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Making housing more affordable means your home's value will have to come down

• mfost 2y ago
  You know what is neat when housing prices go down? You pay less to upgrade your house size than when the prices go up. Despite the fact your own house value dropped. Housing price dropping is good for basically everyone I say.
  • tobbe2064 2y ago
    Well, not if you have to sell at a loss and still have the full loan
  • dudul 2y ago
    That sounds kind of stupid. If prices go down I won't sell my current house for as much as I bought. If I try to upgrade, granted the new house will be less expensive, but I won't have access to as much funds to pay for it.
• dibujante 2y ago
  Not necessarily. If you add density to an existing lot, your land increases in value, and since it’s likely the majority of the value of your property, your property probably goes up in value. Then, the increased supply decreases the cost of shelter.
  • factorymoo 2y ago
    > your property probably goes up in value. > decreases the cost of shelter. Which is it?
    • hammock 2y ago
      Lot A has 1 single family unit. Land: 300K. Building: 600K. Total per unit 900K You subdivide and build another house on the lot with building value 300K. Total land value appreciates 50K. Outcome Unit 1 land 175 + building 600, total 775 (and the owner gets 175 for the land they subdivided and sold off , coming out ahead 50k in cash) Unit 2 land 175 + building 300, total 475. Average unit cost on the lot is now (775 and 475) = 625 (30% decrease)
    • abeppu 2y ago
      They're claiming we can see both, because the number of people sheltered per unit of land will have increased. While I see this as plausible in some cases, I also think it's sweeping a big error constant into "housing affordability" if we're saying that the kind of housing "affordable" to one generation is of a different kind than was realistic for the preceding generation. If your parents could afford a single family home with a yard and you can afford an apartment in a building put up where someone's single family home used to be ... surely we can agree that actual housing affordability meaningfully decreased?
  • jkolio 2y ago
    That's a single plot, increasing density by maybe a factor of 6, at absolute best. If enough units come onto the market to relieve the so-called shortage, prices necessarily drop. In any case, the problem might very well be, directly, that prices are too high, because it has invited speculation and warehousing. Inventory as the crux might be wrong.
  • everforward 2y ago
    How does it not reduce demand for land? Eg right now if I wanted to live in one of these places, I virtually have to compete to buy a plot of land that I alone own. With high density housing, me and another few hundred people who would have been demand for land can instead buy condos or rent apartments and share that plot of land. Our demand was satisfied for fractions of a percent of the supply it would have taken with low density housing. Ie high density housing efficiently uses land, thereby reducing demand for it. Some areas will be gentrified and be worth more. If I were going to guess, the downtown core will spike in value and the suburbs will have to drop in value to compete with the affordability of downtown living. I suspect a lot of people would live downtown instead of the suburbs if they could get a 2/3BR that wasn’t 4x the cost of living in the suburbs.
• CuriouslyC 2y ago
  Why do new homes have to be built in competition with existing homes? With remote work and the digital elite moving wherever, why not just pop up new developments wholesale, complete with shopping and services somewhere out of the way and cheap?
  • renewiltord 2y ago
    The real question is whether the intersection of everyone's reasonable requests is not the null set. California Forever is trying your thing and facing massive headwinds.
  • LargeWu 2y ago
    You've just invented suburbs.
    • CuriouslyC 2y ago
      suburbs aren't designed to be mostly self sufficient.
  • neogodless 2y ago
    I love the power of the word "just." It pairs well with armchair pundits who can simply wave a wand and solve major problems that lots of heavily motivated people who have resources and would profit nicely from solving these problems... still struggle to solve. Can you answer your own questions in reverse? Why aren't new developments built wholesale, complete with shopping and services somewhere out of the way (and cheap)?
    • CuriouslyC 2y ago
      People do intentional communities all the time, and that's small groups of grassroots folks solving the problem. I have no doubt that a company could set up intentional communities much more efficiently, and provide more services to them so they were closer to parity with typical suburbs.
      • 2y ago
• daft_pink 2y ago
  It’s going to be very difficult to make housing more affordable with high interest rates and high inflation. I highly doubt just increasing supply is going to be enough.
  • grecy 2y ago
    Make a law that only humans can buy residential property, and only one house for one human.
    • dgfitz 2y ago
      Talk about increasing the costs of having children…
    • wingspar 2y ago
      So only a human buys a large apartment complex, with all the associated liabilities and risks? Does that exclude partnerships or just corps and llcs?
  • ElectricBoogie 2y ago
    Investment banks will just buy up any affordable housing.
    • HDThoreaun 2y ago
      Housing is only a good investment if supply is artificially constrained. If we let people build it banks wont want it
    • throwaway1105q 2y ago
      That means there is not enough. Housing can't be affordable if a small set of organizations can have it all.
      • kylebenzle 2y ago
        Its just that never before has there been an investment firm large enough to take a big enough share of the largest market in the world, the US housing market.
• grecy 2y ago
  This is so fundamental to the issue. It is impossible for housing to be simultaneously a good investment and affordable. Policymakers simply have to decide if they cater to those that already own homes, or those desperately wanting to buy one. I feel strongly housing is a basic human right, and so we should stop viewing residential property as an appreciating asset.
  • throwaway1105q 2y ago
    Housing can be an asset and a basic right. The rights based housing just isn't in the center of a capital city. Also, do you mean housing ownership, or just housing? People can be housed in houses they don't own too - and it's probably better if it's owned by the municipality.
    • mrcode007 2y ago
      An asset produces cash flow. Primary residence can only be a speculation device because for a majority of people it does not produce a cash flow. Instead it produces expenses.
      • s1artibartfast 2y ago
        nonsense. A primary residence obviously provides utility in the form of shelter for the owner. No assets directly produce cashflow, whether they are factories, tractors, or tools.
        • mrcode007 2y ago
          Utility is not an asset. When you grow up with your parents they provide shelter, you get a utility of it. No asset for you. Majority of assets produce cash flow (e.g. licensing software - IP asset, renting real estate to someone - you get monthly rent, bond - coupon payments, stock - you get dividends, etc)
          • throwaway1105q 2y ago
• ElectricBoogie 2y ago
  Well, I'm against affordable housing then. Let Blackrock, who bought over 40% of the single family homes on the market, take it on the chin. Perhaps we can do a fire sale of corporate-owned homes. This has made me determined to fight affordable housing even more so. I'd also like to ask, why is British journalism so shit tier? It's a fucking joke.
  • jchallis 2y ago
    Globe and Mail is Canadian.
  • gizajob 2y ago
    You mean British journalism talking about Toronto, written by a Canadian, in Canada, for Canadian media?
  • Jensson 2y ago
    It is simply impossible to reduce cost of homes without reducing the money you would sell your home for, those are the same thing.
  • servus45678981 2y ago
    I hope you will pay more property taxes…
• bilsbie 2y ago
  I think non affordable housing makes values come down too. Just I a less controlled way. Eventually people will just stop participating in the housing game and there’s no telling where that will lead.
  • hurutparittya 2y ago
    Stop participating in the housing game? How? By becoming homeless?
    • erikerikson 2y ago
      To be fair, there are a number of people taking that branch of the decision tree
    • bilsbie 2y ago
      Mobile homes, roommates, vans, or maybe new disruptive ideas in housing we haven’t thought of yet. Everyone has a price they wouldn’t or couldn’t afford housing.
  • jjav 2y ago
    > Eventually people will just stop participating in the housing game What game? Not being homeless? People will always want a place to live.
• r0ckarong 2y ago
  I really don't give a shit about the financial value of my home to someone else. Sure, my mortgage is calculated on it and I'll be paying that for the rest of my life but the true "value" of my home is the quality of life my family and I can enjoy here. What you're talking about is how much money some investor can make off of the desire of people to have this quality of life value for themselves. And quite honestly it's incredibly sickening that our world works that way.
  • dudul 2y ago
    The only reason I care about the value of my house is to know what I can get out of it if i need to move. If my house goes down in value but the trend is roughly general then I don't care indeed.
    • s1artibartfast 2y ago
      This position makes sense if you own outright, but changes significantly if you have a significant mortgage based on the purchase price.
    • deleted 2y ago
      [deleted]
  • fifticon 2y ago
    unfortunately this cannot be viewed in isolation. For example, a drop in house prices may cause people with a mortgage to become technically or practically insolvent, as happened in japan. So, for better or worse, if you are tied up in a house, your fate may be tied to the future value of that house. but in principle, i too would like to agree :-/
  • s1artibartfast 2y ago
    I think you are an outlier if resale value doesnt matter. It matters to me for many reasons I doubt you find sickening or sinister. It matters because my family might want or need to move for work. It also forms a major part of my retirement, and how I will feed and take care of myself in advanced age It makes perfect sense that it has financial value to someone else, because it would take a tremendous amount of material and labor to re-create if it burned down.
• jackcosgrove 2y ago
  > To raise housing affordability, we have to lower prices, or at least get price increases consistently below the rate of inflation. I'll pick door number two, Monty. Not because that's what I actually want, but because I'm pretty certain that's how it will play out. Lowering nominal asset prices is almost as hard as lowering nominal wages. It only happens when policymakers screw up. That's what inflation is for.
  • rickydroll 2y ago
    Lowering housing prices will put many mortgages underwater. We are seeing the fallout from this today in CRE and across all properties in 2008. Today, affordable housing means someone takes a loss. In new housing, the builder or the lender could take the loss but they won't start a project unless they are guaranteed to make a profit, which means the property owner takes the loss. Deflating prices on existing housing means either the lender (ha!) or the homeowner takes the loss. An additional impact of deflating housing costs is that there may not be any equity for major repairs like roofing or medical expenses.
    • yterdy 2y ago
      >Deflating prices on existing housing means either the lender (ha!) or the homeowner takes the loss. Okay. (Expand or they're going to flag you for snark.) The cohort that is currently at prime home-buying age (and, really, most people under the age of 50) have had the wealth that was generated by their labor and productivity systematically siphoned to mostly-older higher-earners, in order to shore up unsustainable compensation and retirement funding for the professional managerial/executive class and Silent Gen, Baby Boomer, and Gen X workers. The value of the overbuilt, low-density, transit-access/amenity-access-poor housing that they've built or speculated on plummeting would be not only economically healthy (as it would act as a stimulus for non-asset-speculation activity and finally incentivize density and transit access, while disincentivizing the socioeconomic/racial exclusion that characterizes most American suburbs and which drives so many of our objectively terrible NIMBY-focused municipal planning decisions), but also just deserts.
      • 2y ago
• s1artibartfast 2y ago
  It seems like the author is willfully miss-understanding Trudeau's statement. Value and affordability can be considered independently. Increasing median income and economic growth both increase affordability, even if housing costs track inflation.
  • hammock 2y ago
    Can you explain how?
    • s1artibartfast 2y ago
      I thought I did, but can give an example. If the median income increases from 50K to 100K (adjusting for inflation), and houses stay at 500k (adjusting for inflation), they have become more affordable without losing value.
      • eddd-ddde 2y ago
        But isn't money losing value then? Implicitly making the houses worth 500K also lose theirs?
        • s1artibartfast 2y ago
          I dont understand your question.
      • hammock 2y ago
        Well that begs the question, how are you going to double income beyond the rate of inflation?
        • s1artibartfast 2y ago
          If it happens, it will be the same way it has been done for hundreds of years. Increase in productivity. More widgets and stuff produced per worker is the only way to beat inflation. This is the fundamental economic goal of nations which seek prosperity.
• ebiggs 2y ago
  As a homeowner I see little benefit for me for the insane value of my home. Do I want to pay more in property taxes? No. If I sell it’s to just buy a different insanely priced home. I suppose I’m privileged in that I have other retirement plans so my kids will inherit my home - and that’s good I guess if they ever want to afford a home. Homes being an investment is the wrong mindset for a healthy society. Have cheap homes so you have enough money to invest in something else. I couldn’t care less if the value of my home plummets if all other desirable homes did too. Heck, I’d celebrate it. Seems to me the people who care are those who invest in real estate instead of just want a nice place to live.
  • qeternity 2y ago
    The myth of home equity: most people are implicitly short the housing market for most of their lives.
    • s1artibartfast 2y ago
      I think that is exactly the opposite. Most people are long on the housing market. They have borrowed cash to purchase an asset they think will maintain or go up. Renting would be the short position. https://www.investopedia.com/ask/answers/100314/whats-difference-between-long-and-short-position-market.asp https://www.investopedia.com/ask/answers/100314/whats-differ...
      • seanmcdirmid 2y ago
        There are huge transaction costs to buying and selling a home, renting could also be seen as a way to avoid those costs if you aren’t going to stay somewhere. But I rented for cheap in Beijing when housing to buy costs were super high, who wouldn’t rent a $1 million apartment for < $1000/month, buying in that market would have been dumb even without red tape to buy something.
        • s1artibartfast 2y ago
          Sure, I don't think many would disagree. Especially in places with large agent commissions and capital gains taxes
• bilsbie 2y ago
  I think it’s weird we haven’t made any new cities in what, 100 years? We just keep trying to crowd into existing places.
  • MattGaiser 2y ago
    People don't want to be part of founding new places. They don't want to go to small places.
    • bachmeier 2y ago
      The exception to that is retired people. Everyone else needs to worry about job opportunities and schools for their kids.
      • nullindividual 2y ago
        Even retired people want to be near major hospitals.
  • bee_rider 2y ago
    Apparently the population of Las Vegas was ~2k people in 1920. I think cities just take a while to grow.
    • fragmede 2y ago
      Downtown Las Vegas was Tony Hsieh's baby and he sunk hundreds of millions of dollars into it to make it what it is today, and that's as part of an existing city. Cities take a lot of money to grow.
  • jackcosgrove 2y ago
    South Korea built a new capital but most everyone there still tries to live in Seoul. There are very affordable cities in upstate New York within a few hours of New York City that are still losing population. This concentration in winner cities might swamp efforts to lower prices with new cities. Arguably the Sunbelt suburban cities are new cities. If 90% of a metro's population is new since 1945, that's a new city grafted onto an old town. In the US at least, we have built new cities, and we have also crowded into a smaller number of winner cities. Canada, despite being huge, actually has fewer opportunities for new cities because building on the Canadian shield is impractical.
• Samwitch 2y ago
  Housing affordability is such a silly subject. We live in both a democracy and a capitalist economy, both in the US and Canada. Most believe those within some locality should have a say over that area. If they do not want more housing because it financially benefits them to enforce scarcity, why should they not be able to? We accept the limited availability of other luxury items, why is housing in a _specific_ locality any different? If housing affordability is a problem, live somewhere else.
  • everforward 2y ago
    Housing affordability is wrapped up in good jobs aggregating around major cities. The complaint is that good jobs are accruing to particular areas, through nothing the inhabitants of those areas have done, and then the locals are using that accrual of jobs to boost their own property prices. Housing in a specific locality is a weird luxury item because people often don’t really want the housing, they want access to the job market. So an underlying question is “are we okay with citizens enriching themselves by gatekeeping the good jobs behind a paywall?” Their desire to enforce scarcity is causing societal issues as workers demand more wages to pay for the housing, prices of everything go up as a result of wage demands (among other things), and the US deals with its citizens funneling ever greater portions of their income to housing.
    • deleted 2y ago
      [deleted]
  • II2II 2y ago
    > If housing affordability is a problem, live somewhere else. There are a few problems with that statement. Less expensive homes tend to be in regions that lack jobs. Most of these regions also lack adequate infrastructure for remote work. Many of these regions also lack the resources for people to meaningfully live off the land, never mind the resources and infrastructure to generate income off the land. This isn't really an example of capitalism. It is extraordinarily rare for people to be compelled to surrender their property to facilitate development. It is far more common for property owners to be denied the right to develop their own property in the manner they wish due to restrictions imposed by the government. Quite often this isn't even an example of democracy. A group going to city council to lobby against a development is not necessarily representative of the community as a whole. Zoning laws developed fifty years ago don't necessarily represent the interests of people today. Then you have complicating factors. Democratically elected representatives at the provincial and federal level may be pushing for more housing because the population as a whole is pushing for more housing, while city counsellors are opposing development since the people who voted for them oppose development. Who's voice is more important? When everyone is saying: we need more housing, but not in my neighbourhood, how do we decide where housing gets built? Finally: while some housing is luxury housing, housing is not a luxury item. People should not be denied access to housing due to income. People should not be denied access to housing in a reasonable location due to income. By reasonable location I mean things like reasonable physical access to employment, education, transportation, and material necessities (e.g. food). The environment should also be safe. In other words, that penthouse suite on the waterfront is a luxury item. An apartment within thirty minutes of the shipyards, in a community with a grocer, a school, a low crime rate, and isn't a former toxic waste dump is not luxury housing.
• xkcd1963 2y ago
  Why not have 30% max on houses as investment dictated by the state?
• hiddencost 2y ago
  I'm not sure this is true. My mom owns a single family home near the best park in her city. The only way housing prices will fall in that city is if they build a massive number of affordable, high density buildings. Which will significantly increase the population of the city, because people keep leaving for cheaper locations. Which will significantly increase the price of my mother's house, because it'll be much harder to find a unit like hers, and there will be many more people competing for it.
• xhkkffbf 2y ago
  There's little discussion about immigration. Canada has an even higher rate of immigration than the US and, no surprise, is watching housing prices spiral even higher. If you build X affordable units, but let it 2X or even 1.1X new residents, the prices are going to go up. The YIMBY types tend to be in love with unconstrained immigration. Unfortunately, more people means more competition for housing.
  • bachmeier 2y ago
    > Unfortunately, more people means more competition for housing. You're explicitly assuming "1.1X new residents" but the point of YIMBY is to increase supply fast enough to maintain housing affordability. You're making the case for YIMBY rather than disproving it.
• bee_rider 2y ago
  I can’t really imagine wanting to own a house nowadays, given how unstable everything is. I’d rather buy an RV or something like that. Using home equity as a long term store of value seems nuts, what if your town turns into the next Florida (uninsurable hurricane and flood zone).
  • Eddy_Viscosity2 2y ago
    You have to live somewhere and renting has many downsides as well. Some view a house an investment, but its also a commodity that you use everyday.
  • MattGaiser 2y ago
    > what if your town turns into the next Florida (uninsurable hurricane and flood zone). These are pretty well-known risks. The people buying just think someone else will bail them out (and aren't generally wrong).
  • analognoise 2y ago
    Kids thrive best in stable environments; I don’t think moving them around a lot in an RV would be healthy or stable. It would be hard for them to form friendships, and be involved in the community.
  • seanmcdirmid 2y ago
    RV life in urban locations has a stigma these days of freeloaders and drug addicts. It works as a hack, but it’s a quick race to the bottom. Well maintained stealth van campers are a much more socially viable way to save on housing costs (and even then they achieve that by being super discreet).
• senectus1 2y ago
  I bought just before covid for 500k. local evaluator says its worth between 800-900k now. (I've done very little to the property) I'm fine with losing 3-400k value if it means we have all but solved the housing crisis locally.
• bigtex 2y ago
  Please do, it means my property taxes will go down. I can't wait!
• voisin 2y ago
  The only solution to the housing affordability crisis palatable to current homeowners is to build many new homes of a totally different type that can not be readily substituted. This is already happening where new housing tends to be denser, stacked (apartments) or closer together (row houses). Of course there is some overlap, but to the extent overlap and substitutability can be minimized, current homeowners can enjoy their high values that many have relied upon for retirement plans, and prospective homeowners can enjoy plentiful inexpensive housing to “get into the market”, which would help keep rent costs lower too (much more substitutability between small starter homes/condos and rentals). Just my 2 cents. If we are reliant on Boomers giving up their house values (which many foolishly rely wholly on for retirement) then there’s zero chance we tackle this crisis.
  • happytoexplain 2y ago
    >homes of a totally different type that can not be readily substituted Can you explain what this means? What does "substituted" mean in this context?
    • voisin 2y ago
      People generally wont substitute a single family home on a large lot for a condo on the 16th floor of a building. So if you build a lot of condos and stacked townhomes, etc, then it wouldn’t necessarily affect the price of single family homes on large lots. So young people can get into the housing market without affecting boomer retirement plans (their houses).
    • s1artibartfast 2y ago
      The kind of person who wants a 3000sqft suburban home is in a different market than someone that needs to keep the rain off their head and shower before work. Building dense urban dwellings, especially cheap ones, shouldn't impact the price for better housing much. This is the same reason the availability of paddle boats doesn't impact the price of megayachts.
• happytoexplain 2y ago
  I can't speak for the urban situation, but I don't care about my home value (to a point). I care about the quality of my community. I care about that a lot. Dense housing put in an area that isn't dense just because the area is high-demand is often not productive in the long run, as the effects it can have on the existing community range from nothing (a net positive though, since now there's more housing) to abject disaster. Part of this is housing, but part of it is just people wanting to live in a high-demand location and thereby tempting politicians and developers. You can satisfy the important part (housing) without the bad part by prioritizing building outward. Create more communities, which have the opportunity to become high-demand, instead of destroying places people have worked hard to live in and in which people have developed solidarity and community.
  • Fire-Dragon-DoL 2y ago
    Yeah, that's how we got here though. The solution is taking that high demand area and replace all low density homes with high density ones
    • RhysU 2y ago
      The problem with the local basketball team is there aren't enough positions for everyone who would like to be on the local basketball team. We could fix that problem by 10X-ing the number of players on the court at once. So, rather than 5 players per team the court would have 50. 45 more people would be starters!
• kkfx 2y ago
  "making housing more affordable" means start to spread, meaning leaving big dense cities where real estate value is absurdly high, to build a distributed population were LAND value depend much more on the local land characteristics (a safe place for flooding, landslides and so on or not, an easy accessible land or not, ...) than human structure around and is a substantial part of the house price. This means build new, well insulated, ventilated homes with p.v. for all reasonable latitude, and so on. Like it or not big cities have a future of big ghettos for poor and desperate and the real estate value there will surely drop retargeted to mere local human exploitability index (or hum much you can milk from the desperate before they start looking for you without friendly and civil intents). Personally I left the big city for a nice mountain area where I built a new home, unfortunately for me my parents (who start to be a bit elder) do not want even if they can economically leave the city, so I'll suffer indirectly the easy foreseeable high entertainment costs of city classic buildings (at least here in EU, where most buildings are terribly designed and for another era) then the big drop of real estate value (plus taxes who will NOT drop) but I've NOTHING against that, it's simply a fact any rational human see if he/she do not want to be blind, the point is that if we start debating and moving slowly with public support we can transform the inevitable storm in an opportunity, otherwise it will be just another 1929-alike crisis probably covered by a concomitant global war.
• dave333 2y ago
  Government policy is hugely biased towards homeowners and against renters. It would be more equitable to help renters more, perhaps by helping them become (first-time or partial) homeowners. Two schemes: 1) Government could put up down payments for first-time buyers in exchange for say 50% of the home equity. Buyers obtain a normal mortgage loan. Such buyers can optionally pay back the down payment over time and get 100% equity or govt regains their share of equity after a sale. 2) Government could offer landlords payments for equity in rented property and convert willing renters into owners. Renters can pay back the government over time to gradually gain equity. Landlord shares ownership with govt and some or all renters.
  • clircle 2y ago
    Why do i feel like increasing the amount of government intervention won’t be a fix
    • ryanwaggoner 2y ago
      Ideology?
  • r-s 2y ago
    https://www.cmhc-schl.gc.ca/consumers/home-buying/first-time-home-buyer-incentive https://www.cmhc-schl.gc.ca/consumers/home-buying/first-time... The Canadian government did try a similar strategy for a bit (although I think it maxed out far below 50%). It was discontinued recently.
  • Fire-Dragon-DoL 2y ago
    In Canada it's based toward landlords, not homeowners. If I own the home I live in, I have tax disadvantages over renting. If I rent my property to somebody else, I can write off way more things like the mortgage interest portion.
• dave333 2y ago
  Remove tax breaks above $1M or above local median price + 2 sigma.
• dragonwriter 2y ago
  This isn't true at all; for one example, the main reason housing prices are high in the US is policies that exist to maximize the supply (and thus suppress the price) of low-density and particularly the extreme case of that, single-family detached, housing (which also suppresses the value of land, since the land can only be used for that purpose) Removing those policies will decrease the cost of the minimal housing unit by increasing supply, but also increase land prices (by opening up more valuable uses) and increase the premium for single-family homes sitting on land (since they will become rarer), so making housing more affordable will simultaneously make existing houses more valuable.