Except that the amount of housing you need does not stay the same throughout your entire life. Nor do constraints on your proximity to urban job centers.

> If you don't own a home, you are effectively short the housing market.

If you don't own a home you are not hedged against the housing market.

That's different from being short.

But if you have a mortgage you're long and leveraged. A 20% fall in the value of a house may end up with you losing 200% of your investment.

> If you don't own a home, you are effectively short the housing market.

No, the same way that you aren't short on Tesla if you merely don't own any Tesla shares.

> If you own one home you are neutral

Long, actually.

> you can't sell it to make a profit because you always need one roof over your head.

Yes, you can; you may prefer to have a home, but people do in fact live without them, and, further unless you own the most minimal home allowed by habitability laws in the most inexpensive neighborhood, you can always downgrade while still having a roof over your head.

> If you own more than one house, you are a landlord/investor

That's no more true that it is of “if you own more than the least expensive house possible”; it is quite possible to own multiple homes only for personal use value, viewing them neither as investment for resale or things to rent out.

> It would be better for everyone if housing was not an investment

If it wasn't, how would development happen? It only happens because housing is an investment for the first owners, the one building it.

Many things are created with out them being 'investments.' The builder just needs to be able to sell the home for more than the cost of labor, material, and land. The owner buys it as a place to live and not as an investment.

Much like a car - many things are expensive and not expected to go up in value.

> Many things are created with out them being 'investments.' The builder just needs to be able to sell the home for more than the cost of labor, material, and land.

Spending money on something in th expectation of being able to resell it later for greater than the cost is, exactly, an investment.

> > If you don't own a home, you are effectively short the housing market.

> No, the same way that you aren't short on Tesla if you merely don't own any Tesla shares.

I'm not required to produce Tesla shares every month for the rest of my life. It's not precisely that I need to own "one home" to be "neutral housing", but I need a claim on enough housing for myself (and those I'm responsible for) that I don't have to keep paying market rate for.

That is a very interesting way to think about it, but I am not sure that it works fully. By extending that principle, wouldn't anyone that can't afford to own shares in TSLA or MSFT be short then? In this framework it seems like you can't be "neutral", ie neither short nor long.

No, because you need a home to live. OP is arguing that living in a home you don't own and being exposed to the housing market through your rent costs is equivalent to being 'short'.

Okay that's a fair point. In the housing case, you aren't simply not participating; your money is exposed to the housing market in the form of rent. I buy that.

You can sell at a profit by moving someplace where housing didn’t go up at the same rate (e.g. to another area or to a smaller house).

Housing as an investment and friction around moving keeps you tied to a particular area, which can be argued is better for a community.

I don't see how being tied to a particular area is essentially good for the community, especially for big cities, which are used to huge turnovers. For me having the freedom to move wherever I want for my job sounds much more enticing than being forced to find jobs in the same area even though there might be better chances elsewhere/I just want to experience something different.

Also, you don't necessarily have to be tied to that area either. You can still treat the house as an investment and rent it out, while you yourself rent a smaller house. In some places in Europe such practices might even be encouraged by the policy (tax incentives etc.)

In your analysis, I believe you're missing the class of folks that can't afford a home.

He is not. Within the point he’s trying to make, that class of people are effectively shorting real estate, whether or not they want to.

I’ve never heard of renting as being “short” the housing prices but that’s a great way to think of it.