[HN Gopher] Ever-increasing home values are a Ponzi scheme
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Ever-increasing home values are a Ponzi scheme
Author : tolbish
Score : 20 points
Date : 2021-06-21 22:12 UTC (48 minutes ago)
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(TXT) w3m dump (theweek.com)
| BreakfastB0b wrote:
| Housing can either be affordable, or profitable, not both.
| Affordable means that the price of a house remains stable
| relative to inflation or wages. Profitable means it has to grow
| faster than inflation or wages. Everyone needs somewhere to live,
| therefore housing should not be profitable. You shouldn't be able
| to make a tonne of money by just buying a house and sitting on
| it. Investing in housing should mean improving existing housing
| or building new housing.
|
| Here in Australia the government is talking about letting young
| people access our equivalent of their 401k to afford a deposit on
| a house. Without changing the supply of housing how is this
| anything other than another attempt from boomers to steal more
| wealth from their children so they can line their coffins with
| more gold.
| xwdv wrote:
| Profitable means we get more and more houses being built.
| BreakfastB0b wrote:
| You would think so. But once again, how can housing continue
| to be profitable i.e. grow faster than wages, and people
| still afford to buy houses? Doesn't it collapse at some
| point? Isn't that the joke about only economists think that
| exponential growth can continue forever?
|
| Most of my peers are either completely priced out of the
| market, or taking on 40yr or interest only loans. It seems
| like the market is currently a game of chicken of who's
| willing to sign away more of their life. An interest only
| loan is literally admitting you can't afford this house and
| the only hope you ever have of paying it off is if it
| increases in value without you doing anything.
| xxpor wrote:
| Profitable by owning and sitting on an asset != Profitable
| for a builder to buy land and build a house. You can have
| one without the other.
| BreakfastB0b wrote:
| Totally agree. The government should have a policy goal
| of keeping house prices stable relative to inflation. But
| when multiple generations have locked up most of their
| wealth into housing, it's unclear how to untangle the
| whole mess without collapsing the economy.
| maccard wrote:
| > Most of my peers are either completely priced out of the
| market, or taking on 40yr or interest only loans.
|
| These interest only are the reason my parents lived in a
| house 2x what they could afford - they took out an interest
| only mortgage in 2002, paid less on the mortgage than I was
| paying in rent for a room in an apartment last year, and
| sold at a 2.5x gain (to someone in my generation who is now
| mortgaged to the hilt), and bought a smaller home in cash
| from the proceeds after retirement. It's insanely unfair
| that the solution to irresponsible lending to my parents
| generation is to protect their investments and make sure I
| can pay back what they won't be able to repay.
| cshokie wrote:
| If homes are a profit-seeking investment then supply and
| demand would incentivize lower supply. If new houses cannot
| be built, but the demand is the same or increasing, then
| prices must rise. The profit motive directly leads some
| people to fight against new housing.
| mixmastamyk wrote:
| Nimbys don't allow it.
| tfehring wrote:
| Profitable to build != profitable to hold.
| reportingsjr wrote:
| Except due to insane zoning rules and an ever greater push
| for exurban housing, which is insanely expensive due to the
| infrastructure required, we are not getting nearly enough
| housing.
| nicoburns wrote:
| The way to make them affordable rather than profitable would
| be to build many more than are currently being built. As long
| as the quality is decent, you then drive the prices down
| through a simple increase in supply.
|
| You probably still need some tweaks to disincentivise use of
| property as a financial vehicle, but you're 70% there just by
| building more.
| darepublic wrote:
| Unless something still manipulates the price, as in the
| diamond market.
| alisonkisk wrote:
| Is this payback for the crypto Ponzi scheme posts?
|
| OK, asset appreciation without value creation is a Ponzi scheme.
| Let's stop rehashing, and move on to novel discussion angles.
| ComputerGuru wrote:
| I'm going to ignore the first sentence since it's just snark,
| but in response to your second: if there's a problem that needs
| to be addressed, surely the first step is acknowledging its
| existence?
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