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Home ownership is the West’s biggest economic-policy mistake

economist.com

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Re: Home ownership is the West’s biggest economic-policy mistake

#421

Post by rrrrrrrrrrrryan »

kwere wrote: post #293
dslkfjg wrote: post #268

Earlier quoted context omitted.

Population is going down in the developed world. The housing supply is not. If you can't afford housing where you live, then it can only be because more people are demanding housing where you live, having left where they were previously living. The solution to the "problem of home ownership" is to stop making areas undesirable places to live. Portland springs to mind but there's San Fran. NYC, L.A. but it's not just…

dont fool yourself, big capital always preferred "pragmatic" regimes over accountable democracies.

Yes, phrased differently: investment money chooses stability and predictability over human rights.

Good macroeconomic policy (like international trade agreements) can be used to push back against this trend somewhat.

Re: Home ownership is the West’s biggest economic-policy mistake

#422

Post by akomtu »

bluGill wrote: post #311
pc86 wrote: post #188

Earlier quoted context omitted.

Buying a house for 10% down all in would be a dream in the majority of the US. Yes, FHA or FDA allow 3.5% or even 0% down in some circumstances but you're going to end up in an undesirable area (FDA) and be paying hundreds a month for mortgage insurance (both FHA and FDA). Which, while it sounds like something everyone should have, is you paying for the bank's insurance in case you default on the mortgage. To avoid t…

Realtors commissions? There are none, the seller pays those in almost all case. It is possible to hire a buyers agent who works for a fee from you, but that isn't common (and I'm not sure how it works) so I'll ignore it. There are closing costs, but they are not a percentage in general.

Without a buyer agent, the buyer can get a 3% discount on the sale price.

Re: Home ownership is the West’s biggest economic-policy mistake

#423

Post by akomtu »

swiley wrote: post #366
andrepd wrote: post #273

Earlier quoted context omitted.

The fundamental problem is linking "home as a place to live" and "home as an investment". The two things aren't compatible. If you want to buy a place to live so you don't have to work for a Lord, you want affordable housing. If you have a property which you want to be an investment, you want housing prices to baloon. Currently the latter is winning.

You could have both if dense housing was allowed to be built and people bought condos.

Another solution is a ban on new office buildings in areas with insufficient housing supply. Right now the corps happily build new offices in cities that are already overcrowded to the tilt, and the city councils turn a blind eye to this. I realize that such a law would have no sponsors.

Re: Home ownership is the West’s biggest economic-policy mistake

#424

Post by Copernicron »

dbetteridge wrote: post #347
verelo wrote: post #298

Earlier quoted context omitted.

I love, as an Australian, waking up in the morning seeing the Australians all talking. During the day it’s all North Americans, but obviously this is a game of time zones. Anyway. I just wanted to say that, and also, this issue is seemingly everywhere. I’ve been in Toronto Canada for over a decade now and prices have gone crazy for almost that entire time. When i arrived a house in the city was 350-400k, that same ho…

I'm an Australian in London so for me its only mid afternoon :D Goddamn those are some crazy numbers, how does anyone even begin to afford that? You'd be saving for 20 years just for a deposit....

It’s actually a lot worse than that. For properties over $1 million CAD, you are required to put down a 20% deposit. I came across an article not long ago that it would take the average household 30+ years to save the necessary down payment. I earn six figures and I’m single. I can’t afford to buy any time soon.

Re: Home ownership is the West’s biggest economic-policy mistake

#425

Post by daemin »

bluGill wrote: post #305
yrgulation wrote: post #78

Property ownership is bad. Rent for life, dont leave inheritance to your children so they can rent for life too. All you need in life is clothing, entertainment, a bit of travel to distract you from your tiny living space, maybe a gadget or two and of course onsite work. Oh and praise from you manager to add meaning to your daily grind. Or so “they” say while “they” amass thousands of properties and massive fortunes…

Renting and buying can both turn out well depending on your individual circumstances. If you buy you eventually have a house rent free. However if your rent you probably spend less on rent - so invest that difference and you end up with about the same. With real estate "location location location". In some areas there are situations that will make one or the other better. Everybody has their own life goals, and that…

One thing people seem to skip over is that once you have bought a house you will still need to pay many fees. Just owning a house isn't free, there will be property taxes, fees for services, and other actions that require money from you. In a lot of cases when renting these are taken care of by the landlord.

So just the rent vs mortgage comparison (or rent vs no rent) is misleading at best, downright fraudulent at worst.

Re: Home ownership is the West’s biggest economic-policy mistake

#426

Post by akomtu »

bluGill wrote: post #292
kiba wrote: post #223

Earlier quoted context omitted.

Owning a home as a form of wealth necessarily conflict with affordability. We need to consider one or the other in order to make the best use of land, which are finite. If we choose to make having a home a priority, then we need to choose affordability both so that people are less likely to be homeless and so that people can do other thing with their money.

Not true. A house is a form of wealth because you live there. If you don't own a house you need to rent someplace. If you live in the house long enough you pay it off and live there rent free! The above assumes that you actually pay the house off of course. Many people don't.

No, you don't get to live in "your" house rent free. About 3% of the house value per year goes to property taxes, repairs, utility bills, grass lawn maintenance, hoa dues, insurance and so on. A paid off house is like a brokerage account with insane fees and liability.

Re: Home ownership is the West’s biggest economic-policy mistake

#427

Post by tallon »

bradlys wrote: post #388
deepstack wrote: post #245

Earlier quoted context omitted.

Upvote! Private property ownership and intergenerational wealth transfer is the foundation of middle class, and bigger middle class leads to better education for the masses, and a more democratic society!

Why do people want intergenerational wealth transfer? Anytime we talk about billionaires passing down large sums of money to their children and creating dynasties out of it - it’s a bad thing. Yet, middle class to upper middle class does it and it’s a good thing? I see it as problematic. Keeps the ground unlevel.

I guess it's something you don't understand if you don't want/have kids.

Re: Home ownership is the West’s biggest economic-policy mistake

#428

Post by Glyptodon »

andrepd wrote: post #273
yrgulation wrote: post #78

Property ownership is bad. Rent for life, dont leave inheritance to your children so they can rent for life too. All you need in life is clothing, entertainment, a bit of travel to distract you from your tiny living space, maybe a gadget or two and of course onsite work. Oh and praise from you manager to add meaning to your daily grind. Or so “they” say while “they” amass thousands of properties and massive fortunes…

The fundamental problem is linking "home as a place to live" and "home as an investment". The two things aren't compatible. If you want to buy a place to live so you don't have to work for a Lord, you want affordable housing. If you have a property which you want to be an investment, you want housing prices to baloon. Currently the latter is winning.

I don't think there's a way to unlink so long as there are particularly desirable and undesirable places to live.

Re: Home ownership is the West’s biggest economic-policy mistake

#429

Post by Glyptodon »

effie wrote: post #240
yrgulation wrote: post #78

Property ownership is bad. Rent for life, dont leave inheritance to your children so they can rent for life too. All you need in life is clothing, entertainment, a bit of travel to distract you from your tiny living space, maybe a gadget or two and of course onsite work. Oh and praise from you manager to add meaning to your daily grind. Or so “they” say while “they” amass thousands of properties and massive fortunes…

What is "financial freedom"? You still have to work, use state currency, pay taxes. Did you mean owning your own home is the first step towards being wealthy?

I think it's usually defined as being well off enough to curse out your boss and/or quit when they make unreasonable demands without having to think twice.

Re: Home ownership is the West’s biggest economic-policy mistake

#430

Post by WalterBright »

Nursie wrote: post #148
WalterBright wrote: post #98

Earlier quoted context omitted.

> Speculation tends to increase volatility. Speculators make money off of prices deviating from the norm (i.e. volatility) and every time they make money off of a price difference, it pushes that price back to the norm. I.e. it decreases volatility. The fact that speculators are attracted to volatility is an effect of volatility, not a cause.

This ignores everything about supply/demand and market bubbles.

Not at all. Bubbles are only obvious in hindsight. If somehow you are prescient enough to recognize them reliably in advance, you can make yourself a cool billion easy.
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