5 ms·

On one level, I get that: it is economically sensible to play the landlord role, even at a small scale. And in a lot of ways, you're doing something really imp

On one level, I get that: it is economically sensible to play the landlord role, even at a small scale. And in a lot of ways, you're doing something really important. You're providing someone with a place to live, one that they don't have to worry about taking long-term care of. You've decided that you're going to be a long term care-taker of this home. Assuming you're a good landlord, you really are doing some good for the world. But would you really be "dumb" if you did things differently? Or would you be following a different set of economic values? Seriously, think about that. I challenge you to rethink your "smart vs dumb" idea. It's "smart" to drive and rely on a car. But on another very important level, it's also incredibly foolish, a.k.a. "dumb". And I'd argue that what you and your renter have done is also pretty "dumb". Why? Because you and your renters are paying the bank that much for a house. The cost of building a new house is much less. This is an old house, but the bank said "this house is actually worth more than a new house, because you can simply pass the debt onto someone who doesn't have the option of buying a house at this moment, even though they urgently need a place to live". The house itself probably isn't inherently "worth" that much: it takes a lot of work to keep up an aging house. Yet all of this rent money is harvested from the occupant's time/earnings/savings: money that could be invested in the house gets sucked into some exponential function that translates to the bank taking thousands of dollars a month from your renters. Since the bank is so "helpful", you get to keep a very small amount allowance so that you can do repairs/profit. Of course, in the end you'll "own" the house, you'll have paid off your mortgage. Or maybe you'll sell it to someone else, who will enter into a similar agreement with the bank. Regardless, by the time someone has paid off the mortgage, banks will have gotten off with something in the range of 0.5-5x the entire inflated value of the house just for handling sacred paperwork. To me, that's DUMB. This kind of thing is technically forbidden in Islam, Judaism and arguably Christianity, but not in the USA. By the way, I'm right there with you in doing dumb stuff like this: I'm a renter.

dionidium 9y ago
A lot of what you just said suffers from a pretty big misconception: it's land that's worth money, not the house that's on it. Every single news story about how some tiny shack in Vancouver or Palo Alto now costs $x has the same problem, so you're in good company. But it's still not the right way to think about this problem.
- macawfish 9y ago
  That's a good point, and according to the board game Monopoly, you're totally right. In the above post I complained that housing costs don't reflect the quality of the housing itself. Land speculation is probably a huge part of that, if not the dominant contributor. But my whole point is about "rentier capitalism", and it applies whether you're talking about land, houses or SaaS. In a free market, of course there's gonna be ebbs and flows as people and industry come and go, but look at this chart: http://www.economist.com/blogs/graphicdetail/2016/08/daily-chart-20 http://www.economist.com/blogs/graphicdetail/2016/08/daily-c... Those huge, correlated roller coaster curves aren't based off of natural fluctuations in land values in all those different places. They're based on a kind of big distributed Monopoly game where a bunch of people frustratedly flipped the board over in 2008. Now we're going in for another round. Meanwhile, the north pole is melting, and there's tons of work to be done in retrofitting houses for climate change, in switching to new kinds of fuel, planting gardens sustainable agriculture, fixing broken stuff. What are people doing instead? A lot of people spend much of their time doing dog eat dog capitalism. Chasing rent checks and debt repayments. Doing the 9-5 grind. Driving 40 miles a day to work jobs they don't believe in. Not everyone of course, but too many people! We really need to shed this feudalistic way of doing things, and that's going to take people evolving how we participate in markets, what's considered "smart" or "dumb".
  - dionidium 9y ago
    Those huge, correlated roller coaster curves aren't based off of natural fluctuations in land values in all those different places. They're based on a kind of big distributed Monopoly game where a bunch of people frustratedly flipped the board over in 2008. Couldn't this be that the underlying value of the land didn't change at all in 2008? That people still really value land in desirable coastal areas and will do just about anything to get it? That what did change was the amount of capital available to regular people to get it? Nothing about their underlying desire changed at all.
- curun1r 9y ago
  Would the land really be as valuable as it is if people weren't able to borrow money to purchase it? Someone would still own it and yet the price would largely be capped by the amount that people were able to save, not the amount that people are able to promise to repay. Just like it's been shown that the availability of student loans increases the cost of education, the availability of mortgages increases the cost of real estate. And the banks collect much of that increase by, through financial hand waving, loaning out many times the amount of money we give them to watch over. Somehow we've institutionalized a system where banks are able to leech money off one of society's most basic needs, shelter, while providing little-to-no benefit overall.

dionidium 9y ago

A lot of what you just said suffers from a pretty big misconception: it's land that's worth money, not the house that's on it. Every single news story about how some tiny shack in Vancouver or Palo Alto now costs $x has the same problem, so you're in good company. But it's still not the right way to think about this problem.

macawfish 9y ago
That's a good point, and according to the board game Monopoly, you're totally right. In the above post I complained that housing costs don't reflect the quality of the housing itself. Land speculation is probably a huge part of that, if not the dominant contributor. But my whole point is about "rentier capitalism", and it applies whether you're talking about land, houses or SaaS. In a free market, of course there's gonna be ebbs and flows as people and industry come and go, but look at this chart: http://www.economist.com/blogs/graphicdetail/2016/08/daily-chart-20 http://www.economist.com/blogs/graphicdetail/2016/08/daily-c... Those huge, correlated roller coaster curves aren't based off of natural fluctuations in land values in all those different places. They're based on a kind of big distributed Monopoly game where a bunch of people frustratedly flipped the board over in 2008. Now we're going in for another round. Meanwhile, the north pole is melting, and there's tons of work to be done in retrofitting houses for climate change, in switching to new kinds of fuel, planting gardens sustainable agriculture, fixing broken stuff. What are people doing instead? A lot of people spend much of their time doing dog eat dog capitalism. Chasing rent checks and debt repayments. Doing the 9-5 grind. Driving 40 miles a day to work jobs they don't believe in. Not everyone of course, but too many people! We really need to shed this feudalistic way of doing things, and that's going to take people evolving how we participate in markets, what's considered "smart" or "dumb".
- dionidium 9y ago
  Those huge, correlated roller coaster curves aren't based off of natural fluctuations in land values in all those different places. They're based on a kind of big distributed Monopoly game where a bunch of people frustratedly flipped the board over in 2008. Couldn't this be that the underlying value of the land didn't change at all in 2008? That people still really value land in desirable coastal areas and will do just about anything to get it? That what did change was the amount of capital available to regular people to get it? Nothing about their underlying desire changed at all.
curun1r 9y ago
Would the land really be as valuable as it is if people weren't able to borrow money to purchase it? Someone would still own it and yet the price would largely be capped by the amount that people were able to save, not the amount that people are able to promise to repay. Just like it's been shown that the availability of student loans increases the cost of education, the availability of mortgages increases the cost of real estate. And the banks collect much of that increase by, through financial hand waving, loaning out many times the amount of money we give them to watch over. Somehow we've institutionalized a system where banks are able to leech money off one of society's most basic needs, shelter, while providing little-to-no benefit overall.