It feels a bit like the supply of housing and the supply of debt are both manipulated to make sure people work as hard as possible but without revolting. Living free and clear of debt is extremely hard; the places you can build a home without restriction are generally not near decent jobs, and the places near decent jobs make it more or less illegal to build homes (and those you are allowed to build have to meet labrynthine requirements about outdoor space, parking, density, etc. - certainly the sorts of homes normal people could afford to build with the cash they have aren't allowed in the major metros).
Of course, those who already own homes have a strong incentive to preserve the housing cartel, as it increases the value of their asset (which they can then sell when they retire and move somewhere cheap with no jobs)
So far as I can tell the best path out is remote work and a low cost of living area, but that's open to rather few people and I have a suspicion wages will drop as more people gravitate towards this option and there's more competition.
Not to mention that we explicitly encourage young people to throw away 4 years of their life _and_ take on massive debt before starting. I'm not sure a degree, a pile of debt, and 4 years of opportunity cost are worth more than your wits and a clean slate.
I have to agree, it isn't.
College these days are a business like any other. Its almost more valuable to toss someone into the deep end to learn to think on their own feet rather than have them come out of a college with 4 years of 'experience' thinking they know anything about how life/business/money works. Going to college to get a certification (i.e. law, medicine) might potentially be worth it but I know people who have left those industries as well.
What I think is more unbelievable is that all degrees are 4 year highly structured degrees, which is simply not the case for every job out there. Looking back it all seems so ludicrous, the whole process of being educated in that system. Even video games today are more realistic than this.
In any case, property prices in high CoL locations is mainly the cost of the land. I've visited homes in the midwest nicer than almost anything I ever saw in the Bay Area that cost 200-300k.
When you buy a house here it’s more like you’re buying a $900,000 piece of land and getting a free house in the deal. Those houses are practically worthless and a lot of new buyers tear them down and build a new one.
I’d guess that doing that costs a few hundred thousand. But most of the time I see that, the new houses are way better quality. If you wanted to bare minimum meet code, it’d probably still be cheaper to build a new house than to refit the old one.
And land you can build on is expensive because it's scarce, because people vote to make building anything illegal (except places that are already in decline and need residents)
My house is a death trap, for that matter, but it's thatched..
The banking system doesn't put people into debt by itself. People voluntarily take on debt for reasons such as to attain a college degree because they are told the long-term benefit is worth it.
So rather than go after the banking system, I think it would be more fruitful to go after the reasons people voluntarily take on debt. What are those, and how can we make them more affordable with something other than debt?
If I want to buy a house without a mortgage (or with a limited, affordable mortgage), I still need to be able to outbid other buyers who might have no qualms about taking on an unaffordable debt. So even if I'm just making an individual decision for myself not to go into debt, I'm severely influenced by the behaviour of other members in society, and how much banks are willing to lend to them.
It's still not the bank's fault that people will voluntarily enter unsustainable agreements because they think they need to live in overpriced areas. The banks in this scenario are merely an accessory to financial suicide.
So I think my point still stands: how do we break up this obsession with living in overpriced areas? Improved remote work opportunities? Better cultural opportunities outside major metropolitan areas?
>Better cultural opportunities outside major metropolitan areas?
There is so much historical inertia behind the cultural opportunities in many places that this one will be hard to do and take an inordinate amount of time I think.
Difficulty: houses are more expensive near good schools, because demand is higher, so you can't get away with cheaper housing without harming your children's future prospects.
And no, it's not mostly a funding thing, so just distributing funds more evenly won't fix it. It has a lot more to do with selection bias, of which housing prices are a major part.
An expensive home is a place to live and sleep, but it's also: 1) a ticket of admission into a good school district 2) a ticket of admission to a local economy with well-paying jobs 3) a retirement investing account
I do think changing the way schools are funded will help the first point, and the rise of remote-work will help with the second point, but as to the third point - who knows. There are too many government incentives to buying a home that I don't think it'll change any time soon.
The areas aren’t overpriced, they’re correctly priced given the reduction in value of many types of labor due to automation and outsourcing.
This is a structural change where many Americans now have to compete with people in poorer countries who are up and coming, and at the same time facing redundancies due to technology sufficiently automating their tasks that far fewer people can output more labor.
The obsession is not with living in overpriced areas, the obsession is trying to be in the top quintile/decile and having a network of people in the top quintile/decile because you see the value of labor of the rest of the population going down.
This the solution has to involve either making more people’s labor more valuable, or reducing people’s need for income from their labor.
The first might be accomplished by better educating people so their labor is more valuable and funding research and development, and/or reducing the amount of labor available.
The second can be accomplished with a universal basic income.
Whether this would continue to let a country be economically competitive against other countries in the world, I don’t know, but probably not.
I'd blame local zoning boards for that, they won't let new houses be built, so the prices keep going up, screwing folks who don't own homes already.
Let's say the rules right now permit 30 year mortgages. Someone suggests allowing 100 year mortgages. I don't presently own property, but I have $300k saved up in the bank, which is enough to get a low-end apartment that would be a step down from where I'm renting now, or enough for a mortgage downpayment on a house. I don't want to live in debt so I have no plans to get a mortgage.
Should I believe that these rules changes won't affect me, because I don't have any plans to get a mortgage?
Or should I be worried that the cheaper availability of credit will quickly put those entry-level apartments out of my price range?
Basically, my point is that changes in details regarding contracts that I'm not a party to can still significantly affect me!
In Sweden, you'd be competing against people getting 110 year mortgages.
The more predatory side of taking on excessive debt, because one's back is against the wall or one wants to make an impulse purchase, gives you very little additional time (e.g. weeks or months instead of years). This kind of debt is dangerous.
I bought my house about 60% cash, 40% an unsecured personal loan I could default on without losing my house. This is only because my house was insanely cheap, though.
Personally, I'd love to see a political push to ease back income taxes and capital gains taxes (why are we disincentivizing working and saving?), and implement either a VAT or a progressive consumption tax instead, which discourages spending beyond one's means.
We could also take away corporate income taxes, and replace them with hefty Pigovian carbon taxes (to offset negative externalities), and land value taxes (as they're non-distortionary).
Singapore don't penalize saving and you see how competitive they are. More importantly, they have a lot of savings.
At the end of the day this all adds up to millions of dollars for what my parents and grandparents could easily afford on mediocre pay by today's standards.
It means I spend all day every day thinking about career moves. If I'm sittin here on Slacker News I'm not gaining knowledge or skills to move ahead. I can easily see this causing one to feel isolated and trapped which isn't good for mental health.
You've unfortunately picked up a wrong country to continue living (and possibly retire). Many european countries offer all of this, US currently none. Unless you jump into career rat race, but even then you are 1 severe illness/accident away from financial ruin.
Apart form the last point about good area. Depends on what is good for you. If its good for everybody, its unreasonable to expect that it can be available to many. That's unrealistic... anywhere
Daniel Kahneman argues that people optimize for satisfaction over happiness. If we had UBI many parents would choose to spend extra time with their children instead of friends. That may not make them happier.
https://qz.com/1503207/a-nobel-prize-winning-psychologist-de...
For that we need to change the banking system which puts people in debt. Ie working to pay of debt is voluntary wage debt enslavement. The previous sentence is controversial. Most still want status quo vs radical change.