Home ownership is the West’s biggest economic-policy mistake • Hacker News Board

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

#121

Post by lucian1900 » Tue, Apr 20, 2021, 9:02 AM UTC

maratc wrote: post #113

lucian1900 wrote: post #58

Earlier quoted context omitted.

I expected your last two paragraphs to argue for abolishing capitalism, after such a robust critique of its fundamental contradiction. Why not publicly owned and democratically controlled housing, like socialist countries have? I grew up in a flat where my parents paid less for rent to the state than for utilities.

> like socialist countries have? What socialist countries have it? Are there any?

In my parents' case, it was România before '89. Thankfully they were lucky to be able to buy their flat in the early 90s, but those of us that rent today aren't so lucky. Rents consist of the majority of one's income, like in all liberal countries.

The remaining socialist countries are China, Vietnam, Cuba, the DPRK and Laos. Venezuela and Bolivia are struggling towards it as well. All of them have varying but significant levels of public housing, in some cases limited by conditions imposed on these countries in exchange for being allowed to trade with the rest of the world.

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

#122

Post by lucian1900 » Tue, Apr 20, 2021, 9:05 AM UTC

fogihujy wrote: post #106

lucian1900 wrote: post #58

Earlier quoted context omitted.

I expected your last two paragraphs to argue for abolishing capitalism, after such a robust critique of its fundamental contradiction. Why not publicly owned and democratically controlled housing, like socialist countries have? I grew up in a flat where my parents paid less for rent to the state than for utilities.

In general, large public housing projects may seem very nice at first, but once the maintenance costs start going up (20-30 years later) it will become increasingly difficult for a publicly owned business to avoid increasing rent. Old buildings are simply quite expensive to maintain, especially when regulations require that buildings are occasionally renovated and brought in line with recent changes in regulations. I…

You have described very well the limits of social democracy, indeed. Ceding any ground to markets and capital ends up eroding any gains won by the working class.

Similar happened after capitalism was restored in Eastern Europe. Even though housing was built and maintained just fine for many decades, very little was built or maintained after 89 since there was no profit in it.

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

#123

Post by gigatexal » Tue, Apr 20, 2021, 9:05 AM UTC

Home owner here. I feel lucky to have been able to (barely) qualify for a loan when I did and buy a home. We now live overseas and rent it. It’s been a huge help to us knowing that it’s there growing in value. I’m also for governments using my property taxes and other taxes to pay for Or subsidize more housing, even affordable housing, even if it might lower the price for my home if it helps the community out.

Being able to have something that’s yours (yes, yes, I know it’s not truly yours until you pay off the bank note...) is a huge boost to my confidence. When we lived there we made improvements, were involved in the community, supported local business and such. I liked knowing the only thing that could raise my monthly mortgage payment was a rise in the assessed property value or a jump in my insurance premium. That peace-of-mind is a huge asset when budgeting. It’s also something one can borrow against to consolidate loans or start a business.

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

#124

Post by tpm » Tue, Apr 20, 2021, 9:07 AM UTC

luckylion wrote: post #101

tpm wrote: post #61

Earlier quoted context omitted.

"If people didn't own houses then someone would, and that someone is still incentivized to constrain the supply." that does not follow - if that someone does not want to sell them or make profit on the rent, why would he constrain the supply? "What's the actual alternative to people owning their own homes." The state, the city, not-for-profit entities owning them, for example. "I also take issue with this idea that w…

> if that someone does not want to sell them or make profit on the rent, why would he constrain the supply? Why wouldn't that someone want to make a profit? > The state, the city, not-for-profit entities owning them, for example. That'd just make each individual eternally indebted to the state, at the whims of bureaucrats and vulnerable to political punishments while the costs wouldn't come down by much, because the…

> Why wouldn't that someone want to make a profit?

Because they are not a for-profit company or institution? Public housing is often owned or managed by such entities. Also there can be other incentives besides direct profit; a city can build flats to encourage people to move and live there. The city will profit from the economic activity this will bring. In that case the city has a motive to have a larger, not a smaller, supply of flats.

> That'd just make each individual eternally indebted to the state, at the whims of bureaucrats and vulnerable to political punishments while the costs wouldn't come down by much, because the state generally sucks at doing these things.

The state may generally suck at doing these things, but nevertheless this is the way it works in some places and works good in some of them. In a different thread I mention Vienna where around 220'000 flats are owned by the city and another 220'000 are indirectly influenced by them which together housing about 25% of the population. The city started this program at the beginning of the 20th century when 300'000 people didn't have a place to live - it's obviously much better now. So maybe it's not a completely broken way of doing things?

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

#125

Post by KoftaBob » Tue, Apr 20, 2021, 9:07 AM UTC

This seems to target the wrong part of the problem.

Rather than

"homes appreciate in value --> homeowners have an incentive to constrain supply of new housing to further appreciate the value --> we should somehow tackle the concept of homes being an investment"

we should instead focus on the aspects of our state/local governments that allow homeowners to have an influence on constraining new supply of housing to begin with.

Namely, zoning rules for any particular parcel of land should be handled by the state, not the local government. If a development fits the zoning rules, it should automatically be approved, with no endless town hall meetings that add tons of delays and cost overruns.

The way zoning and approval of housing construction currently works in much of the US is a prime example of what happens when you let too many opinions get in the way of progress.

It's no coincidence that states like Texas, with their less stringent zoning laws and relatively small NIMBY (Not In My Backyard) presence, do the best at allowing new housing supply to better keep up with demand. As a result, despite Texas' population exploding over the past 20 years, its housing remains relatively affordable compared to states like CA.

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

#126

Post by Ekaros » Tue, Apr 20, 2021, 9:08 AM UTC

Homes logically really shouldn't be an appreciating asset. After build(including warranty fixes) they should be in best condition they ever will be(unless further invested). And then just wear down from there and require maintenance to even keep functioning. So after 10, 20 or 50 years it should cost less, not more.

I wonder how will this look in let's say 100 or 200 years. That is after we have reached full urbanization. As outside changing demand in different regions the prices should stay same apart from inflation.

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

#127

Post by satellite2 » Tue, Apr 20, 2021, 9:10 AM UTC

Ekaros wrote: post #126

Homes logically really shouldn't be an appreciating asset. After build(including warranty fixes) they should be in best condition they ever will be(unless further invested). And then just wear down from there and require maintenance to even keep functioning. So after 10, 20 or 50 years it should cost less, not more. I wonder how will this look in let's say 100 or 200 years. That is after we have reached full urbaniza…

Generally you buy the land under the house as well, and this is the part of the pack that is appreciating.

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

#128

Post by Ekaros » Tue, Apr 20, 2021, 9:12 AM UTC

satellite2 wrote: post #127

Ekaros wrote: post #126

Homes logically really shouldn't be an appreciating asset. After build(including warranty fixes) they should be in best condition they ever will be(unless further invested). And then just wear down from there and require maintenance to even keep functioning. So after 10, 20 or 50 years it should cost less, not more. I wonder how will this look in let's say 100 or 200 years. That is after we have reached full urbaniza…

Generally you buy the land under the house as well, and this is the part of the pack that is appreciating.

True, but I imagine that at some point that won't be true any more. And in many cases that has already happened. In the end it just comes to betting on right location... See Detroit vs SF.

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

#129

Post by eertami » Tue, Apr 20, 2021, 9:14 AM UTC

inglor_cz wrote: post #75

Mengkudulangsat wrote: post #70

Earlier quoted context omitted.

I'm a millennial and I plan to rent forever because I value the ability to move out whenever I liked. Even homeowners can't escape that sword of Damocles you describe. IMO as long as you have assets (stocks, cash, etc.) that you can periodically liquidate to cover expenses, the form of those assets doesn't matter.

I am a GenXer and after some time I got tired of obnoxious landlords. Plus, after living in 12 different places and not knowing when the next "please move out, I need this apartment for other purposes" note comes, is sorta stressful. Every coin has two sides. I can imagine that expensive real property may be a burden that prevents you from living fully. I can also imagine having a house as an anchor in a place I love…

>not knowing when the next "please move out, I need this apartment for other purposes" note comes, is sorta stressful.

Yeah I've had this happen in the UK, can be inconvenient. The fix is legislation and increased requirements for landlords.

I moved to another country where it isn't possible for a landlord to evict a tenant during a tenancy agreement (unless they are withholding rent) and now thankfully I don't need to worry about this at all.

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

#130

Post by eertami » Tue, Apr 20, 2021, 9:17 AM UTC

verbify wrote: post #85

brobdingnagians wrote: post #80

Even from the title, the implication is that "home ownership" is a "policy" from the government rather than just a natural state of people acquiring and improving the land. It implies the government can simply revoke home ownership by a new policy. Property ownership and improvement isn't a privilege "given" to us by a benevolent government with their immaculate "policies" from time immemorial. People are the source…

In the UK there are lots of government policies/incentives by the Conservative Party to encourage people to buy a home. These policies can be revoked.

The "incentives" for home ownership in the UK are mostly just government (taxpayer) subsidies paid to land owners.

H2B/LISA schemes artificially raise house prices above what the floor would otherwise be.