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Comment by bettercallsalad | Hacker News Reader

Ah classic wsj opinion pieces. Where their opinion columnists also said inflation would be transitory and we need more inflation. not less. They don’t realize the housing market in Netherlands, Canada, Australia are far worse. How come?

They forget much like their “expert Economists” like those scumbag Fed governors and Nobel laureate Paul Krugman - they had loose monetary policy for over a decade. The right time to raise rates were 2012 when asset bubbles were still not so bad, not after 2021 when finally wages started to catch up just for once. But oh no, wages can’t rise, we need to finally raise the rates now. INFLATION they screamed finally. All along ignoring asset inflation. Ever wondered why house prices aren’t part of their “hedonic inflation measure” whatever that is?

https://www.bloomberg.com/news/articles/2019-03-21/powell-ai...

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"Oh why won't someone think of the poor house prices!" - wsj

As a homeowner I don't mind if house prices fall, that means more people will be able to afford to live in their own house. I still get to live in a house. It's a win win, until I try and sell my house and small amount of that imagined house value is gone, but maybe living in a farer society makes up for that.

Unfortunately though you seem to be in the minority. There is ganging up on the "boomer" generation in Irepand for example because they buy up all the properties they can specifically to rent out for exorbitant prices.

This is encouraged. So when there is legislation or regulations that would reduce the price inflation of properties they are the first to complain. They usually have more political influence too by way of being regular voters etc. And so instead of the mentality you share, they don't see owning properties other than a means of "semi passive" income.

Do you have a source for your assertions about the Irish property market? Like, as a landlord in Ireland you'll pay 52% tax on your rental income, and while you can claim tax relief on the interest, it doesn't make a lot of financial sense to borrow relatively expensive money for rentals.

It made a lot more sense 10 years ago, but the data would seem to suggest that it's not a massive driver of sales right now.

Like the Irish property market is insane right now, but I suspect that much more of the rental purchases are driven by small investment companies as that makes much, much more sense from a tax and overall expense purposes.

The rental market in the USA for sure is greatly distorted by the people who think there is “guaranteed easy money” to be made. They’re the type who say “mortgage $1500, rent $1600, it’s free real estate.”

Sadly for them, eventually they learn why professional landlords want to see debt service be 50% or less of revenues. And it’s not because they get to pocket 50%.

It’s been covered up because appreciation has been so high as to cover the bad accounting, but a few years of increased rates and near zero appreciation will put the hurt on them - and then watch out!

If you're a landlord you're most likely not borrowing large amounts on the properties you're renting out. Its more common that those properties were bought years before when prices were achievable.

There are some good statistics here in the CSO (Central Statistic Office) for Ireland.

https://www.cso.ie/en/releasesandpublications/ep/p-cp1hii/cp...

A bit further down you can find the age gaps between "Outright ownership"

"Figure 3.5 Tenure status by age of householder, 2016" Particularly glaring.

> I suspect that much more of the rental purchases are driven by small investment companies

On this topic, yes for new builds, pretty much investment companies will come in and buy them up prior to being built. This has always been a thing, but is not helping the situation for normal people just looking to buy somewhere to live.

Edit : Another infuriating thing they did was for the 2022 Census, the obfoscuated so much of the data, made a presentation in powerpoint and after easily 20 mins of searching : https://www.cso.ie/en/releasesandpublications/ep/p-cpp2/cens...

They managed to take a master class is bad Chart/Informatics design. For the age variations, I swear they changes the green RGB but 1.

Speculation on housing is really the super-heater I think. Housing prices in major cities seem to be based on a different market to demand for housing as a place to live.

It sucks how homeownership is supposed to serve this dual role of "having a place to live" and "having an infinitely appreciating asset" when the two are fundamentally at odds with each other.

I'm with you, though—as long as I can afford to live here, the value of my house doesn't matter so much because I like it and don't want to sell it. But part of me knows (and hates) that this house is also the biggest slice of my net worth, and its value heavily impacts any future financial leverage...

having an infinitely appreciating asset

It wasn't always viewed that way in the US until the past few decades. And in many places, it's not viewed that way at all, more of a "store of wealth", rather than a "good investment".

At best housing should roughly keep pace with inflation itself (and this is what it did for decades, perhaps even centuries depending on how you account for things) and therefor should kind of be “money losing” if you count depreciation and repair (and ignore the value of having a place to live).

And until quite recently, in most of the country, this basically help, once you factored out size increase (modern housing stock is much larger on average than housing stock from the 50s or even 70s even as families are smaller) and also factor out mechanical improvements - modern houses are built better in many ways that do cost more.

I wish more of the indicies that track this stuff did more to track the land and the improvements separately.

Because most of the increase in valuation of land comes from the old farmhouse now being inside the city boundaries.

At best housing should roughly keep pace with inflation itself

That's Robert Shiller's claim when you look at average home prices across the entire country over a long enough period.

Contrary to popular belief, there has been no continuous uptrend in home prices in the US and the home prices show a strong tendency to return to their 1890 level in real terms. Moreover, he illustrates how the pattern of changes in home prices bears no relation to changes in construction costs, interest rates or population

But this doesn't seem to have been the case since I bought my first house 25 years ago. Prices have constantly been going up. I'm living in a west coast tech city, but it looks to me like all the tech cities have seen very steady home prices on a few years moving average, more than inflation. My house is 4x over those 25 years. A 3% annual increase would be about 2x over 20 years.

Am I missing something in my inflation calculation, have we divided into areas with steady growth and increasing incomes vs say non tech cities without rising incomes and people moving there or is it something else? Because there are lots of cities, like stereo-typically mid-west cities that have struggled to maintain their population after major manufacturers leave.

You're missing across the entire country and long enough period.

Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological.

Of course, at that zoomed out view it becomes "houses are more expensive where people want to live" which is kind of tautological.

The conclusion goes beyond that. The argument is that local areas may see price inflation, but over time they trend towards the mean (you can't have the average be inflation otherwise).

So basically people may enjoy an increase worth of their property, but it's not a long term trend but rather something that happens in distinct periods, usually followed by a price drop or stagnation that pulls the average back towards the mean.

And that is a necessity or you quickly reach absolutely insane conclusions, such as the average house costing 500x the average salary, and 200x the average income to rent.

It's simply impossible on a long term over a long area.

And, as HN commentators, we have been accustomed to appreciation in "our areas" for nearly 40 years now - and that has covered many "mistakes" that may not be covered in the future.

I think the point is that telling people that real estate, over the long term, appreciates barely more than inflation is something most people don't realize.

It's worse than that, they refuse to believe it - no matter how much data you pour on them, or point out, etc, the myth that real estate is the easy path to perpetual riches is ingrained in (US) society.

I disagree that desirable places aka tech cities are decreasing to the mean on price increases over the last 25 years. But I really need evidence instead of my opinion.

I think that in the expensive tech cities (for lack of a better description), like seattle, austin, SF/bay area, prices have generally increased over time much faster than inflation, and they aren't losing that lead. It's actually true that people can hardly afford to live in those places because hourly wages of $20+/hour is just not enough to pay for housing. Using a multiple of avg salary seems wrong because where does the average come from, because avg in that area?

It's simply too expensive for most regular workers, teachers, police, but also that person working at a coffee shop can't afford to live there. It's not a good thing. I recognize we need to build more housing and I'm part of the problem because I bought a house in mine a long time ago.

You can't both see housing as an investment and expect it to never fall. Investing carries risk

It's also worse in Norway, and not just that but even remote places in Norway. It's going to be everywhere, isn't it? Where exactly is housing cheap now?

Very very remote places in Canada in terms of absolute price

You can find fairly cheap housing in East Germany (not Berlin of course). But that’s mostly because people don’t want to live there, there is way less economic activity.

Places with few jobs and a low quality-of-life. I live in a place like that now, a car-reliant northern England town where there's no transit service, it's not safe after 7pm and the locals will threaten to fight you if you look funny. Luckily I have a job, it's not as well paid as the same job in other areas but I'm employed and don't pay a huge housing cost. But I'm miserable, it's a horrible place to live (especially as a childless 30-something single person) and I'm looking to move somewhere that's nicer.

I'm really struggling to do that, because trading up in areas is difficult, I'm looking at a doubling of housing costs (plus all the other costs of moving) in exchange for ~20-30% more pay in a more affluent area. There are a lot of people like me, trapped in crappy areas with low housing costs and unable to trade up despite being full-time employed. I feel like I just exist here, weekends are my escape but I need to escape forever.

Sweden is pretty crazy too.

Finland isn't too bad outside the capital region.

Some dead or dying places are so cheap that you can not even get loans to fix properties. Which itself is an different issue.

Some reasonably growing areas have quite affordable old housing.

Plenty of places in the US.

I have family in Michigan. I checked home prices and you can still buy a house (not a condo), in a nice town with very good schools for $200,000. With property tax, insurance and mortgage your total home expense would be ~$1,000/month, even at today's interest rates.

Plenty of jobs that pay $60,000 there, that's $7,000 per month take home if you're married with two wages earners, leaving $6,000 left over each month, or $60,000 per year.

You don’t even have to be in the sticks - you can find $200k-ish places within commuting distance of lots of “kind of dying but still big” cities if you will.

You will often have weather to deal with.

And if you’re young and willing, buying a fixer upper is still a workable strategy - and youtube makes this actually much more workable than even 20 years ago. Sweat equity works wonders.

Part of the trick is that lots of jobs are not actually IN the city - they will be to one side, so live on the side that your job is.

> You don’t even have to be in the sticks - you can find $200k-ish places within commuting distance of lots of “kind of dying but still big” cities if you will.

This is why a few cities, like Pittsburg, have seen a resurgence -- cheap housing and the benefits of an actual city.

The world is running out of young people to build houses. The TFR for the entire would will be below replacement rate by 2034. Simultaneously, the world is getting stuffed with old people who do not want new houses constructed to inflate their own house's value.

Why build new houses in Western countries when they're mostly below replacement rates anyway?

Easy to fix instead of ranting about what the 1% thinks.

People should pick a month and just stop paying their credit bills as a protest. Suddenly overnight there will be a debt jubilee announced.

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