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Some young people are buying houses with friends (bbc.co.uk)
178 points by chrisseaton 16 days ago | hide | past | web | favorite | 342 comments

I strongly recommend, if possible, to have a single homeowner and set everyone else up as renters. The only exception is married couples who already have shared finances.

Want to share a house with friends for twenty years and share childcare responsibilities? Great, have them sign an intent-to-lease agreement and take that to the mortgage company to help with qualification. Not having this kind of agreement can lead to all sorts of issues.

This should also extend to being jointly and severally liable for paying rent, not just mortgage. What happens when a tenant stops paying? If you've got joint and several liability, you basically have to pay the full amount while being unable to evict the deadbeat for nonpayment (since they're an owner or on the lease). It's slightly better in the case of the lease since you can negotiate a technical default and deadbeat-only eviction with your landlord, but it's still a mess that you should avoid if possible.

That all said, living in a house with friends is an excellent choice IMO. I think humans are built to have some non-blood relatives at that level of closeness and cooperation, and it seems good to raise a child with more than two adults that they interact with in their typical household setting.

> I strongly recommend, if possible, to have a single homeowner and set everyone else up as renters.

If everyone is contributing to the downpayment and everyone wants to share in the risk/reward of appreciation, than your proposal doesn't work (and if only the first holds, setting all parties but one up as renters is problematic because then either much the downpayment is gifted to them, or exchanged for a claim against the property (and first right to lease is a claim), or it is lent by the “renters”), all of which have problems, including the fact that some are outright disqualifying for some loan programs.

Your proposal is exactly the right thing to do when one of the people is supplying the initial capital and everyone wants them to take the sole risk/reward of future market moves.

The logistical issues you raise are why you ideally want the group to form a separate legal entity to buy the house, have everyone rent from that entity, and have an appropriate ownership agreement for that entity as well as rental agreements, so that a deadbeat can be both evicted and have their ownership share of the controlling entity bought out; but that's probably an initial and ongoing cost more than you want for the purpose if it's just for a shared home.

I strongly recommend, if possible, to have a single homeowner and set everyone else up as renters. The only exception is married couples who already have shared finances.

Around here, finding the money for a 20% down payment is the biggest impediment to buying a house (it can be hard to scrape up $100K - $200K), so that's easier if you can pool your funds among friends, its easier to do. So that pretty much precludes a rental arrangement. I think it'd be hard to get a loan on a property if the down payment funds are coming from your friends -- and you're treating it as an investment property because you need their rent to afford the mortgage.

This kind of arrangement is typically structured as a Tenancy in Common:


In the US, most home buyers will qualify for a much lower than 20% down payment for their primary residence.

> In the US, most home buyers will qualify for a much lower than 20% down payment for their primary residence.

Well, that's true in the US in that, so long as you have sufficient income to make the payments, you can probably fine subprime financing for purchases with less than 20% down, but you'll pay more for it than you would for the same size loan with more equity (whether in PMI, interest, fees, or some combination.)

But if you're your counting on rent from your friends to pay the mortgage, you're no longer a residential homebuyer, you're buying an investment property and typically higher standards apply.

So realistically, the only way you could buy a house and rent to your friends is if you can qualify to buy the house on your own.

DTI ratios are usually pretty generous, but if you can't qualify without the rental income, you may need to buy a 2-4 unit building and rent the other units to friends. This can be done with an FHA insured loan. It may be possible to count rental income on a 1 unit property under some programs, I am not fmailiar with all the rules. I don't think you can with an FHA loan, though.

AFAIK the rental amounts count for 75 cents on the dollar against the mortgage total, and you need to either have experience being a landlord or have a signed letter of intent to show the underwriter.

What? That's not how the qualification works. If it's no bigger than a 4-unit building and is going to be your primary residence, you can still qualify for a FHA loan at 3.5% down.

My bank required proof of income sufficient to qualify for the mortgage -- presumably if part of that proof was "4 of my friends promised to pay me $1000/month each to rent a room in the house", that would no longer qualify for a regular homeowner mortgage program.

This likely comes with a monthly PMI payment. Correct?

Do people know situations where its possible to not have PMI with a bit less than 20% down?

Ideally they wouldn't increase your rate then. I know SoFi has no PMI with 10% down but I believe rates are slightly higher.

You can ask lender to drop PMI once 20% downpayment is reached.

Yes, in most cases.

I agree that joint ownership is absolutely something to be avoided. But there's also tenancy-in-common (TIC), which provides liability commensurate with your ownership stake. In most places TIC is an antiquated form of ownership usually only seen as the result of intestacy.

Banks typically won't issue a mortgage for a TIC title as they're not interested in becoming a tenant-in-common in the case of default, making such titles relatively unmarketable. TIC owners through inheritance almost always liquidate by selling the property as a whole or, in the case of undeveloped land, through partition.

But in San Francisco TICs have become common alternatives to condominium conversions with real estate developers. The city caps the number of yearly condominium conversions, but has little ability to control private arrangements like TICs. It's so common that many local banks will issue mortgages for TIC shares, provided the proper contractual arrangements are in place to expedite recovery from deadbeat tenants-in-common. Taking ownership of a TIC share typically involves simultaneous execution of both a title transfer from the seller and contracts with each remaining TIC owner. (These contracts also effectively partition the property, as TIC owners otherwise have a right to access the entirety of the property, including your bedroom.)

The contracts tied to TIC arrangements do increase the costs and risks of litigation. If title passes to someone who doesn't enter the shared contract--say by inheritance--then you have a problem. (Presumably TIC contracts attempt to force maintenance of Wills or Trusts to prevent this from occurring.) So while banks here will issue mortgages the property values are discounted. But that means that TIC apartments also typically sell for substantially less than comparable condominiums, which translates to a smaller mortgage, making ownership more affordable. If you see a deal too good to be true in SF, assuming its legitimate it's probably a TIC.

Condominiums are designed to simplify this whole process, but in their absence you can hack together a substantially equivalent form. Interestingly, few property lawyers outside San Francisco would think of doing this. My Property Law professor, who was also the professor for my Land Use seminar, was surprised TICs were being used this way. So if you're outside San Francisco it may pay to inquire with an SF-based real estate developer or property attorney.

In the Bay Area intent to lease is worthless and not taken into account for mortgage qualifications (I tried it).

Your suggestion seems to be to just buy the place and have your friends be roommate tenants? The reason this isn’t viable is the costs are too high.

By buying a place together you can get a better place with an affordable mortgage split and you can share in the upside without getting locked out of the market.

The risk is the standard social risk plus the risk that if everyone does this prices will get even crazier.

> The risk is the standard social risk plus the risk that if everyone does this prices will get even crazier.

Should be roughly neutral in effect; the money is pulled out of the rental side of the housing market by people who aren't able to afford sole purchase going together to do a joint purchase and going into the owner-occupied housing side that way, but that either drops rental prices (making purchase at high prices less attractive) or gets current rental units sold off into the owner-occupied market because they are unable to make enough to be profitable as rentals, increasing supply on the owner-occupied side and dropping prices.

> if everyone does this prices will get even crazier

So not viable after all then. The only solution I see is build higher and denser, and do it so much that it can accommodate the demand growth.

Yep that’s the real solution - just build a lot more (not “affordable” housing just lots of any housing).

Unfortunately between existing owners working to kill any new units and renters in SF claiming that building more increases rent (and vying for rent control which makes things worse) I think it’s just hopeless.

...how on earth do you argue that building more increases rent and sound even vaguely plausible?

Higher land prices mean it is only profitable to build luxury apartments and therefore new construction is more expensive than the average. However what people seem to forget is that each unit of housing means more people can live in the area and eventually the luxury apartments will become average apartments in 30 years.

I’m not sure how, but people do (this was my response in a thread from a while back): https://twitter.com/zachalberico/status/1056645172283420672?...

I've lived with friends a number of times and I would add the qualification that you must ensure you've all got the same desire for cleanliness (or uncleanliness). Resentment will always build if somebody thinks the other is being unreasonable in the level of housework they're willing to take on, and you will end up losing friends.

Another option is to pool some money together and hire a maid to regularly come in and clean. It's not that expensive, depending on the size of the house and how many people are living there. I used to have this mental image of a maid being something that only someone incredibly rich would be able to afford, but after looking at prices I realized it wasn't that expensive.

I absolutely recommend a cleaner for anybody that can afford it, but cleaners only clean around stuff, they don't tidy things for you. At least none that I've ever had. If you've got a housemate who leaves their breakfast dishes on the counter on the day your cleaner comes in, that counter won't get cleaned.

On the other hand, landlords are not friends. You create a situation where the owner is building equity and the friends are building the owner's equity.

I co bought a house with my wife and another couple. We spent about 18 months figuring out the legal agreement, including many permutations on failure to pay. Fwiw, our 'failure to pay' arrangement is in two steps. First step is the generation of interest bearing loans, secured against the non paying owner's equity. (Effectively auto sale of part of the non-paying owner's portion of the house.) Stage two is an actual sale process, which might be owner to owner, or might be dissolving entirely and selling the house. All of this is in our TiC contact.

On the flip side, we were able to pay 40% down on an awesome place that we couldn't have done individually, and even the lowest earner is getting significant equity because of the way we've structured our terms.

Rent is theft.

For most people's financial situation, home equity is less desirable than its dollar value. Housing prices are based off prevailing rents, which are based off prevailing wages. These prevailing wages are a large factor into your wages, too, and your future wages are one of the biggest factors going into your overall financial health.

Owning your own house is thus exposed to significant downside risks that can hit both your income and your assets simultaneously. Imagine being a Ford employee who bought a house in Detroit in 2007. The auto employers ran into severe issues and many cut employee pay in 2008, right when Detroit's housing prices basically fell by half. The only way to make matters worse would be to own significant amounts of Ford stock, too.

>First step is the generation of interest bearing loans, secured against the non paying owner's equity. (Effectively auto sale of part of the non-paying owner's portion of the house.)

Yeah, that's actually a great point that I should have thought more about. Co-owners have home equity, which means that you have an asset right there that the other owners can lay claim to in case of non-performance. This works better with significant down payment to ensure positive equity, too.

>Stage two is an actual sale process, which might be owner to owner, or might be dissolving entirely and selling the house. All of this is in our TiC contact.

Suppose a co-owner got a job offer halfway across the country that pays significantly more than their current salary. Would they be able to unwind their position here without significant loss of equity? Or does an entering agreement like this effectively limit your labor mobility?

For the distant job offer case: There are a number of ways out can play out, depending on circumstances. Can do an owner to owner sale, if possible. Or we can fail over to taking a renter, which (given my position stated above) is less than ideal, but a fine resolution for the short term. Or can always fail over to sale and a move if all else fails.

(Which, fwiw, is equivalent to what any home owner taking a distant job offer would face, though more people are impacted. The fall back to renting, though, leaves other owners in the house, to ensure things are well taken care of, at least; much better than the absence landlord situation...)

> Rent is theft.

Wow that's strong. Do you really believe anyone who offers property for rent at market price is morally equivalent to a conventional thief?

My take on it isn't that strong, but perhaps it will give you an idea where they're coming from.

Part of rent pays for goods and services: construction costs, upkeep costs, administration costs, insurance costs, etc. Insofar as it does that, I believe that it is a healthy net-positive economic exchange.

Rent also partly goes to pay an individual or company for the service of everyone else staying away from that particular chunk of space. That's the problematic part.

See also: banks selling mortgages are financial arms dealers profiting off of exacerbating all of this.

The real trick is figuring out what to do about it and how, of course.

> Rent also partly goes to pay an individual or company for the service of everyone else staying away from that particular chunk of space. That's the problematic part.

That sounds like a general aversion to any property rights or right to privacy at all, if you mean that you're paying for nobody else to come and be in the property at the same time as you. Not sure how it's specific to rent?

It's an aversion to a very specific form of property right. Henry George is the one to look up for details.

It's not an aversion to property rights in general. In particular, it isn't an aversion to allowing private ownership of the means of production (communism) or, on the flip side of the modern acceptability coin, private ownership of people (slavery).

You're right that the phrasing of the argument was general. There are more specific moral arguments on every side of every one of these, but the practical side of it always boils down to: how do you preserve incentives in a market's growth phase while discouraging rents (in the economic sense of the word) in the steady state?

That's a tricky one, and I don't claim to have a general answer, but I'm pretty sure that in the particular case of land it has something to do with society not making unbounded promises in exchange for bounded goods, e.g. of eternal, transferable land exclusivity to a private entity in exchange for building a log cabin on it. From that perspective, the government of past generations stole the exclusivity rights from modern citizens, and the present landowners are in a situation similar to any other possessor of stolen goods.

Tool rental maybe. I once rented a power tool for 30€ that cost 200€ in total. 7 days and I could just buy it outright... However the residential rent market is pretty fair in my opinion. It is viable for an individual to rent for a whole lifetime and not pay significantly more than the property cost in the first place. As a comparison: I could buy that power tool hundreds of times if I rented it for three years.

> You create a situation where the owner is building equity and the friends are building the owner's equity.

Conversely, if there's an earthquake/fire/mold problem, then the equity holder is on the hook and the renters can just move on.

Rent means having access to liquid capital that you can invest in alternatives that are not property.

It also means: no property taxes, maintenance costs, stamp duty, and it makes it easy to move.

> Rent means having access to liquid capital

No rent means you're spending more on housing, as you need to pay for someone's mortgage, costs and their profit, so it means you save less and so have less liquid capital, and also don't have any non-liquid capital in your equity.

> It also means: no property taxes, maintenance costs, stamp duty

No you're paying for all that, via your rent.

> > Rent means having access to liquid capital

> Rent means you're spending more on housing

That's not a contradiction; liquidity has a cost. Yes, by tieing up capital in property purchase, you can, on average, trade liquidity for lower total cost if you are using the property forever. (Whether the actual total cost ends up being lower if you ever decide to move depends on market conditions and timing and transaction costs; transaction costs on both ends of a home purchase or sale are a lot higher than entering or exiting a residential lease.)

I still don't understand what you mean.

If I pay $2000 a month rent I'm always going to have less liquid capital than if I pay $1000 a month mortgage, aren't I? The mortgage payer ties up their money in the equity so it's not liquid, but the rent payer's money is just gone, so it's infinitely not liquid, and on top of that more of their money is gone.

When you've paid off the mortgage the mortgage payer has more liquid capital, and a property.

You’re forgetting about the opportunity cost of locking up all of that capital in an asset that has a high carrying cost (maintenance, taxes). The initial downpayment could have been used for other investments, so you have to compare how much you could have earned if you’d invested and rented instead of bought the house.


> an asset that has a high carrying cost (maintenance, taxes)

I don't know who you think ends up paying for maintenance and taxes in a rented property - it's the renter, through their rent.

> I don't know who you think ends up paying for maintenance and taxes in a rented property - it's the renter, through their rent.

Equally correctly, the landlord pays them, and landlords that can't at market rents on top of any purchase financing that they are still paying go out of the landlord business.

Most precisely, where, as is usually the case, neither supply nor demand are either haveperfectly elastic or inelastic, the costs are effectively split between renters and landlords in some ratio; the market rents are higher but the financial profits are lower than they would be if the costs involved were not a factor.

I didn’t say renters dont pay.

What I’m saying is that you don’t (usually) get to buy a house for $0 down. So it’s never a choice of $2000/mo for rent vs $1000/mo for mortgage. It’s more like $20k cash + $2000/mo for rent vs $20k equity + $1000/mo mortgage. Over long enough time horizons the monthly payments don’t matter and it’s a question of which investment appreciates more.

Unless you're already wealthy, it's difficult if not impossible to have access to a large investment that provides 5x (or more!) leverage. A home is a leveraged investment and security rolled into one.

Even if your mortgage interest is greater than property value appreciation you could conditionally still come out ahead as compared to the available alternatives.

Diversity, leverage, better appreciation: if you're not already wealthy you can really only pick 1 (maybe 2) out of the 3.

And this ignores the value of having stable monthly living expenses, something not otherwise possible without rent control. You can of course buy cheap land, but such places are typically remote from employment opportunities and, while possible, that approach is just another form of speculation--people will readily share stories about living in the country and telecommuting to a high paying job (successful speculation), but few would ever discuss how they ended up stuck in a cycle of minimum wage employment (unsuccessful speculation).

>Unless you're already wealthy, it's difficult if not impossible to have access to a large investment that provides 5x (or more!) leverage.

That's wrong - the futures market is easily available if you have $10k, and offers rock-bottom costs for embedded leverage due to arbitrageurs. It varies based on the contract in question, but the two-year treasury futures contract offers roughly 400x leverage. Generally they offer you as much leverage as you can handle before overnight price moves will eventually wipe you out, so you definitely want to use less than they're offering.

Fair enough. That's what I get for trying to make a pithy point.

But what's your exposure? Home mortgages are almost always non-recourse loans, limiting your losses to your initial down payment.

I don't think speculation in the futures market is a very good justification to the argument that home ownership is in general a poor investment--IME the conventional thinking in economic circles. I stand by my larger point that home ownership is a categorically sub-par investment only for those already with substantial wealth.

> If I pay $2000 a month rent I'm always going to have less liquid capital than if I pay $1000 a month mortgage

If you pay 20% down plus 4% upfront in closing costs on a $1 million dwelling, and then pay mortgage of $3,800/mo (which is fairly realistic for a conventional loan), it'll be more than 5 years before you break even, in liquid capital and presuming nothing is extracted from equity and ignoring any property maintenance costs that landlords have that would be rolled into rent for most renters, with a renter paying $7,600 for a similar dwelling which would actually represent a quite high rental yield.

Depends. In Toronto, you can rent and the landlord can't kick you out. They can only raise your rent 2.9% max here per year, or whatever inflation is. It's really cheaper to rent here. Property taxes can go up at a rapid rate. Also, if you sell the property it has to be to someone who moves in otherwise the renter has the right to stay. It really depends on the market. Also, the market pays much better than the appreciation of the unit subtract property taxes, maintenance, and other upkeep fees.

To add to this, if you own, you are stuck in one area. Selling and buying has closing costs. I might be biased because I prefer the markets more than anything but index fund investing on its own can give you better returns than owning. IMO, owning and renting out a portion is the best return, or rental properties run by a property management company, especially if you own property in a LCOL area.

Rents are set by supply (number of units available) and demand (number and pay of nearby jobs). An exogenous change in maintenance costs affects neither supply nor demand. A landlord is not going to drop rent merely because they can maintain your apartment cheaper, nor are they able to increase rent beyond what people are willing to pay. If they sell the unit, it is generally to either another landlord (who charges market rent) or to an owner-occupant whose previous residence faces the same situation.

Fundamentally, landlords capture any and all surplus value.

Tell that to some investors in Toronto, I think they missed the memo. :P


The laws here do not favour the owner at all so it's hard. If you own 10+ condos, you can't move into the condo to evict the renter, so you are at their mercy. Toronto is probably the worst market for being a landlord. The good part is people here move frequently because travel times are ridiculous and people are willing to lose money on rent to reduce the headaches. Some tenants in apartment buildings are paying $1200 for a 2 bedroom, when the market rent is $2900. The landlord can't do anything.

Huh? If the landlords are willing to rent it to the tenants for $1200, isn't that literally the market rent?

Landlords can move in for personal use, but not as a way to evict a tenant. Seems perfectly fair to me, security of tenure is something that benefits the whole community.

Not really when people feel entitled to live in the downtown area at an extremely low rent. For example, someone new moves in for $2400 for a 2 bedroom whereas a person who has been there 20 years is paying $1300. The new person ends up having to subsidize the tenured renter and the landlord also is not able to maximize their profit. Then a big corporation can come in and buy the property because a landlord cannot maintain it well enough. The big companies have their own renovation teams who they own so it's profit to maintain it whereas the smaller landlords end up having to pay a 3rd party and they lose money. It's a delicate balance. 1.9% yearly increases and up to 4.9% on capital expenditures makes it a challenge.

and paying interest to bank is executive theft :)

In the US 2 single people who jointly own a home can EACH deduct the interest on up to $1m loan. So consider having a legal agreement for joint ownership instead. I’ve done this and deduct an extra $20k.

What is the basis for saying that two single people can deduct the same interest paid? How could this possibly not be fraud? You are double claiming the interest.

> What is the basis for saying that two single people can deduct the same interest paid?

They can't, but the maximum limit on both mortgage interest ($100K) and the indebtedness on which you can deduct interest paid ($1.1 million) apply per-taxpayer for unmarried co-owners. You still can only each deduct what you actually pay. This is a result of a 9th Circuit City decision IRS decided not to appeal that almost certainly want the intent of the law, and was not the way the law was applied prior to the decision.

I'm surprised Republicans haven't framed it as a new marriage penalty and jammed a “fix” that would increase the limit for married taxpayers to double the single-taxpayer limit into one of their tax bills, since it would let them champion marriage, rail against the perfidy of the Ninth Circuit, and cut taxes on the rich all at the same time.

No. My home loan is well over $2m. If we were married we could only deduct $1m (half the interest). As 2 single people we can deduct the interest up to $2m. It’s a wrinkle in the tax code.

The tradeoff there is that you can no longer depreciate the portion of the house that person lives in. Not sure which is bigger, but being able to effectively push current income into the unrealized capital gains on your home is fairly attractive.

On the other hand, you need to be charging market rents with the intent to try to make a profit in order to do this on your taxes, and that means keeping track of rent payments and reporting them. And any profit here could mean that what would otherwise be an untaxed sharing of expenses is now a taxed profit-seeking transaction.

If you're buying a $2,000,000 home, you're probably not splitting it with friends to save money.

As an anecdote, my wife and I bought a place with friends because we couldn't afford on our own. People told us we were crazy. We basically bought the worst place in the city even with both families having good incomes (Vancouver). We had a five year plan to renovate the house and sell it. My wife and I didn't have a kitchen for a year. We cooked on a hot plate and washed dishes in the tub. Every time one of the houses around us was torn down, the mice would flee to our house until we plugged all the holes. Weekends and evenings were spent working on the house. We were lucky that the market continued to go up and that both couples were on the same page about everything. The house turned out quite nice. We have since gone our separate ways and each have our own place.

I love where we are now but I could have continued to live in the situation we were in longer. It was like family. We did lots of things together socially and we supported each other. Financially, it was the best thing both couples have done in their lives (again lucky the market continued to go up).

That's my sample size of one.

You bought property in Vancouver 5 years ago. That's like saying you bought AAPL in 2004 with a bunch of friends and it worked out great. Well, it wasn't the friends part of the scheme that made it work out. ;D

I get the tongue in cheekness of the comment with the ";D" but I think I qualified how lucky I feel several times and that it is an anecdote/sample size of one.

When we bought people thought it was the peak of the market and that is part of the people telling us it was crazy. We had no thoughts of the market continuing to go up when we bought. Our main focus was possibly making a bit on the renovations.

Even if the the market had gone down or sideways, and we didn't sell, I would have been fine with it. If we had lived there for the rest of our lives, I would have been fine with it. I liked the location and with the renovations, it was a great house.

It wasn't a get rich quick "scheme". Buying with friends was a way to buy a home. We were constantly being renovicted. We didn't have a place we felt was home. That house was home and buying with fiends was the only way it was possible.

Buying with friends was probably still the riskier part of the equation though. Chances were pretty high the market was going to grow, or at least not decline. One marriage has a relatively high chance of failure, let alone two marriages plus the relationships between all four adults.

Buying a fixer upper is still risky, not to mention buying it with friends and trusting them to not flake out on the deal.

Do you think you would still be friends if instead of buying 5+ years ago, you bought 1 year ago, and you lost 20% on the house already -- wiping out your down payment?

Good question. As I said in the response to a comment on my initial, we thought it was the peak when we bought. That may seem crazy now but people have been saying Vancouver was at a peak since the mid 2000s. So it was conceivable that it could have gone down. We knew it was a possibility.

It is hard to say though. You don't really know someone until you go through hardship together. My sense from knowing my friends would be yes we would be friends but I just can't say. We did go through some things in that time on personal fronts but it wasn't financial. Financial things can be different than others.

Our main focus was having a place of our own. We had the five year plan but as I said, I liked living where we were and with our friends. If it turned into a ten year plan or more, that would have been fine with me.

I think if we all kept our jobs, etc, things would be fine. If someone couldn't pay their side of the mortgage or something, that would have been more detrimental. Or if we had some sort of fight and were mid-renovation and had to try to finish the renovation not getting along or try to sell a half renovated house. Those things would have been pretty detrimental.

I grew up in a big suburban house because my parents bought a house with a friend. She and her son took the downstairs bedrooms, we had the upstairs rooms. It was more house and in a nicer area than either could have afforded, and meant all the kids went to nicer schools. Built in shared parenting support, communal (but not hippy-ish) dinners.

We moved in in the mid 80s, and in the early 2000s after all the kids had moved out my parents sold their half to the co-owner. Everyone's still friends.

Interesting: I've heard anecdotes about similar experiences in southern California, where the "good" school districts often don't allow apartments or smaller subdivided buildings (duplexes/triplexes) to be built.

This does seem very financially risky to me. Yes, they did draw up a deed of trust and they mention that is okay if one of them wants to back out later. But that doesn't solve the monthly mortgage cost. Is that person who is "out" still obligated to pay that cost according to their arrangement? Because I can imagine finding another person to sign up to this arrangement could be difficult.

I'm leaning more towards stacked micro-houses, aka micro condos, as the "future of housing" in urban centers.

> I'm leaning more towards stacked micro-houses, aka micro condos, as the "future of housing" in urban centers.

This is already a thing, it's called coffin cubicles or cage homes: https://www.theguardian.com/cities/gallery/2017/jun/07/boxed...

What I'm trying to say is: No, you should not lean towards this. You should lean towards jobs and opportunities spreading out over the country. To appeal to the HN population, instead of thinking in the binary thought of "SF (or some other tech hub) or fully remote!", consider another option: opening up smaller offices. Bring work where housing is affordable.

The price of housing is only one factor. You can probably buy a nice, cheap house and open some office in the arse end of nowhere. And then you can spend your day driving around to get basic shopping done.

Some cities are certainly more affordable than others, but in my experience they are also much less desirable.

I've lived most of my life in places ranging from a monastery to a town with around 20k people. I never needed to spend a day driving around to get basic shopping done.

I now live in a place an order of magnitude larger, but that really does not cut down on the time spent on basic shopping.

The issue is that once a job can be done remotely or moved to a cheaper city, it can usually just be moved to a different country where the labor is much cheaper.

We will likely not see jobs move to less expensive areas in the US(or any other high wage country), in any meaningfully significant number, because those cheaper areas can never compete with cheaper countries overseas on cost.

The big issue with moving jobs to other countries more than anything else is timezones and language.

Distributed teams across the US isnt much of a problem, but try working with people that have an 8 hour timezones difference and it's much more difficult.

> No, you should not lean towards this. You should lean towards jobs and opportunities spreading out over the country.

Can someone say 'urban sprawl'?

Have you done the math for your company? No one I know wants to do that because the talent wants to be where the other talent is. Perhaps you’re targeting the niche who wants to live somewhere as your hiring pool? How has that worked out so far?

Why not? I don't see any reason why young individuals looking to experience inner city life wouldn't be happy to exchange loving space for easy commuting and urban culture (which is what they already do).

>Why not?

Because your equity is now at the mercy of other people who you cannot control. No one wants to default on a mortgage.

I think we're talking about two different things. The parent comment was referring to micro apartments, which are generally rented to tenants.

Considering that many college students have two to four dormatory roommates, I don't see what's wrong with renting a small living as a young adult - provided that the living space itself is up to code.

Ah ok, I thought it was the shared mortgage idea. I see no issue with shared housing, not exactly a radical idea.

Shared housing is one thing. Shared housing with which you share major financial responsibility with someone else is another matter. Houses also require maintenance, are often upgraded over time, etc. and reasonable people can disagree about what needs to be done when and how—especially if people have significantly different financial situations.

I feel like we're going in circles. I said the same thing and was corrected (these are rentals.) I then agree, and you come in saying they're not rentals. Which is it?

Here's my stance:

Getting into a mortgage with roommates = bad.

Getting into a lease with roommates = no problem.

I was agreeing that shared rentals are fine. Well, they can have problems too but people mostly manage. As you say shared mortgages seem very risky in general.

Yeah, I think the issues that arise with roommates are well understood and generally acceptable given the benefits. Shared mortgages are insane.

Are these not just "a block of flats" in British parlance? Buildings with 5+ floors containing a variety of single-floor homes between 300 and 1000sqft are the way most people live in British cities.

'Stacked micro-houses' are probably related to 'blocks of flats' as 'tiny houses' are to 'mobile homes' - a way of selling traditionally lower class housing to middle-class hipsters.

Micro-houses are the future of housing for everyone.

The massive living spaces we have now are not sustainable. By 2050 if we are to avoid 2 degrees of warming we need to be emitting 2 tons of carbon per year per person: http://insight.gbig.org/targeting-2-tons-closer-than-we-thin.... The average American today emits 11 tons, whereas 2 tons per person is closer to that of someone living in Brazil or Egypt.

In climates where you need to heat and cool a home, carbon taxes will make heating and cooling the living spaces we have now financially impossible. People will drive demand for these smaller living options out of necessity. Additionally, as we make consumption less and less economically attractive people will have fewer things to want to store anyway, and personal vehicles will likely no longer be something the average person will be able to afford or want so there will be less need for parking and garages.

Your 11 tons is total US emissions (including industrial), spread out across the entire population. Of course the US emits 5x that of Brazil or Egypt, the US produces 5x the output.

Moving into micro houses isn’t going to cut it, you’d need to slash US economic activity to reduce those numbers (an entire new technology).

Microhousing would be just one development carbon taxing would bring about- if we began to price our food appropriately for example animal agriculture would largely come to an end except for luxuries, and that would do a great deal to cut emissions. Personal vehicles and flying would also become cost prohibitive. These are only a few of the ways taxing carbon could make our lifestyles more sustainable and shrink highly polluting sectors of our economy such that we reach a more sustainable amount of emissions per capita.

Which is why we won't ever have those carbon taxes. As soon as politicians implement (or probably even seriously suggest) carbon taxes with enough pain to legitimately incentivize people to give up their homes (and all their stuff) to live in "microhousing", some other politician will come along and tell your constituents that you're crazy and they have a better way. And poof, just like that you're out of a job.

We're not going to solve climate change by democracies adopting high carbon taxes.

I worry that without the voting public waking up to the reality of how deep in the hole we already are we won't solve climate change at all. No near-future technology has the ability to reduce emissions by the amount we need to, besides widespread deployment of nuclear power which is also not politically viable. At some point people will, either willingly or by force (such as widespread natural disaster and famine), realize that things have to change.

I think the problem here is that you still have some hope that climate change can be reversed or at least mitigated. It can't.

There is simply no way developed nations are going to curb their emissions enough in time, and that developing nations will refrain from increasing their emissions, for us to avoid this disaster.

We might as well get used to the idea that our civilization is going to collapse before too long, and there's really nothing we can do about it. Other civilizations in the past collapsed and disappeared because of environmental change, and ours will be no different.

Well, a little different. We have globe-spanning transportation and communications. Actual technology to bring to bear. The best chance of mitigating the disaster that has ever existed in history.

Yes, but before that actual technology, there wasn't a problem because we weren't pumping so much carbon into the atmosphere. And even with technology, there's too many political problems to actually use that technology to solve the problem before it's too late, which climate scientists are telling us it already is.

Our globe-spanning communications seems like it should help us solve these problems together, but instead look what it's brought us: anti-vaxers convincing a lot of people not to vaccinate, which has now brought back diseases we thought were almost extinct. Instead of using these communications to convince people about real problems and solve them, these communications have instead enabled the stupidest people to have a much larger voice and influence, which has led us to disaster politically in the US for one (just look at who we elected in 2016).

Sorry, but I don't see how there's any way out of this mess. We can't just figure things out in 50 years and then start fixing the problem; by then it'll be far too late.

That's exactly what's going to happen. Humanity will not solve climate change until we're already suffering badly from its effects.

Which is a shame since it is the only realistic option.

That's the whole point: it's not a realistic option because it ignores political reality.

Political realities are the easiest to change in this case. See segregation.

Can't I just keep my moderately sized home and add solar panels? I would definitely rather do that and bike to the train station.

If we implemented a carbon pricing scheme and these panels allowed you to heat and cool your home with no or minimal draw off the grid, this would be an affordable option.

> But that doesn't solve the monthly mortgage cost.

The space can be rented out to someone else to cover the cost, possibly at a profit to the remaining owners since the renter isn't taking on any risk.

The bigger risk in this arrangement is to the party that is leaving since a share of a house is illiquid.

A few experiences here from people who did this and worked out nicely. I also know a good amount of stories of people who bought property with their partners and didn't turn out ok. Now take that risk and multiply it by the number of people involved.

But my biggest issue with this approach is that it doesn't solve the underlying issue of housing affordability. Essentially it says "you need 4 incomes to buy a house now", which will enable prices to keep on rising. What will happen when prices keep on rising and 4 incomes are not enough? Where will the limit be.

"Is buying with friends the future of housing?" I hope that if I do it it's because I want to, not because it's what I need to do to put a roof over my head.

I feel like this is the past of housing as well. Most people you see that live in a relatively nice housing unit in a nice neighborhood have a roommate -- the person they married. I remember when I was younger I would always ask myself why it seemed everyone other than me had twice as much money with which to buy a house... then I realized.

No, that's a quite recent development too. Not too long ago it was normal for each household to have one earner. Now, thanks to women joining the workforce, we all work more for the same thing.

>we all work more for the same thing

No, we work more for more things. If you were to live according to the living standards of the times we associate with stereotypical one income households, say 40 years ago, your house would be 1000 sq feet smaller, your electricity consumption would be much lower because you would have no smartphone, a small TV, your car would not have the features it has today, you would likely have no college education, and your healthcare expenditure would be lower because you would receive significantly less care. You also would sweat a lot in the summer, because back then air conditioning was a luxury rather than the rule.

You would also eat significantly less meat, and you would be much less likely to go on holidays, travel abroad, or eat fresh fruit from the other end of the world at all times during the year.

Your TV & other appliances all used a lot more electricity to get the same job done, even if the screen or icebox was smaller. Your car got worse fuel economy and didn't last to 100k miles. Your house used a lot more wood/gas/oil/electricity to heat.

A big part of why we have more is social & technical progress. We get more for our money.

I do think your parent's question is an interesting one- thorny, but it's not ridiculous to wonder if doubling the work force eventually gnaws away at compensation for the same work. (The natural next question is, well did the demand for labor grow to match, stay constant, or somewhere in between? Did the pie grow and we're all wealthier for it, or are twice as many people now fighting over the same pie?)

There seems to be an error in that argument. If you shrink your workforce holding productivity equal, then labour becomes more expensive and wages and prices are going to be pushed, i.e. you just get inflation.

A larger labour force means more competition in wages, but it also increases supply so this shouldn't have any effect. If this wasn't true, then you could reduce inequality simply by artificially restricting the supply of labour, which I don't think has ever occurred.

>your electricity consumption would be much lower because you would have no smartphone, a small TV,

Smartphones use a ridiculously small amount of power compared to many of the appliances people had in those days. Modern TVs also use less power than old ones.

No, electricity consumption would be lower because you wouldn't have air conditioning. That's the big power user in most peoples' homes.

> your house would be 1000 sq feet smaller

You've got to be joking. My grandparents lived in much bigger houses with much more land than I could ever afford despite the fact that they were single earner manual labourers and I'm a highly qualified person with in STEM.

In any case, they were at least as happy with their cars then as we are now, and they didn't want smartphones.

I'm not joking. That is in fact literally the increase in average house size


You happen to be an outlier if you're living in a smaller house than your grandparents. Given that you're saying you're a STEM worker and that your grandparents were manual labourers, my guess is that they owned cheaper property and you live in a very urban area. Which has very different perks.

Well, I live in the UK, not the US. It's very different for us.

Women, including married women and mothers, have been in the (paid) workforce for millennia, doing all sorts of jobs. Common paid jobs outside the home included: housekeeping; laundry (which btw 150+ years ago was heavy manual labor); childcare; factory work; tending shops and market stalls; beauty services; entertainment; and more recently (since it's become more common for women to be educated), clerical work and teaching.

The only people to whom a single-earner household outside the upper and upper middle classes was ever considered a default were the inhabitants of certain developed countries for a few decades in the middle of the 20th century; and even then it was more of a norm than a universal fact.

The only things that changed recently are a) women now can also have "careers" and prestigious occupations instead of just jobs; and b) working outside the home has become normal for upper middle class women as well as working class women (and for some even a status symbol rather than a symbol of poverty).

Some women worked, they did not have careers. Who do you think had all the children, and how?

It isn't women's fault that the capital-holding class has turned the screws on the rest of us. It is, however, to the capital-holding class's advantage that we blame women for being paid less.

While I love Slate Star Codex, just commenting a link in response to a written comment feels a bit snarky. It'd be a lot nicer if you could provide some preface, maybe a summary given the length of it, and just link to it as a source for your comment. :)

Particularly when the reader view estimates it to be 78-99 minutes. I'm several paragraphs in and not seeing the connection to the comment thread.

Edit: Just as soon as I post about not seeing the connection, I find the bit they were referencing:

"6. The Two-Income Trap, as recently discussed on this blog. It theorized that sufficiently intense competition for suburban houses in good school districts meant that people had to throw away lots of other values – time at home with their children, financial security – to optimize for house-buying-ability or else be consigned to the ghetto.

From a god’s-eye-view, if everyone agrees not to take on a second job to help win their competition for nice houses, then everyone will get exactly as nice a house as they did before, but only have to work one job. From within the system, absent a government literally willing to ban second jobs, everyone who doesn’t get one will be left behind."

Not that recent. We left the gold standard in 1971. All that inflating monetary supply has to get stored somewhere. https://fred.stlouisfed.org/series/MSPUS

CAGR from 1961 (beginning of data) to 1971 (gold standard) - 4.2%

CAGR from 1971 to 2018 - 5.5%

Is the BBC writing more clickbait headlines than ever? continue reading to find out more!

Ignoring the headline. This seems to be mostly beneficial to the lenders more than anyone else. The risk of a non-payments and financial issues is much higher and repossessions will be higher.

> Even if four people's names are on a mortgage, if one or more stop paying, the mortgage lender has the right to demand full repayments from whoever they can reach, he explains.

You only have to consider divorce rates to see the maligned incentives. Can someone more knowledgeable than me on the subject of mortgages explain if repossession is more valuable to the lender than someone paying off their debt? Intuitively it feels like repossession is worth more on a long enough time scale but would be interested in insights from someone else.

Financial industry makes money off transactions and commissions.

The idea of hyper-unstable living seems to be if you live by yourself or with a spouse you'll make a mortgage transaction every 20 years on average, but if you try to live in a giant commune like a 90s era sitcom, it'll financially collapse every 2 years and ya gotta live somewhere so you'll be entering into new transactions the bank can middleman every two years rather than every twenty years. They probably will make less money off each transaction, maybe lose some of the time, but if you increase transaction volume by 10, as long as their profit drops less than 90% its a net gain for them on average.

Also interest is profit to the financial institution, they'll make far more money off ten two year mortgages than one twenty year mortgage. With a side dish of the bank eating all the equity in interest in fees meaning the participants will be much poorer after twenty years meaning the bank can extract ever more middleman profits off the victims.

The nightmare scenario for a financial institution is someone getting a mortgage, paying it off early, and not getting another mortgage.

> The nightmare scenario for a financial institution is someone getting a mortgage, paying it off early, and not getting another mortgage.

I think the nightmare scenario for financial institutions is people buying houses for cash. No mortgage, no down-payments, no middlemen. The west coast right now is seeing an increase of such transactions. Add to that the slew of services trying to get around realtors, and the future may be bleak for such financial institutions.

One can only hope...

Majority of Americans have less than $1000 in savings, I don't think "paying for the entire house in cash" is what's going to disrupt the housing market.

Let's set a more ambitious goal. The real nightmare scenario for these institutions should be: people buy houses like refrigerators, as durable goods, with financing being only for the very worst-off.

Where do you live that people don’t routinely finance appliances for 2-3 years on consumer credit?

I don’t, but all the appliances sellers here advertise it so people must do it.

That is interesting, I wonder how many people do buy appliances on credit.

I recently replaced a refrigerator, which was over 40 years old and which I'd done multiple overhauls myself on over the years.

Appliance store had lots of refrigerators in the $3,000-$16,000 range. With lots of features and compartments, multiple icemakers, LED zoned glow lighting, exotic hinges, internet connectivity, etc.

I got a good fridge for $500 for cash. No icemaker and a single fridge and freezer door so it had the highest energy efficiency rating, higher than all the high tech fridges there with exotic energy saving features. And plenty of room inside because it wasn't taken up by compartments and drawers and icemakers.

So... if most people are financing as you speculate, maybe it is because they are going for these $5000 refrigerators that don't work as well as the $500 refrigerators.

Also I just know that all the internet, digital stuff, and touchscreens on the $5000+ fridges is going to break down in a few years and cost a fortune to repair. No thanks!

Have you looked at the price of a house lately? Maybe the 1% can manage to buy houses for cash, but that's not something most of us can realistically aspire to.

I've bought most of my houses for cash. If you start in an up and coming market and upgrade the property after 10 years you can sell at a big profit. So you sell the first one and have a bunch of money that you use to buy the second one outright in a less hot market but one with better lifestyle, and have a bunch of cash left over to buy an investment property. Then you have monthly income, but also a maintenance and tenant headache and you're anchored to that neighborhood.

If I had invested the money in my stock portfolio instead, I would be ahead of the game since in the US (I realize the article is about the UK) mortgage rates are ridiculously low, stock returns are good, and mortgage interest is deductible.

I like to upgrade my houses though including major demolition which the lienholder of record sometimes doesn't want to go for without trouble. I have more freedom with the property with an outright purchase. Despite the fact I'd have more money taking a mortgage and investing my investment gains have been dramatic enough that I'd rather have the freedom.

Anyone working in IT should own at least one house outright by age 30 if they want to and if the can't they need to upgrade their skills, switch jobs, or stop spending irresponsibly. Starting salaries for recent grads from decent colleges are $90k now on average. That's people with no experience. After 10 years everyone should be making a lot more than that and all these rates are vastly more than anyone needs to live on. Save save save in the early years, then invest. Don't spend earned income on anything other than bare essentials. Spend from surplus investment income. Lots of people are in trouble every month spending all their earned income despite making $180-$400k and they never get ahead. There's no excuse for that. Cut expenses to what the poor spend and invest the surplus until you can permanently live well off your investments. But continue working at that point.

> Starting salaries for recent grads from decent colleges are $90k now on average.

I graduated ~7 years ago. Besides this figure being far higher than I experienced as a starting salary,

1) These salaries are for high cost of living areas. Rent can and often is $25,000 or more a year.

2) These high cost of living areas, homes can and readily list for $1,000,000 or more, which is, in your estimate, 11 times the starting yearly salary, ignoring every and all expenses.

3) These 'decent colleges' can put you in several hundred thousand dollars in debt.

4) $180-$400k is not in the salary range for most software developers. This is well above average.

There's no way I'm buying a home when I'm 30. When I do, there is no way I will own it outright. And I feel like I make a good living for myself.

Ok so lets do the math. Age 22, graduated and making 100K USD. After tax this is about 70K. Rent on the low end is 15000 a year, food is about 5000, and a car is about 4000. Assume you spend nothing else, you ae left over with 46000 dollars. You repeat and lets say you salary goes up by 5000 every year and nothing else changes, if you add up you will have 46K+49.5K+53K+56.5k+60k+63.5+67k+70.5k+74+77.5k = 617.5k

So after 8 years of living the bare minimum life style and using up the a good portion of your youth on saving money, you can finally outright buy a 800sq foot house in the poorer communities of silicon valley.

Sounds like a great plan to me. /s

Note you could invest the money while you build it, but get if the market tanks, good buy money

Your math is great and comparable to many people's experience.

You do 10 years. Let's do 8 years instead so we take our next move age even 30. Using your numbers there's 465.5 saved total. But we put that in the market each year in boring run of the mill bread and butter commodity stocks with half decent dividends and reinvest the dividends. Over all we see a modest 7% annual return from the market all together, both gains and dividends. So we're 30 and have $625k in fungible stocks that can be cashed in. Similar to 617.5k but somehow having 0% returns, and we're 2 years ahead.

So the only option is to buy a lousy house in a bad neighborhood with crime in a city where homeless guys are blowing each other on the sidewalks which are strewn with feces and AIDS infected heroin needles?

No of course not. If in such an area the only rational thing is to move to another area.

Now if you bought a house in this hot market that house appreciated more than 7% for these 8 yrs. But you also were paying 4% or so on a mortgage. Still you have a big gain. You paid $480,000 for a condo in 2010 and now it's worth $1.3 million (12.5% APR). BTW, I'm using real numbers for a family member's property in the bay area with these exact years. So that's nice cash infusion as well, rather than losing money on rent. However ignore that, let's just go with rent and stock gains instead, which I recommend anyway. I don't recommend people pay cash for houses like I do unless they have a reasonable justification for doing so. It's better to let the bank front it when mortgage rates are low as they are.

Anyway so you get a transfer to Topeka or Bismarck or Austin or Durham. You buy a mansion with a swimming pool and a horse barn on a 2 acre parcel. Or maybe you decide to commute 10 minutes from outside town where you buy a 4500 sq ft farm house on 75 acres of land. And you pay $250,000 either way. If you had bought your condo in 2012 you have around $1 million to spend, if not you have around $625k to spend. The rest you leave in those stocks.

You took a big salary hit moving. Went from $140k with $300k in bonuses and equity to $110k and $300k in equity/bonuses if managed to move in-company but different office across country, or $110k and no equity if not. Either way your living expenses drop to near zero. Company has full benefits so you're paying utilities, low property tax, and food. Maybe $500 a month total since your mansion is paid off. Now you have $104k a year to stuff into those low yield commodity stocks.

But you get "lucky", like everyone who invests long term. It's not luck, it's just persistence. One of those stocks takes off. Or maybe you have an equity event in a company you're consulting with who couldn't pay market rate. So that's a few million here or there.

I'm not lucky or special. I just do basic common sense stuff and avoid stupid stuff. I know car mechanics who have done better than me by retirement with their investments because they took more risks. But I have done OK and my value is above $30M. I'm old and now have health problems, so it's nice.

May your unusually good fortune continue indefinitely.

> The nightmare scenario for a financial institution is someone getting a mortgage, paying it off early, and not getting another mortgage.

It seems really backwards to consider this the nightmare scenario. This is exactly what everybody wants: for people to take a mortgage once and pay it off eventually.

A business that considers healthy finances a nightmare scenario is a predatory business that needs to die.

The problem is that natural investment opportunities with a given risk profile are a limited resource.

A healthy economy would make investors compete over those investment opportunities. If a lot of investors want to put their money into residential single-family mortgage loans, and only N families seek to borrow with that type of loan per year, the investors would have to offer lower interest rates for every level of default risk. This limits the amount of money the investors can make by lending, so some go off to look at different types of investment. The rate of return naturally sorts itself out such that it increases with increasing risk.

When rates of return are low, entrepreneurs generate more investment opportunities at all levels of risk. But housing starts and transfers are more closely associated with employment opportunities, which tend to trail new business starts. People don't buy houses unless they have jobs that pay enough to buy houses, and they don't have better jobs unless businesses are expanding and labor is getting more scarce.

What seems to be happening is that middlemen are assembling artificial investment opportunities with a falsified risk profile, in order to capture investment dollars that would otherwise leave to find other opportunities with a better return/risk ratio. Some of those investments would have eventually sloshed back into mortgages, filtered through new employees or promoted employees, to replenish the pool of available investment opportunities. So the risk fraud is self reinforcing; the more it happens, the more it has to happen in order to maintain the status quo.

If the financial institutions are completely serving the mortgage market, that excess money has to go into other investments, or it loses its value. They won't be mortgage investments, but there are only so many of those around to pick up. The "nightmare scenario" is "OMG! We need to find another parking spot for our colossal pile of money! And the available ones are SOOOO FAR--like 50m away!"

I mean, plenty of businesses have incentives maligned with society. Gas stations want you to burn more gasoline, not less. Hospitals want you to visit more often, and spend more each visit. Liquor stores want you to drink more alcohol. Etc etc.

Are hospitals predatory?

Hospitals don't want you to visit more often. At least not in any healthy society. Hospitals that do prefer ill people over healthy people are indeed predatory and dangerous for a society to have, because it operates on very harmful incentives.

I guess this is the clearest case ever of why regulation is important. Good regulation provides businesses with incentives that help rather than harm society.

>Hospitals don't want you to visit more often. At least not in any healthy society

"Healthy" society is a weasel word here though: a qualifier that turns this into a "no true scotsman".

In this one, and most real societies, hospitals do want people to visit more often. Their incentives are geared towards that.

And not just "visit more often" -- hospitals (well, hospital execs, doctors, etc) want (and do) all kinds of things detrimental to society:

- to charge more for healthcare

- to add hidden charges

- to perform unneeded operations and treatments to make profit (even if the patient not only doesn't need them, but can be in danger from them)

- to prescribe drugs that the drug companies wine and dine them to promote, whether they're needed or not

And whole more besides.

E.g. https://www.scientificamerican.com/article/unnecessary-tests...




>"Healthy" society is a weasel word here though: a qualifier that turns this into a "no true scotsman". >In this one, and most real societies, hospitals do want people to visit more often. Their incentives are geared towards that.

This might be true, but I would expect citations. I might be biased, is only anecdote, but my experience around the world would single out USA as a place where this is predominant.

Besides, not all the hospital visits are equal, a clear example of how we can align the incentives are vaccination campaigns.

>This might be true, but I would expect citations. I might be biased, is only anecdote, but my experience around the world would single out USA as a place where this is predominant.

Sure, but most of the discussion on HN focuses on a USA context.

In my country for example, such incentives might not be predominant re: public healthcare (since the staff gets paid whether they have more patients or not), but they are with private practices.

Hospitals are extremely predatory. They're the number 1 cause of bankruptcy in the US, and that's not even including the extreme financial drain they cause through all those insane insurance premiums. The banks, facebook, apple, not even at&t can compete with hospitals in terms of the financial damage they've caused. It's funny how the media never seems to mention them?

Just adding here: gyms don't want you to use their equipment / facility to get healthier. Or at least many don't.

> Hospitals want you to visit more often

Maybe this is true in the US but not sure it's valid point in Europe where, given how the health system works, most of the time patients are actually a cost for the business hence less patients the better really.

Parent is talking on a profit-per-patient driven environment. Now where (e.g. due to welfare) a patient is a cost.

Hence the other arguments he made, about gas stations want you to burn more fuel, etc.

It's about how for-profit incentives of companies can be detrimental to society.

The way this sometimes works is that people want to do higher quality work than might be strictly necessary, and charge appropriately. That way you can feel proud of what you do (a quality job) and make money doing it.

Price-sensitive customers may feel differently.

Profit-taking hospitals are absolutely predatory.

It is not predatory to profit when both parties come out ahead, and we should not confuse organizational or financial structure of a company with the actual behavior of the company or its members.

The Surgery Center of Oklahoma[0][1], for instance, makes a profit while providing better, lower-cost treatments than traditional hospitals. And they actually have transparent pricing.

[0] https://surgerycenterok.com/ [1] https://reason.com/reasontv/2012/11/15/the-obamacare-revolt-...

Yes. The people there aren't, but the institutions by design are.

Do doctors set up people who suffer from chronic circulatory inflammation due to their diet / exercise regime with dieticians and psychiatrists that attempt to treat the root causes of their issues, or with a regimen of pills that make them feel like shit?

The average ownership duration seems to be in the 10 to 12 year in the US, shorter for apartments, but yeah, your point still stands.

https://eliresidential.com/blog/2018/6/12/what-is-the-averag... http://nahbclassic.org/generic.aspx?genericContentID=194717

> The nightmare scenario for a financial institution is someone getting a mortgage, paying it off early, and not getting another mortgage.

This is very interesting and produces an odd incentive structure. The only upside I can think of is mortgage terms might be favourable to the buyer as the lenders just want a higher mortgage turnover which can't happen if people are stuck in mortgages for too long.

Maybe, but at 4% interest, isn’t it financially optimal for me as a consumer to continue borrowing?

Why would I dump $x00,000 into home equity when I could leverage that money for decades are earn more in the market?

It seems like a win win, at least for people who have access to 4% interest.

> Why would I dump $x00,000 into home equity when I could leverage that money for decades are earn more in the market?

My favorite rebuttal to that argument is this Q&A: https://money.stackexchange.com/questions/89245/should-i-buy...

To quote the top answer:

> Ask them if you already owned the house, would they be advising you to take out a mortgage in order to invest elsewhere. If not, ask them to explain the difference between taking out a mortgage on the day you buy the house and taking the same mortgage out the day afterwards.

If I owned a house (with no mortgage), I wouldn’t take out a mortgage on it just to invest those funds in the market. Some people might, but that’s too much risk for me.

It really depends.

If your mortgage is big enough (over 750k as of the last tax bill, which is not that uncommon in some real estate markets) or small enough (so you don't itemize your tax deductions; that roughly corresponds to mortgages under $300k for married couples, I would think), then putting money into paying off the mortgage has a guaranteed 4% _after-tax_ return for some number of years that depends on where you are in your mortgage payoff cycle.

Would you buy a government bond on those terms in the market?

There are obviously liquidity issues with home equity that are much less of a problem with bonds, but I am also not seeing any 4.5% (generously assuming a 12.5% marginal rate on your bond interest) US treasuries bonds in the market right now, at any maturity.

Maybe. You owe the 4% no matter what. There’s some risk associated with putting money in the market instead, even over a long period. Historically youd be ok but you are taking on some risk for the potential gains.

I really like that advice that you save those extra payments in a high yield savings account at around 2-2.5% instead.

You're still losing a little but you will be ready for emergency home fixes & getting sacked with random specials from your city which are usually at a higher interest rate.

Of course if you have tons of cash, then for sure throw it in some ETFs in the market.

You do not have a risk free return on that capital. There is no free lunch.

for individuals it is attractive because you don't pay income tax on the imputed rent.

Most US banks sell the loans immediately and are basically middlemen. They don’t care.

Agree here. Most of the money made on a mortgage with the lowest risk are the origination fees (say ~$10k in US) and then the individual mortgages are sold off to sit in tranches where they are risked by credit level and p

> The idea of hyper-unstable living seems to be if you live by yourself or with a spouse you'll make a mortgage transaction every 20 years on average,...

People take out long term mortgages but it is quite common to re-mortgage on the same property to get a better deal...and usually people go with a different lender in those cases

> it is quite common to re-mortgage on the same property to get a better deal

Or to "extract" equity as money to spend. There's a huge amount of advertising out there trying to convince people they should take out a home equity loan and spend the resulting money.

> The nightmare scenario for a financial institution is someone getting a mortgage, paying it off early, and not getting another mortgage.

This is only true provided that the mortgage rate for this person is below or at the federal funds rate, right? Given how low it is, even in the nightmare scenario they're making good money.

Depends on the institution and their relationship to the borrower. For instance, if you are a servicer who bought the MSRs to a loan portfolio and a large cut of those borrowers pay off early, you may not make back your investment on the MSR purchase (this is unlikely though as rarely will that many people pay off early as to not payback the investment if you've conducted appropriate due diligence of the portfolio).

Though for the originating institution you're generally correct.

>The nightmare scenario for a financial institution is someone getting a mortgage, paying it off early, and not getting another mortgage.

Well, that's a bit of encouragement to overpay my upcoming mortgage.

They booked a nearly risk free profit on that mortgage that was paid off early.

I’m not sure i can be that cynical, but you’re right that lenders prefer higher monetary velocity (in the form of transaction volume here), all other things being equal.

They don't. I don't know where your getting this idea from. The tiny origination fee that lenders charge is nothing to compared the amount of interest earned over the life of the loan. A lender would much rather have steady income over 30 years than constantly having to seek out new deals.

that’s a false dichotomy. if you love strawberries, would you sit on the one you have or go out and try to get as many as possible?

The humorous visual of someone preferring to sit down on a strawberry is the only redeeming value of that analogy.

“The risk of a non-payments and financial issues is much higher and repossessions will be higher.”

Increased risk does not benefit the lender.

Lenders do not want real estate, or the work it takes to get it. They want regular payments.

your sentiment is directionally correct but the details are more complicated...

a lender’s job is to price default risk. if they could do this properly (pricing at a premium), they’d prefer higher risk because it would net them more profits (this is supposed to be reigned in by regulations on risk exposure but we saw how effective that was a decade ago). so higher risk does generally benefit the lender.

however, lenders are horrible at being real estate investors and property owners/managers, so they’d rather avoid (most) foreclosures as it’s less profitable to them. they’ve even gotten out of managing the loans in many cases, preferring to sell them off and reinvesting the money in new loans instead. it’s specialization at work.

Does any of this matter? Higher default risk means the rate of defaults is higher, so the costs of foreclosure and repossession will be higher. If the market is competitive, they should be making the same amount of money on average as low risk. Low risk by definition is going to have lower repossession costs.

This changes when banks exploit mispricing or miscalculation of risk by other lenders, to undercut them or to buy low risk debt at high risk prices.

In hindsight (classic) this makes sense. I guess I was imagining a scenario where the house debt is already mostly paid off but not fully, the house is repossessed and the lender has the debt mostly already paid and now owns the property. I don't own any property and so I'm trying to build a mental model of all the moving parts.

Foreclosure doesn't provide the entire value of the property to the lender. But it does allow the home to be sold at auction in order to recover the money owed. Any remainder is given to the home owner. That said it would be an exception to foreclose/auction a home with significant equity.

Major underwriters want regular payments. If they wanted market value property, they would invest in that instead.

If banks wanted to foreclose property, why wasn't 2008 a winning year for banks?

Historically[0] that was a profit center for contract lenders which people living in redlined neighborhoods (i.e. mostly black Americans) had to resort to if they wanted to buy a house before the reforms of the 1960's. These people would lend money for a house with very predatory terms. It was apparently common for a borrower to have their house foreclosed on for minor missed payments and the contract lender would simply repossess the house so they would have the house and all the payments they collected. The borrowers couldn't easily refinance since the neighborhood was redlined and there were few to no regulations on the contract provisions so a mostly paid off house could still be repossessed with no reimbursement.

This was one of the major ways the black middle class was hollowed out since homeownership was one of the major sources of middle class wealth gain.

[0] https://www.chicagoreader.com/chicago/contract-selling-redli...

You're describing the "buy here pay here" used car lot model but for houses.

If the house is worth a lot more than the debt, you don’t see many foreclosures. An owner could simply sell their house and keep the profit, or take out a HELOC. Foreclosures are much more common when the debt level is high and/or the house is under water.

It's also dependent on the jurisdiction. In some cases the lender doesn't actually have a right to proceeds in excess of their loan amount (plus interest, penalties and fees).

One other thing to consider is brand reputation. Most lenders, big bank lenders at least, don’t want their brand being the one that took a family home away. Often before things get real bad they will offer to break the term and let you refinance somewhere else.

In the US 30 fixed have no prepayment penalty.

That's a good deal! In Canada pre-payments often result in fees, which isn't ideal. Good(ish?) news is the banks will let you transfer out with no fee (or a reduced fee) if they want to remove your risk from their portfolio.

"explain if repossession is more valuable to the lender than someone paying off their debt?"

No, it's not more valuable.

When a property is repossessed by a lender, it is sold (often at auction) by the lender. The proceeds (minus costs for admin, auction fees, legal costs) will be put towards the debt. If there is money left over, then it goes to the borrower.

So, in the best case, the lender gets their money back (and loses the chance to earn interest for the remainder of the mortgage term). In the worst case, they get back less than they were owed.

In the UK the bank can put the property through normal private sales, using agents. In Spain the bank have kept real estate for decades following the last market crash rather than selling it at discound price. So that's a YMMV per country.

Don't forget that you hardly repay any capital at all in the first years of mortgage which is in favour of the lender. Similarly in a lot of countries like Spain, UK, France, ... if you LTV is too low, the bank charge you for a specific insurance that covers loss of value of the property.

The common wisdom was that indeed the bank would rather have people paying their debt, but I'm not so sure it is still necessary the case. One sibling comment to yours provide a different point of view, talking about how bank takes money of transation and more transaction is more money. Following the 2008 crisis that showed that the backend debt component of the mortgage is actually instrumentalised and resold and the element I mention here, I wouldn't be surprised if, for some banks at least, repossession is not part of their revenue stream.

> When a property is repossessed by a lender, it is sold (often at auction) by the lender

Is this just what they do as it makes financial sense to them, or is there some law or similar prompting them to do it? I was wondering if holding on to strategic property would be beneficial. But if they are immediately selling all property that is repossessed then it doesn't sound as ominous as I imagined and actually sounds like the most beneficial thing that could be done, for the market and potential buyers.

I've reveiwed California laws, but some time ago, and other jurisdictions vary (sometimes considerably), but my recollection is that after repossession, the lender must pay the excess value to the borrower in a fairly short timeframe. The auction sale to establish value is not required by law, but is allowed by law, and provides an efficient and nearly unchallengeable method to establish the current value.

When banks end up owning properties is usually when there are no bidders; the starting bid is usually either the amount of delinquent debt or the total of the debt and any other costs that can be charged to the borrower. The bank has effectively shown that the house is worth less than what was owed at that point in time, and then it's their job to get rid of it (in some cases a bit of staging will go a long way, in others, they'll have to sell it for much less or hold it for a long time or both)

The bank's core competencies don't lie in real estate investment (of the direct kind) nor in stuff like property management.

As far as I'm aware there's no law demanding they turn around and sell, but it makes a lot of sense to.

Not a law but regulatory capital requirements on speculative real estate make it uneconomical for the banks to hold the properties.

Banks are interested primarily in liquid assets. There's not much less liquid than real estate.

They're not immediately repoing the property much less selling it. It's a point of contention in the US anyway that first mortgagees, who are invariably bondholders rather than banks, are leaving the properties vacant and unmaintained post-default to avoid maintenance and other obligations, often for many years, contributing to neighborhood blight and deteriorating property values.

The whole point of fractional reserve banking is a $100K house being held represents a modest return during a housing bubble, but they could turn that $100K property into $1M of mortgages with a likely higher total return. During a bubble people want to transact like crazy so tying up working capital in dirt would have some substantial opportunity costs. So in a financial model of banking that doesn't actually exist, it still would not be a good idea.

There are practical problems relating to specialization in the industry; there are no participants at this time who could play the proposed game. There are salespeople-transactors companies who need to turn their working capital over every month or so; the people who sell you a loan for a commission and then sell the loan to a national servicing company next month, they need to turn that working capital over every month or two or they go out of the business of selling loans because they run out of cash to turn over in new loans. Meanwhile the national servicers specialize in logistics, sort of, by trying to optimize cheap and poor customer service to turn (junk) bonds and such into the largest income stream they have; they optimize all internal processes on being identical and simple and fast and dumb. They're in the business of raising money, buying lots of small income streams, then milking it for all its worth via monthly payment transactions and trying to branch out into long term real estate investing is problematic for that business model level. Why don't restaurants own farmland, because skilled farmers and skilled restaurant operators usually aren't the same people so two people trying to do that would overall make far more money if one tried to be the farmer and one tried to be the restaurant chain owner.

There are real estate investment trusts but they tend not to be a tiny department of a sales org or a servicing org. REITs tend to be stereotypical investment organizations that happen to buy real estate and derivatives and holding companies rather than Apple or Google stock; not a desk at your local bank branch or a dude in the mail room at a national service center.

The closest analogy is probably pawn shops. Those guys will sometimes do weird things to optimize return on their collateral. Its probably a good thing they tend to be smaller and less centralized than the world wide megacorporate financial system.

> The whole point of fractional reserve banking is a $100K house being held represents a modest return during a housing bubble, but they could turn that $100K property into $1M of mortgages with a likely higher total return.

That is a significant misunderstanding of fractional reserve banking. Banks can only lend money they have, i.e. that customers have deposited. They can't just invent money to lend. So, a bank with $100,000 in cash can only make loans totaling $90,000 with it (assuming a 10% reserve requirement).

This appears to no longer be true: http://gregpytel.blogspot.com/2009/04/largest-heist-in-histo...

By financialising the mortgages and other loans, the banks can now treat them as if they were lendable cash. A bit like they can treat gold bullion like cash.

In the UK, if they repossess and the sale doesn't cover the balance owed, the mortgagor (word of the day!) still owes them the rest. Don't know about the US; I know that in some US states, the mortgagor can walk away from the mortgage scot-free if they feel like it (nonrecourse debt, as it's known).

I feel like the time scales don't matter as much as the aggregate repossessions. If the aggregate is high, it's worse for lenders. Reposessing a home is not good for the lender if they can't sell it on the open market for a price close to the previous price. If repossessions go up, demand drops, and the market collapses.

Good point. Is this percentage a known number or is there a name for the threshold in the lingo? Like a number they would actually want repossessions to be maintained at as it maintains gaining property while the market is effected as little as possible?

Don't they only need to sell it for the amount of outstanding debt? That is in part why standard loans require 20% down

Plus the costs of selling it (typically reposessed houses have all sorts of issues, from damage to eviction costs to disgruntled ex-tennents)

They'll likely sell at an auction for cash too. With two houses otherwise identical, one being sold normally, one as a reposession, you'd go for the normal one. How much less would you pay for a repossession which runs a risk of the previous owners coming back to haunt you?

How is this a clickbait headline? It's not a bait and switch; the article is about the headline's subject. Its just an attractive headline, which is half the point of the headline.

They ask a question that they know has no reasonable chance of being up for debate. It's fine to discuss the phenomenon of people buying houses together, but there's nothing in the article that points to it being on the cards as being the 'future of housing'. It's intellectually dishonest.

One scenario like this played out after the mortgage crisis in 2008. Many banks now owned homes where the mortgage amount was greater than the market value, ie underwater. There was a ton of bank owned inventory for a long time because a) They are banks, not real estate companies with all of the expertise in marketing and transacting single family homes in bulk b) the market for homes significantly shrunk in the years after 2008.

In hot markets sure, maybe a bank might see a default and repossession as a good thing, but I doubt they are optimizing for those scenarios.

Everybody would have been better served by allowing the defaulting owners to remain in the homes under some sort of managed process until they could start making mortgage payments. Or restructuring the mortgages. Instead as you point out these banks were suddenly residential real-estate owners with no existing property-management capabilities and many of these already underwater properties lost further value due to neglect.

A foreclosure is never a good thing for whomever holds the loan.

Well start here for deliquency rates in the US.


A rate of 2-4% is about average for the US, I'm told most lenders model default rates of up to 8%, though given 2008 I'm guessing 10% will be seen in some forecasts from now on.

As a side note, the above site fred.stlousfed.org has some of the best clean data that you can find for free for modelling purposes

And lenders always want to be repaid as there is no incentive for them to repossess a house as its auctioned off and the owner get any excess return above what they own.

I'd imagine "joint and several liability" would be used - I found (to my horror) that this is pretty common in UK rental agreements as I guarantee the tenancies of my son at university.

IIRC, after the last financial crisis UK banks took possession of a lot of homes but sold these fairly quickly at below market rate in order to get the cash.

As others have said, banks don't want to be holding on to property any longer than they have to.

The space can be rented out to tenants to make the payments. Of course, their should be good contracts in place amongst the parties to make sure this can happen smoothly.

Is I understand it, if a house is repossessed in the UK, the lender only gets to keep the balance owed, not the full price.

While that may include plenty of fees etc, theres limited upside.

Whilst that's true, there are some potentially sketchy practices which it theoretically permits (in reality if the lender is regulated it's unlikely they'd risk them these days but in the small business lending sector you can find examples by googling "RBS GRG West Register").

This classic example is lenders forcing an auction into which they know the only likely bidder is a related company of the lender.


Google "jointly and severally liable".

> Even if four people's names are on a mortgage, if one or more stop paying, the mortgage lender has the right to demand full repayments from whoever they can reach, he explains.

This is called "joint and several liability" and is the legal position for many agreements when a party is made of several people (at least in the UK).

For example, people sharing a flat/house as renters will have the same liability unless they have separate tenancies. This is extremely common but surprisingly many people have no clue about it and think that they are fine paying "their share" of the rent.

Part of the reason for this is that the lender really needs everyone whose name is on the title deeds to sign the mortgage deed and also wants to ensure that none of them are able to claim an equitable interest to prevent a foreclosure. A simple joint mortgage is a relatively quick way and reliable way to ensure this.

The risk if they don't look after their security properly is that the lender ends up owning (say) a 1/3rd joint share in a property which they are not permitted to sell without permission from the other 2 owners and on which they are not entitled to any rent and can't evict the defaulting borrower. There are cases where this has been the result of a defective mortgage arrangement. Understandably, that's not something lenders really want to risk.

It is possible for property to be owned with only one name on the deeds and one name signing the mortgage deed by establishing a trust.

If you want the lender to consider multiple incomes on that basis then you'd need guarantors and you then run into the problem that this probably needs specialist human legal input so it is suddenly not a mass market product.

It's also worth noting that under joint and several liability, the tenants would usually have the right to then sue one another for the relevant shares if the lender went after one of them for the whole amount.

> Is the BBC writing more clickbait headlines than ever? continue reading to find out more!

I notice this more and more, along with promotion of clearly trivial stories to the front page - is a banal and contrived tweetstorm about Trump/race/trans/gender/tax issues justifiably worth elevating above a story like Venezuela, or rampant knife crime, or any number of other inconvenient yet important stories about which the BBC chooses to avert its eyes?

I believe that much of what is motivating their current direction seems to be desperate fear of becoming irrelevant in a changing media landscape (an existential threat given that with falling engagement the license fee would eventually become untenable), hence their degeneration into a crumby buzzfeed simulacra. Another reliable institution subverted and going down the tubes, hey ho.

At some point, I really hope the trend of massive centralization reverses. There are hundreds, even thousands, of smaller towns in Europe and America where one can buy a house for a reasonable amount of money.

Remote work might be the panacea...hopefully.

Remote work might bring relief to the larger cities, but it also opens up smaller, often blue-collar industry towns up for gentrification, out-pricing the existing residents in a place where there wouldn't normally be "office jobs".

Remote workers who previously worked in Seattle have done this to where I live now - which has only displaced their housing affordability crisis to a different location, and on to a different demographic.

Well, why are all of those remote workers moving to your town? If you live anywhere remotely desirable, I think it's only to be expected that housing prices are going to go up over time until we start to see an overall decline in population.

Furthermore, why has the movement of people to your town created an affordability crisis in the first place? If the existing residents are opposing increased building, then it's not really the newcomers fault. If you're building to meet demand, why are prices going up?

Yeah, I also hope for the same. It's hard though. Major jobs are around the big cities so a lot of people migrate from smaller towns.

In addition to remote work, there is better/faster/cheaper transportation possibilities as well!

Why is the future of housing always having less?

It's not just about having less, it's also about paying more for less.

Constant property ramping by the BBC back in the early 'oughts was the main reason I cut the cord and never looked back. They're about the only big player in UK media with no commercial interest in doing it (no ads from the property sector), but even so, they just couldn't control themselves.

Because those in housing already want the rest of us to pay more for less.

For quite some time it was about having more.

Bigger houses, bigger plots, bigger garages.

At the same time, families got smaller, stay-at-home spouses (i.e. "free" upkeep) became less common, etc. Add in population growth in popular areas and the recent trend to smaller housing makes a lot of sense.

It's not addressed in the article, but one of the big factors should be that having the massive living spaces we do now is not sustainable. If we want to curb climate change to 2 degrees, we need to get our emissions down to 2 tons per person per year by 2050, which means heating and cooling a large living space will need to become financially difficult. I predict we will see increasing demand for tiny and micro houses as legislation and economics catches up to the severity of the problem.

Because land in high proximity to jobs is a zero-sum game.

Especially so when you consider incumbent NIMBYs.

because the wealth gap keeps increasing and we need to do more about it

Because we're on track to be 10 billion soon.

Small nitpick, but it's estimated that global population will peak at approx. 8.7 billion before starting to decrease. See: https://www.cnbc.com/id/101018722

That's very optimistic.

"The median estimate for future growth sees the world population reaching 8.6 billion in 2030, 9.8 billion in 2050 and 11.2 billion by 2100" (2017)

Source: https://en.wikipedia.org/wiki/Projections_of_population_grow...

People typically have fewer kids as their society develops. Average age in the developed world is almost double of places like Africa. There is some evidence that slowing or decline in population is a reasonable expectation.

Also, from Wikipedia:

Low estimates suggest a decline

Moderate estimates suggest a plateau

High estimates suggest constant increase

Time will tell, and estimates suggest that the earth can comfortably support ~10bn


I don't think housing prices have much to do with population increase, but more to do with urbanization (as well as increasing wage gaps).

People are flocking to existing cities, and the more center you are the higher prices are.

This pushes people to the outskirts, which become more urbanized, which spreads urbanization through the same cycle.

Increased urbanisation is at best marginal in Western countries. This is not what is driving prices.

But top places like London now attract from a global pool of billions.

People need to realise that a world with 10 billion does not look like a world with 2 billion.

Lastly, the planet has trouble with us now... It's terrorism to suggest that 10 billion is just fine.

>Lastly, the planet has trouble with us now... It's terrorism to suggest that 10 billion is just fine.

Calling it terrorism is a bit absurd.

It's totally possible (and even likely within our lifetimes), but that doesn't mean that there aren't huge logistical issues to overcome for it to be comfortable.

One of the main problems is that the world population is so widely distributed. We can already feed and house everyone, we already have more resources than what would be required... they're just not distributed appropriately (some due to hoarding, some due to supply chain barriers, political borders, etc).

Considering the current environmental issues this is not absurd at all.

"You keep using that word. I do not think it means what you think it means."

It is because I didn't say it was "just fine" I said "can" as in "is possible" — which is objectively true.

...and even if I did say it was "just fine" it wouldn't be tantamount to terrorism because I was pointing out something that is very likely inevitable.

I'm not invoking 3 billion people by assuming one day they will exist.

Please, describe to me how pointing out the inevitability of population increase is terrorism.

You don't need to weaponize "sorry" — just don't say it.

It doesn't make sense to jump to ad hominem attacks because someone's calling you out on a statement that seems completely irrelevant.

It is intellectual terrorism. I am sorry but sometimes things must be called out even if the feelings of thin-skinned people are hurt.

It is only 'inevitable' because no-one has cared about it and, worse because some try to downplay the issue.

I did not accuse you personally, but you also did not say that it was inevitable, you spread the opinion that it was fine.

Those who claim that it is all good are pushing us to the abyss.

Edit: Downvoting the inconvenient truth won't make it go away.

I don't know if anyone's ever told you this, but you're being outwardly shitty when you have no reason to be. You're just throwing the word terrorism around disingenuously to get a rise out of people.

It was not disingenuous. You complain too much while avoiding the point.

Your only point is that the suggestion of the earth supporting 10bn people is akin to terrorism (which you later amended to "intellectual terrorism"), which I'd argue is objectively disingenuous... and completely pointless.

This conversation has reached the point of unproductive a while ago.

I'm sure you'll try to bait me back into it, because you fit that MO, but you're on your own.

That’s the global pop, not the UK’s.

The UKs pop should dropping, if not for immigration which the UK can control if they wanted too (being an island surrounded by rough seas and rich neighbors).

And because a much larger percentage of those people want to live in big cities compared to 50 years ago.

In developed countries things haven't changed that much.

If you look at London (since that's essentially the article), population has actually only reached back to its 1950 level.

But attractive cities can now pull people and investment from a global pool of billions of people and thus the market does its thing and prices move accordingly.

It's definitely a thing in the US. 64% of the population lived in urban areas in 1950 compared to 81% in 2010.


Be careful of that though. Urban is very broadly defined by the census. I live in a 7,000 person town 40 miles outside of a major city. Myself and 2 neighbors are collectively on 75 acres and are adjacent to conservation land. This area is considered urban.

It was 74% in 1970 (50 years ago). It is not a massive change.

The massive change in urbanisation is happening in developing countries. In developed countries it happened earlier and is not really a thing anymore.

I haven’t seen recent details but as of a few years ago, there was an uptick in college educated young people moving to a handful of mostly coastal dense urban cores but the overall urbanization trend in the US was rather limited.

Because every industry needs to consistently grow, forever, under a capitalist system. "The future" will always be increased austerity and sacrifice for the proletariate, never the bourgeoisie.

Because people believe they are nobly resisting capitalism by preventing housing construction in cities, as the population continues to grow and urbanize, capitalism’s most important feedback loop (high demand -> high prices -> more profit —> more supply) is short circuited.

Because the vast majority of new housing projects in cities are luxury housing designed to further enrich property owners and would be unaffordable to most people in need anyway. If you're poor and starving and all I'm offering is $90 filet mignon, I'm not really helping you.

Even if what you're saying were true, it'd still drive housing prices down for the poor. I.e. the rich would slightly shift towards these new luxury units, leaving more supply for those in mediocre housing units.

A 600sqft box is a luxury because we have decided it should be rare.

We are massively overbuilding a housing type with offensive levels of resource consumption built in: single family detached.

Cap VW at 100 cars a year. Think they’re going to be Jettas or Porsche? Probably Porsche. Doing that, then getting mad that cars are unaffordable, and saying “clearly if we let the automakers make more cars they will just be more Porsches, that’s not helping” would be silly.

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