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Home and land ownership has been one of the main ways that the working class can accumulate wealth. It's the average man's tried and true method of investing.

by blub 8y ago

Symmetry 8y ago
Is that actually true? I mean, it was true in the US in the middle of the 20th century but it seems at odds with what I know of conditions elsewhere, though I'm not an expert.
- igravious 8y ago
  Yes it's actually true. It's more that the counter-position broadly applied over the long run is untenable. If you don't own the home you live in and/or the land it stands on then you are by definition renting that property. A portion of your labour is going straight to someone who owns at least one home and some land thus depending on how long this goes on for drives inequality. It's not called “Rentier Capitalism” for nothing you know: https://en.wikipedia.org/wiki/Rentier_capitalism https://en.wikipedia.org/wiki/Rentier_capitalism If people have a decent chance to own their own home and land it gives them an avenue to a better life, if they don't it doesn't.
  - Symmetry 8y ago
    Sorry, I meant to ask if you had any evidence that it was true, rather than if you just had some reasoning that it was true. As far as I can tell social mobility in Europe is about as good as it is in the US despite the much higher home ownership rate in the US. Yes, home ownership provides a way for people to accumulate wealth that is tax advantaged by US government policy. But does it provide the same benefit in countries without that tax advantage? And is that advantage enough to offset the reduced labor mobility that home ownership brings[1]. [1]https://www.citylab.com/life/2013/05/link-betweeen-high-levels-homeownership-and-unemployment/5520/ https://www.citylab.com/life/2013/05/link-betweeen-high-leve...
    - igravious 8y ago
      I see what you're saying. That's too counter-intuitive for me. I'd need a lot more than one article to change my mind on this. All other things being equal, if you're paying down a mortgage rather than lining someone else's pocket that has to be a good thing for you. Because when you have the mortgage paid off you own a property. Just because in some places (like parts of Europe) there are tenant councils and strong tenant rights which makes being a tenant less bad doesn't then make the reverse situation (working towards owning your own home) less good. And just because there are negative externalities to homeownership in a certain job market says just as much about that particular job market as it does about homeownership.
TorKlingberg 8y ago
It is an unfortunate conflict that homes cannot be both stay affordable and be a good investment. Houses accumulated wealth in the 20:th century because they increased in value quickly, but that means they are no longer affordable to many people. We should allow building more homes so people can buy them. But then they won't go up as much in value as when the supply is restricted.
- topkai22 8y ago
  Homes can be a good iinvestment even if prices aren’t rising (or at least aren't rising faster than inflation). You have to have shelter, so you have to purchase that some how. If you choose to rent theoretically you need to pay for the raw cost of the real estate you are living, the cost of maintaining and managing that property, and a small profit for the owner. If you own the property you can choose to do much of the maintenance and management yourself, and can keep the profit portion. Sweat equity is a real thing, and there is no other asset type I can think of that allows average people to casually invest thier labor like that.
  - TorKlingberg 8y ago
    Absolutely. Housing can be an ok investment compared to renting without becoming unaffordable. Buying vs. renting comes down to a trade-off of how long you will stay, how much work you are willing to put in, etc. For you last point, the gig economy is partially filling that role for non-homeowners. You can drive around or deliver things almost as casually as doing home improvements. Not quite as easily, but the payoff more direct.

Home and land ownership has been one of the main ways that the working class can accumulate wealth. It's the average man's tried and true method of investing.

by blub 8y ago

Home and land ownership has been one of the main ways that the working class can accumulate wealth. It's the average man's tried and true method of investing.

Symmetry 8y ago

Is that actually true? I mean, it was true in the US in the middle of the 20th century but it seems at odds with what I know of conditions elsewhere, though I'm not an expert.

igravious 8y ago
Yes it's actually true. It's more that the counter-position broadly applied over the long run is untenable. If you don't own the home you live in and/or the land it stands on then you are by definition renting that property. A portion of your labour is going straight to someone who owns at least one home and some land thus depending on how long this goes on for drives inequality. It's not called “Rentier Capitalism” for nothing you know: https://en.wikipedia.org/wiki/Rentier_capitalism https://en.wikipedia.org/wiki/Rentier_capitalism If people have a decent chance to own their own home and land it gives them an avenue to a better life, if they don't it doesn't.
- Symmetry 8y ago
  Sorry, I meant to ask if you had any evidence that it was true, rather than if you just had some reasoning that it was true. As far as I can tell social mobility in Europe is about as good as it is in the US despite the much higher home ownership rate in the US. Yes, home ownership provides a way for people to accumulate wealth that is tax advantaged by US government policy. But does it provide the same benefit in countries without that tax advantage? And is that advantage enough to offset the reduced labor mobility that home ownership brings[1]. [1]https://www.citylab.com/life/2013/05/link-betweeen-high-levels-homeownership-and-unemployment/5520/ https://www.citylab.com/life/2013/05/link-betweeen-high-leve...
  - igravious 8y ago
    I see what you're saying. That's too counter-intuitive for me. I'd need a lot more than one article to change my mind on this. All other things being equal, if you're paying down a mortgage rather than lining someone else's pocket that has to be a good thing for you. Because when you have the mortgage paid off you own a property. Just because in some places (like parts of Europe) there are tenant councils and strong tenant rights which makes being a tenant less bad doesn't then make the reverse situation (working towards owning your own home) less good. And just because there are negative externalities to homeownership in a certain job market says just as much about that particular job market as it does about homeownership.

TorKlingberg 8y ago

It is an unfortunate conflict that homes cannot be both stay affordable and be a good investment. Houses accumulated wealth in the 20:th century because they increased in value quickly, but that means they are no longer affordable to many people. We should allow building more homes so people can buy them. But then they won't go up as much in value as when the supply is restricted.

topkai22 8y ago
Homes can be a good iinvestment even if prices aren’t rising (or at least aren't rising faster than inflation). You have to have shelter, so you have to purchase that some how. If you choose to rent theoretically you need to pay for the raw cost of the real estate you are living, the cost of maintaining and managing that property, and a small profit for the owner. If you own the property you can choose to do much of the maintenance and management yourself, and can keep the profit portion. Sweat equity is a real thing, and there is no other asset type I can think of that allows average people to casually invest thier labor like that.
- TorKlingberg 8y ago
  Absolutely. Housing can be an ok investment compared to renting without becoming unaffordable. Buying vs. renting comes down to a trade-off of how long you will stay, how much work you are willing to put in, etc. For you last point, the gig economy is partially filling that role for non-homeowners. You can drive around or deliver things almost as casually as doing home improvements. Not quite as easily, but the payoff more direct.