Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The economy is going great, except for the housing market

investopedia.com

Post reply on HN
Print view View original

51–60 of 84 posts

Re: The economy is going great, except for the housing market

#51

Post by Supermancho »

leereeves wrote: post #12
zeroonetwothree wrote: post #7

Earlier quoted context omitted.

The majority of voters are homeowners so that’s probably why it isn’t going to happen so dramatically.

Regular homeowners aren't benefiting much from high house prices. If they sell they just have to buy another, so it's a wash. If they borrow against it, they have to repay at currently high interest rates.

> If they sell they just have to buy another, so it's a wash.

They have to buy another at a higher interest rate. It's not a wash, I think it's a loss for most. If I sold my house, then bought another at the same size, the gains would not cover the monthly mortgage increase for very long.

Re: The economy is going great, except for the housing market

#53

Post by smileysteve »

lr4444lr wrote: post #27
smileysteve wrote: post #4

The 2017 tax act had an obfuscated impact on corporate ownership of houses. Capping the personal SALT deduction while simultaneously lowering the corporate tax rate made local tax policies to increase local ownership ineffective.

What do federal corporate tax rates have to do with municipalities setting their own property taxes? Nothing stops them from giving preferential treatment either to primary residence homeowners. Municipalities are their own worst enemies with restrictive zoning and small-minded inability to consolidate services with neighboring districts that don't need so much duplication.

Relativity;

If corporate income taxes are 21%, income is reduced by expenses such as property taxes.

If individual income tax rates are 24%/32%; and a state has a low income tax rate of 5%; then a married couple making $200k earned income, then a salt cap at $10k, pays 25% more in property taxes than the corporation.

So, even if the state and local taxes are massaged to give owners a 25% discount for being owner occupied; they don't.

The idea is not the the state/city needs less services; owner occupied properties often want more services and are willing to pay for it; but now the city can no longer create policy that supports that.

Re: The economy is going great, except for the housing market

#54

Post by jauntywundrkind »

rootusrootus wrote: post #42
smileysteve wrote: post #4

The 2017 tax act had an obfuscated impact on corporate ownership of houses. Capping the personal SALT deduction while simultaneously lowering the corporate tax rate made local tax policies to increase local ownership ineffective.

Saw that directly. Everyone talks about the tax cuts , but my taxes went up as a result of the SALT changes. There was a real effect on people, especially those in high cost of living areas, when they could no longer deduct mortgage interest. I wonder if it will be allowed to expire on schedule and my taxes will go back down. Probably too much to hope for.

My first order ignorant analysis is this feels like something done to make people dislike higher tax or progressive states. It increases the indigestion/frustration with taxes & the state. Makes the payments compound.

But I'm also willing to admit there may be some very solid policy reasons why this is a good idea. I have tried to imagine some, but no luck so far!

What kind of impact did making SALT tax no longer deductable have on the federal government? Did this change the budget noticeably?

Re: The economy is going great, except for the housing market

#55

Post by smileysteve »

qwertyuiop_ wrote: post #14
smileysteve wrote: post #4

The 2017 tax act had an obfuscated impact on corporate ownership of houses. Capping the personal SALT deduction while simultaneously lowering the corporate tax rate made local tax policies to increase local ownership ineffective.

Could you explain ?

Yes, relatively, the lever that municipalities had to encourage owner occupied properties (a homestead exemption) is taken away for upper middle class (especially if a married couple each has a tech salary, and if the state has even a low income tax rate)

Therefore, it becomes beneficial for the (even the same individuals) to invest in corporations that rent out real estate; and removes the ability for the city to use homestead exemptions to help discriminate to encourage owner occupied units.

So you get higher home prices/rents with fewer owner occupied properties, with less incentive for community investment (including property taxes), and fewer levers for the state/municipality to pull.

Re: The economy is going great, except for the housing market

#56

Post by Dalewyn »

nostromo wrote: post #44
Dalewyn wrote: post #22

I think the economy is doing decently in aggregate , but doing either extremely great or extremely bad depending on which specific part of the economy you look at. Kind of like how the US Air Force will tell you there is no such thing as The Average Man. Looking at the securities market (stocks and bonds) they're basically a statistical anomaly with how good they're doing. Inflation is irrelevant with luxury goods an…

Bonds are not doing well. Far from it.

And yet US Treasury bonds are the gold standard for bonds.

Besides, if the theory of inverse correlation or no correlation between bonds and stocks (read: the economy) holds, it's arguably a good thing bonds in relative terms aren't doing too hot right now.

Re: The economy is going great, except for the housing market

#57

Post by _heimdall »

worstspotgain wrote: post #46
_heimdall wrote: post #40

Earlier quoted context omitted.

If you want to consider interest rates in the usual model where increases are meant to reduce demand and lower prices, the Fed either really screwed up or we're about to see a huge drop in the housing market. Prices consistently went up over the last couple years of high rates. The recent fed funds rate drop didn't seem to help, and last I checked loan rates had stayed flat or actually gone up a bit. If loans weren't…

Prices are not the relevant statistic though, it's housing starts [1]. They dropped from ~1.8M in April 2022 to ~1.3M today. Prices are affected by supply and demand equally, while starts are much more affected by supply. As for how the Treasury and Fed managed the crisis, it was easily the most incredible macro success story since I've been alive. Had you told me in 2022 that they'd manage sub-3% inflation without a…

> Prices are not the relevant statistic though, it's housing starts [1]. They dropped from ~1.8M in April 2022 to ~1.3M today. Prices are affected by supply and demand equally, while starts are much more affected by supply.

New construction and prices are always connected, I'm not sure how you could consider one without the other. New builds increases supply, but building them requires buyers willing to pay market price for them. You can't have one without the other.

> As for how the Treasury and Fed managed the crisis, it was easily the most incredible macro success story since I've been alive. Had you told me in 2022 that they'd manage sub-3% inflation without a recession at all, I'd have said you believed in fairy tales.

Its too early to make that call either way. They may very well have managed the "soft landing" they kept pitching, but we really won't know for sure for at least a decade or so. Markets move slow and economies move even slower, give it time to shake out before popping bottles and awarding Nobel Prizes.

Re: The economy is going great, except for the housing market

#58

Post by _heimdall »

germinalphrase wrote: post #50
FooBarBizBazz wrote: post #47

Earlier quoted context omitted.

Already you can barely function as a citizen unless you either own a house or pay rent to a landlord. Want to live in your car? Want a bank account registered to a box at the Post Office? Can't do it! Whether you are a human being deserving of rights is determined -- who would have guessed? -- by whether you get a bill from the electric company. Homeowners are the only caste that matters. Renters are grudgingly accep…

Allowing the post office to do very basic banking sounds like a fine idea to me.

Please don't ask for the goverent to have full control over the entire life cycle of our wealth. They already print the money and set rates that largely define what loans cost us. If the government also directly owns our bank accounts as well we really are entirely at their whims.

Not only could the government implement austerity to pay of debt or attempt to reduce inflation, they could directly control approval over every digital payment you make.

Re: The economy is going great, except for the housing market

#59

Post by dragonwriter »

_heimdall wrote: post #58
germinalphrase wrote: post #50

Earlier quoted context omitted.

Allowing the post office to do very basic banking sounds like a fine idea to me.

Please don't ask for the goverent to have full control over the entire life cycle of our wealth. They already print the money and set rates that largely define what loans cost us. If the government also directly owns our bank accounts as well we really are entirely at their whims. Not only could the government implement austerity to pay of debt or attempt to reduce inflation, they could directly control approval over…

> they could directly control approval over every digital payment you make.

Is it better that this is instead controlled by a narrow set of “private” actors who use their private status to deny everything the government would deny plus things it constitutionally (mostly for first and/or fifth amendment reasons) couldn't?

Re: The economy is going great, except for the housing market

#60

Post by _heimdall »

FooBarBizBazz wrote: post #47
_heimdall wrote: post #36

Earlier quoted context omitted.

Its quite a nice circle. First you limit voting rights to land owners, then people wise up and let everyone vote, then you incentivize anyone that may vote to buy land.

Already you can barely function as a citizen unless you either own a house or pay rent to a landlord. Want to live in your car? Want a bank account registered to a box at the Post Office? Can't do it! Whether you are a human being deserving of rights is determined -- who would have guessed? -- by whether you get a bill from the electric company. Homeowners are the only caste that matters. Renters are grudgingly accep…

This seems like a bit of an extreme take to me. Some jurisdictions are shitty towards anyone that sleeps in public, but people do still do it. I know a few people that would fall into the category of "vanlife", they have stories to tell about cops trying to tell them they can't sleep there but ultimately they still live in a van (occasionally down by the river).

Many banks don't let you use a PO Box, but there are services for mail forwarding that give you a regular address. That also isn't my biggest complaint with banks today if we want to complain about them, I don't think that'd rank in my top 10.

What have you seen that made you think homeowners are a caste, or that anyone who doesn't own or rent is subhuman? Genuine question, I just haven't seen anything in my years to make me see the world that way.

Post reply on HN