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Comment by ChuckNorris89 | Hacker News Reader

Real estate can either be a lucrative investment or it can be affordable.

Why are people continuously acting shocked when they realize it can't be both?

And why are elected politicians everywhere continuously shrugging their shoulders as if the housing market is somethin completely outside of their control.

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> And why are elected politicians everywhere continuously shrugging their shoulders as if the housing market is somethin completely outside of their control.

This isn't what's happening. Any politician that promised to lower house prices would be demolished by middle class people who

a) think that additional wealth from rising house prices is their just reward for being wealthy enough to own a house, and

b) will be in deep shit on their mortgage if house prices go down, because mortgages are just highly leveraged investments.

edit: whenever house prices seem like they might go down, governments inject huge amounts of tax money into the housing market. The people that tell us in the US that cancelling student debt is a subsidy to the rich will never fail to send direct subsidy to homeowners and prospective homeowners. In that way, government interventions into the housing market only happen as a bubble is popping, and their intention is to maintain bubble pricing.

We somehow have this belief that the "market" is some immutable law of nature like say, gravity. The "market" is based on behaviour, albeit behaviour that is heavily manipulated and controlled (somewhat invisibly - complicity or otherwise - to, seemingly, most people). We acquiesce and, when life is good for us, ignore the fact that we have to the power to change our behaviour and our beliefs and values and, thus, the market. But that will take hard work over time and much sacrifice. And so it goes ...

Market theory is like lambda calculus or turning machines - it's a framework for describing/framing arbitrary emergent behavior whose power comes from its expressiveness.

Even without (foreign) investment, it s a trap. Sweden has 63% homeownership rate and these people tend to like regulations that make their homes go up perpetually, and they vote accordingly. Happens everywhere in europe.

Best solution is deregulation. Housing is a primary need of humans, and we have been building our houses for cheap for most of history except the past 2-3 decades

Suppose a large, publicly listed real estate investment trust (REIT) owned a diversified portfolio of housing across the country and operated it all as rental housing. Tenants could buy shares in the REIT and thereby invest not only in their own house, but all the others as well. Less risk and more flexible than home ownership.

The downside for tenants is not being able to renovate. The upside is not being responsible for maintenance.

Imagine the state did this instead using taxes and eminent domain. Congrats, you’ve invented Vienna, one of the most beautiful cities in the entire world.

Hong Kong too.

I'm not familiar with this program. Could you give me a few keywords to search for, so I can learn about it?

> using taxes

Is it a tax credit? The key is allowing tenants to invest and get dividends from the portfolio, which they can then use to pay for rent (or whatever they like).

They key is to make housing incredibly affordable, such that it has no real overall impact on people’s wages or upward mobility:

https://www.politico.eu/article/vienna-social-housing-archit...

It's funny that it was sold as "affordability". Is it really more affordable to have a mortgage that lasts twice as long? Can we really consider interest only to be home ownership? You don't own that home, the banks do, Maverick!

If you invest your money on anything that gives , say, 5% yearly returns on your money, instead of paying off your mortgage, which used to be at less than 2% (but is not getting beyone 4%), you're just better off.

Say you start with a 10,000 mortgage, and your payment per year is 500, not including interest. By the end of the year, you'll have a 9,500 mortgage left. If you just invested the 500 and only paid interest on the mortgage (which was common in Sweden until a few years ago), you'll still have a 10,000 mortgage, but you have 525 in your pocket. You could now go and pay off some mortgage, resulting in you having now only 9,475 left (i.e. you're better off)... but why would you do that? Just keep investing that money!

Risk, I think. For most people this is a higher risk strategy long term than just "paying the mortgage". Depending on your life stage and overall position it can make sense but it's not for everyone.

It's literally lower risk to invest if your average investment return rate is lower than your mortgage rate. It's likely more of a psychological opposition, where people want to feel more secure with a fully paid off mortgage, even if it does lose them potentially millions in the course of their lifetime.

It's impossible to average 5% return risk-free (if mortgage interest is 2% or whatever). Saying "as long as your average return is higher than your mortgage interest then it's lower risk" is a ridiculous statement, the entire reason you're getting a better return is because you're taking on more risk.

A lot of the talk about how great mortgages were has the benefit of hindsight. Yes, if you have steady income, it would have been better to get a larger mortgage a couple years ago when money was cheaper (assuming you bought in an area that appreciates, assuming maintenance isn't crazy, assuming you aren't overly leveraged). You have to make several qualifying statements.

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