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The short answer is that a house is no longer a place to live, but an abstract financial asset. The problem with divorcing occupation and use from finance and o

The short answer is that a house is no longer a place to live, but an abstract financial asset. The problem with divorcing occupation and use from finance and ownership concerns remediation of grievances. The benefit of such a system concerns maximizing the building's utility. I'm personally in favor of a more boring housing market, in addition to automatic tenant enrollment in equity-sharing programs (ie, due to living in a building and paying rent, the person who experiences hardship and loses tenancy still has some small, depreciating ownership based upon what they paid as rent). This helps solve the problem of financial engagement for the less financially literate, in addition to enabling higher-density housing to be built.

tmountain 2y ago
This sounds interesting. Where is it typically put into practice?
ratmeadow 2y ago
Bingo. People love to go into some deep analysis of housing and "agh it's a really hard problem", but it's simple at the end of the day: we have constructed, and continue to construct, a society where housing is not considering a right, but instead a way to inflate your bank account. It smells like this from the prospective house buyer at the bottom all the way to the government propping up the system at the top. Time to change the system. I refuse to believe that out of all the great things humanity has achieved, effective housing (shelter, of all things!!) is unsolveable.
- toomuchtodo 2y ago
  The system will not change because the folks in charge profit and maintain power from a system of accelerated financialization. They then wring their hands and clutch their pearls as young people take rational actions by not having children (rapid fertility rate decline), worried what happens to the pyramid scheme as it runs out of steam. Their crisis is the young cohort's survival mechanism. Young people have to do their best to survive in an unfavorable macro for the life they have left, and old folks age out eventually (which is the only way they give up power, the power which is needed to make change to improve the macro). https://news.ycombinator.com/item?id=40338619 https://news.ycombinator.com/item?id=40338619 https://www.ted.com/talks/scott_galloway_how_the_us_is_destroying_young_people_s_future https://www.ted.com/talks/scott_galloway_how_the_us_is_destr... https://www.youtube.com/watch?v=u-PinTQcuik https://www.youtube.com/watch?v=u-PinTQcuik https://www.axios.com/2024/07/25/adults-no-children-why-pew-data https://www.axios.com/2024/07/25/adults-no-children-why-pew-...
  - almost_usual 2y ago
    > old folks age out eventually (which is the only way they give up power, the power which is needed to make change to improve the macro). A lot of those old folks have children who will inherit their homes.
    - toomuchtodo 2y ago
      And a lot of folks don't have parents leaving them a portfolio or a high value asset they can live in. A material amount of people 55+ have no retirement savings, have material amounts of debt, or are in similar situations where the house might have to be sold versus be conveyed to children at death to break even (healthcare, senior|nursing home, memory care facility costs until death). If you are lucky enough to inherit an unencumbered (or one with a mortgage you can at least afford) residential property you can live in as a young person when your parent(s) pass, that is fantastic luck. Take the win if you can get it. That is not the mean experience, based on the data. https://www.gao.gov/financial-security-older-americans https://www.gao.gov/financial-security-older-americans https://www.nbcnews.com/business/consumer/generational-wealth-transfer-baby-boomers-cant-save-gen-x-millennials-rcna128099 https://www.nbcnews.com/business/consumer/generational-wealt... https://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html https://www.nytimes.com/2023/05/14/business/economy/wealth-g... | https://archive.today/fpbNK https://archive.today/fpbNK https://www.deseret.com/business/2024/09/10/millennial-gen-z-inheritance/ https://www.deseret.com/business/2024/09/10/millennial-gen-z...
      - brailsafe 2y ago
        This was the case with my dad and he isn't even 55. His house wasn't even worth all that much relatively speaking, but he had too much debt, not enough income, and too many expenses (more kids). It's fairly likely we won't see any inheritance from him. The 2 of us who can realistically work for a living might make more, but it's not looking likely either of us will ever be able to retire. On the other hand, if I chose the same life, it's plausible I could buy a house eventually, but buying a house in my home town isn't worth the trade of living in my home town.
boogieknite 2y ago
Im a rube but it my knee jerk reading tfa is there has to be some correction or young people are financially and domestically doomed. The solutions you listed here seem great. Is there momentum behind establishing these in the US? Is it more likely the trend continues and young people will simply become priced out, or is a correction more likely? If the latter, what are smart people expecting?
- frmersdog 2y ago
  You are correct. >Is it more likely the trend continues and young people will simply become priced out, or is a correction more likely? As a layman, take this with a huge grain of salt: it depends. By established rules, a major correction should be imminent. In fact, it should have happened one of several times already. Examples of catalysts include a bond liquidity crisis in late 2019, the flash crash at the start of the COVID pandemic, the Gamestop debacle in early 2021, the collapse of the Chinese real estate market later in 2021, and the US bank collapses of early 2023. There are also others, though several venture into conspiracy theory territory. In every example I mentioned, unprecedented action was undertaken to prevent a catastrophic event that might have lead to financial contagion across global markets. There will be probably be more. It remains to be seen whether authorities will continue undertaking steps to shore things up when the bubble threatens to pop. (Trump's return to office is an interesting wrinkle; grab another grain of salt, but it's my opinion that the Gamestop thing only got as bad as it did because the regulatory regime under his tenure was asleep at the wheel.) It should be noted that a correction doesn't necessarily lead to affordability if purchasing power simply continues falling or remains stagnant, as a result of a weaker job market. There are people who believe that sellers will simply refuse to drop residential real estates prices, as they have with commercial properties. Consolidation of ownership under large entities - as we've already seen to some extent - would allow owners to simply squat on properties, perhaps renting then out. Who knows what happens to the algorithmic rent fixing lawsuits, that might have brought those costs back to Earth a bit, after this year's electoral red wave.
  - toomuchtodo 2y ago
    A correction won't occur because there is a housing shortage of between 3-8M units, depending on who you ask. There is not enough labor to build more units at any reasonable rate, so it'll be a slow burn as the system reaches equilibrium over time (new housing comes into the market when owners must sell, demand destruction due to pricing). Due to demographics, a lot more housing could be satisfied by smaller units accounting for reduced forward looking family formation, but the challenge remains in sourcing labor to build these units. With regards to the labor market, due to structural demographics and labor shortages, it is highly unlikely in my opinion that the job market weakens to the point where housing experiences a crisis from a rapid, sustained increase in homeowners who cannot afford their mortgage payments. https://www.voronoiapp.com/demographics/Over-Half-of-Households-in-the-US-Dont-Have-Kids--2933 https://www.voronoiapp.com/demographics/Over-Half-of-Househo... ("Over Half of Households in the U.S. Don't Have Kids") https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage https://www.fanniemae.com/research-and-insights/perspectives... ("U.S. Housing Shortage: Everything, Everywhere, All at Once") https://www.fanniemae.com/media/45106/display https://www.fanniemae.com/media/45106/display ("Fannie Mae: The U.S. Housing Shortage from a Local Perspective") https://www.marketplace.org/shows/marketplace/the-housing-sector-droops-under-a-labor-shortage-and-price-hikes/ https://www.marketplace.org/shows/marketplace/the-housing-se... ("APM Marketplace: The housing sector droops under a labor shortage and price hikes") https://www.businessinsider.com/baby-boomers-housing-wealth-home-prices-housing-shortage-retirement-2024-11 https://www.businessinsider.com/baby-boomers-housing-wealth-... | https://archive.today/OsNgL https://archive.today/OsNgL ("Business Inside: Baby boomer homeowners got rich from skyrocketing house prices. Now they can't find retirement housing.") https://www.bloomberg.com/news/articles/2024-09-18/us-faces-a-deficit-of-6-million-workers-in-less-than-a-decade https://www.bloomberg.com/news/articles/2024-09-18/us-faces-... | https://archive.today/Lyr5t https://archive.today/Lyr5t ("Bloomberg: US Faces a Deficit of 6 Million Workers in Less Than a Decade") https://www.axios.com/2024/06/27/labor-shortage-workforce-economy https://www.axios.com/2024/06/27/labor-shortage-workforce-ec... ("Axios: Labor shortages are the new normal") https://www.axios.com/2023/08/27/labor-shortages-air-traffic-health-care-teachers-police https://www.axios.com/2023/08/27/labor-shortages-air-traffic... ("Axios: Labor shortages plague high-stakes industries") https://www.axios.com/2023/05/08/us-labor-shortage-older-workers https://www.axios.com/2023/05/08/us-labor-shortage-older-wor... ("Axios: Why labor shortages could be here to stay")
deadbabe 2y ago
People don’t have the right to simply live in highly desirable areas for very cheap. It is time for people to accept that if they want affordable housing they should look at some lesser developed areas in the country. Otherwise it’s pay to play.
- tantivy 2y ago
  What happens in society when every city is filled with the retired rich and zero actual workers?
  - MarkusQ 2y ago
    The price of houses will fall and the price of basic services, food, etc. will skyrocket as people flee the stagnant cities and core economic activity moves elsewhere. It will never go this far of course (zero actual workers is an asymptote), but that's the way it will trend.
  - Invictus0 2y ago
    In places like Lisbon and Milan, the rich live in the center and the young folks live on the outskirts. The outskirts then become trendy and cool and filled with bars and restaurants and cafes (can also look at Brooklyn, and now we are seeing a second Harlem Renaissance as well). Eventually the rich realize this and move to that place, and then the young people move again. But no matter what, the young people always end up living in the most desirable area because they commune with each other and create a desirable community in that place; meanwhile retired wealthy people are inherently uncool and consume more than they contribute.
  - HarryHirsch 2y ago
    Look at Aspen, CO - the indigent commute in from far away because they are priced out and disposable.
  - mattnewton 2y ago
    This is already happening in many neighborhoods in California. I imagine elsewhere in the US too. People who keep it running have to commute long distances.
xienze 2y ago
> The short answer is that a house is no longer a place to live, but an abstract financial asset. This line of thinking is commonly repeated, but it fails to take into account the old “location, location, location” thing. If you bought a house that was once in the middle of farmland 30+ years ago but now that house is on (let’s say) two acres of land in the middle of a coveted suburb of a large city where the average house sits on .2 acres, why _wouldn’t_ that house (or more accurately, the land) have appreciated greatly in value? A LOT of these houses that “boomers” bought were once out in the boonies, and now those places are desirable, developed areas.
- bigtex88 2y ago
  Henry George is screaming from his grave. We know how to fix these sorts of problems but we will never take the steps to actually fix them.
blindriver 2y ago
There should be no tax on selling a primary residence if and only if you buy another primary residence. Otherwise tax it like capital gains or higher. Make it economically unfeasible for people to own more than one house. I’m generally a capitalist but i’m okay with this because the housing situation is ridiculous. Hedge funds and other corporations should be disallowed from purchasing single family homes. Period.
ipython 2y ago
This is all well and good but as someone who just went through a renovation, the cost of labor and materials is astronomical. Yes the land is expensive too but it’s not like it was free to get construction crews out either. So while it is a financial asset, the cost is still tied to the cost of physically constructing the thing.
deleted 2y ago
[deleted]
Eddy_Viscosity2 2y ago
Another short answer is that actual inflation could be much larger than the "official" inflation numbers use for these calculations.
masto 2y ago
The part I found strangest about the house-buying process (in 2015) was that the real estate agents, mortgage brokers, etc., had a fundamentally different conceptual framework than we did. I thought we were looking for a place to put our stuff, where we would stay basically permanently. They were assuming we'd sell it in 5-10 years. I didn't understand this unstated premise at first and it led to some confusing moments.

tmountain 2y ago

This sounds interesting. Where is it typically put into practice?

ratmeadow 2y ago

Bingo. People love to go into some deep analysis of housing and "agh it's a really hard problem", but it's simple at the end of the day: we have constructed, and continue to construct, a society where housing is not considering a right, but instead a way to inflate your bank account. It smells like this from the prospective house buyer at the bottom all the way to the government propping up the system at the top. Time to change the system. I refuse to believe that out of all the great things humanity has achieved, effective housing (shelter, of all things!!) is unsolveable.

toomuchtodo 2y ago
The system will not change because the folks in charge profit and maintain power from a system of accelerated financialization. They then wring their hands and clutch their pearls as young people take rational actions by not having children (rapid fertility rate decline), worried what happens to the pyramid scheme as it runs out of steam. Their crisis is the young cohort's survival mechanism. Young people have to do their best to survive in an unfavorable macro for the life they have left, and old folks age out eventually (which is the only way they give up power, the power which is needed to make change to improve the macro). https://news.ycombinator.com/item?id=40338619 https://news.ycombinator.com/item?id=40338619 https://www.ted.com/talks/scott_galloway_how_the_us_is_destroying_young_people_s_future https://www.ted.com/talks/scott_galloway_how_the_us_is_destr... https://www.youtube.com/watch?v=u-PinTQcuik https://www.youtube.com/watch?v=u-PinTQcuik https://www.axios.com/2024/07/25/adults-no-children-why-pew-data https://www.axios.com/2024/07/25/adults-no-children-why-pew-...
- almost_usual 2y ago
  > old folks age out eventually (which is the only way they give up power, the power which is needed to make change to improve the macro). A lot of those old folks have children who will inherit their homes.
  - toomuchtodo 2y ago
    And a lot of folks don't have parents leaving them a portfolio or a high value asset they can live in. A material amount of people 55+ have no retirement savings, have material amounts of debt, or are in similar situations where the house might have to be sold versus be conveyed to children at death to break even (healthcare, senior|nursing home, memory care facility costs until death). If you are lucky enough to inherit an unencumbered (or one with a mortgage you can at least afford) residential property you can live in as a young person when your parent(s) pass, that is fantastic luck. Take the win if you can get it. That is not the mean experience, based on the data. https://www.gao.gov/financial-security-older-americans https://www.gao.gov/financial-security-older-americans https://www.nbcnews.com/business/consumer/generational-wealth-transfer-baby-boomers-cant-save-gen-x-millennials-rcna128099 https://www.nbcnews.com/business/consumer/generational-wealt... https://www.nytimes.com/2023/05/14/business/economy/wealth-generations.html https://www.nytimes.com/2023/05/14/business/economy/wealth-g... | https://archive.today/fpbNK https://archive.today/fpbNK https://www.deseret.com/business/2024/09/10/millennial-gen-z-inheritance/ https://www.deseret.com/business/2024/09/10/millennial-gen-z...
    - brailsafe 2y ago
      This was the case with my dad and he isn't even 55. His house wasn't even worth all that much relatively speaking, but he had too much debt, not enough income, and too many expenses (more kids). It's fairly likely we won't see any inheritance from him. The 2 of us who can realistically work for a living might make more, but it's not looking likely either of us will ever be able to retire. On the other hand, if I chose the same life, it's plausible I could buy a house eventually, but buying a house in my home town isn't worth the trade of living in my home town.

boogieknite 2y ago

Im a rube but it my knee jerk reading tfa is there has to be some correction or young people are financially and domestically doomed. The solutions you listed here seem great. Is there momentum behind establishing these in the US? Is it more likely the trend continues and young people will simply become priced out, or is a correction more likely? If the latter, what are smart people expecting?

frmersdog 2y ago
You are correct. >Is it more likely the trend continues and young people will simply become priced out, or is a correction more likely? As a layman, take this with a huge grain of salt: it depends. By established rules, a major correction should be imminent. In fact, it should have happened one of several times already. Examples of catalysts include a bond liquidity crisis in late 2019, the flash crash at the start of the COVID pandemic, the Gamestop debacle in early 2021, the collapse of the Chinese real estate market later in 2021, and the US bank collapses of early 2023. There are also others, though several venture into conspiracy theory territory. In every example I mentioned, unprecedented action was undertaken to prevent a catastrophic event that might have lead to financial contagion across global markets. There will be probably be more. It remains to be seen whether authorities will continue undertaking steps to shore things up when the bubble threatens to pop. (Trump's return to office is an interesting wrinkle; grab another grain of salt, but it's my opinion that the Gamestop thing only got as bad as it did because the regulatory regime under his tenure was asleep at the wheel.) It should be noted that a correction doesn't necessarily lead to affordability if purchasing power simply continues falling or remains stagnant, as a result of a weaker job market. There are people who believe that sellers will simply refuse to drop residential real estates prices, as they have with commercial properties. Consolidation of ownership under large entities - as we've already seen to some extent - would allow owners to simply squat on properties, perhaps renting then out. Who knows what happens to the algorithmic rent fixing lawsuits, that might have brought those costs back to Earth a bit, after this year's electoral red wave.
- toomuchtodo 2y ago
  A correction won't occur because there is a housing shortage of between 3-8M units, depending on who you ask. There is not enough labor to build more units at any reasonable rate, so it'll be a slow burn as the system reaches equilibrium over time (new housing comes into the market when owners must sell, demand destruction due to pricing). Due to demographics, a lot more housing could be satisfied by smaller units accounting for reduced forward looking family formation, but the challenge remains in sourcing labor to build these units. With regards to the labor market, due to structural demographics and labor shortages, it is highly unlikely in my opinion that the job market weakens to the point where housing experiences a crisis from a rapid, sustained increase in homeowners who cannot afford their mortgage payments. https://www.voronoiapp.com/demographics/Over-Half-of-Households-in-the-US-Dont-Have-Kids--2933 https://www.voronoiapp.com/demographics/Over-Half-of-Househo... ("Over Half of Households in the U.S. Don't Have Kids") https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage https://www.fanniemae.com/research-and-insights/perspectives... ("U.S. Housing Shortage: Everything, Everywhere, All at Once") https://www.fanniemae.com/media/45106/display https://www.fanniemae.com/media/45106/display ("Fannie Mae: The U.S. Housing Shortage from a Local Perspective") https://www.marketplace.org/shows/marketplace/the-housing-sector-droops-under-a-labor-shortage-and-price-hikes/ https://www.marketplace.org/shows/marketplace/the-housing-se... ("APM Marketplace: The housing sector droops under a labor shortage and price hikes") https://www.businessinsider.com/baby-boomers-housing-wealth-home-prices-housing-shortage-retirement-2024-11 https://www.businessinsider.com/baby-boomers-housing-wealth-... | https://archive.today/OsNgL https://archive.today/OsNgL ("Business Inside: Baby boomer homeowners got rich from skyrocketing house prices. Now they can't find retirement housing.") https://www.bloomberg.com/news/articles/2024-09-18/us-faces-a-deficit-of-6-million-workers-in-less-than-a-decade https://www.bloomberg.com/news/articles/2024-09-18/us-faces-... | https://archive.today/Lyr5t https://archive.today/Lyr5t ("Bloomberg: US Faces a Deficit of 6 Million Workers in Less Than a Decade") https://www.axios.com/2024/06/27/labor-shortage-workforce-economy https://www.axios.com/2024/06/27/labor-shortage-workforce-ec... ("Axios: Labor shortages are the new normal") https://www.axios.com/2023/08/27/labor-shortages-air-traffic-health-care-teachers-police https://www.axios.com/2023/08/27/labor-shortages-air-traffic... ("Axios: Labor shortages plague high-stakes industries") https://www.axios.com/2023/05/08/us-labor-shortage-older-workers https://www.axios.com/2023/05/08/us-labor-shortage-older-wor... ("Axios: Why labor shortages could be here to stay")

deadbabe 2y ago

People don’t have the right to simply live in highly desirable areas for very cheap. It is time for people to accept that if they want affordable housing they should look at some lesser developed areas in the country. Otherwise it’s pay to play.

tantivy 2y ago
What happens in society when every city is filled with the retired rich and zero actual workers?
- MarkusQ 2y ago
  The price of houses will fall and the price of basic services, food, etc. will skyrocket as people flee the stagnant cities and core economic activity moves elsewhere. It will never go this far of course (zero actual workers is an asymptote), but that's the way it will trend.
- Invictus0 2y ago
  In places like Lisbon and Milan, the rich live in the center and the young folks live on the outskirts. The outskirts then become trendy and cool and filled with bars and restaurants and cafes (can also look at Brooklyn, and now we are seeing a second Harlem Renaissance as well). Eventually the rich realize this and move to that place, and then the young people move again. But no matter what, the young people always end up living in the most desirable area because they commune with each other and create a desirable community in that place; meanwhile retired wealthy people are inherently uncool and consume more than they contribute.
- HarryHirsch 2y ago
  Look at Aspen, CO - the indigent commute in from far away because they are priced out and disposable.
- mattnewton 2y ago
  This is already happening in many neighborhoods in California. I imagine elsewhere in the US too. People who keep it running have to commute long distances.

xienze 2y ago

> The short answer is that a house is no longer a place to live, but an abstract financial asset. This line of thinking is commonly repeated, but it fails to take into account the old “location, location, location” thing. If you bought a house that was once in the middle of farmland 30+ years ago but now that house is on (let’s say) two acres of land in the middle of a coveted suburb of a large city where the average house sits on .2 acres, why _wouldn’t_ that house (or more accurately, the land) have appreciated greatly in value? A LOT of these houses that “boomers” bought were once out in the boonies, and now those places are desirable, developed areas.

bigtex88 2y ago
Henry George is screaming from his grave. We know how to fix these sorts of problems but we will never take the steps to actually fix them.

blindriver 2y ago

There should be no tax on selling a primary residence if and only if you buy another primary residence. Otherwise tax it like capital gains or higher. Make it economically unfeasible for people to own more than one house. I’m generally a capitalist but i’m okay with this because the housing situation is ridiculous. Hedge funds and other corporations should be disallowed from purchasing single family homes. Period.

ipython 2y ago

This is all well and good but as someone who just went through a renovation, the cost of labor and materials is astronomical. Yes the land is expensive too but it’s not like it was free to get construction crews out either. So while it is a financial asset, the cost is still tied to the cost of physically constructing the thing.

deleted 2y ago

[deleted]

Eddy_Viscosity2 2y ago

Another short answer is that actual inflation could be much larger than the "official" inflation numbers use for these calculations.

masto 2y ago

The part I found strangest about the house-buying process (in 2015) was that the real estate agents, mortgage brokers, etc., had a fundamentally different conceptual framework than we did. I thought we were looking for a place to put our stuff, where we would stay basically permanently. They were assuming we'd sell it in 5-10 years. I didn't understand this unstated premise at first and it led to some confusing moments.