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)

#621

Post by yrgulation » Wed, Aug 17, 2022, 10:07 PM UTC

kenned3 wrote: post #613

yrgulation wrote: post #601

Earlier quoted context omitted.

Interesting. It seems like the main issue is proximity to work and the reasonable demand for a short commute. If that need would be satisfied then i think the resulting effect of wanting to build more in already crowded cities wouldnt be there, thus nimby’ism wouldnt be an issue because either since locals wouldnt feel threatened. When i moved to london uk i had the same opinion as your colleague. I wanted a place to…

> So i am wondering isnt the root of all evil the fact that high paying jobs are clustered around large urban centres? Shouldnt tech have solved this issue by now? Even if people prefer office work, cant this work be done in smaller urban areas? This gets into an interesting "can of worms" problem. My background is finance which tends to be clustered around "financial hubs" (London, New York, Toronto...). Again, I wi…

In a way i can see why finance is linked with the status expensive offices give but surely the bulk of the work which happens behind the scenes doesn't need to be located in city centres.

Moving everything that isn't client facing outside would do both a favour. Indeed demand drives prices up but it seems like the reasons behind that demand are a bit archaic.

As a side note I cant help but giggle about this: “true sense of belonging and fun”.

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

#622

Post by djbebs » Wed, Aug 17, 2022, 10:08 PM UTC

cheriot wrote: post #600

ChrisLomont wrote: post #439

Earlier quoted context omitted.

>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…

> And are losing value on the property, which is the point of depreciation. The house depreciates while the land appreciates. In the US for the last 50 years has been net appreciation for most homes. > 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. Hedge funds have been buying houses at scale since the great rec…

Why do you believe land appreciates?

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

#623

Post by fwip » Wed, Aug 17, 2022, 10:10 PM UTC

commandlinefan wrote: post #551

ChrisLomont wrote: post #439

Earlier quoted context omitted.

>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…

> once it became clear that tenants destroy things Or/and just refuse to pay rent for years while you try to evict them.

Then you're not trying very hard.

https://rentprep.com/evictions/when-can-i-evict-a-tenant-for...

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

#624

Post by djbebs » Wed, Aug 17, 2022, 10:11 PM UTC

wonnor wrote: post #443

ChrisLomont wrote: post #439

Earlier quoted context omitted.

>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…

>>~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 aware of the concept of risk? The amortization schedules are what they are for a reason, even if not all houses only last 30 years, the average is what matters here.

Any number of things can result in houses being destroyed and become worthless prior to that time, including damage from earthquakes, fires. Additionally poor initial building standards, or changing building standards, or new regulatory barriers can make certain properties become not just worthless, but have an active cost to their owners and therefore have negative value.

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

#625

Post by dcolkitt » Wed, Aug 17, 2022, 10:13 PM UTC

ChrisLomont wrote: post #455

dcolkitt wrote: post #262

Earlier quoted context omitted.

> this cannot be solved from the federal level. I disagree. The federal government invests enormous resources into subsidizing home ownership. Everything from Fannie Mae guaranteeing mortgages to not taxing home owners on the imputed value of rent. And I think that's all well and good, home ownership has many positive externalities. But there's zero point subsidizing demand for something when supply in inelastic. In…

>Fannie Mae guaranteeing mortgages FM does not guarantee most mortgages, only certain govt types like FHA and VA loans, which the govt decided to back in order to help low income people get loans (otherwise the rates would be even higher for them). FM buys up a lot of mortgages and sells them to investors, then turns around and puts the money back into productive use. >taxing home owners on the imputed value of rent…

> FM does not guarantee most mortgages,

What? Of course Fannie and Freddie guarantee the MBS they issue. Which is an implicitly a guarantee from the US government. Otherwise they'd trade at much wider credit spreads, which would in turn lead to higher rates for home buyers. You don't have to take my word for it, here's the New York Fed's own words:

For agency MBS, the GSEs and Ginnie Mae promise full and timely payment of principal and interest, a guarantee that is either explicitly or implicitly backed by the federal government[1]

> You want to tax homeowners as if they paid themselves rent?

Alice, who has a 20% income tax rate, owns a house and rents it to Bob for $25k/year. Bob also has a 20% income tax rate, owns an identical house and rents it to Alice for $25k/year.

In total the government collects $10k/year in tax revenue from Alice and Bob from their rental income. Now let's say Alice and Bob swap houses and move back into their owner-occupied properties. This is an economically identical situation (remember the houses are identical). Both still own one home. Both are still consuming housing that's worth $25k/yr to them. Yet the government collects no tax revenue. Exempting the implicit value of rent is a subsidy favoring owner occupied housing.

> imputed rental value (which is likely not even legal)

The IRS already taxes tons of benefits based on the imputed income, even if no cash changes hand. For example, if your employer provides you life insurance, you have to pay income tax on the actuarial value of the policy even if you don't die during the coverage period.[2]

> then you will increase the cost of home ownership,

Not if the supply of housing is completely inelastic. Any increase in housing taxes will result in a commensurate fall in the sticker price that matches the tax increase. Economists have known this since Henry George.

[1]https://www.newyorkfed.org/medialibrary/media/research/staff...

[2]https://www.duq.edu/assets/Documents/benefits/_pdf/Imputed%2...

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

#626

Post by djbebs » Wed, Aug 17, 2022, 10:14 PM UTC

MarcelOlsz wrote: post #572

commandlinefan wrote: post #565

Earlier quoted context omitted.

> 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.

If your 401kholds stocks or bonds, they probably do.

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

#627

Post by kenned3 » Wed, Aug 17, 2022, 10:14 PM UTC

lotsofpulp wrote: post #615

kenned3 wrote: post #583

Earlier quoted context omitted.

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…

I sympathize with your younger colleague. Spending 1+ hours of your day, 5 out of 7 days per week, just to afford your own house would mean I would opt out of raising a family. Even 30+ min per day commute sounds terrible.

This is where things get even more strange.

Most people who do manage to afford to live in Toronto still have to commute. you can get condo's right in the downtown core, but they are insanely expensive.

So the debate he had was a ~30 min commute and a "toronto" address vs a 45-60 min commute and an address in a small city outside Toronto.

I worked in toronto a very long time, dont know many people who actually lived there. Most commuted from cities in the GTA (Greater Toronto Area).

Sometimes the commute is sort of unavoidable.

What are the options to avoid a 30 min commute if you work in a specific industry which prefers "on site" work, and that company owns property in a city you cant afford to live in?

You can change industries, etc.. but those are personal choices.

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

#628

Post by nly » Wed, Aug 17, 2022, 10:18 PM UTC

aorloff wrote: post #561

fhrow4484 wrote: post #547

Earlier quoted context omitted.

The mortgage interest deduction has a cap though, right? https://turbotax.intuit.com/tax-tips/home-ownership/deductin... seems to indicate there's a cap on the amount, as well as number of homes (only primary and secondary, not third, fourth etc) Or are people going around those caps somehow?

The mortgage interest deduction is for your primary home. Investment property mortgage interest is a business expense

It's wild to me that Americans can deduct mortgage interest from their tax bill ...

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

#629

Post by smcl » Wed, Aug 17, 2022, 10:23 PM UTC

carom wrote: post #413

pessimizer wrote: post #249

Earlier quoted context omitted.

> When was housing not an investment? Housing was never an investment before recent decades, with an emphasis on the housing bubble. Housing tracked inflation for 400 years . https://thegoldobserver.substack.com/p/amsterdam-real-housin... edit: the history of US house prices is that they strictly tracked inflation, then with government subsidy right after WWII, housing prices jumped up, then stayed flat at that new l…

The US was a brand new country that was mostly empty. Look at England for some historical data.

Ok but they also provided a link showing how this also applied in Amsterdam, in The Netherlands - a much older and less-empty country.

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

#630

Post by jklinger410 » Wed, Aug 17, 2022, 10:25 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…

This system is clearly designed to subsidize and create new landlords. Which is one of many desperate micro-economies that American capitalism has spun up in order to manufacture economic activity.

We should be doing the opposite.