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In the US, homes are the best way for the middle class to create wealth because the government essentially subsidizes this transfer. The entire financial system

by anonu 10y ago

In the US, homes are the best way for the middle class to create wealth because the government essentially subsidizes this transfer. The entire financial system and tax code are designed to support this. There is no other country in the world where you can just get a loan that leverages you up 10:1 . This is where the cycle begins. Home prices have to go up now, otherwise these loans go underwater and we get another financial crises like the one we saw in 2008. Then, the tax code effectively gives you free money to do this trade. If you don't take advantage of it, you're probably missing out. Finally, this is why we always like a bit of inflation. Inflation devalues that loan and pushes the price of your house up. Falling home prices would be a disaster for America ... we've already seen this scenario less than 10 years ago...

dilemma 10y ago
>The entire financial system and tax code are designed to support this. There is no other country in the world where you can just get a loan that leverages you up 10:1. It's actually the same in most or all western countries.
jstanley 10y ago
> There is no other country in the world where you can just get a loan that leverages you up 10:1. That's a big claim, and possibly I've misunderstood it. I live in England and I had no trouble at all getting a mortgage with a 10% deposit.
pzone 10y ago
The entire point of the article is that this way of thinking is outdated. Yes, we have long considered homes as primary investments and as the best way to grow wealth, and yes, we have had falling home prices bite us in the ass before. But these things are not set in stone, and a world where houses are just one of many goods we own and consume would work out just fine too, and perhaps it would work even better. We can change the tax code, and home prices don't have to drop suddenly like they did in 2008 and put people underwater. They could simply plateau.
- namlem 10y ago
  Changing things isn't so simple. Homeowners aren't going to be very keen on voting for politicians who run on devaluing their homes or making them pay thousands of dollars of extra taxes every year.

by anonu 10y ago

dilemma 10y ago

>The entire financial system and tax code are designed to support this. There is no other country in the world where you can just get a loan that leverages you up 10:1. It's actually the same in most or all western countries.

jstanley 10y ago

> There is no other country in the world where you can just get a loan that leverages you up 10:1. That's a big claim, and possibly I've misunderstood it. I live in England and I had no trouble at all getting a mortgage with a 10% deposit.

pzone 10y ago

The entire point of the article is that this way of thinking is outdated. Yes, we have long considered homes as primary investments and as the best way to grow wealth, and yes, we have had falling home prices bite us in the ass before. But these things are not set in stone, and a world where houses are just one of many goods we own and consume would work out just fine too, and perhaps it would work even better. We can change the tax code, and home prices don't have to drop suddenly like they did in 2008 and put people underwater. They could simply plateau.

namlem 10y ago
Changing things isn't so simple. Homeowners aren't going to be very keen on voting for politicians who run on devaluing their homes or making them pay thousands of dollars of extra taxes every year.