Comment by DoreenMichele | Hacker News Reader

Comment by DoreenMichele | Hacker News Reader

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The federal government has myriad housing programs. It's not hard to look them up. FDA. Freddie Mac. Etc.

They generally provide assistance for purchasing or improving single family detached housing. There is much less support for other types of housing.

When Americans try to build innovative housing, such as co-housing, they can't find financing for it. This means forms of housing used to provide affordable housing in Europe can only be built in America by groups of wealthy individuals who can afford to self finance. It's also generally harder to build condos and the like because of the lack of financing support generally in the country for anything other than single family detached housing.

Tax breaks intended to make housing more affordable in the big city aren't actually designed to do that. That's not really the outcome you get.

Instead, they are designed in a way that actively encourages people to buy larger homes. This contributes to the size inflation of single family homes and deepens the divide between the have and the have nots. Those who can afford a house at all buy bigger homes, helping to further crowd out those who are poor.

In the 1950s, the average new home was 1200 sqft and housed about 3.5 people. Today, the average new home is around 2500 sqft and houses about 2.5 people, or about one less person.

We are having few children on average, but our houses are larger than ever. We have destroyed about a million SROs and have largely zoned out of existence a variety of smaller home styles currently being called Missing Middle housing.

Some links:

https://en.m.wikipedia.org/wiki/Single_room_occupancy

https://streetlifesolutions.blogspot.com/2018/11/the-clear-c...

https://streetlifesolutions.blogspot.com/2018/12/the-missing...

https://streetlifesolutions.blogspot.com/2018/05/seattle-sta...

https://streetlifesolutions.blogspot.com/2018/05/california-...

https://www.geekwire.com/2018/every-100-families-living-pove...

Street Life Solutions is one of my blogs where I occasionally try to gather data. The 4 posts from it above link out to other resources.

Fannie Mae and Freddie Mac are publicly traded companies that deal with secondary mortgages.

The HUD does have multi family housing loans, rural loans, affordable housing loans and even loans for farm labourer dwellings.

A loan depends on the ability of the borrower to pay it back. Everywhere, land has appreciating value and the dwelling itself is a depreciating asset. It is obvious why because land is limited and we can’t create new land. Also given that the population growth is exponential, the value of land keeps rising and hence the cost of housing.

There arent tons of financing programs for co housing and group homes because lenders like to select only borrowers who have collateral that can be resold. The reason is that Americans don’t want Co housing or group homes. If there is a demand and trend of qualified borrowers who can build and hold and increase assured re sale value, there is no reason why there wouldn’t be loans for it.

Remember ..for a lender..to back a loan for a co housing project, he has to see a viability to sell it to more than one competitor. And there just isn’t demand because low housing stock and housing affordability is an uniquely tier 1 city problem. Middle America and most economically depressed parts of the country still have lots of land.

It comes back to density. I have looked at this every way possible. Although I can’t claim to have worked on this issue, my mother worked thirty years in the affordable housing sector. I spent most of my after school hours doing homework at her place of work in meeting rooms while listening in... Favoring high density at the cost of stressed infrastructure is desirable only in the United States. No one else who have lived in high density cities around the world will get it.

That’s because there is a difference between crowded and high density. Former is cramming a lot of people with fixed or diminishing resources. The latter is densely packing more people while allocating resources and infrastructure equitably to everyone to optimize sustainability indices. America doesn’t understand high density sustainability.

Property is the most desirable form of investment because as I mentioned before we can’t create more land. We can create more living space by building vertical etc but again, more land is more vertical value and this still operates on scarcity principle. The outcome would be housing unaffordablility.

Living with room mates is rather common in most parts of the world. One can’t modify a financial instrument like a mortgage to manipulate value of an appreciating immovable non replicating asset like land.

It’s an interesting problem, but it’s not a financial problem. It’s a cultural one.

The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac, is a public government-sponsored enterprise (GSE)

On September 7, 2008, Federal Housing Finance Agency (FHFA) director James B. Lockhart III announced he had put Fannie Mae and Freddie Mac under the conservatorship of the FHFA (see Federal takeover of Fannie Mae and Freddie Mac). The action has been described as "one of the most sweeping government interventions in private financial markets in decades".

https://en.m.wikipedia.org/wiki/Freddie_Mac

A government-sponsored enterprise (GSE) is a type of financial services corporation created by the United States Congress. Their intended function is to enhance the flow of credit to targeted sectors of the economy

The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors primarily by reducing the risk of capital losses to investors

Well known GSEs are the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corporation, or Freddie Mac.

https://en.m.wikipedia.org/wiki/Government-sponsored_enterpr...

Fannie Mae was founded in 1938. Freddie Mac was founded in 1970. Freddie Mac ranks 38 on the Fortune 500, which means it's quite powerful.

One can’t modify a financial instrument like a mortgage to manipulate value of an appreciating immovable non replicating asset like land

Home mortgages aren't really for land per se. They are mostly for fostering the development of specific kinds of buildings on that land. We absolutely routinely "manipulate" what kinds of development we wish to actively encourage. We very often do that via various financial instruments, such as tax breaks, grants and loan guarantee programs.

All mortgages are about ability to repay and it’s not for land because one still needs a building structure. Having said that, value of building is minimal compared to value of land.

Example: an acre in Detroit is significantly less than an acre in the Bay Area. The cost of the building is somewhat the same..maybe a little higher due to labour cost differences. But Home Depot stocks the same things across the country.

The manipulation happens at state level to ‘manipulate’ how much tax levies can be extracted from properties. That’s why higher value properties are preferable. And people who can afford to pay millions of dollars for a dwelling are generally the kind of people who would not like to live in a co housing situation.

This is an affordability issue. The affordability issue is also partly because people insist upon living in areas where they cannot afford to live. It is as simple as that. With remote work and soon to come automation, low wages jobs are simply not going to be necessary. And if they are like manual or menial labour, it will be built into the larger landscape. An example of this is Singapore. Singapore is a city-state where housing is very clearly segregated by wealth. And in the wealthier parts of town, it is mandatory to build in a room for live in help.

So there is no such thing as a need for affordable housing in the tony part of Singapore. It’s a system that works. Home prices rival or exceed Bay Area prices in parts of high density Singapore, but every single home beyond a certain price range must have a room and bathroom for live in help. In America, we are very allergic and sensitive to segregation of any kind because of the rather nasty history. In most other countries, it is not and in higher density cities, it works and things move on smoothly because the system in place gives more important to resource allocation and quality of life than social justice. But in a way, there is no greater social justice than providing a safety net and reasonable quality of life for everyone. In Singapore, for example..there are no homeless people on the street or the economically vulnerable struggling to be sheltered. But housing is wealth segregated. And it works.

Other problems in America: technology is not democratized and there is no public transport network. Technology is not cutting edge. Not consumer technology but tech for living. (Example: how we deal with our trash and garbage. Compared to Sweden or Norway or Singapore is just embarrassing). This country runs on job and employment stats. There is sprawl. Which is bad and unsustainable. But the solution is not high density. The real solution is low to medium density that is well networked with other low to medium density. For this we need a good transportation network. The interference of federal, local and regional governance into each other’s territories make a mess of everything and nearly impossible to get anything done. (California’s High speed rail disaster is a great example). Big Gov fails if it gets too complicated. Small self sustainable communities networked with each other and having autonomy over their governance is the way to go. The future is not nations, but city states.

All mortgages are about ability to repay

It's absolutely not that simple.

Given that you a. dismissed the idea that Freddie Mac is a federal program and b. completely ignored the rebuttal of that erroneous assertion to blather on about your world view and insist you are right and I am wrong anyway, I don't see any constructive value in continuing this discussion further.

Me neither...especially when you think all of what I have taken time to respond to you is ‘blather’. Have a good one.

FWIW, I found your points interesting, and I agree that all mortgages are about the ability to repay. Wasn't that at the root of the 2008 subprime mortgage crisis?

And ability to repay, in my understanding= Capital, Capacity, Credit history, Collateral

-Capital: Down payment, loan fees, closing costs, escrow impounds, reserves, moving expenses

-Capacity: Current income, income history & future earning potential, Amount owed on installment accounts & revolving charge accounts

-Credit history: Current liabilities and past history

-Collateral: i.e., Is the house worth what you are paying for it, and if not, that has to be fixed before closing.

I learned the above through a home-buyer's education class I'm taking in order to qualify for a down-payment assistance program (https://housingtrustsv.org/programs/empowerhomebuyersscc/).

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