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

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

#171

Post by tpm » Tue, Apr 20, 2021, 10:38 AM UTC

luckylion wrote: post #160

tpm wrote: post #124

Earlier quoted context omitted.

> 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 sma…

> 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? Hard to say. How would Vienna look, and how many people would be able to live there at what cost if it hadn't? I'm absolutely not opposed to the state getting involved when there's a crisis, or the investments…

> But generally, the bureaucracy is large, the inefficiency and corruption runs rampant, the quality is subpar and they're constantly at risk to be sold off when the next mayor wants to spend money on a new air port or some policy their voters like.

I completely believe all of that. It's still much better than here in Slovakia where public housing is pretty much nonexistent, most people own their flat/house outright and if you live in a rented property people are looking down on you. As a result there are on one side scores of people who live in their own house in so-called 'hunger valleys' where they can't find work and on the other side lots of available employment roles but no affordable living in the cities.

> If you want the interests to align, just use a private entity, like cooperative housing. And the best thing about that? It's completely voluntary, no need for state involvement, no need to force others to fund it etc.

I already mentioned Slovakia, so I can continue with that: a private entity first would have to acquire land suitable for flats and get all the planning permissions. Land is scarce and regulations complicated. It's made worse by the outdated building code, and the state is not really incentivized to update it. So I think interests would be better aligned if the state decided it wants to really support building new housing instead of only paying lip service to it.

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

#172

Post by solarkraft » Tue, Apr 20, 2021, 10:41 AM UTC

blueblisters wrote: post #163

kumarvvr wrote: post #95

Earlier quoted context omitted.

This. I'm from India, and the most important goal for any salaried person in India, is to own a piece of land. Maybe 150 - 200 square yards (decently sized to build a 3 bedroom house). And that land is not seen as an expense, but as an investment. An investment to be handed over to children. And usually, families try to buy about 1 plot of land for each child typically. I think that, no matter where you are in the wo…

A curious phenomenon I have noticed only in India is that rental yields tend to be much lower than any other country. Arguably, if renting is so cheap, it makes more sense to rent than own a house, unless property is expected to appreciate in value indefinitely.

Yeah, but one doesn't want to rent because owning a home is an investment ... and that's how we end up with the price :-)

This must be great for people who like to move around a lot.

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

#173

Post by yosito » Tue, Apr 20, 2021, 10:44 AM UTC

yrgulation wrote: post #78

Property ownership is bad. Rent for life, dont leave inheritance to your children so they can rent for life too. All you need in life is clothing, entertainment, a bit of travel to distract you from your tiny living space, maybe a gadget or two and of course onsite work. Oh and praise from you manager to add meaning to your daily grind. Or so “they” say while “they” amass thousands of properties and massive fortunes…

> Owning your own home is, in my view, the first step towards financial freedom.

I don't disagree with you, but owning your own home can also be a step towards financial ruin if you choose the wrong home. I know a few people who bought homes that they ended up losing huge amounts of money on and selling a few years later. Beyond that, it's also a commitment that comes with a huge opportunity cost. If I buy I house in Texas and later there's an opportunity in Oregon, I've got to deal with the house first before I can take the opportunity in Oregon. Lastly, the math doesn't always add up. Sometimes it makes more financial sense to rent (at least temporarily) than to own, but you have to do the math for your own situation.

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

#174

Post by dbetteridge » Tue, Apr 20, 2021, 10:45 AM UTC

yrgulation wrote: post #78

Property ownership is bad. Rent for life, dont leave inheritance to your children so they can rent for life too. All you need in life is clothing, entertainment, a bit of travel to distract you from your tiny living space, maybe a gadget or two and of course onsite work. Oh and praise from you manager to add meaning to your daily grind. Or so “they” say while “they” amass thousands of properties and massive fortunes…

I mean the article agrees with you?

It primarily talks about the unfairness of the current system, the NIMBY problem reducing housing stock and the issue of regulations intended to curb new building reducing the stock of houses so that only the elite and existing homeowners can afford them.

The section on renting/alternatives is mainly just a discussion about alternatives to the current unfair approach and some cases where things work better.

That said the situation in most of the western world is insanity, If I want to buy a house in my hometown (Perth, Australia) I need a minimum 5% deposit + 3-5% stamp duty and the median house now costs 500k AUD.

Median salary is closer to 75k AUD, so you're looking at a mortgage of roughly 6 salary years and a deposit of at least 50k (if you have good credit and no debts).

Edit to add:

A 20% deposit is minimum to not have to pay a 'Mortgage insurance' which gets added to your mortgage to cover the bank if you default and is usually equivalent to the difference between your deposit and 20%.

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

#175

Post by dgudkov » Tue, Apr 20, 2021, 10:47 AM UTC

jcbrand wrote: post #166

hexhex wrote: post #159

There is a solution to the housing problem besides home ownership and renting: Housing cooperatives. These are still relatively common in Germany, my parents live in a flat owned by a cooperative and are consistently paying less rent than I pay for my college dorms, despite living in the center of a major city. The cooperative was founded by workers in the 19th century and has a single purpose: To provide affordable…

I know people who live in cooperatives and I've explored it for myself as well. You might pay less in a cooperative, but you're expected to be more involved in its internal politics and in keeping things running, so you're likely making up for the lower monetary price by paying with your time and energy. There are also many opportunities for interpersonal conflicts. > you constantly have to give up a significant port…

>...doing nothing

This is unfair. There is nothing wrong with passive income. Owning shares or bonds, or having a bank deposit is also "doing nothing" yet no one would blame anyone for it.

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

#176

Post by yosito » Tue, Apr 20, 2021, 10:49 AM UTC

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…

> It implies the government can simply revoke home ownership by a new policy.

There are countries where this has happened. In Cuba, when it happened, people started fleeing in boats.

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

#177

Post by teachingassist » Tue, Apr 20, 2021, 10:51 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…

> the state generally sucks at doing these things.

Most European states do a great job of this - the suck part comes (like in the UK), when the state stops supporting this and a generation of people are left without decent housing options.

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

#178

Post by yosito » Tue, Apr 20, 2021, 10:52 AM UTC

fergie wrote: post #34

> a generation of young people who cannot easily afford to rent or buy and think capitalism has let them down Thats not some irrational misconception- capitalism has indeed let these people down. Capitalism, a set of social policies that prioritises the needs of capital over the needs of people, is literally a system that is designed to concentrate ownership. Under capitalism the best way to make money is to own, or…

> Capitalism, a set of social policies that prioritises the needs of capital over the needs of people

I'm not sure that there's a consensus around that definition of capitalism.

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

#179

Post by cryptica » Tue, Apr 20, 2021, 10:53 AM UTC

The system is so heavily manipulated. I don't trust statistics anymore.

I remember reading a statistic that only 35% of wealth is inherited... The way I read this now is that 35% of wealth is inherited via a will after a parent's death and 64.9% is inherited via some kind of money laundering or power laundering financial scheme while the parents are alive... Leaving only 0.1% to real, self-made individuals.

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

#180

Post by VBprogrammer » Tue, Apr 20, 2021, 10:57 AM UTC

yosito wrote: post #173

yrgulation wrote: post #78

Property ownership is bad. Rent for life, dont leave inheritance to your children so they can rent for life too. All you need in life is clothing, entertainment, a bit of travel to distract you from your tiny living space, maybe a gadget or two and of course onsite work. Oh and praise from you manager to add meaning to your daily grind. Or so “they” say while “they” amass thousands of properties and massive fortunes…

> Owning your own home is, in my view, the first step towards financial freedom. I don't disagree with you, but owning your own home can also be a step towards financial ruin if you choose the wrong home. I know a few people who bought homes that they ended up losing huge amounts of money on and selling a few years later. Beyond that, it's also a commitment that comes with a huge opportunity cost. If I buy I house in…

Personally I feel like buying housing, at least in the UK, makes a lot of sense. However, I have a friend who is currently in that kind of situation where it's certainly made me think twice.

She bought a new built flat about 5 years ago in the outskirts of London. Following the Grenfell disaster it has gotten caught up in the inspections for fire safety and is now practically worthless until ~£70k worth of remedial works are carried out. She cannot remortgage it, she can't rent it out and she can't sell it. Pretty nasty scenario.