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

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

#571

Post by xenadu02 »

diydsp wrote: post #484
throwaway908724 wrote: post #339

Earlier quoted context omitted.

Yes, we're landlords. We own two small properties that were originally built as residences but now have commercial tenants because the zoning permits it and therefore the tax valuations assume we'll use it that way. > Everyone wants to do what you are doing. As with any other asset that makes money, there are reasons why property prices are what they are, and if it's a magic ticket to free wealth, you have to ask you…

> you have to ask yourself why professionals with deep pockets aren't grabbing every property and driving prices up even further. But... they are. My Experience Ever heard of Grant Cardone? He and his ilk are filling my youtube algorithm with seminars on how to do this. I meet strangers on planes telling me about gathering together in clusters of partners and buying up real estate. Ads on the radio hawk house-flippin…

Yeah but part of what throwaway908724 says is absolutely true:

There are a lot of naive newbies _and_ investors buying up property right now without a viable plan to ever make money on that property. This in turn drives up prices for both potential owners and "reasonable" landlords, then by extension for renters both because potential owners continue renting reducing supply and landlords need higher rent to break even let alone profit.

The worst is when investors stop maintenance on the property, it begins to deteriorate, then they write it off and bail. That turns what could have been a rehabilitation by a competent investor into a tear-down. More than a few apartment buildings are being ruined by this sort of thing, evicting all the tenants in the process.

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

#572

Post by MarcelOlsz »

commandlinefan wrote: post #565
Emma_Goldman wrote: post #460

Earlier quoted context omitted.

>"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, a…

> any enrichment in this case is "silly", and that landlords don't tend to do much - or any - work Hm - the same could be said about your 401(k), but you probably expect to live off of it at some point in your life, right? At worst, buying and renting properties is a (risky) investment.

Nobody pays me for the privilege of living inside of my 401k though.

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

#573

Post by ChrisLomont »

Emma_Goldman wrote: post #524
ChrisLomont wrote: post #489

Earlier quoted context omitted.

And there was a housing crash in there and decent growth in population over that time. Next, instead of picking a window wrapping the biggest housing bust in a century, pick various decades and see how normal volatility behaves - and you might find this variability not uncommon. In fact, from your own source, Figure 1 - the percent of rented properties is, well, nearly constant over the entire window (31% rented in 2…

>"And there was a housing crash in there and decent growth in population over that time." There was a slight slump in rentals after the financial crisis, not before. So if anything it would depress the subsequent growth. In England the population grew over that period from about 51 million to 55 million. That's a 7% increase. Privately rented households, as per the link I posted above, rose by 63%. Hardly compelling.…

>There was a slight slump in rentals after the financial crisis, not before

And a significant decline in mortgages over that time, likely due to mortgage law changes as a result of the crash. Making it slightly harder to get a mortgage would, over time, move people from mortgages to rentals, which is exactly what the data shows, right?

UK added Basel capital rules, the affordability test, and changed capital ceilings in banks, among other changes. Academic papers list these as being major drives in declines in UK mortgage rates. Those people rent instead.

All with no need for speculators to drive the market up - the laws changed.

>Social rentals, which you are bizarrely conflating with private rentals

Ah, so now we're only taking a subset of renters. Good idea.

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

#574

Post by resoluteteeth »

nemo44x wrote: post #523
namlem wrote: post #462

Earlier quoted context omitted.

Japan changed it. They passed sweeping zoning reform that made it easy to build and prices went down. New Zealand just passed sweeping reform to address their housing crisis as well. Reforms are being passed in the US too. Oregon, California, Minneapolis, Ann Arbor, and others have started to pass reforms.

> Japan changed it. They passed sweeping zoning reform that made it easy to build and prices went down Japanese homes are generally prefabricated and have a lifespan of 20-30 years before they are disposed of and a new prefabricated home is put in its place. This is why housing is "cheap" in Japan.

> This is why housing is "cheap" in Japan.

This doesn't explain why rent for apartments is cheaper in Tokyo than in the greater metropolitan area of similar cities in other countries like the US.

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

#575

Post by TaylorAlexander »

cgdub wrote: post #535
TaylorAlexander wrote: post #280

Earlier quoted context omitted.

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.

The article I shared in my first comment in this chain addresses problems in NYC and compares that to Vienna and Singapore, which are much better. So please take a look if you would like to learn about alternatives.

https://charterforcompassion.org/shareable-community-ideas/p...

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

#576

Post by Supermancho »

adamsmith143 wrote: post #454
Supermancho wrote: post #309

Earlier quoted context omitted.

Here's a mortgage calculator: https://www.google.com/search?q=mortgage+calculator 500k property at 2.75% is $200k down gets you under 15k (this is very similar to my current mortgage) Now you're going to object that the interest rate isn't that anymore, which is irrelevant. There are numbers that will work which are simply an example to illustrate how depreciation works, and you just don't like the arbitrary scenario…

Mate who cares about rates from years ago. You aren't getting anything under 5 these days. Not to mention those rates are for primary residences, you get even worse rates for investment properties. The point is if you have 200k to put into a rental property you are already wealthy way beyond an average American.

> Mate who cares about rates from years ago. You aren't getting anything under 5 these days

That is irrelevant. The point was the role of other vehicles in investment properties, wherein the GP diverted into arguing about the specific numbers being used.

> The point is if you have 200k to put into a rental property you are already wealthy way beyond an average American.

That's your point, which is not in dispute.

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

#577

Post by c7DJTLrn »

As a 21-year-old guy, it's my absolute dream to have my own home. Fortunately because I work in tech, I can realistically achieve this within a few years, though I will be paying an arm and a leg for one. But I can't help but think of everybody else who isn't in STEM or didn't grow up in fortunate circumstances like I did. If young people don't have a stake in society by owning a home, why should they give a shit?

There needs to be serious reform but it won't happen because it's against the interests of the people with the power to do it.

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

#578

Post by sizzle »

cannaceo wrote: post #503
mminer237 wrote: post #192

Earlier quoted context omitted.

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…

Aside from a 1031 you can do what I do and take loans against the property to buy the next property. Keeps your tax basis lower. At least in LA county the appreciation is limited to 2% a year while the increase in property value has been 20%+ the last few years.

How many times can you do this until the banks will not entertain the Idea? Does this only work in a market where home prices only go up?

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

#579

Post by lovich »

ChrisLomont wrote: post #477
wonnor wrote: post #443

Earlier quoted context omitted.

>>~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. Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old?

>Are you really in good faith trying to argue that nobody will rent a house that is 30+ years old? Nope, pointing out that in order to keep the house rentable, the landlord has in put money into over all those years, which the OP left out. A house that has had no money spent on for 30 years would not be rentable, right? So depreciation is not a free ride.

Why would it not be rentable? That’s an assumption that doesn’t stand on its face when you look at the unmaintained crackhouses landlords will rent easily because demand is so high for housing.

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

#580

Post by mdavis6890 »

Enginerrrd wrote: post #486
mdavis6890 wrote: post #398

Earlier quoted context omitted.

Really the only problem here is the step-up cost-basis at death that you mention. This is indeed a big problem, and the fix is simple: Your heirs inherit your cost-basis as well (likely $0), so that when/if they sell it they have to pay taxes on the whole capital gain. We could also force the payments over some years, by increasing the cost basis and taxing on that amount. e.g. I inherit a property worth $1M and zero…

>Really the only problem here is the step-up cost-basis at death that you mention. This is indeed a big problem Why is that a problem?

It provides a large artificial financial incentive to hold onto a property that you otherwise would sell.

I also think it's not right to create this kind of arbitrary, large tax break that only applies in specific circumstances. I think if we're going to have a capital-gains tax (and maybe we shouldn't), then we should keep it simple and not have carve-outs.

If I sell my house while I'm on my death bed, I pay all the taxes. If I wait a week to die first, and then my heirs sell, no tax. This is wrong and unnecessary.

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