because they will always be too far from their friends at school and will be stuck at home with nothing but video games and tiktok.

When I was in school most of my friends lived in the inner suburbs and had good access to public transport so they could all meet up in the city and do things, while I was further out in an arguably richer area but without public transport so I was stuck inside missing out.

Many people don’t actually want single family homes. In my 20’s I was regularly on the lookout for efficiencies but I could rarely find them. It wasn’t about cost I just liked the layout more.

That is fair, no issues as long as we are building what people want - not what city councillors believe is best for everyone other than themselves.

I don't think I buy that without a bit more justification. On an individual case, or when analyzed very locally, there can be wild departures from the aggregate case, but if housing is rapidly increased compared to demand, in aggregate, how can that not plummet the price of grandma's land for the aggregate grandma?

Homes may be both affordable and an investment as long as median income increases faster than inflation.

Being a good investment is a different question and really comes down to your alternatives. You need to sleep somewhere, and renting includes many overheads. Depending on how you value your time and what skills you have managing your own home can be worthwhile or a waste. A carpenter may use their downtime between jobs to improve and flip their houses while a doctor is wasting time calling people for even the most modest repairs.

> Housing can not be both an investment and affordable.

If old homes were somehow better and more desirable, they could theoretically be both. But homes aren't like comic books or magic cards: newer-built ones are generally better in quality, often dramatically so.

housing should not be an investment. simple as that.

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