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

economist.com

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

#221

Post by lotsofpulp »

dclusin wrote: post #193
AlexandrB wrote: post #161

Earlier quoted context omitted.

What gets me is the dramatic language. I don't think home values would "massively" decrease with a few multi-family residences in the area. What's funny too is that even if they did, the Andreessen family is one that could easily afford to eat the loss. Meanwhile no one blinks twice when home prices increase 20% over just a few years and put housing out or reach of even more families.

My personal belief is that the housing supply scarcity is having the opposite effect and is actually holding property values down. Let’s say there’s two 1 acre lots that have a market value of $1m each. A developer can buy them and turn them into 8 condos and sell them each $600k yielding $4.8m. Is it possible the developer would pay more than $1m apiece for these properties? Obviously, these numbers are made up some…

At the property values referenced in above post, the opposition to apartment buildings is not exactly about properties’ sale prices. Presumably, the residents are happy where they live, so their priority is not in maximizing the sale price, but keeping the riff raff out that cannot afford $1M+ homes, and hence have to live in apartments.

The concern about decrease in home prices is just cover from accusations of discrimination, although keeping home prices high is a necessary component. But maximizing them is not.

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

#222

Post by ska »

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…

Don't lots of places differentiate between a primary residence and any other real estate, basically for this reason?

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

#223

Post by pdonis »

fezfight wrote: post #185
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…

So I think folks overlook just how wealthy certain investors are when they propose the fix is to just build new properties. Those will also get snapped up by investors. To fix the problem, investing in housing needs to be either banned or made very unattractive. You only need one house to live in.

> You only need one house to live in.

Many people do not want to own a home, they would rather rent. Someone has to be the landlord for all those people, and to all those someones, the home is an investment. You can only get rid of homes as investments if you get rid of renting.

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

#224

Post by l33t2328 »

seiferteric wrote: post #218
namdnay wrote: post #173

Earlier quoted context omitted.

> 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.

That’s what every parent hopes to leave their kids with: an obligation

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

#225

Post by bthater »

gitrog wrote: post #147
pochekailov wrote: post #26

Earlier quoted context omitted.

Q1: Yes, there is. Once a professional politician sees more activity from renters, they will include the renter's interests into their agenda Q2: Yes, obviously there is a positive correlation. This is exactly why renters need to fight: stakes are against them. Current status quo is in favor of homeowners; it will not be possible to change it while being passive. Renters and homeowners have conflict of interests, the…

I'm sorry but your answer to Q1 is extremely naive. There is no way that activity from renters will even remotely approach the power of those who own property in politics. The latter group can lobby and make campaign donations, the former can't exactly... The best thing you'll get is a campaign promise to do something about it, but not much action. The only way something will actually be done about it is if the effec…

The latter group can unionize like the tenants union of Washington[1]. Unions can lobby on the behalf of their members and make campaign donations based on their dues. While their power may not be as great as the amount of individual homeowners who can independently donate a union is a good mechanism here for renters to advocate for affordable housing. Here in Seattle there are multiple unions that have lobbied to local city council members for increased tenants rights such as 6 month notice for increase in rent[2]. _Things_ are being done about the problem at the local level across the country through unionization of renters and workers.

[1]: https://tenantsunion.org/ [2]: https://council.seattle.gov/2021/09/27/sawant-congratulates-...

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

#226

Post by [deleted] »

mminer237 wrote: post #192
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…

You don't write off your rental income. You depreciate the rental property over 27½ years and write that off against your rental income. Few rental properties will have under a 3.7% ROI where depreciation would cover all the income. At best you might be paying half tax. In your example, you'd pay no tax, but you'd lose out on the potential income you could have had with better investments (and lose about 6 years' wor…

[deleted]

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

#227

Post by horsawlarway »

goodpoint wrote: post #203
axg11 wrote: post #141

Earlier quoted context omitted.

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.

Almost never. Housing has always been a basic necessity for survival. Only when feudal societies developed you had landlords and serfs and that's hardly something to be proud about.

> feudal societies developed

Sooo... the last thousand some years, given that feudalism was widespread by the 11th century (and housing was absolutely an investment before that). Basically - half of recorded history (~400bc for Europe), and longer than the United States has existed.

I don't understand what you think this comment means...

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

#228

Post by pessimizer »

datacruncher01 wrote: post #200
fezfight wrote: post #185

Earlier quoted context omitted.

So I think folks overlook just how wealthy certain investors are when they propose the fix is to just build new properties. Those will also get snapped up by investors. To fix the problem, investing in housing needs to be either banned or made very unattractive. You only need one house to live in.

I agree with you, that's a whole other problem. But housing like many goods is still subject to supply and demand. The investors buy the properties because they are actually good investments in situations where housing is in demand, and that's true in all the major cities where we're not building enough housing and appropriately sized housing. If we increase the supply, if we make smaller housing units so there are a…

Everybody has a place to live. Housing isn't scarce. When housing is scarce, people are homeless or living in extremely tiny spaces. They are not. The problem is that people wouldn't be able to afford to own the places where they live.

Housing is only "scarce" in desirable places, and that's simply tautological. The sum of unfulfilled desires is the contrapositive of scarcity.

Housing is a market in which a very tiny percentage of goods are up for sale at any particular time, and the projected prices of those goods are heavily shared among a huge network of people who profit when the prices are high. The owners of those goods are often heavily leveraged, and can't afford to lower the price significantly, and the transaction and mortgage costs push them to raise the price to cover those costs at the next place they buy.

> They can only extract so much wealth from housing before people move for alternatives.

No such alternative, which is why the market is as lucrative to exploit as health care. Finding an "alternative" to health care is just to find another type of health care, and if you find an alternative to being housed, you've just found a new kind of house.

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

#229

Post by idkyall »

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…

> 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.

I think it's fine to allow this treatment for a home used as a primary residence for the exact reasons you mention, but I don't understand the logic of allowing it for an investment property

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

#230

Post by Supermancho »

adamsmith143 wrote: post #166
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…

Little wrinkle in your calculation is that 15000 in rental income doesn't even cover half of your Mortgage + Property Tax bill.

> 15000 in rental income doesn't even cover half of your Mortgage

That depends on how much you put as a down payment. Work backwards from the payment to make it sensible.

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