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Comment by tnel77 | Hacker News Reader

A major issue with housing is that it is a primary driver of wealth for many Americans. Obviously, this comes at the expense of our fellow Americans who do not own a home. I was able to buy shortly out of college (1% down loan) so rising home prices don’t impact me as much since my home has also gone up in value. I was able to sell the first house and roll that equity into the next house.

As long as it’s the main store of wealth for your average citizen, there will be very little incentive to change that.

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> A major issue with housing is that it is a primary driver of wealth for many Americans.

This was a very unfortunate trap that many western governments fell into in the latter part of 20th century. It's not really about wealth per se. but forced saving for retirement (i.e. reducing government responsibility for elder care).

> reducing government responsibility for elder care

That's a bit of a non-sequitur. The economy pays for elder care no matter what, and mostly our governments remain responsible if people haven't saved.

Plus we get emergent outcomes in our economies for systemic reasons - blaming our governments as though they are effective at controlling everything makes little sense.

Even if true it seems unlikely to be a primary reason, although it could be a partial reason.

> and mostly our governments remain responsible if people haven't saved.

That's the point of it being "forced saving".

Look, I'm not saying the government steered everything or even that they thought it through very far. I'm saying that they constructed a bunch of programs (in US, Fannie/Freddy, mortgage tax break, etc. similar other countries) to subsidize and incentivize house ownership in ways that economists hate (creates market distortions). Couple this with policies that support growth of houses as an asset class effectively has people saving pretty aggressively in a way that will typically be available to them in retirement. Less people with no assets upon retiring means less load on government programs. Implicit in this is left to their own devices, most people don't save as effectively.

The trap part is this: once this system has momentum any abrupt policy change will result in a lot more people being directly dependent, or more directly dependent on government programs in their old age. This will have massive budget impacts and governments know it.

The second part of the trap, which we are seeing now, is that if you make housing too effective as an investment vehicle, it will be financialized and further distorted away from effectively functioning as housing.

It's not just financialization of housing - as you note there are emergent outcomes in complex systems. For example, end of life care would probably look a lot different if it wasn't often effectively drawing down some of these savings.

The momentum is why the "quick fixes" don't work - you need "slow, long term" fixes to undo slow, long term problems.

> That's the point of it being "forced saving".

It isn't really savings: it is a giant Ponzi scheme that depends upon the population cohorts aging and working and getting mortgages.

I'm in New Zealand and immigration is a primary driver for our house prices. Overseas owners will also drive house prices when we allow that again (our economy is strong but I suspect we will need to sell the family silver eventually).

If you are below 50 it is difficult to apply your implicit knowledge of the current steady-state to the future.

Italy and Japan have houses for sale at $0.

> saving [that] will typically be available to them in retirement

Currently.

I'm suggesting to try and take care to avoid inductive reasoning when looking locally at older cohorts and applying your knowledge of their experiences to your planning.

Of course as an individual you don't have a lot of choices to avoid the economics of your particular cohort. Understanding and mitigating your personal economic risks is trés difficult.

Using the word "savings" for your house is extremely self-deceptive in the longer term IMHO. Especially because the vast majority of what you spend is on interest not principal. I'm not saying paying for interest is avoidable or worthwhile, just that using the word savings misleads oneself.

Plus I deeply mistrust governments to do long term planning. The biggest drivers of our economic wealth seems to be unplanned emergent results of capitalism. Governments will turn to taxation and other means when an aging population turns out to be a problem. Our Green Party in New Zealand with about 10% of the MMP vote already suggested a policy of a wealth tax if you had saved over $1 million.

Ok if you dislike technically "savings", call it "incentivized regular investment" - the point remains. As a policy issue countries are stuck a bit because they are reliant on the asset value of these houses to help support non-working people later in life (that is, they have "saved", in some sense). Does that make it a ponzi scheme? No, of course not. Is there risk in the investment? Absolutely, and more than most people like to think about.

I don't think we are really disagreeing here, which is why I described it as a "trap". Governments will go to great lengths to keep this market stable, probably more than they should, because they are in a bind. People will respond to the incentives and keep buying when they can - probably more than they should. So long as there is net growth in economy and population on the whole they can keep the plates in the air, if either or both of those fail to be true, harder. And of course this is only on average, individual areas are not all protected.

Detroit has houses for sale for $0 (or near enough) for the same reason as some places in Japan and Italy (and others). Namely, fewer people want to live there than housing and infrastructure exists for. Same deal with unfinished subdivisions in Florida, essentially worthless.

Upzoning is a win-win for existing homeowners. Land doesn't get expropriated to build multifamily; it's purchased. Multifamily is a more efficient use of a lot than SFH, so it's purchased at a premium.

NIMBYs worry that the mere existence of nearby multifamily will decrease their home value. In rare and unsympathetic cases (places like Winnetka in Illinois) that may be true. But in the bedroom neighborhoods of big cities and their inner ring suburbs, it's not; allowing missing-middle multifamily will revitalize neighborhoods and help shift the cost burden from SFH property taxes to sales tax (retail follows rooftops).

> NIMBYs worry that the mere existence of nearby multifamily will decrease their home value. In rare and unsympathetic cases ... that may be true.

It's not rare. I've known multiple people, myself included, who have decided not to make an offer on a single family home because it neighbors a gross apartment building.

The vast majority of home buyers want single family homes. I don't know where HN obsession with vertical housing comes from, maybe because the majority are young and still live in apartments, but this isn't reflective of most home buyers

The only adults I know who will even consider purchasing a condo are single with no pets and no intention of having a family. Even among most childless couples, once they live in a single family home they would never go back.

Yes, it’s totally rational to want to live in a SFH. That’s the beauty of allowing (not requiring) other types of construction: people like me who don’t want to live in a SFH can and people who want to live in a SFH can continue to.

I even suspect SFH owners will see some benefits. Their underlying land will become more valuable as the parent explains but SFH buyers will no longer be competing against people who don’t really want a SFH but have to rent or buy one because that’s all that’s available. A lot of my friends end up doing a group house thing with 4-5 people because they have to live somewhere without apartments.

You're allowed to have preferences! You don't have to live next to a "gross apartment building". You can achieve your preferences by (a) paying more or (b) accepting a larger commute from the nearest urban center. Property values don't scale with your particular preference. Among many things, they're a function of:

* (Probably foremost, in IL at least) the perceived quality of the school districts

* The property tax burden

* The diversity and quality of amenities

Missing-middle multifamily improves all of these things.

SFZ neighborhoods and munis are locked into a death spiral on property taxes and schools: residents are incentivized to plow money into schools (attract new residents -> increase home prices; you "get the money back" you put into schools) which quickly gets you across a threshold where the only rational buyer of property in your muni is a family with children. Multifamily allows for aging-in-place (rather than moving out when your kids graduate, a phenomenon sometimes called "renting the schools") and diversifies the tax base.

Amenities scale with foot traffic and usage. Expensive bedroom communities tend to be commercially moribund. In addition to not being fun to live in, it also shift the levy towards property taxes and away from sales tax and licensing fees, which in turn depresses home prices.

The first answers you get on this policy question always seem to come from people who think it's dispositive that they and people like them don't want to live near apartments. Municipalities make policy decisions for the welfare of the entire mix of people who will reside there. When you do the math on overwhelmingly SFZ munis you sometimes realize that the people loudly complaining about multifamily are a minority interest to begin with.

Your list of drivers of property values is missing the single most important factor:

• how much can one borrow?

Mortgages drive house prices so long as demand outstrips supply: which it always does in desirable places. Demand can always increase in a healthy city - I want to have multiple houses in different parts of the city and I could even AirBnB them out to defray costs or make a profit.

I live in Christchurch, where we had a lot of houses selling at below ½-price for a while because the bank rules forbade giving mortgages on those houses. This was after our 2010 earthquake and banks would not lend on uninsurable houses. The houses were often safe and liveable but uninsurable due to fine print (e.g. require even floors <50mm drop across entire footprint). They were often economically fixable, but to fix them needed money or a mortgage! There are still "as-is" uninsurable houses on the market - the price discrepancy isn't because of demand per se but because of mortgage/insurance restrictions - although the pricing gap has significantly narrowed (flippers and cash-buyers create enough demand for the very few as-is properties that now go on the market). I bought a spare as-is property and there's reasons not to sell it (even though I can't insure against say fire).

Christchurch zoning rules were relaxed for a while plus our government was committed to more housing so Christchurch now has many more houses than a decade ago. House prices are going up even though you can effectively only get variable mortgages in New Zealand at 7%. We have more house supply but demand is outpacing that because we also have high immigration (30% of NZ population was born overseas and we still encourage immigration).

As an individual buying a house the market dynamic is visible - I borrowed as much as I possibly could to buy the best place I could afford for my home. Bank lending rules drove my pricing. The "market" price for the house did not set my price (low competition blind deadline bid - I could not know what others bid and a price could not be accurately calculated for my property). Market price is set by competition between buyers - most buyers are borrowing as much as they can.

The economically worst part is that it is a zero-sum game with everybody competing for how much money they can give to banks for interest payments. We all lose.

The graph of sold house prices in a city looks strange - a severe cut-off just below the median price. Investigate the underlying cause for that and everything will be revealed?

> We have more house supply but demand is outpacing that because we also have high immigration (30% of NZ population was born overseas and we still encourage immigration).

This is a huge part of it, as is anything that drives housing demand (for example, as more people end up divorced, more housing is needed).

And most people go to the bank and ask how much house they can buy (based on what monthly payment they can stomach), and then go looking for the best they can get for that.

But there is another floor even without banks and mortgages; the cost to build new housing. If the minimum viable house is $250,000 to build (assuming minor builder's profit, etc) than you're going to be hard pressed to find new housing less than that.

> there is another floor; the cost to build new housing

Mostly irrelevant in an older city so long as there is a large number of older less-desirable houses in the market. And new houses become old houses in 2-3 decades.

Only the people that can afford a new home need to buy a new one.

Building prices do drag up prices, but I don't believe they set a floor unless most everything available is greenfield.

But if you're densifying you're often knocking down those older homes. And so the only way to keep the older homes is to have newer homes being built somewhere - which fights against density.

Conversely, I know several couples who have gone back, especially after child rearing.

What people want is far more complicated that "single family homes", but a range of preferences. Most prefer a detached home from any thing non-detached. Most prefer access to good schools (while/if they have school age children) opposed to poor schools. Most prefer being close to work over a long commute. Most prefer easy access to cultural/social aspects of a city over not having access. Etc. etc.

Every buying choice is a set of tradeoffs unless you are almost unfathomably wealthy (20m detached home in a dense city with a helicopter pad ticks a lot of boxes). I think a lot of focus not so much on "vertical housing" but density and "missing middle" housing is just the fact that current (US, anyway) city design is hitting some walls, and "more of the same" isn't going to work.

Plenty of people in Europe live in flats and have kids, pets and all that, myself included.

> The vast majority of home buyers want single family homes.

The vast majority of home buyers have a quality of life they want to achieve at a given price point, and SFHs as built in America fulfill the requirements (other than costs) better than the MFH that gets built.

Moved out of a townhome into my current house when we had a kid, I actually looked at quite a few condos and townhomes first but multi-family housing in America is, ironically, not built for families.

The townhome community I had live din actually had a lot of families in it, but my particular unit was not conducive to family life.

The complex had 2 yards, one huge field for hosting parties complete with a fireplace, lots of tables and chairs, and bathrooms right off the court yard. Kids are playing together outside all the time! The other smaller grass patch was for people with dogs to take them out.

After moving into a house, my yard is now smaller than what I had before, go figure. Also there are fewer kids running around on my block than at the complex I moved out of.

Unfortunately those nice lifestyle complexes aren't being built anymore, instead what you get is 8 or 12 narrow townhomes scrunched up together with the government required minimum amount of greenery outside.

IMHO the 4 story town homes that are being built all over the place are foolish on many fronts. They aren't good for babies (stairs) they aren't good for anyone over 50 (stairs) and they waste a ton square footage (on all the stairs).

But if I could buy a 3 (+ den) or 4 bedroom flat in a large complex that had huge green spaces and places for activities? Sure! The QoL of living in a well managed complex is better than doing all the home owner stuff myself, and it turns out when services are being ordered for 100 households (window cleaning, pressure washing, deck cleaning, etc) you can get some good group discounts!

The large complexes that I do see being built around my city (Seattle) are all rental units, which has a ton of down sides - bad for the local economy, money doesn't stay in the community, residents don't build value in their house, prices go up dramatically year over year, etc.

I don't want to live next to a huge building, so I selected a town where that was not allowed. So don't tell me changing this is a win win for me. It isn't.

I’m genuinely curious: Why not? What difference does it make to you what’s next door?

sound, privacy, views, for example.

I'm speaking only to overall property values, because that's the argument I was replying to. I don't care about your preferences.

I am responding to your first sentence, which is "Upzoning is a win-win for existing homeowners", which is not true in general.

It is true in the sense that I meant it, about property values.

Nor do you apparently care about the fact that "NIMBYs worry that the mere existence of nearby multifamily will decrease their home value" is a false stereotype.

A NIMBY straight-up told you that their motivations are about lifestyle and not money and your response is "I don't care about your preferences".

I suppose you didn't buy the entire town, so you can't preclude your neighbors from wanting their property to appreciate, their lives to become more social, and their environment to change.

The neighbors collectively agreed to the previous zoning. Now some outside body is forcing that to change.

Once upon a time, neighbors also collectively agreed to zone by race and ethnicity, until Buchanan v. Warley in 1917 put an end to that practice and created the minimum-lot-size SFZ proxy system we have today. You can argue persuasively for respecting SFZ, but you probably can't do it from a moral high horse (which is just to say: you can't rest your argument on a moral right).

I’m not sure the implication that those of us who don’t enjoy sharing walls are immoral racists is particularly justified.

It's a historical fact. I'm not saying you're a racist. Those zoning ordinances though definitely are.

It's not a win for you then. It is a win for the 100 people who can move into that apartment building.

Are you really that important?

What about the 100 people who also owned homes within a few blocks of that apartment building and are also opposed to the change that it brings to the neighborhood? Zoning laws don't exist because of one loudmouth, they exist because solid majorities of the people who live in a given area like having them.

In your example, your side is outnumbered by the residents of a single apartment building.

This whole thread is kind of silly, in that high-density apartments aren't what's going to get built on SFZ blocks in cities and inner-ring suburbs; 3-flats are.

Well but aren’t you giving a great example of how that wealth is illusory?

The purpose of this comment is to make this conversation interesting instead of rehashing BS about NIMBYs.

Don’t get me wrong, measuring billionaires’ wealth by multiplying stock price and stock count is flawed too, for a different reason. But both your wealth and that wealth are really measuring “taxable wealth in the marginal transaction case.” Not a super interesting measurement IMO.

If you were an immigrant from the Soviet Union like my parents were for example, sure you were dirt poor but you might have an education, which turned out to be much more valuable in every sense, in most cases, than a house, for baby boomers this century.

Like isn’t being educated being “wealthy?” On the flip side, Russia today has 30 percentage points more higher educated people than the US, so tell me Obama, what did that education get them?

There’s no reductive lens for this stuff. One POV is that maybe the average American is myopic, their house value number goes up and they regard that as real wealth, just like billionaires do. But it’s not just a matter of understanding what house values are because “that number going up and therefore you become wealthier” isn’t strictly speaking flawed. IMO what we lack is leadership: politicians who have the patience and motivation to figure these things out and inform the public, as opposed to merely being reactive to the hottest crisis on social media.

> Well but aren’t you giving a great example of how that wealth is illusory?

It is mostly, since your purchasing power doesn't increase because all house prices rise.

But: people don't live forever, and when your home-owning parents die, you now have two homes instead of one, and you'll get much more than if housing price was half the price. Same when your in-laws die too.

Obviously this is entirely unsustainable and is a huge driver for the political despair that is spreading in Western countries.

> and when your home-owning parents die, you now have two homes instead of one

While I absolutely believe it's a thing for someone. It's not a thing for anyone I know.

Two factors there.

People live longer. An then parents die (70+), they kids ( avg. 2) are at the age of 55+. At that point they housing situation is figured out. Also if ( big if in Canada) house was paid off you inherit half of it ( unless you are single kid which was rare 50+ years ago in Canada).

However in Canada what I see is that houses were reverse-mortgaged to supply income on pension and/or live in a retirement home, and thus my friends got trivial inheritances in a tune of tens thousands of CAD dollars after estate liquidation.

> People live longer. An then parents die (70+), they kids ( avg. 2) are at the age of 55+. At that point they housing situation is figured out.

That's exactly what I mean when I say people end up with two homes. In fact, if the home was given to children not owning their home, we would still be in the wealth illusion situation.

> However in Canada what I see is that houses were reverse-mortgaged to supply income on pension and/or live in a retirement home, and thus my friends got trivial inheritances in a tune of tens thousands of CAD dollars after estate liquidation.

This is not something we see a lot in my country (France) because so far we had decent pensions… But obviously situations vary a lot between countries.

The wealth may be imaginary, but the debt I took in via my mortgage isn’t haha. I get the point you are making though. Thank you for sharing your perspective.

This is a common refrain from the YIMBY crowd, but I'm skeptical that the driving force of NIMBYism is wealth.

My own experience is that I couldn't care less about my property value: I view my mortgage as mostly a locked-in monthly payment, a guard against rent increases and against being forced to move if the landlord decides to do something different.

However, I would actively campaign against a large multi-family housing development being built within a few blocks of me. I don't want the added traffic it would bring, I don't want the added noise, and I don't want the more frequent turnover. I enjoy being able to recognize all of my neighbors, not just because it's nice but because it makes me feel safer.

If you actually went out and interviewed NIMBYs instead of just reading the stereotypes on the internet, I suspect that the motivations I describe above are much more common than wealth. It's not as exciting or provocative as "the upper-middle class just wants to get richer", but it's the reality that many of us live in.

You can live in what ever reality you want, but NIMBY behavior is inherently rent-seeking.

That being said, I don't hold it against people from paying themselves rent and taking a profit when they sell. But if you have kids, you do have to come to terms with the fact that you're creating a situation where they likely won't be able to afford to live in the neighborhood where they grew up or near you at all.

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