[6502nerdface]

> That $230,000 was taken from the pockets of my non-homeowning friends.

Nope! First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper.

Second of all, when you do sell it, the money will come from the pockets of your willing buyer :-)

Edit: if you still want to feel bad about something, let it be this: that the rise in your home's value represents wealth that has been created "by the community" in the sense that it's only because of many variables of the surrounding community that the land has become more desirable and therefore more expensive; and your ability to capture all of that increase via your untaxed monopoly on the ground rent creates a deadweight loss for the broader economy.

But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)

[landryraccoon]

If your phone and your laptop were suddenly worth twice as much would you also be celebrating?

I am struggling to find the right words to express how wrong your view is to me. Housing is a basic human need like food and clothing. How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need?

[6502nerdface]

> I am struggling to find the right words to express how wrong your view is to me.

Then surely I have failed to convey it!

In any case, my edited point about "deadweight loss" is perfectly consonant with the parent poster's feeling of guilt, and with what I presume is your feeling of disgust; it is in fact the economic term of art for that at which you intuitively recoil.

(Although you're kind of equating a very, very expensive home, in the overall scheme of things, with the minimum requirements of decency, if you really think that he's exploiting someone's inability to afford housing, but w/e.)

Now let's get into the controversial stuff...

> Housing is a basic human need like food and clothing.

Agreed. But it's also an asset, because someone has to build and maintain it and have exclusive use of (at least parts of) it, and being a basic need doesn't automatically create a right to something (for obvious reasons) so that asset is gonna trade hands voluntarily like any other. Its price will fluctuate, sorry.

Now, NIMBYs using government fiat to drive down housing supply in their market is an annoyingly common failure mode of local democracy, maybe that's all you're upset about.

[btilly]

No. It really is that your view is wrong, and not that you simply failed to convey it.

You glimpse the problem at the end, only to dismiss it. Your glimpse is when you say:

> Now, NIMBYs using government fiat to drive down housing supply in their market is an annoyingly common failure mode of local democracy, maybe that's all you're upset about.

The triangle that you're looking at is that NIMBYs lead to lack of construction, lead to undersupply of housing, which is a direct cost of both high housing costs and high homeless populations. The profit that I have as a homeowner comes from somewhere. Where it comes from is artificial scarcity that causes renters to struggle, and over 170,000 Californians to be unhoused.

Looking at that without guilt, is like New Englanders whose families made a fortune investing in the triangle trade, congratulating themselves on not having been those evil slave owners. Sorry, but it is tied together. You cannot both profit from the crime, and disclaim a portion of responsibility for it at the same time.

[psunavy03]

Ah, the internet. Where homeownership is unironically being compared to slave trading.

[jwestbury]

> for obvious reasons

What are those obvious reasons?

[lelanthran]

> Housing is a basic human need like food and clothing.

Yes, food, but I don't see many arguments for bringing down the price of caviar.

IOW, making an argument against high property prices in highly desirable areas is not the same as making an argument for low cost housing.

It doesn't really matter how dense you make housing in highly desirable areas, there'll always be more people who want to live there than houses available.

The solution is more remote working and much faster public transport.

Tax breaks on businesses for each remote worker will be cheaper than building more slums, it will be quicker (demand is affected almost immediately) and it needs no political campaigning against the local NIMBY residents.

Instead of trying to guilt trip people about the paper value increase in their property, just remove that paper value increase altogether.

(I'm not sure how you would solve the slow public transportation problem. Where I am we have 160km/hour trains, but the door-to-door travel time using these trains to travel 20km is still about twice the time it takes to drive)

[AnthonyMouse]

> It doesn't really matter how dense you make housing in highly desirable areas, there'll always be more people who want to live there than houses available.

A land area with a 40 mile radius and the population density of Manhattan would contain the entire population of the United States.

> Instead of trying to guilt trip people about the paper value increase in their property, just remove that paper value increase altogether.

The only way to do this is to build more housing. You can't fix it with mass transit because the existing housing is low density and mass transit requires high density.

[lelanthran]

> A land area with a 40 mile radius and the population density of Manhattan would contain the entire population of the United States.

That's a good point you make - even at the extremes of high-density living, high density still doesn't solve affordability!

People can neither walk nor bike 80 miles, and public transport over 80 miles with multiple stops takes hours, so you can reasonably expect that prices would be considerably higher in the center (40 miles to everywhere) where it is more desirable, and people can neither walk nor bike 40 miles for commuting. Public transport infrastructure for a 40 mile journey also makes commuting infeasible.

The problem of not being able to afford living close to where you need to be is still there, even in the hypothetical pathological case.

If it can't solve the problem in the ideal case, it can't solve the problem in any case.

[the_gastropod]

I’m not the GP poster. But I do not think one 80 mile wide city containing every US resident was intended as an example ideal case. It was intended as a demo of how non-dense the US is, on average.

Most “new urbanism” people advocate for medium sized, densely built, 15 minute cities. Not a single megalopolis.

[PH95VuimJjqBqy]

I plan on retiring in an area with hardly any people in it. Even now, living that tightly packed in sounds like a nightmare.

I can drive 30-45 minutes and be sitting on a lake with no one around, when I retire that drive will be 5-10 minutes.

A lot of us don't want to live like that even if we could.

[AnthonyMouse]

> That's a good point you make - even at the extremes of high-density living, high density still doesn't solve affordability!

Manhattan is <23 square miles, containing ~1.6M people, surrounded by a metropolitan area of ~20M. The surrounding metro area has a much lower population density (less than 3% that of Manhattan itself), implying that it's practical for it to be higher, which would reduce housing costs by supply and demand.

It's not about how much housing you have in absolute, it's about how much you have relative to demand. The demand in NYC is about the highest in the country, so they need more supply than they have even now.

> People can neither walk nor bike 80 miles, and public transport over 80 miles with multiple stops takes hours, so you can reasonably expect that prices would be considerably higher in the center (40 miles to everywhere) where it is more desirable, and people can neither walk nor bike 40 miles for commuting. Public transport infrastructure for a 40 mile journey also makes commuting infeasible.

The average commute is 41 miles as it is. And with that level of density you could justify express trains that travel at highway speeds or more, making that distance a much shorter commute than it is even now.

The area in the center might cost more than the outer ring, but what of it? The point is not to make all housing have the same price, it's to build more housing to lower the price of all housing. It doesn't matter if the center costs more than the outskirts if they each cost <25% of what they do now.

It also goes without saying that you would not actually build this. You neither need nor want the entire US population to live in an area the size of Connecticut which represents less than 1% of its land mass; there are multiple metropolitan areas spread all over. The point is merely that enough housing for the entire population would fit in that area, which serves as an upper limit on how much housing demand you could even have. And even Manhattan has a lower population density than we could build at -- it certainly doesn't consist entirely of 100 story buildings despite them being possible to build. The claim that it isn't possible is clearly false.

> The problem of not being able to afford living close to where you need to be is still there, even in the hypothetical pathological case.

That is the pathological worse case scenario because you would have to provide enough housing for a single city with 340M people in it, and you still end up with a lower average commute than people have today.

If you took an existing metropolitan area and raised the population density to that of Manhattan (i.e. lowered the area with the same population) then the San Francisco metro area with 7.8M people would have a radius of less than 6 miles.

And it would be silly to do even that, because all you need to do is convert existing single story housing into multi-story housing and thereby provide enough housing to satisfy demand. You can increase the density by a factor of >50, it's not a question of whether existing construction technology would allow it to be built, but even increasing it by a factor of only 2 or 3 would significantly lower housing costs.

[PH95VuimJjqBqy]

Because we don't all levitate over open water.

If someone discovers their vintage car is worth more than they paid for it as teenager should they feel guilty over this?

Do you feel guilty when you eat food because someone somewhere isn't?

[otteromkram]

Shelter is a basic human need, not housing.

[zarzavat]

Anybody who’s seen a slum would agree that it’s housing that is a basic human need, not shelter.

[Arrath]

That's a fine line you're cutting there.

[gorlilla]

No, the line is clear. Now here's your government issued box and tarp.

[claytongulick]

> How can you in good conscience celebrate making a tremendous profits exploiting the fact that people cannot afford a basic need?

I'm completely missing your point.

If I buy property in a developing area because I think it's cool, and I live there for years and am part of the community and watch it grow around me, and years later decide to sell - I took an early risk, don't I deserve to recognize the rewards from that risk?

If it was a bad risk and the area went to hell, and I lost money - is that ok?

But making money isn't?

Should home builders not be allowed to make money because housing is a basic human need?

Should we not be allowed to build luxury homes that cost more because we could have built multiple cheaper ones with the same money?

What should the rules be, in your opinion?

[vineyardmike]

> I took an early risk, don't I deserve to recognize the rewards from that risk?

In your mind, how much of the increase in value of housing is due to “early risk” paying off in a valuable community vs an increase in overall demand without an increase in supply?

When the nation sees the housing supply increase slower than the population, that’s not a risky investment. It’s musical chairs where you pay to win.

[claytongulick]

Are you actually involved with real estate investing?

I'm asking because it really doesn't seem like you have much experience with it based on your comments.

Housing prices go through bubble-burst cycles regularly.

National trends are interesting, vaguely, but local markets are everything, and fluctuate wildly based on many factors.

We get into serious trouble when we have external forces skew the market, like in 2008.

Covid years + essentially free loans (nearly zero interest) are another example.

It caused a bubble that's going to cause a lot of pain as the market corrects.

I'll be part of the solution - I'll buy properties (most likely next year) that are in distress, rehab them, and then sell them later.

According to you, though, that's somehow wrong. I should just let foreclosures happen, let houses rot empty - because profit is wrong?

[vineyardmike]

Hmm don’t think I said profit is wrong. I said owning an asset in limited supply with growing demand and then selling later is not particularly risky. I made no moral claim.

I’ve seen HGTV. I’m familiar with house flipping, I know that the markets are local. I don’t really need an economics lesson to understand that low interest rates spurred buying. Don’t kid yourself into thinking it takes a genius investor to buy something in low supply relative to demand and resell it for more.

[claytongulick]

> I’ve seen HGTV

Guess I should be learning from you then.

[satvikpendem]

Singapore has a good model that allows most of its citizenry to own homes. Basically, it competes with home builders directly. If they don't want to build, the government will do so.

https://youtu.be/3dBaEo4QplQ?si=r_3FWkZJLBvWAxJ_

[refurb]

The Singapore government won’t build in advance so demand is far higher than supply so there is a lottery. Oh and you have to married. Singles wait until 35 and can only buy a 1 bed.

If you don’t win the lottery you can always buy resale which is close to $1M for a 2 bedroom place.

Oh and it’s a 99 year lease. After 99 years you give it back to the government and get $0.

[mixmastamyk]

Oh, folks want to build, that’s for sure. They’ve been prevented, and sometimes still are.

[satvikpendem]

In Singapore, the state has vast eminent domain powers and is exempt from all zoning laws, which is covered in the video. I'm not sure that would ever fly in the US.

[mixmastamyk]

Yes, would have to fall on the state, as in US State, not the domain of the Feds.

Being a nationwide problem, they probably wouldn't be able to solve the problem. Because solving the problem means everyone moves to your state.

[kelnos]

That "wealth created by the community" is often really "there is high housing demand, but the community of housing owners refuse to allow reasonable increases in density, which has the effect of increasing their home values".

When the people who "generate wealth" are doing so by dictating prices, that seems a bit sketchy to me.

The ironic thing is that housing scarcity often ends up making a place much less desirable -- even for the entrenched homeowners who cause the scarcity problem.

[pj_mukh]

This is a house, presumably close to a job. Not an optional night out. It’s by no means a “willing” buyer. Mostly a “I need this to survive” buyer.

Homeowners with this much gain based on artificial supply constraints should definitely feel bad.

[thghtihadanacct]

Again, if they sell ... my house has doubled in value ... its still the same house I bought. I would only realize some gain if I put it on the market. What it is now is just another house not for sale and I happen to live in it. This is the same uneducated statement people make about prop 13 in California ... 'oh your house is worth a million so youre a millionaire' ... oh?

[mbauman]

Baloney. You have a house with relatively stable monthly payments. You will be able to purchase another hour if and when you need to move. You have a nest egg.

It doesn’t matter when you sell because now you’re floating on the water. As the tide rises, so do you.

[kelnos]

The problem is that in California, the owner is still paying taxes on an assessed value only a little bit higher than what they paid for it initially.

If they sell that house, and then buy something new at a similar market rate, their property taxes will balloon overnight, because the assessments "reset" to the purchase price when the property changes hands.

The only way this works out great is if, after selling this house, they move to a new area (possibly new state) with lower cost-of-living, and possibly a more sane property tax regime.

(Not sure the person way upthread is in California, but someone lower down mentioned Prop 13, so I thought I'd bring this up.)

[Guvante]

1% property taxes are ~15% of my mortgage payment in CA.

I would pay 50% more if I upgraded with the same debt amount due to interest.

[jjav]

> You will be able to purchase another hour if and when you need to move.

Say you bougt a house for 200K many years ago. Your neighbor bought the slightly larger house next door for 275K back then. Your house is worth 1M now. Can you move?

Sure, you can sell your house at a nice profit (and pay taxes on that!!). The neighbors house is worth maybe 1.2M now. So you can't really afford to move.

Housing gains on paper are not income and you can't cash in on it unless you move out to a much cheaper area. Otherwise whatever gains you had on paper also apply to the nearby houses, so you can't afford them.

[mbauman]

> Otherwise whatever gains you had on paper also apply to the nearby houses, so you can't afford them.

Why are you so certain you couldn't you afford them? You were able to purchase a 200K house many years ago. Now you just need another 200K to buy that bigger house — and it's a bigger house! You did it once long ago, you can probably do it again even easier (in addition to everything else, you have a huge downpayment now). And no, you typically don't pay capital gains taxes against your primary residence.

In any case, the point is that you're in a way better place than if you hadn't made that 200K purchase. That's what I mean by "floating on the water" — you have a stake in the market so now as it moves, so does your asset.

[jjav]

> And no, you typically don't pay capital gains taxes against your primary residence.

A married couple can exclude 500K from taxes, but the rest (given example above) is taxable.

> In any case, the point is that you're in a way better place than if you hadn't made that 200K purchase.

For sure. Owning is better than renting.

[thghtihadanacct]

Not where i live I wont ... there is a bunch of real estate know nothings in here downvoting me cuz they angry. If I sell my house I gotta leave town. I cant afford any of the others. It isnt an investments it is where i live, even if i owe on. A mortgage isnt speculation ... it is debt.

[Guvante]

California has a 1% tax rate.

If you can't afford less than $1k per month you could just sell your $1 million house.

Those numbers aren't being dramatic. You need a $1.2 million house to pay $1k a month in property taxes.

[jjav]

> California has a 1% tax rate.

That is technically true, but not really true. The basic tax rate is indeed 1%, but counties and cities are free to add any kind of fees they want (AFAIK there is no limit) to your property tax so in practice you're paying way more than 1% in CA.

[Guvante]

Prop 13 says they can't do that. Only the county can charge 1%.

Irvine CA wanted property tax and so they get builders to force you to an extra fee but it isn't technically a property tax.

Not to say there isn't sometimes a fee or two added but it isn't the Wild West at all.

[jjav]

> but it isn't technically a property tax

That is the loophole they use. They add all kinds of fees into the property tax but don't classify them as taxes. Best I know, there is no limit to how many and how much. Twenty years ago my property tax was just a single line item, the property tax. Now it's up to 6-7 (don't have the bill in front of me to check exact count) line items.

So yes, your CA propery tax^H^H^Hfee bill can be way over 1%

[AnthonyMouse]

> First of all, it's come from no one's pockets until you sell. Until then it's just a hypothetical, theoretical gain on paper.

It comes from their pockets when they pay rent. Meanwhile you, as a property owner, receive thousands of dollars a month in imputed rent by owning a place to live.

You also have the ability to spend the money without selling the property by borrowing against the equity, as many people do.

> Second of all, when you do sell it, the money will come from the pockets of your willing buyer

People "willingly" subscribe to Comcast. Not because they prefer doing business with Comcast or believe themselves to be getting a fair deal.

> if you still want to feel bad about something, let it be this:

The people celebrating the increase in housing costs because they own housing should feel bad about it. Especially the ones who caused it by lobbying for zoning restrictions.

> But that's why we created the universal land value tax and used it to replace all other taxes! (Hello from the year 2078!)

This doesn't actually fix housing shortages created by restrictive zoning -- which you could conceivably still have with a land value tax and a government that keeps the restrictive zoning to maximize land values and therefore tax revenue. (Land is worth a lot more if you need it proportionally to build housing instead of just buying one piece of land to build an arbitrarily large amount of housing by building an arbitrarily tall building.)

[rcpt]

> it's come from no one's pockets until you sell

Assuming that property tax has been tracking the current market value of the house then yes.

But in California prop 13 means that isn't the case

[benjaminwootton]

The more important point is that you will take that extra money and more and give it to the next willing seller who you are buying from. Rising property prices don’t do much for you at all until you are ready to trade down or leave the market.

[eru]

Opportunity costs are real.

[thghtihadanacct]

So is gravity and rainbows. You just gotta get what you can

[thghtihadanacct]

and taxes ... while prop 13 keeps property taxes reasonably down for legacy home owners there is nothing blocking capital gains

[lotsofpulp]

Prop 13 is only in California, and previous poster was talking about sub $350k houses, which makes it very, very unlikely they are in California.

[adolph]

I thought you were joking about sub-350k and looked it up for CA. That is nuts:

In August 2023, home prices in California were up 4.8% compared to last year, selling for a median price of $792,900. On average, the number of homes sold was down 14.0% year over year and there were 25,115 homes sold in August this year, down 29,214 homes sold in August last year.

https://www.redfin.com/state/California/housing-market

[lotsofpulp]

Yes, checkout the figures for the US west:

https://cdn.nar.realtor//sites/default/files/documents/ehs-0...

A couple hundred thousand is the price of land, not a home. If it is a home, it’s a teardown.

[thghtihadanacct]

Fair enough but same idea. Any appreciation on a home you live in is moot. Its a house, its a home ... its not an investment. Anyone that leverages their home is an idiot. ... and capital gains applies anywhere but i guess if they are selling a house not in cali there might not be enough gains to worry about the IRS.

[eru]

Leveraging homes is almost universal when acquiring property: that's exactly what a mortgage is. Why do you call everyone who has a mortgage an idiot?

Capital gains don't necessarily apply everywhere. In eg Australia your owner occupied house is exempt. And in eg Singapore we don't have capital gains on any asset at all.

A house is both a home and an investment for most people. That's just a description of what's happening. However you could say that a house _should_ not be an investment.

[thghtihadanacct]

Australia?!? Who gives an f about australia or singapore? What youre saying is your arguments have no merit against mine... Cuz mine operate for the place I live in. I understand your gross under generalization ... but if you are living in a house its only worth is a roof over your head.

[eru]

You didn't specify which place you live in, nor that you were only interested in your part of your small town or perhaps yourself.

> Anyone that leverages their home is an idiot. ... and capital gains applies anywhere [...]

Anyone, anywhere..

[singleshot_]

No cap gains on the house you treat as your primary residence for three out of the last five years up to $250,000 ($500,000 if married filing separately).

Less than a quarter of Americans own their own homes. [0]

[0] - https://www.forbes.com/sites/johnwake/2023/03/31/us-has-3rd-...