Treating housing as an investment vehicle is fundamentally incompatible with the ideal of housing being affordable. How can you possibly have affordable housing in a system where housing increases in value (cost) at 5% a year? Who could possibly afford it after several decades of compound growth?
By the time I had to move to CA for work in 2009 of course the market had crashed badly and the condo was well underwater, not even counting the $20k I had put into the kitchen and bathroom.
It was a $185k 2BR 1.5BA unit, with a condo fee of $300/mo and a monthly payment (principle + interest) of $980 with a 3/1 ARM at 3.5%. I got lucky because the rate was indexed to the LIBOR and it was being manipulated to ~0% back then, so my rate stayed super low even though it was adjusting every year.
I put the unit on the market for $165k for two months and got zero showings. So I offered it for rent at $1400 on Craigslist and it was rented that weekend.
I just sold the property last year, to the person who was renting it (and had been for 4 years) for $185k. I gave him the last 4 months before closing rent free because we closed without any broker (no commission) and because I didn’t have to do a thing to the unit pre-closing, seeing as how he was already living there.
Not all landlords are scum out to make a buck on the back of tenants they never met and don’t care about. Not all landlords are even in it because they initially set out to be! And very few landlords are being “fed” half of someone’s paycheck, but more like, covering the costs plus a few percentage points, as long as nothing unexpected happens.
I will nitpick and say that paying your mortgage is not a cost. That is equity you're getting.
And only public housing would collapse the entire economy. Plenty of countries tried this, most notably the commies in Russia and in eastern Europe.
That doesn't make much sense to me. 1/2 of the paycheck is only true for a few places with limited housing supply, which is the root cause of the problem. One could apply the same logic of "x% of the paycheck" to other spending items such as food and conclude that the state should also produce our food.
> Public-owned housing is the future. It works in Europe and it can work here.
Public housing in European countries accounts for less than 10% of the overall market and is mainly aimed at poor people. I do not see how this would be a general solution to the shortage of housing.
> Treating housing as an investment vehicle is fundamentally incompatible with the ideal of housing being affordable. How can you possibly have affordable housing in a system where housing increases in value (cost) at 5% a year?
True, but here, too, the cause is a lack of supply due to zoning, minimum parking requirements, minimum lot sizes and other restrictions.
Public housing has failed time and time again in the US, so citation needed.
Unless it’s economically attractive to invest in real estate, the money won’t flow into housing.
Sure you could have the govt do it, but based on their track record I don’t assume it’ll be done very efficiently.
The generous way to read the post above is an arrangement where property ownership can be both public and private - possibly where rental units are majority state owned and private ownership is more concentrated in actual residents.
It’s akin to saying most transit should be gov owned: cars, trucks, trains, planes, ships... they may allow you to own one private vehicle.
You joke but many people here would support just that.
In Asia too: https://en.wikipedia.org/wiki/Public_housing_in_Singapore
Investment requires a return on investment. Return on investment must be commensurate with the risk. Risk adjusted returns are the reason the house/apartment was built in the first place.
But your anger is misdirected. The distortion in the housing market is the direct and predictable result of specific government policy, of which TFA is just more of the same.
In this case by “more of the same” what I mean is a policy which will do nothing to solve the problem. This particular law seems to be relatively harmless.
