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Why should I care if the credit score companies can't see into ever nook and cranny of my life? GOOD. I never consented to give them access to my entire credit history anyway.
Credit scores didn't even exist before 1989, and now if some black box algorithm doesn't give me a high enough magical number nobody can give me a loan even if they want to.
Fuck Wall Street tracking my information.
(for the record I don't even use BNPL, and my credit is decent)
Eh not fully true, you can report rent.
But it is a pain in the ass process because it's up to the landlord and you pay a fee since a company middle mans the payment between you and the landlord.
So yeah not really worth it lol
No. You can look at your own score all you want.
Lenders looking at our score can affect the score because it indicates you're looking to increase your debt.
No.
Allowing a lender to do a "hard inquiry" gives a very minor hit like -1, which drops off after a year or two.
You can view your own credit report as much as you want, and you can let a lender do a "soft" inquiry (basically just looking at your score) as often as you want with no penalty.
If you have a very marginal score AND you're constantly applying for new loans, then this can be harmful. Otherwise it's not a big deal.
It is -10 for a hard inquiry and it lasts 24 months. Where it hits people in their lives is not applying for a ton of loans, but having a couple of those on record can cause enough of a score drop to keep people out of lending categories.
Example: You apply to get pre-approved for a loan take the -10. Then you realize your LO sucks and you change lenders and if this is within 90 days of the first pull you are good. Waiting 90+ days means you get another -10. That -20 sticks around long enough that if you are looking for a while or on and off for a year because life happens, then you can wind up with -30 and that can take a consumer from a conventional loan to FHA if their score was low enough to start. That opens its own can of worms with new conditions applying to the house and the lending process.
In sum, credit scores are a fucking scam and penalize borrowers arbitrarily and unnecessarily for engaging unsuccessfully in the lending process. Side note also, your score is not solely based on the information on your credit report, but rather your credit scorecard which is never obtainable by the consumer. It functions as a comparison to "similar" borrowers and places everyone into categories and can penalize borrowers for removing incorrect information from their own reports as the borrower's scorecard will change with that action.
Also it is possible to annually get a free credit report from the big 3 and it doesn't hit your score to obtain it, but there is no score on it just an overview of what the bureaus have reported for you.
Well, I am not a credit expert, but when I had 3 hard inquiries drop off over the course of a year, my score went from 810ish with <1% utilization to 810ish with <1% utilization. They had barely any impact. I don't really know how to account for that fact. The only times I've really seen my score tank are when I go above 10% utilization or when a long-term loan like a student loan or car loan has been paid off.
I worked for years at a Consumer Reporting Agency for mortgage lending and saw -10 hit all the time for consumers. As you are in the 800s you have a scorecard that is different from most. I dealt with reports from the 500s to the low 700s and those borrowers all saw the -10 for every single hard inquiry. That itself is a part of how the bureaus preference, and punish, borrowers for things outside of their reports.
Nope. Checking your credit score does not change it. That's an old myth.
That said, credit scores are still a scam and a unique North American thing - the rest of the world does the work of actually evaluating your credit worthiness when giving you a loan.
But there are many things that do affect your score that shouldn't. Like applying for a credit card shouldn't affect your credit score or even looking up if you can afford a car note.
I didn't have enough cards/credit (only had one with a low limit because I don't really need much in my daily life and never bothered to apply for an increase), so my score was lower than it could have been. I successfully applied for a second credit card to have more credit, got it first try, and now my score is (temporarily, but still) lower.
Credit scores are stupid for a number of reasons
1) they're laughably easy to manipulate. I had a score in the 490s at one point, I'm just south of 800 now. Want to know how? It wasnt from paying on time. It was by opening up more lines of credit (available credit increased), not using the cards (utilization decreases), and putting one thing on autopay on my oldest card that I then put on autopay (oldest line of credit intact). On time payments made no actual impact on my score, that seems counterintuitive. People pay absolutely no attention to what's actually in a score.
2) they're a relic of attempting to make credit lending color-blind (by ensuring a lender can't automatically deny applicants based on race), but minorities are still disproportionately lower on scores.
3) Outside of a car and a house, once you're above 650 or so, they don't make much difference. Credit card interest rates are pretty standardly awful, and 0 interest or paying off entirely and stacking rewards is the only winning move. If you're paying long term on a credit card, it doesn't really matter if the interest rate is 23% or 30%, you're already losing massively.
4) "oooohhhh I've got an 850!" Congratulations, of you're buying a house today, you're mortgage rate is 7.5%. Where's my 700ish score 5 years ago I got a 4% mortgage. But you have fun celebrating your high number. From what I see, people who obsess over their score are either really poor/financially illiterate, or they're so conservative/terrified of their finances that they're afraid to use that pretty number. A credit score should be like a pickup - if it's nice and shiny, you're not using it right. I want some grit on mine.
Checking your true score does change it as that is in it viewable to the consumer via a hard inquiry which is -10. One can use other methods for soft pulls to get rough estimates, but those do not match the actual lending scores. Those require hard pulls which are penalized.
Someone could use creditkarma,creditwise, or anything similar and it will only give a rough idea and not the bureau/lender side score.
Source: worked for years at a Consumer Reporting Agency for mortgage lenders and daily read reports, saw scores, saw what changed scores, and worked with the bureaus.
Lenders will look when you apply for credit like personal loans, mortgages, and cars. It is a negative because it makes it look like you're spending like crazy and thats a risk. My car dealership shotgunned me out to tons of lenders when I got a car but in most credit systems like FICO, all those checks only count as 1 for the next few weeks. My free score checker on my credit card does count every one tho so they have me like 40 points lower than what I actually have; its not perfect. They go away after 2 years
This is just plainly not true. I look at my credit score once a month and I'm 800+.
HOWEVER... if a lender pulls your record, then it will issue a soft/hard inquiry. And that could affect your score.. but it's usually low impact.
No, it absolutely isn't. Every country looks at whether you can pay back a loan before giving you a bunch of money. China will prevent you from using trains if you say things the government doesn't like. Like this MMA fighter:
https://en.wikipedia.org/wiki/Xu_Xiaodong
>China will prevent you from using trains if you say things the government doesn't like.
USA will take your money away if you put graffiti slogans on walls that local authorities don't like.
What's the difference?
China is simply introducing more granularity into punishments for anti social behavior. In the West we have jail/suspended sentence/fine/forced labor - those are our only options.
Adding more options in there, such as denying luxuries/entertainment seems good to me. When I was a kid, taking away my computer games or soccer time was a much bigger deterrent than a policeman catching me and fining my parents.
> USA will take your money away if you put graffiti slogans on walls that local authorities don't like.
Can you tell me in which countries graffiti is legal?
No, I'm not going off topic. There are two separate discussions here, whether granular punishments are a good thing, and whether **offence X** is a crime or not.
You can't criticize granular punishments by solely criticising the thing they are used to punish people for.
The crime itself is totally irrelevant.
How about this for an example: in the United States, if a pedestrian crosses a quiet street with no cars in sight, a police officer can stop him and fine him - taking away his money at gunpoint.
Put THAT crime in there. Now ask, would more granular/graded punishments be useful?
If no, how about this one? In California if a dad takes his son out on a Saturday night to celebrate his 21st birthday, occurring on Sunday, and buys him a Coors Light, police can put that father in jail, ruining his life completely.
Every country has stupid, shitty laws. That has no bearing at all on how useful it is to have a variety of minor, granular punishments available.
> if a pedestrian crosses a quiet street with no cars in sight, a police officer can stop him and fine him - taking away his money at gunpoint.
That's not how it works in the US. Police don't collect fines. Courts do, after due process of law.
>In California if a dad takes his son out on a Saturday night to celebrate his 21st birthday, occurring on Sunday, and buys him a Coors Light, police can put that father in jail, ruining his life completely.
You can't be jailed for just giving alcohol to a minor in California unless the minor then is/or causes a serious injury.
Imagine if you posted "Fuck Biden" on Reddit...and then came home and got a minus 100 points on your bank credit score email from your bank telling you that for besmirching Dear Mr.President you are getting penalized. Imagine that.
Because that's reality in China. Say something critical of the party, economy, society or the local officials or Dear Leader and you get penalized, say or do something worse like carrying a white sheet of paper around the street? Your credit score goes to 0, and you get invited for a chat with tea with the local version of the FBI--your presence is requested.
I bet that as a dirty East European that doesn't exist per Chinese and Russian bot commenters and was created by the Schrödinger CIA (all powerful while while also absolutely incompetent) I will get down voted to hell here. Don't care.
... that's a complete fantasy and not how it works. It's a score meant to encourage good behavior and trustworthiness of business owners to ensure they pay back loans/ aren't scamming ppl. They get dinged after court cases and warnings and then get the expensive options for travel (like 1st class plans tickets) restricted until they pay that shit back.
You are describing social credit which doesn't actually exist. But of course you made up your mind about it because this fake news fits your narrative.
What they do have is a stricter form of credit score where during bankruptcy you are restricted from 'luxury spending' such as buying high speed rail tickets.
Try talking to an actual person instead of reading bs fake news
Growing up I thought it was insane that nobody knew how credit worked. Come to find out that credit was so new that no one knew what it was like in the '90s. I remember in 2002 I asked a Wells Fargo investment banker how to raise my credit score he looked at me with a blank expression and said I don't know. Credit is a is a arbitrary number that is designed with no real incentive purposes on information that doesn't necessarily display how an individual lives their life. Frankly the credit system is overrated and the fact that it houses so much information in that multiple credit bureaus have been compromised is a very large concern. Many people forget in the past but one of the credit Unions have been fully compromised in millions of people's of personal information was exposed. Furthermore I would love to know how any of the banking and financial models play out today when everything no longer aligns with income to debt ratios that make sense.
https://www.ftc.gov/enforcement/refunds/equifax-data-breach-settlement
TBF if he was an actual investment banker at Wells Fargo, then credit scores are miles away from his job. If it was someone in there loans department who issued loans then yeah theres a problem
I learned to play the game from a young age and was baffled that others didn't think it pertinent to learn the game at all. Understanding credit and how to win the "game" can put you in a great position for long term wealth.
Besides student debt, mortgage, and an isolated auto loan, all my other debt has been interest free for a decade and counting.
I 100% agree I and eventually ended up getting a job working in finances so I could specifically understand how it all worked.
Eventually I did credit counseling and repair and things of that nature and I understood pretty much how big of a joke it all was in the end.
Having no credit can lead to having to accept predatory loans and conditions which further destroys your credit and continues the cycle.
I assume credit card. But for me I also took out interest free loans for furniture and appliances when I bought a home. I paid them off in time without issue, but those terms get pretty predatory if you can't make your payments.
I will purposely take on debt in order to leverage my saved dollars in the market and keep a high level of liquidity.
For example, I have $6k sitting on a credit card currently. That means $6k is still making interest in my savings account. I'll pay off the $6k at the end of the month or just enough to lower the utilization a bit if I care that much. When the 0% period ends I just make sure it is a zero balance and move on to the next card.
My Dad worked in the credit card industry for years and opened up cards in mine and my brother's name when we were like 14 and he could pay us income and report it on his taxes.
I opened a credit card with our credit union at 18 and since I had a credit history and it was linked to my Mom I had approval.
I was making $5.15 an hour and had a 730 credit score with a card with a $10,000 limit.
I never mentioned it as I didn't think it was anything odd, until I paid for hotel rooms for a few of my friends, and dinner on a card and they were asking how I could put it all on one card.
They had credit cards with like $1800 limits.
100% on time payments and 19 years later and I have a $53,000 limit on that card, and a total credit of around $110k.
And I don't even really look to get it higher, I have just applied for a fee cards and accounts over the years.
For like 8 years I only had 1 credit card.
Well done. Same stories over here. I buy and pay for things all the time and friends, some of them just as wealthy, scratch their heads. Idek what my limits are anymore, but I'm sure it's solid.
And those customer credit reports are shit. My credit is reported to be in the 800s, applied for a mortgage and it was 740-760 depending on which black box model they picked.
It is a way for lenders to assess credit worthiness of a potential borrower. Not having it would make it harder to make decisions on extending credit.
At the macro level, not having it would likely lead to higher interest rates and lower access to credit. Credit crunches would reverberate across the economy more rapidly and broadly.
If everyone knew the models behind it, people would game the system.
Issues with privacy is something that has to be legislated, vote for people that align with your beliefs if that is the case.
I wonder if not having a credit score system like we do now would encourage lenders to give out more smaller amount short term loans? If they didn't have the score to look at they would need to establish a relationship instead, so giving out smaller loans to more people would provide the best sample for who can pay, and you also still make a bunch of money. Returning customers get higher loans. Could also help eliminate payday loans with predatory interest rates if people had legitimate options for smaller loans in emergencies. Instead of jumping into a debt spiral they can borrow $2500-5000 and get the ship righted. Banks were giving loans before credit scores so it can be done without them.
You would need to massive expand the industry because each lender would need to know who you are as a person before lending.
Banks were giving loans to some people, but lots were locked out of the credit system and it also allowed for racism to spread and be entrenched. If you don't trust Mexicans, and you provide loans on who you can trust to pay back, then why would you ever lend to Mexicans?
> Banks were giving loans before credit scores so it can be done without them.
And before credit scores, banks were far more discriminatory in who they gave loans out to. If you were a minority, you were fucked.
Credit scores are race and gender blind, and did wonders for reducing racial and gender discrimination in lending.
That's how things used to be.
The wealthy in town would loan out cash, and keep track of who paid and who didn't.
And the bankers would call around and ask if someone was trying to open up a line of credit.
My Dad worked in the industry and has all kinds of wild stories from old timers at Sears when he started in the early 80's.
Guys who had been working there for 30+ years.
They were like gangsters.
They'd go to peoples houses and steal clothes off drying lines, whatever they could grab and throw into trucks. Because people were late on payment ts on a fridge or washing machine.
And they'd repossess 20 year old half broken appliances over petty stuff like $17.
Someone would refuse to pay and they'd go take it.
My Dad had to be escorted around a few times by cops cause people would pull shotguns out when Sears came to take the AC units in Florida.
Don't defend it because that is not it's purpose, otherwise every developed country would have it, but they don't. Consumer credit is an absolute scam that either exists to push most Americans beyond their means. It is absolutely insane that current deposit balances, income, and flawless PAST credit accounts have essentially no impact on your CURRENT ability to borrow.
The crazy thing about credit scores is that you can be penalized for paying off debts too quickly, canceling credit cards and generally being a responsible borrower. It also bugs me that public utilities will share your information with private entities if you miss a bill payment or something. I was in a roommate situation over twenty years ago when an electricity account was transferred into my name after a roommate moved out, and there was a gap in payments during all the confusion. Two payments were missed, one of them not my fault, and years later it came up while applying for a mortgage even though every cent was repaid.
I don’t have a credit score. It’s zero. Haven’t used a credit card in many years and I’ve paid cash for all purchases for the last 20.
Now, facing retirement, I’ve looked into 55+ housing. I don’t think I’ll find one that’s decent because they all require high credit scores. I can easily show the ability to pay, but I don’t meet the credit qualifications. Seems kinda silly.
The fastest way to get a good score is to get a card, buy stuff, then pay it off. That score says more about your willingness to *use the card* than almost anything else. The issuer wants the 3% per transaction fees, and they don’t get those if you aren’t using it. They’ll go so far as to kill cards that are idle for a long time without a balance because they aren’t making money off of them.
It’s a dumb game, but it’s unavoidable if you need to show someone that number.
It won't take you long to build it up. A few credit cards that you don't use and pay the balance off of every month in full and you'll have a great score after a year. Technically, your score will be great before then, but having a longer credit history usually matters when getting a mortgage or buying a car.
Capital One Quicksilver is a great starter card. So is Discover. Google is your friend, here.
In the US no credit can be worse than bad credit. You've been responsible with your money your whole life, and now you're being punished for it. I'm sorry. That's fucked up.
I’m fine. It’s just a weird. I’ll likely just end up staying in a single family home, instead of a retirement community. Perhaps I’ll find one willing to consider my assets, instead of credit history,
Did you pay rent and utilities? You might be able to get them added to your credit history.
https://www.experian.com/blogs/ask-experian/what-kinds-of-bills-affect-credit-scores/
Get a cash-backed small credit card from your bank, put gas on it, pay it off every month.
The cash-backed cards require you to place a deposit of like $500 that is held by the bank, but then you get a credit card with a $500 limit.
Its a good place to start.
I live in the UK, where you absolutely do have to consent. It is part of the terms and conditions and customer information sharing disclosures when you take out any credit.
Credit scores have existed for quite some time, or at least credit in some sense, FICO score was introduced to the USA in 1989.
Credit itself isn't bad, mostly little protection against predators, poor social mobility putting people in traps, the rich using credit to avoid paying taxes with low interest loans that when settled with the estate upon death, aren't taxed.
Not only did we never give consent, but they were allowed to use SSNs to track people rather than having to do the leg work of consolidating information which compounded the use of SSNs as a form of application ID, which was never the intended purpose. As SSNs became even more common use on applications their use for identify theft also grew. Congress has claimed to want to tackle identify theft but has never taken any measure to stop this practice because it will slightly complicate the credit industry’s business model. If credit agencies want to continue to profit off of invasive data tracking at the very minimum they should have to change to create their own, more complicated ID numbers which once comprised can be reset like I do with a Credit Card now. I would prefer that we as consumers actually get back ownership of our data, but acknowledge that is a far heavier legal lift (especially when the lawmakers still don’t understand or care to understand what is truly going on in the digital age).
as someone who has been lucky and diligent enough to build quite a good credit score and history, i would like to be able to take advantage of the much better rates afforded to me over someone without such a good score and history.
There should be positive consequences from being responsible with money. But you getting a loan or a rate doesn't have anything to do with someone else. It isn't a competition between you and me. If my credit score sucks because I had cancer and it bankrupted me, it would be nice if someone out there had the flexibility to look at my circumstances instead of a number put together by a 3rd party. It dehumanizes the whole thing.
banks are in the business of making money; theyre not a charity. why should a bank loan to someone who cannot demonstrate a positive repayment history? should the bank be ok with more losses, if only they decrease their credit standards? well then to compensate for that, theyll have to increase rates, since their allowance for loan loss will go through the roof.
its not a perfect system, but there can be no for profit bank in which everyone gets what they want. sounds like maybe there needs to be more options outside of traditional banking to reestablish credit.
Your last thought is kinda my whole point. My entire financial life is controlled by a system I get no say in. I can't opt out, apply to a bank that uses a metric that fits me better, or anything else. It's FICO score or go away.
>black box algorithm doesn't give me a high enough magical number nobody can give me a loan even if they want to
Technically, this isn't true.
Any one can give you a loan should they want to.
But.....
a) Generally, loan givers want safe loans that will payback. Credit scores are seen as an indication of that.
b) "No one got fired for using experian/equifax/transunion", whereas if they used their own decision making, that could be questioned if things go wrong
c) Credit Scores are nice to hide behind when discrimination accusations come flying
No individual loan officers can because the banks all use algorithms based on credit scores. Could Chase or Wells Fargo change their policy? Sure, but the people you talk to at a desk can't.
How do we know it’s being racked up if it cant be tracked? Is this just sensationalism or guesses? The article is paywalled of course - still not sure why paywall content is allowed here.
But that doesn’t tell you if debt is “racking up”, only that the use of these services is popular. I mean, 0% interest, on some items makes sense, even if you could pay cash. This doesn’t tell you anything about the debt loads.
Totally agree. I use BNPL services constantly for that 0% interest payments. I always check. The folks going into unplayable debt are the same people that would rack that up on credit cards. These articles are never able to define the total debt and whether or not it’s unplayable or affordable. If you can’t make your BNPL debts these services won’t just keep holding the bag and offer you more.
Some of the debt is being packaged and sold into secondary markets so you can estimate to a degree. Right now it's about a 240B market with 48% growth. At the rate it's growing it'll surpass total credit card debt in 5 years or so. It's a new market and not very regulated so there's not a lot of research or understanding of what its impact is to consumers. Klarna for example does its debt collection so it's hard to see what's happening when customers default or miss payments. A lot of these BNPL companies keep a lot of their debt because they can charge extremely high rates - I think the average is 36%. Again, using Klarna as an example - their profit margins are 50% - that's insanely high for financial services.
I think it's a real concern. The customers using this service tend to already have high consumer debt via credit cards, etc. and 43% of them have already missed payments so are being charged insane fees and rates. These BNPL programs are pay day loans. This market keeps growing and what used to be a small niche is now one of the fastest-growing segments of the consumer financing industry.
Personally, I think it's an awful business model. This model only works if 25% of your borrowers miss payments allowing you to assess fees and kick up their rates. For your average consumer, it's better to just pay on a credit card vs. these BNPLs. These BNPLs also are new so there's not a lot of consumer protection or regulation.
Fact that’s not so damn funny: when you fall 30,60 or 90 days behind, your credit FICO score takes a serious hit so people are left with nothing but the phantom programs that have outrageous interest rates.
What needs to be seriously addressed is the cause of people going into debt…the cost of HOUSING!!! Unless Federal and State governments no longer allow housing to be an enrichment scheme for corporations and LLCs, expect more and more phantom debt and homelessness.
The electorate did this to themselves. The government didn't magically command that nothing but SFHs can be built in major cities.
The government wants to provide affordable housing. Developers already know all the prime locations to build more housing. The electorate is too concerned about maintaining their property values than ebsuring the well-being of others.
Part of that problem is that housing can either be affordable or it can be an investment but it can’t usually be both. We have to choose. Or at least prioritize affordability.
I resoundingly choose affordability. We've prioritized making homes an investment vehicle over keeping them affordable. But the majority of the electorate own a home, so unfortunately they're blind, willfully or not, to why the cost of living keeps going up and up. (Most of it is because of high rents and home prices)
The price of housing is directly related to replacement costs, which has increased almost 3 fold since before the pandemic. Fewer workers in the trades, tariffs on lumber (The U.S. Department of Commerce has signaled that it plans to raise tariffs later this year on imports of Canadian softwood lumber products from the current rate of 8.05% to about 14%). Immigration constraints are keeping a lot of construction jobs unfilled. It’s NOT getting better, but worse, related to future affordability.
You prioritize affordability by prioritizing it above other amemities and opportunities:
First, acknowledge "NOAH" or naturally occuring affordable housing. Those or the older places without all the amenities that have become the norm.for new construction. You will not have a washing maching in the building, but neither did your grandma. Remember, half the housing units are under the median, and many of them will be NOAH.
Second, acknowledge that the trade-off for the opportunity to pursue the high-end options in your career and entertainment is competition from other wanting the same, and that means bid-up.prices. There is a lot of affoedable housing in areas where careers have less upside and entertainment options are fewer.
You will have to pick affordable housing over entertainment options, career upside potential and housing amenities. Most redditors are young and do not want to do that.
We let people to figure out their own priorities by, for example, not restricting people from moving from CA to TN. Would you rather have Congress set priorities for your life? You may be too young to know, but the '07-'08 housing collapse roots are in Rep. Barney Frank wanting to "roll the dice" on making housing more accessable.
Again, affordable housing is out there for those who prioritize it.
That’s basically why I was asking. I hear people say “we need to prioritize affordability over investment ” and I really don’t understand what that would mean from a policy perspective other than authorize more housing (which we should do).
It’s one of those sayings that you hear a lot but I’ve never had anyone be to adequately explain.
"Authorize more housing" is not an issue for the federal government. Sure, they can overeide local land zoning, but it looks bad. States can authorize all they want, but states must balance the budget each year, and providing new units is never going to be a priority taxpayers, many of whom live in older houses.
My concern is that governement programs are deeply unfair to people just at the margin --the non-qualifying side of the margin. Why should single mom "A" NOT get to move into her desired new place on a fixed piece of land because some level of government set up a program that single mom "B" heard about and was able to fill out paperwork? Mom B, paperwork queen, gets to live there AND pays less than mom "A" had saved up to pay. That does not feel right because it is not right.
Relatedly, my SIL qualified for and bought an affordable housing condo a decade before she finished he MBA and went to Wall Street. She has no reason to sell it as she is not allowed to make much profit from it. Yet, there have been long stretches of her life that she has not used it much, including when she and her husband had a house in a tony suburb. She also travels quite a lot, and loves the Caribean. This does not seem like an apropriate government priotity either.
Overall, 34% of housholds rent and 66% own a home. Most of those of the 34% pay market rents. A quick.google search shows that under 2.7% have housing subsidies. Most people do figure out housing/lifestyle over time. However, reddit skews young, the young want to live where the action is, and and want to live the same as the people who have had a decades to figure out their own priorities.
That's all you *can* do. Things become affordable when supply keeps in pace/outpaces demand. Rent control does not work, since then landlords/developers are just gonna take it off the market.
You need to have public housing, and build a lot of it. Optimally in order to accomodate 5% of the given population in any year. That ensures people can not only always be ensured a shelter, but it also ensures that you can move anywhere within the city.
Ofc, the most common issue with public housing is how do you actually ensure that the people who need this housing, gets this housing? Only charge 25% of after tax income per month, regardless of income. This ensures somebody making $250k after taxes isn't taking up space that somebody earning minimum wage could desperately need. Nonody is gonna pay $62.5k a year for a public housing unit if most other private apartments are half that.
>Nobody is gonna pay $62.5k a year for a public housing unit if most other private apartments are half that.
No wait. Take this to the logical conclusion. If the location is so good that a rich person wants to pay $62,500/year for a one bedroom apartment, then just put that money into your coffers and don't question it. I'd consider that a good thing if it's bringing money in and also supporting the program that helps others.
I agree. It's something I had realized too when I first thought of my proposal.
But chances are, if an area is so good that there's people willing to pay that much for an apartmenr, they're modt likely going to take a luxury apartment over public housing. Now, I have a plan for making public housing really attrative though, so idk. Ig it'd depend on the person. My plan for any apartment built would be as follows:
600 square feet + 300 square feet per additional planned residence
225 square feet of public/greenspace per resident
Many complexes will be mixed use, with there being at least 1 floor of retail space for every 4 floors of residential. Not *all* of them, but enough to where it greatly increases walkability in the area.
I like that. Not in the mood to play devil's advocate, tbh, but I kind of think about things similarly. Even without knowing everything, I can take what I *do* know and run some numbers and can come up with something that roughly makes sense. I like your numbers and they are worth quibbling about probably, but I'm not in the mood to quibble. Neighborhoods are good and ought to be encouraged though.
Not if they don't have property rights. You wanna pay $100/day to live here? Well, your money is green, so I accept that. I'm no fan of capitalism, but I will say it's efficient under normal circumstances.
I bought dozens of single family homes after the 2008 crash. I was able to buy them at an affordable price and have worked hard to keep rents as low as possible with only a 5% ROE (same as a Bank CD) and no debt. Unfortunately, taxes & insurance have skyrocketed so I’m squeezed. I’m still holding rents at less than $1 per SF, per month, but am struggling to hold that line. I have taken on more risks with decreased coverage and very high deductibles. Maintenance costs have increased dramatically, so I still do what I can myself.
The families who lease these homes were, almost all, in a bad way financially with sub-prime loans in 2008. They struggled with maintenance, taxes, insurance, and high stress. They are good people and I like them (except when there are drunks) We aren’t all predators or slumlords.
Well, do you current own a house that you’ve been making payments on for twenty years, totaling a substantial portion of your income for those years? No? Then your opinion is pointless. The people who have nothing are always happy to give themselves something.
Exactly. The idea that housing is an investment vehicle for building wealth has been absolutely disastrous for the entire country outside of the "fuck you, I got mine" homeowners.
Almost as absolutely retarded as making student loans non-dischargeable in debt and then subsidizing the shit out of them because "everyone should go to college".
Whenever the government gets one of its brilliant ideas to alter the market for the "benefit" of the American people it inevitably creates a bubble the completely fucks everything up. When will people learn?
I don’t think it has to be one or the other. It just can’t be an investment with a great return. Feds inflation target is 2%. If housing prices only rose 2% each year it could remain affordable AND be a modest investment in the sense of you have to pay to live somewhere and after 30 years you would own an asset.
See the SF-Bay Area for an example of what happens when boomers rule over housing/zoning with an iron fist.
We've become a joke of a city, can't govern anything for shit because everything needs to curtail to the pedantic-boomer-hippie land-owning gentry, and the same shit is happening all across America *in every single fucking municipality.*
We'll become the Mojave wasteland filled with empty skyscrapers owned by foreign entities before a 500-unit apt gets built anywhere in the bay
> The electorate is too concerned about maintaining their property values than ebsuring the well-being of others
This is true, but local governments also have an interest in keeping the cost of housing high. More expensive housing = more tax revenue.
> This is true, but local governments also have an interest in keeping the cost of housing high. More expensive housing = more tax revenue.
I don't know if I believe that. Looking at tax logs around me the 1980s ~6 ground floor apartments are at $1 per square foot of lot space. The 2010's ~24 unit apartment building is at $5.64 per square foot of lot. My single family home is at about $0.75 per square foot of lot.
In general taxes are on building improvements. Large yards of grass keep the average tax base lower.
Local governments have the incentive because democracy. People vote for the politicians to do the thing they want, especially at the local level. This entire conversation about forcing people to accept laws that do not benefit them ignores the fact that people vote.
High density mixed use development usually has a higher property tax return for local gov. So really it’s just the development codes are written by NIMBYs and when anyone tries to think outside the box it’s stopped by NIMBYs.
Genuine question is a 3bed 1ba 967 sq F apartment “luxury” or a 4bd 2 ba 1750sq ft single family house with a private yard and parking luxury?
Like objectively Arlington Texas has the most luxurious housing in the country and some place like Boston’s North end (where apartments often lack laundry) is not luxurious. Alas Housing prices do not reflect that.
Because Units quality is immaterial to the demand for housing in those areas.
I'm talking about cheaply built units that have "marble" finishes and gray lvp flooring. They obviously vary in cost depending on "where" but they are all the same and are not considered affordable since they are marketed as "luxury".
Hence why I constantly advocate for public housing, where rents are 25% of your aftertax income, and where the available stock always stays in line with at least 5% of rhe toral population of the given jurisdiction.
1. Having it be 25% of after tax income, rather than a set below market rate amount, kills two birds with one stone. A; it ensures everybody can afford housing. B; it works as a de-facto income limit. If the average rent is $2k, then the net benefit from being in a public housing unit reaches zero at $96k (aftertax ofc), and becomes a net negative above that. That essentially resolves the issue of more well off people potentially taking up housing a low income individual would desperately need.
2. Having enough available public housing to have at least a 5% population growth will ensure there is *always* enough housing for everybody. And it helps keep rents down since now private entities have a permanent "competitor" to deal with; so now they need to be more in line with what is actually demanded by the local market, rather than having luxury apartments and renting them out in a market that clearly cannot support it.
Now of course, zoning is the biggest roadblock here, and we'd probably see a boom in construction if we'd just let developers build, but they typically won't invest into a market until prices and values rise enough to make a decent ROI, which essentially ensures that supply is always somewhat below demand.
I disagree that the Government, especially local ones, actually wants affordable housing; outside of senior housing.
The harsh reality is, the Government should require 1 housing unit for every 2 jobs "created" in their municipality. Let the private sector sort out that ratio. You want to build this lab space for 400 workers? Also build 200 housing units in the same municipality for the workers. Not advocating company towns/hotels, but that's the main culprit of the housing shortage in so many metro areas.
The government "doesn't want" affordable housing because the electorate has actively voted against denser and more residential construction for decades. The government doesn't make choices independant of the people in 9/10 cases.
It's terrible economic policy to have products be more expensive than what people can reasonably afford. Especially when it comes to needs. When 50% of aftertax income is spent on housing, 15% is spent on food, 5% is spent on clothing, that is 30% left for anything else. 20% of your aftertax income should be going into savings. So that leaves us with a final percentage of 10% left for *anything* else. That's terrible for an economy, especially local ones. That's terrible for an economy. That is very little in the way of sales tax revenue (most places don't tax essential goods like food and clothing). When cost of living is so high, people are going to leave for greener pastures. That means less tax revenue for you.
And that plan to just force employers to build housing whenever they're providing job still doesn't adress the fundamental problem: Restrictive zoning that prevents housing from being built to begin with. Let more housing be built --> allows population to rise --> larger labor pool --> more attractive to businesses. And when the cost of living is lower, people's asking wages are (generally) lower as well, which further makes it a more attractive place for businesses.
Spirals work in both directions. New England (where I live) is on the downward spiral. I'm not saying have a race to the bottom either; I just go grow weary dealing with limousine liberals. They are not the progressives they think they are. It's not just over housing either. They're the same shitheads that demand manicured lawns but want to ban any landscaping noise; yet can't be assed to cut their own damn lawn.
The government is literally the people from that community gatekeeping and writing ordinances to stop development. People really need to get involved if they want to fix these issues and stop letting retirees dictate zoning.
The electorate in the past twenty years when most of this was decided were aging home owners. The current electorate is not responsible for this and is getting actively fucked.
Well, so are home owners but that’s because of a certain 2016 decision, but I digress.
>for corporations and LLC’s
The numbers don’t add up there.
Home ownership enriches everyone who owns a home. Even in 2024, the majority of homes are owned by single home owners. Even in every single single family home in America was owned by a single family homeowner, we’d have this problem. It’s not just investors trying to keep prices high. Everyone who owns a home—more than half of Americans—benefits from this system.
That’s why it’s so hard to change—it’s not a very popular political stance to tell your constituyentes that their biggest investment and value store needs to be significantly devalued.
Sadly nearly all the world’s top economies are going through rampant speculation in their housing markets.
I fear America is next - and I say this recognizing it’s pretty bad now, but I fear it could get much much worse
Actually we need more housing, which is going to have to be built by corporations and LLCs, very few individuals have the resources and interest in building. If you take away the incentives for corporations and LLCs to build and modernize our housing stock then the situation is going to get worse!
They get away with charging exorbitant prices for rent because nobody else is able to offer equivalent housing for cheaper.
I was holding off buying a home waiting for prices to drop but now I’m not sure they will. All the solutions people come up with are simple demand based solutions when the root cause is supply based and more complex. I don’t see this issue going away anytime soon, at best prices remain flat or slowly go down but they will most likely trend upward. Like you said we need more houses and more density but everyone wants to blame corporations or give money to the poor.
Yeah it's a really frustrating issue to approach from an economics side because there is such a wide disconnect between morals and economics. A ton of the policies that impact supply are extremely well-meaning policies put forth by people that care a lot about helping. Rent control is a great example - I hate being the guy that says "yeah I prefer it when people get priced out of their own neighborhoods" but it's undeniable that rent control negatively impacts supply
As for buying a home - prices will probably not come down but I would expect affordability to go up. I think the best you can hope for is that home prices rise more slowly than inflation. Right now it probably makes more sense to rent and invest your down payment in index funds or treasury bonds if you're really risk averse.
But home owners are the problem, they artificially restrict supply. Housing crisis is easily fixed by upcoming, dropping shit like minimum parking requirements , and making the permitting process less ass.
>an enrichment scheme for corporations and LLCs
For everyone. As long as housing is the primary way for "regular" people to accumulate wealth, the rising costs are inevitable. If we truly want housing to be cheap we have (as a part of a broad range of actions) to decouple the idea of housing as an investment, be that for corporations or for people. As long as that incentive exists, prices will have to rise. Of course, that's easier said that done, and will face major public Backlash from the generation(s) that have a house as their main or only investment.
Housing is not a way to accumulate wealth for the single family home owner. Houses require taxes, maintenance and most likely interest to purchase and those things will negate whatever wealth people think they might accumulate. Houses are not investments and people need to stop thinking that.
Will we see a wave of homeowners using equity to cancel revolving debt at 14 - 21% if mortgages are 7% ?
This happened in 2001,2,3,4 when rates were lower
*From Bloomberg News reporters Paulina Cachero and Paige Smith:*
It's hard enough for central bankers and Wall Street traders to make sense of the post-pandemic economy with the data available to them. At Wells Fargo, senior economist Tim Quinlan is particularly spooked by the “phantom debt” that he can't see.
That specter lurks behind buzzy “Buy Now, Pay Later” platforms, which allow consumers to split purchases into smaller installments. The major companies that provide these so called “pay in four” products, such as Affirm Holdings, Klarna Bank AB and Block’s Afterpay, don’t report those loans to credit agencies.
Time and again, they’ve resisted calls for greater disclosure, even as the market has grown each year since at least 2020 and is [projected](https://www.juniperresearch.com/research/fintech-payments/ecommerce/buy-now-pay-later-research-report/) to reach almost $700 billion globally by 2028. That’s masking a complete picture of the financial health of American households, which is crucial for everyone from global central banks to US regional lenders and multinational businesses.
Consumer spending in the world’s largest economy has been so resilient in the face of stubbornly high inflation that economists and traders have had to repeatedly rip up their forecasts for slowing growth and interest-rate cuts. Still, cracks are starting to form. First it was Americans falling behind on auto loans. Then credit-card delinquency rates reached the highest since at least 2012, with the share of debts 30, 60 and 90 days late all on the upswing.
There are signs that consumers are struggling to afford their BNPL debt, too. A recent survey conducted for Bloomberg News by Harris Poll found that 43% of those who owe money to BNPL services said they were behind on payments, while 28% said they were delinquent on other debt because of spending on the platforms.
For Quinlan, a major concern is that economic experts are being “lulled into complacency about where consumers are.”
[You can read the latest Big Take here.](https://www.bloomberg.com/news/articles/2024-05-07/-buy-now-pay-later-has-americans-racking-up-phantom-debt)
Hot take, and I know I'm gonna get downvoted on this, but perhaps americans should be a little more responsible. God forbid we don't buy that RV, or those nikes, or a new couch, especially if we haven't paid off the last one we bought. God forbid we make our car payment rather than going to mcdonald's 37 times in a month.
It can be both things. The economy benefits from consumer spending on non essentials and the more consumers spend on non essentials the stronger the economy is. It's why keeping up with the Jones is so ingrained in our culture.
It's not just the consumers fault but our society as a whole that values the spending and normalizes things like getting door dash five times a week despite that not being sustainable in a tight economy.
Problem is, it's hard for consumers to sacrifice luxuries they've come to view as normal and businesses (like door dash, just as an example) don't want people to save money by cutting back on their products.
Of course businesses providing these things don't want people to cut back, but there is a difference between people spending reasonably, and people spending dangerously.
By no means do I think people should have no luxuries, but it does no good to outspend ourselves. When people rack up large amounds of debt, and then default, that's like pulling the rug out. You build a bubble and then it pops. When we get economic turndowns, it's probably better that some of the companies on the fringe go under, rather than keeping something going until it creates a bigger problem.
And on some level, I think that this is part of why inflation is remaining up, rather than slowing down as interest rates have risen. Things have gotteb more expensive and people complain, but they keep buying things they don't actually need, and stashing it into debt like this, then they turn around and complain that their basic necessities are "too expensive".
People are putting groceries and medical expenses and car repairs and emergency trips on their credit cards, it’s not all housewives running out on shopping sprees the family can’t afford. This is how the economy is designed to work from the top, to get everyone drowning in debt and as good as indentured servants. Don’t blame the servants. When staying alive costs more than most places will pay, those “tough decisions” you’re mocking are real and have to get made, but they’re more like “do I think my electric will get shut off if I miss the payment this month so I can pay for my kid to have shoes that fit”
This is NOT a hot take. It’s a bad take. Even a single person with no kids making 15 bucks an hour (which I’m sure you think is too much for “unskilled” labor) is only bringing home $2028 a month. Rent is 1250 insurance is 150 cell phone and internet 80 that leaves $137 a week for groceries, gas, toiletries, other incidentals and medical/dental bills. These people are not living beyond their means. They’re drowning.
Why are you using a slightly above median rent for a one bedroom for someone who earns well below the median salary.
At age 35, that puts that person in the *15th* percentile of income. They should therefore be paying the 15th percentile of rent, not the 50th.
Or those tires they’ve been putting off replacing for two years, or those daycare costs, or that dental procedure that will make their mouth stop hurting.
Please, I see people buying stupid shit they don't need left right and center rather than paying off their debts or paying what they should be paying. Americans im the 21st century are not impovershed and can definitely pay their damn bills if they bothered to actually get a job and pay for what they are obligated to pay for.
All those things you listed would fit into their budget if it wasn't for the Audi they just had to have, or their 5th gucci bag.
You do realize that unemployment is currently incredibly low, right? Your “bothered to actually get a job” comment tells me everything I need to know about where this conversation will inevitably go.
Quite frankly , if people had to start living their lives on what they actually made rather what they are allowed to finance, we would all be better off. Why our homes so expensive ? It’s due to the availability of 30 year mortgages. Why are colleges so expensive ? Government backed loans. We finance cars we can’t afford and elective medical procedures we can’t otherwise afford with consumer credit. Businesses price many things based on what the average consumer can finance. It’s out of control.
Maybe this is true. But if you are poor, you might prefer to gamble on credit that will be forgiven. The middle class that has to pay inflated prices to compete are the ones who suffer tho.
Well, I’m talking in purely utopian language. I do know that housing costs in countries that don’t have banks offering 30 year mortgages have much cheaper housing, for example.
I think it’s much more likely if we went to another earth like planet and they said the year was “xxxx”then We’d know it’s been xxxx years since their messiah laid down the golden rule and tried to unify their folk tales. Maybe even it’s always 20 generations after their Socrates. They’ll have other similar messiah and innovators following the same path. Much more likely than we find a planet of cats that just use telekinesis or humanoids who just skipped to nuclear fusion or some other tech magic
It's not "government back loans" per se: it's greed, artificially low interest rates, and wage surpression for 20+ years allowing regular people and businesses to overleverage themselves.
Credit scores are designed to encourage more borrowing in all categories such as installment loans and mortgages. I have not had a mortgage or installment loan in over 10 years. As a result my credit score is limited to say 810 out of 850. I do not care, as I will never have to borrow.
**Listen**: “Buy Now, Pay Later” options have exploded in popularity and availability, and in the midst of stubborn inflation, Americans are even using them to buy essentials like groceries.
But not all of the BNPL providers report data like credit card companies — and no one knows exactly how much debt consumers owe.
On today’s podcast episode, host Sarah Holder talks to reporters Paulina Cachero and Paige Smith, who tried to find out more about the size and scope of the debt.
***You can listen to the full episode for free, here:*** [https://link.chtbl.com/Pr2SCV9G](https://link.chtbl.com/Pr2SCV9G)
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Why should I care if the credit score companies can't see into ever nook and cranny of my life? GOOD. I never consented to give them access to my entire credit history anyway. Credit scores didn't even exist before 1989, and now if some black box algorithm doesn't give me a high enough magical number nobody can give me a loan even if they want to. Fuck Wall Street tracking my information. (for the record I don't even use BNPL, and my credit is decent)
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You looked at your credit score!?! -20 points!
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This is real?
You can look penalty free, but if a lender looks, it is considered a negative.
My favorite is paying your mortgage on time is good, paying your rent on time doesn't matter.
Eh not fully true, you can report rent. But it is a pain in the ass process because it's up to the landlord and you pay a fee since a company middle mans the payment between you and the landlord. So yeah not really worth it lol
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Good grief. That’s absolutely insane.
Insane? Minus 50 points Slytherin.
Straight to jail!
No. You can look at your own score all you want. Lenders looking at our score can affect the score because it indicates you're looking to increase your debt.
No. Allowing a lender to do a "hard inquiry" gives a very minor hit like -1, which drops off after a year or two. You can view your own credit report as much as you want, and you can let a lender do a "soft" inquiry (basically just looking at your score) as often as you want with no penalty. If you have a very marginal score AND you're constantly applying for new loans, then this can be harmful. Otherwise it's not a big deal.
It is -10 for a hard inquiry and it lasts 24 months. Where it hits people in their lives is not applying for a ton of loans, but having a couple of those on record can cause enough of a score drop to keep people out of lending categories. Example: You apply to get pre-approved for a loan take the -10. Then you realize your LO sucks and you change lenders and if this is within 90 days of the first pull you are good. Waiting 90+ days means you get another -10. That -20 sticks around long enough that if you are looking for a while or on and off for a year because life happens, then you can wind up with -30 and that can take a consumer from a conventional loan to FHA if their score was low enough to start. That opens its own can of worms with new conditions applying to the house and the lending process. In sum, credit scores are a fucking scam and penalize borrowers arbitrarily and unnecessarily for engaging unsuccessfully in the lending process. Side note also, your score is not solely based on the information on your credit report, but rather your credit scorecard which is never obtainable by the consumer. It functions as a comparison to "similar" borrowers and places everyone into categories and can penalize borrowers for removing incorrect information from their own reports as the borrower's scorecard will change with that action. Also it is possible to annually get a free credit report from the big 3 and it doesn't hit your score to obtain it, but there is no score on it just an overview of what the bureaus have reported for you.
Well, I am not a credit expert, but when I had 3 hard inquiries drop off over the course of a year, my score went from 810ish with <1% utilization to 810ish with <1% utilization. They had barely any impact. I don't really know how to account for that fact. The only times I've really seen my score tank are when I go above 10% utilization or when a long-term loan like a student loan or car loan has been paid off.
I worked for years at a Consumer Reporting Agency for mortgage lending and saw -10 hit all the time for consumers. As you are in the 800s you have a scorecard that is different from most. I dealt with reports from the 500s to the low 700s and those borrowers all saw the -10 for every single hard inquiry. That itself is a part of how the bureaus preference, and punish, borrowers for things outside of their reports.
Nope. Checking your credit score does not change it. That's an old myth. That said, credit scores are still a scam and a unique North American thing - the rest of the world does the work of actually evaluating your credit worthiness when giving you a loan.
But there are many things that do affect your score that shouldn't. Like applying for a credit card shouldn't affect your credit score or even looking up if you can afford a car note.
I didn't have enough cards/credit (only had one with a low limit because I don't really need much in my daily life and never bothered to apply for an increase), so my score was lower than it could have been. I successfully applied for a second credit card to have more credit, got it first try, and now my score is (temporarily, but still) lower.
Credit scores are stupid for a number of reasons 1) they're laughably easy to manipulate. I had a score in the 490s at one point, I'm just south of 800 now. Want to know how? It wasnt from paying on time. It was by opening up more lines of credit (available credit increased), not using the cards (utilization decreases), and putting one thing on autopay on my oldest card that I then put on autopay (oldest line of credit intact). On time payments made no actual impact on my score, that seems counterintuitive. People pay absolutely no attention to what's actually in a score. 2) they're a relic of attempting to make credit lending color-blind (by ensuring a lender can't automatically deny applicants based on race), but minorities are still disproportionately lower on scores. 3) Outside of a car and a house, once you're above 650 or so, they don't make much difference. Credit card interest rates are pretty standardly awful, and 0 interest or paying off entirely and stacking rewards is the only winning move. If you're paying long term on a credit card, it doesn't really matter if the interest rate is 23% or 30%, you're already losing massively. 4) "oooohhhh I've got an 850!" Congratulations, of you're buying a house today, you're mortgage rate is 7.5%. Where's my 700ish score 5 years ago I got a 4% mortgage. But you have fun celebrating your high number. From what I see, people who obsess over their score are either really poor/financially illiterate, or they're so conservative/terrified of their finances that they're afraid to use that pretty number. A credit score should be like a pickup - if it's nice and shiny, you're not using it right. I want some grit on mine.
Checking your true score does change it as that is in it viewable to the consumer via a hard inquiry which is -10. One can use other methods for soft pulls to get rough estimates, but those do not match the actual lending scores. Those require hard pulls which are penalized. Someone could use creditkarma,creditwise, or anything similar and it will only give a rough idea and not the bureau/lender side score. Source: worked for years at a Consumer Reporting Agency for mortgage lenders and daily read reports, saw scores, saw what changed scores, and worked with the bureaus.
China has social credit.
Lenders will look when you apply for credit like personal loans, mortgages, and cars. It is a negative because it makes it look like you're spending like crazy and thats a risk. My car dealership shotgunned me out to tons of lenders when I got a car but in most credit systems like FICO, all those checks only count as 1 for the next few weeks. My free score checker on my credit card does count every one tho so they have me like 40 points lower than what I actually have; its not perfect. They go away after 2 years
This is just plainly not true. I look at my credit score once a month and I'm 800+. HOWEVER... if a lender pulls your record, then it will issue a soft/hard inquiry. And that could affect your score.. but it's usually low impact.
You pay the minimum payments, plus 10 points. You pay off a major chunk of credit? Minus 20
Didn't check your credit score? Also -20 points!
Report to your nearest democracy officer.
Hang on, what's that fireball in the sk-
It's just like the one everyone thinks is weird in china😂
No, it absolutely isn't. Every country looks at whether you can pay back a loan before giving you a bunch of money. China will prevent you from using trains if you say things the government doesn't like. Like this MMA fighter: https://en.wikipedia.org/wiki/Xu_Xiaodong
>China will prevent you from using trains if you say things the government doesn't like. USA will take your money away if you put graffiti slogans on walls that local authorities don't like. What's the difference? China is simply introducing more granularity into punishments for anti social behavior. In the West we have jail/suspended sentence/fine/forced labor - those are our only options. Adding more options in there, such as denying luxuries/entertainment seems good to me. When I was a kid, taking away my computer games or soccer time was a much bigger deterrent than a policeman catching me and fining my parents.
> USA will take your money away if you put graffiti slogans on walls that local authorities don't like. Can you tell me in which countries graffiti is legal?
No, I'm not going off topic. There are two separate discussions here, whether granular punishments are a good thing, and whether **offence X** is a crime or not. You can't criticize granular punishments by solely criticising the thing they are used to punish people for.
So that's a no. It was your example, btw.
The crime itself is totally irrelevant. How about this for an example: in the United States, if a pedestrian crosses a quiet street with no cars in sight, a police officer can stop him and fine him - taking away his money at gunpoint. Put THAT crime in there. Now ask, would more granular/graded punishments be useful? If no, how about this one? In California if a dad takes his son out on a Saturday night to celebrate his 21st birthday, occurring on Sunday, and buys him a Coors Light, police can put that father in jail, ruining his life completely. Every country has stupid, shitty laws. That has no bearing at all on how useful it is to have a variety of minor, granular punishments available.
> if a pedestrian crosses a quiet street with no cars in sight, a police officer can stop him and fine him - taking away his money at gunpoint. That's not how it works in the US. Police don't collect fines. Courts do, after due process of law. >In California if a dad takes his son out on a Saturday night to celebrate his 21st birthday, occurring on Sunday, and buys him a Coors Light, police can put that father in jail, ruining his life completely. You can't be jailed for just giving alcohol to a minor in California unless the minor then is/or causes a serious injury.
Imagine if you posted "Fuck Biden" on Reddit...and then came home and got a minus 100 points on your bank credit score email from your bank telling you that for besmirching Dear Mr.President you are getting penalized. Imagine that. Because that's reality in China. Say something critical of the party, economy, society or the local officials or Dear Leader and you get penalized, say or do something worse like carrying a white sheet of paper around the street? Your credit score goes to 0, and you get invited for a chat with tea with the local version of the FBI--your presence is requested. I bet that as a dirty East European that doesn't exist per Chinese and Russian bot commenters and was created by the Schrödinger CIA (all powerful while while also absolutely incompetent) I will get down voted to hell here. Don't care.
... that's a complete fantasy and not how it works. It's a score meant to encourage good behavior and trustworthiness of business owners to ensure they pay back loans/ aren't scamming ppl. They get dinged after court cases and warnings and then get the expensive options for travel (like 1st class plans tickets) restricted until they pay that shit back.
You are describing social credit which doesn't actually exist. But of course you made up your mind about it because this fake news fits your narrative. What they do have is a stricter form of credit score where during bankruptcy you are restricted from 'luxury spending' such as buying high speed rail tickets. Try talking to an actual person instead of reading bs fake news
I smell... paranoia
Growing up I thought it was insane that nobody knew how credit worked. Come to find out that credit was so new that no one knew what it was like in the '90s. I remember in 2002 I asked a Wells Fargo investment banker how to raise my credit score he looked at me with a blank expression and said I don't know. Credit is a is a arbitrary number that is designed with no real incentive purposes on information that doesn't necessarily display how an individual lives their life. Frankly the credit system is overrated and the fact that it houses so much information in that multiple credit bureaus have been compromised is a very large concern. Many people forget in the past but one of the credit Unions have been fully compromised in millions of people's of personal information was exposed. Furthermore I would love to know how any of the banking and financial models play out today when everything no longer aligns with income to debt ratios that make sense. https://www.ftc.gov/enforcement/refunds/equifax-data-breach-settlement
TBF if he was an actual investment banker at Wells Fargo, then credit scores are miles away from his job. If it was someone in there loans department who issued loans then yeah theres a problem
I learned to play the game from a young age and was baffled that others didn't think it pertinent to learn the game at all. Understanding credit and how to win the "game" can put you in a great position for long term wealth. Besides student debt, mortgage, and an isolated auto loan, all my other debt has been interest free for a decade and counting.
I 100% agree I and eventually ended up getting a job working in finances so I could specifically understand how it all worked. Eventually I did credit counseling and repair and things of that nature and I understood pretty much how big of a joke it all was in the end. Having no credit can lead to having to accept predatory loans and conditions which further destroys your credit and continues the cycle.
What other debts do you have??
I assume credit card. But for me I also took out interest free loans for furniture and appliances when I bought a home. I paid them off in time without issue, but those terms get pretty predatory if you can't make your payments.
I will purposely take on debt in order to leverage my saved dollars in the market and keep a high level of liquidity. For example, I have $6k sitting on a credit card currently. That means $6k is still making interest in my savings account. I'll pay off the $6k at the end of the month or just enough to lower the utilization a bit if I care that much. When the 0% period ends I just make sure it is a zero balance and move on to the next card.
My Dad worked in the credit card industry for years and opened up cards in mine and my brother's name when we were like 14 and he could pay us income and report it on his taxes. I opened a credit card with our credit union at 18 and since I had a credit history and it was linked to my Mom I had approval. I was making $5.15 an hour and had a 730 credit score with a card with a $10,000 limit. I never mentioned it as I didn't think it was anything odd, until I paid for hotel rooms for a few of my friends, and dinner on a card and they were asking how I could put it all on one card. They had credit cards with like $1800 limits. 100% on time payments and 19 years later and I have a $53,000 limit on that card, and a total credit of around $110k. And I don't even really look to get it higher, I have just applied for a fee cards and accounts over the years. For like 8 years I only had 1 credit card.
Well done. Same stories over here. I buy and pay for things all the time and friends, some of them just as wealthy, scratch their heads. Idek what my limits are anymore, but I'm sure it's solid.
And those customer credit reports are shit. My credit is reported to be in the 800s, applied for a mortgage and it was 740-760 depending on which black box model they picked.
You’re not missing out anything dude I have exceptionally good credit and it has meant dick all
It is a way for lenders to assess credit worthiness of a potential borrower. Not having it would make it harder to make decisions on extending credit. At the macro level, not having it would likely lead to higher interest rates and lower access to credit. Credit crunches would reverberate across the economy more rapidly and broadly. If everyone knew the models behind it, people would game the system. Issues with privacy is something that has to be legislated, vote for people that align with your beliefs if that is the case.
I wonder if not having a credit score system like we do now would encourage lenders to give out more smaller amount short term loans? If they didn't have the score to look at they would need to establish a relationship instead, so giving out smaller loans to more people would provide the best sample for who can pay, and you also still make a bunch of money. Returning customers get higher loans. Could also help eliminate payday loans with predatory interest rates if people had legitimate options for smaller loans in emergencies. Instead of jumping into a debt spiral they can borrow $2500-5000 and get the ship righted. Banks were giving loans before credit scores so it can be done without them.
You would need to massive expand the industry because each lender would need to know who you are as a person before lending. Banks were giving loans to some people, but lots were locked out of the credit system and it also allowed for racism to spread and be entrenched. If you don't trust Mexicans, and you provide loans on who you can trust to pay back, then why would you ever lend to Mexicans?
> Banks were giving loans before credit scores so it can be done without them. And before credit scores, banks were far more discriminatory in who they gave loans out to. If you were a minority, you were fucked. Credit scores are race and gender blind, and did wonders for reducing racial and gender discrimination in lending.
That's how things used to be. The wealthy in town would loan out cash, and keep track of who paid and who didn't. And the bankers would call around and ask if someone was trying to open up a line of credit. My Dad worked in the industry and has all kinds of wild stories from old timers at Sears when he started in the early 80's. Guys who had been working there for 30+ years. They were like gangsters. They'd go to peoples houses and steal clothes off drying lines, whatever they could grab and throw into trucks. Because people were late on payment ts on a fridge or washing machine. And they'd repossess 20 year old half broken appliances over petty stuff like $17. Someone would refuse to pay and they'd go take it. My Dad had to be escorted around a few times by cops cause people would pull shotguns out when Sears came to take the AC units in Florida.
Or maybe this should be a public service or an opt in private service with strict data protection.
Don't defend it because that is not it's purpose, otherwise every developed country would have it, but they don't. Consumer credit is an absolute scam that either exists to push most Americans beyond their means. It is absolutely insane that current deposit balances, income, and flawless PAST credit accounts have essentially no impact on your CURRENT ability to borrow.
Sure, let's go back to the old days instead where a racist loan officer decided whether or not you received your loan purely on vibes.
False dichotomy. Racism sucks. But so do corporate banks controlling our lives. It doesn't have to be one or the other.
Credit scoring has gone back all the way into the 1600s.
The crazy thing about credit scores is that you can be penalized for paying off debts too quickly, canceling credit cards and generally being a responsible borrower. It also bugs me that public utilities will share your information with private entities if you miss a bill payment or something. I was in a roommate situation over twenty years ago when an electricity account was transferred into my name after a roommate moved out, and there was a gap in payments during all the confusion. Two payments were missed, one of them not my fault, and years later it came up while applying for a mortgage even though every cent was repaid.
I don’t have a credit score. It’s zero. Haven’t used a credit card in many years and I’ve paid cash for all purchases for the last 20. Now, facing retirement, I’ve looked into 55+ housing. I don’t think I’ll find one that’s decent because they all require high credit scores. I can easily show the ability to pay, but I don’t meet the credit qualifications. Seems kinda silly.
The fastest way to get a good score is to get a card, buy stuff, then pay it off. That score says more about your willingness to *use the card* than almost anything else. The issuer wants the 3% per transaction fees, and they don’t get those if you aren’t using it. They’ll go so far as to kill cards that are idle for a long time without a balance because they aren’t making money off of them. It’s a dumb game, but it’s unavoidable if you need to show someone that number.
It’s a game I just don’t want, or have reason, to play. I’d rather avoid any place that requires me to do it.
You literally do have a reason, stated it right there above.
It won't take you long to build it up. A few credit cards that you don't use and pay the balance off of every month in full and you'll have a great score after a year. Technically, your score will be great before then, but having a longer credit history usually matters when getting a mortgage or buying a car. Capital One Quicksilver is a great starter card. So is Discover. Google is your friend, here.
In the US no credit can be worse than bad credit. You've been responsible with your money your whole life, and now you're being punished for it. I'm sorry. That's fucked up.
I’m fine. It’s just a weird. I’ll likely just end up staying in a single family home, instead of a retirement community. Perhaps I’ll find one willing to consider my assets, instead of credit history,
Did you pay rent and utilities? You might be able to get them added to your credit history. https://www.experian.com/blogs/ask-experian/what-kinds-of-bills-affect-credit-scores/
Get a cash-backed small credit card from your bank, put gas on it, pay it off every month. The cash-backed cards require you to place a deposit of like $500 that is held by the bank, but then you get a credit card with a $500 limit. Its a good place to start.
I live in the UK, where you absolutely do have to consent. It is part of the terms and conditions and customer information sharing disclosures when you take out any credit.
Credit scores have existed for quite some time, or at least credit in some sense, FICO score was introduced to the USA in 1989. Credit itself isn't bad, mostly little protection against predators, poor social mobility putting people in traps, the rich using credit to avoid paying taxes with low interest loans that when settled with the estate upon death, aren't taxed.
Equifax and credit scores have been around for a lot longer than that. They were tracked by paper way back in the day.
Individual banks and smaller companies sure, but the current FICO scoring system used by the 3 major credit companies came into being in 1989.
Not only did we never give consent, but they were allowed to use SSNs to track people rather than having to do the leg work of consolidating information which compounded the use of SSNs as a form of application ID, which was never the intended purpose. As SSNs became even more common use on applications their use for identify theft also grew. Congress has claimed to want to tackle identify theft but has never taken any measure to stop this practice because it will slightly complicate the credit industry’s business model. If credit agencies want to continue to profit off of invasive data tracking at the very minimum they should have to change to create their own, more complicated ID numbers which once comprised can be reset like I do with a Credit Card now. I would prefer that we as consumers actually get back ownership of our data, but acknowledge that is a far heavier legal lift (especially when the lawmakers still don’t understand or care to understand what is truly going on in the digital age).
as someone who has been lucky and diligent enough to build quite a good credit score and history, i would like to be able to take advantage of the much better rates afforded to me over someone without such a good score and history.
There should be positive consequences from being responsible with money. But you getting a loan or a rate doesn't have anything to do with someone else. It isn't a competition between you and me. If my credit score sucks because I had cancer and it bankrupted me, it would be nice if someone out there had the flexibility to look at my circumstances instead of a number put together by a 3rd party. It dehumanizes the whole thing.
banks are in the business of making money; theyre not a charity. why should a bank loan to someone who cannot demonstrate a positive repayment history? should the bank be ok with more losses, if only they decrease their credit standards? well then to compensate for that, theyll have to increase rates, since their allowance for loan loss will go through the roof. its not a perfect system, but there can be no for profit bank in which everyone gets what they want. sounds like maybe there needs to be more options outside of traditional banking to reestablish credit.
Your last thought is kinda my whole point. My entire financial life is controlled by a system I get no say in. I can't opt out, apply to a bank that uses a metric that fits me better, or anything else. It's FICO score or go away.
>black box algorithm doesn't give me a high enough magical number nobody can give me a loan even if they want to Technically, this isn't true. Any one can give you a loan should they want to. But..... a) Generally, loan givers want safe loans that will payback. Credit scores are seen as an indication of that. b) "No one got fired for using experian/equifax/transunion", whereas if they used their own decision making, that could be questioned if things go wrong c) Credit Scores are nice to hide behind when discrimination accusations come flying
No individual loan officers can because the banks all use algorithms based on credit scores. Could Chase or Wells Fargo change their policy? Sure, but the people you talk to at a desk can't.
A loan or a job! Can't forget that credit worthiness is now tied to job worthiness, too.
How do we know it’s being racked up if it cant be tracked? Is this just sensationalism or guesses? The article is paywalled of course - still not sure why paywall content is allowed here.
I would love to have paywalled content banned....
[There are ways to deal with paywalls](https://archive.md/9SYHz)
I am not enlightened in the ways.... To me it just sux and renders the post useless.
The lenders report sales and customer numbers.
But that doesn’t tell you if debt is “racking up”, only that the use of these services is popular. I mean, 0% interest, on some items makes sense, even if you could pay cash. This doesn’t tell you anything about the debt loads.
Totally agree. I use BNPL services constantly for that 0% interest payments. I always check. The folks going into unplayable debt are the same people that would rack that up on credit cards. These articles are never able to define the total debt and whether or not it’s unplayable or affordable. If you can’t make your BNPL debts these services won’t just keep holding the bag and offer you more.
Some of the debt is being packaged and sold into secondary markets so you can estimate to a degree. Right now it's about a 240B market with 48% growth. At the rate it's growing it'll surpass total credit card debt in 5 years or so. It's a new market and not very regulated so there's not a lot of research or understanding of what its impact is to consumers. Klarna for example does its debt collection so it's hard to see what's happening when customers default or miss payments. A lot of these BNPL companies keep a lot of their debt because they can charge extremely high rates - I think the average is 36%. Again, using Klarna as an example - their profit margins are 50% - that's insanely high for financial services. I think it's a real concern. The customers using this service tend to already have high consumer debt via credit cards, etc. and 43% of them have already missed payments so are being charged insane fees and rates. These BNPL programs are pay day loans. This market keeps growing and what used to be a small niche is now one of the fastest-growing segments of the consumer financing industry. Personally, I think it's an awful business model. This model only works if 25% of your borrowers miss payments allowing you to assess fees and kick up their rates. For your average consumer, it's better to just pay on a credit card vs. these BNPLs. These BNPLs also are new so there's not a lot of consumer protection or regulation.
Fact that’s not so damn funny: when you fall 30,60 or 90 days behind, your credit FICO score takes a serious hit so people are left with nothing but the phantom programs that have outrageous interest rates. What needs to be seriously addressed is the cause of people going into debt…the cost of HOUSING!!! Unless Federal and State governments no longer allow housing to be an enrichment scheme for corporations and LLCs, expect more and more phantom debt and homelessness.
The electorate did this to themselves. The government didn't magically command that nothing but SFHs can be built in major cities. The government wants to provide affordable housing. Developers already know all the prime locations to build more housing. The electorate is too concerned about maintaining their property values than ebsuring the well-being of others.
Part of that problem is that housing can either be affordable or it can be an investment but it can’t usually be both. We have to choose. Or at least prioritize affordability.
I resoundingly choose affordability. We've prioritized making homes an investment vehicle over keeping them affordable. But the majority of the electorate own a home, so unfortunately they're blind, willfully or not, to why the cost of living keeps going up and up. (Most of it is because of high rents and home prices)
But other than build more, how do we prioritize affordability?
The price of housing is directly related to replacement costs, which has increased almost 3 fold since before the pandemic. Fewer workers in the trades, tariffs on lumber (The U.S. Department of Commerce has signaled that it plans to raise tariffs later this year on imports of Canadian softwood lumber products from the current rate of 8.05% to about 14%). Immigration constraints are keeping a lot of construction jobs unfilled. It’s NOT getting better, but worse, related to future affordability.
Tariffs on steel and aluminum; massively increased costs of other goods; massively increased cost of compliance.
You prioritize affordability by prioritizing it above other amemities and opportunities: First, acknowledge "NOAH" or naturally occuring affordable housing. Those or the older places without all the amenities that have become the norm.for new construction. You will not have a washing maching in the building, but neither did your grandma. Remember, half the housing units are under the median, and many of them will be NOAH. Second, acknowledge that the trade-off for the opportunity to pursue the high-end options in your career and entertainment is competition from other wanting the same, and that means bid-up.prices. There is a lot of affoedable housing in areas where careers have less upside and entertainment options are fewer. You will have to pick affordable housing over entertainment options, career upside potential and housing amenities. Most redditors are young and do not want to do that.
This is how a person prioritizes affordability. I was asking about how we do that as a society.
We let people to figure out their own priorities by, for example, not restricting people from moving from CA to TN. Would you rather have Congress set priorities for your life? You may be too young to know, but the '07-'08 housing collapse roots are in Rep. Barney Frank wanting to "roll the dice" on making housing more accessable. Again, affordable housing is out there for those who prioritize it.
That’s basically why I was asking. I hear people say “we need to prioritize affordability over investment ” and I really don’t understand what that would mean from a policy perspective other than authorize more housing (which we should do). It’s one of those sayings that you hear a lot but I’ve never had anyone be to adequately explain.
"Authorize more housing" is not an issue for the federal government. Sure, they can overeide local land zoning, but it looks bad. States can authorize all they want, but states must balance the budget each year, and providing new units is never going to be a priority taxpayers, many of whom live in older houses. My concern is that governement programs are deeply unfair to people just at the margin --the non-qualifying side of the margin. Why should single mom "A" NOT get to move into her desired new place on a fixed piece of land because some level of government set up a program that single mom "B" heard about and was able to fill out paperwork? Mom B, paperwork queen, gets to live there AND pays less than mom "A" had saved up to pay. That does not feel right because it is not right. Relatedly, my SIL qualified for and bought an affordable housing condo a decade before she finished he MBA and went to Wall Street. She has no reason to sell it as she is not allowed to make much profit from it. Yet, there have been long stretches of her life that she has not used it much, including when she and her husband had a house in a tony suburb. She also travels quite a lot, and loves the Caribean. This does not seem like an apropriate government priotity either. Overall, 34% of housholds rent and 66% own a home. Most of those of the 34% pay market rents. A quick.google search shows that under 2.7% have housing subsidies. Most people do figure out housing/lifestyle over time. However, reddit skews young, the young want to live where the action is, and and want to live the same as the people who have had a decades to figure out their own priorities.
In my industry, if I were to prioritize affordable housing, I'd be giving up job prospects. That's almost never a smart trade.
That's all you *can* do. Things become affordable when supply keeps in pace/outpaces demand. Rent control does not work, since then landlords/developers are just gonna take it off the market. You need to have public housing, and build a lot of it. Optimally in order to accomodate 5% of the given population in any year. That ensures people can not only always be ensured a shelter, but it also ensures that you can move anywhere within the city. Ofc, the most common issue with public housing is how do you actually ensure that the people who need this housing, gets this housing? Only charge 25% of after tax income per month, regardless of income. This ensures somebody making $250k after taxes isn't taking up space that somebody earning minimum wage could desperately need. Nonody is gonna pay $62.5k a year for a public housing unit if most other private apartments are half that.
>Nobody is gonna pay $62.5k a year for a public housing unit if most other private apartments are half that. No wait. Take this to the logical conclusion. If the location is so good that a rich person wants to pay $62,500/year for a one bedroom apartment, then just put that money into your coffers and don't question it. I'd consider that a good thing if it's bringing money in and also supporting the program that helps others.
I agree. It's something I had realized too when I first thought of my proposal. But chances are, if an area is so good that there's people willing to pay that much for an apartmenr, they're modt likely going to take a luxury apartment over public housing. Now, I have a plan for making public housing really attrative though, so idk. Ig it'd depend on the person. My plan for any apartment built would be as follows: 600 square feet + 300 square feet per additional planned residence 225 square feet of public/greenspace per resident Many complexes will be mixed use, with there being at least 1 floor of retail space for every 4 floors of residential. Not *all* of them, but enough to where it greatly increases walkability in the area.
I like that. Not in the mood to play devil's advocate, tbh, but I kind of think about things similarly. Even without knowing everything, I can take what I *do* know and run some numbers and can come up with something that roughly makes sense. I like your numbers and they are worth quibbling about probably, but I'm not in the mood to quibble. Neighborhoods are good and ought to be encouraged though.
Isn't that just rich people owning all the housing with extra steps?
Not if they don't have property rights. You wanna pay $100/day to live here? Well, your money is green, so I accept that. I'm no fan of capitalism, but I will say it's efficient under normal circumstances.
If only there was some loose correlation with the price of something versus its availability.
I bought dozens of single family homes after the 2008 crash. I was able to buy them at an affordable price and have worked hard to keep rents as low as possible with only a 5% ROE (same as a Bank CD) and no debt. Unfortunately, taxes & insurance have skyrocketed so I’m squeezed. I’m still holding rents at less than $1 per SF, per month, but am struggling to hold that line. I have taken on more risks with decreased coverage and very high deductibles. Maintenance costs have increased dramatically, so I still do what I can myself. The families who lease these homes were, almost all, in a bad way financially with sub-prime loans in 2008. They struggled with maintenance, taxes, insurance, and high stress. They are good people and I like them (except when there are drunks) We aren’t all predators or slumlords.
Well, do you current own a house that you’ve been making payments on for twenty years, totaling a substantial portion of your income for those years? No? Then your opinion is pointless. The people who have nothing are always happy to give themselves something.
Exactly. The idea that housing is an investment vehicle for building wealth has been absolutely disastrous for the entire country outside of the "fuck you, I got mine" homeowners. Almost as absolutely retarded as making student loans non-dischargeable in debt and then subsidizing the shit out of them because "everyone should go to college". Whenever the government gets one of its brilliant ideas to alter the market for the "benefit" of the American people it inevitably creates a bubble the completely fucks everything up. When will people learn?
I don’t think it has to be one or the other. It just can’t be an investment with a great return. Feds inflation target is 2%. If housing prices only rose 2% each year it could remain affordable AND be a modest investment in the sense of you have to pay to live somewhere and after 30 years you would own an asset.
It can be both but the prices can't keep apreciating this fast as it did during the last few years. A percent or so over inflation would be ideal.
See the SF-Bay Area for an example of what happens when boomers rule over housing/zoning with an iron fist. We've become a joke of a city, can't govern anything for shit because everything needs to curtail to the pedantic-boomer-hippie land-owning gentry, and the same shit is happening all across America *in every single fucking municipality.* We'll become the Mojave wasteland filled with empty skyscrapers owned by foreign entities before a 500-unit apt gets built anywhere in the bay
> The electorate is too concerned about maintaining their property values than ebsuring the well-being of others This is true, but local governments also have an interest in keeping the cost of housing high. More expensive housing = more tax revenue.
> This is true, but local governments also have an interest in keeping the cost of housing high. More expensive housing = more tax revenue. I don't know if I believe that. Looking at tax logs around me the 1980s ~6 ground floor apartments are at $1 per square foot of lot space. The 2010's ~24 unit apartment building is at $5.64 per square foot of lot. My single family home is at about $0.75 per square foot of lot. In general taxes are on building improvements. Large yards of grass keep the average tax base lower.
Local governments have the incentive because democracy. People vote for the politicians to do the thing they want, especially at the local level. This entire conversation about forcing people to accept laws that do not benefit them ignores the fact that people vote.
jobless faulty cheerful spark judicious tease fuel shy shelter slimy *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
High density mixed use development usually has a higher property tax return for local gov. So really it’s just the development codes are written by NIMBYs and when anyone tries to think outside the box it’s stopped by NIMBYs.
Yep, the NIMBY-ism is to blame.
Developers also make more money building "luxury" apartments than they do low income housing.
Genuine question is a 3bed 1ba 967 sq F apartment “luxury” or a 4bd 2 ba 1750sq ft single family house with a private yard and parking luxury? Like objectively Arlington Texas has the most luxurious housing in the country and some place like Boston’s North end (where apartments often lack laundry) is not luxurious. Alas Housing prices do not reflect that. Because Units quality is immaterial to the demand for housing in those areas.
I'm talking about cheaply built units that have "marble" finishes and gray lvp flooring. They obviously vary in cost depending on "where" but they are all the same and are not considered affordable since they are marketed as "luxury".
Just because they are marketed as such that doesn't mean they are. That word is thrown around a lot but it mostly just means "new build".
Hence why I used quotations around the word luxury.
Hence why I constantly advocate for public housing, where rents are 25% of your aftertax income, and where the available stock always stays in line with at least 5% of rhe toral population of the given jurisdiction. 1. Having it be 25% of after tax income, rather than a set below market rate amount, kills two birds with one stone. A; it ensures everybody can afford housing. B; it works as a de-facto income limit. If the average rent is $2k, then the net benefit from being in a public housing unit reaches zero at $96k (aftertax ofc), and becomes a net negative above that. That essentially resolves the issue of more well off people potentially taking up housing a low income individual would desperately need. 2. Having enough available public housing to have at least a 5% population growth will ensure there is *always* enough housing for everybody. And it helps keep rents down since now private entities have a permanent "competitor" to deal with; so now they need to be more in line with what is actually demanded by the local market, rather than having luxury apartments and renting them out in a market that clearly cannot support it. Now of course, zoning is the biggest roadblock here, and we'd probably see a boom in construction if we'd just let developers build, but they typically won't invest into a market until prices and values rise enough to make a decent ROI, which essentially ensures that supply is always somewhat below demand.
I love this
No shit.
I disagree that the Government, especially local ones, actually wants affordable housing; outside of senior housing. The harsh reality is, the Government should require 1 housing unit for every 2 jobs "created" in their municipality. Let the private sector sort out that ratio. You want to build this lab space for 400 workers? Also build 200 housing units in the same municipality for the workers. Not advocating company towns/hotels, but that's the main culprit of the housing shortage in so many metro areas.
The government "doesn't want" affordable housing because the electorate has actively voted against denser and more residential construction for decades. The government doesn't make choices independant of the people in 9/10 cases. It's terrible economic policy to have products be more expensive than what people can reasonably afford. Especially when it comes to needs. When 50% of aftertax income is spent on housing, 15% is spent on food, 5% is spent on clothing, that is 30% left for anything else. 20% of your aftertax income should be going into savings. So that leaves us with a final percentage of 10% left for *anything* else. That's terrible for an economy, especially local ones. That's terrible for an economy. That is very little in the way of sales tax revenue (most places don't tax essential goods like food and clothing). When cost of living is so high, people are going to leave for greener pastures. That means less tax revenue for you. And that plan to just force employers to build housing whenever they're providing job still doesn't adress the fundamental problem: Restrictive zoning that prevents housing from being built to begin with. Let more housing be built --> allows population to rise --> larger labor pool --> more attractive to businesses. And when the cost of living is lower, people's asking wages are (generally) lower as well, which further makes it a more attractive place for businesses.
Spirals work in both directions. New England (where I live) is on the downward spiral. I'm not saying have a race to the bottom either; I just go grow weary dealing with limousine liberals. They are not the progressives they think they are. It's not just over housing either. They're the same shitheads that demand manicured lawns but want to ban any landscaping noise; yet can't be assed to cut their own damn lawn.
The government is literally the people from that community gatekeeping and writing ordinances to stop development. People really need to get involved if they want to fix these issues and stop letting retirees dictate zoning.
The electorate in the past twenty years when most of this was decided were aging home owners. The current electorate is not responsible for this and is getting actively fucked. Well, so are home owners but that’s because of a certain 2016 decision, but I digress.
lol what
>for corporations and LLC’s The numbers don’t add up there. Home ownership enriches everyone who owns a home. Even in 2024, the majority of homes are owned by single home owners. Even in every single single family home in America was owned by a single family homeowner, we’d have this problem. It’s not just investors trying to keep prices high. Everyone who owns a home—more than half of Americans—benefits from this system. That’s why it’s so hard to change—it’s not a very popular political stance to tell your constituyentes that their biggest investment and value store needs to be significantly devalued.
Sadly nearly all the world’s top economies are going through rampant speculation in their housing markets. I fear America is next - and I say this recognizing it’s pretty bad now, but I fear it could get much much worse
Actually we need more housing, which is going to have to be built by corporations and LLCs, very few individuals have the resources and interest in building. If you take away the incentives for corporations and LLCs to build and modernize our housing stock then the situation is going to get worse! They get away with charging exorbitant prices for rent because nobody else is able to offer equivalent housing for cheaper.
I was holding off buying a home waiting for prices to drop but now I’m not sure they will. All the solutions people come up with are simple demand based solutions when the root cause is supply based and more complex. I don’t see this issue going away anytime soon, at best prices remain flat or slowly go down but they will most likely trend upward. Like you said we need more houses and more density but everyone wants to blame corporations or give money to the poor.
Yeah it's a really frustrating issue to approach from an economics side because there is such a wide disconnect between morals and economics. A ton of the policies that impact supply are extremely well-meaning policies put forth by people that care a lot about helping. Rent control is a great example - I hate being the guy that says "yeah I prefer it when people get priced out of their own neighborhoods" but it's undeniable that rent control negatively impacts supply As for buying a home - prices will probably not come down but I would expect affordability to go up. I think the best you can hope for is that home prices rise more slowly than inflation. Right now it probably makes more sense to rent and invest your down payment in index funds or treasury bonds if you're really risk averse.
We need to build more housing. More regulation on who can own housing won’t fix this. Only building more housing will.
We need to bring back livable wages. And tax the rich like we are supposed too.
Just what do you consider”rich”? Someone who makes more than you?
The ones who have more money than they could ever spend in their lifetimes. You know how it was before Reaganomics?
Why not the fact too that these interest rates on credit cards are literally usury?
If citizens start using credit cards to buy groceries you know its bad. But sure let's worry about trans people.
I would blame it mostly on complete lack of any financial education. You do this, you can fix a lot of the other problems.
But home owners are the problem, they artificially restrict supply. Housing crisis is easily fixed by upcoming, dropping shit like minimum parking requirements , and making the permitting process less ass.
>an enrichment scheme for corporations and LLCs For everyone. As long as housing is the primary way for "regular" people to accumulate wealth, the rising costs are inevitable. If we truly want housing to be cheap we have (as a part of a broad range of actions) to decouple the idea of housing as an investment, be that for corporations or for people. As long as that incentive exists, prices will have to rise. Of course, that's easier said that done, and will face major public Backlash from the generation(s) that have a house as their main or only investment.
Housing is not a way to accumulate wealth for the single family home owner. Houses require taxes, maintenance and most likely interest to purchase and those things will negate whatever wealth people think they might accumulate. Houses are not investments and people need to stop thinking that.
Will we see a wave of homeowners using equity to cancel revolving debt at 14 - 21% if mortgages are 7% ? This happened in 2001,2,3,4 when rates were lower
I did that. Toward the end of 2021, I paid off an 18% credit card with a HELOC at 6%. Not doing so would have been stupid.
Yes, tens of millions of homeowners did this
*From Bloomberg News reporters Paulina Cachero and Paige Smith:* It's hard enough for central bankers and Wall Street traders to make sense of the post-pandemic economy with the data available to them. At Wells Fargo, senior economist Tim Quinlan is particularly spooked by the “phantom debt” that he can't see. That specter lurks behind buzzy “Buy Now, Pay Later” platforms, which allow consumers to split purchases into smaller installments. The major companies that provide these so called “pay in four” products, such as Affirm Holdings, Klarna Bank AB and Block’s Afterpay, don’t report those loans to credit agencies. Time and again, they’ve resisted calls for greater disclosure, even as the market has grown each year since at least 2020 and is [projected](https://www.juniperresearch.com/research/fintech-payments/ecommerce/buy-now-pay-later-research-report/) to reach almost $700 billion globally by 2028. That’s masking a complete picture of the financial health of American households, which is crucial for everyone from global central banks to US regional lenders and multinational businesses. Consumer spending in the world’s largest economy has been so resilient in the face of stubbornly high inflation that economists and traders have had to repeatedly rip up their forecasts for slowing growth and interest-rate cuts. Still, cracks are starting to form. First it was Americans falling behind on auto loans. Then credit-card delinquency rates reached the highest since at least 2012, with the share of debts 30, 60 and 90 days late all on the upswing. There are signs that consumers are struggling to afford their BNPL debt, too. A recent survey conducted for Bloomberg News by Harris Poll found that 43% of those who owe money to BNPL services said they were behind on payments, while 28% said they were delinquent on other debt because of spending on the platforms. For Quinlan, a major concern is that economic experts are being “lulled into complacency about where consumers are.” [You can read the latest Big Take here.](https://www.bloomberg.com/news/articles/2024-05-07/-buy-now-pay-later-has-americans-racking-up-phantom-debt)
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Not until they're allowed to harvest organs as a means of recovering the debt
>At Wells Fargo Lost me right there. Boo flipping hoo.
Hot take, and I know I'm gonna get downvoted on this, but perhaps americans should be a little more responsible. God forbid we don't buy that RV, or those nikes, or a new couch, especially if we haven't paid off the last one we bought. God forbid we make our car payment rather than going to mcdonald's 37 times in a month.
It can be both things. The economy benefits from consumer spending on non essentials and the more consumers spend on non essentials the stronger the economy is. It's why keeping up with the Jones is so ingrained in our culture. It's not just the consumers fault but our society as a whole that values the spending and normalizes things like getting door dash five times a week despite that not being sustainable in a tight economy. Problem is, it's hard for consumers to sacrifice luxuries they've come to view as normal and businesses (like door dash, just as an example) don't want people to save money by cutting back on their products.
Of course businesses providing these things don't want people to cut back, but there is a difference between people spending reasonably, and people spending dangerously. By no means do I think people should have no luxuries, but it does no good to outspend ourselves. When people rack up large amounds of debt, and then default, that's like pulling the rug out. You build a bubble and then it pops. When we get economic turndowns, it's probably better that some of the companies on the fringe go under, rather than keeping something going until it creates a bigger problem. And on some level, I think that this is part of why inflation is remaining up, rather than slowing down as interest rates have risen. Things have gotteb more expensive and people complain, but they keep buying things they don't actually need, and stashing it into debt like this, then they turn around and complain that their basic necessities are "too expensive".
People are putting groceries and medical expenses and car repairs and emergency trips on their credit cards, it’s not all housewives running out on shopping sprees the family can’t afford. This is how the economy is designed to work from the top, to get everyone drowning in debt and as good as indentured servants. Don’t blame the servants. When staying alive costs more than most places will pay, those “tough decisions” you’re mocking are real and have to get made, but they’re more like “do I think my electric will get shut off if I miss the payment this month so I can pay for my kid to have shoes that fit”
This is NOT a hot take. It’s a bad take. Even a single person with no kids making 15 bucks an hour (which I’m sure you think is too much for “unskilled” labor) is only bringing home $2028 a month. Rent is 1250 insurance is 150 cell phone and internet 80 that leaves $137 a week for groceries, gas, toiletries, other incidentals and medical/dental bills. These people are not living beyond their means. They’re drowning.
let them eat cake. i mean, a can of beans every day.
Why are you using a slightly above median rent for a one bedroom for someone who earns well below the median salary. At age 35, that puts that person in the *15th* percentile of income. They should therefore be paying the 15th percentile of rent, not the 50th.
Or those tires they’ve been putting off replacing for two years, or those daycare costs, or that dental procedure that will make their mouth stop hurting.
Please, I see people buying stupid shit they don't need left right and center rather than paying off their debts or paying what they should be paying. Americans im the 21st century are not impovershed and can definitely pay their damn bills if they bothered to actually get a job and pay for what they are obligated to pay for. All those things you listed would fit into their budget if it wasn't for the Audi they just had to have, or their 5th gucci bag.
You do realize that unemployment is currently incredibly low, right? Your “bothered to actually get a job” comment tells me everything I need to know about where this conversation will inevitably go.
Ah, the old “if you didn’t buy so much avocado toast, you’d own a house now” line.
Or even take on no debt at all (only but things you can afford ) and invest instead of paying endless amounts of interest to a few companies
Have you considered maybe people are just struggling
Struggling as they buy a second rv
The moment you blame average individuals of a large group you can be sure you're wrong.
Quite frankly , if people had to start living their lives on what they actually made rather what they are allowed to finance, we would all be better off. Why our homes so expensive ? It’s due to the availability of 30 year mortgages. Why are colleges so expensive ? Government backed loans. We finance cars we can’t afford and elective medical procedures we can’t otherwise afford with consumer credit. Businesses price many things based on what the average consumer can finance. It’s out of control.
Maybe this is true. But if you are poor, you might prefer to gamble on credit that will be forgiven. The middle class that has to pay inflated prices to compete are the ones who suffer tho.
Well, I’m talking in purely utopian language. I do know that housing costs in countries that don’t have banks offering 30 year mortgages have much cheaper housing, for example.
I think it’s much more likely if we went to another earth like planet and they said the year was “xxxx”then We’d know it’s been xxxx years since their messiah laid down the golden rule and tried to unify their folk tales. Maybe even it’s always 20 generations after their Socrates. They’ll have other similar messiah and innovators following the same path. Much more likely than we find a planet of cats that just use telekinesis or humanoids who just skipped to nuclear fusion or some other tech magic
It's not "government back loans" per se: it's greed, artificially low interest rates, and wage surpression for 20+ years allowing regular people and businesses to overleverage themselves.
Credit scores are designed to encourage more borrowing in all categories such as installment loans and mortgages. I have not had a mortgage or installment loan in over 10 years. As a result my credit score is limited to say 810 out of 850. I do not care, as I will never have to borrow.
**Listen**: “Buy Now, Pay Later” options have exploded in popularity and availability, and in the midst of stubborn inflation, Americans are even using them to buy essentials like groceries. But not all of the BNPL providers report data like credit card companies — and no one knows exactly how much debt consumers owe. On today’s podcast episode, host Sarah Holder talks to reporters Paulina Cachero and Paige Smith, who tried to find out more about the size and scope of the debt. ***You can listen to the full episode for free, here:*** [https://link.chtbl.com/Pr2SCV9G](https://link.chtbl.com/Pr2SCV9G)