Escaping the Housing Trap
- https://www.amazon.com/Escaping-Housing-Trap-Strong-Solution/dp/1119984521
- by Chuck Marohn and Daniel Herriges
Notes
Housing as investment
P6 … they want housing to become more affordable but without prices going down. … in a sense, the more expensive units must be priced even higher to subsidize the below-market units. High prices are enforced in the name of affordability.
Most actors benefit from rising housing price. Local government benefits from high housing prices thanks to more property tax. State and federal gov also benefits through income, and home equity consumption. Banks and insurance hold mortgage backed instruments that become more secure as price rises. Developers can wait out bad development when price rises. And then the current home owners.
On the side side, there are renters, young people, and poor people. Not very influential.
We are trapped. This is a cycle that can only go in one direction. … It is a financial trap, of course. We have placed housing at the core of the financial system. Home prices can’t meaningfully decline without threatening the entire financial sector. It is also a regulatory trap. … Finally, it is a cultural trap. We have common beliefs and practices that are part of the culture of housing in America. To escape this trap, we need to move beyond those beliefs and practices. To escape the housing trap, we must overcome the basic contradiction that housing can be both affordable and a good investment, more than just a store of wealth.
Survival bias about the quality of old houses. Most Houses were pretty crappy.