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Home ownership is the West’s biggest economic-policy mistake

economist.com

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Re: Home ownership is the West’s biggest economic-policy mistake

#41

Post by wahern »

Animats wrote: post #4

What's this obsession with increasing housing density? Population in the developing world is leveling off. Most of the developed world is already at "peak child".[1] Housing shortages come from migration to cities, not more people. [1] https://ourworldindata.org/peak-child

> What's this obsession with increasing housing density?

Wealth inequality is compounded when urban real estate appreciates faster.

The Economist blithely ignores why governments are obsessed with homeownership, though--because homeownership tends to negatively correlate with wealth inequality. That is, the greater rate of homeownership, the less wealth inequality. So rents may be stable in Germany, but so is its moderately high wealth inequality.[1]

However, mortgage burden positively correlates with wealth inequality. Using easy financing to make ownership more common tends to cancel out the former effect. So, really, what correlates with lower income equality isn't nominal ownership, but actual equity.

[1] See https://www.oecd.org/officialdocuments/publicdisplaydocument... and https://www.jstor.org/stable/pdf/10.15609/annaeconstat2009.1...

Re: Home ownership is the West’s biggest economic-policy mistake

#43

Post by andybak »

bserge wrote: post #28
tgv wrote: post #5

The title is clickbait, I presume. I can't read the full article either, but in the introduction it already says that the problem is that not enough houses have been built. And in my opinion, that plus regulation failure are at the root of the problem. Who actually owns the houses is of lesser importance.

Yeah, it's clickbait. It's not homeownership that's the problem, it's the regulations (tbf, put in place mostly by homeowners) and the always ongoing concentration of the population. Housing prices in/near cities is a worldwide problem. Renting could be cheaper, though, but that can be done without social housing imo.

> tbf, put in place mostly by homeowners

There you have it. Follow the money. Home ownership concentrates wealth. Wealth often determines political clout and thus directs legislation and policy. The cycle continues.

So surely - largely by your own logic - home ownership is the problem?

Re: Home ownership is the West’s biggest economic-policy mistake

#44

Post by bserge »

andybak wrote: post #43
bserge wrote: post #28

Earlier quoted context omitted.

Yeah, it's clickbait. It's not homeownership that's the problem, it's the regulations (tbf, put in place mostly by homeowners) and the always ongoing concentration of the population. Housing prices in/near cities is a worldwide problem. Renting could be cheaper, though, but that can be done without social housing imo.

> tbf, put in place mostly by homeowners There you have it. Follow the money. Home ownership concentrates wealth. Wealth often determines political clout and thus directs legislation and policy. The cycle continues. So surely - largely by your own logic - home ownership is the problem?

That's what the government is for. Regulate on behalf of the majority. Sadly, that seems to be evolving backwards, from practice to theory.

Re: Home ownership is the West’s biggest economic-policy mistake

#45

Post by cozzyd »

shuckles wrote: post #20
Animats wrote: post #4

What's this obsession with increasing housing density? Population in the developing world is leveling off. Most of the developed world is already at "peak child".[1] Housing shortages come from migration to cities, not more people. [1] https://ourworldindata.org/peak-child

There is much unmet demand for living in dense areas, and it’s unmet largely for reasons of policy set by incumbents and not technology. LA’s zoned capacity was higher 50 years ago than it is today. Same with San Francisco.

As household sizes have gone down, it stands to reason that household density should go up.

Re: Home ownership is the West’s biggest economic-policy mistake

#46

Post by eptcyka »

wahern wrote: post #41
Animats wrote: post #4

What's this obsession with increasing housing density? Population in the developing world is leveling off. Most of the developed world is already at "peak child".[1] Housing shortages come from migration to cities, not more people. [1] https://ourworldindata.org/peak-child

> What's this obsession with increasing housing density? Wealth inequality is compounded when urban real estate appreciates faster. The Economist blithely ignores why governments are obsessed with homeownership, though--because homeownership tends to negatively correlate with wealth inequality. That is, the greater rate of homeownership, the less wealth inequality. So rents may be stable in Germany, but so is its mod…

Easy financing only drives up prices.

Re: Home ownership is the West’s biggest economic-policy mistake

#47

Post by mustafa_pasi »

Another public policy that would help tremendously would be providing financial incentives for big industries to relocate or expand in low cost of living areas. This would also have other benefits besides more affordable housing.

Other than that I find the author's casual dismissal of other people's lifestyles as a bit off putting. Calling home ownership a cult and providing Tokyo as a model to follow, ..., I personally don't like this style of writing that does not acknowledge that people might have different preferences from the author. As a young millennial I of course don't like the high rents in big cities. I would also like to live in a house that I own, and I would also not like living in a very big city with a skyscraper skyline.

Re: Home ownership is the West’s biggest economic-policy mistake

#48

Post by Traster »

I don't think this article makes a logical argument at all. It says house ownership is bad because it gives people a vested interest in constraining the supply of housing. That's true but that's not a problem. If people didn't own houses then someone would, and that someone is still incentivized to constrain the supply.

I'm also not sure that reducing home ownership is a good idea - "let's make everyone poorer" doesn't sound like great policy to me, especially at a time where asset prices are inflating like mad. What's the actual alternative to people owning their own homes. Would we be better off all holding shares in housing companies?

I also take issue with this idea that we should all be living in skyscrapers. If you go off and build skyscrapers. Maybe some people want to live in skyscrapers but if the result of this policy is that the middle class who used to be able to live in a nice semi/detatched house are now living in flats in a skyscraper that is a massive detriment to their quality of life. It's like the problem we have with Houses of Multiple Occupancy in the UK. It's a fine concept to break up a 4 bed house into 3 flats and sell each individually but you need to understand you're making it economically unviable for anyone to ever afford a 4 bed house anymore in that area.

There are serious issues with housing, and the massive disincentive for people to downsize is definitely one of them, but a lot of these policy solutions are just trash.

Re: Home ownership is the West’s biggest economic-policy mistake

#49

Post by rlonn »

dr_dshiv wrote: post #37

What if renters could have a way to pay more to gain partial ownership of their property? E.g., could progressively own up to 10%. That woulf allow for more of the feeling of ownership and allow renters to participate in the appreciation. That would mitigate some of the negative impacts of gentrification. Has anyone given this sort of renter-ownership blend a thought?

I think that is called a mortgage :)

Re: Home ownership is the West’s biggest economic-policy mistake

#50

Post by DocTomoe »

joshuahughes wrote: post #42

So am I reading this right, that the Economist is suggesting “mortgage bad, rental good”?? Seems I’ve seen something similar referenced quite a lot recently... https://www.weforum.org/agenda/2016/11/how-life-could-change...

Seen from another angle, homeownership (once the mortgage has been paid) grants freedom, while a rent-dweller will remain a slave to his landlord forever, with Damocles's sword named "Eviction and homelessness" always dangling over their heads.
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