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

economist.com

261–270 of 497 posts

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

#261

Owner occupation of property vs rent seeking ownership are 2 very different paradigms. The former results in community, and investment and a large number of beneficial economic effects. The later is simply an economic parasite Only have to look to the past to see what happened with farming. Substance farming and feudaliam was inefficient and disincentified investment.(why improve land you don't own and someone else r…

I rented out my small apartment for 6 years when I had no use for it (living elsewhere), and I never felt like an economic parasite. It is a service that comes with plenty of duties and risks, at least if you want to have a reasonable reputation. It probably depends on local market. I can imagine that in Silicon Valley, bad landlords can get away with almost anything, because the demand is so strong. Outside such eco…

> I rented out my small apartment for 6 years when I had no use for it (living elsewhere), and I never felt like an economic parasite.

He said rent seeking, one apartment is a bit different then people who walk around with dozens in a portfolio before 30.

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

#262

Earlier quoted context omitted.

> If people didn't own houses then someone would, and that someone is still incentivized to constrain the supply. Yes, but constraining the supply is done through political means: planning laws, green belts, individual objections to developments, voting etc. All of those in theory are based on "one man one vote", so if you concentrate ownership of supply you drastically reduce the number of votes it gets. > the middl…

> Yes, but constraining the supply is done through political means: planning laws, green belts, individual objections to developments, voting etc. All of those in theory are based on "one man one vote", so if you concentrate ownership of supply you drastically reduce the number of votes it gets. Genuinely curious: when has one-person-one-vote ever really constrained special interest groups, particularly in the US? La…

> Maybe votes actually don't matter that much?

I think Brexit is a good counterpoint to this: almost every large corporation thought it was a terrible idea, but it still got voted through and carried out.

> Good for them! One question: could I add my own flooring to my flat for allergy purposes? If the neighbors are loud after my kids' bedtime, can I ask them to stop? Will that cause tension? Would I need to call the police if it escalated?

With a HDB flat you can do whatever you like - you buy a 99 year lease with the assumption that the building will be demolished after then.

I don't really know Singapore well enough to give you good answers on your other questions, other than that sound insulation is generally good and people really respect the police in general.

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

#263
post #206

Earlier quoted context omitted.

What's the reason for the strange difference between the tax on old and new houses?

Belgium has complex housing and zoning problems caused by 50 years of inconsistent policies and regulations. One (of many) big issue(s) is that the past has seen unchecked claiming of land for new projects leading to an acute shortage of land, while lots of existing houses and buildings are entirely outdated. We are talking about houses which are 60 or 70 years old typically located in densely pouplated urban agglome…

> buying outdated property only to face long, drawn out and expensive renovation projects

I'm in a nearby country and this accurately describes my house. I gave up, we live in it, halfway renovated, crazy plumbing, mixed masonry, hairball electric panel, dangerous corners everywhere. Contractors are too expensive and the DIY spirit only goes so far when you're working parents.

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

#264
post #231

Earlier quoted context omitted.

I think it's reasonable to argue against (such a heavy emphasis) on home ownership; but it has to apply equally. Everyone striving to own a home is a consistent scenario, which has pros and cons. Social housing that's owned by nobody/everybody is a consistent scenario, which has pros and cons. Having some paying rent to others who own (or, even worse, have buy-to-let mortgages), is inherently unjust.

> inherently unjust. Why is it inherently unjust? The owner paid to have the building constructed. That took upfront capital. Asking the renter to pay for the use of this capital doesn't sound unjust to me. Is renting out a car you purchased inherently unjust?

> The owner paid to have the building constructed.

Much of the rent paid in big cities is not for the construction or maintenance costs, but the land value. Did the owner construct the land?

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

#265
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.

Much of that appreciation should be taxed away as the landowner unfairly benefits from public spending elsewhere. If a government decides to invest public money in building a good new school in an area, it is not right that the landowners benefit from free appreciation while the renters are forced to pay more.

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

#266

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…

The problem is not the practice of home ownership, it is the _policy_ of massively subsidising home ownership through regulations and tax breaks, while also isolating it from actual market forces such as by blocking increased supply. The article is specifically arguing against those policies, not home ownership itself. If you want to own property because you believe in free market capitalism that's fine, I happen to also own my own home, but the current home ownership system in much of the West is a government created stitch up. I'm lucky to have benefited from it, but my children will suffer.

The 'they' you rail against who are amassing properties as massively subsidised wealth accumulators are exactly who this article is arguing against. Deregulate, open up the markets and let people decide on their investments of choice in a competitive environment. Are you really arguing that?

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

#267

Owner occupation of property vs rent seeking ownership are 2 very different paradigms. The former results in community, and investment and a large number of beneficial economic effects. The later is simply an economic parasite Only have to look to the past to see what happened with farming. Substance farming and feudaliam was inefficient and disincentified investment.(why improve land you don't own and someone else r…

I rented out my small apartment for 6 years when I had no use for it (living elsewhere), and I never felt like an economic parasite. It is a service that comes with plenty of duties and risks, at least if you want to have a reasonable reputation. It probably depends on local market. I can imagine that in Silicon Valley, bad landlords can get away with almost anything, because the demand is so strong. Outside such eco…

nobody generally feels like an economic parasite.

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

#268

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…

Population is going down in the developed world. The housing supply is not. If you can't afford housing where you live, then it can only be because more people are demanding housing where you live, having left where they were previously living.

The solution to the "problem of home ownership" is to stop making areas undesirable places to live. Portland springs to mind but there's San Fran. NYC, L.A. but it's not just the Big Blue cities in the US and elsewhere, it's nations run by totalitarians everywhere.

The solution is to export prosperity around the world. Then we can all enjoy the benefits of the developed world's population crash which translates into cheaper housing, amongst other things, both good and bad.

Since The Economist is looking everywhere for the West's biggest mistake, today's their lucky day, I happen to have it right here.

The West should have demanded of China and every other non-democratic regime in the world, as a condition of receiving manufacturing and industries and the privilege of importing their products duty-free, that they liberalize their political systems in ways which are hard to reverse.

This had the power to transform regions from Mexico and Central America to China.

We could have created a schedule of increasingly substantive requirements composed of democratic institutions, free speech and political assembly, (truly) free markets and anti-corruption metrics which had to be met in order to benefit from trade with the West. But we didn't.

We didn't because a small group of industry beneficiaries made small and large fortunes by outsourcing the West's industrialization. They leveraged the lack of environmental and labor standards endured by the world's poor, living under corrupt and totalitarian regimes, to lower the cost of goods sold then sell back into the first world at first world prices.

That's what the elite have been doing since Clinton gave China MFN status and even before.

Now no one in the West can afford the most basic thing every mammal requires- a place of their own. A home. A burrow. A nest. A place to which they can retreat, which they can control and experience sheer animal comfort and safety. Now even that has to go to satiate the boundless greed of our elites.

The only thing left for them to come after is reproduction. We should probably also start thinking about turning our mates over to them, since they can provide for them better than we can.

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

#269

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 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.

The wrong part is that having passive income of that kind is a privilege that only few can reach, and it works by squeezing the rest. It isn't possible for everybody to have such passive income.

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

#270
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.

We sort of have that. Your primary residence gets tax advantages generally and your other properties don’t.
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