"Housing cannot be simultaneously affordable and a good investment."
Housing as an investment first and a place to live second is a disease. It penalizes the poor, new arrivals, and the young, transferring wealth from these groups to people who bought homes back before the disease took hold. This is not wealth earned by working hard or creating value. Instead it's wealth extracted by obstructing value creation to collect rent from a captive audience.
Most of those benefiting from this condition would never have been able to buy in today, but "I've got mine, fuck you."
Any place dominated by this dynamic has zero claim to any kind of liberal or progressive title. This includes the supposed liberal bastion of the San Francisco Bay Area, a massively distorted housing market that creates one of the widest divisions between rich and poor anywhere in the US. Places like Texas, Georgia, and South Carolina are more progressive than San Francisco because a working class person can afford a home.
Most of the country has this disease to some extent, but obviously there are a few hot spots that are particularly bad. I picked on SF because it's among the worst and also among the most sanctimonious, continuously holding itself up as some kind of progressive bastion while implementing what amounts to red lining on a massive scale.
Unfortunately I can't think of any solution to this problem that isn't painful. Either we inflate the rest of the economy until a loaf of bread is $15 but housing is reasonable again or we let housing collapse.
> Unfortunately I can't think of any solution to this problem that isn't painful. Either we inflate the rest of the economy until a loaf of bread is $15 but housing is reasonable again or we let housing collapse.
Housing is a good investment because it is a place you live in. When you own (and live in) a house, you ideally make both a short-term profit (by having a place to live) and a long-term one (from reselling it later). These aren't mutually exclusive.
Renting is short-term cheaper than owning, though (depending on local markets). I've rented a bunch of properties way out of my mortgage price range.
And I think gp's point was that if housing prices rise (so that they're a good investment) then they become unaffordable (as we're seeing). One or the other, not both.
The fact is, for many people having a home that they build equity in is the closest they’ll ever get to some kind of “savings” account. When the home is paid off in 30 years they no longer need money saved up to buy a retirement home because they will have full equity of their house which may have gone up substantially in value. They could then sell this property and downsize and continue to live off the proceeds from the equity they sold.
If homes weren’t investments, it means people would have to be a lot more serious about saving and investing money for the future, and frankly that just isn’t going to happen at scale given human behavior.
That's the disease: the use of housing as one's primary source of savings and retirement funding.
There are alternatives like pensions, improving social security and medicare/medicaid, etc. The de-prioritization and gutting of these has probably contributed to housing taking their place.
But housing isn't a sustainable answer. It's basically done. Current generations can never see the kind of housing appreciation their parents did. Prices simply can't go up much more except in areas that are undervalued and never saw a run-up in previous decades. New buyers today risk the opposite: straining to buy into overvalued markets only to see them crash and leave them underwater. Housing as a source of retirement funding is a one-generation-and-done phenomenon.
Personally I would not touch real estate in overvalued metros today unless I were rich and could afford to lose 25-50% of the value of the home. If interest rates don't come back down to near-zero and/or if the trend toward telework and geographic decentralization continues, these areas could very well crash.
Pensions, social security, and Medicare/Medicaid can all be wiped out with the stroke of a pen. A hard asset such as a home is not so simple. I think there is still room for housing to be the best investment a person could make in their life.
This myopic "but government" fearmongering is itself a cause of the disease.
The "hard asset" value of a house is a very small component of its total value. The majority of the value directly relies on the government policy of overwhelming monetary inflation dumped into the financial industry. That policy can be changed much easier than bona fide entitlement policies, and perhaps it has even started changing already.
> I think there is still room for housing to be the best investment a person could make in their life.
If so, only at the expense of the next generation who will find it even harder to afford a place to live. When housing prices go up it means the next generation will find it that much harder to afford a place to live.
Delta of moving to smaller or cheaper is entirely reasonable case. But the appreciation is bullshit and massive extraction of wealth from those that can least afford it.
Housing as an investment first and a place to live second is a disease. It penalizes the poor, new arrivals, and the young, transferring wealth from these groups to people who bought homes back before the disease took hold. This is not wealth earned by working hard or creating value. Instead it's wealth extracted by obstructing value creation to collect rent from a captive audience.
Most of those benefiting from this condition would never have been able to buy in today, but "I've got mine, fuck you."
Any place dominated by this dynamic has zero claim to any kind of liberal or progressive title. This includes the supposed liberal bastion of the San Francisco Bay Area, a massively distorted housing market that creates one of the widest divisions between rich and poor anywhere in the US. Places like Texas, Georgia, and South Carolina are more progressive than San Francisco because a working class person can afford a home.
Most of the country has this disease to some extent, but obviously there are a few hot spots that are particularly bad. I picked on SF because it's among the worst and also among the most sanctimonious, continuously holding itself up as some kind of progressive bastion while implementing what amounts to red lining on a massive scale.
Unfortunately I can't think of any solution to this problem that isn't painful. Either we inflate the rest of the economy until a loaf of bread is $15 but housing is reasonable again or we let housing collapse.