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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)

#321

Post by nradov »

lotsofpulp wrote: post #88
nradov wrote: post #78

Earlier quoted context omitted.

Most of the laws regarding property taxes are set at the state level, not the municipal level. In California, a voter in Modesto can influence tax rates in San Francisco. Local votes only control minor things like special additional school district assessments.

That is a California specific phenomenon due to various caps they put at state level on the rate at which property taxes can be increased

Even in other states which lack property tax caps, the basic framework within which tax rates are set is controlled at the state level. For example, some economists have proposed replacing property taxes with land value taxes but it would be impossible for a single city to do so without enabling state legislation.

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

#322

Post by nradov »

newsclues wrote: post #61
pochekailov wrote: post #14

Nothing will change while the homeowners have more political power than the renters. Even in the cities where the renter population is bigger than the homeowners, such as in Seattle, half of the votes come from people of > 65 years old (all of whom are homeowners, likely more than one home). Young people simply won't vote at all. There is very little incentives for the young people to vote. Even if you cancel all the…

I’m not sure. At a certain point, if landlords strangle renters it can make hiring hard (workers can’t afford Cost of living if rents are too high), thus making the business environment uncompetitive. Will the business community have more power than landlords? I think so, eventually.

Peter Thiel agrees and has shifted his investments out of the Bay Area because high housing prices make it too expensive to hire workers there.

https://sf.curbed.com/2018/3/19/17138290/peter-thiel-slumlor...

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

#323

Post by Jiro »

dionidium wrote: post #275
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…

> It's a simple problem, we turned housing into an investment. People are not natural economists and will basically dig in to support the status quo until that status quo changes, at which point they'll support the new one. Americans, for example, buy new cars at an average new price of $40k and for most of my life accepted uncritically that the value of those cars would plummet the second they were driven off the lo…

https://en.wikipedia.org/wiki/The_Market_for_Lemons

There's a legitimate reason why a car immediately loses its value. People are more likely to sell cars that have something wrong with them. The market price for a car that you just drove off the lot is not the market price for an average car of that age, it's the market price for the subset of cars of that age that people want to sell. Because a car in that subset is more likely to have something wrong with it, its value is lower. Even if you personally are not selling the car because there's something wrong with it, it's hard for the buyer to know this.

If people had magic X-ray eyes that could tell that the car you just drove off the lot doesn't have more problems than an average new car, then its sale price would be similar to a new car. But they don't.

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

#324

Post by carabiner »

obblekk wrote: post #179

Have we considered just building new cities? It would be cool if the state could run a contest, have a rural county sign up to reform their zoning laws, and in exchange receive 100 year tax relief guarantees from the state to build a new city. America used to build new cities from scratch all the time up until WW2. This creates competition between cities (new entrants) resulting in better policies all around. And the…

Of course, and they failed. See the huge empty tracts in places like California City and Merced.

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

#325

Post by Geee »

ch4s3 wrote: post #87
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.

> Currency used to be backed by gold, and now it's backed by real estate No it isn't. Mortgages are not the only kind of fractional reserve banking. The currency is also fiat, its backed by the market's belief in the strength of the US government and economy. Gold back currencies also had pricing shocks, inflation/deflation and a myriad of other weird issues. You're parroting the least informed version of Austrian Ec…

Yes, of course. I just left other types of debt out to make the argument simpler. Mortgage debt is a huge part of broad money supply.

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

#326

Post by nradov »

pochekailov wrote: post #49
throwaway6734 wrote: post #45

Earlier quoted context omitted.

Add to this the upcoming social security and Medicare crises, the constant rise in healthcare prices driven by elder care, and a shrinking population that needs to support more retirees. We're in a weird place in the US where young people are unwilling to flex any political power to stop elder people from financially taking advantage of them.

Only one question: why are they unwilling? Is it that hard? They won't be killed or tortured, like in Belarus or Russia, then why not?

Young people often vote against their own economic self interest because the major political parties successfully leverage splitter social issues. Young voters are no different from old voters in that regard.

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

#327

Post by rhacker »

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.

That's not really a wrinkle considering most renters are going to be paying 30k/year avg. in no time.

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

#328

Post by dionidium »

Jiro wrote: post #323
dionidium wrote: post #275

Earlier quoted context omitted.

> It's a simple problem, we turned housing into an investment. People are not natural economists and will basically dig in to support the status quo until that status quo changes, at which point they'll support the new one. Americans, for example, buy new cars at an average new price of $40k and for most of my life accepted uncritically that the value of those cars would plummet the second they were driven off the lo…

https://en.wikipedia.org/wiki/The_Market_for_Lemons There's a legitimate reason why a car immediately loses its value. People are more likely to sell cars that have something wrong with them. The market price for a car that you just drove off the lot is not the market price for an average car of that age, it's the market price for the subset of cars of that age that people want to sell. Because a car in that subset i…

That sounds reasonable to me, but it didn't stop the cost of used cars from skyrocketing during the pandemic, due to the supply-chain-induced shortage of new cars. When the car market started looking a lot more like the housing market, so did its prices.

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

#329

Post by vkou »

l33t2328 wrote: post #224
seiferteric wrote: post #218

Earlier quoted context omitted.

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

I'll happily take a million dollars from you, if that 'obligation' comes a 250K tax bill.

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

#330

Post by 0000011111 »

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…

Ya I think you are leaving out the concept of Deprecation Recapture.

In short, if I buy the rental property for $10. Deprecate it to $0 over 27.5 years. Then Sell it for $20. I then haft to pay taxes on the sale of the profitable asset.

###### Depreciation recapture is a tax provision that allows the IRS to collect taxes on any profitable sale of an asset that the taxpayer had used to previously offset taxable income ######

https://www.investopedia.com/terms/d/depreciationrecapture.a....

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