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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)

#581

Post by seper8 »

mschuster91 wrote: post #68
seper8 wrote: post #54

Earlier quoted context omitted.

Plot values have doubled BECAUSE OF regulations! Agricultural land here in the Netherlands sells at 6 euro per m2. With a single stroke of a pen that ground can become 300 euro per m2, when the municipality decides you can build a house there. Same process in Germany. There is more than enough space. Problem is the price of plots is kept artificially high by municipalities, because they rely on the easy money it prov…

> Plot values have doubled BECAUSE OF regulations! Hard disagree here. Munich, Berlin and Hamburg simply don't have much land in their borders any more. In Munich, we only have two major unpopulated areas left - the SEM Nord (900 ha, 50.000 people) and SEM Nordost (600 ha, 30.000 people) [1], and the currently under construction projects Freiham (25.000 people) and Bayernkaserne (15.000 people). The opposition to the…

https://www.google.com/maps/dir/48.1369799,11.5756907/Bogenh...

Take this area, plenty of plots now housing cows. Distance to city centre (by car!) is 20 minutes.

Same thing to the North West, in between Munich, Grobenzell, Puchheim...

Buddy you are buying into the horsecrap being told by current homeowners. "It's full!"... Nope, not really. Just like in the Netherlands, about 50% of land in Germany is farmland. And even outside of big cities like Amsterdam and Munich there's plenty of space left. But you're not allowed to build there, let alone build high apartment complexes...

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

#582

Post by DubiousPusher »

wonnor wrote: post #468
andrewmutz wrote: post #457

Earlier quoted context omitted.

He's saying that you factored in the depreciation deduction, but never factored in the expenses of related to keeping the property in good shape. So you either left them out of your math, or you planned to do zero upkeep (hence, "nobody would rent it")

To claim that you need to spend money equal to the tax-assessed value of the building over the course of 30 years to maintain equal value is slightly less ridiculous, but still not exactly reasonable. The (conservative) rule of thumb is 1% of the property value per year in repairs, which would be 30% of the property value over 30 years. And even then, it seems there's no shortage of fairly decrepit buildings that hav…

Here is a starter list of things a house will need over the course of 30 years.

- a new roof (maybe two if they are 15 year rooves)

-new siding (unless fiber cement siding was installed originally)

-new exterior paint

-new windows

-major repairs to the driveway

-2 new furnaces

-2 to 3 new water heaters

-2 to 3 full new sets of appliances

-1 cosmetic kitchen remodel

-1 cosmetic remodel of each bathroom

-1 to 2 cosmetic relandscapings

-1 to 2 new floors (depending on the flooring material chosen)

-new exterior doors

-new garage doors and openers

None of this includes any repairs the home may have needed at the time of purchase. Nor does it include any upgrades. Nor does it include any unexpected repairs that may not be covered by insurance (there are many). Nor does it include any of the dozen or so minor repairs you either have to do yourself or get a handy man for.

I'm not going to symp for the landlords but maintaining property is brutally expensive. I know because I bought a 40 year old house. Since I bought a home I've become very convinced that there are a ton of landlords losing their ass out there. Some have been saved by the ridiculous property valuations we've seen lately. But that is not the norm. Houses typically increase in value at a pace with inflation.

Personally, I would only ever rent housing I had specced myself because the design choices and material choices have a huge impact on the cost of maintenance.

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

#583

Post by kenned3 »

yrgulation wrote: post #568
lotsofpulp wrote: post #555

Earlier quoted context omitted.

It is the same in the US. While labor and materials do cost more, the greatest increase in costs is for the land. But since the US is big, there are huge disparities in land cost. While a laborer or materials might cost 2x or 3x more in a popular area than in an unpopular area, land will be 10x more. Actually, the labor and land costs invert if you go to really unpopular areas, where the land is much cheaper, but no…

“the US is big” Thats what puzzles me. What changed in the dynamics of the american society in such way that new cities are no longer built? I get it in europe there barely and land left to develop, but the us and canada have plenty.

This is a great conversation as there is so much input from around the world.

I can sort of paint the picture of what takes place here (Canada - also a large land mass country).

we have a rather large public rail system run by the government (GO Transit: https://www.gotransit.com/en/)

it is fairly cost effective, modern, and the trains are all new and comfortable.

we also have a major problem with a population which seems to refuse to accept they cant afford to live where they want.

Everything is about "affordable housing in Toronto", but this is unrealistic.

Once i had a conversation at work on this. A younger employee was complaining that he wasnt able to afford a nice house in Toronto and how "unfair" this was.

The problem is he was making these comments to 5 others, not one of us lived in Toronto either, as we cant afford it.

He refused to commute, and felt he was somehow "entitled" to live where he (and millions of others) want to live.

So in short, while the US and Canada have plenty of space, the population doesn't want to live there because the commutes are around an hour each way to work.

we also have serious NIMBY issues, where any attempt to increase population density is met with fierce resistance by the local residents who are concerned about their own property values.

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

#584

Post by seper8 »

Atheros wrote: post #366
jason0597 wrote: post #298

When AMD or NVIDIA sell GPUs to scalpers, and those scalpers resell the GPUs and keep the profit, there's outrage about it. Nobody ever says to "build more GPUs" to fix the problem. When houses and new developments get snatched up by investors and landlords as buy-to-lets (or even by Blackrock and pension funds), there is little outrage and calls for restricting who can buy them. The same argument is rehashed over an…

Building more GPUs requires billions of dollars of investment and many years to build a new fab. Building more houses requires only several hundred thousand dollars to form a new construction company and train some workers. So it's not a good analogy. It is physically possible to just build more housing in high-demand markets. Separately, GPU scalping is (was) only happening because of cryptocurrency booms which ever…

> Building more houses requires only several hundred thousand dollars to form a new construction company and train some workers.

Hahahah look at this guy!

Bet you never tried to get a permit for home construction? Shit can take YEARS in most states/countries. Even worse if you dare suggest to make apartment complexes. N I M B Y

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

#585

Post by avereveard »

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?

a tax per square feet on residential properties where the owner doesn't live in for more than half a year, irregardless of wheter it's rented out or not, and independent from the tax from rent income. since "promoting good behaviour" trough taxation didn't work the last idk 50 years, it's time to be back to "punish bad behaviour"

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

#586

Post by reillyse »

ChrisLomont wrote: post #534
reillyse wrote: post #511

Earlier quoted context omitted.

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 th…

Right. But let us pretend that the we all decided to treat shoes as an asset class. Everyone (with shoes) is counting on their shoes increasing in value. So the government becomes focused on raising the prices of everyone's shoes.

It institutes restrictions on the amount of shoes that can be made (so as not to crash the market). Supports the market by subsidizing mortgages so people can purchase shoes at high prices (note that people will always be able to buy shoes, they just might not have the money that the market is asking and so the market would need to adjust their price - hence why mortgages are important. They give everyone tax breaks on the income they make from renting out shoes to people without shoes and places restrictions on everyone so that everyone must have a complete set of shoes (no sandals allowed) and forces everyone to always wear shoes.

So now, the people who own shoes are happy. They decide the government is a great government because they are protecting their shoe interest and we have a situation where shoes are very expensive and always must be increasing in value for everyone (with shoes) to be happy.

Lots of people start investing money in shoes (driving up the value of shoes) because everyone knows the government are actively protecting the price of shoes. Which in turn drives up the "value" of shoes and the cost of shoes for people without shoes.

So, are shoes and houses that much different. Houses also require upkeep. You can resole your shoe, you can reroof your house. Some would say houses require much more upkeep. Sure, houses are a little more permanent and hard to steal. But a shoe very rarely burns down.

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

#587

Post by PaulDavisThe1st »

dexterdog wrote: post #521
happiness_idx wrote: post #293

Earlier quoted context omitted.

As a home-owner not landlord (I am against the idea of owning more property than my family will use) I WISH I could write off half of my property tax.

When you are the owner/user and not the landlord you should be paying the taxes because most of the taxes are for use in the local community and most of that is schooling. The landlord gets no benefit from the majority of that stuff. The tenant does.

That assumes that the landlord lives in a different tax jurisdiction. Possible, certainly, but not inevitable.

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

#588

Post by Supermancho »

adamsmith143 wrote: post #505
foobarian wrote: post #259

Earlier quoted context omitted.

You don't need to make a profit, there are ways to get loans against the property and continue acquiring more inventory.

Well this ain't a startup with VC funding. How long can you reasonably have negative cashflow like this before you personally go bankrupt?

Land is often leveraged by creation of negative (or net neutral) commercial enterprises to gamify population growth (and inflation).

eg https://www.silverstarcarwashes.com/latest-news/silverstar-c... (this is of 6 planned)

Because of the city tax conditions and depreciation schemes available, enough capital will turn a net negative run cost into a positive capital sale in less than 10 years. It's the same thing as flat asphalt parking lot developments that covered southern california commercial land until the 90s.

It seems to be a gamification of city growth incentives.

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

#589

Post by foota »

rory wrote: post #507
foota wrote: post #493

Earlier quoted context omitted.

What you describe does happen, unless they use that transfer process described, but by doing so they reduce the effective cost basis of the new property by the difference between the cost basis of the old one and the sale price.

Yeah the 1031 exchange simply defers the tax to a later time. But if you defer it until you die, your heir (in many cases) gets off tax-free.

Yeah, I guess the unintended? consequence here is that the lack of a time window allows indefinitely propagating it, maybe the exchange should come with a time window phase out.

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

#590

Post by the_gastropod »

goodpoint wrote: post #209
the_gastropod wrote: post #129

Earlier quoted context omitted.

This all-or-nothing thinking is, itself, a problem. Capitalism is a tool. And it's good at many things. Creating competition and innovation in consumer goods is one area it's obviously very good at. It is not good at equity. Externalities are a massive problem raw capitalism has no affordance for addressing. Regulations (another tool) are necessary to smooth out capitalism's rough edges. You'll find very few people t…

> Creating competition and innovation in consumer goods is one area it's obviously very good at. Not really.

Good point ;-)
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