Ask HN: Anyone else feels the commoditization of real estate is unethical? • Hacker News Board

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#451

Post by MontyCarloHall » Sat, Aug 13, 2022, 3:41 PM UTC

oblio wrote: post #406

MontyCarloHall wrote: post #272

Earlier quoted context omitted.

>but everyone who owns property would be against it because they don't want to see their net-worth drop. They would be against it because it would mean they can never move, since they are now underwater on their mortgages. Most people who only own one property don’t care about its impact on their net worth unless they are planning on downsizing, since they can’t just liquidate the house to purchase other things as th…

It depends on where they want to move. For national policies prices should drop nation wide, ergo people would still be able to move inside the same country (probably 99% of relocations). And if they don't sell, they wouldn't care much. Yeah, annoying, but as long as you pay the installments, not much changes in practice.

>For national policies prices should drop nation wide, ergo people would still be able to move inside the same country

No. Suppose I buy a million dollar house at 20% down. I thus owe $800k in principal to the bank. I live in the house for a few years, and build up $100k in additional equity beyond my down payment.

If housing prices stayed the same, I could sell the house for $1M, use $700k of that to pay off my remaining principal, and use the remaining $300k towards my next $1M house. (If housing prices appreciated by 20%, I have $300k in equity and $200k in profit to put towards another $1.2M house.)

Now suppose the housing market crashes by 50% and my house is worth $500k. If I sell my house for $500k, I still owe $200k of principal to the bank. I don’t have any leftover money to go towards another $500k house, or even a $0 house; instead, I have $200k in debt that buys me absolutely nothing.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#452

Post by bamboozled » Sat, Aug 13, 2022, 3:42 PM UTC

BlargMcLarg wrote: post #429

bamboozled wrote: post #404

Earlier quoted context omitted.

One thing I find interesting though is that at least in Australia, it's speculated that a lot of the property pressure is from foreign investment, especially from China. So if China's population starts to crash or their economy goes bad at some stage what effect will this then have on the Australian market (for example)? I'm guessing not much because the inflationary property price damage has been done. It's a curiou…

Too many variables to say. In theory, you would say a stable population all other things equal would keep the housing prices equal (or drop a little initially since predictions aren't green anymore). In practice, even without foreign money, there are still many ways with which the value of housing can go up. And as long as the majority of voters want housing to go up, it likely will. Practice can be seen by the many…

However, unless there is another population boom on the horizon (which really seems unlikely at present). Property speculators must have their doubts.

This combined with climate change and it's ability to change the landscape (literally) makes it getting harder to predict where people might actually want to live.

For example, I visited Scottsdale, Arizona not long ago which is going through it's own mini-boom at the moment. Will that be a nice place to live in ten years with rising temps? One would have to ask the question? Would people still pay huge money to live in Tahoe with poor snow quality and lots of bush fires in summer?

You did say there's too many variables :)

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#453

Post by mxkopy » Sat, Aug 13, 2022, 3:42 PM UTC

missedthecue wrote: post #191

targ65 wrote: post #172

Like another comment here mentioned, housing is complicated. People don't want to live in a random house in the middle of nowhere ('roof over your head'). Some people prefer to be homeless on the street versus getting to a roof over their head that they don't like. People want to live where they want to live (near family, jobs, culture etc) Take NYC for instance. Politicians try to address the NYC housing crisis from…

It's amazing how many people in government globally refuse to understand this. The UK government has just been talking about inheritable 50 year mortgages. No one wants to build more housing. I think it might help people understand to put it in terms like this: there are 100 housing units out there and 150 people. How do we solve the problem?

Make it OK for 2, 3 people to live in one "housing unit". The whole "out of the house by 20" thing is a pretty new and American idea. Intergenerational housing is going to be the future till this shit gets sorted.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#454

Post by end_of_line » Sat, Aug 13, 2022, 3:42 PM UTC

birdyrooster wrote: post #306

_8j50 wrote: post #228

Earlier quoted context omitted.

You are right that throwing money at it isn't a solution. But corporations should not own residencial housing and no one should be allowed to sell propery at a meaningful profit if they own multiple properties. The government should excecise it's power of taxation to take the profits of an investment housing sell (as defined above: multiple property owner selling at profit) with something like a 95% tax on profit and…

No one needs more than one house period.

Yeah, nobody should have vacation cabin. It's very bad for the sake of society.

I will paraphrase wrongly attributed to Bill Gates quote.

15m should be enough for each worker in this world.

Marx would be very happy hearing this.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#455

Post by horsawlarway » Sat, Aug 13, 2022, 3:42 PM UTC

capitalsigma wrote: post #309

horsawlarway wrote: post #68

Earlier quoted context omitted.

> why can't real estate work the same way? So I'll tackle this... Food is highly responsive to market pressure because it is nearly entirely fungible. I'll throw this here for the sake of making sure we're on the same page when I say that --- Fungible: able to replace or be replaced by another identical item; mutually interchangeable. --- So food markets are sensitive to pressure because there is hardly ever anything…

> I think we'd see pretty insane food prices then as well. All you are saying is "imagine if food supply was more constrained" with more words. Commodification and constrained supply are orthogonal concepts -- the argument here is that increased commodification may lead to increased supply, so long as the market is allowed to act freely. > that ear of corn was where your family has been buried for centuries, This arg…

> This argument of "what if your family lived there before" in housing discussions annoys me to no end.

It's NOT about right - it's about demand. It's not relevant at all if it annoys you, the issue is that people can and do form sentimental attachments to the places where they live, and those attachments influence their willingness to pay (or hinder their willingness to sell).

And no - I'm not saying "imagine if the food supply was more constrained". I'm very clearly saying that food is fungible (you know - the thing I actually said...).

The housing supply is both constrained and non-fungible. The food supply can be constrained or not, but it's fungible as all get out - For the purposes of not starving, a calorie is a calorie, and where it comes from is irrelevant in a broad sense.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#456

Post by turtlebits » Sat, Aug 13, 2022, 3:43 PM UTC

VirusNewbie wrote: post #426

rojobuffalo wrote: post #257

Earlier quoted context omitted.

I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes. Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value. The counter-argument people make is "that wou…

Tax land value appreciation, that is the rent seeking part of the equation. You want to incentivize developers to create more units, you want to discourage people buying units hoping to bank on appreciation.

Then you’ve pretty much forced every retired homeowner to sell and move when their neighborhood starts to become desired.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#457

Post by xeromal » Sat, Aug 13, 2022, 3:44 PM UTC

mnd999 wrote: post #335

targ65 wrote: post #172

Like another comment here mentioned, housing is complicated. People don't want to live in a random house in the middle of nowhere ('roof over your head'). Some people prefer to be homeless on the street versus getting to a roof over their head that they don't like. People want to live where they want to live (near family, jobs, culture etc) Take NYC for instance. Politicians try to address the NYC housing crisis from…

> Deregulate construction, get rid of unions, prioritize developer rights over tenant or homeowner rights. That’s how you build slums. Which I think is what you’re proposing.

Pretty sure that's the point they're making. It doesnt' sound like they're proposing it.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#458

Post by ethbr0 » Sat, Aug 13, 2022, 3:44 PM UTC

nrmitchi wrote: post #276

rojobuffalo wrote: post #257

Earlier quoted context omitted.

I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes. Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value. The counter-argument people make is "that wou…

The biggest thing missed when proposals like that is that not everyone wants to (or does it make sense to) buy a property. Making it 4x more expensive to own a rental property means that rent will be 4x more expensive for those that have to rent. If I was moving to NYC for 6 months, or 2 years, there’s no way I want to spend tens of thousands of dollars buying-and-then-selling a property.

> If I was moving to NYC for 6 months, or 2 years, there’s no way I want to spend tens of thousands of dollars buying-and-then-selling a property.

There's no fundamental reason real estate transaction costs should be what they are.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#459

Post by rojobuffalo » Sat, Aug 13, 2022, 3:45 PM UTC

nrmitchi wrote: post #276

rojobuffalo wrote: post #257

Earlier quoted context omitted.

I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes. Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value. The counter-argument people make is "that wou…

The biggest thing missed when proposals like that is that not everyone wants to (or does it make sense to) buy a property. Making it 4x more expensive to own a rental property means that rent will be 4x more expensive for those that have to rent. If I was moving to NYC for 6 months, or 2 years, there’s no way I want to spend tens of thousands of dollars buying-and-then-selling a property.

4x higher tax, not 4x total cost. First housing prices would crash, so rental prices would also drop. And they wouldn't go up 1:1 with tax increases. They would go up by some percentage which is fine. It should be a little more expensive month-to-month to rent vs. own. Renting should still be available, but a lower proportion of housing should be rentals.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#460

Post by ItsMonkk » Sat, Aug 13, 2022, 3:45 PM UTC

foogazi wrote: post #418

ItsMonkk wrote: post #333

Earlier quoted context omitted.

Not true, but I'm a Georgist so would be against the GP's targeting non-owner tax. Tax everyone according to the value of the unimproved value of their land. I can show you plenty of places with $3k+ rents in SF with prop 13 property taxes that have not changed their tax meaningfully in decades. Taxes have absolutely no effect on what the renter pays. The tenant is always paying the land value. It's just going straig…

> Tax everyone according to the value of the unimproved value of their land. Why ? How do you figure the unimproved value of land ? There is so much land in this country why do we have to fight over the coastal regions ? Why not incentivize building out other areas and creating population hubs ?

If I sent you a picture of a home, and I asked you what it was worth, you wouldn't be able to answer me until I first mentioned it was in the middle of SF or if it was in the middle of the Arizona desert. The majority of urban values are not the value of the improvements but the value of the land.

The value of the unimproved value of land comes from your neighbors. It comes from your city. When roads and sewers and train stations are built, the value of being close to that infrastructure is given to the existing landowner. By properly returning this value to the city that created it, it gives them funding that they can use to build more infrastructure.

Eventually with a Land Value Tax is in place, what you propose of building new cities will happen. If you treat a city like a company, we might even see investment companies funding new cities. They make an investment of an infrastructure, get a profit, then they can use those profits and give back to their shareholders - the citizens. Or they could use those profits to build another city. The existing paradigm doesn't allow proper investment.

Right now they only charge for their costs and let the landowners take their share while the renters don't see a dime. Imagine if a company was not allowed to make a profit, and could only sell for a cost. That's exactly what happens with real estate today. They let landowners sit on empty lots that appreciate while they do nothing. They incentivize minimum parking requirements and single family zoned cities.