Subnostr

I think there is an affordability crisis because the banks have promoted to base concepts. One, housing is an investment in personal wealth, and two, that increase in personal wealth is proportional to the market value of your property. The 30 year mortgage is the worst thing thing that ever happened to personal wealth, and housing can be an investment practically only if the investment is a second property where the first is owned entirely. The market value of your primary residence is of little consequence because that value cannot be practically realized. You need a place to live, and few people go from a mansion to a shack to capitalize on the sale/purchase difference.

Mallory 2y ago

The 30 year mortgage makes sense in a specific practical use case. You buy a starter home, then use the equity from that property to transition to a larger family home, once empty nesters you transition back to a smaller home and use the equity you built over the years to help fund your retirement or have a home you own in it’s entirety. This assumes that you had a fixed rate mortgage and property values continued to rise over the years.

Pushing one size fits all financial advice is problematic. As is assuming that everyone wants the same life.

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Discussion

Jac 2y ago

It would be nice if it had worked that way. Realistically the the plentiful large amounts of money created a market for overpriced housing, each level buying to the extent their credit and circumstance would allow. This made all of the housing unaffordable for wage earners who don’t want to opt for a mortgage and unreasonable for everyone else, unless you are a fool betting on perpetual growth, and even if that growth continues, what is it fueled by? The evidence for my case is the increasing number of lower middle class people living as tenants, and working class joining the ranks of people raising families in automobiles or tents. I don’t blame the stupid people, I blame the banks for unscrupulous lending practices. The 30 year mortgage is necessary unfortunately, but that necessity doesn’t make it a good idea. Eventually the housing market will price enough people out, making them homeless and they will forcibly take properties over. It’s already happening in poorer metropolitan areas like Detroit.

Mallory 2y ago

The problem of housing costs outpacing wage growth is a real concern.

Mallory 2y ago

Detroit had a lot of flight from the city into the suburbs. Issues with the automobile industry affecting the economic health of the city. Houses were abandoned because no buyers existed. Having people return, fix up houses and do urban infill is beneficial for the city. Detroit is a perfect example of the dangers of being a one industry economy. Poor policy choices bringing a city to the utter brink. San Francisco should take note of what not to do.

Jac 2y ago

Interesting perspective. I’m not talking about having people return and fix up houses. I’m talking about people returning and squatting in houses they cannot afford to rent or buy. You honestly think that issues with automobile industrials caused the housing collapse? GM received government cheese to right their boat, have you checked Ford stock lately? Corporations and their profit margins along with cheap global labor are to blame. AI and automated manufacturing are going to make this measurably worse. What is the answer? UBI? Depopulation? We can’t all be royalty, princess. I can’t help but see your opinions as a rendition of “if the peasants can’t afford bread, let them eat cake. “

Mallory 2y ago

Far from a princess. I was speaking specifically about the situation in Detroit, the causes of which go back to the 1960’s. The housing crisis did have an effect on Detroit. From my understanding it was more like a layer of snow on a snowball that had been rolling downhill for quite some time.

Jac 2y ago

Lol. Just a good natured jab. I’m concerned that there are lots of snowballs all starting to roll downhill. Great analogy. I travel extensively in the US and I see the socioeconomic ladder eroding from the bottom up. I know there are few easy answers if any at all, but every conversation is a little piece of the big picture. I appreciate our dialogue.

Mallory 2y ago

I too see a lot of snowballs rolling downhill and have for some time.

Mallory 2y ago

I’m willing to go into more detail on contributing factors in Detroit if you’d like. I don’t feel like taking the time to go down that rabbit hole if you’re not interested.

Jac 2y ago

I am interested. I think the mode of failure can always be discerned with in depth analysis. Let’s take a trip down the Detroit rabbit hole. 🐇

Mallory 2y ago

I was writing a very long post. Went to double check a fact and fell down a rabbit hole of conflicting facts and timelines that need reconciling to have a chance of coming up with a cohesive timeline. Ah history.

I will quickly say everyone can agree that the exodus of the white middle class from Detroit to the suburbs in the 1960’s that was hastened even more by the 1967 riots was the inflection point of Detroit’s downward spiral. But trying to unravel where the snowball started keeps leading me further back in time.

My power has gone out due to bad storms. So this will have to wait until I don’t need to conserve power on my devices.

Jac 2y ago

I think the practical necessity of the 30 year mortgage is exactly that: pushing one size fits all financial instruments. Everyone needs housing.