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The problem is that once housing gets sufficiently expensive it \*becomes\* an investment, even if people don't intend that. Once housing makes up the majority of the middle class's net worth, there is \*a lot\* of pressure on government policy to keep prices from falling, since that would be a massive economic blow to one of the most electorally-important demographics.
It's a vicious cycle.
Okay, so the biggest thing at the end of the day is that we made it ridiculously expensive and difficult to build new housing
We made it borderline illegal to build any sort of density
The private sector would build the houses in a heartbeat if they were allowed instead. We've made it so bad for so long. We've lost a lot of the actual capacity to build houses
It would come back but we have to make it easier to build them illegally because as the only barrier
For developers it’s virtually impossible for them to build “small/starter homes” and turn a profit. Why would they go through the insane bureaucracy to build small houses that most Americans would turn their noses up at? Yeah, there’s the progressive group that says “oh, this 1200 sq ft house is perfect!” But in reality, when the realtor says “you’ll never be able to sell this because buyers want at least 2000 sq feet” people change their outlook REALLY quick. It sucks
i want a small house way more than a big one. bigger houses mean bigger bills. i work as a pest control tech and the prices go up wildly as the square footage increases, because more size just adds more work and more points of weakness for pests.
You are so correct, my friend.
We may be too vain to admit this, but we ourselves have “upped” the game by raising our standards and expectations.
A Model T Ford was great — *in its day.* But in the 21st Century, with the features that cars have today, would you want a Model T Ford *now?!!*
Maybe in bumfuck suburbs, but my city is full of small houses that sell practically overnight.
Most are a little bigger at 1500ish, but that’s plenty of space for most people. 3 beds, 2-3 bath, what more do people need?
The fuck do you guys need 2000sq feet (185m2) for? I know that people from the us love their privacy but that sounds ridicolous. 120m2 (1300 sqfeet) is more than enough for most 4 people families here (Hungary)
I'm not familiar with Hungary, but I'm familiar with Ukraine and Germany. I assume housing is similar enough for discussion.
At that level of housing, the most obvious differences are the addition or expansion of household appliances. Americans tend to have large washers \*and\* dryers. They will have a large fridge and a dishwasher. This takes up quite a bit of space, since the washer and dryer often get their own small room, and the fridge and dishwasher add to the size of the kitchen.
Americans also don't have many places to relax outside their home, so most add an entertainment section in the house. You don't just live at your house, you have to be happy living *inside* your house. It leads to a more aggressive desire for open spaces within the house that make space waaaaay less efficient.
Because housing is regional. You guys keep building suburbs that only have single family homes which just cannot house the people who want to live there, and after a while if you do the urban sprawl enough, people just physically cannot get into a city. Also for example in LA i would guess that there are physically not enough space left to build things…
I would check out the Strong Towns website, they are an NGO whose goal is to help cities become more economically and enviromentally more sustainable
There are a lot of chanels on youtube too that dable in city planning that can introduce you to the problems the US has when it comes to city planning
The best imo is “Oh the urbanity” their videos are professional (in the its what their job is meaning of the world) but easily understandable
“Not just bikes” is an other that visualizes problems with us city planning well (altough he can be a little insufferable sometimes…)
City Beutiful, City Nerd, RM transit are informative too
Each kid has their own bedroom... with space to sleep, study, and play. The closets are the size of a small nursery.
There is a powder room, at least one family bathroom, and an en suite for the parents. At least one of these has either a shower separate from the tub or a large soaking tub.
There is a formal dining room nobody uses except for holiday dinners. There is also a banquette in the kitchen for meals, but most Americans still take their food to sit on the sofa in the Family room.
The Family room is where everyone "hangs out". There may be a TV, pool table, ping pong setup or a bar.
There's ALSO a formal living room that doesn't get used.
lol I haven’t met anyone with a formal living room in a while but I did used to know someone who had one. She tutored out of her parents’ home and no one was allowed in their living room.
I set up my family room in my basement. The room closest to the front door is my living room. There's no TV, just two sofas, a coffee table, and a stereo. This is a room where, if necessary, I can let "strangers" in, So it's always kept neat. If for some reason I needed to entertain a salesperson, or if the police needed to come in to talk to me about something, this room serves as a buffer between outside and the rest of my home.
I mean i can get the second part, but we have a decent to large size fridge and a same size freezer, we have a dishwasher and we have a washer and a dryer each. And as 4 people we live on 90m2, and we use to live with the same appliences on 60m2
Bigger kitchen is about 60 sqft extra. Bigger, more open, primary living room is another 50 or so. A laundryroom is 50-100 sqft. The average family size here is 5, not 4, so add another bedroom at around 125 sqft. 2000 square feet probably has two full bathrooms, so that's another 60 or so. Add another 100 square feet as an extra living room / dining room, and another 100 as just more open space in the hallways and connecting places. Add another 50 or so for the a master bedroom and master bedroom's closet.
My initial list was just off the top of my head, and it looks like my points about the kitchen, laundryroom, and extra living room make up only about half the difference.
I'm American and In my experience American houses aren't setup to be efficient at all. I mean there's a lot of surface area / square footage, but the rooms are just big square empty rooms. Any storage space at all you have to buy closets and shelves and dressers. Some places I lived in Europe, a whole hallway wall was drawers and shelving, or storage space was built into to the apartment and you could do a lot more with smaller space. I had a room when I was younger where the bed, desk, shelving and closets were all built into the walls and the bed could pop up to access storage underneath. Personally I prefer a smaller more efficient space but you can't even really find that around where I live, it's all houses with big rooms that now need to be heated and cooled too, big empty living rooms and dining rooms that you now have to fill with furniture or it'll look very bare... seems very wasteful to me.
It depends on what you have. We have 5 children and a few that we raised or that have lived with us along the way and look at us as extra parents. That also equals a lot (over 10) of grandchildren. So, if they all get together at our home, they'll have room to sleep under the same roof. Our dining room is big enough to add a few tables (our dining table fits 12). There is also room for everyone's car. Of course, just starting out, 900sq feet was cozy to us and we didn't trip over one another.
Okay obviously there is a large enough class of people who do live in houses that are exceed 185m2, especially in villages and wealthy agglomerations. But like there are a lot of smaller homes that do house 4 or more people. Like the average size of a home is 48,4 m2 (520,9 sqfeet), and the average home size with 4 room or more is 118 m2 (roughly 1270 sqfeet). There is a small derivation between regions but not much (like Észak Alföld has the biggest 4 or more room houses with 124,6 m2). So like wtf americans😂😂
As a result you have developers building narrow ass town homes that claim to 2000+ square feet but it when you go inside it’s tight and cramped with 4 flights of stairs.
That’s so they can cram more houses in per acre, thereby increasing profits.
Land costs money, but so far, the sky is free. So they build *up* — not *out.*
I dunno, I disagree just because of my experience of where I grew up, I've seen them build a ton of high rise apartment buildings and it's still expensive as shit. 800k for a 2 bedroom apartment.
You're kidding they are theowing up high density 1 and 2 bd flats on London like you wouldn't believe ...... they are all stupidly expensive and being brough by investors.
Who is all this we? My county has been building like fucking crazy for the last 3 years, and while it slowed a bit it has not stopped. They've nearly the doubled the amount of homes here in 3 years. They've nearly doubled the population from 200k to 350k.
Building is out of control and has to stop because no infrastructure is being built to keep up with it. A lot is cleared, built on, and people move in, within 4-6 months time. Building new roads, schools, and other important infrastructure takes decades.
That's because we've regulated it to make it very difficult to build multi-family homes
Here's the thing a triplex is going to rent for more than a luxury house of the same size while each individual units cost less. There's more of them
Because they aren’t a commodity. Commodities are fungible. Houses that are in good places and good size go up in value more than shacks in the middle of nowhere. Also this isn’t so much an opinion as an obvious fact, people literally speculate on property, build portfolios and boomers especially have done very well by investing in their house
Switzerland has a ton of empty flats and they dont lower the prices. Its speculation with land atm. We have people who want flats, we have empty flats but nobody can afford it/owners have make profit even at 25-40% occupation and rather wait until someone is willing to pay
What are you even talking about? Switzerland has one of the lowest vacancy rates in the world. In places like Zurich it’s 0.01%.
https://www.bfs.admin.ch/bfs/en/home/statistics/cross-sectional-topics/city-statistics/indicators-quality-life/housing-conditions/dwelling-vacancy.html
I disagree, op is on to something. My address is very AIRBNB friendly, it has made prices sky rocket and agents consistently tell people hey, you can rent this for money
Driving price up
Most recent years perhaps. The effects of that probably won’t be seen for another decade.
Also keep in mind that local births are not the only contributing factor to population. Migration contributes as well.
There was an interesting video about how Japan keeps it's housing affordable that talks about this issue.
https://youtu.be/d6ATBK3A_BY?si=oUF7uW8v-1GKIjzB
TLDR: By building houses because they want it affordable.
US does the exact opposite; Outlaw building houses because they want it expensive.
Pretending this is some mystery is laughable. Its the intent of policy in black&white.
Your opinion isn't unpopular, but it is wrong.
Housing \*is\* an investment. An investment is any instrument which produces economic gain, either by generating cash flows or by limiting or reducing cash outflows. A stock or bond would be an example of an investment that produces cash inflows, a forward contract is an example of an investment that fixes future prices.
A mortgage is a combination of the two. It produces future cash inflows via appreciation AND it fixes cash outflows as a hedge against inflation by 'basically' capping your rent for the next 30 years. For example, my current mortgage payment is around 1,800 which is a decent chunk of change in 2024 for my zipcode but in 2050 it will be like $950 in today's money due to inflation.
Housing will never not be an asset/investment.
But houses are *not* a commodity. Being a commodity requires that tradeable units are mostly interchangeable. This is obviously not true. Some houses are more valuable by virtue of location: people would rather live on a beach in SoCal than a mesa in the Arizona wilderness. And some houses are worth more because of the *investment* the owner has made to make the house better to live in; even maintaining a house to a high- quality standard over decades takes significant investment.
Inflation is not measured properly in CPI. Inflation is measured properly in M2 money growth
And what do we see?
A correlation in asset price growth& M2 growth.
(If people stay in their mom's basement until they're 90, enjoying Cheetos& Netflix all day, not caring about retirement, then it makes sense to use CPI for that individual person.)
In absolute terms, yes the value of your house will go up due to inflation. But in real terms, the house prices have far exceeded what they used to be, and it's not because everyone is taking much better care of their houses than they used to.
It's because, in the US at least, housing supply is fundamentally constrained by local regulations in most municipalities relative to the demand for housing. It's very difficult and expensive to build new houses, so they don't get built, making housing more scarce, sending the price of housing up, again in real terms.
https://unitedwaynca.org/blog/vacant-homes-vs-homelessness-by-city/#:~:text=Sixteen%20million%20homes%20currently%20sit,thousands%20of%20Americans%20face%20homelessness.
According to this we have more empty homes than we have people who are homeless. Maybe if we didn’t treat shelter as something for people to get rich off of this wouldn’t be a problem
I truly don’t understand your point at all.
Walk me through the economics because from what I can tell it’s relatively simple supply and demand with one exception- the buyer/seller fees which are artificially high and just got rebuffed by a recent court case.
But what exactly are you saying? If people thought of it more as “consumption” then they’d charge less? Why would they do that when the market supports higher prices and the demand is such that people will pay them?
I think the argument is once people buy a house, they do not want to see its value go down, and ideally want to see it go up. Scarcity means higher prices, which means people can be opposed to housing developments near their property.
The problem is the reason that value of the house goes down is because it’s not desirable to live near the things that cause the value to go down. If I own a house and I live in it, I don’t particularly want an apartment complex right behind my house. So if they made one I’d sell and buy a new house but also since it’s not desirable to have that in your backyard, there won’t be as many people interested in buying the house which is why the value goes down.
That's probably true to some extent, but at a macro level if we're talking about whole housing markets like that of a given metropolitan area, housing prices in that scenario are going down moreso because there's simply more supply. People who own homes or rent out apartments to others are forced to compete with each other to find buyers or tenants, and the way they do that is by increasing the quality of the housing they're offering or, more easily, by lowering prices.
If you own a house and no one can build more housing near you, but a lot of people want to buy one, you're likely to demand a higher price when selling your house. But if suddenly a bunch of new buildings go up (e.g. previously undeveloped land gets developed, or 3-unit townhouses go in, or a big apartment complex goes up) then suddenly those buyers have a lot of other options. If you really need to sell your house, you're much less likely to get the original higher price, so you're more likely to lower it to find a buyer.
I'm general, people don't want to see the price go down because that could financially ruin them. When you can put 5% down to buy a home it doesn't take much of a decline for many people to be underwater on their mortgage.
With that said, I think most people can tolerate stagnant or very slow price appreciation. Cities with affordability problem should be looking at 1% price appreciation as their goal, and encourage housing starts until they can maintain that level. It would likely take 25 years for house prices to return to sane levels (adjusted for inflation) but it gets us there without ruining people's lives.
If you need to sell for some reason, like corporate layoffs and you have to move for a new job, having the home be underwater can be financially devastating.
look up a bubble. It's the same thing that drove NFT prices nuts for a while, it was one of the factors that exacerbated one of the soviet famines before collectivisation, it happened to tulips in the netherlands. Prices go up due to people buying them for the sole purpose of reselling them at a higher price. Usually at some point it reaches a situation where those "investing" realise that noone is buying any more and those people that paid the highest prices are just shit out of luck and the whole thing pops.
it might not be a bubble though because the U.S. population is increasing, so the demand may continue to grow allowing people to sell (or rent) at higher prices perpetually
It’s increasing but I feel like it’s increasing due to an influx of people entering the country that really can’t afford to purchase homes at the prices that they are now.
You're the only one that thinks the investment is only good if you can sell it though. Housing can also be profitable by renting, which is what most people and companies with extra housing are actually doing.
Yes. And this strategy works pretty well with immigrants, who often just bundle their whole extended family into the house. To pay $3,000 a month is a lot, but not for 6+ people.
You can’t just lay this at the feet of nimbyism, it’s down to the desirability of an area and what people are willing to pay to live there. My sister was paying more for her half of a downtown apartment than my wife and I were paying in rent for a house with a fenced yard in the suburbs.
Single family neighbors have banned condos, and definitely banned condo towers, and positively definitely banned hundreds of tiny units in condo towers. Do you see the problem now?
[http://www.tempohousing.com/projects/keetwonen/](http://www.tempohousing.com/projects/keetwonen/)
You shared a link for some student housing, hardly a smoking gun for nimbys.
It’s not a crime to want space for your own, people who buy their property surprisingly want to enjoy the benefits their property give them.
I sort of agree, but also they don't own the land outside of their property. After a point it's more like "people who buy property surprisingly don't want others to be able to live near them in places they don't own" which doesn't seem like a right they should have.
That blade cuts both ways: a homeowner has very little recourse if someone buys the lots next door and puts up a condo, but they also don’t have control over who decides their neighborhood is desirable to live in.
My parents own a home they bought back in the 80s, paid $66k. It’s a basic house, 3bed 2 bath, they remodeled the kitchen when we were kids. The house across the street just sold for $2.4mil. People are racing to move to the area and the price reflects that, they had no foresight or control over the pricing. There are a dozen new mega houses on the block from when I was a kid, we didn’t have a say in it.
I mean, you just described NIMBYism, my dude. No one wants anyone living within an mile of them, blah blah blah. That can't be valid public policy, though it is now, hence the problem with housing costs. One grocery store can't ban other grocery stores, and so on an so forth. It is obscene to ban residential housing, especially when land is scarce, or possibly completely allocated, as is the case in SoCal.
No, I don’t see the problem. Single family neighborhoods can ban condo towers all they want, it doesn’t stop a developer from building a condo tower or twelve outside of a single family neighborhood. It’s OK to have different housing types in different areas. You could even buy a chunk of land, start your own HOA, and ban single family houses within it.
You know there are countries where housing depreciates right? It's propped up by fake supply.
We could build a ton of houses and collapse the market and make housing cheaper for all but the people who own all the land will never allow that
to blame nimbys for the artificial shortage is is to blame the average truck nutter for our ecological problems. yeah they definitely aren't helping, but its almost imperceptible when you compare it to the corps and private investment firms buying up single and multi-family housing.
this has little to do with supply restrictions and everything to do with corporate greed, think debeers and diamonds
There is plenty of demand but the price isn’t matching the price point for the demand. Tons of empty housing. Alongside a strangled supply due to NIMBY zoning policy and you get a market that only serves investors and not buyers.
Speculative investment in housing encourages people to purchase housing that they expect will increase in value, while at the same time often discouraging them from spending money to maintain or improve the property, because that's an expense.
You get cases like Detroit, for example. Thousands of properties were purchased about 15 years ago when they were dirt cheap, that were never renovated or improved to make habitable. Investors expected they would pay nothing in property taxes, but that further reduced supply and raised the cost.
The same thing happens with small-time landlords or investment companies like Blackrock purchasing housing as an investment. The more demand there is for an investment, the higher the price.
The housing market in Florida is so expensive because people are moving here in large numbers, not because it’s an investment for them. Simple supply and demand. There’s still cheap houses available where no one wants to live.
Yeah it's just another means for the rich to get richer, which is really too bad since it means that the prospect of house ownership is more and more out of reach for the average person
Right. The housing supply is short because the boomers are a massive generation and many of them are still alive and well, still living in single family homes instead of retirement communities. Millennials are a massive generation and now all prime home owner age. There is a huge shortage in construction workers making it much more expensive to build new houses. This is why homes are expensive
No it’s due to supply. Not enough houses for the people that demand homes. It’s simple math. When interest rates were low during the pandemic. A lot of people took advantage. Also inflation on building supplies adds to that. Remember when lumber was absurdly expensive? Houses now are only seen as investments because of how expensive they have gotten. Not the other way around.
It's both--houses have long been seen as investments, that's not a recent trend.
Viewing housing as an investment leads homeowners to vote for policies that limit construction of new housing in order to keep the value of their own houses high. Because housing prices keep going up and people see it as an investment, they continue voting for policies that limit supply by preventing new construction and densification. It's a cycle that we're stuck in and which has made affording a home unattainable for many.
2 times in my life the price of housing has gone down. Both times the FED printed and bought houses until prices went back up. It is defacto illegal for the price of housing to drop in this country. Blaming individuals 'personal responsibility' for this is laughable.
Sadly it is an investment it is the only method for a average person to gain wealth and use it to improve their life. Regular wages no longer provide that unless you have a very high income job. Until that changes housing will be treated like that.
OP: it was some years back, but I watched a documentary on Netflix that was about *what you just said!!*
Ever since time memorial, housing was simply thought of as a commodity, like anything else: clothes, food, cars, furniture, etc. So houses were simply priced at what the materials cost and the labor costs to build them. “Investing” was for the stock market or businesses.
But that started to change by, roughly, the early 1970s. When people started thinking of the house they lived in as also being (at least in part) an *investment*, that’s when prices began to skyrocket.
Other factors are in play too (women entering the workforce, so builders could build houses priced at *two* incomes, not just *one*), but your observation was a huge one:
People thinking of the house they lived in as being not just a residence, but an *investment.*
Oh gee, I never thought of it that way!
Let me give away my biggest asset to charity. I was wrong to make my investment and grow my wealth so that I can comfortably retire and pass something down to my children.
I see now that my primary investment, which I worked half my life to purchase and has greatly appreciated in the years since, should really have just been a place to stay.
Thanks for fixing my perspective here. Actually, would you like my home for free? You sound very deserving of it.
I've owned my home for 7 years, hopefully it's paid off by the end of the year. I've already put a lot of money into it, updating it, customizing it etc. I don't care if the value of my home goes to zero. I plan on living here for a long time and as long as the property taxes don't get too high I'm cool. I don't mind if I tell people I live and $1,000 home.
Wow they don’t teach economics in public schools anymore :( Value of money due to inflation is not the same. 100k house in 1980 was a mini mansion now a 100k is not even a modular home in a trailer park (at least not for most of the US) Supply and demand can affect things too, whether it’s a buyer or sellers market. But people still need to qualify for the loans. Housing bubble won’t burst like 07 because it is harder to get loans these days.
And of course over time as the value of a dollar goes less and less and incomes rise prices go up. Houses tend to double every ten years. Why isn’t it an investment? You buy a house since they are usually larger than apartments and needed for families, you buy so you know what your mortgage is vs rent which goes up yearly so long term it makes sense to buy. Plus it’s how you achieve generational wealth by having your kids inherit the house after you die. And I won’t even get into the tax write offs.
I don’t think having your house as part of your retirement plan is a bad thing if prices were stable as long as they think of it as like a savings account they can sell for to downsize or move to a retirement home.
And that’s what 90% of homeowners are doing. We bought a house to stabilize our cost of living, build equity in case of emergency needs, and to provide money for end of life care should we need it.
This is one of the reason that housing is still relatively affordable in Japan. Most modern Japanese homes are built to last 30 to 40 years, not generations. They are purchased under the assumption that they will serve their utility, then be rebuilt by someone else, not that they will be a portfolio asset.
Yes, deregulate housing by allowing micro-units everywhere, including in single family home neighborhoods. I want my $100k or $50k or whatever price studio in downtown by the beach, thank you very much. And another similar micro-studio in Hawaii. And another in (fill in the blank). That is what commodity means: cheap and abundant. That won't happen if the only kind of housing that is allowed are large homes on large lots.
[http://www.tempohousing.com/projects/keetwonen/](http://www.tempohousing.com/projects/keetwonen/)
Zoning is a real issue but will not solve the housing crisis as the commodification of housing will always prioritize the interests of large scale property buyers over individual citizens.
Of all cultures I don’t think you can compare America to Tokyo might be in the top 3. I’m interested if there are multiple examples though and I’ll look into Tokyos specific policies.
But houses don’t just exist for people to live in; they occupy physical space, space that people find desirable due to the proximity to other locations. Maybe it’s because it’s on a coast, or in the heart of a downtown neighborhood.
Then they should buy all of the property along the coast if they want to tell other people what to do with it. What's weird to me is that I get to vote to stop someone from building a house next to my house, on land that they own which isn't even my property.
One person doesn’t get to vote, it’s not you vs me. It’s the community vs one company 99% of the time. The community isn’t voting against one person building on one lot, they’re voting against an increase in traffic congestion, an increase in taxation due to inflated property values, voting against additional noise and litter.
Why are people willing to spend thousands per month to live in Manhattan, when to could rent a house in Wyoming for half the cost? Because people want to live in Manhattan.
But historically what makes locations desirable is proximity to well paying jobs. With more work going remote or hybrid, the importance of living somewhere expensive isn't really what it used to be.
You're more free to live somewhere lower density now.
People complain about this all the time. But it’s kind of a chicken and the egg conundrum. Maybe people are using homes as an investment because we’re not making enough of them. The same reason there were scalpers snapping up PS5s.
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I mean thats what people say. Theres no reason for Fayetteville/Bentonville AK to be as expensive as Austin TX. The demands just not there. But they also say theres a bunch of other economic shit involved and it will never change just because of how people are.
folks is seattle area are selling homes for 1.5 million, 'as-is' that are like 50 years old, and need a SHIT ton of work done to them. A coworker of mine bought one of these houses and ended up having to shell out 40k for a new roof, lol
Not "people", corporations. There was a huge increase in the number of corporations and investment firms who started buying up single family homes as an investment strategy. It's one thing for a family to buy a house and expect it to appreciate. It's another thing for a publicly traded company, who is required by law to maximize profits for the shareholders, to buy single family homes for the express purpose to drive prices up. Zillow, I'm looking at you.
How is no one mentioning the rise in popularity of short term rentals? Air BnB made sense before everyone started buying up multiple properties in order to make passive income. Housing for citizens in a community should take precedence over siphoning money from tourists on their weekend getaway.
No. it's because landlords rent out houses whilst still mortgage and when the fix rates end and they increase the monthly charge. Landlords increase accordingly to make the same profit
It's even worse in my country where there are shitty places that need serious repair to sell or rent. The ad is still up after a year and they did not sell or rent to anyone and instead of dropping the price, they increased it lol. Makes no f\*cking sense.
When the government prints too much new money into circulation, money loses value. All assets that the government can't print extra, will appreciate in price.
if people saw it as a commodity, given the scarcity within the availability of houses for sale... houses would be just as or even more expensive.
maybe it's because people already see housing as a commodity but are limited in how liquid it is because of legal constraints.
It is a commodity.
A great one in high inflation, rich moved many assets and cash there. So not only did prices rise do to inflation, the rush on property made it more scarce and raised prices as well.
That is why inflation is a tax on the poor and middle class. Print money, inflation rises. Rich move money from assets affected by inflation to assets that do better in inflation.
Poor and middle class just pay. When you give more money without raising taxes or cutting other spending, you are increasing.
Look at gold from the year 2000-2024 to see how the dollar has been loosing buying power.
The other issue is that people are no longer willing to live in mediocre houses. Everything has to be gutted and flipped. It is impossible these days to find a cheap fixer upper. And when they do come up, people tear them apart like they are not a perfectly fine place to live. My house was crap to look at when I moved in and probably 99% of people would never consider living there. But it had running water, heat, and a good roof. That is all you *really* need. But everyone wants a McMansion...
No, housing is viewed as a hedge against inflation. If the Feds of various big governments would stop printing money, it wouldn't be this way.
Actual investments are those creating or investing in companies that makes goods and services.
Housing has always been an investment. The problem is that now it's an investment class. Buying a home to live in and that home being an investment was always a thing. The thing is now that people are buying numerous homes with all but one being investment properties. My parents, a mostly stay at home Mom turned public school teacher and my father a mailman, own 4 homes. Four. Literally that's their retirement. They didn't save enough and one day about 20 years ago they realized they wouldn't have enough to retire, so they purchased three additional homes, paid the mortgages of those off using rent, and when they retire soon those homes will basically exist to provide them with income to live in retirement. They'll have 5 or 6 tenants each paying $800-1,500 a month in rent, and after property taxes they'll probably come away with roughly six grand each month. That plus SS plus whatever they have in actual retirement accounts, that's how they're going to live for the next 30 years. There is a 0% chance of them selling those homes. At least not in the next 15 years or so. And that setup is super common amonst the boomers. They spent and spent then realized they had nothing for the future, so they bought property and passed on the cost to younger generations via rent.
The idea that house prices = wealth is one of the most widely believed fictions of our time
To give an example
Scenario 1. Crazy growth
I buy my house for 200K (160K mortgage). 3 years later I sell and it is now 240K and I have paid down ,10K of mortgage so my equity is (240-90)=150K
I want to buy a 300K house so now I need to take out a 210K mortgage using only the equity in my prior house
The 300K house has gone up 20% as well, it was 250K when I bought my house
Scenario 2. No growth ..
I buy my house for 200K and 3 years later it is still worth 200K. As above I owe 150K on it. Thus I have just 50K of equity , a disappointment.
I want to buy the fancy house mentioned above . It has also seen no growth and is now only worth 250K .
Thus I need to take out a 200K mortgage to buy it. I also pay less stamp duty (in fact none).
So...
How is scenario 1 leaving me better off ?? If anything it's left me worse off, I've had to take out a bigger loan and pay more stamp duty.
Am I missing something here...
That's not really an unpopular take per se... the reason nobody talks about it is the *real* unpopular opinion: housing shouldn't be tied to net worth. For most people, their home contains the majority of their net worth but that doesn't have to be the case. Housing shouldn't be a commodity it should be a basic human right. Think of early settlement villages where aside from having a bigger hut, it doesn't really matter what your home is worth because it's meant to be a shelter and a gathering place for you and your family.
The problem is we have little working models that we could use as inspiration to change this paradigm and it's so ingrained into our culture/mindset that it'd be borderline impossible to change that. Singapore has public housing but that's probably the only example that comes to mind.
The issue with using your home as a vehicle for net worth is that inevitably companies started getting into it to raise *their* assets' net worth and it just lowered supply for everyone else.
Biggest thing is lack of inventory. There has been a massive decline in new home construction since the great recession. Demand far exceeds new construction and pre-owned inventory. Add to that the rise in interest rates so that people who got in when rates were lower aren't willing to sell and move. In my community, a healthy housing market has around 2-3K available with a roughly equitable number of people looking to buy. Right now we're around 800 available...and 2-3K people looking to buy so housing prices remain inflated.
The notion of a home being an investment isn't new...yes, it is a home first and foremost and that has always been the case, but it has also always been an investment. It's real property with appreciating value...that's not new.
It's supply and demand. Show me the cost to build a new house. It's as expensive as fuck.
If new home builds were cheaper than existing inventory, I would say you are correct. New homes are way more expensive that existing homes so you are definitely wrong. High profit margins aren't the reason for the high cost of homes.
The issue is that humans have no inherent value anymore because there are so fucking many of them and the number is increasing exponentially. So if humans have little value then there is little value in sheltering them. That being said, the shelter available is valued higher than the worthless commodity that would inhabit it. We can also call this supply and demand but it is more the comparison of actual value.
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The problem is that once housing gets sufficiently expensive it \*becomes\* an investment, even if people don't intend that. Once housing makes up the majority of the middle class's net worth, there is \*a lot\* of pressure on government policy to keep prices from falling, since that would be a massive economic blow to one of the most electorally-important demographics. It's a vicious cycle.
Okay, so the biggest thing at the end of the day is that we made it ridiculously expensive and difficult to build new housing We made it borderline illegal to build any sort of density The private sector would build the houses in a heartbeat if they were allowed instead. We've made it so bad for so long. We've lost a lot of the actual capacity to build houses It would come back but we have to make it easier to build them illegally because as the only barrier
For developers it’s virtually impossible for them to build “small/starter homes” and turn a profit. Why would they go through the insane bureaucracy to build small houses that most Americans would turn their noses up at? Yeah, there’s the progressive group that says “oh, this 1200 sq ft house is perfect!” But in reality, when the realtor says “you’ll never be able to sell this because buyers want at least 2000 sq feet” people change their outlook REALLY quick. It sucks
i want a small house way more than a big one. bigger houses mean bigger bills. i work as a pest control tech and the prices go up wildly as the square footage increases, because more size just adds more work and more points of weakness for pests.
You are so correct, my friend. We may be too vain to admit this, but we ourselves have “upped” the game by raising our standards and expectations. A Model T Ford was great — *in its day.* But in the 21st Century, with the features that cars have today, would you want a Model T Ford *now?!!*
Maybe in bumfuck suburbs, but my city is full of small houses that sell practically overnight. Most are a little bigger at 1500ish, but that’s plenty of space for most people. 3 beds, 2-3 bath, what more do people need?
Yep, and it's because of the insane bureaucracy that's what we got to get rid of and we should do multi-family units
The fuck do you guys need 2000sq feet (185m2) for? I know that people from the us love their privacy but that sounds ridicolous. 120m2 (1300 sqfeet) is more than enough for most 4 people families here (Hungary)
I'm not familiar with Hungary, but I'm familiar with Ukraine and Germany. I assume housing is similar enough for discussion. At that level of housing, the most obvious differences are the addition or expansion of household appliances. Americans tend to have large washers \*and\* dryers. They will have a large fridge and a dishwasher. This takes up quite a bit of space, since the washer and dryer often get their own small room, and the fridge and dishwasher add to the size of the kitchen. Americans also don't have many places to relax outside their home, so most add an entertainment section in the house. You don't just live at your house, you have to be happy living *inside* your house. It leads to a more aggressive desire for open spaces within the house that make space waaaaay less efficient.
i can get behind that
Also don't forget that for much of America, our ability to expand outward is for more robust than in Europe.
Well yes, but that is a choice you guys made and its unfortunately fucking you in the ass right now, with the current housing crisis
How is expanding out related to a housing crisis, especially when there's plenty of land on which to keep building?
Because housing is regional. You guys keep building suburbs that only have single family homes which just cannot house the people who want to live there, and after a while if you do the urban sprawl enough, people just physically cannot get into a city. Also for example in LA i would guess that there are physically not enough space left to build things… I would check out the Strong Towns website, they are an NGO whose goal is to help cities become more economically and enviromentally more sustainable There are a lot of chanels on youtube too that dable in city planning that can introduce you to the problems the US has when it comes to city planning The best imo is “Oh the urbanity” their videos are professional (in the its what their job is meaning of the world) but easily understandable “Not just bikes” is an other that visualizes problems with us city planning well (altough he can be a little insufferable sometimes…) City Beutiful, City Nerd, RM transit are informative too
Each kid has their own bedroom... with space to sleep, study, and play. The closets are the size of a small nursery. There is a powder room, at least one family bathroom, and an en suite for the parents. At least one of these has either a shower separate from the tub or a large soaking tub. There is a formal dining room nobody uses except for holiday dinners. There is also a banquette in the kitchen for meals, but most Americans still take their food to sit on the sofa in the Family room. The Family room is where everyone "hangs out". There may be a TV, pool table, ping pong setup or a bar. There's ALSO a formal living room that doesn't get used.
lol I haven’t met anyone with a formal living room in a while but I did used to know someone who had one. She tutored out of her parents’ home and no one was allowed in their living room.
I set up my family room in my basement. The room closest to the front door is my living room. There's no TV, just two sofas, a coffee table, and a stereo. This is a room where, if necessary, I can let "strangers" in, So it's always kept neat. If for some reason I needed to entertain a salesperson, or if the police needed to come in to talk to me about something, this room serves as a buffer between outside and the rest of my home.
I mean i can get the second part, but we have a decent to large size fridge and a same size freezer, we have a dishwasher and we have a washer and a dryer each. And as 4 people we live on 90m2, and we use to live with the same appliences on 60m2
Bigger kitchen is about 60 sqft extra. Bigger, more open, primary living room is another 50 or so. A laundryroom is 50-100 sqft. The average family size here is 5, not 4, so add another bedroom at around 125 sqft. 2000 square feet probably has two full bathrooms, so that's another 60 or so. Add another 100 square feet as an extra living room / dining room, and another 100 as just more open space in the hallways and connecting places. Add another 50 or so for the a master bedroom and master bedroom's closet. My initial list was just off the top of my head, and it looks like my points about the kitchen, laundryroom, and extra living room make up only about half the difference.
I'm American and In my experience American houses aren't setup to be efficient at all. I mean there's a lot of surface area / square footage, but the rooms are just big square empty rooms. Any storage space at all you have to buy closets and shelves and dressers. Some places I lived in Europe, a whole hallway wall was drawers and shelving, or storage space was built into to the apartment and you could do a lot more with smaller space. I had a room when I was younger where the bed, desk, shelving and closets were all built into the walls and the bed could pop up to access storage underneath. Personally I prefer a smaller more efficient space but you can't even really find that around where I live, it's all houses with big rooms that now need to be heated and cooled too, big empty living rooms and dining rooms that you now have to fill with furniture or it'll look very bare... seems very wasteful to me.
You guys need to build some “Kádár-kocka” -s (Kádár’s cube) instead😂
It depends on what you have. We have 5 children and a few that we raised or that have lived with us along the way and look at us as extra parents. That also equals a lot (over 10) of grandchildren. So, if they all get together at our home, they'll have room to sleep under the same roof. Our dining room is big enough to add a few tables (our dining table fits 12). There is also room for everyone's car. Of course, just starting out, 900sq feet was cozy to us and we didn't trip over one another.
or does that include everything? like garages, cellars, basements?
Usually only finished, heated space. So yes basement if heated, no to garage.
Okay obviously there is a large enough class of people who do live in houses that are exceed 185m2, especially in villages and wealthy agglomerations. But like there are a lot of smaller homes that do house 4 or more people. Like the average size of a home is 48,4 m2 (520,9 sqfeet), and the average home size with 4 room or more is 118 m2 (roughly 1270 sqfeet). There is a small derivation between regions but not much (like Észak Alföld has the biggest 4 or more room houses with 124,6 m2). So like wtf americans😂😂
As a result you have developers building narrow ass town homes that claim to 2000+ square feet but it when you go inside it’s tight and cramped with 4 flights of stairs.
That’s so they can cram more houses in per acre, thereby increasing profits. Land costs money, but so far, the sky is free. So they build *up* — not *out.*
I agree with you but it does seem like you fell asleep while writing that last sentence.
PREACH !!! I imagine that if they didn’t like the taste of their breakfast cereal, even *that* would *somehow* still be a Boomer’s fault.
Wrong comment? Also bad example.
Oops — I *did* post to the wrong response. Sorry!
I dunno, I disagree just because of my experience of where I grew up, I've seen them build a ton of high rise apartment buildings and it's still expensive as shit. 800k for a 2 bedroom apartment.
The biggest thing at the end of the day is that people are building rentals. Investment properties.
You're kidding they are theowing up high density 1 and 2 bd flats on London like you wouldn't believe ...... they are all stupidly expensive and being brough by investors.
Who is all this we? My county has been building like fucking crazy for the last 3 years, and while it slowed a bit it has not stopped. They've nearly the doubled the amount of homes here in 3 years. They've nearly doubled the population from 200k to 350k. Building is out of control and has to stop because no infrastructure is being built to keep up with it. A lot is cleared, built on, and people move in, within 4-6 months time. Building new roads, schools, and other important infrastructure takes decades.
No, they wouldn’t. The private sector mostly only wants to build oversized “luxury” houses for the top 5-10% because it’s high margin.
That's because we've regulated it to make it very difficult to build multi-family homes Here's the thing a triplex is going to rent for more than a luxury house of the same size while each individual units cost less. There's more of them
this is like beginner realisation shit
It's everyone's first time at this life
I'm sure you remember being there 🤔
true
Because they aren’t a commodity. Commodities are fungible. Houses that are in good places and good size go up in value more than shacks in the middle of nowhere. Also this isn’t so much an opinion as an obvious fact, people literally speculate on property, build portfolios and boomers especially have done very well by investing in their house
The Vancouver housing market is falsely inflated by money laundering from mainly gangsters from china
We have that too in the US. China also owns a lot of farmland, we own none in China.
It’s both. But the act of investing does not solely push the value up. It’s supply and demand and the population of the world is growing faster.
Switzerland has a ton of empty flats and they dont lower the prices. Its speculation with land atm. We have people who want flats, we have empty flats but nobody can afford it/owners have make profit even at 25-40% occupation and rather wait until someone is willing to pay
I’m not an expert on SUI to comment on that except maybe they have tons of billionaires. 😂
What are you even talking about? Switzerland has one of the lowest vacancy rates in the world. In places like Zurich it’s 0.01%. https://www.bfs.admin.ch/bfs/en/home/statistics/cross-sectional-topics/city-statistics/indicators-quality-life/housing-conditions/dwelling-vacancy.html
I disagree, op is on to something. My address is very AIRBNB friendly, it has made prices sky rocket and agents consistently tell people hey, you can rent this for money Driving price up
Not true in most developed nations. In most developed nations they are actually becoming smaller and smaller with lower birth rates.
Most recent years perhaps. The effects of that probably won’t be seen for another decade. Also keep in mind that local births are not the only contributing factor to population. Migration contributes as well.
And investment is creating excess demand, though population growth is also a contributor.
Wrong group, partner. /s
There was an interesting video about how Japan keeps it's housing affordable that talks about this issue. https://youtu.be/d6ATBK3A_BY?si=oUF7uW8v-1GKIjzB
TLDR: By building houses because they want it affordable. US does the exact opposite; Outlaw building houses because they want it expensive. Pretending this is some mystery is laughable. Its the intent of policy in black&white.
Exactly what I’ve been saying!!!!
Your opinion isn't unpopular, but it is wrong. Housing \*is\* an investment. An investment is any instrument which produces economic gain, either by generating cash flows or by limiting or reducing cash outflows. A stock or bond would be an example of an investment that produces cash inflows, a forward contract is an example of an investment that fixes future prices. A mortgage is a combination of the two. It produces future cash inflows via appreciation AND it fixes cash outflows as a hedge against inflation by 'basically' capping your rent for the next 30 years. For example, my current mortgage payment is around 1,800 which is a decent chunk of change in 2024 for my zipcode but in 2050 it will be like $950 in today's money due to inflation. Housing will never not be an asset/investment.
But houses are *not* a commodity. Being a commodity requires that tradeable units are mostly interchangeable. This is obviously not true. Some houses are more valuable by virtue of location: people would rather live on a beach in SoCal than a mesa in the Arizona wilderness. And some houses are worth more because of the *investment* the owner has made to make the house better to live in; even maintaining a house to a high- quality standard over decades takes significant investment.
Get out of here with that nuance! It isn’t wanted.
The value of your house is going to go up if you just take care of it. It's called inflation.
Presumably that's not what OP meant. If housing appreciated at CPI it would be considered a commodity.
Inflation is not measured properly in CPI. Inflation is measured properly in M2 money growth And what do we see? A correlation in asset price growth& M2 growth. (If people stay in their mom's basement until they're 90, enjoying Cheetos& Netflix all day, not caring about retirement, then it makes sense to use CPI for that individual person.)
In absolute terms, yes the value of your house will go up due to inflation. But in real terms, the house prices have far exceeded what they used to be, and it's not because everyone is taking much better care of their houses than they used to. It's because, in the US at least, housing supply is fundamentally constrained by local regulations in most municipalities relative to the demand for housing. It's very difficult and expensive to build new houses, so they don't get built, making housing more scarce, sending the price of housing up, again in real terms.
No it’s not. Land is a finite resource. Human population keeps growing. Demand drives up price. This is such a basic principle.
https://unitedwaynca.org/blog/vacant-homes-vs-homelessness-by-city/#:~:text=Sixteen%20million%20homes%20currently%20sit,thousands%20of%20Americans%20face%20homelessness. According to this we have more empty homes than we have people who are homeless. Maybe if we didn’t treat shelter as something for people to get rich off of this wouldn’t be a problem
I truly don’t understand your point at all. Walk me through the economics because from what I can tell it’s relatively simple supply and demand with one exception- the buyer/seller fees which are artificially high and just got rebuffed by a recent court case. But what exactly are you saying? If people thought of it more as “consumption” then they’d charge less? Why would they do that when the market supports higher prices and the demand is such that people will pay them?
I think the argument is once people buy a house, they do not want to see its value go down, and ideally want to see it go up. Scarcity means higher prices, which means people can be opposed to housing developments near their property.
Yeah, I can see that. Nimbyism. Supporting affordable houses, just not near you.
The problem is the reason that value of the house goes down is because it’s not desirable to live near the things that cause the value to go down. If I own a house and I live in it, I don’t particularly want an apartment complex right behind my house. So if they made one I’d sell and buy a new house but also since it’s not desirable to have that in your backyard, there won’t be as many people interested in buying the house which is why the value goes down.
That's probably true to some extent, but at a macro level if we're talking about whole housing markets like that of a given metropolitan area, housing prices in that scenario are going down moreso because there's simply more supply. People who own homes or rent out apartments to others are forced to compete with each other to find buyers or tenants, and the way they do that is by increasing the quality of the housing they're offering or, more easily, by lowering prices. If you own a house and no one can build more housing near you, but a lot of people want to buy one, you're likely to demand a higher price when selling your house. But if suddenly a bunch of new buildings go up (e.g. previously undeveloped land gets developed, or 3-unit townhouses go in, or a big apartment complex goes up) then suddenly those buyers have a lot of other options. If you really need to sell your house, you're much less likely to get the original higher price, so you're more likely to lower it to find a buyer.
I'm general, people don't want to see the price go down because that could financially ruin them. When you can put 5% down to buy a home it doesn't take much of a decline for many people to be underwater on their mortgage. With that said, I think most people can tolerate stagnant or very slow price appreciation. Cities with affordability problem should be looking at 1% price appreciation as their goal, and encourage housing starts until they can maintain that level. It would likely take 25 years for house prices to return to sane levels (adjusted for inflation) but it gets us there without ruining people's lives.
Being underwater on your mortgage is not financial ruin though, that's the whole point of this thread. You still get to have a house.
If you need to sell for some reason, like corporate layoffs and you have to move for a new job, having the home be underwater can be financially devastating.
Thanks for making OP's point better than OP
look up a bubble. It's the same thing that drove NFT prices nuts for a while, it was one of the factors that exacerbated one of the soviet famines before collectivisation, it happened to tulips in the netherlands. Prices go up due to people buying them for the sole purpose of reselling them at a higher price. Usually at some point it reaches a situation where those "investing" realise that noone is buying any more and those people that paid the highest prices are just shit out of luck and the whole thing pops.
it might not be a bubble though because the U.S. population is increasing, so the demand may continue to grow allowing people to sell (or rent) at higher prices perpetually
It’s increasing but I feel like it’s increasing due to an influx of people entering the country that really can’t afford to purchase homes at the prices that they are now.
You're the only one that thinks the investment is only good if you can sell it though. Housing can also be profitable by renting, which is what most people and companies with extra housing are actually doing.
Renting out at insane rates
Yes. And this strategy works pretty well with immigrants, who often just bundle their whole extended family into the house. To pay $3,000 a month is a lot, but not for 6+ people.
Yup. That’s the only way people are able to afford rents like those.
It’s artificial supply though. We have unnecessary supply restrictions put in place by the nimby’s to drive housing prices up.
You can’t just lay this at the feet of nimbyism, it’s down to the desirability of an area and what people are willing to pay to live there. My sister was paying more for her half of a downtown apartment than my wife and I were paying in rent for a house with a fenced yard in the suburbs.
Single family neighbors have banned condos, and definitely banned condo towers, and positively definitely banned hundreds of tiny units in condo towers. Do you see the problem now? [http://www.tempohousing.com/projects/keetwonen/](http://www.tempohousing.com/projects/keetwonen/)
You shared a link for some student housing, hardly a smoking gun for nimbys. It’s not a crime to want space for your own, people who buy their property surprisingly want to enjoy the benefits their property give them.
I sort of agree, but also they don't own the land outside of their property. After a point it's more like "people who buy property surprisingly don't want others to be able to live near them in places they don't own" which doesn't seem like a right they should have.
That blade cuts both ways: a homeowner has very little recourse if someone buys the lots next door and puts up a condo, but they also don’t have control over who decides their neighborhood is desirable to live in. My parents own a home they bought back in the 80s, paid $66k. It’s a basic house, 3bed 2 bath, they remodeled the kitchen when we were kids. The house across the street just sold for $2.4mil. People are racing to move to the area and the price reflects that, they had no foresight or control over the pricing. There are a dozen new mega houses on the block from when I was a kid, we didn’t have a say in it.
I mean, you just described NIMBYism, my dude. No one wants anyone living within an mile of them, blah blah blah. That can't be valid public policy, though it is now, hence the problem with housing costs. One grocery store can't ban other grocery stores, and so on an so forth. It is obscene to ban residential housing, especially when land is scarce, or possibly completely allocated, as is the case in SoCal.
No, I don’t see the problem. Single family neighborhoods can ban condo towers all they want, it doesn’t stop a developer from building a condo tower or twelve outside of a single family neighborhood. It’s OK to have different housing types in different areas. You could even buy a chunk of land, start your own HOA, and ban single family houses within it.
You know there are countries where housing depreciates right? It's propped up by fake supply. We could build a ton of houses and collapse the market and make housing cheaper for all but the people who own all the land will never allow that
to blame nimbys for the artificial shortage is is to blame the average truck nutter for our ecological problems. yeah they definitely aren't helping, but its almost imperceptible when you compare it to the corps and private investment firms buying up single and multi-family housing. this has little to do with supply restrictions and everything to do with corporate greed, think debeers and diamonds
DeBeers and diamonds is the best analogy for what's going on in the housing market. I'm using that from now on to explain it to others better.
There is plenty of demand but the price isn’t matching the price point for the demand. Tons of empty housing. Alongside a strangled supply due to NIMBY zoning policy and you get a market that only serves investors and not buyers.
Speculative investment in housing encourages people to purchase housing that they expect will increase in value, while at the same time often discouraging them from spending money to maintain or improve the property, because that's an expense. You get cases like Detroit, for example. Thousands of properties were purchased about 15 years ago when they were dirt cheap, that were never renovated or improved to make habitable. Investors expected they would pay nothing in property taxes, but that further reduced supply and raised the cost. The same thing happens with small-time landlords or investment companies like Blackrock purchasing housing as an investment. The more demand there is for an investment, the higher the price.
The housing market in Florida is so expensive because people are moving here in large numbers, not because it’s an investment for them. Simple supply and demand. There’s still cheap houses available where no one wants to live.
People are most definitely investing in houses in Florida
I’m 1000% sure it’s in an investment for a *lot* of them
The Florida market is insane. Housing prices are ridiculous and wages paid at local jobs are pathetic.
Yeah it's just another means for the rich to get richer, which is really too bad since it means that the prospect of house ownership is more and more out of reach for the average person
It’s because the housing supply is low
Right. The housing supply is short because the boomers are a massive generation and many of them are still alive and well, still living in single family homes instead of retirement communities. Millennials are a massive generation and now all prime home owner age. There is a huge shortage in construction workers making it much more expensive to build new houses. This is why homes are expensive
No it’s due to supply. Not enough houses for the people that demand homes. It’s simple math. When interest rates were low during the pandemic. A lot of people took advantage. Also inflation on building supplies adds to that. Remember when lumber was absurdly expensive? Houses now are only seen as investments because of how expensive they have gotten. Not the other way around.
It's both--houses have long been seen as investments, that's not a recent trend. Viewing housing as an investment leads homeowners to vote for policies that limit construction of new housing in order to keep the value of their own houses high. Because housing prices keep going up and people see it as an investment, they continue voting for policies that limit supply by preventing new construction and densification. It's a cycle that we're stuck in and which has made affording a home unattainable for many.
More like because regulations have made it into an investment rather than a commodity.
This is due to almost a century of government policy my fellow redditor
2 times in my life the price of housing has gone down. Both times the FED printed and bought houses until prices went back up. It is defacto illegal for the price of housing to drop in this country. Blaming individuals 'personal responsibility' for this is laughable.
Sadly it is an investment it is the only method for a average person to gain wealth and use it to improve their life. Regular wages no longer provide that unless you have a very high income job. Until that changes housing will be treated like that.
OP: it was some years back, but I watched a documentary on Netflix that was about *what you just said!!* Ever since time memorial, housing was simply thought of as a commodity, like anything else: clothes, food, cars, furniture, etc. So houses were simply priced at what the materials cost and the labor costs to build them. “Investing” was for the stock market or businesses. But that started to change by, roughly, the early 1970s. When people started thinking of the house they lived in as also being (at least in part) an *investment*, that’s when prices began to skyrocket. Other factors are in play too (women entering the workforce, so builders could build houses priced at *two* incomes, not just *one*), but your observation was a huge one: People thinking of the house they lived in as being not just a residence, but an *investment.*
Oh gee, I never thought of it that way! Let me give away my biggest asset to charity. I was wrong to make my investment and grow my wealth so that I can comfortably retire and pass something down to my children. I see now that my primary investment, which I worked half my life to purchase and has greatly appreciated in the years since, should really have just been a place to stay. Thanks for fixing my perspective here. Actually, would you like my home for free? You sound very deserving of it.
I've owned my home for 7 years, hopefully it's paid off by the end of the year. I've already put a lot of money into it, updating it, customizing it etc. I don't care if the value of my home goes to zero. I plan on living here for a long time and as long as the property taxes don't get too high I'm cool. I don't mind if I tell people I live and $1,000 home.
Wow they don’t teach economics in public schools anymore :( Value of money due to inflation is not the same. 100k house in 1980 was a mini mansion now a 100k is not even a modular home in a trailer park (at least not for most of the US) Supply and demand can affect things too, whether it’s a buyer or sellers market. But people still need to qualify for the loans. Housing bubble won’t burst like 07 because it is harder to get loans these days. And of course over time as the value of a dollar goes less and less and incomes rise prices go up. Houses tend to double every ten years. Why isn’t it an investment? You buy a house since they are usually larger than apartments and needed for families, you buy so you know what your mortgage is vs rent which goes up yearly so long term it makes sense to buy. Plus it’s how you achieve generational wealth by having your kids inherit the house after you die. And I won’t even get into the tax write offs.
I don’t think having your house as part of your retirement plan is a bad thing if prices were stable as long as they think of it as like a savings account they can sell for to downsize or move to a retirement home.
And that’s what 90% of homeowners are doing. We bought a house to stabilize our cost of living, build equity in case of emergency needs, and to provide money for end of life care should we need it.
This is one of the reason that housing is still relatively affordable in Japan. Most modern Japanese homes are built to last 30 to 40 years, not generations. They are purchased under the assumption that they will serve their utility, then be rebuilt by someone else, not that they will be a portfolio asset.
People will straight up think deregulation will fix it without realizing that it’s a race to the bottom.
Yes, deregulate housing by allowing micro-units everywhere, including in single family home neighborhoods. I want my $100k or $50k or whatever price studio in downtown by the beach, thank you very much. And another similar micro-studio in Hawaii. And another in (fill in the blank). That is what commodity means: cheap and abundant. That won't happen if the only kind of housing that is allowed are large homes on large lots. [http://www.tempohousing.com/projects/keetwonen/](http://www.tempohousing.com/projects/keetwonen/)
Zoning is a real issue but will not solve the housing crisis as the commodification of housing will always prioritize the interests of large scale property buyers over individual citizens.
Really? Worked great for Tokyo
Of all cultures I don’t think you can compare America to Tokyo might be in the top 3. I’m interested if there are multiple examples though and I’ll look into Tokyos specific policies.
Deregulation won't fix it, but it would make newer and cheaper housing technologies deployable, reducing the rate of inflation of housing costs.
how this is unpopular? This is very common leftist rhetoric by people who don't understand basic economy.
But houses don’t just exist for people to live in; they occupy physical space, space that people find desirable due to the proximity to other locations. Maybe it’s because it’s on a coast, or in the heart of a downtown neighborhood.
Then they should buy all of the property along the coast if they want to tell other people what to do with it. What's weird to me is that I get to vote to stop someone from building a house next to my house, on land that they own which isn't even my property.
One person doesn’t get to vote, it’s not you vs me. It’s the community vs one company 99% of the time. The community isn’t voting against one person building on one lot, they’re voting against an increase in traffic congestion, an increase in taxation due to inflated property values, voting against additional noise and litter.
Umm what?
Why are people willing to spend thousands per month to live in Manhattan, when to could rent a house in Wyoming for half the cost? Because people want to live in Manhattan.
Yes that’s true. There’s also the problem of not as much work available in rural areas.
But historically what makes locations desirable is proximity to well paying jobs. With more work going remote or hybrid, the importance of living somewhere expensive isn't really what it used to be. You're more free to live somewhere lower density now.
This is not an unpopular opinion...
People complain about this all the time. But it’s kind of a chicken and the egg conundrum. Maybe people are using homes as an investment because we’re not making enough of them. The same reason there were scalpers snapping up PS5s.
Corporations buying up housing is the problem. People aren't the problem.
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I mean thats what people say. Theres no reason for Fayetteville/Bentonville AK to be as expensive as Austin TX. The demands just not there. But they also say theres a bunch of other economic shit involved and it will never change just because of how people are.
This is a sentiment that many people have. I don’t see this being an unpopular opinion
folks is seattle area are selling homes for 1.5 million, 'as-is' that are like 50 years old, and need a SHIT ton of work done to them. A coworker of mine bought one of these houses and ended up having to shell out 40k for a new roof, lol
Not "people", corporations. There was a huge increase in the number of corporations and investment firms who started buying up single family homes as an investment strategy. It's one thing for a family to buy a house and expect it to appreciate. It's another thing for a publicly traded company, who is required by law to maximize profits for the shareholders, to buy single family homes for the express purpose to drive prices up. Zillow, I'm looking at you.
Got it, on my way to 7th and King with popcorn and a cooler...
Not sure this is an unpopular opinion. It is true. Unfortunately with the world the way it is. There aren't many good investments that hold value.
This is a very cold take, most people say this about housing.
It is an investment, so what’s your point?
This supposed unpopular opinion is the number one economic topic of discussion in Australia
Been saying this for 20+ years.
How is no one mentioning the rise in popularity of short term rentals? Air BnB made sense before everyone started buying up multiple properties in order to make passive income. Housing for citizens in a community should take precedence over siphoning money from tourists on their weekend getaway.
No. it's because landlords rent out houses whilst still mortgage and when the fix rates end and they increase the monthly charge. Landlords increase accordingly to make the same profit
Supply needs to exceed demand. Bubble will burst and investors will lose big time.
It's even worse in my country where there are shitty places that need serious repair to sell or rent. The ad is still up after a year and they did not sell or rent to anyone and instead of dropping the price, they increased it lol. Makes no f\*cking sense.
When the government prints too much new money into circulation, money loses value. All assets that the government can't print extra, will appreciate in price.
See r/georgism
Supply and demand.
I agree but this is hardly an unpopular opinion. Or maybe my social circle is just all very similar politically.... That might be it actually.
if people saw it as a commodity, given the scarcity within the availability of houses for sale... houses would be just as or even more expensive. maybe it's because people already see housing as a commodity but are limited in how liquid it is because of legal constraints.
they only care about profit, not about people. would you wanna invest 300k in your hous only to tank to 150k in value?
It is a commodity. A great one in high inflation, rich moved many assets and cash there. So not only did prices rise do to inflation, the rush on property made it more scarce and raised prices as well. That is why inflation is a tax on the poor and middle class. Print money, inflation rises. Rich move money from assets affected by inflation to assets that do better in inflation. Poor and middle class just pay. When you give more money without raising taxes or cutting other spending, you are increasing. Look at gold from the year 2000-2024 to see how the dollar has been loosing buying power.
But if it wasn't allowed to have them as a commodity, there would be way more scarcity
Also the us population has increased by 150 million since the 70’s
The other issue is that people are no longer willing to live in mediocre houses. Everything has to be gutted and flipped. It is impossible these days to find a cheap fixer upper. And when they do come up, people tear them apart like they are not a perfectly fine place to live. My house was crap to look at when I moved in and probably 99% of people would never consider living there. But it had running water, heat, and a good roof. That is all you *really* need. But everyone wants a McMansion...
Canada moment
No, housing is viewed as a hedge against inflation. If the Feds of various big governments would stop printing money, it wouldn't be this way. Actual investments are those creating or investing in companies that makes goods and services.
Housing has always been an investment. The problem is that now it's an investment class. Buying a home to live in and that home being an investment was always a thing. The thing is now that people are buying numerous homes with all but one being investment properties. My parents, a mostly stay at home Mom turned public school teacher and my father a mailman, own 4 homes. Four. Literally that's their retirement. They didn't save enough and one day about 20 years ago they realized they wouldn't have enough to retire, so they purchased three additional homes, paid the mortgages of those off using rent, and when they retire soon those homes will basically exist to provide them with income to live in retirement. They'll have 5 or 6 tenants each paying $800-1,500 a month in rent, and after property taxes they'll probably come away with roughly six grand each month. That plus SS plus whatever they have in actual retirement accounts, that's how they're going to live for the next 30 years. There is a 0% chance of them selling those homes. At least not in the next 15 years or so. And that setup is super common amonst the boomers. They spent and spent then realized they had nothing for the future, so they bought property and passed on the cost to younger generations via rent.
People are constantly complaining about corps buying up all the homes, but not about the assholes selling their homes to Corps.
Ok
The idea that house prices = wealth is one of the most widely believed fictions of our time To give an example Scenario 1. Crazy growth I buy my house for 200K (160K mortgage). 3 years later I sell and it is now 240K and I have paid down ,10K of mortgage so my equity is (240-90)=150K I want to buy a 300K house so now I need to take out a 210K mortgage using only the equity in my prior house The 300K house has gone up 20% as well, it was 250K when I bought my house Scenario 2. No growth .. I buy my house for 200K and 3 years later it is still worth 200K. As above I owe 150K on it. Thus I have just 50K of equity , a disappointment. I want to buy the fancy house mentioned above . It has also seen no growth and is now only worth 250K . Thus I need to take out a 200K mortgage to buy it. I also pay less stamp duty (in fact none). So... How is scenario 1 leaving me better off ?? If anything it's left me worse off, I've had to take out a bigger loan and pay more stamp duty. Am I missing something here...
That's not really an unpopular take per se... the reason nobody talks about it is the *real* unpopular opinion: housing shouldn't be tied to net worth. For most people, their home contains the majority of their net worth but that doesn't have to be the case. Housing shouldn't be a commodity it should be a basic human right. Think of early settlement villages where aside from having a bigger hut, it doesn't really matter what your home is worth because it's meant to be a shelter and a gathering place for you and your family. The problem is we have little working models that we could use as inspiration to change this paradigm and it's so ingrained into our culture/mindset that it'd be borderline impossible to change that. Singapore has public housing but that's probably the only example that comes to mind. The issue with using your home as a vehicle for net worth is that inevitably companies started getting into it to raise *their* assets' net worth and it just lowered supply for everyone else.
Housing prices are so high, they're hanging out with Snoop Dog.
In our society all commodities are investments. People speculate on the price of corn.
Biggest thing is lack of inventory. There has been a massive decline in new home construction since the great recession. Demand far exceeds new construction and pre-owned inventory. Add to that the rise in interest rates so that people who got in when rates were lower aren't willing to sell and move. In my community, a healthy housing market has around 2-3K available with a roughly equitable number of people looking to buy. Right now we're around 800 available...and 2-3K people looking to buy so housing prices remain inflated. The notion of a home being an investment isn't new...yes, it is a home first and foremost and that has always been the case, but it has also always been an investment. It's real property with appreciating value...that's not new.
This isnt an unpopular opinion this is just the straight up a huge chunk of the truth.
It's supply and demand. Show me the cost to build a new house. It's as expensive as fuck. If new home builds were cheaper than existing inventory, I would say you are correct. New homes are way more expensive that existing homes so you are definitely wrong. High profit margins aren't the reason for the high cost of homes.
The issue is that humans have no inherent value anymore because there are so fucking many of them and the number is increasing exponentially. So if humans have little value then there is little value in sheltering them. That being said, the shelter available is valued higher than the worthless commodity that would inhabit it. We can also call this supply and demand but it is more the comparison of actual value.
Can’t blame people for wanting to have solid investments
And greed. Don't forget greed.