Housing is at the root of many of the rich world’s problems (2020) • Hacker News Board

Re: Housing is at the root of many of the rich world’s problems (2020)

#211

Post by Ekaros » Wed, Aug 17, 2022, 4:09 PM UTC

sfe22 wrote: post #169

idkyall wrote: post #122

Housing in the US has gotten to where it is due to horrible laws effectively allowing total tax avoidance for landlords. Take some investment property. You buy it at some basis price, let's say 500k. You rent it out for 15k a year. Each year you can offset your rental income against deprecation of the property and property taxes - meaning, you pay no income tax on your rental income. ~30 years later, you've deprecate…

It is easy to pick an example like this to show the “bad” sides. But what is the alternative? If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill. This is just deferring the tax not avoiding it. W…

How high would that tax bill be? 50-60%? Still would be lot under fair value of property and thus should be able to get loan against that tax amount. So I really see no reason not to have it taxed.

Re: Housing is at the root of many of the rich world’s problems (2020)

#212

Post by randomdata » Wed, Aug 17, 2022, 4:10 PM UTC

ryukafalz wrote: post #133

api wrote: post #59

Earlier quoted context omitted.

The only rational move is for aspiring owners to leave SF, and not for another crazy expansive city. There is a gigantic country and world out there.

I would say a non-exclusionary city would work just as well. Tokyo is the most expansive city I can think of and they've managed to keep prices down. Still, fighting to make US cities more livable is a laudable goal.

> and they've managed to keep prices down.

Perhaps it would be more accurate to say that they managed to crumble their economy which brought the value of housing down with it? They had a massive housing boom before the "Lost Decades". Japan is no stranger to asset prices rising out of control.

That said, when I have looked at Tokyo pricing it has always been in line with high priced North American cities, only configured differently. The difference in configuration means that the sticker price is often lower, but you are getting less for that lower price. Apples to apples the prices have always shown to be in the same ballpark.

Re: Housing is at the root of many of the rich world’s problems (2020)

#213

Post by toomuchtodo » Wed, Aug 17, 2022, 4:11 PM UTC

SamoyedFurFluff wrote: post #175

sfe22 wrote: post #169

Earlier quoted context omitted.

It is easy to pick an example like this to show the “bad” sides. But what is the alternative? If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill. This is just deferring the tax not avoiding it. W…

I think inheriting property should absolutely force children out of their home unless they plan to actually live in it as their primary home immediately, and even if they do, they should be paying the same taxes as the rest of the neighborhood.

60 days to occupy would be reasonable, same guidelines for when a primary residence mortgage is originated.

Re: Housing is at the root of many of the rich world’s problems (2020)

#214

Post by throwaway908724 » Wed, Aug 17, 2022, 4:11 PM UTC

idkyall wrote: post #122

Housing in the US has gotten to where it is due to horrible laws effectively allowing total tax avoidance for landlords. Take some investment property. You buy it at some basis price, let's say 500k. You rent it out for 15k a year. Each year you can offset your rental income against deprecation of the property and property taxes - meaning, you pay no income tax on your rental income. ~30 years later, you've deprecate…

Wow, I wish.

I'm speaking as someone who put all his retirement savings into index funds year after year, but then married someone whose job is related to real estate. Real estate feels more concrete and understandable to her than finance, so that's where our money goes now.

It's not easy free money, and I don't know why you would think that any high-profile, low-barrier-to-entry investment would be easy free money. Half of my friends have either bought property or are constantly talking about it. My friends are part of a horde of first-timers who believe, like you, that it's easy free money, and their belief inflates prices.

And that's not just my amateur opinion: my wife and I sit in on a developer happy hour where experienced developers constantly bemoan that they haven't been able to work with certain types of property in years, because they get outbid by naive first-time buyers who don't have a plan for making money other than betting on the market going endlessly up. People who are looking for income rather than appreciation are not seeing opportunities at the current prices.

Thanks to my wife managing our properties herself and having a lot of applicable skills from her profession, we manage to make some money, but every hour she spends managing property is an hour less (or two, really) that she can bill her clients. I doubt that if we adjusted for that it would work out to be a wise use of time. It's work she enjoys and finds satisfying, so we don't look that closely at whether her time (or our money) would be more profitably invested elsewhere, but I'm certainly not quitting my software development job to double our commitment to real estate.

I'm in Austin, one of the hottest markets in the country, so in the end, it's possible that everyone regardless of how naive they are will be rewarded by continued appreciation. Income from real estate hasn't been a game-changing multiplier for us, but appreciation might be. Or not. That aspect of it is just a gamble.

Re: Housing is at the root of many of the rich world’s problems (2020)

#215

Post by DubiousPusher » Wed, Aug 17, 2022, 4:11 PM UTC

aluminussoma wrote: post #201

datacruncher01 wrote: post #132

It's a simple problem, we turned housing into an investment. Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. The simple solution is we need more housing in cities and suburbs. How we get there is an exercise that's taken on by local housing authorities and they are not incentivized to solve the problem. That's because they work for voters who…

I wonder if persistently low interest rates is the real culprit that led to housing as investment. I have been recently intrigued by FinTwit arguments that an excess of demand spurred by too low interest rates is the real reason for many shortages. As a saver, that argument naturally appeals to me.

> I have been recently intrigued by FinTwit arguments that an excess of demand spurred by too low interest rates is the real reason for many shortages

I don't believe this is the case as since 2008 the U.S. construction industry has not even built enough units to keep up with population growth. I believe this is a supply problem which is two-fold.

1) Restrictive zoning and permitting which really took off around the 70s

2) A boom and bust construction cycle which has convinced many to not risk it any longer and find other work (this which has been going on for decades but truly inflected after 2008).

Re: Housing is at the root of many of the rich world’s problems (2020)

#216

Post by namelessoracle » Wed, Aug 17, 2022, 4:14 PM UTC

namdnay wrote: post #173

sfe22 wrote: post #169

Earlier quoted context omitted.

It is easy to pick an example like this to show the “bad” sides. But what is the alternative? If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill. This is just deferring the tax not avoiding it. W…

> If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. so if they can't afford to pay tax on the windfall, they'd have to sell the house and buy a smaller one. is that the end of the world? > Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill what…

So a family on hard times should be forced to leave their grandmothers home when she dies and hope they can find a new one? Gentrification can easily push a property in the place they've lived their whole lives out of their price range. And the family home might not have been super well kept up so the "windfall" isn't as big as the property values in the area may reflect. This happens now with gentrification in big cities, it would get worse with what you are saying.

Being able to leave something to your descendants is a critical part of society. If people know they cant leave anything behind they start acting differently (and not in a good way). I understand a key part of communism is you and your family own nothing, but trust me you don't want people to have a use it or lose it attitude towards everything.

Re: Housing is at the root of many of the rich world’s problems (2020)

#217

Post by bobthepanda » Wed, Aug 17, 2022, 4:15 PM UTC

soared wrote: post #205

bobthepanda wrote: post #197

Earlier quoted context omitted.

Most cities are where they are because all the good spots have been taken. Any new significant city will need billions if not tens of billions of dollars on transport links, water, sewer, etc, if there is even a way to bring a city sized amount of potable water. And then you have to convince people to actually move their residences and jobs there. Most people don‘t like betting uprooting their whole family and social…

Cities are where good spots were x years ago, where x is somewhere between 300 and 100. The world is different with transportation/etc and the good spots don't look the same. See the flood of people to small mountain towns during covid. They weren't the best places before because they were hard to get to and from, but with highways, small airports, fiber internet, etc they are in many ways better than cities. With en…

By definition, the carrying capacity of a small mountain town, is small.

Summit County is currently in drought. Where is more potable water for more residents going to come from? (That‘s a pretty big problem in most of the West as drought conditions show no sign of improvement.)

The cities are located where they are, because barring major changes transport costs going from cheapest to most expensive are navigable waterways > rail > road > air. Flying out of small airports is pretty expensive and not something that most Americans can afford to do regularly.

Re: Housing is at the root of many of the rich world’s problems (2020)

#218

Post by seiferteric » Wed, Aug 17, 2022, 4:16 PM UTC

namdnay wrote: post #173

sfe22 wrote: post #169

Earlier quoted context omitted.

It is easy to pick an example like this to show the “bad” sides. But what is the alternative? If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill. This is just deferring the tax not avoiding it. W…

> If people had to pay inheritance tax on their family home, how many could not afford such a tax bill and would have to get rid of their family home to please the tax man. so if they can't afford to pay tax on the windfall, they'd have to sell the house and buy a smaller one. is that the end of the world? > Regarding the cost basis rest that is so people can upgrade their house without having to pay a tax bill what…

If you had to pay the tax you could probably just finance it anyway instead of paying it all at once so it would be just like having a new (small) mortgage.

Re: Housing is at the root of many of the rich world’s problems (2020)

#219

Post by horsawlarway » Wed, Aug 17, 2022, 4:16 PM UTC

axg11 wrote: post #141

datacruncher01 wrote: post #132

It's a simple problem, we turned housing into an investment. Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. The simple solution is we need more housing in cities and suburbs. How we get there is an exercise that's taken on by local housing authorities and they are not incentivized to solve the problem. That's because they work for voters who…

When was housing not an investment? Throughout history, people have always wanted to drive up the value of their land and properties. There are still plenty of places in the US/Canada/UK where housing is cheap. The problem is that nobody wants to live in those areas.

I genuinely don't understand why you're getting down-voted.

Not only has it been true historically - there's a real reason to allow it: it incentivizes owners to maintain and improve their properties. Further... maintenance of that property requires investment, both in time and labor. If you make it so that owners have no reward or incentive for improving their properties, they WON'T DO IT.

Why invest money into fixing your place if the price of the house is capped anyways? Trying to prevent this style of investment has almost always failed, and generally makes neighborhoods that are nice/attractive places to live much less nice and attractive - because people stop maintaining and improving them.

I think the real question right now that needs to be answered is: Why are we not able to create new urban areas in low cost areas? What has changed so that we no longer create towns?

Because frankly - right now the issue isn't housing, it's housing in areas where economic opportunities exist. Why are economic opportunities so exclusive to high population centers? What can we do to change that?

Re: Housing is at the root of many of the rich world’s problems (2020)

#220

Post by DubiousPusher » Wed, Aug 17, 2022, 4:18 PM UTC

Geee wrote: post #81

Housing is not the root of the problem. The root of the problem is our current inflationary debt-based monetary system. Banks create currency by giving out mortgages, and mortgages are backed by real estate. Currency used to be backed by gold, and now it's backed by real estate. In other words, real estate has become money.

Do you have any idea how many people were under housed when the gold standard was the international order?

The mid century boom in housing is almost certainly a direct product of the inflationary and easy credit economy that was created by loosening the gold standard.