Housing Can't Be Both Affordable and a Good Investment (2018) - <AUTHOR> https://www.citylab.com/perspective/2018/11/housing-cant-both-be-a-good-investment-and-be-affordable/574813/ <comment><USER4> So much written about housing is just... Wrong. And I don't mean factually inaccurate. I mean based on false premises.

Owning your own home serves several purposes:

1\. Security

2\. Stability

3\. As a hedge against inflation

4\. As a hedge against market forces

That doesn't mean buying is always a good idea. Clearly or isn't. Like don't but in a town where 70% of the adults are employed by the local coal mine, for example.

Here's how I like to think about it: you are never out of the housing market. By not owning you have a large short position in real estate. Given that rents eventually track prices, if prices go down you benefit (you're rent will eventually go down and you didn't lose capital). If prices go up you lose. You missed a gain and your rent will go up.

Given that, you buy your house to remove risk of local changes to your detriment.

<comment><USER5> Maybe I'm not old enough or it's due to the markets I've worked in, but I've literally never seen rent go down in price.

During the housing crisis, for example, rent went UP because as people became evicted there was higher demand for rentals. I acknowledge this was a black swan event though.

<comment><USER6> I think a bigger concern with investing in housing WRT alternatives is this:

Rents don't usually go down, but they often stagnate ESPECIALLY in units owned mom n pop landlords. If your rent doesn't change for 5 years, but inflation is 2%, at the end of the period, your rent has effectively declined by about 10% in real terms. Additionally, you have your 20% down that would be paid for a house, but instead you invest in the stock market that returns 6% annually, at the end of 5 years, you have increased your assets by 33%

If you bought a home, and the home price did not increase for 5 years and you pay the normal 20% down mortgage, %6 closing costs, and 1.5% annual property tax, you're looking at some significant loss of net worth when compared to the rent alternative.

<comment><USER7> If your timeframe is less than 7 years buying a house is almost always a bad idea because of the risks. As you get over 7 years odds start to get good that you are even after the downturn (that is the loss in value during the downturn is just a loss back to what you paid in the first place), at which point your house payment vs rent is the only difference, and the foregone gains from the down payment investment. As you get over about 10 years you start to need to consider the costs of remodeling a house, but your rent would almost certainly gone up so again you are roughly even other than the down payment investments. As your get over 20 years rent has gone up again, but your house payment has not and so you are starting to catch up on the down payment investment. At 30 yours rent has gone up again, but the house payment is gone and you can really work at that down payment investment difference. At 40 years both retire, the renter has still more rent increases which need to be paid for from that down payment investment. AT 55 years both move to assisted living, the renter just sees another rent increase, while the homeowner sells the house and has a big influx of cash that should take care of rent until they die. Ideally both give their last 20 to the taxi outside the hospital 20 minutes before they die. The renter's highest investment balance was higher than the homeowners, but the renter had larger expenses latter in life and so had a bigger draw down of principal.

There are a number of assumptions in the above. Each that is different for you changes the analysis. In particular it assumes disciplined savings such that rent+savings == house payment + house maintenance + savings. It assumes that house maintenance and remodeling is not making the house more luxurious. Its assumes similar levels of luxury (renters are likely to go for a cheaper apartment and spend the difference in housing luxury on travel).

As always, location, location, location. Different areas have different situations that can make one significantly worse than the other.

</comment></comment></comment></comment><comment><USER8> People are always surprised when I tell them, in the long term housing can only increase an amount equivalent to inflation or wages. Anything more, simply isn't sustainable or even desirable (for society anyway). In fact, in the longer term, if we were making actual progress in creating shelter for humanity, then housing should increase a bit less than inflation and return negative real rate of return.

<comment><USER9> There's a fixed amount of "desirable" land, and a growing population competing over it. This means some combination of "up" and "out" is necessary - <USER2> we end up using less land per person (density), or new growth gets channeled into marginally desirable locations (sprawl).

<comment><USER10> > There's a fixed amount of "desirable" land

I don't think this is true at all. Even the nature of "desirable" land has changed drastically over the last few hundred years. There's no reason to think that change won't continue to happen. Especially given the rise of internet, climate change, and the necessary decarbonization of our economy, what's "desirable", it's ridiculous to think where people want to live is fixed.

<comment><USER11> Just to reinforce this: for the vast majority of people who don't live in the countryside, desirability is almost all about nearby human activities. Look at what makes a location desirable: good schools, good job prospects, retail, night life, transportation, etc. It should be pretty clear that this is definitely not fixed.

<comment><USER9> That's uhh, way less true than you think it is. There's some pretty important geographical considerations.

1\. Cheap shipping via navigable rivers 2\. Deep water ports 3\. Not subject to periodic flooding 4\. Flatness (not a _huge_ deal, but it does make construction cheaper) 5\. Soil suitability for construction (especially relevant is where the bedrock is, and what kind of soil lies atop it)

Granted, a lot of this _is_ merely the reason why network effects got started where they did. But they are still highly relevant considerations that add completely natural value to land, regardless of what people would decide to do with it.

<comment><USER10> I would submit that the first two are effectively irrelevant today. I agree they were historically important, but today we have cheap shipping handled.

Note also that your "uhh" is something many people find objectionable. E.g. [https://web.archive.org/web/20070105163441/http://www.televi...](https://web.archive.org/web/20070105163441/http://www.televisionwithoutpity.com/articles/content/a12088/) with more discussion here: [http://languagelog.ldc.upenn.edu/nll/?p=28802](http://languagelog.ldc.upenn.edu/nll/?p=28802)

</comment></comment></comment></comment></comment></comment><comment><USER12> Housing is treated as a good investment because it is scarce. Stuff that's affordable is usually not scarce. Hence you can't have both something that's scarce and affordable.

That aside, the reason why people have been using housing as an investment vehicle is because there really aren't that many good investment opportunities over the long term. You have stuff like gold and stocks, but they have their own problems. Housing has the additional utility of the ability to live in it.

I suspect that the reason housing/real estate wouldn't be considered such a great investment if there were a better store of value.

<comment><USER13> In a lot of America, the scarcity is kind of artificial or unstable though, so it's still a risky investment. Look at California City - land there is anything but scarce. Or Detroit where the seemingly indestructible world- leading industry it depended on for house value shifted out from under it. Or the concepts of white flight and gentrification where neighborhoods can be tipped one way or the other in a self-perpetuating avalanche effect that doesn't necessarily correspond to any fundamental change in their utility. What's scarce isn't property in general, but property near rich people. If the rich people move away, so do the property values. I'd say property investors are chasing after rich people extracting value out of their desire to congregate together.

Housing investment doesn't really have the ability to live in it. If you don't rent out your house, you're losing investment returns. Plenty of property investors depend on rents, not just price rises for their profit. As long as you live in a house in the free market, you're paying for that privilege, whether you own it or not. What it does provide over renting is you can't be kicked out so easily. I think that could be the main reason families prefer to buy houses instead of rent.

<comment><USER14> > gentrification where neighborhoods can be tipped one way or the other in a > self-perpetuating avalanche effect that doesn't necessarily correspond to > any fundamental change in their utility

No fundamental change in their utility? Gentrification goes hand in hand with reduced crime rates, better education, increase in available public spaces/restaurants/bars. It's a feedback loop based off of people's tolerances. In one common model, for example, it begins with more desperate braver artists starting to congregate in an area because it's what they can afford. Their presence alone will typically change the dynamics of an area to a certain degree that is enough to create a tolerable pocket for the more adventurous that are better off (think software engineers opting to live in Mission/Oakland 5-10 years ago for the cultural element of the neighborhood). More tax money starts coming in, policing goes up and is partly responsible for crime going down, which also goes down due to demographic shift to wealthier people who are less likely to feel as though they must engage in crime. The children of these people can create a large enough community of kids that are culturally primed to take education seriously that the critical mass of a classroom can shift from boisterous and unruly to more manageable, further stabilizing the education situation for those that come after.

The point is, very little of this is just some arbitrary decision with no impact on the function of neighborhoods. Over the course of gentrification, neighborhoods change dramatically in ways other than demographic shift.

<comment><AUTHOR> The value changes from gentrification or owner flight (see' most mid-century US cities) come from the _community_ rather than any significant owner- initiated changes to the propety itself.

You do nothing, rich people move in around you, value increases.

You do nothing, rich people move out around you, value decreases.

The direct utility of the property is unchanged. The owner has made, net, an insignificant contribution to the surrounding community. And yet value accrues (or diminishes) all the same.

Housing and real estate internalise the net community utility changes. The pathological cases are where the owners or investors are outside the community and strip-mine the resulting wealth.

Land value taxes both dampen wild valuation swings and internalise value gains to the community to provide infrastructure, institutions, and services.

<comment><USER13> Unfortunately, it's hard to find a way to allocate land without using the market. Yes it's unfair that rich people have to pay more to live where they want than poor people who are happy living near other poor people, but how else can you allocate land that gives the useful land to the people who'll get the most value from it? Central planning doesn't get it right, a lottery would mean people can't group themselves together so they would lose that important value (eg programmers in Silicon Valley).

Land value tax would take money from people who don't need those community services and give it to different people who happen to live nearby. That's not really fair. It's still a kind of rent seeking that also happens to give the rent to charity but not back to the original payers in proportion to what they paid. But it does sound more reasonable than the luck of the draw that property owners get.

<comment><AUTHOR> Long-term leases and LVT seem among the better solutions.

It's the assetification of an essential economic input that seems to be the root of the problem. Bernhard J. Stern commented on this in the 1930s in several works I've submitted (to no traction) in recent weeks.

[https://doi.org/10.1177%2F000271623820000104](https://doi.org/10.1177%2F000271623820000104)

[https://archive.org/details/technologicaltre1937unitrich/pag...](https://archive.org/details/technologicaltre1937unitrich/page/39)

</comment></comment></comment></comment></comment></comment><comment><USER15> I agree that a necessity such as housing being treated as an investment is insane. I usually bring this up to people whenever housing is discussed.

Most people I talk to are more concerned with eventually renting out their homes they bought decades ago and using that to buy another house, though. I'm really inclined to believe renting homes shouldn't be legal, perhaps, because eventually you wind up with a situation where no one even has the option of buying their own house.

<comment><USER16> By renting a home, I can let somebody else tie up a million dollars in capital and all I have to pay them is a few thousand a month. This seems like a great deal for me, why do you want to ban me from engaging in this transaction?

<comment><USER17> Housing is such a big problem. And a collective thing.

The key to solving it is to make sure everyone is focused on affordable housing.

Once you got a impactful part of society focused on something else, for example extracting rent - you've lost.

That's why Germany managed to create a working, affordable housing system after ww2.

And that's why Israel, in it's early years, managed to do the same, and offer affordable housing to everyone,while working under dire economic situation.

<comment><USER16> I think the solution is clear. Legalize tall buildings. Requiring someone to own or rent thousands of square feet of land to get access to hundreds of square feet of housing is guaranteed to lead to shortages.

<comment><USER18> And abolish prop 13 in California and other tax pyramid schemes ? Especially for entities that are not people.

<comment><USER19> I wonder why even with a super majority, Dems still haven't raised split-roll for removing prop13 for corporations.

<comment><USER20> A very good question!

</comment></comment></comment></comment></comment></comment></comment><comment><USER21> In the UK, since WW2, ROI for buying a house and renting it out has on average kept pace with the stock market, albeit with far less volatility. This is including the house price growth and income from renting it out exceeding the debt.

This shouldn't happen - there should be a premium return for investing in something risky. The reason it has happened is because of policies such as being able to discount mortgage costs from rent before you pay tax on the rent (the government is phasing this out).

What has been the result of this? People who can borrow a lot (the rich) have hoovered up houses, reducing home ownership, raising house prices & rents, and making lots of money in a not very productive way. This is bad - a few decades ago average house prices were about 4x average salary, now it is 10+. Incentives to work hard are becoming out of touch. Also, all the money people are investing in housing could have been invested in starting a new company, or something risky but rewarding.

</comment><comment><USER22> My family lives in a relatively modest house in mid sized city. A thought that went through my mind when considering the house as an "investment" is that it's a portion of our overall investment portfolio, and it functions as a hedge against a rise in the cost of housing. It's an assurance that except under extreme circumstances, we can always afford a place to live without massive disruption to our lives.

<comment><USER23> When your final mortgage payment occurs then the sense of freedom is immeasurable. This feeling is beyond dollars and cents so my recommendation is always to buy and pay down your mortgage ASAP.

<comment><USER24> I felt this way when my liquid assets exceeded my mortgage balance, a sort of "I could pay it off if I wanted to" feeling.

But I have decided not to pay it off yet, because the return on keeping my capital in equities is much higher than my mortgage rate.

<comment><USER23> If you owned you home free and clear then would you mortgage it to invest? That's what your statement suggests. I won't gamble with my primary residence as I don't want the risk or stress.

</comment></comment></comment></comment><comment><USER25> Here's where we are currently -

>...Each pod has its own front door, balcony, kitchen and TV. The small, but perfectly formed units also feature a mezzanine floor with a desk, doubled bed, bathroom and storage space.

>The units cost between £80,000 and £120,000 to build and install depending on the specification.

>Designer of the pods, Bill Dunster, believes the homes are perfect for packed cities with little land space as the units can be built above existing structures such as car parks.

>"Importantly the ZEDPod concept decouples housing provision from land prices using air rights over car parks," Mr Dunster said.

>"This enables affordable, quality city homes where land is scarce or expensive to be put up quickly, helping keyworkers to live near their work and at the same time maintaining precious parking spaces.

>"We are working with key partners to create a development model that allows Local Authorities and others to create communities of affordable houses at almost zero capital outlay."

[https://www.bristolpost.co.uk/news/bristol-news/pre-built- ho...](https://www.bristolpost.co.uk/news/bristol-news/pre-built-homes-could- popping-2054429)

One thing I noted from this article, was this is pretty much the most affordable you can get and they are being aimed at employed keyworkers. Given the market insists on having 'range' for marketing segment purposes, if the plan is for vital keyworkers to be living in these, what exactly is the plan for people lower down the social ladder?

</comment><comment><USER26> Amend Prop 13 to allow tax increase of up to 10% per year on rental properties. Houses will flood the resale market as owners try to avoid the taxes, driving down housing prices. Prop 13 wasn't intended as a giveaway to rent seekers, and yet it's made it crazy for anyone to sell if they can rent. That needs to be reversed.

<comment><USER27> Will you allow rents to increase to cover increased costs?

<comment><USER28> The rents as they are now have no relation to the underlying costs.

</comment></comment></comment><comment><USER29> "good" is relative. the longterm rate of return on investment is 7% so a stable property portfolio returning 5% or less _reliably_ can counter-balance higher risk exposure above 15%

remember that the rate of return in property investment has two components: the rent, offsets against tax for the maintenance of costs, and the capital gain. the show isn't over until the deal is done and like gambling you have to know when to hold 'em and know when to fold them into somebody else's property portfolio.

also, social housing is "good" for reasons which can go to longer term investment outcome. What if holding cheap housing stock in your portfolio also prevents competition setting up closer to your other valuable investment?

<comment><USER30> From the position of affordability housing should not appreciate faster than the income profile of the population. Since median income increased minimally (inflation adjusted) in the past 50 years one would expect that "affordable" housing should not increase beyond the rate of inflation. As such, 5% is far greater appreciation rate than what is sustainable (2-3% being more in line with income).

<comment><USER29> Yes. So _rent_ had to be regulated and controlled. The ROI is across rent as income and capital gain. Capital gain would make up a lot of the long-term ROI of owning property. Even cooperative housing and co-owner models have to recognize this.

<comment><USER30> A lot of people buy housing with the idea that the house they live in is somehow an investment. This is also what was discussed in the article. Long term, this is not sustainable. If you rent out property, then it makes sense you can make more than inflation, but if you live in the house, you should have the same ROI as income growth in your area.

<comment><USER29> Yes. I think believing your home is an investment beyond providing your home is a huge mistake. But, its a common huge mistake.

The point I was trying to head to, is that rent doesn't have to rise, simply because people think rental investment has to return some arbitrary ROI for the capital invested in it. Lots of forms of investment exist, some of which return less than others, and we have a mix of investments for a mix of reasons.

In Brisbane (where I live, and co-own a house I live in which I do not regard as an investment in that sense), rents fell last year due to oversupply. Prices fell too, but the two were somewhat de-coupled. Supply of affordable housing fell too. Some people think there is a nexus, I think the fall in affordable housing is down to lack of rent controls, long term tenancies, and state and federal convergeance on housing policy.

</comment></comment></comment></comment></comment><comment><USER31> The specifics here are somewhat inaccurate, but the overall point is simple sense. If house prices consistently increase, housing will be unaffordable.

Specifics matter though. Home ownership can be sensible as a hedge against price changes, as a forced savings, as an intergenerational asset, as a security for loans... These all relate to "wealth building" and they make sense in a stable-price world. They make sense for low income people, who have more need of stability.

So yes, rising prices contradicts affordability. But no, home ownership doesn't stop making sense if they don't.

There was a thread yesterday, o. Clayton Home's (allegedly) predatory practices.

A notable point (to me) is that the low income market (where land is cheap, this doesn't apply to dense urban areas) seems well served by the market, in that case, pre-fab homes. They _are_ affordable.

Where the problems start is in the lending market. High interest rates, affordability problems, hard sells and a general market that gets a suboptimal (or downright abusive) product to the customer.

This is a recurring theme. Lending/financial markets either don't serve the bottom third of the new income distribution or they gauge them. It happened with the subprime markets, rolling debt markets. Payday loans are an example. ..long list.

I think affordable housing is two distinct problems. One is prices, and that's mostly an urban issue. The second is loans, one of the most "it's expensive to be poor" markets there is.

I'm in the "capitalism doesn't apply to money markets" camp.

</comment><comment><USER32> Housing only needs to be a decent investment because is soaks up so much capital and in doing so, opportunity cost.

If housing was significantly cheaper there would be no need for it to be a good investment because you could use the money you would have spent on more expensive housing and put it into an _actual_ investment.

</comment><comment><USER33> The fundamental issue with housing is that you cannot rent a home. You can rent a house. These are really very different.

Retiring in a (privately) rented property is so impractical in the UK that I would feel fairly comfortable in calling it impossible.

I would be extremely surprised to hear of more than a few token examples in London who have been privately renting the same property for the past 20 years, for example.

From the council, with secure tenure and at below-market rents? Sure.

Performing anything other than basic improvements to a rented property is also fairly pointless, so your options are to live in a cookie-cutter new build, a run down conversion, or if you're lucky an ex-family home.

I tend to think that this effect causes prices to skyrocket far beyond what they normally would do because there's such an enormous gulf between renting and ownership far beyond the basic financial calculations.

<comment><USER34> What is a home?

Why can't you negotiate improvements with your landlord?

<comment><USER35> Have you ever tried negotiating improvements with a landlord?

Often what happens is one of (a) they don't like it so you can't - "I think no, let's stick with white for the walls so the next tenants won't be put off".

Or (b) it's a disruptive improvement with no obvious benefit to them while you're there - "no, let's keep the useless and ugly blocked-up fireplace that nobody can use but takes up a wall, I agree it's in the way but the next tenant might like it". Or "I'm not going to invest in solar panels, this is a business not a charity, and it's you paying electricity bills not me".

Or (c) it's a genuine improvement they go for, which makes the property more valuable to rent. So they kick you out at the next renewal (no reason given), and raise the rent by 30% when they advertise next.

Sometimes you're lucky. Most times, you're lucky to have working facilities and no mould, be grateful scum etc. I once had a wall knocked down onto my bed by builders while I was away. When I got back there was rubble on my bed, big chunks of wall on the floor throughout the house, old plaster dust in the food in the kitchen, and my bike which was kept indoors was making a grinding noise. The landlord's representative turned up and said they saw nothing wrong with the place, what was I complaining about... It was cleaned up eventually, but the cockroaches remained. Did I mention my friend whose landlord-provided bathroom has no floor, only broken-up rough crumbly concrete, no hot water, mould throughout the house, no door on the bedroom, etc... And my other friend who moved out of one place and into another, only to be told after getting there that she would need to "stay away at the weekends because we use your room to 'have girls over'"; we had to move her stuff out and get her to safe, temporary accomodation very quickly. Then there was that time I was about to fly home for Christmas, and my landlord told me he had sold the flat and I had 2 weeks to find somewhere else, which of course was impossible.

Such landlords do not budge when it comes to improvements, unless they think it will make them money.

I personally live in a nice enough place these days. But honestly, in 30 years of renting about 15 different places, negotiating anything but negligable improvements has been unrealistic most of the time. Even with the nicest landlords, who can be very kind, negotiating is usually limited to minor, cosmetic things. I've known some exceptions, but it's rare.

Curiously, commercial landlords (business rentals) are different. They will do all sorts of major works as part of a deal with the tenant.

</comment></comment></comment><comment><USER36> It's a good investment because it reduces your lifetime housing cost to zero. You can achieve that in other ways or basically just not care about it. There was a women in NYC who paid $25 a month since 1950... she got a deal. It wasn't zero and she didn't make money but she got a deal.

<comment><USER37> Not zero (taxes, upkeep, etc), but yes. This is the main thing.

<comment><USER38> Taxes, upkeep, etc., is easily going to run into the tens of thousands of dollars annually depending on where you live. It's very far from zero.

I don't get OP's argument at all. You're never going to get housing costs anywhere close to zero unless you're grifting off someone else or living on the street.

<comment><USER36> Appreciation.

<comment><USER38> The long term average return on a primary residence doesn't even keep up with inflation.

<comment><USER36> You are mistaken.

<comment><USER39> "Home prices look remarkably stable when corrected for inflation. Over the 100 years ending in 1990 — before the recent housing boom — real home prices rose only 0.2 percent a year, on average. The smallness of that increase seems best explained by rising productivity in construction, which offset increasing costs of land and labor."

From Nobel Prize winner Robert Shiller

[https://awealthofcommonsense.com/2013/04/robert-shiller- on-r...](https://awealthofcommonsense.com/2013/04/robert-shiller-on-real- estate-investments/)

<comment><USER36> When corrected for inflation equals zero. And 1990 was 29 years ago.

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER40> In related news, I built a simple tool to track real estate. For e.g. in San Francisco prices are down by about 3% across all property types (Condos, Townhomes, etc) compared to 6 months ago:

[https://agentsunlocked.com/trends/San- Francisco](https://agentsunlocked.com/trends/San-Francisco)

Out in the East Bay, in the city of Milpitas, prices are down by about 10% across all property types:

[https://agentsunlocked.com/trends/Milpitas](https://agentsunlocked.com/trends/Milpitas)

You can very quickly get a snapshot of the latest price trends with just a few clicks for each of the 300+ cities in the Bay Area. Check it out - [https://agentsunlocked.com/](https://agentsunlocked.com/)

</comment><comment><USER41> I have met so many people telling me what their house it worth, getting euro sings in their eyes! But your next house is also more expensive and your kids' house even more so!

In similar vain I have friends who cried after the 2008 crash that they had to use all their savings to pay for what they lost in value and then happily moving into a house bought from people that lost even more, in other words, a house they couldn't even afford before the crisis. And they are lucky too because they don't pay interest over the savings they were forced to spend. But somehow people don't see it it seems.

It's a trap.

</comment><comment><USER42> I am just about to buy a place in London which is basically clearing out everything I have saved up and putting me in substantial dept. There is as much home building as there is space in London, as far as I can see, unless we start building Hong Kong style thirty plus story blocks. Land values take away most developers profits here so in a world where we build more houses, where on Earth does this land come from and who is willing to sell this land (probably for less than it's worth with planning for a sky scraper)? I don't get it.

<comment><USER43> > There is as much home building as there is space in London as far as I can > see unless we start building Hong Kong style thirty plus story buildings.

Why not?

I think all and every Chinese from the mainland I met tells me of shock they get when they see people in rich countries living in wooden or brick "huts"

They have hard time understanding why rich people go along with such standards of living

<comment><USER44> I think that's an inaccurate generalization.

I'm pretty sure the rich mainland Chinese gobbling up single family homes on the US west coast don't view their purchases as substandard "wooden huts"...

</comment></comment></comment><comment><USER45> Actually housing could be a good investment and affordable. It just can't be both in the same place. If we continued to make new cities with tons of housing and accepted that all the people who couldn't afford housing should move there, we could accomplish both goals.

For the record I think this is a terrible idea.

<comment><USER46> > _make new cities with tons of housing_

China does this. It doesn't work.

1\. [https://en.wikipedia.org/wiki/Under- occupied_developments_in...](https://en.wikipedia.org/wiki/Under- occupied_developments_in_China)

2\. [https://www.abc.net.au/news/2018-06-27/china-ghost-cities- sh...](https://www.abc.net.au/news/2018-06-27/china-ghost-cities-show-growth- driven-by-debt/9912186)

<comment><USER47> What percentage of new housing in China would fall in the 'ghost-city' category now?

People tend to forget there are 1,6 Billion Chinese. 10 cities failing in the last 10 years would be a low percentage.

<comment><USER46> I think the relevant question is, "When China builds a brand new city in an area that isn't currently desirable to live in, do people move there?"

The answer seems to be no. People want to live where friends, family, jobs, history, and culture already exist. It's not like low rent is still valuable to someone when everything else in their life is awful.

</comment></comment></comment></comment><comment><USER48> Learned this from experience. Real estate prices are a function of supply and demand. Buy into a market where the population/job market is declining then be sure that the prices will fall. Buy into a market where the population is increasing then watch the prices rise. It won't be straight up but long term they will rise.

Determine if you will stick around and which way the population numbers are moving then you can decide whether to buy or rent.

In Los Angeles, people are always bitching about housing costs. But as long as people want to live there, it will always be a good time to buy vs rent -if you plan to stick around. Sure there will be declines but house prices will increase in the long run.

</comment><comment><USER49> There are two types of houses: The house you live in, and the house you rent to others (and sometimes one house is a mix of the two). One of these is an investment, one is an expense. If you can get on board with that mindset, you'll be ok and probably make good investment choices with the rest of your capital.

Maybe you will get lucky, and you wont have a true expense due to appreciation, but it's not something you should bank on. Houses take a lot of money to maintain, time to manage and sometimes just your mental capacity...be careful where you spread your effort.

</comment><comment><USER50> On a similar note, recently I was recounting how in my career I have always moved to places with more opportunities, higher salaries and consequently, higher cost of living.

As some places become unbearable expensive, I see some people asking for locations with good salaries and career opportunities AND low cost of living. I believe that such places can't exist (unless you achieve the coveted 100% remote), as good opportunities and high salaries will inevitably be followed by increased cost of living soon after.

</comment><comment><USER51> Due to unprecedented urbanisation you effectively have runaway inflation in large cities, which is wiping out whole economic classes. Raising interest rates would be the only sane thing to do from the city perspective, but outside of the cities high interest rates would wreak havoc to the small amount of industry and jobs that remain there. I don't think any country has come up with a solution to the economic imbalance created by the flight of capital to cities.

</comment><comment><AUTHOR> For those intrested in digging into dusty nooks of this topic, and away from the current Sturm und Drang, I recommend taking a look at Richard T. Ely, founder of the American Economic Association and scholar of land value economics:

[https://en.wikipedia.org/wiki/Richard_T._Ely](https://en.wikipedia.org/wiki/Richard_T._Ely)

Elements Of Land Economics (1926)

[https://archive.org/details/in.ernet.dli.2015.13745/page/n7](https://archive.org/details/in.ernet.dli.2015.13745/page/n7)

Property And Contract In Their Relations To The Distribution Of Wealth

Vol 1: [https://archive.org/details/propertycontract01elyr](https://archive.org/details/propertycontract01elyr)

Vol 2: [https://archive.org/details/in.ernet.dli.2015.241476](https://archive.org/details/in.ernet.dli.2015.241476)

</comment><comment><USER52> That article makes sense only in the context of California coastal communities. None of the assumptions or logic mentioned apply in my housing market where they simply build new houses without end.

Despite the constant stream of new housing my house has almost doubled in value over that last 10 years and yet still remains affordable.

</comment><comment><USER53> Any safe housing is a good investment. It is the bottom of the hierarchy of needs. While you might not make a profit on the property, you should at least come out even when selling. It provides a way to save money (to eventually own the home) and you can use that money to slowly climb into another better house and so on.

<comment><AUTHOR> What if title isn't clear?

Hernando de Soto on _Capital_ is recommended, specifically as regards Latin America.

[https://www.worldcat.org/title/mystery-of-capital-why- capita...](https://www.worldcat.org/title/mystery-of-capital-why-capitalism- triumphs-in-the-west-and-fails-everywhere-else/oclc/54624555)

[https://en.wikipedia.org/wiki/Hernando_de_Soto_Polar#Main_th...](https://en.wikipedia.org/wiki/Hernando_de_Soto_Polar#Main_thesis)

</comment></comment><comment><USER8> Considering the shear magnitude of the housing problem, I'm a little disappointed we haven't seen more startups/VC money chasing this problem. After all, housing in the US is worth 30+ trillion dollar industry, and that's just the US.

<comment><USER54> The only way to solve the problem is to build more housing, and the only way to do that is to change the zoning laws. A startup cannot do much about that.

The only way to change the zoning laws is to convince the majority of voters that they need to be changed. A nonprofit would have just as much luck doing this as a VC-backed startup.

<comment><USER8> Well, as the decades roll by more and more innovation will be constrained by regulation (not just housing, but also transportation, medical, etc). Instead of tech startups, I think we may need political startups the aim of which is to change public policy, regulations and educate voters.

</comment></comment></comment><comment><USER55> This is like the saying: Quality, speed, and affordability, pick two. Except with housing it is something like: affordability, quality, location, pick two.

Are people so dumb that they think simply buying any property is an investment? You have to be smart about it. You have to be willing to put work and money into the property to improve it. Housing CAN be affordable and a good investment. You just have to look at the right places. Also, it is supposed to be a long-term investment (30 years, traditionally). Not something you flip after a few years hoping the market has gone nuts and you luck into cashing out. That's speculation not investing.

There is no way to regulate your way out of scarcity. If you tear down the regulations that are causing scarcity inventory will go up and prices will come down. Admittedly, that will probably impact what makes SF a desirable place to live (at least to the NIMBY types).

</comment><comment><USER56> Housing can both be reasonably affordable, roughly corresponding to underlying market forces and provide stability to renters, while at the same time be a decent investment, with enough incentives for construction and maintenance.

</comment><comment><USER57> It could be both if there were more diverse types of housing that fit the different stages of life.

Apartments and cohousing early in life, single family homes when you have children, and then downsizing.

</comment><comment><USER58> Of course it can.

The question is the time period you're looking at.

Real estate is one of those things that don't spoil with time, so it's conceivable to have a return on investment in 500 years.

</comment><comment><USER59> Previous discussion: [https://news.ycombinator.com/item?id=18367680](https://news.ycombinator.com/item?id=18367680)

</comment><comment><USER9> Housing affordability is part of a larger demographic/economic problem - <USER3> to extended longevity and declining birth rates, many Western societies are facing a higher ratio of retirees to workers.

This is a problem because essentially all current consumption is created by current workers, and retirees aren't working. The transfer from workers to retirees happens in one of two ways: either through taxation ("Pay As You Go" systems like Social Security), or in exchange for transferring a financial claim from retirees to workers. So as the retiree ratio increases, a combination of several things have to happen to balance the flows of goods and services:

1\. Retiree consumption decreases.

2\. Worker productivity goes up.

3\. Taxes go up.

4\. Workers spend more of their money on financial claims.

If you look at what happens when the first three are relatively fixed, what does the last one happening look like? The only household budget items big enough to swing the needle are things like paying back student loan debt, their rent or mortgage (basically equivalent here), 401k contributions and other retirement investments, and to a lesser extent automobile financing and other consumer debt.

Note that this is more like an energy-based physics analysis than a force- based ones - it illustrates the overall tradeoffs that have to get made somewhere, but doesn't specify causal mechanisms. The actual causal path is something like the increase in saving pushing down interest rates, which makes financing desirable long-term goods (housing, education) more affordable on a monthly cash flow basis, which drives up prices until the market clears once more. In other words, college and housing became more expensive because the aging population needs to loan more money to the next generation to fund their retirement.

Also, the demographic that's currently getting squeezed the hardest by all this isn't Millennials. It's middle-aged folks stuck in the awful gap of having aging parents and maturing children. After all, "retiree consumption decreases" is a really bland euphemism for what goes on at the ground level - retirees not having enough food to eat or being unable to afford medical care. And on the other end, it's getting harder for children to afford to take the steps required to become independent, so this unfortunate demographic also has to set aside more housing and other resources for their children than before.

I really don't have good ideas for any sort of practical action to resolve these tensions. It's extraordinarily depressing. Personally, I'm expecting these trends to continue, and for this all to result in lower per-capita retiree consumption when I'm of the appropriate age, so I'm saving at a higher clip now to compensate. All this does is, though, is increase current retiree consumption and improve my rank-ordering in my retirement cohort; saving more doesn't fix the problems my cohort will end up facing.

<comment><USER60> This is only a problem if you take the view that a nation needs to (and is able to) save for its future in terms of a currency it issues.

Increased taxation is not required to support a growing population of retirees, increased production is.

Taxation is neither here nor there: it is required as an inflation control and to give value to the currency but the limits on spending at the federal level (where social security/pensions SHOULD reside instead of in privately held pension funds) are total spending this year, not tax receipts last year.

Tax receipts extinguish a liability that was created when the federal government spent the money into existence in the first place.

It's not true that current consumption is created by current workers. Retirees spend. What's true is that we have an incredibly inefficient means of funding their retirement through property as an asset class which sucks money out of the current working population _via private financial institutions_ and hands it to retirees, some of whom support their kids in purchasing exorbitantly priced property, placing them in a very precarious financial position which lowers birth rates and further exacerbates the problem down the line.

Property isn't required as an asset class, it's just a convenient thing most people understand and governments worldwide have been able to conveniently take their hands off the wheel.

<comment><USER9> >This is only a problem if you take the view that a nation needs to (and is able to) save for its future in terms of a currency it issues.

If you track the real goods and services involved, nations are essentially incapable of saving for the future. Ignore the financial claims and just look at the goods involved - today's retirees are consuming the fruit of today's labor, essentially. They're not making a car in 1980 so that they can drive it around today.

>Increased taxation is not required to support a growing population of retirees, increased production is.

Increased productivity definitely helps (see point 2 above). It has to grow in excess of the rate of growth of the gross retiree consumption, though, or else you're just facing a less intense version of the prior dilemma.

>Taxation is neither here nor there: it is required as an inflation control

Saying you don't have to tax workers and can allow inflation to rise instead is solving the problem through point 1: reducing the consumption of retirees (by inflating away their purchasing power).

> It's not true that current consumption is created by current workers.

Apologies for saying things in an unclear way - I probably should have used "produced" instead of "created", because I was getting at the physical act of producing goods and services for consumption, rather than the desire and means to consume goods and services.

</comment></comment></comment><comment><USER61> It can be if it crashes, but it will only be affordable for a very short period when prices normalizes again to market forces

</comment><comment><USER62> If it's not affordable, how is it a good investment then? Going into crazy debts is not a good thing.

</comment><comment><USER63> Isn't this obviously wrong because of density?

Suppose I own 1 unit in a 10 unit condo worth $100k. Then a few years later the condo is demolished and rebuilt as a 20 unit condo, of which I own 2 units. I sell them each for $100k, doubling my original price.

This example ignore construction costs, but the point is density means you can have both ROI in real estate and affordable housing.

</comment><comment><USER64> Land prices can increase faster than inflation and wages while house prices actually drop. Housing is measured in square feet. Land can hold multiples of square feet depending on the number of floors it's permitted to hold. Land can thus be a good investment while housing remains affordable if the NIMBYs are restricted from strangling property growth.

</comment><comment><USER65> The article is true if you limit the definition of "good investment" and "wealth-building" to mean rent appreciation. But if you take a broader definition of investment (as in a farmer invested in a tractor, or a contractor invested in a pickup truck, or a property owner invested in improvements, or a landlord invested in buying an underpriced property with an unusually high capitalization rate), then it is counterproductive. When people talk about housing as an investment around the country, how often are they referring to zero-sum rent increases, vs. how often are they referring to capital expenditures that expand the pie? And how do we get people to celebrate one type of investing (capitalism) instead of the other kind of investing (rentiers).

<comment><USER13> Perhaps by national governments preventing local governments from artificially restricting the supply of housing? Local governments will always want those restrictions because their local homeowner voters will want it.

<comment><USER66> At least one national government was founded on the basis that those powers not explicitly granted to the national government nor reserved for the people remain in control of the states which united to form it. (That's not to say that they've followed that doctrine, but I predict it would be a long Constitutional challenge for that country to settle that real property [generally immobile, of course] is part of "interstate commerce".)

That national government could however put a lot of _pressure_ on the states and local governments by banning federally guaranteed housing loans in areas where zoning laws were not to their liking. This would have a temporary effect (while it was being battled out) of smashing the property values of the little guy homeowners (whose next buyer will likely be taking a federal-supported loan), while leaving the jumbo loan market relatively untouched, so it's a pretty nuclear option to try to accomplish in any kind of a rapid fashion.

</comment></comment></comment><comment><USER67> Sure it can. You are forgetting UBI.

Here is where single payer systems may be better than UBI:

Collective Negotiating Power drives prices down for the basics as buyers don't compete for the basics.

That's why Medicare for All would have lower prices for the same services than a UBI which people could spend on private insurance companies.

The question is - as Marx would say - why should society allow the "market value" of housing to greatly exceed the "use value", and who does that speculation really help? Today, 11% of all housing sits unused even as people struggle to pay their rent and homeless have increased. In a plutocracy, the percentage would be even higher.

We may want to transition to a society with a UBI + single payer systems for the basics.

</comment><comment><USER68> it can be if you take into account the rent you don't have to pay. or the rent you might gain from renting it out.

</comment><comment><USER69> I'll just say it. Commodification of housing is stupid and is a sign of cultural sickness. We can do better.

If housing was protected from market forces, then increases in productivity would actually be realized instead of spending all the gains we make over time as a society _back_ into ever-increasing housing prices.

Capitalism is supposed to make things cheaper over time. It does not with housing, because housing cannot be "produced" more efficiently and is in somewhat limited supply. Because housing is also _necessary_ (unless you find living in a van sufficient), then I believe it makes sense for all apartments, condos, duplexes, etc that are 4br or less to be municipally-owned.

We should reap the rewards of our gains in productivity, not increase our spending to match our income.

EDIT: As an addendum, we should also start trying to stabilize our population. The Earth ain't gettin any bigger.

</comment><comment><USER70> Sorry, without reading the article, isn't that a contradiction in itself? How can it be affordable, if it isn't a good investment? That would imply the money would be better spent elsewhere?

Edit: OK having read the article: can there be such a thing as a "good investment" in the terms of the article? I mean something that is guaranteed to be a good investment? I don't think that is possible in general, not just for housing, but for anything.

</comment><comment><USER71> This article completely ignores rent as the means for wealth-building with real estate. Instead it focuses on the _price_ of real estate. Even when prices stop rising, real estate can keep generating income.

Really, the opposite of the headline is true: If prices go too high, real estate _stops_ becoming a good investment, because you can get better ROI elsewhere.

</comment><comment><USER72> My favorite solution is that all rental agreements, commercial and residential, include a 2% ownership transfer per year. You own something for 50 years when you buy it and rent it out (or leave vacant). Make the improvements immediately, because time is running out.

</comment><comment><USER73> False. What's not affordable is having human beings not able to have access to shelter.

<comment><USER66> That is literarily eloquent but not logically eloquent. It's not _desirable_ , but it seems it's perfectly _affordable_.

</comment></comment><comment><USER74> It's bizarre to talk with someone who views a house as a good "investment" and who doesn't see the danger of 4:1 leverage that a "standard" mortgage involves.

These are the kinds of people who get wiped out in real estate declines.

<comment><USER75> This is really important. I've reached income stability to purchase a home, but a recession seems looming, and even the market seems like it'd be ok during a recession near me, I feel it's far too risky. People can't handle large numbers well. When everything is hundreds of thousands of dollars more than you're used to thinking about, judgments lose their rationality. People get exposed to all kinds of risk and they don't realize it.

</comment></comment><comment><USER24> Why not? Treasury bonds can be affordable and a good investment. Stocks can be affordable and a good investment.

> Well, in order for your home to offer you a real profit, its price would > need to increase faster than the rate of inflation.

The entire article rests on the premise of this sentence, which is wrong.

<comment><USER76> The rest of the article explains it more detail, but the sentence is obviously correct.

Stocks and bonds remain "affordable" because the minimum purchase size is small; the same cannot be said for housing.

<comment><USER24> I know this is counterintuitive but the sentence is wrong in several ways.

a) Your home does not have to offer you a real profit in order to be a good investment; preserving capital and hedging inflation are benefits and legitimate goals for an investment.

b) The leverage and tax benefits of buying a home with a mortgage can create returns exceeding other investments even if the home merely keeps up with inflation. For example, you can keep capital gains from your home tax-free up to $250,000... a stock with taxable capital gains would have to deliver a real return of 15% over the same time frame just to match this.

c) The minimum purchase size is not the total value of the house, it's the down payment, which can be 0% for some people. I paid 5% as a down payment. (edit: and closing costs)

<comment><USER76> OK, some fair points, with caveats. I think that property growth matching the general rate of inflation inevitably tends towards unaffordability because of the high base cost and that's why I don't entirely agree with your argument.

On the first, even if housing keeps up with inflation it's becoming significantly more unaffordable due to the high base price - ideally housing should not keep up with the general rate of inflation, so if it's a "good investment" in the sense that it successfully hedges against inflation... then it's inconsistent with being affordable.

On the second point, this depends on the location. In Australia, gains on your primary residence would be tax free, uncapped, and gains on investment properties would be reduced by 50% before calculating tax if you'd held it for more than 12 months (which is exactly the same tax as is applied to stocks). Note the point above about inflation though; if housing is keeping up with inflation then it's becoming progressively more unaffordable.

On the third point, this again depends on location. In Australia you _can_ buy with low deposits (almost impossible to do 0%) but you will be hit with additional up front costs that get loaded on to your mortgage (Lenders Mortgage Insurance, ~1-4% of the property value depending on lender and the exact percent deposit that you have) if you have less than 20%, you will have access to a much smaller pool of lenders and products so will almost certainly be paying a significantly worse interest rate, and you will likely have to pay stamp duty (varies by state, generally about 5% of the property value, some discounts / waivers available for first home buyers depending on state and property value). Ideally in Australia, you're normally going to be looking at a 20% deposit, plus a 5% stamp duty, so you need to have 25% of the purchase price in cash. You might get away with 10% deposit, and on a first home purchase in some states pay no stamp duty, but that's still a substantial burden when median prices are ~$800k Melbourne or $1m Sydney.

</comment></comment></comment></comment><comment><USER77> Yes it can. It would be a better investment for me to buy a cheap house then to rent an apartment at the same mortgage/rent even if the house never increased in value over time.

<comment><USER78> the article means "good" for society, long-term

</comment></comment><comment><USER79> This article takes a really bad situation and paints homeownership in general with the same brush. That's really not helpful.

Buying a home is generally a good idea even if the "asset" isn't growing very rapidly. There are a lot of socioeconomic benefits to ownership, which I won't rehash - google is your friend there.

For the financial benefits, provided interest rates make sense and the buy vs rent trade-off is sane (in SF it may not be), a mortgage essentially acts as a forced savings account, while providing you with a place to live.

Say you take out a 30 year loan, in 10 years, roughly 19% of the principle have been paid down. Assuming the house roughly stays with inflation and you made ZERO real profit on it, you are still wealthier.

Now, if the market moved significantly down or you had major repairs, it could still be a crappy savings account. However, all else being equal, it's generally better than the exactly equivalent rent.

In the end, everyone's situation is different - do your research and talk to professional advisors (the ones that are fiduciaries and not just sales people).</comment>


Seagate now offer only one year warranties on some HDD's - <AUTHOR> http://www.techpowerup.com/156962/Seagate-Take-A-Leaf-Out-Of-WD-s-Book-Offer-Crummy-ONE-YEAR-Warranties-On-Some-HDD-s.html <comment><USER2> A while back I bought six 1TB Seagate Baracudas.

Every single drive failed within the warranty period; I RMAed them and got replacements. Every single replacement drive failed too. I RMAed a couple of them, and their _REPLACEMENTS_ have now failed. I believe that's a 233% failure rate, and it would probably have been higher if I hadn't given up and just bought new (non-Seagate) drives. And before you ask - all drives were used normally in desktop machines, and they were kept cool[1].

I have no idea how widespread my experience was, but I've heard rumours of very high failure rates in some models of their 1TB drives. If so, I can understand them wanting to protect themselves from a repeat in the future.

[1]: [http://www.codinghorror.com/blog/2006/12/hard-drive- temperat...](http://www.codinghorror.com/blog/2006/12/hard-drive-temperatures- be-afraid.html)

<comment><USER3> I read that heat has yet to be proven to detriment a drive's life or performance within reason. Sure, 5000 degrees would be bad, but there apparently is no evidence that cooling drives matters.

I can't source the article, but seem to recall is was google related with the data coming from their experience with drives in their data centers. It possibly could have come from BackBlaze, though that is a distant second.

I used to run a small ISP, and found that I had a 10% failure rate on average of anything, before it was even used. Order 100 new servers, 10 will be dead on arrival. Order 1000 drives, 100 will be DOA. 100 network cables, all will work, that was about the only deviation.

With drives, the failure rates were better, however, I never allowed drives to be put into use that were not internally "certified". I would use SoftRAID, which is a Macintosh application, though I am sure there are equivalent on Linux and Windows. While this is nothing more than software RAID for the Mac, many of my servers were not Macintosh. I didn't use the RAID capacity of the software, rather using the drive certification feature instead. It takes about 8 hours per 1TB drive to "certify" it. This will run through every sector on the drive, and make sure it is ok. The softwares ability to "predict" that a drive was about to fail, or susceptible to failure, was very good. I would never use a drive that didn't pass.

One handy feature which I did run on non servers with the software, is that it can monitor the drive and tell me that is suspects failure to be imminent. This is not SMART, though SMART was a first line test, the software went deeper and logged aspects of the drive over time.

Once I started doing this, drive failure went to near nothing. I can't really measure failure in percentage or time, as we would outgrow the capacity of the drive, or the server would be taken out of commission for a faster server before a failure ever happened. Those drives were then given to friends or sold. As a result, we never had an in use failure once we started using this method of testing. 42U worth of server space, with a mix of 1U, 2U, 4U, and a few 6U NAS's, plus switching gear.

Do keep in mind, we were a small local ISP, and could take the time to perform these tests. Someone like BackBlaze has their system created in a way to deal with failure as part of the operation, and it would be a waste of time to perform these tests.

<comment><USER4> Thanks for sharing your story, and an upvote for all the details. But don't you think it's a little bit dishonest to sell perfectly healthy drives that you knew to be on the verge of failure?

<comment><USER5> The way I read it, they sold the healthy drives that they had outgrown and needed to replace for operational rather than technical reasons.

</comment></comment></comment></comment><comment><USER6> That's technically illegal in the EU, where two-year warranties on electronics are compulsory. This means EU resellers and OEMs will have to be responsible for that second year, or drop Seagate.

<comment><USER7> That's interesting. Do you have a reference?

<comment><USER8> The comments on this thread (from yesterday) along with the original article should prove fruitful: <http://news.ycombinator.com/item?id=3395577>

</comment></comment></comment><comment><USER9> Nothing unpredictable here. There are less than three HDD manufacturers left (do you still count Toshiba as HDD vendor?), so what do you expect? No real competition == (no customer care && no discounts && poor quality of goods)

</comment><comment><USER10> I've been thinking about buying an external hard drive but having some vague idea about the current failure rates, I concluded that, for my data storage needs, the new disks will be practically useless for me without RAID-1. The external disk will store my media and backup my local files already, so I don't want to have a backup of a backup.

This means I'd have to upgrade the disks of my external RAID-1 unit instead, but my old unit only supports 500GB disks officially.

Looks like it's going to be expensive.

For reference, I still had some IDE (EIDE?) harddrives manufactured in the 90's that spun up without a glitch a few years ago when I still had an old desktop box with the appropriate controllers. Ditto for some early-90's SCSI drives that I turned on in the early 2000's, they worked just fine.

I would trade some speed and silence for a lot more robust platters that I could actually trust.

</comment><comment><USER4> I just had the most pleasant experience RMAing a Western Digital 2TB hd. I purchased it while on a trip overseas a year ago, and I fully expected to be SOL when it began clicking for no reason (it's been a fixture on my desk and most certainly hasn't been dropped).

Lo and behold, a Google search for "WD RMA" took me to their website where they asked for the serial number. It immediately showed it as being purchased "out of region" and "not covered by warranty," except "replacement only."

I wasn't sure I read that right, but I entered my CC details and two days later I had a new drive at my door. Thank you, WD.

<comment><USER11> To be fair, Seagate's RMA process is similarly painless. The reason I've bought Seagates and WDs is for the warranties and I've had to RMA both brands; both were easy and didn't try to give me the runaround at any point in the process.

If Seagate is only offering 1-year warranties it's simple; I just won't buy Seagate. It really doesn't matter to me.

<comment><USER12> The trouble I have with the whole warranty idea for hard drives is that the real value in such devices is the data on them, not the mechanics. I'm trying to think of any hard drive that I or any of my businesses have owned in the past decade or more that could reasonably have been returned under warranty other than for being DOA, given the amount of sensitive data that would have been stored on each of them with even a few weeks of use. The only ones I can think of where it would be acceptable (or, indeed, legal) are the company ones that are in a fully encrypted RAID array, which was an experiment we probably won't repeat because of the horrendous performance hit we see on that particular NAS box.

In this sort of context, I wonder how much all these extended warranties were ever really worth. Do some businesses just return failed drives as a matter of procedure, without regard to the possibility of commercially sensitive data leaking because it was still readable with patience and/or the right equipment? Do home users return drives under warranty without realising that all those juicy bank details in their personal accounts spreadsheet might still be accessible to someone who gets hold of the physical drive later, and that such a person might just be buying these things thousands at a time in some foreign country with no goal other than to harvest things like bank details that can be sold?

<comment><USER11> Seagate wipes the drives they get returned [1]. I imagine other companies have similar processes.

[1][http://www.seagate.com/ww/v/index.jsp?locale=en- US&name=...](http://www.seagate.com/ww/v/index.jsp?locale=en- US&name=data_overwriting&vgnextoid=f52d29e293eae110VgnVCM100000f5ee0a0aRCRD)

<comment><USER12> I appreciate the effort they go to, and perhaps for typical home users they might consider it an acceptable risk. However, for my business dealings, Seagate's statement there has limited value, because I still have to release the faulty drive into some sort of postal/courier system with any retrievable data intact and trust that it reaches Seagate to be securely wiped. Unless they provide a specialist collection service with the appropriate certifications that they have taken responsibility for destroying the drive securely, nothing that only kicks in when something reaches them via a third party is likely to be an acceptable risk if you're dealing with data protection for credit card data, medical records, etc.

<comment><USER4> Why aren't you encrypting?

<comment><USER12> As I mentioned before, in some cases, we do. Obviously if you're dealing with, say, sensitive customer data like card numbers or any sort of legally privileged information, then you have to have robust security in place across the board.

More often, in the particular cases I'm familiar with, we're talking about commercially sensitive information, where we have to weigh up the costs of complete end-to-end encryption by default against the loss of productivity that results when things like big network file transfers slow way down. In a self-funded small company, with limited staff time and limited cash, total encryption is not always the answer.

For example, I think you can reasonably have a policy that encryption of any removable media is required but anything screwed into a rack in the office is biased toward performance, and in fact that is basically what we do in most cases. But it does limit the value of the kinds of warranties we're talking about, because we're not going to just hand over a hard drive that has probably had sensitive company documents on it to some random delivery service.

Similarly, from a personal point of view, I don't consider theft of my home computers to be a very high risk, so I don't routinely encrypt all the hard drives, even though I have some potentially sensitive data like downloaded bank statements and bills on there. Instead, I expect to keep the hard drives for a relatively long time anyway, and then have them securely wiped/destroyed when they are too old/broken to be useful any more.

Just to be clear, I'm not saying these choices are anyone's problem but my own. I accept the cost of the occasional hard drive failure as a natural consequence of these policies. I'm just saying that it means hard drive manufacturers' long-term warrantes are effectively not worth anything to me or the companies I run. I suspect that in practice plenty of other people/small businesses follow similar procedures, and therefore the warranties probably aren't worth much to them either.

</comment></comment></comment></comment></comment></comment></comment><comment><USER13> Timing also seems opportunistic here too. Hard drive scarcity has increased due to the floods and subsequent production issues in Thailand.

In addition to raising prices, like you would in a traditional supply/demand model, this would seem to be a good time to increasing the favorability of warranty terms to the manufacturer given that they're no longer racing to the bottom on price margins with their competitors.

</comment><comment><USER14> I bought Maxtor back in the day because of their customer service. I also recommended them to everyone I knew. Without at least good customer service I don't know what I'll do. I would pay $200+ for a 250-500GB if I knew the thing would absolutely not fail within 3, maybe 4 years with high usage.

[http://web.archive.org/web/19961110081033/http://www.maxtor....](http://web.archive.org/web/19961110081033/http://www.maxtor.com/ss.html#No%20Quibble)

</comment><comment><USER15> I've vowed to never buy seagate after going though 4 RMA's on 4 hard drives on a raid 10 array that failed one after the other within a month time frame. After talking to a service rep about how the _new_ hard drives were failing within A DAY of use I was told 'rma'ed drives are recertified and cannot be bad' and thus was my fault. If you value your data or your time do not buy seagate, at least in my experience.

</comment><comment><USER16> the totally nonscientific, based on anecdote, word for a number of years (since they acquired maxtor) is that seagate drives - fast but crap for reliability. which is bad since samsung drives have been reasonably good but just got acquired by them...oh well, back to hitachi.

<comment><USER17> "Back to Hitachi" is now "back to WD".

</comment></comment><comment><USER18> I don't know about the warranties, but Seagate is my favorite manufacturer of HDDs and SSDs. I haven't had a single failure yet.

</comment><comment><USER19> Yep. Even Seagate thinks their products suck. I agree.

</comment><comment><USER20> Seagate failure rate is ridiculous. Just do a google search for " seagate drive failure rates" for proof. I bought a 256 GB Seagate barracuda back in the day and one morning it just spit read write errors after maybe 3 years of heavy use. I only buy western digital now. ive never seen one fail. If you have a Seagate then keep automated backups or you'll be sorry.

<comment><USER11> That may be a bit of confirmation bias. Google's massive hard drive study [1] states that there was no significant difference in failure by manufacturer.

[1]<http://labs.google.com/papers/disk_failures.pdf></comment></comment>


Mars: a hybrid imperative-declarative higher-order language - <AUTHOR> http://mars-lang.appspot.com/ <comment><USER4> Mixing imperative and functional paradigms is a really interesting point in the design space, and has gotten me (begrudgingly) interested in statically- typed languages. I noticed writing Common Lisp that I preferred to write code in a functional style, but occasionally I'd want to bury an imperative update somewhere. Putting a comment saying: "this should be the only use of SETF in the whole algorithm" isn't the most satisfying solution.

Languages like Common Lisp and Dylan (and SML) have mixed imperative and functional paradigms in a non-controlled way for awhile, but there is some interesting work going on about how to do it in a more controlled way. Much of this work involves limiting aliasing and mutability, or expressing imperative features an effect system, or some combination of the two.

Rust is probably the most mainstream example of the former, but Mezzo is another language exploring this area: [http://protz.github.io/mezzo](http://protz.github.io/mezzo). The basic idea is that if you've got the unique reference to an object, or a tree of objects, you can modify it without worrying about how it will affect the rest of the program. Koka is a language that focuses more on the latter, expressing the imperative characteristics of a function through an effect system: [http://arxiv.org/pdf/1406.2061.pdf](http://arxiv.org/pdf/1406.2061.pdf) (section 2.1). The basic idea here is similar to Java's exception specifications. If the set of objects potentially modified by a function must be part of its type, then you can use the type system to keep you from modifying an object, or calling a function that does, in a context where the rest of the program doesn't expect that object to be modified.

<comment><USER5> Then of course there are monads which aren't too inappropriately described as the pattern of expressing controlled imperative features in the type system.

<comment><USER6> The difference between monads and the kind of effects system used in Koka is that in Koka, effects are inferred, whereas with monads, they have to be stated up-front. Koka also allows you to mix effects, e.g. a function can be `<io, st<h>, ndet>`, meaning that it reads/writes files, reads/writes memory in heap `h`, and is non-deterministic. Effect variables are akin to higher- kinded polymorphism, so that e.g. `map` can be polymorphic in the effect of the mapping function.

<comment><USER5> As others have stated, that's all done as libraries in Haskell in a variety of ways.

I'd be interested in knowing how the _order_ of the combined effect types are resolved in Koka, though. For instance, in `<io, ndet>` the ndet effect will end up conducting a search. How do the (observable) io side effects get woven into that search? In particular, how does Koka know the proper ordering?

In Haskell, you'd be forced to eventually declare an order to your monad stack (although most functions can be agnostic to the particular choice). So in this instance, you would write `LogicT IO a` to indicate that the non-determinism gets resolved first while most functions would be of the form `(MonadIO m, MonadLogic m) => m a` where the parenthesized set of constraints is unordered.

<comment><USER6> Hm... if I understand correctly, the `ndet` effect isn't _non-determinism_ in the sense of _amb_ , but rather _non-determinism_ in the sense or _random_. I.e., there is no search, it's just producing a random number.

<comment><USER5> Ah, sorry. The question still holds, though it's less obvious what it means with this effect stack. Perhaps a more obvious example would be failing, stateful computation written as follows as an order-free restricted type in Haskell

        ( MonadPlus , MonadState s ) => m a

Given some concrete choices of monads to witness those effects like MaybeT and StateT there are two "orders" we can stack them.

        MaybeT (StateT s Identity) a
        StateT s (MaybeT Identity) a

where Identity forms the "effect free" base of our stack. While functions which operate on types with the order-free signature work for each stack, ultimately the stacks represent different combined effects. In particular, the `StateT s (MaybeT Identity)` stack throws away state if the computation fails while `MaybeT (StateT s Identity)` does not.

        run1 :: StateT s (MaybeT Identity) a
             -> s -> Maybe (s, a)
             -- failure captures the result state

        run2 :: MaybeT (StateT s Identity) a
             -> s -> (s, Maybe a)
             -- result state always produced, failure captured
             -- only in the result value

So, ultimately the semantics of your effect set depend upon the ordering of your effects. At least in Haskell. I'd be interested to see how Koka handles it.

<comment><USER6> If I understand Koka correctly, it's type system is purely descriptive, and has no effect on runtime. Having said that, Koka is a strict, eager language (at least currently, as it's compiled to JavaScript), so effects happen in the order that they appear in code. It doesn't support "handlers" like Haskell or Bauer & Pretnar's Eff.

<comment><USER5> Eagerness doesn't really matter for this purpose. It has more to do with "overriding" or priority of effects. I'll just look into it later. Thanks!

If it's anything like purescript's extensible records effect system then there are "handlers" which determine effect order/priority (see [http://www.purescript.org/posts/Eff- Monad/](http://www.purescript.org/posts/Eff-Monad/))

</comment></comment></comment></comment></comment></comment></comment></comment><comment><USER7> Something that _bugs_ me in Haskell, and which Mars inherits as it is mostly the same semantics - you've taken the effort to create a good type system with optional types and type checking, only to decide to not actually use them for some common operations you're performing in the language (namely, head/tail).

        ?> Nil.head
        Runtime Error: List instance has no field 'head'

Such runtime errors could easily be avoided by making head/tail return Maybe, and using Nothing in the case of Nil. This hardly complicates code, but it provides the correct behavior, particularly when it comes to doing "records" properly. The Mars docs give an example of how I consider copying Haskell's semantics directly without improving them leads to flawed code.

        type Foo:
            X(u :: Num, v :: Num)
            Y(v :: Num)

There's nothing wrong with `v` here, as it is total, but you can easily introduce a runtime error by using `u` incorrectly.

        ?> x = Y(1)
        ?> x.u
        Runtime Error: Foo instance has no field 'u'

This is why using records in combination with sum types in Haskell is widely considered a bad idea. It's a misfeature as far as I'm concerned. If given the chance to redo Haskell's awful record system, I'd fix it.

The problem can be trivially avoided by making `u` return `Maybe Num` in this example, where it returns Nothing for Y and `Just 1` for X. Ideally, the compiler should check if field names are total over the constructors - if not, it should automatically return an optional type. If the fields are total there's no need. I doubt there would be any noticeable performance cost to moving the error to compile time - particularly because you don't actually need to use it in internal implementations of map/fold and such - you could have an internal function which mimics the current behavior, but don't expose it from the module.

<comment><USER8> (I am the designer of Mars.)

You make an interesting point. I haven't decided if I agree with you, but here are my thoughts.

If I understand you, you're saying that x.v should have type Num, but x.u should have type Maybe(Num) (because u is not totally covered). That sounds like a very bad thing, because it means that if I were to change the type so that u is covered, by changing Y to:

Y(u :: Num, v :: Num)

then suddenly everywhere I refer to x.u would break, because x.u would now have type Num, not Maybe(Num).

If I was to go for the "safe" option, it would have to be that all fields return a Maybe no matter what (and I think that would make fields quite unpleasant to use).

I think a better plan (which I've designed but didn't implement -- and I realise that now executing this plan would require a backwards incompatible version of the language) would be to do a simple static analysis of switch statements which records exactly which constructors a variable might have at any given program point, and make it a compile-time error to access a field of a variable unless it is provable that the variable has that field.

So in general, x.u would be a compile error. But this code would be legal, and never generate a runtime error:

switch x: case X: whatever(x.u)

You could also do error checking up front to avoid nesting your code too much:

switch x: case Y: error("blah") # Guaranteed to have a 'u'. whatever(x.u)

(For the record, I actually didn't blindly copy Haskell's semantics in this instance; I came up with this scheme myself and then only later discovered that Haskell had the exact same scheme!)

<comment><USER7> I'll give that I didn't give thought to what would happen if you later added u, but on the other hand, I'd consider that changing Y (if you expose it from the module) is a breaking change in any circumstance. If we consider for example, a Haskell equivalent with pattern matching.

        data Foo = X { u :: Int, v :: Int }
                 | Y { v :: Int }

        bar :: Foo -> ...
        bar (X u v) = ...
        bar (Y v) = ...

If "u" were then added to Y, this pattern matching would break - the names of the fields don't matter in this case - the arity does. We just can't add to Y here without going through every pattern match on Foo to fix it.

The only case where changing Y is not a "breaking change" is if Y is never exported from the module - one of Haskell's most underused features is the ability to hide constructors and expose custom functions in their place - <USER2> functions would easily allow adding to Y (but not change the function y) without breaking the public interface - we need a default value for u though.

        module Foo (Foo, x, y) where

        data Foo = X Int Int
                 | Y Int Int

        x :: Int -> Int -> Foo
        x = X

        y :: Int -> Foo
        y = Y defaultU

        defaultU = 0

        u :: Foo -> Maybe Int
        u (X a _) = Just a
        u _ = Nothing

        v :: Foo -> Int
        v (X _ b) = b
        v (Y b) = b

Just manually expanding what records do, except you have more control over changes to it - if you expect changes, you probably want to do this. The caveat is that you can no longer pattern match over X/Y from outside the module - unless you expose "isX, isY" functions, and use -XViewPatterns or some other extension. I actually prefer manually expanding things out this way because I consider Haskell's record system to be so poor.

It's not just a poor record system, but also the idea of encapsulation. To me, exposing constructors is like making the guts of your classes public in an OOP language - allowing any outsider to access fields really leads to tightly coupled code, and makes it difficult to introduce changes like the one you've suggested.

Consider a trivially modified list class where we want to optimise the performance of `length` if it were used frequently. I could define a data type for it with an extra "Int" field to hold the length.

        data LList a = Nil | Cons Int a (LList a)

What would I expose from this module? Almost certainly not the constructors, because I wouldn't want a consumer arbitrarily inserting integers, nor should they need to include it in their pattern matches - what I really want is to expose exactly the same "Cons" and "length" functions as the regular list which doesn't contain the head index.

        cons :: a -> LList a -> LList a
        cons a Nil = Cons 1 a Nil
        cons a (Cons n h t) = Cons (n + 1) a (Cons h t)

        length :: LList a -> Int
        length Nil = 0
        length (Cons n _ _) = n

This is really what we want to expose, the constructors themselves don't matter - exposing constructors is only even useful in the cases where the structure of the type maps exactly to the operations we want to perform on it from outside the module, and thus we don't need to "hide" anything. It's not all that common, more often than not you want to hide things (OOP wasn't created by accident). Most haskell programmers think like C programmers - <USER3> terms of data rather than the operations you perform on the data.

If we continue this OOP analogy to the record syntax, we're treating Foo as some object exposing its public fields and some constructor functions.

        public class Foo {
            public Int u;
            public Int v;

            private Foo(Int u, Int v) {
                this.u = u;
                this.v = v;
            }

            private Foo(Int v) {
                this.v = v;
            }

            public static Foo X(Int u, Int v) {
                return new Foo(u, v);
            }

            public static Foo Y(Int v) {
                return new Foo(v);
            }
        }

Now, if we construct Foo.Y(1), and attempt to access `u`, we get the dreaded "NullReferenceException". In Haskell and Mars we've simply renamed `null` to "Runtime error", but it's effectively the same thing.

To me it's a design flaw. Optional obviates the need for null when used properly. I'm not sure what would be the best way to go about it - whether my previous suggestion, or making all fields Maybe, restricting records to types with only one constructor, or just do away with records altogether, because they're ultimately unnecessary. Writing out your own constructor functions gives you more flexibility, and having record syntax is not all that useful compared to say, using lenses.

<comment><USER9> To me, automatic Maybe inference seems correct. I don't think the concerns about types being broken (when one makes `u` total) are valid. That's really the point of a strong type system. You get the errors at compile time and they show you that the semantics of your program are inconsistent. My only issue with it is that it's a little too "magical". I'd rather that the behavior of record functions be more explicit. That makes lenses seem more attractive, as you mentioned.

</comment></comment></comment></comment><comment><USER10> Mm. The native library looks difficult to use and primitive ([http://bazaar.launchpad.net/~mgiuca/mars/trunk/view/head:/li...](http://bazaar.launchpad.net/~mgiuca/mars/trunk/view/head:/lib/native.mar)) making this interesting in a theoretical sense, but not really in any practical sense (to me, at least).

<comment><USER11> To be fair, they admit it isn't usable for "real" software:

      About Mars
      ...
      Mars is an experiment, not a full-featured programming
      language. You can use it for playing with the boundaries
      between imperative and declarative programming, but we
      don't recommend you write real software with it.

</comment></comment><comment><USER12> This looks really good. What prevents them from committing this language to the public? Their About ("we don't recommend you write real software with it") is really off-putting for me because I can think of a fantastic use case for this in my current line of work but what does this even mean? I should expect compiler bugs? Conflicted.

<comment><USER13> What do you mean "committing to the public"? The source code is available, and it's GPL 3.0.

And I think their caveat is clear: they consider the language a research project at the moment, and not only do they not have enough confidence in the reliability for real-world use, they probably don't want the implied responsibility.

</comment></comment><comment><USER14> Calling functional programming declarative seems like a bit of a stretch to me. I understand the reasoning. Still, when I read the headline I was imagining something pretty different.

\---

The language looks pretty good. I think for most programmers some kind of vanilla ML would work well.

</comment><comment><USER15> I hate the double colon, it's so unpythonic.

I believe the 'as' keyword would be more smooth:

        def hello(name as String) as String:
            var greeting as String
            greeting = 'Hello '+name
            return greeting

<comment><USER16> Even that isn't smooth enough for me. Why is the 'var as' still there? it's superfluous, ofcourse we're declaring a variable, there's nothing else that makes sense at that point. Why not:

      def hello(String name) as String:
            String greeting
            greeting = 'Hello '+name
            return greeting

which is how a lot of other languages are doing it. On the other hand, maybe I just don't like writing syntax that doesn't add any meaning :p

<comment><USER17> C style type annotations that put type before name were never as elegant as pascal style annotations that put name before type. They are also more consistent.

<comment><USER16> elegance is debatable, and consistency is a matter of how the rest of the language is built. But you can still eliminate the superfluousness (is that a word?) by using

      greeting as String

or even

      greeting :: String

Either is fine, though my preference would then go to the latter option, since it'll be faster when scanning.

<comment><USER13> Having a language keyword which means "we are now defining a new variable" makes parsing easier, and you run into less ambiguity. See: [http://en.wikipedia.org/wiki/Most_vexing_parse](http://en.wikipedia.org/wiki/Most_vexing_parse)

<comment><USER16> Ambiguity in the language is a whole problem of its own. Ambiguity in parsing is also ambiguity in writing, so a language should avoid it all cost. It's true that forcing actions to come with extra words is a way to do that, but it's by no means the only one. It's possible to strive for non-ambiguity without extra syntax.

A good example of this case would be Java (like it or not):

      String Hello(String name) {
        String greeting;
        greeting = "hello " + name;
        return greeting;
      }

Say of the braces and the semicolons what you will, but the core syntax is unambiguous and doesn't have a single word that doesn't have semantic meaning.

<comment><USER13> I was exclusively talking about parsing ambiguity.

Using a keyword to introduce entity definitions (variables, functions, packages, etc.) gives the language more space to grow in syntax without worrying about such ambiguities later. You can construct a grammar without any ambiguities that does not use such keywords - such as with your example of Java - but you're going to have to keep this pitfall in mind anytime you change the grammar.

<comment><USER16> That's true, it does make it easier to evolve the syntax. The negative side of demanding a terse syntax is clear enough in the C# 6 changes ([http://msdn.microsoft.com/en- us/magazine/dn683793.aspx](http://msdn.microsoft.com/en- us/magazine/dn683793.aspx)), which are really showing a lot of bloat.

It's possible to debate the positive side too, but I do agree that constructing a language with a verboser non-semantic grammar is easier.

<comment><USER13> For things like "var" and "def", I'm coming to see them as a smidgen of up- front verbosity to prevent much later monstrosities.

</comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER18> Great. I've thought about making a language with similar concepts, but I just can't get myself to make a proper stab at it. Not motivated enough. Perhaps scared of failing. I don't know.

<comment><USER19> The concepts are the important part. You can get a long way with a nasty interpreter to see if your concepts play out. :-)

If it's a "deep" concept, I'd pick a simple representation that I can implement without much cognitive overhead (a basic Lispish or Forthish stacks- and-registers syntax is usually something I can spin up in a few minutes) and then start layering my concepts in.

Some of the things you think will be awesome will end up just being wrong or inefficient, but you'll cut the loop down really quickly.

It makes it really easy to compare your hypotheses. If you want to factor them into a more conventional syntax model (c, python, haskell, etc.) you can always learn that along the way.

In fact, if you want to get _really_ simple about it, write the code you would want to write and hand interpret it. You can get really far with simple pre- processors written in whatever text or AST manipulation environment with which you feel comfortable. (I'm notorious for being lazy and writing 50-pass compilers, just writing 10 to 200 line features and chaining them, all in a ghetto RPN.)

</comment></comment><comment><USER20> First time I ever saw on appspot.com 503 over quota message.

Are Google that measly with the bandwidth allocations?

<comment><USER8> Apparently you only get 1GB per day. I've enabled billing now so it's back on its feet.

</comment></comment><comment><USER21> Looks a lot like Python.</comment>