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Comment by skohan | Hacker News Reader

Everyone is talking about healthcare, but I think affordable housing needs to be the next big public issue to tackle. It seems like this is acting as a lever in wealth inequality, since less and less young people are even able to imagine owning a home in their lifetime, and many in the position to buy treat it as an investment instrument, and thus have the incentive to drive the price up rapidly, putting it farther out of reach of everyone else.

I'm not against profit, but with something like housing which is a fundamental need, it seems like some effort must be made to build a system which makes it attainable for average people.

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The country is made up mainly of affordable housing. It’s certain areas that are so expensive because you’re competing with many high earning professionals. In many cases a pair of them.

Not everyone can live in NYC or SF.

Saying that, people need to consider the low interest world we live in. When their parents bought their home years ago, the interest rate was very likely 10% or higher. Today it’s 3.5% and even lower. This drives prices up. The biggest issue is getting a down payment.

I believe a combination of lower standard down payments and new mortgage terms of 40-50 years would make housing more attainable for a lot of people. I also agree, more development is needed.

> not everyone can live in NYC or SF

Reads more like "naturally the poor should be displaced from wherever the rich choose to live" considering that both cities have been heavily gentrified. There's a lot more than just higher income couples putting pressure on the market, there is a lot of distortion coming from developers seeking to squeeze every penny of margin from the jump in prices

Exactly. Vienna, for example, has tons of public housing which is affordable and is also a nice place to live. You can achieve that, even in a capital, if you have the political will to make it a reality.

I'll agree with almost everything you say, but I can't agree with the lower standard down payments. That is one of the reasons that we got into such a mess in the mid 2000's, along with lower underwriting standards.

I hear you. The issue is, to me, that because interest are so low (and appear to continue to get lower) this has caused the list prices of homes to increase in proportion. Because of this, a 20% downpayment has become even more difficult to achieve for more people.

To be sure, the down payment doesn't protect the buyer at all. It simply exists to protect the lender in the case of an early default. They can still sell the foreclosed home, possibly under market or in a depressed market, and be made whole since they only lent 80% of the original price.

In fact, the average Joe would be better off in today's climate by putting 0 down and using what they would have put down into different financial instruments that will likely out perform the 3.x% interest rate they are likely receiving, considering they wouldn't have other penalties like PMI.

The financial crisis had a lot of inputs and bad banking was a part. That is, banks giving loans to those who were not financially able. However, a big part of this was due to government interference in the free market pushing President Bush's "ownership economy" policy which forced banks to give loans to people they probably wouldn't have otherwise. And then the whole thing went to hell.

A 0% down loan to a vetted individual with sufficient net worth wouldn't be a bad thing. I do believe there is a calculus we are missing between interest rates, inflation rates, and what a viable down payment should be.

Competing with high earning professionals AND using the levers of local government to slow the construction of new housing far below demand.

The first part would not be an issue except in the short term without the second.

You can find affordable housing, it’s just just the densely spaced spec homes that deteriorate quickly. We’d be better off from a value perspective if developers could only carve out subdivisions but had to sell the lots to, home buyers who could then choose the house style and materials. Get rid of the HOAs and their covenants requiring uniformity. The builder extracts a huge margin by using the cheapest materials. A home is the worst purchase to do this way, since the economic lifetime is 75 years but the actual lifetime can be longer.

We should not allow developments in such a style as the lack of allowed change in such neighborhoods means that a neighborhood can never move up. The density and walkability is permanently fixed at a low level. Single family zoning and such home owners associations and cities don't allow, for example, people to turn a house into a duplex, which would increase affordability for all involved.

I think the biggest problem is that solutions we've used to subsidize middle class homeownership in the 20th century don't work anymore. Think mortgage interest rate deductions, things of that sort.

In cities surrounded by cheap farmland waiting to be developed, this money can be funneled into housing development. In the modern city that's already at "peak suburb", homeowner subsidies just contribute to bidding wars, driving up prices.

What we need is better utilization of land in desirable location.

Also, we need transit to connect neighborhoods to city centers. Hellish driving commutes could be pleasant train commutes with modern infrastructure.

The options have always been build up, build closer together, or build further out. The first two have been illegal in most places for decades, and at peak suburb we've reached the limits of the third one in terms of car infrastructure

The best time to build affordable housing is 20 years ago. The second best time is now. Unfortunately zoning rules mean you cannot build in places where there is demand, so supply and demand result in high prices. However if you already have a house this works in your favor: when you do sell out your house has gone up in value a lot more than inflation, while if your neighbor had built a large apartment next door your house value wouldn't be as high.

> when you do sell out your house has gone up in value a lot more than inflation, while if your neighbor had built a large apartment next door your house value wouldn't be as high.

This is an example of the issue I was talking about: it functions as an inequality accelerator. People who are already "in" have the power to set the rules of the game to be even more advantageous to themselves.

People don't want to live next to a neighbor who builds a multi-family 3-story apartment complex out of wooden shipping pallets, blue tarps, and extension cords. We don't even want that anywhere, because it is a death trap fire hazard.

Cheap living is thus prohibited, though some large California cities look the other way sometimes when the homeless build homes of that nature.

You can't even build a new home without arc fault interrupters and centrally wired fire alarms. In some places, you'll even need to install solar. Of course this isn't cheap! We have simply banned cheap construction.

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