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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

#441

Post by ganafagol »

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…

Inheritance of large wealth like a $1M+ home is the first step to inequality of opportunity in a society. Get as rich as you want, but for the next generation there needs to be a reset (beyond a reasonable threshold), otherwise you just end up with family dynasties. May be fantastic for the involved individuals, but ends horribly for society. Usually with a revolution after a few generations.

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

#442

Post by XorNot »

VBprogrammer wrote: post #180
yosito wrote: post #173

Earlier quoted context omitted.

> 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 w…

Apartments have always been kind of a sucker's deal compared to houses though. Houses in almost any condition can still be worth a ton, because you the owner have complete control over the state of the building on the land (including, knock it down and put a new one in).

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

#443

Post by andrepd »

Glyptodon wrote: post #428
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.

I don't think there's a way to unlink so long as there are particularly desirable and undesirable places to live.

There are way yes, such as Georgism or Socialism. They require rethinking some things and shaking some powerbases, so that's why they appear impossible.

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

#444

Post by throwaway316943 »

Smaug123 wrote: post #437
throwaway316943 wrote: post #415

Earlier quoted context omitted.

No thanks.

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

I do and I also respect others property rights. Communal ownership and responsibility should only cover those things for which there are no other options, even then they are hard enough to deal with.

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

#445

Post by ClumsyPilot »

XorNot wrote: post #442
VBprogrammer wrote: post #180

Earlier quoted context omitted.

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 w…

Apartments have always been kind of a sucker's deal compared to houses though. Houses in almost any condition can still be worth a ton, because you the owner have complete control over the state of the building on the land (including, knock it down and put a new one in).

that because the laws in UK basically turn a apartment ownership into a indentured servitude - you pay 100 years of rent for the privilege of being bound to the place, taking the cost of any remedial works, having no stake in the land and on the hook for ground rent and any feed the management company dreams up

In Czech Republic you actually own a share of the whole building and the land it stands on.

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

#446

Post by ClumsyPilot »

mustyoshi wrote: post #256
janekm wrote: post #247

Earlier quoted context omitted.

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.

for some people that 30% is literally impossible in a major city

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

#447

Post by ClumsyPilot »

nly wrote: post #62
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…

Old Victorian houses in London have been broken up in to 6-8 flats or more since the 80s. The original properties are just too large for single owner occupiers. Of course the resulting 2 bed flats are still on the market for $1M USD.

The original properties are just too expensive for single owner occupiers

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

#448

Post by mrslave »

KptMarchewa wrote: post #220
mrslave wrote: post #213

Earlier quoted context omitted.

Developers lobbying politicians. And because jobs! Is win-win[-everybody-else-loses].

Shouldn't the new houses have lower tax then? Why would developers lobby for lower taxes on old houses?

> Shouldn't the new houses have lower tax then? Why would developers lobby for lower taxes on old houses?

Sorry if my first comment was a bit coy and unclear. Both ancestor comments are about Australia & Belgium. Google tells me that in Australia new properties are incentivized over old:

>Grant: First home buyers can access a $10,000 grant when purchasing or constructing a new home, regardless of how much the property is worth. Stamp duty concessions: The territory government provides an up to $18,601 Territory Home Owner Discount (THOD) on stamp duty costs for first-time buyers.

My Aussie friends tell me this changes frequently, that it also differs by state, but some sort of incentive to prefer new properties have been policy for a long time.

GP says that Belgium penalizes existing houses:

>a 6% tax for an old house (10% up until very recently)

So there aren't lower taxes on older properties in either country. You get a discount on the taxes only when you purchase a new property, which is an incentive in alignment with the interests of property developers.

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

#449

Post by bradlys »

ethagknight wrote: post #369
hnnameblah365 wrote: post #260

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…

This is not correct, both land and structure have differing but related values. With persistently increasing construction complexity and building code, replacement cost generously outpaces existing building value. At least from a USA perspective, many neighborhoods are stuck with older, dated housing stock that would be aesthetically better off scraped and rebuilt in modern form, but the existing home is too valuable…

> With persistently increasing construction complexity and building code, replacement cost generously outpaces existing building value. At least from a USA perspective, many neighborhoods are stuck with older, dated housing stock that would be aesthetically better off scraped and rebuilt in modern form, but the existing home is too valuable and ground-up new construction too expensive relative to market.

Is this not NIMBY-ism? You either need to build a new house that is very expensive OR you can just buy my little shit-shack that is grandfathered in. It's a bargain in comparison - believe me! Either way, pay me lots of money or increase the value of my property indirectly.

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

#450

Post by ajxs »

mikem170 wrote: post #438
ajxs wrote: post #277

Earlier quoted context omitted.

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?

What's a reasonable alternative that an individual can make today? The economic pressures that compel individuals to purchase or rent expensive property are ever-present. I agree with you that some kind of systemic regulation is probably necessary to alleviate the current state of the housing market in world cities. Holding out for political change is not a viable solution however. For a prospective owner, the longer you wait to purchase the harder it will be.
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