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> Oddly, those same single family home owners would become rich if they could subdivide their properties for intensive development. I have never understood this
by rcpt 8y ago
> Oddly, those same single family home owners would become rich if they could subdivide their properties for intensive development. I have never understood this paradox.
Because there's no insurance for drops in property values and most home owners have the vast majority of their wealth tied up in a single asset they are rationally terrified of any change which might increase the variance of property values, even if it means a higher expected value.
https://www.dartmouth.edu/~wfischel/Papers/00-04.PDF https://www.dartmouth.edu/~wfischel/Papers/00-04.PDF is a good read
- dfxm12 8y agomost home owners have the vast majority of their wealth tied up in a single asset Is this a problem, and is it feasible to fix it?
- kerbalspacepro 8y agoIt is a problem because it creates NIMBY behavior. It is not feasible to fix it because it would require rewriting the US tax code.
- rcpt 8y agoThe linked paper discusses the idea of an insurance market for property values. Somehow, prior to 1970, housing was a home and not an investment. I'm not entirely sure what happened to change it.