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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

#431

Post by WalterBright »

yetihehe wrote: post #151
WalterBright wrote: post #141

Earlier quoted context omitted.

All sellers maximize the sale price.

Original sellers are makers. They create and sell at reasonable price. Speculators only buy to sell at higher price, thus their only reason to exist is to be the one between people who value something more than it's previous price and those selling at previous price. And they want to buy at lower price before other people can buy at that lower price. They don't contribute anything. They just insert themselves and sel…

> They create and sell at reasonable price.

I'm afraid there's no evidence whatsoever that makers sell at lower prices than speculators. Everyone sells for as much as possible. There's nothing magic about speculators that enable them to get higher prices.

> And they want to buy at lower price before other people can buy at that lower price.

Every buyer tries to do that.

> They don't contribute anything.

Yes, they do. They provide liquidity, and reduce volatility. For example, the only reason a seller sells to a speculator is if the speculator offers to sell at a higher price than others. The only reason a buyer buys from a speculator is the speculator is offering it at a lower price than others.

There is no magic "speculator market" that operates under different rules and different prices.

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

#432

Post by Viliam1234 »

bradlys wrote: post #388
deepstack wrote: post #245

Earlier quoted context omitted.

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.

If you rent your house instead of buying it, it only means that someone else is passing their money to their kids. I mean, ultimately, someone owns the house, even if that person is not you, right?

An interesting solution is to decouple the price of the house from the price of the land it stands on, and then the government could rent the land and use that income instead of other taxes. Better description of this idea is here:

https://astralcodexten.substack.com/p/your-book-review-progr...

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

#433

Post by jjav »

kiba wrote: post #223
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 a home as a form of wealth necessarily conflict with affordability. We need to consider one or the other in order to make the best use of land, which are finite. If we choose to make having a home a priority, then we need to choose affordability both so that people are less likely to be homeless and so that people can do other thing with their money.

> Owning a home as a form of wealth necessarily conflict with affordability.

It's impossible for a home to not be wealth, unless somehow infinite houses could be built for free.

So an argument can be had on how much wealth it should be and who gets to define that, but it is inescapable that it has some value.

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

#434

Post by ozborn »

bsenftner wrote: post #224
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…

At the risk of sounding racist, Asian culture respect their commons to a significantly larger degree than non-Asian cultures. If the Singapore residential skyscrapers where in the United States, for example, the space between the buildings would be a no-mans zone of graffiti, illegal trade, and youth gangs.

"At the risk of sounding racist, Asian culture respect their commons to a significantly larger degree than non-Asian cultures."

Your gross-generalization is so poorly constructed it's hard for it to be wrong, never mind right. So I'll ask you a few questions instead.

How would you even begin to test your claim in a realistic way? What time period/s would you select? Even if it were true, would it matter? Would efforts to solve these problems best be dealt with government policy/funding/enforcement or by pushing "Asian culture" in Europe or Africa?

Do you really mean East Asia? Does Bangkok, New Delhi and Manila count as Asian? Does a skyscraper in the Philippines surrounded by gangs, illegal trade and graffiti not count if it is made of garbage (https://en.wikipedia.org/wiki/Smokey_Mountain)? What if it was closed and re-opened elsewhere, does that mean the culture changed twice?

Is your generalization "significant" in understanding why Tokyo is cleaner than New Delhi or Bangkok or why Toronto has fewer youth gangs than New York? Was their "respect" for "the commons" in Singapore in 1964 when youth gangs and others engaged in race warfare? Or is it just more respect for the commons now that Singapore is no longer part of Malaysia?

How does a communal "respecting their commons" work when most people in a society think it is okay to conduct trade in ivory or whales, that are illegal under international law? What about dumping plastic in the ocean, where Asia in the main source? Or does the "commons" not count if it refers to the rest of the world? Perhaps how much money a society has to clean up pollution is more predictive than culture? Maybe individualism is useful when an entire society needs to change in some fashion and perhaps less useful when norms are reasonable?

Is there a chance that you are bothered by the problems you cite, but find it convenient to say "culture" because it allows you to wash your hands of these problems?

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

#435

Post by Viliam1234 »

throwaway316943 wrote: post #414
pbhjpbhj wrote: post #399

Earlier quoted context omitted.

>All land starts out near worthless and in the middle of no where. // No. People don't raise armies to steal land that's worthless. If you're going back to pre-history then the land near a nice river that has plenty of game, isn't predated by larger animals, and has nice fruit trees is worth way more to a person than some section of desert. If right to live on land also goes with rights to exploit resources beneath t…

How much of that intrinsic value is still there once everything is paved?

There is a concept called "path dependence". Something may be important to get you from point A to point B, even if at point B you perhaps don't use it at all.

You start with a place with nice fruit trees near the river, then a few people build their houses there, then someone builds roads and a port, then someone builds larger houses, then someone builds factories... and at some moment in the future, there is a huge city, but the river is poluted and the trees were cut down.

There is another place with no trees and no river. Hundred years later, there is no city.

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

#436

Post by jjav »

akomtu wrote: post #426
bluGill wrote: post #292

Earlier quoted context omitted.

Not true. A house is a form of wealth because you live there. If you don't own a house you need to rent someplace. If you live in the house long enough you pay it off and live there rent free! The above assumes that you actually pay the house off of course. Many people don't.

No, you don't get to live in "your" house rent free. About 3% of the house value per year goes to property taxes, repairs, utility bills, grass lawn maintenance, hoa dues, insurance and so on. A paid off house is like a brokerage account with insane fees and liability.

The cost of owning a house needs to always be compared to the alternative. By owning, the principal+interest payment disappears when it is paid off. Sure you continue paying other expenses. If you rent, you pay the full and increasing market rate, forever.

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

#437

Post by Smaug123 »

throwaway316943 wrote: post #415
Smaug123 wrote: post #402

Earlier quoted context omitted.

That's what Georgism is about: fully separating those two concepts. The land is valuable because of the community; the property is valuable because of its owner. So under Georgism, all land is held under common ownership, with the land's value being entirely taxed away from its occupier, allowing you to profit personally only by improving the property and supplying value to others thereby.

No thanks.

A shot in the dark here, but I assume you own land? ;)

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

#438

Post by mikem170 »

ajxs wrote: post #277
jariel wrote: post #189

Earlier quoted context omitted.

I'm down-voting you because you haven't made an argument in the face of the issue. The flaw the assumption is that somehow 'buying' a home that is 15x your annual salary, that takes your entire life to pay off, is some kind of 'freedom'.

What's a reasonable alternative, just pay someone else's mortgage instead? Go live in the woods and opt out of the economy entirely? A mortgage is debt, yes. However the money you put into the mortgage is wealth that you're slowly accruing. If you're just renting a property someone else owns you're not accruing anything at all. No one thinks that taking on a 20-30 year debt is a good thing. People only do it out of n…

> What's a reasonable alternative

Housing that costs half as much as it does today, and doesn't grow faster than consumer price inflation?

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

#439

Post by milkytron »

daemin wrote: post #425
bluGill wrote: post #305

Earlier quoted context omitted.

Renting and buying can both turn out well depending on your individual circumstances. If you buy you eventually have a house rent free. However if your rent you probably spend less on rent - so invest that difference and you end up with about the same. With real estate "location location location". In some areas there are situations that will make one or the other better. Everybody has their own life goals, and that…

One thing people seem to skip over is that once you have bought a house you will still need to pay many fees. Just owning a house isn't free, there will be property taxes, fees for services, and other actions that require money from you. In a lot of cases when renting these are taken care of by the landlord. So just the rent vs mortgage comparison (or rent vs no rent) is misleading at best, downright fraudulent at wo…

> In a lot of cases when renting these are taken care of by the landlord.

The thing is, a landlord isn't likely to continue renting out if they're losing money. Typically, the money for services, maintenance, etc. comes from rent.

The renter is indirectly paying for those, otherwise the landlord would be out of business.

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

#440

Post by Nursie »

WalterBright wrote: post #430
Nursie wrote: post #148

Earlier quoted context omitted.

This ignores everything about supply/demand and market bubbles.

Not at all. Bubbles are only obvious in hindsight. If somehow you are prescient enough to recognize them reliably in advance, you can make yourself a cool billion easy.

This still ignores that speculation can contribute to them, and can move the market. It's is not a rebuttal or an explanationa.
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