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)

#431

Post by horsawlarway » Wed, Aug 17, 2022, 7:11 PM UTC

goodpoint wrote: post #428

horsawlarway wrote: post #227

Earlier quoted context omitted.

> 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...

Please refresh your memory around the topic https://en.wikipedia.org/wiki/Human#History > and housing was absolutely an investment before that ..and don't make absurd generalizations. Humanity is way older that the middle ages, and hundreds of different cultures existed around the world even during the middle ages. Very few had the concept of investment and the idea a house has a monetary value that grows significant…

Ok - well have a good one. You aren't helping yourself here, and I don't think we'll have a productive conversation.

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

#432

Post by namlem » Wed, Aug 17, 2022, 7:15 PM UTC

ROTMetro wrote: post #283

namdnay wrote: post #267

Earlier quoted context omitted.

In what universe does paying tax on what you inherit equate to communism?

When you effectively take someone's home for government benefit. People think that when they buy property they own it. You're model is more the China version. You don't own property, you only lease it from the government. Hence, your model looks more like the communist model than the traditional Western one.

The government isn't taking the house, a private buyer is purchasing it for its market value. Paying taxes on income is not communism lol.

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

#433

Post by namlem » Wed, Aug 17, 2022, 7:17 PM UTC

ROTMetro wrote: post #292

bobkazamakis wrote: post #255

Earlier quoted context omitted.

Ah yes, everyone without a home is simply a lazy poor who should just move to Mississipi where the land is cheap and the jobs are abundant.

I left California because I couldn't afford to own a home there.

Which is why California needs to fix the policies that led to its housing shortage. There is no inherent reason for California to be so expensive, it is a deliberate policy choice driven by local governments.

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

#434

Post by rory » Wed, Aug 17, 2022, 7:18 PM UTC

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…

You're skipping over the (extremely important) part where you take out a mortgage on property.

So you buy the $500k property with $125k in cash and a $375k mortgage (25-30% down is typical for investment mortgages). Depreciation *plus mortgage interest expense* leads you to (for tax purposes) more or less break even on this investment after 10 years and so you pay no tax.

After those 10 years are up, you've now paid off around $68k of the principal, plus the asset has gained $250k in value. So from your initial $125k of capital invested, you now have ~$400k in capital that you can leverage into a $1.6M property in a 1031 exchange. That bigger loan comes with a much larger mortgage interest expense, so you continue to earn no taxable income while growing a larger and larger asset and taking a (relatively modest) cash-on-cash return.

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

#435

Post by choko » Wed, Aug 17, 2022, 7:18 PM UTC

AlexandrB wrote: post #172

choko wrote: post #64

Earlier quoted context omitted.

We have all that and more. There are even groups that seek people out to teach them to vote. When you file a change of address with the post office, they send you a packet with all kinds of moving resources including how to re-register. In addition, a really quick Google search gives you all you need to know to register and vote. I don't understand why some people pretend the process is difficult. If people still are…

I don't get why there's a "process" at all. In Canada, when I change my address with the CRA (our version of the IRS), my voter registration gets updated automatically. Why is there a separate step in the US? I've also voted when my CRA address was out-of-date at the time, and this was fine too as long as I brought government-issued ID or a recent bill sent to my new address.

Like most things in the USA, voting is a local matter, not federal. It would be prohibitive for the post office to manage this across 50 states with differing rules.

States in the US have more atonomy than states in most of the rest of the world. So much so that it often doesn't make sense to compare national US figures to national figures in other nations - education being a good example - https://learn.uvm.edu/blog/blog-education/vermont-eighth-gra...

But the same applies to voting. The federalist system under which the US operates allows communities and localities the flexibility to operate in a manner consistent with local needs and values.

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

#436

Post by namlem » Wed, Aug 17, 2022, 7:18 PM UTC

pessimizer wrote: post #208

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…

> Now everyone who owns a home is incentivized to ensure their investment is maximized and that results in a lot of NIMBYism. This motivation is backwards. Getting zoning restrictions around your house removed multiplies the value of that house. NIMBYism comes from places where people live. YIMBYism maximizes property values, although there's an element of blockbusting because overbuilding and a change in neighborhoo…

It's probably very rare the holdouts sell truly cheap. More like slightly cheaper than they could, but still at a very large profit.

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

#437

Post by choko » Wed, Aug 17, 2022, 7:20 PM UTC

Retric wrote: post #72

choko wrote: post #64

Earlier quoted context omitted.

We have all that and more. There are even groups that seek people out to teach them to vote. When you file a change of address with the post office, they send you a packet with all kinds of moving resources including how to re-register. In addition, a really quick Google search gives you all you need to know to register and vote. I don't understand why some people pretend the process is difficult. If people still are…

It is unreasonably difficult. There is no reason you should need to jump through any extra hoops beyond a change of address.

Why stop there? Perhaps government employees should go door to door and record my vote for me. Sending something in the mail is unreasonably difficult.

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

#438

Post by l33t2328 » Wed, Aug 17, 2022, 7:20 PM UTC

groby_b wrote: post #317

l33t2328 wrote: post #224

Earlier quoted context omitted.

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

I mean, we can solve that problem by a 100% inheritance tax so they don't leave an obligation. No? Then maybe let's skip arguing in sound bites. Personally, I think the answer here is a continued and ongoing land tax. Occupying land should come with an expectation you contribute to the common good, because you don't "own" land. It's a shared good, just like air and water, and you should pay for use. Primary residence…

You make an extremely compelling point. I was arguing in sound bites and your final paragraph is entirely reasonable.

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

#439

Post by ChrisLomont » Wed, Aug 17, 2022, 7:21 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…

>you pay no income tax on your rental income

And are losing value on the property, which is the point of depreciation.

>~30 years later, you've deprecated it down to an effective value of $0

An no one will now rent, since your building has an effective value of $0 since it has become crap.

All throughout your list you ignore all the costs involved in being a landlord. Have any friends that have tried it? (I do). Did they become silly rich? Or did they quit because it is a major problem to actually make it very profitable versus other uses of capital and time? I'm a decently saavy investor (in many things), and have watched multiple friends start up rental properties, only to stop once it became clear that tenants destroy things, costs to maintain properties are volatile and astronomical, the work required is significant, and so on.

I have done the math on real estate investing many times, and each time have decided the returns are not worth it.

>The net result is that rental properties generate a ton of income for the owners

If it were so profitable, then tons of capital currently being spent on other uses (tech, medical, finance) would instead go into buying up more housing. But the fact is that being a landlord is not very profitable, so capital doesn't flood into that market - it is still mostly elsewhere.

Historically, housing has performed quite similar to the stock market for returns - as it should be. If housing were a better investment, money would flow in until they balanced. If housing is too poor an investment by screwing with taxes, then money will flow out into other more productive places. And if money flows out, people wanting housing will then have to pay even higher prices for less stock.

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

#440

Post by namlem » Wed, Aug 17, 2022, 7:22 PM UTC

ROTMetro wrote: post #291

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…

The government made me an explicate promise with zoning laws that my neighborhood was a safe investment, just as they make people comfortable that bank accounts are safe via banking laws, or that stocks are somewhat safe. Taking that away is breaking a MAJOR social contract made to the 65% of American's that own their home.

Yes, it's a social contract that must be destroyed. Otherwise we will experience economic ruin. Look at what happened in Japan in the 1980s, or is happening in New Zealand in Canada. The fact of the matter is that this social contract is pure rent-seeking, and never should have been allowed in the first place. It is theft from future generations by present day homeowners.

Also it certainly is not true for all homeowners btw, lots of municipalities have fairly minimal zoning laws.