<story><title>Housing Can’t Be Both Affordable and a Good Investment (2018)</title><url>https://www.citylab.com/perspective/2018/11/housing-cant-both-be-a-good-investment-and-be-affordable/574813/</url></story><parent_chain><item><author>asdff</author><text>So what might happen if California enacted statewide rent control? Capping yearly rent increases at inflation + 3%? There are places where properties have &lt;i&gt;doubled&lt;/i&gt; in value in less than a dozen years while wages remain stagnant, leading to rents surging and more %income going to housing. Many low income renters are paying 50% or more of their income on rent, that&amp;#x27;s not sustainable for the wider economy that relies on low skill labor to function, and the solution is not to have people commute 4h every day to clean an office, teach a class, or fight a fire.&lt;p&gt;The housing market moves so much faster than wages ever will, and it seems having only some units rent controlled exacerbates the problem for units that aren&amp;#x27;t, so why not make &lt;i&gt;every&lt;/i&gt; unit in the state a rent controlled unit? The landlords are already insulated from the whiplash of the housing market from statewide property tax control in the form of prop 13, why not let renters enjoy that isolation as well?</text></item><item><author>klipt</author><text>Right, the problem is NIMBYs are allowed to rent-seek by preventing construction around them. And in San Francisco, Prop 13 &amp;#x2F; rent control insulates many people from any consequences of rising prices, as long as they don&amp;#x27;t have to move, which means they make decisions that push up prices for everyone &lt;i&gt;else&lt;/i&gt;.&lt;p&gt;In the economically ideal case we&amp;#x27;d have a fair Land Value Tax to encourage as much building as necessary.</text></item><item><author>jdavis703</author><text>The idea from the headline should be viewed at a more macro level. A society that views housing as an investment means that we wind up adopting housing policies that lead to people being priced out (i.e. regulatory capture). This eventually means people winding up in subpar situations like moving in with parents, couch surfing or living on the street.&lt;p&gt;Now your argument about housing on a personal financial level is spot-on, at least points #1 and #2. As for the latter points, the first purpose of a house should be to house people. When we view housing as an investment we start making economically rational (but morally questionable) arguments like, &amp;quot;ban new apartments because they&amp;#x27;ll lower my home&amp;#x27;s value.&amp;quot;</text></item><item><author>cletus</author><text>So much written about housing is just... Wrong. And I don&amp;#x27;t mean factually inaccurate. I mean based on false premises.&lt;p&gt;Owning your own home serves several purposes:&lt;p&gt;1. Security&lt;p&gt;2. Stability&lt;p&gt;3. As a hedge against inflation&lt;p&gt;4. As a hedge against market forces&lt;p&gt;That doesn&amp;#x27;t mean buying is always a good idea. Clearly or isn&amp;#x27;t. Like don&amp;#x27;t but in a town where 70% of the adults are employed by the local coal mine, for example.&lt;p&gt;Here&amp;#x27;s how I like to think about it: you are never out of the housing market. By not owning you have a large short position in real estate. Given that rents eventually track prices, if prices go down you benefit (you&amp;#x27;re rent will eventually go down and you didn&amp;#x27;t lose capital). If prices go up you lose. You missed a gain and your rent will go up.&lt;p&gt;Given that, you buy your house to remove risk of local changes to your detriment.</text></item></parent_chain><comment><author>lmm</author><text>&amp;gt; So what might happen if California enacted statewide rent control? Capping yearly rent increases at inflation + 3%?&lt;p&gt;No-one would move, ever. People wouldn&amp;#x27;t be able to change jobs even for much higher salaries or better conditions. Children would live with their parents forever. Many people would live precariously in illegal sublets with inadequate fire exits etc. Developers would stop building. Landlords would stop doing maintenance and let their buildings rot. Everyone would be miserable.&lt;p&gt;&amp;gt; Many low income renters are paying 50% or more of their income on rent, that&amp;#x27;s not sustainable for the wider economy that relies on low skill labor to function, and the solution is not to have people commute 4h every day to clean an office, teach a class, or fight a fire.&lt;p&gt;Rent control creates longer commutes. To the extent that the economy actually relies on low skill labour, it can pay the actual cost of having that labour where it needs it. In fact by having rent control you artificially depress wages and encourage companies to employ humans in bad jobs rather than finding ways to make things better.</text></comment>
<story><title>Housing Can’t Be Both Affordable and a Good Investment (2018)</title><url>https://www.citylab.com/perspective/2018/11/housing-cant-both-be-a-good-investment-and-be-affordable/574813/</url></story><parent_chain><item><author>asdff</author><text>So what might happen if California enacted statewide rent control? Capping yearly rent increases at inflation + 3%? There are places where properties have &lt;i&gt;doubled&lt;/i&gt; in value in less than a dozen years while wages remain stagnant, leading to rents surging and more %income going to housing. Many low income renters are paying 50% or more of their income on rent, that&amp;#x27;s not sustainable for the wider economy that relies on low skill labor to function, and the solution is not to have people commute 4h every day to clean an office, teach a class, or fight a fire.&lt;p&gt;The housing market moves so much faster than wages ever will, and it seems having only some units rent controlled exacerbates the problem for units that aren&amp;#x27;t, so why not make &lt;i&gt;every&lt;/i&gt; unit in the state a rent controlled unit? The landlords are already insulated from the whiplash of the housing market from statewide property tax control in the form of prop 13, why not let renters enjoy that isolation as well?</text></item><item><author>klipt</author><text>Right, the problem is NIMBYs are allowed to rent-seek by preventing construction around them. And in San Francisco, Prop 13 &amp;#x2F; rent control insulates many people from any consequences of rising prices, as long as they don&amp;#x27;t have to move, which means they make decisions that push up prices for everyone &lt;i&gt;else&lt;/i&gt;.&lt;p&gt;In the economically ideal case we&amp;#x27;d have a fair Land Value Tax to encourage as much building as necessary.</text></item><item><author>jdavis703</author><text>The idea from the headline should be viewed at a more macro level. A society that views housing as an investment means that we wind up adopting housing policies that lead to people being priced out (i.e. regulatory capture). This eventually means people winding up in subpar situations like moving in with parents, couch surfing or living on the street.&lt;p&gt;Now your argument about housing on a personal financial level is spot-on, at least points #1 and #2. As for the latter points, the first purpose of a house should be to house people. When we view housing as an investment we start making economically rational (but morally questionable) arguments like, &amp;quot;ban new apartments because they&amp;#x27;ll lower my home&amp;#x27;s value.&amp;quot;</text></item><item><author>cletus</author><text>So much written about housing is just... Wrong. And I don&amp;#x27;t mean factually inaccurate. I mean based on false premises.&lt;p&gt;Owning your own home serves several purposes:&lt;p&gt;1. Security&lt;p&gt;2. Stability&lt;p&gt;3. As a hedge against inflation&lt;p&gt;4. As a hedge against market forces&lt;p&gt;That doesn&amp;#x27;t mean buying is always a good idea. Clearly or isn&amp;#x27;t. Like don&amp;#x27;t but in a town where 70% of the adults are employed by the local coal mine, for example.&lt;p&gt;Here&amp;#x27;s how I like to think about it: you are never out of the housing market. By not owning you have a large short position in real estate. Given that rents eventually track prices, if prices go down you benefit (you&amp;#x27;re rent will eventually go down and you didn&amp;#x27;t lose capital). If prices go up you lose. You missed a gain and your rent will go up.&lt;p&gt;Given that, you buy your house to remove risk of local changes to your detriment.</text></item></parent_chain><comment><author>outlace</author><text>The price of housing is only part of it. The rising prices reflect the rising demand and the relatively static supply. Even if prices were capped, it doesn’t mean more people would be able to get housing. There’s still fewer units than there are people who want them, so people would get units based on some other mechanism beside price such as a lottery.&lt;p&gt;The unpredictability this would entail would probably be worse than a functioning price mechanism. Imagine you get a job in San Francisco but there’s only a 20% chance you’ll be able to “win” a housing unit where you want. Versus the current reality of for sure being able to find housing given you’re willing to pay enough.</text></comment>