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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)

#531

Post by distances »

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…

> 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.

This is absolutely normal in the rest of the world, and there's nothing wrong with it. People don't go bankrupt over inherited property. The tax-free inheritance part is also ridiculous, in my humble opinion inheritance should be fully taxed.

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

#532

Post by dexterdog »

ska wrote: post #222
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…

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

Not when it comes to property taxes they don't.

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

#533

Post by nemo44x »

rhacker wrote: post #332

You want housing prices to cave? Jump property taxes for landlords (short-term rentals included) and you'll see a shit ton of houses on the market tomorrow.

All you have to do is continue to raise interest rates. That will lower the value of property.

However, it won't change how much you pay/month for the property as people will pay whatever they can afford to per month to live where they want to. It's just more of that payment will go to interest. So yes, the list price will crater but the actual cost to buy the place will be the same.

The only person it really benefits is cash buyers which most people aren't. This could actually make homes less accessible to most people as their mortgage bid will never beat a cash bid.

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

#534

Post by ChrisLomont »

reillyse wrote: post #511
ChrisLomont wrote: post #475

Earlier quoted context omitted.

>is being treated as an asset class It always has been and likely always will be an assert class - it can be sold later so it's an asset. For well over 100 years the inflation adjusted price of new housing has been a quite similar rate per sq foot, despite the quality and safety having increased many fold over that time.

I think you are misunderstanding me. I didn’t say it was an asset. The majority of physical things you purchase are assets. I said it was an “asset class” in the financial use of the term. “ An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations.” It is being treated as an asset class as opposed to say a service or a utility. We need housing a…

>“ An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations.”

Yes, I got that. Housing has been such for well over 100 years, right?

It is not treated as a service or utility because, well it is neither of those things at all.

Even if you somehow forced it into such a market, the value would still likely be the same cost to a homeowner, since there is not going to be some free lunch here. People willing to pay $X to live at Y will continue to be willing to do that. Services and utilities do not mean free or low cost.

>treat or normal clothing as an asset class

Because it is cheap, it wears out, and goes to zero value. You really don't want the value of your house to be zero, meaning it has no utility to anyone, including you.

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

#535

Post by cgdub »

TaylorAlexander wrote: post #280
dionidium wrote: post #260

Earlier quoted context omitted.

I rented (by choice) for many years. I never once thought, "I wish the government were my landlord." The arrangement actually works pretty great just how it is. I was very happy to write that rent check every month and always felt like I got a good deal for my money, even when I lived in a very expensive market (NYC). In every case, I desired something that was very important to me and for which there's a lot of dema…

That the fact has not occurred to you personally does not mean such an arrangement in aggregate would not help solve the problem of housing as a profitable investment. Maybe you didn't think of this on your own accord, but I bet you WOULD have appreciated if the same unit was cheaper, and this would be the case if 50% of the housing in your market was public housing as is the case in Vienna, even if your unit was pri…

There is public housing in NYC, and I can assure you that your landlord is better than NYCHA.

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

#536

Post by not_real_acct »

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 wonder if persistently low interest rates is the real culprit that led to housing as investment.

Of course.

The profit from selling a leveraged investment is based on the delta between what you pay to borrow the money and how quickly the asset goes up. Doesn't matter it that's a house, a stock, bonds, whatever.

Housing is particularly attractive for these bets, because it's so easy to qualify for a big loan and because the rates have been so low.

Once mortgage rates exceed about six percent, the incentive to invest in real estate will be much lower.

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

#537

Post by Kalium »

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…

If you're in California, your children also get to inherit your price-controlled tax assessment.

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

#538

Post by coryrc »

lesuorac wrote: post #128
coryrc wrote: post #106

Earlier quoted context omitted.

Then why does Washington state also have low voter participation? Nine of that applies to a Democratic-run state with mail-in-only voting.

[Citation needed] From what I see WA had a turnout of 75% compared to USA's 66%. https://docs.google.com/spreadsheets/d/1h_2pR1pq8s_I5buZ5agX...

You're cherry-picking the most interesting election of the last five years. The recent primary was ~38% turnout.

https://www.seattletimes.com/seattle-news/politics/which-wa-...

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

#539

Post by NotYourLawyer »

reillyse wrote: post #426

People in the comments here seem stuck in the weeds around various laws and tax incentives. The overarching issue is that housing (something everyone needs) is being treated as an asset class. As an asset class people who own it want it to increase in price which gives the government an incentive to maintain and increase this value. Unfortunately this makes it more and more expensive for people who need housing. Deco…

Anything capable of being owned is an asset class. How would housing become not an asset class? Government owns all the land and we just rent? Seems worse.

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

#540

Post by naasking »

carom wrote: post #402
TaylorAlexander wrote: post #364

Earlier quoted context omitted.

> Many people seem to want to live in large, densely populated areas, and for most people that is always going to mean renting. The "for most people that is always going to mean renting" is that part that we could change through large scale collective policy. That's what Singapore has done for example. No one doubts whether people want to live in cities. We are asking whether the model of private landlords is the bes…

We do not need to hand over ownership to the government to build more houses. Just simplify zoning laws. Private landlords want to build. People want to maximize the value of their properties. They can't because of zoning laws that favor single family home hellscapes.

> They can't because of zoning laws that favor single family home hellscapes.

This can easily go too far in the other direction though, carving up a single family sized living space into 5 tiny 400 sqft apartments. There have to be incentives for mixed sized living spaces.

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