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

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

#381

Post by FredPret » Tue, Apr 20, 2021, 3:34 PM UTC

verelo wrote: post #298

dbetteridge wrote: post #280

Earlier quoted context omitted.

Yeah Melbourne and Sydney are just insane, First home owners grant is great on paper but essentially covers none of the expense of buying a first home and like you said encourages the prices to increase even further. I'm on a decent salary by Australian standards and am going to be waiting at least 2 more years before I can afford a 10% deposit (have been saving for several years already at a lower rate). Just have t…

I love, as an Australian, waking up in the morning seeing the Australians all talking. During the day it’s all North Americans, but obviously this is a game of time zones. Anyway. I just wanted to say that, and also, this issue is seemingly everywhere. I’ve been in Toronto Canada for over a decade now and prices have gone crazy for almost that entire time. When i arrived a house in the city was 350-400k, that same ho…

Toronto went through an insane boom, yes, but there was a period in I think the 90’s that was very quiet for property values, so some of it may have been pent-up demand.

And now they’re building like crazy, with people leaving in droves. Hopefully that’ll depress prices long-term.

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

#382

Post by lucian1900 » Tue, Apr 20, 2021, 3:38 PM UTC

maratc wrote: post #135

lucian1900 wrote: post #121

Earlier quoted context omitted.

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 signif…

The "privatization" in the '90s was a one-off where failed socialist states just passed the bulk of state-owned flats to its inhabitants for a symbolic sum, on their way to becoming capitalist states. There wasn't any "market" to speak of, so no market prices. This can hardly be seen as an example-setting experiment, as socialism only works when there is something or somebody to pay up the costs. In the case of the U…

It is true that the flats were sold for symbolic sums. This was done by the counter-revolutionary government after '89 both to prevent revolts from people used to cheap housing and in the hope of engendering individualism through ownership.

Of course the destruction of socialism in '89 isn't a good example, most of us would still prefer it over capitalism. And it's not true that the socialist countries were somewhat subsidised by some external force, although it is a common myth spread by neoliberals (most famously Thatcher).

Workers create all value through labour and are paid only a fraction of that to survive on. The rest (surplus) is either appropriated by capitalists or pooled together by the workers or a worker's state to fund collective efforts. An economy that doesn't seek profit is inherently much more efficient, all else being equal.

The USSR did in fact support many socialist countries, out of the surplus of the labour of soviet workers. România actually paid reparations to the USSR for years for having invaded it during WW2. It's also worth keeping in mind that all socialist revolutions so far have been in poor under-industrialised countries that improved drastically under socialism, so comparisons to their industrialised colonisers aren't exactly honest.

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

#383

Post by RobertoG » Tue, Apr 20, 2021, 3:39 PM UTC

chii wrote: post #306

RobertoG wrote: post #142

Earlier quoted context omitted.

Until you pay the mortgage. Then, your bigger expense, rent, disappear and you can start saving. Also, the thread of homelessness disappear from your life. That's something never will happen if you keep just renting.

> rent, disappear and you can start saving. that's not true. At any point in time, the cost of the capital is going to be comparable to rent. If you owned 100% if equity in the house, what you're "losing" is the potential rental income from the house, in exchange for the free rent you don't have to pay, plus the difference in the income from investing in the stock market (assume a maximally diversifed portfolio). AKA…

Well, I suppose that Warren Buffet and similar are all renting then.

I think that part of the problem is thinking of your home only in terms of an financial investment. A home is a place for living, you are always going to need a place for living. Despite appearances, you don't need a maximally diversified portfolio for living.

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

#384

Post by RobertoG » Tue, Apr 20, 2021, 3:43 PM UTC

effie wrote: post #321

RobertoG wrote: post #142

Earlier quoted context omitted.

Until you pay the mortgage. Then, your bigger expense, rent, disappear and you can start saving. Also, the thread of homelessness disappear from your life. That's something never will happen if you keep just renting.

Germans and Swiss are renting the most and do not have a dread of homelessness. The dread comes in when you can't find work that will pay for rent. Not when you don't own a house.

Yes, but then, people get all puzzled and surprised when they read that, median household wealth, is bigger in Italy or Spain than Germany.

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

#385

Post by X0Refraction » Tue, Apr 20, 2021, 3:44 PM UTC

pjc50 wrote: post #84

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.

> as long as you have assets (stocks, cash, etc.) that you can periodically liquidate to cover expenses "I don't care because I have a trust fund" is not the argument you think it is. If you're talking about accumulating wealth, I note that (in the UK at least) the gain you can make without incurring tax is somewhat limited but the house that you're living in has unlimited exemption from capital gains tax.

Correct me if I'm wrong, but in the UK you can make an unlimited gain on stocks and shares tax free in an ISA. The only restriction is the amount you can place in it per person, per year (£20k) and the vast majority of people aren't going to be putting that into savings in a given year.

If the rent is less than the opportunity cost of your deposit along with mortgage payments/maintenance taking into account possible gains in the house value as opposed to the stock market then it's plausible you could gain tax free assets faster via investing in an ISA than property ownership especially taking into account the extra opportunities you may be able to take advantage of by being able to move easier for a better job.

I personally am a home owner because I value having control over my environment (decorating, pets etc.) although that could conceivably be fixed via legislation as others have alluded to.

I'm not sold that avoiding home ownership is the best way to accumulate capital in the UK, but I don't think it's completely out of the question as you seem to imply.

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

#386

Post by bradlys » Tue, Apr 20, 2021, 3:45 PM UTC

swiley wrote: post #366

andrepd wrote: post #273

Earlier quoted context omitted.

The fundamental problem is linking "home as a place to live" and "home as an investment". The two things aren't compatible. If you want to buy a place to live so you don't have to work for a Lord, you want affordable housing. If you have a property which you want to be an investment, you want housing prices to baloon. Currently the latter is winning.

You could have both if dense housing was allowed to be built and people bought condos.

How? If an asset goes up in value then that means someone is paying more for it at the end of the day. Thus, it’s less affordable...

If your argument is about splitting up land use by building higher, it still is true. At the end of the day, that land became more expensive and you are less able to purchase the land.

Appreciating asset and affordability are opposites by definition.

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

#387

Post by michael1999 » Tue, Apr 20, 2021, 3:47 PM UTC

FredPret wrote: post #381

verelo wrote: post #298

Earlier quoted context omitted.

I love, as an Australian, waking up in the morning seeing the Australians all talking. During the day it’s all North Americans, but obviously this is a game of time zones. Anyway. I just wanted to say that, and also, this issue is seemingly everywhere. I’ve been in Toronto Canada for over a decade now and prices have gone crazy for almost that entire time. When i arrived a house in the city was 350-400k, that same ho…

Toronto went through an insane boom, yes, but there was a period in I think the 90’s that was very quiet for property values, so some of it may have been pent-up demand. And now they’re building like crazy, with people leaving in droves. Hopefully that’ll depress prices long-term.

The Toronto area consistently adds >100k people each year, and added a full mega-person in the last 5. We have never built units for 100k beds in any year in the last 20. Don't hold your breath.

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

#388

Post by bradlys » Tue, Apr 20, 2021, 3:48 PM UTC

deepstack wrote: post #245

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…

Upvote! Private property ownership and intergenerational wealth transfer is the foundation of middle class, and bigger middle class leads to better education for the masses, and a more democratic society!

Why do people want intergenerational wealth transfer? Anytime we talk about billionaires passing down large sums of money to their children and creating dynasties out of it - it’s a bad thing. Yet, middle class to upper middle class does it and it’s a good thing?

I see it as problematic. Keeps the ground unlevel.

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

#389

Post by bovine3dom » Tue, Apr 20, 2021, 3:51 PM UTC

kQq9oHeAz6wLLS wrote: post #361

bovine3dom wrote: post #77

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…

> It isn't giving up your garden: it's swapping it for a much larger shared garden with facilities you could never dream of affording on your own. And for some people, that's great. For me, not living in a flat in the city (quite the opposite) isn't because I want a garden and facilities all my own. It's because you can't control how terrible your neighbors are, so if they're farther away from where you spend most of…

Most of those problems could be solved by good noise insulation which is fairly cheap to add during construction.

Terraced houses are common in the UK and are the worst of all worlds: poor noise insulation from neighbours, tiny dark gardens and very low density.

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

#390

Post by bovine3dom » Tue, Apr 20, 2021, 3:57 PM UTC

coldtea wrote: post #365

bovine3dom wrote: post #313

Earlier quoted context omitted.

Yeah, within reason, more global considerations should be taken into account when making local decisions.

Sure, when the local desicions have outside externalities (e.g. pollution). But this is a case where we're taking about outsiders making it more difficult for locals to hold to their homes, so they (the outsiders) have it easier to live in some place. How is that OK? Ousiders "really" wanting to live to that place is not enough justification (people want lots of things. Many people want a pony too, doesn't mean they…

> where we're taking about outsiders making it more difficult for locals to hold to their homes

I'm predominantly suggesting making it easier to build new high density housing. The other side is to slow move to taxing estimated land values rather than house prices. This means that you pay for your share of the benefit you get from improvements to the land that you didn't make - a new metro line, for example, or a new supermarket or school. But if you renovate your house you wouldn't pay any more in taxes.

> Plus, those outsiders only want to come live to a place (over other places) because the place has been developed well by the locals.

Most infrastructure funding comes from central governments (at least in the countries I am aware of) so I don't understand what you mean by this exactly.