I'd argue that many people aren't being paid enough to participate in the society they were born into. Therefore taking on debt for daily expenses is involuntary.

A growing underclass isn't paid enough to get basics of life like healthcare or being consistently fed - it's beyond not being able to participate, for many to even exist is backsliding.

Hmm, sort of. Let's look at mortgages.

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.

>I still need to be able to outbid other buyers who might have no qualms about taking on an unaffordable debt

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?

Build more housing in the major metropolitan areas to meet demand is a fantastic start to it all. Look at how much is built in the big desirable cities. It's not enough, which is driving up prices to absurd levels (looking at you specifically San Francisco in particular). Decommodify housing where possible and take away it's ability to devolve into strictly a monetary investment vehicle.

>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.

> 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.

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.

Housing prices haven't been based on the underlying asset for decades.

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.

>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?

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.

>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.

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.

That's definitely an issue, but not the one I'm talking about.

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!

Agreed - increased loan availability affects the supply/demand curve.

Thank you! It's often overlooked that housing basically soaks up as much debt as we throw at it.

In Sweden, you'd be competing against people getting 110 year mortgages.

Isn't the extreme of this interest only mortgages?

We are competing among ourselves. It becomes a rat race.

Debt to me is just something that buys time by making things immediately available. I think it's healthy only if it supports real growth. For a person, if they need money now to buy an education, home, or other thing that will be put to productive use, debt is valuable they don't need to save up for years at a less productive state first. Same for companies -- 'responsible' debt can unlock growth by meeting obvious and pressing demand today. The future is unclear, so this is of course riddled with traps and competitive pressures, but at least there is a chance that money today rather than tomorrow is a good thing, if your returns can beat the interest rate you pay.

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.

True, and indeed swapping a $2k a month rent payment for a $1k a month mortgage payment (that ends after 15 or 30 years) can make sense. But people have different tolerances for risk and to me securing multiple years of debt with the roof over my head scares the shit out of me.

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.