5 ms·

Housing is only an 'investment' because of how expensive it inherently is. However, my opinion has been that housing /has been/ in a bubble since at least the

Housing is only an 'investment' because of how expensive it inherently is. However, my opinion has been that housing /has been/ in a bubble since at least the mid 2000s (pre recession); and it didn't actually deflate (at least in the area I live in) /during/ that recession. It would really be nice if some way of fixing this bubble chasing nonsense happened. Maybe if healthcare and retirement were fully socialized this would be less of an issue.

deleted 8y ago
[deleted]
gt_ 8y ago
http://dsausa.org http://dsausa.org
ummonk 8y ago
Well, Prop 13 in California particularly incentivizes housing bubble chasing.
- gnicholas 8y ago
  Doesn’t Prop 13 incentivize buy and hold? That’s the only way to keep your low property tax basis. Or am I misunderstanding your comment?
  - mjevans 8y ago
    The effect on the market is to make the market even less liquid than it would be since sales cost such huge benefits. Plus insulating existing homeowners from the rising market value of land is a tax on literally everyone that does NOT live there.
    - gnicholas 8y ago
      Thanks for clarifying — I didn't realize what you meant by bubble chasing. I agree that Prop 13 can reduce available inventory and drive prices up. Though note that at age 55, you can move into a less-expensive home and keep your old property tax basis (if you meet certain restrictions). This provides somewhat of an escape valve that allows empty-nesters to downsize and new families to move in.
      - mjevans 8y ago
        Someone from CA or who's more familiar with the actual Prop 13 should clarify, however from what I recall reading in prior threads... I believe the benefits can also be passed in some non-sale transfers of the property; IE passing it on to loved ones. So if something stays within the family those benefits are locked in at the old rate instead of hitting the new rate. Which while it sounds nice for handing off a property among married couples creates an entirely new class (literally) of people as land ownership flows through family generations.
        gnicholas 8y ago
        I’m from California and am also a (former) tax lawyer. There is a limited ability to inherit property tax basis. It only applies to children (or grandchildren, if all children are deceased at the time of the grandparent’s death). It can’t be used to pass off property whenever you wish — only when you die. Given how long people generally live, this means that the people inheriting properties are usually already homeowners themselves, and in many cases already senior citizens.
        pound 8y ago
        Transferring prop13 taxes when moving if someone is older than 55yo is very limited - should be within the same county and number of counties allowing it is 10 or 8 or something like that in CA. I may not remember exact details on that. Prop13 was expanded to allow transfer taxes between parents & children and grandparents & grandchildren. Also, commercial property is covered by prop13 too. Also, prop 13 is not limited to the primary residences. Also in many places schools are funded from property taxes, so all those complaints about horribly underfunded non-performing Californian schools have big "FU, got mine" from homeowners behind them.
        gnicholas 8y ago
        Regarding property taxes being used to pay for schools, this is actually not as unfair as it might seem. That is, I pay much more than my next door neighbors, who have lived here for 30+ years. But I have school-aged kids, so I’m receiving more of a benefit from the local schools than they are.
  - ummonk 8y ago
    It encourages treating property as an investment, rather than something you own so you can live in it. This results in, for example, people buying second homes or investment properties, as well as people holding on to houses that they would have otherwise sold off (to move to a more suitable locaiton as a retiree, for example).
rspeer 8y ago
Cars are expensive but aren't investments; they're depreciating assets. In Tokyo, housing is a depreciating asset too. In the US, housing is an appreciating investment because we've made that a political axiom, and because homeowners hold political power that let them fight any policy that would make housing cheaper.
- mmt 8y ago
  > Cars are expensive but aren't investments; they're depreciating assets. There's a case to be made that the two aren't mutually exclusive. Sure, by the traditional definition of "investment", a profit or gain is required, but a broader understanding includes considerations such as risk and loss avoidance (i.e. hedging). Even under the traditional/strict definition, a car could be considered an investment if the loss from depreciation is less than the loss from not having it available (e.g. having to pay more for rideshare services). That said, with housing, it's important to remember there are two components, the depreciating part (the structure) and the land (location). The latter both doesn't depreciate and is usually the part people are investing in, at least in high-cost areas.
- puranjay 8y ago
  Cars are a depreciating asset because you can always manufacture more of them Housing appreciates because land supply is limited in big cities. You can't manufacture more land
  - rspeer 8y ago
    How simplistic. America has enough land. Vast swaths of it are empty. What we don't have enough of is density in the places where people actually want to be, and that's not a natural limit. You could make more density, if it weren't illegal in all of these desirable places. And I just mentioned Tokyo, which actually does have serious land constraints but does zoning and transit well. (And where they are making more land.) Ordinary people can afford homes there and almost nobody is homeless. "They're not making any more land" isn't a relevant thing about urbanism, it's just a cliche that a realtor says to convince you to buy.
debacle 8y ago
> It would really be nice if some way of fixing this bubble chasing nonsense happened. Penalize corporations (banks) for holding inventory, rather than the other way around. Vacant residences should have a higher tax rate.

deleted 8y ago

[deleted]

gt_ 8y ago

http://dsausa.org http://dsausa.org

ummonk 8y ago

Well, Prop 13 in California particularly incentivizes housing bubble chasing.

gnicholas 8y ago
Doesn’t Prop 13 incentivize buy and hold? That’s the only way to keep your low property tax basis. Or am I misunderstanding your comment?
- mjevans 8y ago
  The effect on the market is to make the market even less liquid than it would be since sales cost such huge benefits. Plus insulating existing homeowners from the rising market value of land is a tax on literally everyone that does NOT live there.
  - gnicholas 8y ago
    Thanks for clarifying — I didn't realize what you meant by bubble chasing. I agree that Prop 13 can reduce available inventory and drive prices up. Though note that at age 55, you can move into a less-expensive home and keep your old property tax basis (if you meet certain restrictions). This provides somewhat of an escape valve that allows empty-nesters to downsize and new families to move in.
    - mjevans 8y ago
      Someone from CA or who's more familiar with the actual Prop 13 should clarify, however from what I recall reading in prior threads... I believe the benefits can also be passed in some non-sale transfers of the property; IE passing it on to loved ones. So if something stays within the family those benefits are locked in at the old rate instead of hitting the new rate. Which while it sounds nice for handing off a property among married couples creates an entirely new class (literally) of people as land ownership flows through family generations.
      - gnicholas 8y ago
        I’m from California and am also a (former) tax lawyer. There is a limited ability to inherit property tax basis. It only applies to children (or grandchildren, if all children are deceased at the time of the grandparent’s death). It can’t be used to pass off property whenever you wish — only when you die. Given how long people generally live, this means that the people inheriting properties are usually already homeowners themselves, and in many cases already senior citizens.
      - pound 8y ago
        Transferring prop13 taxes when moving if someone is older than 55yo is very limited - should be within the same county and number of counties allowing it is 10 or 8 or something like that in CA. I may not remember exact details on that. Prop13 was expanded to allow transfer taxes between parents & children and grandparents & grandchildren. Also, commercial property is covered by prop13 too. Also, prop 13 is not limited to the primary residences. Also in many places schools are funded from property taxes, so all those complaints about horribly underfunded non-performing Californian schools have big "FU, got mine" from homeowners behind them.
        gnicholas 8y ago
        Regarding property taxes being used to pay for schools, this is actually not as unfair as it might seem. That is, I pay much more than my next door neighbors, who have lived here for 30+ years. But I have school-aged kids, so I’m receiving more of a benefit from the local schools than they are.
- ummonk 8y ago
  It encourages treating property as an investment, rather than something you own so you can live in it. This results in, for example, people buying second homes or investment properties, as well as people holding on to houses that they would have otherwise sold off (to move to a more suitable locaiton as a retiree, for example).

rspeer 8y ago

Cars are expensive but aren't investments; they're depreciating assets. In Tokyo, housing is a depreciating asset too. In the US, housing is an appreciating investment because we've made that a political axiom, and because homeowners hold political power that let them fight any policy that would make housing cheaper.

mmt 8y ago
> Cars are expensive but aren't investments; they're depreciating assets. There's a case to be made that the two aren't mutually exclusive. Sure, by the traditional definition of "investment", a profit or gain is required, but a broader understanding includes considerations such as risk and loss avoidance (i.e. hedging). Even under the traditional/strict definition, a car could be considered an investment if the loss from depreciation is less than the loss from not having it available (e.g. having to pay more for rideshare services). That said, with housing, it's important to remember there are two components, the depreciating part (the structure) and the land (location). The latter both doesn't depreciate and is usually the part people are investing in, at least in high-cost areas.
puranjay 8y ago
Cars are a depreciating asset because you can always manufacture more of them Housing appreciates because land supply is limited in big cities. You can't manufacture more land
- rspeer 8y ago
  How simplistic. America has enough land. Vast swaths of it are empty. What we don't have enough of is density in the places where people actually want to be, and that's not a natural limit. You could make more density, if it weren't illegal in all of these desirable places. And I just mentioned Tokyo, which actually does have serious land constraints but does zoning and transit well. (And where they are making more land.) Ordinary people can afford homes there and almost nobody is homeless. "They're not making any more land" isn't a relevant thing about urbanism, it's just a cliche that a realtor says to convince you to buy.

debacle 8y ago

> It would really be nice if some way of fixing this bubble chasing nonsense happened. Penalize corporations (banks) for holding inventory, rather than the other way around. Vacant residences should have a higher tax rate.