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There was talk about renaming the Krugman thread for this purpose, but that seems to be going nowhere. Besides which, I feel the Krugman thread should be left to discuss Krugman while this thread can be used for more general economic discussion.

Discuss:

  • The merits of competing theories.
  • The role of the government in managing the economy.
  • The causes of and solutions to our current economic woes.
  • Comparisons between the economic systems of different countries.
  • Theoretical and existing alternatives to our current market system.

edited 17th Dec '12 10:58:52 AM by Topazan

Zendervai Since: Oct, 2009
#23651: Aug 1st 2022 at 6:54:59 PM

I think an important thing to remember is "house value always go up" isn't a consistent thing. It's actually pretty unusual in Japan where an old house can put a pretty significant dent in the value of a piece of land because any purchasers generally intend to pay to rip down the old house and build a new one. This doesn't mean buying a property is cheap, but it means that if you aren't in like, the heart of a major city, the real estate market didn't really overheat the same way as North America. (There's a bunch of other problems with that model though)

The big problem is that rent and house purchasing values skyrocketed significantly faster than average income and them becoming primarily an asset led to a ton of people buying them as an asset and taking them out of reach of people who actually need them. And that's before the whole thing with Airbnb destroying the rental market in a lot of places.

If you think housing is a human right, that's really hard to square with how a ton of people are seemingly incapable of seeing a house as anything other than an investment, complete with a lot of people getting fucked over because they didn't realize that suburbs were going to fall hard out of fashion.

MorningStar1337 The Encounter that ended the Dogma from 🤔 Since: Nov, 2012
The Encounter that ended the Dogma
#23652: Aug 1st 2022 at 7:00:56 PM

honestly I get the feeling that apartments and condos would've been the better route for mass housing nowadays.

M84 Oh, bother. from Our little blue planet Since: Jun, 2010 Relationship Status: Chocolate!
Oh, bother.
#23653: Aug 1st 2022 at 7:03:52 PM

You'll run into the same issues with condos too. A decent condo in a prime location isn't cheap. And a lot of people who get them also treat them as assets to be re-sold eventually.

Apartments meanwhile have all of the issues with landlords and renting...and that's not even getting into Airbnb messing things up further as Zendervai noted.

Edited by M84 on Aug 1st 2022 at 10:05:17 PM

Disgusted, but not surprised
MorningStar1337 The Encounter that ended the Dogma from 🤔 Since: Nov, 2012
The Encounter that ended the Dogma
#23654: Aug 1st 2022 at 7:16:41 PM

fair point, though at least they seem more space efficient than suburbs and especially mansions

minseok42 A Self-inflicted Disaster from A Six-Tatami Room (4 Score & 7 Years Ago) Relationship Status: Wishfully thinking
A Self-inflicted Disaster
#23655: Aug 1st 2022 at 8:58:58 PM

Does treating housing as an investment, rather than a necessary good lead to more conservative politics? In my country, during recent election cycles, one reason young men voted for the conservative party was that they thought they would become millionaire landlords, but the liberal party was stopping them. Also, the conservative media went on a smear campaign against public housing.

"Enshittification truly is how platforms die"-Cory Doctorow
SeptimusHeap from Switzerland (Edited uphill both ways) Relationship Status: Mu
#23656: Aug 2nd 2022 at 4:38:57 AM

My statement was pretty clear

Frankly, I think it would be better if folks stopped treating houses as an asset.
but I'll expand on why:

Unlike your Bitcoins, you can't simply sell your house and get the money. You'll need another one if you don't want to become homeless. That's why houses don't work well as assets and why their value is largely inconsequential - unless you are changing houses, it will never affect your budget. Yes, taxes, mortgages etc. get attached to them but this is not an inherent property of houses, just a corollary of their misuse as assets. And a bad idea, anyway - just ask people who lose their homes because of the mortgages, or the banks in 2008 that had their debitors default on house mortgages.

Also, unlike e.g stocks which are typically held by financiers (i.e experts) and Bitcoins which are held by ideologues and cranks (which are tiny in number), houses are held by average people who don't usually have the experience of how to properly do financial speculation. So the risk of bubbles and the like is much higher.

"For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled." - Richard Feynman
Zendervai Since: Oct, 2009
#23657: Aug 2nd 2022 at 4:55:36 AM

[up][up] It absolutely does. And it's the really dumbass kind at that, where there's a ton of fixation on respectability and policing the actions of your neighbors.

Like "no, the person nine houses down is ruining the value of my house by painting their door purple!" where you will get people who will outright harass anyone who doesn't conform. It's also part of the reason Home Owner's Associations can get so incredibly toxic, or at least, part of the justification.

A lot of the metrics for house and neighborhood value are...strange and are pretty obviously defined by incredibly anal and uptight people. The average person doesn't give a shit if a house they can't see easily has a weird front garden as long as it doesn't cause problems or the actual owners are quiet.

Edited by Zendervai on Aug 2nd 2022 at 7:59:27 AM

Fighteer Lost in Space from The Time Vortex (Time Abyss) Relationship Status: TV Tropes ruined my love life
Lost in Space
#23658: Aug 2nd 2022 at 4:57:56 AM

Look, I'm not saying that all of these problems don't exist, but what I don't see is how to get from here to there, where housing is not treated as a personal asset. You can't just pass a law telling people, "Sorry, your home has no asset value any more."

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Zendervai Since: Oct, 2009
#23659: Aug 2nd 2022 at 5:01:11 AM

A single home has asset value and always will, what I think should happen is that there should be a lot more in place to discourage people from buying multiple houses and landlords should probably get really cracked down on.

...and maybe a much larger pushback against HO As because they average out to being pretty awful. Condo corporations are a bit different, those actually make sense and tend to be a lot more reasonable due to the sheer nature of the buildings.

Edited by Zendervai on Aug 2nd 2022 at 8:02:24 AM

M84 Oh, bother. from Our little blue planet Since: Jun, 2010 Relationship Status: Chocolate!
Oh, bother.
#23660: Aug 2nd 2022 at 5:04:44 AM

Homeowner's Associations are fucking terrible and relics of suburbia.

Disgusted, but not surprised
Fighteer Lost in Space from The Time Vortex (Time Abyss) Relationship Status: TV Tropes ruined my love life
Lost in Space
#23661: Aug 2nd 2022 at 5:56:31 AM

Speaking as someone who has been a renter, a homeowner, and a landlord (for 14 years because I couldn't sell my old house and was forced to rent it out to cover the mortgage), these are overly simplistic points of view.

As a renter, often you don't want to buy even if you could otherwise afford to because you need the mobility. I've almost always been a tenant of a private landlord (as opposed to a corporation) and, frankly, it's kind of nice to have someone else on the hook if the air conditioning breaks or the pipes leak. I didn't really care if the landlord owned multiple properties; it was none of my business.

As a landlord, I was on the hook for all of those expenses but had to wait for the rent check to come each month and hope the tenants didn't fall behind or trash the place. I wasn't rubbing my hands together like Ebenezer Scrooge wondering how I was going to cheat the rubes today. It was always a knife's edge of being able to balance the books in the hopes of being able to sell the property at some point.

As a homeowner, having an asset to maintain can be a serious pain in the ass. There are lots of costs and if you don't have the money, you're SOL. More importantly, if someone passes a law that would result in my property losing value, that sucks for me. I don't want that, and I'd have to be a pretty fucking altruistic person not to oppose it.

As for HOAs and condo associations, what I remember most about the latter is how the fees kept going up every year. It was nice to have grounds maintenance covered, though. Not so nice when they fined our tenants for trash violations or instructed everyone to pay to have the external electricity panels upgraded, but it's an overall positive to have someone making and enforcing rules.

I don't have a lot of experience with HOAs, but I find that developments without any sort of governing body devolve rapidly into That One Neighbor who doesn't mow their lawn and leaves trash piling up in the backyard. The development where I live now doesn't have a HOA or condo association, but is supervised by the local township. They do an adequate job.

Edited by Fighteer on Aug 2nd 2022 at 8:59:58 AM

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Zendervai Since: Oct, 2009
#23662: Aug 2nd 2022 at 6:04:02 AM

The issue with HO As is that they have a really nasty habit of devolving into a de-facto fiefdom of some random busybody who's the only person who cares enough to want to be on the board and everyone else just follows their lead. There's often a lot of racism or homophobia/transphobia in the mix as well.

The one time my family experienced one (vacation rental in Florida, they're not really a thing in Canada), the chairman of the HOA board came around with a fucking ruler and tried to make us pay a fine for the grass being a third of an inch too long and he wouldn't listen to anything we said. We ended up ignoring him and sending a message to the actual owner about it.

Condo associations don't really work the same because they're usually talking about common elements that actually are shared by everyone for real, it makes sense to want to keep them nice and clean to specific standards. It's when you get someone obsessed with housing value to the point that they think anything that doesn't make a neighborhood look like an unsold model neighborhood is a travesty worth harassing people over that it's a problem and HO As are riddled with people like that.

And the thing I'm thinking overall is that the current system is outright not sustainable. For every "good" landlord, there's a dozen neglectful at best ones, and the giant companies have deservedly awful reputations.

There should be heavy rent control put in place basically everywhere though, relative to the utility and maintenance costs of a given area. This idea that a landlord can increase the rent by the maximum amount every single year is ridiculous and it's a huge part of the reason the cost of living is skyrocketing the way it is.

Edited by Zendervai on Aug 2nd 2022 at 9:06:07 AM

M84 Oh, bother. from Our little blue planet Since: Jun, 2010 Relationship Status: Chocolate!
Oh, bother.
#23663: Aug 2nd 2022 at 6:18:15 AM

H.O.A's make petty tyrants of us all.

Disgusted, but not surprised
TheyCallMeTomu Since: Jan, 2001 Relationship Status: Anime is my true love
#23664: Aug 2nd 2022 at 6:58:06 AM

But a petty tyrant is the best KIND of tyrant!

Fighteer Lost in Space from The Time Vortex (Time Abyss) Relationship Status: TV Tropes ruined my love life
Lost in Space
#23665: Aug 2nd 2022 at 10:09:50 AM

Okay, but what do HOAs have to do with housing prices in this macroeconomic scenario we're discussing — or at least, what do they have to do that isn't shared among everyone else with an interest in their asset values?

I'm asking how we force housing prices to go down by increasing supply without breaking everyone whose home is a major part of their net worth, never mind collateral on their mortgage. I'm fairly sure my lender wouldn't appreciate my equity suddenly going negative, nor allow me to sell the property afterwards.

Heck, even the hated landlords have loans to service. If we put them all underwater, they go bust and then who maintains the properties? The resulting collapse of mortgage lending could easily throw the global financial system into another crisis.

If the government wants to force down the value of my home, it had damn well better compensate me. I'll take cash to pay off my lender so I can keep my equity.

Edited by Fighteer on Aug 2nd 2022 at 1:13:20 PM

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Zendervai Since: Oct, 2009
#23666: Aug 2nd 2022 at 10:15:37 AM

HO As actually do have an incredibly disproportionate impact on housing prices in areas where they're really prevalent. Anything with an HOA gets a lot of support and value increases because the assumption is that the HOA is a net good. Anywhere in the area without one has their value collapse because it's assumed that they'll inevitably fall apart and become festering heaps because no one's taking charge. The result being that all the places with one put their prices too high and the places without one get all the homes snapped up by giant rental companies.

It's a very regional issue, but it's a regional issue that scattered across the US and impacts things everywhere.

[up] Many landlords with multiple rental properties behave in a way that can be considered...irrational. They're usually mortgaged up to their eyeballs, leveraging various mortgages against each other and when a mortgage is paid off, they'll immediately take out another one in order to try and expand their property holdings. It frequently results in the landlord having issues paying for basic maintenance because most of the profit goes right back into the mortgages so they end up asset-rich but very cash-poor and a lot of people who behave like this won't sell a property unless they're forced to.

I would say maybe pushing for rent-to-own schemes would be a pretty good move, allowing people to get a foothold without needing to deal with the fucking insane requirements many banks have for a first mortgage.

Edited by Zendervai on Aug 2nd 2022 at 1:18:56 PM

Fighteer Lost in Space from The Time Vortex (Time Abyss) Relationship Status: TV Tropes ruined my love life
Lost in Space
#23667: Aug 2nd 2022 at 10:18:07 AM

Okay, I guess HOAs are bad...? This is not something that I have enough knowledge about to contest.

I remember during the aftermath of the 2006 housing crisis and the 2008 recession that I strongly supported cram-downs of mortgages for the very reason that it would provide relief to all the homeowners who were suddenly underwater and unable to sell their homes. There was a program of mortgage relief under Obama that was reportedly fairly successful, but I didn't qualify for it because the home in question was being rented out... because I moved right as the crash was happening. As it was not my primary residence I couldn't get any aid. Worst. Timing. Ever.

Edited by Fighteer on Aug 2nd 2022 at 1:18:30 PM

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"
Silasw A procrastination in of itself from A handcart to hell (4 Score & 7 Years Ago) Relationship Status: And they all lived happily ever after <3
A procrastination in of itself
#23668: Aug 2nd 2022 at 10:44:27 AM

As a renter, often you don't want to buy even if you could otherwise afford to because you need the mobility.

While that’s true in theory, reality (at least in the U.K.) isn’t like that. Around half of renters in the UK a want to buy the property they currently rent, and a quarter would have bought their last rental if they could have.

So that’s 25-50% of the rental market who don’t want to be there, before we factor in all the people who want to buy but not the specific property they’re in.

I didn't really care if the landlord owned multiple properties; it was none of my business.

Because you rented by choice. That’s a rarer and rarer thing these days, the latest survey I can find shows that only 8-9% of U.K. non-owners has no desire to own a home, though 40-29% don’t think it’s a realistic goal for them, with 52-62% thinking that it’s a realistic goal. That drops to 2% for the 18-24 demographic. If you’re renting by choice you don’t care if a landlord is snapping up the purchase market and converting houses into rental, if anything it may be good for you (more options). But if you’re looking to buy then it matters a lot, as it means fewer options and higher prices.

If the government wants to force down the value of my home, it had damn well better compensate me. I'll take cash to pay off my lender so I can keep my equity.

That’s assuming a rapid drop. Large-scale property development isn’t going to be easy even with the political will. The easiest solution would be to push prices down at a rate that’s slightly slower than the rate people are paying down their mortgages. So you’d stay in equity, even if the value itself was lower.

Edited by Silasw on Aug 2nd 2022 at 6:47:03 PM

“And the Bunny nails it!” ~ Gabrael “If the UN can get through a day without everyone strangling everyone else so can we.” ~ Cyran
TheyCallMeTomu Since: Jan, 2001 Relationship Status: Anime is my true love
#23669: Aug 2nd 2022 at 10:46:57 AM

Sounds like the UK and the US have different market situations.

raziel365 Anka Aquila from South of the Far West (Veteran) Relationship Status: I've been dreaming of True Love's Kiss
Anka Aquila
#23670: Aug 2nd 2022 at 10:50:12 AM

Honestly, the only zone I can think of in which you could have some level of objective metric is for buildings within a city's historical centre since preserving the cultural environment gives an intrinsic value to the zone. Even then though you still run into the problem of gentrification and whether or not doing this will shun away the people who actually keep the centre vibrant.

As for the problem with the mortgages, I think we are going to need a more complex solution because part of what fueled the 2008 crisis is the fact that average wages couldn't keep up with the escalating prices of the mortgages. If people are reticent to let the value of their home go down is in part because there's not enough cash going around that could give them the security to not see or use their house as a financial asset.

I'm not keen on throwing away regulation because that's the other reason why 2008 happened and why China's housing industry is on a death spiral currently.

Instead of focusing on relatives that divide us, we should find the absolutes that tie us.
Zendervai Since: Oct, 2009
#23671: Aug 2nd 2022 at 10:53:03 AM

I wouldn't be surprised if the percentage rates of people who want to own are similar between the US and UK, especially among younger people. Especially younger people who have to deal with one of the big companies.

Silasw A procrastination in of itself from A handcart to hell (4 Score & 7 Years Ago) Relationship Status: And they all lived happily ever after <3
A procrastination in of itself
#23672: Aug 2nd 2022 at 10:58:04 AM

I’ve personally (and in conversation with others) found that renting from a company is better than renting from an individual. Individual landlords run the risk of being a busybody who views the home as theirs rather than as an asset they’ve loaned to you, they’re all less likely to know the law and more likely to make decisions on emotional grounds rather than financial ones.

Companies are also more likely to have proper coverage and less likely to go *poof* on you.

“And the Bunny nails it!” ~ Gabrael “If the UN can get through a day without everyone strangling everyone else so can we.” ~ Cyran
TheyCallMeTomu Since: Jan, 2001 Relationship Status: Anime is my true love
#23673: Aug 2nd 2022 at 10:58:16 AM

Maybe I'm just lame then, 'cause owning a home sounds like a huge ass hassle!

Zendervai Since: Oct, 2009
#23674: Aug 2nd 2022 at 11:01:45 AM

[up][up] The US rental market is dominated by a few gigantic companies that swoop in and grab whatever they can get, generally being incredibly difficult to get into contact with anyone, it taking forever for them to deign sending anyone for even really important maintenance and generally putting nasty clauses into the contracts to avoid having to pay back the deposit and things along those lines. They also really love mandatory arbitration, which means that if they screw you over, you can't really get any meaningful restitution.

[up] You have to maintain it yourself, but it creates stability, the costs generally remain stable year to year as long as maintenance is fine, you don't need to deal with a landlord if something breaks and it's incredibly difficult to get evicted. Once you get past the mortgage, it's also generally cheaper than renting month to month. I'm extremely lucky to have my own home (small townhouse and my parents helped me pay for it, I'm not even going to pretend that I did something special or that I deserve it) and my bills and taxes are about 40% lower than the average rent in my city, month to month.

That's really fucked up and the numbers shouldn't work out that way.

Edited by Zendervai on Aug 2nd 2022 at 2:05:31 PM

Mullon Since: Jan, 2001 Relationship Status: And here's to you, Mrs. Robinson
#23675: Aug 2nd 2022 at 11:04:08 AM

I'd like to own a home someday, just not a big one, like a cottage or something.

Never trust anyone who uses "degenerate" as an insult.

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