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I think the biggest threat to poor people, would be the ridiculous housing market. It's not just in big expensive cities, it's pretty much everywhere. Only places that are being spared, are those in destitute areas with some serious emigration problems - but those things happen for a reason (no work).

In my country (Norway), the housing market has appreciated around 5.5% ANNUALLY, compared to annual wage increase of some 2.5%. In some cities, that growth is much higher - almost 8%

We have a very decent welfare system, but a spread like that will surely create a hard class-divide between owners and renters. Renters will be forced further away from the cities, having to rely on longer commutes.

Some places it's already that bad. Certain normal salaried professions can not, and will probably never, be able to own even "starter" homes (as in small apartments), because they need to spend more and more time on saving for the down-payment (15% here) - and once they've reached their original goal, the goalpost have been moved. I'm talking about professions like teachers, nurses, etc. Not even legit poor people!

Having been raised by a poor-ish single mother, I can remember that at least in the 80s/90s, there was a lot less debt around. At least here, credit cards and consumer debt wasn't being handed out like free candy, back then. You had to rely on your salary, and then either get help from family/friends, or the welfare office. My mother had too much pride for that, even though my dads side were loaded.

These days, it seems like poor people are also getting trapped in debt. Everything is driven by debt, and every bill you fall behind on, is compounded by some fee, which is applied the second you're overdue.

I can absolutely understand why many poor people feel complete helplessness and apathy.




You can't have an eternally appreciating housing market and affordable housing [0], one has to give. Our current housing market appreciation comes from systematic housing shortage.

Rognlie finds out that the increase in return to capital (vs return to labor) observed by Piketty comes largely from the residential real estate sector [1].

It turns out, Henry George was right. We need to tax the value of land such that we capture all of the economic rent that rightfully belongs to the community and distribute it to the community as a dividend. The same tax will spur a more efficient use of land and, thus, more housing supply. The dividend will serve as a cash-based safety net for the community members.

Additionally, at some point we have to make the switch that Japan did in how we view housing: as a depreciating asset.

[0] Note that the only sustainable way to have affordable housing is if market-rate housing is affordable. Publicly owned/built/subsidized housing is useful for handling exceptions, but not for your main point of supply.

[1] https://www.brookings.edu/bpea-articles/deciphering-the-fall...


I've been thinking about this as well, and I think the crux of the problem is that housing is a prime investment. I'd imagine for most older Americans, real estate makes up a significant amount of their nest egg. In my circle, it seems like there is much more talk about housing investment than stocks or something similar.

If this is true, then it implies that the corrective paths are all things which will negatively impact the investments of anyone with a mortgage. I wonder what percent of the voting body they make up? I think this is part of why we aren't seeing change. It seems like somebody has to lose out.

I think these are the main solutions. As you see they are all legislation dependent:

1. As you mention, larger tax on housing, especially on those which are used as rental properties.

2. Saturate housing markets with government housing, which don't need to be priced at subsidized rates but only at a rate such that no rent seeking behaviour would be practiced in a 40-50 year window. A 0% IRR investment from the government would not cost taxpayers nearly as much as subsidized housing.

3. Relax building code standards and zoning regulations to drastically increase the supply of low cost real-estate opportunities.

4. Related to 3, relax laws relating to mobile homes/RVs/tiny homes and allow people to live in them if they have a place to keep them. I know in many places this is illegal, even in very rural areas [1].

[1] https://globalnews.ca/news/7501035/bc-couple-salmo-land-evic...


There is no "systematic housing shortage." There are 59 vacant housing units for every homeless person in the US. [0] Even California has more than 9 empty housing units per homeless person. [ibid]

---

[0]: https://www.self.inc/info/empty-homes/


That's a bad indicator for whether there is a "shortage" or not.

You need a sufficiently high vacancy rate to be able to have a dynamic marketplace: if all houses were occupied then moving then moving houses would involve swapping houses with someone (or having a short-term stay... which means not all houses were occupied).

We live in a spectrum, the higher a vacancy rate the easier it is to find a house that meets your needs.

It really is not surprising that as vacancy rates go up prices go down [0]

[0] https://www.sfchronicle.com/bayarea/article/S-F-renters-gain...


This is known as “vacancy trutherism”, and it has about as much truth to it as q-anon. The vacancy rate is in the low single digits, and the less vacancy there is, the less affordable the market is. The vast majority of vacancies are units that are in the process of being rented or sold.

The idea that there is some Illuminati cabal of housing speculators holding vast numbers of units off the market is a crazy fantasy pushed by those who don’t want to face the reality that our society has not built enough housing.

The article you link shows how laughable this concept is. It contains a table of states ordered by their vacancy to homeless ratio. One would expect that the states with the worst housing crises would appear at the top of the list. But California appears at the very bottom of the list, since it has the lowest number of vacancies per homeless people. This would imply that California is doing the best out of all the states on housing!


Reported vacancy rates (the ones you’ll hear quoted in the media) are usually discovered by asking real estate agencies how many of the properties on their books are currently available to rent. It doesn't include houses otherwise unavailable for rent such as holiday homes or those being 'land banked'.

For some data on Low Use Properties (LUP's) and speculative vacancies in the UK and Australia respectively, see [1] and [2].

Also worth checking out official government statistics for NZ where the difference between the number of households and the number of residences is about 7.5% nationally. That compares with almost half that rate 25 years ago. This change has occurred amidst a property boom purportedly driven by a shortage of properties (really it is a speculative boom driven by a shortage of investment opportunities in the form of residential property).

[1] https://theodi.org/event/friday-lunchtime-lecture-empty-home...

[2] https://www.prosper.org.au/wp-content/uploads/2019/04/Specul...

The solution to this in my opinion is to remove the privileged tax status of property investors and introduce a wealth tax in the form of a Land Value Tax. Political suicide unfortunately.


Citations very much needed. A 59:1 ratio of available units to those in need of housing, which has been increasing over the years, prima facie shows there is no housing shortage. Moreover, with that high of a ratio, everyone looking for housing could have it, with plenty left over for those who have none.

I've offered facts. You offer nothing concrete. Which of our comments is more like the drivel Q-Anon spreads?

Edit: I should add that yes, homelessness has been on a general decline for some time, but not enough to account for the increased ratio of available units to homeless people. See https://www.statista.com/statistics/555795/estimated-number-...


> Having been raised by a poor-ish single mother, I can remember that at least in the 80s/90s, there was a lot less debt around. At least here, credit cards and consumer debt wasn't being handed out like free candy, back then. You had to rely on your salary, and then either get help from family/friends, or the welfare office. My mother had too much pride for that, even though my dads side were loaded.

> These days, it seems like poor people are also getting trapped in debt. Everything is driven by debt, and every bill you fall behind on, is compounded by some fee, which is applied the second you're overdue.

This all is a side-effect of the one-two punch of aging demographics and switching from pay-as-you-go to defined-contribution retirement schemes. Every debt is someone else's asset, so if the market is demanding more assets, interest rates will fall until asset values rise, debt loads increase, and the market clears.

The situation is just cursed, IMHO. If you want to ease conditions, you have to reduce the payments various debtors and tenants make to asset-holders, which is ultimately infeasible on the grounds of impoverishing retirees and ruining pension funds. If you use government spending on this, you either raise taxes or foist off the problem to public borrowing and/or inflation. At the end of the day, the real goods and services that the working public produces but does not consume is the same size as the real goods and services that the non-working public consumes but does not produce; at best you can redistribute spending within these demographics.


> I think the biggest threat to poor people, would be the ridiculous housing market.

I have heard this referred to as the "financialization of housing" in articles I've read over the last few years. Google that term to find out more..

Basically more and more multinational corporations (structured as REITs and similar) have turned their eyes towards the housing market, buying up stock in major cities and wherever there is arbitrage opportunity...

And of course this means maximizing profits and minimizing costs, which is squeezing the average person harder and harder as rents go up more aggressively than before (which also drives up home prices etc)...

The idea of treating people's homes as "assets" to be bought and sold and optimized for profit is, personally speaking, horrendous..

But hey, capitalism, right?


You can't arbitrarily set rent prices. You can only ask what people are also willing to pay.

People are willing to pay because they have high paying jobs and want to live near to where they work. And that is ultimately also a good thing.

Think about a brain surgeon, who under socialism would have to commute for two hours to his jobs, and under evil capitalism can live 20 minutes from the hospital. Under capitalism he will get to the job well rested and therefore have a higher success rate for his operations.


Not that I disagree with the notion that "you can't arbitrarily set rent prices", but this is an incredibly simplistic example and does nothing to address literal rent seeking.

If the pandemic has shown us anything, it is that grocery store workers, meat packers, and the supply chain workers that get food (and toilet paper) to our tables are far more important to society than most high paid white collar and knowledge jobs. Does anybody care how well rested the brain surgeon is when you can't even buy produce or rice or meat at the grocery store? Do these employees not have a right to live 20 minutes from their place of employment?

There are ways to address these issues without devolving to some simplistic "capitalism or socialism" (with no in-between) argument.


Groceries salespeople are cheap because there are many people with the skills to do that job. The same does not go for brain surgery. And you can also sell groceries just fine when you are tired - a little slower perhaps, but nobody goes hungry.

The example may be extreme, but in general people pay other people in relation to how much the value or need their services. So it seems the brain surgeon is higher valued than the groceries person, simply because of supply and demand (many groceries people, few brain surgeons).

As for "deserving to live 20 minutes away from ones job", that is where it gets interesting.

Who, indeed, deserves to live in a good location? Good locations are not in unlimited supply. Who determines who gets the best spots?

What would be fair, according to the ubiquitous socialist crowd? First come, first serve? Poor people first? Lottery? Rich people first? Socialist who worked the hardest to bring about the socialist utopia first (that is usually what it ends up with, but I think not what the poor supporters of socialism envision)?

Personally I think by and large the market does get good results in that regard - the brain surgeons get to live in nice places, because of their merit. I prefer brain surgeons living in nice places to socialist activists living in nice places. Just my personal preference.


You are absolutely right.

I live in the Bay Area now, which everyone knows has absurd rental prices. In my home town, I can rent a comparable sized apartment to what I have now for around 1/3 what I currently pay. But, there's no way I could earn 1/3 the income I make as a Bay Area software engineer working at a non-remote job in my home town.

Even making 1/4 what I'm making would be highly optimistic. I just did a search on Google for "$HOMETOWN $HOME_STATE jobs," and pretty much everything I could qualify for was retail level jobs. In my home town, that means probably $10/hour, or, $20k/year, if you can manage to get full time hours. Even in retail management, it would be tough to hit 1/5 of what I make now. Add in student loans, which are a fixed expense, no matter where I go, unless I want to go to a repayment plan that depends on my income and never pay them off, and we see the advantage goes squarely to the Bay Area.

Now, imagine starting in my home town and actually making it to the Bay Area. If you move with a job already lined up, you'll need to have at least 1 month's rent + 1 month security deposit saved up, plus moving expenses. First month's rent and security deposit will be at least $3500. Think about how long it takes to save up $3500 making $20k per year. Then, think about how this doesn't include moving expenses, which, even if everything you own fits in your personal vehicle, is going to amount to another several hundred for gas and probably at least one night in a hotel if you drive. Call it another $500.

Oh, and I forgot to mention, at $20k per year in my home town, you're probably either spending 35-40% of your gross income on rent, or living with roommates. So, good luck saving up nearly 1/4 of your gross annual income just to GTFO.


Isn't that exactly what banks are for - so that you can get a loan? I would expect that you would qualify for a loan if you show evidence of your upcoming employment.

Many companies also pay for moves.

Of course if you do all that, and then your employment is suddenly canceled, you are stuck with some debt. I guess that happens to some people.


A loan against what collateral? What does someone making $20k per year have to put up as security for a loan? You're also assuming this person has little to no debt to begin with, so their debt to income ratio can sustain another loan. Banks don't lend money out of the kindness of their own hearts; you have to qualify, and that's much easier with a higher income than a below median income.


They have their work power - don't banks actually love it when people can't pay off their debt?

If your odds of making your investment back are so bad that the bank won't give you a loan, maybe it is the wrong plan to begin with. The job of bankers in theory is to evaluate the risk of your plans and offer you credit accordingly. (Not that I claim they are all good at their job).




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