4 ms·
This is a problem for all assets, not just primary residences. > I think we need to stop providing incentives for housing prices to go up. While true, the mai
by bzbarsky 8y ago
This is a problem for all assets, not just primary residences.
> I think we need to stop providing incentives for housing prices to go up.
While true, the main such incentive historically is inflation: housing prices have been growing at about the rate of inflation in the long run, averaged over the US.
- sjwright 8y agoIdeally, capital gains tax should be charged on gains above the rate of inflation.
- bzbarsky 8y agoSo that still assumes that saving is risk-free (maybe) and the discount rate people apply to consumption is 0, right? The latter just doesn't match reality. But it would definitely be a step up from where we are now, in theory. In practice, measuring inflation is an interesting exercise; there are multiple measures that differ quite a bit once your timescale is "decades" as it can easily be for savings and housing. And yrs, I know I said "the rate of inflation" -- I forget which measure those studies used. For housing specifically, one could use whichever inflation measure best matched housing prices in the past, I guess...