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Like I said, I think we have a similar view. My objection if any, is based on the idea of a risk based portfolio. But it seems you actually mean more generally:

• shoover 11y ago
  I hadn't thought about first time home ownership in terms of access to the market like that. Possibly related (among other factors) in 2008 the US tax code gave $8000 tax credits to first time homebuyers. It was enough for me to jump from renting a little earlier, because I knew that money would be there to fund repairs and start chipping away at the mortgage principal. Of course this assumes prices are in reach and one has some savings ready to go for the opportunity, and I'm sure more people took advantage in rural areas to mid-sized cities than, say, SF or NYC. The issue of rentals adding inefficiencies to the market is also quite complex and tied to local variables. If supply is ok, I think there's not such a premium on rentals. Where I live (Indianapolis) it's generally cheaper to own, but not by a lot. The overall value greatly depends on local pricing, interest rates, and definitely on not moving around and paying closing costs very often. In such an environment, renters may be enjoying the value of extra flexibility for not too much premium while landlords have to work harder to extract efficiencies in maintenance and management. Consider me as a homeowner looking up a few contractors or appliance servicers in the phone book vs. a landlord who has the experience and the rolodex to know who to call for the best price and service for each problem? Also, less money goes to financial servicing when landlords pay cash. Without knowing how many pay cash vs. use leverage it's hard to say if there is an overall effect. I see your point on the fueled inequality, though, and have no naive market analysis for that.
  • ap3 11y ago
    You do understand that the $8000 tax credit just made houses more expensive right ?
    • shoover 11y ago
      My parenthetical was admitting I don't know what other complexities were involved with the tax credit, but to the grandparent's point it was closed to landlords and perhaps lowered rents as some like me bought houses instead.
    • OrwellianChild 11y ago
      Not when the tax credit is only for first time buyers and the majority of buyers are not first-time... This type of credit is an attempt to address the concern of @okc in providing preference to new home buyers over existing homeowners.
• Symbiote 11y ago
  > Being English …. Primarily I see housing as a necessity rather than a financial opportunity. This is the opposite of what most English people seem to value, and vote in policies for. Is there any other country where property is treated so much as an investment? This[1] system is a good way to have reasonable rent, essentially a housing association. But housing associations in England are only for poor people; not the case in other European countries like Germany and Scandinavia. [1] https://news.ycombinator.com/item?id=11032936 https://news.ycombinator.com/item?id=11032936
  • okc 11y ago
    The point was that people have different perspectives on where the issue is, regardless of what they think about it. To wit: As an English person the debate in housing is heavily based on investment. As an individual I however feel housing is primarily a necessity. The underlying sentiment is that its a localised debate. Though I disagree with you that most English people value and vote for the promotion of investment in housing. But then that could mean a million things; from stamp tax on buy to let mortgages, to freeing up green belts for development, to reforming housing benefit eligibility. It has always been and still is a massively divisive, sometimes violent and always complex issue in English society. Elections are won and lost on the nuances of these issues and politicians will often find a complex "3rd way" to attempt to appease everyone. And that's without questioning your assertion that all English peoples values are dutifully represented by the political party currently holding majority in the house of commons. We also have a fairly unelected House of Lords having a final say in these matters - a notion that quite easily resonates with Serfdom.
• tempestn 11y ago
  > Do you think people who own a house should be allowed to buy a 2nd one and push first time buyers out the market? Just to address this, first, yes, I absolutely think people need to be able to buy a second house. There is also a natural impediment in place of investors buying up "too many" houses. The reason is, if there are more houses on the rental market than there is demand for rentals, it will drive rental rates down. Similarly, if there are not enough houses for sale to fill demand of all these investors as well as purchases for-self, it will drive house prices up. As those two things happen, the rate of return on an investment property will quickly become lower than that of other comparable investments, so people will not rationally keep buying investment properties until either prices go back down or more houses are built (which will also drive prices back down). Obviously in the short term people don't always act rationally, but that situation can't logically persist indefinitely. (And while it does, renters get below-market rent, subsidized by owners. That was has been the case here in Canada for the past few years, and I happily rented for several of those years.) Long term though, investment owners will earn just enough return to make it worthwhile for them to provide the service of rental housing to people who want it. That's a good thing. Now imagine if people couldn't buy second houses. It would be impossible to rent, because there would be no unoccupied homes. Yes, it would bring house prices down, but what if you were just starting out and didn't have the money to buy a home, even a cheap one? You would then have no options. I know you're not really advocating for outlawing second houses completely, but incentives for first-time buyers over investment buyers would have a similar effect to the lesser extent. You would be making first-time ownership cheaper, and renting more expensive. Now, I don't think that some help for first time buyers is terrible policy. However, I think better policy would be to focus on helping young people in general. For instance, instead of a first time home buyers' credit, there could be a special reduced tax rate on the first $X (or £Y :P ) that a person earns after age 18. (Possibly varied on a means-tested basis.) That would help people get started, either saving up a down payment, or starting an investment portfolio, without skewing the housing and rental markets. Of course I recognize that the problem with that plan is that many, or even most, people would waste that money instead of saving it. By tying it to house purchase, you force people to put it into an asset, and in turn, owning a home forces people to save (in the form of equity). However, we need to find a different solution to that problem, because we'll never be (or want to be) at the point where everyone is a home owner, and right now the people who most need that leg up early in life are the ones who aren't getting it. I don't know what the solution is, but there are certainly possibilities. For instance, a defined benefit state-backed pension plan can prevent people with no savings from being screwed in retirement. It could be made possible to borrow from one's state pension plan to buy a first home. In theory that should not skew prices vs rents as much as a straight tax break, because it's not free money. And it would be more equitable, because people who choose not to use it (or who aren't able to) will still get an equivalent benefit.
• DrScump 11y ago
  <Do you think people who own a house should be allowed to buy a 2nd one and push first time buyers out the market?> To say, "you can't buy a second house" seems fundamentally contrary to American tradition. On the other hand, whether second homes should be eligible for deductibility of mortgage interest and property taxes is another question altogether (present law = yes).