[onion2k]

Over the past 30 years buy-to-let has fundamentally changed the housing market to the point where I honestly don't believe there'll ever be a housing market crash again. Rich people will buy up all the available housing stock to rent out (or to AirBnB) if there's a small price drop. That will stop there ever being a big price drop.

Barring a sea change in housing policy that enables massive amounts of new houses to be built, I would make a significant wager that in 50 years time about 75% of people will rent their home all their life.

[api]

Add to this the fact that governments (at least in the US, and in many other countries) have made it clear that housing won't be allowed to fall. This combined with money printing means the price is almost guaranteed to rise.

The reason is that for most homeowners their home equity is the majority of their savings, and homeowners vote in higher proportion than renters (on average). Any politician that allows home values to fall too much will be facing the end of their career.

Under these conditions the only way housing will fall in a lasting way is if something so terrible happens to the economy that... well... you'll have bigger problems than housing.

Housing is fundamentally broken and very hard to fix due to vested interests all over the place. "Housing cannot simultaneously be affordable and a good investment," and we've clearly decided that housing is a financial instrument first and a place to live second.

There is one way out of the housing price trap: telework plus ubiquitous broadband via things like 5G and Starlink. That could allow people to escape the housing trap by locating away from price hotspots. If you simply must live in a big city this won't work for you, but keep in mind that you could always live somewhere more rural and visit big cities any time you please.

[pantalaimon]

> There is one way out of the housing price trap: telework plus ubiquitous broadband via things like 5G and Starlink.

I don’t buy that. People don’t like to live in cities primarily because of jobs, but because living in cities is fun. People like to be close to other people, exchange with others and their community.

Living in a small town sounds depressing to me, no matter how fast the internet connection might be.

Maybe if you create your own commune, bring in a social circle from the city. But that has a tendency to fall apart.

[mr_toad]

> People don’t like to live in cities primarily because of jobs, but because living in cities is fun.

This is mostly only true of younger childless people. Once you have kids you can forget about having any fun for the next 15 years or so. And after that, well, how many 45 year olds do you see in nightclubs?

[cyberdrunk]

Fun is more than nightclubs. Where I live, I have fun just by walking the streets, admiring the varied and pretty architecture (granted, I live in Poland), seeing the various characters which walk the streets, eating/having snacks at the many food outlets available etc. In a rural setting, you exchange all that for easy access to a lot of nature.

[api]

It's your choice. Trouble is that if you stay in a city under the current housing finance regime it will be a lot harder to build wealth. A lot will get eaten by rent or mortgage.

[JKCalhoun]

How has it been made clear that housing won't be allowed to fall? The held-low interest rates?

[anthk]

The more they keep the artificial prices, the harder will be the fall. You'll see that, and 1929 would be a child's play compared to that.

[swimfar]

"housing policy that enables massive amounts of new houses to be built"

I think you mean "new homes". I don't think there's anywhere in the US with a housing crisis is due to new houses not being allowed. It's usually due to the difficulty in tearing down houses (and low-density apartments) and building higher density apartments. This may seem pedantic, but in these discussions the distinction is important. In almost every housing-related thread on HN, I see people using them interchangeably, in ways that are confusing.

[jefftk]

I'm not sure what distinction you're getting at? I'm in Somerville Massachusetts, houses are very expensive, and the land is all built out. If you tore down a house, you would not be able to build as large a house in its place, in almost all circumstances. You definitely couldn't build a bigger one. What are you trying to get at with "new houses" versus "new homes"?

[cortesoft]

You could if you built a multistory apartment complex.

[my_username_is_]

Most housing in Somerville, and lots of the urban northeast, is made up of multistory apartments (sometimes referred to as "three deckers")

[cortesoft]

You can always build higher!

[jefftk]

I see, you're using "new houses" to mean new buildings, and "new homes" to mean new units.

[toomuchtodo]

Anything over 5 stories gets expensive per sq ft quick.

[an_opabinia]

It’s funny because barely any houses in Somerville are up to code. It’s like less than 5%. So the regulations have achieved a double nothing.

[jefftk]

The regulations came into place after Somerville was almost entirely built out. What they achieved was preventing additional building, which may or may not have been the intent.

[david927]

My feeling is that the pandemic and impending economic collapse will change that.

Remember when the 2008 crisis hit, no one was buying but no one was renting either. And a lot of banks with real estate on their books just let it sit there (where it sits today).

Once a the credit default domino chain starts to fall, people and organization will need to get liquid. The first stage will see some people jump in on pent-up demand but after that, real estate will fall through the floor. It will literally drop to near nothing in places.

[benrbray]

> no one was buying but no one was renting either.

As someone who was in eighth grade at the time, can you clarify what you mean by this? Every person either 1) buys property, 2) rents property, 3) goes homeless, or 4) dies. There aren't really any other choices.

[david927]

You're not alone -- it was quite surprising to a lot of people! What happened was the fifth option: move in with others, such as parents.

P.S. I just saw this article:

Mortgage Delinquencies Have Risen Fastest In US History

https://thewashingtonstandard.com/housing-crash-2-0-mortgage...

[tingletech]

from the point of view of the owner of an empty housing unit, if no one is buying and no one is renting then you are just left paying property tax and maintenance on an empty unit.

But, at least in my local market, it would surprise if the banks are sitting on empty units from 2008, as far as I know it all got auctioned off years ago.

This article predicts the covid crisis will center around a new collateralized debt instrument "[after post 2008 banking reform] [d]emand shifted to a similar—and similarly risky—instrument, one that even has a similar name: the CLO, or collateralized loan obligation. A CLO walks and talks like a CDO, but in place of loans made to home buyers are loans made to businesses—specifically, troubled businesses." https://www.theatlantic.com/magazine/archive/2020/07/coronav... discussed at https://news.ycombinator.com/item?id=23480680

[ArekDymalski]

Some additional options: staying with your parents; inheriting the property; marrying someone who owns a property.

[dasloop]

You can share so less people rent or going back to your parents place (common in Spain for example, in where families use to live in the same city)

[barnesto]

Millions of people live in a van (#vanlife) or RV. You can work from anywhere and when the sights get boring you drive to the next place.

[PaulDavisThe1st]

It can be pretty awesome.

For a while.

For a lifetime? I think not.

ps. I've done 9 months/6 months/3 months in my van with my wife. We love it, but it's not a home, it's a journey.

[cortesoft]

5) pack more people into the house and split rent

[benrbray]

Still technically renting, though :)

[cortesoft]

Sure, but it is the same effect on rental demand... one person renting a house and one person being homeless consumes the same amount of housing as two people sharing a rental house

[freeone3000]

(3) and (4) have nearly infinite growth potential.

[JKCalhoun]

If banks let real estate sit on their books, why did the real estate market crash? I remember seeing whole neighborhoods of new homes in Las Vegas going for $100K just to move them.

[david927]

It wasn't all real estate for all banks, and individuals were getting out, of course.