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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

#251

Post by willcipriano »

effie wrote: post #240
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…

What is "financial freedom"? You still have to work, use state currency, pay taxes. Did you mean owning your own home is the first step towards being wealthy?

Here's what owning my home has meant for me.

I live in a high COL area, when I moved out when I was 20 rent was more than half of my income. I'd get raises but my rent would continue to climb. 5 years ago I bought a house, my rent stopped climbing. Now I can't even get a apartment for 125% of my mortgage and that is without a yard, with neighbors a half inch of sheet rock away, and no equity.

This means that while yes I still have to work, it isn't the end of the world that I get fired or miss a promotion. I no longer need to push hard to drive up my income like I did when I was in a apartment. So now I have more options, when a PM screws the pooch and misses a requirement I attend my daughters soccer game as planned instead of staying late.

If that isn't freedom I don't know what is.

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

#252

Post by norswap »

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…

Reminds me of this recent book review on "Georgism", an economic doctrine that states that land ownership is responsible for most of capitalism's evil: https://astralcodexten.substack.com/p/your-book-review-progr...

Interestingly, Georgism agrees with you: the problem is that since land appreciates in value (as the supply is fixed and demand increases), there is an incentive to hoard it speculatively. George proposes a high land tax to negate land appreciation, and make it so it is only profitable to own land if it is effectively used (to live or to produce on).

Having corporations own land instead of individuals is just about the worse compromise that can be made.

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

#253

Post by effie »

em-bee wrote: post #132
radicalbyte wrote: post #57

Earlier quoted context omitted.

It would make so much more sense to just implement a progressive wealth tax combined with tax rules which make owning more than one home very expensive. I would also be interested to see what would happen if the rental and sales markets were forced to only supply houses which matched the current building codes - it would make building much more competitive.

now that would be interesting. if an old flat or house became unrentable or unsellable once the current occupant moves out because it doesn't match current requirements, then landlords would be begging renters to stay. on the other hand, individual home owners would be stuck unable to sell their property, because it would drop in value. (even if they could sell it, not everyone would want to buy it). i am not sure if…

> individual home owners would be stuck unable to sell their property, because it would drop in value. (even if they could sell it, not everyone would want to buy it). i am not sure if that's good or bad.

It's good because it would motivate owners to own only as few houses as possible (to minimize work on updates), and many more people could own a home then.

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

#254

Post by kwhitefoot »

radicalbyte wrote: post #57
Traster wrote: post #48

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…

It would make so much more sense to just implement a progressive wealth tax combined with tax rules which make owning more than one home very expensive. I would also be interested to see what would happen if the rental and sales markets were forced to only supply houses which matched the current building codes - it would make building much more competitive.

> only supply houses which matched the current building codes

That would either destroy vast numbers of perfectly usable and often interesting or historic buildings or require the creation of a system for giving exemptions in order to preserve them. And of course this gives an opportunity for corruption and cronyism.

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

#255

Post by soarfourmore »

janekm wrote: post #247
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…

Having to pay >60% of monthly salary on a mortgage for the next 25 years isn't exactly my definition of financial freedom. If the market crashes you have no freedom to move for opportunities elsewhere. Here in London, rent is <50% of mortgage payments on an equivalent property.

> Having to pay >60% of monthly salary

I moved to a MCOL city where my mortgage is <20%. my salary

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

#256

Post by mustyoshi »

janekm wrote: post #247
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…

Having to pay >60% of monthly salary on a mortgage for the next 25 years isn't exactly my definition of financial freedom. If the market crashes you have no freedom to move for opportunities elsewhere. Here in London, rent is <50% of mortgage payments on an equivalent property.

”60% monthly salary on a mortgage"

I think everyone would agree that that is not financial freedom, but it's commonly accepted and taught that your rent/mortgage shouldn't be more than 30% of your take home.

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

#257

Post by tuukkah »

jorvi wrote: post #221
tuukkah wrote: post #198

Earlier quoted context omitted.

In comparison, in Finland the stamp duty is 0% when you buy your first home while you are under 40.

> while you are under 40 This seems such a weird condition to add. Someone who doesn't earn much but saves up over 22 years for a house has to pay stamp duty on his first house, but someone privileged who can buy a house when 30 years old doesn't?

I fully agree. I guess the intention may have been to make people hurry up buying or building while young.

One of the major political parties here (Centre Party, the agrarian-liberal party) wants people to live outside of the cities. Finnish cities are so small that it's easy to commute from a place with plenty of cheap land and thus it's possible for most people to buy or build a house there if they want to.

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

#258

Post by bidirectional »

dgudkov wrote: post #175
jcbrand wrote: post #166

Earlier quoted context omitted.

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.

There's an entire political ideology which totally disagrees with you -- Georgism. Basically most of capitalism is fine, shares, bonds etc. but natural monopolies and value derived from land are not the same thing and must be treated specially. There's one very pithy way of expressing this which goes back to Adam Smith -- taxes on land do not cause economic inefficiencies in the same manner as other taxes.

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

#259

Post by shard972 »

CalRobert wrote: post #99
sufehmi wrote: post #91

Earlier quoted context omitted.

Yup, COVID-19 shows me something that I have suspected all along - a LOT of parents are not comfortable to be with their OWN children. Because schools are closed, parents have to be with their children all the time A lot of them are really, really stressed out because of this. Which begs the question - why the fuck did you bother to have kids then? Children are blessings from heaven. If they can not see it that way,…

Are you a parent? I really don't think humans evolved to have a nuclear family with no external support from grandparents, uncles, aunts, neighbours, etc. We also have a scenario where children have been robbed of their independence (suburban design patterns, dangerous drivers, fearmongering on the news about child molesters, etc.) - so you can't just shove your 5 year old out the front door at 9 AM and tell them to…

hey at least women have carrer

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

#260

Post by hnnameblah365 »

I would pin the failure on how we view home ownership as an investment vehicle. There's little inherently appreciable to a building. In fact they depreciate over time and require constant investment to maintain.

The location however can appreciate, which we all agree on. But we never say out loud the underlying mechanism. Locations appreciate in value specifically because more humans want to own it.

Viewing homes as investments therefore, requires you to steadily make more and more people want your home who are unable to have it. This explains why NIMBYism is so effective at raising house value.

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