3 ms·

> being in place early makes you a winner Isn't this just the housing market in general? Why should renters not benefit from the same dynamics that owners do?

neilparikh 6y ago
The solution is make it so that no one benefits from this dynamic (via a land tax), rather than just expanding the group that gets the benefits (which will never expand to include everyone, since land is scarce).
- sib 6y ago
  And then, of course, California decided to pass Proposition 13 [1] which made sure that owners who got in early also "win" vs more recent buyers. There are owners of identical homes on the same block in San Francisco who pay 10x what their neighbors pay due only to when they bought (and the resultant purchase prices). This is unlike saner places in the country which reassess property values regularly. [1] https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13
  - sologoub 6y ago
    That’s definitely picking winners and losers, but not inherent to the real estate itself. Just shows that populist polices are not new. EDIT: also, why prop 13 applies to non-residential real estate is another issue.
    - neilparikh 6y ago
      Even without Prop 13, this problem still applies, and is inherent to real estate. Buying land is essentially buying a monopoly (since land is in fixed supply), and getting access to its rents for perpetuity. Prop 13 gives you even more of the rents, but in places with Prop 13, property taxes are low enough that most of the rents still go to the landowner. You can compare land to taxi medallions, and see that all the reasons taxi medallions are bad also apply to land. Allowing indefinite ownership of the rents from a scarce resource essentially gives a slice of the future productivity of the community to those who were lucky to buy early enough.
sologoub 6y ago
Not at all, owners take on the risk and capital responsibility. I suspect those who bought in Detroit in the peak of that market would not look like a winner today. An extreme example, but still. Other less extreme examples would be in international markets where the base currency has declined - nominally the houses are more expensive, but in real terms could have lost over 50% of value. If the housing market is relatively flat (and the currency is stable), then owning still typically provides you with benefits, such as equity accumulation.

neilparikh 6y ago

The solution is make it so that no one benefits from this dynamic (via a land tax), rather than just expanding the group that gets the benefits (which will never expand to include everyone, since land is scarce).

sib 6y ago
And then, of course, California decided to pass Proposition 13 [1] which made sure that owners who got in early also "win" vs more recent buyers. There are owners of identical homes on the same block in San Francisco who pay 10x what their neighbors pay due only to when they bought (and the resultant purchase prices). This is unlike saner places in the country which reassess property values regularly. [1] https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13
- sologoub 6y ago
  That’s definitely picking winners and losers, but not inherent to the real estate itself. Just shows that populist polices are not new. EDIT: also, why prop 13 applies to non-residential real estate is another issue.
  - neilparikh 6y ago
    Even without Prop 13, this problem still applies, and is inherent to real estate. Buying land is essentially buying a monopoly (since land is in fixed supply), and getting access to its rents for perpetuity. Prop 13 gives you even more of the rents, but in places with Prop 13, property taxes are low enough that most of the rents still go to the landowner. You can compare land to taxi medallions, and see that all the reasons taxi medallions are bad also apply to land. Allowing indefinite ownership of the rents from a scarce resource essentially gives a slice of the future productivity of the community to those who were lucky to buy early enough.

sologoub 6y ago

Not at all, owners take on the risk and capital responsibility. I suspect those who bought in Detroit in the peak of that market would not look like a winner today. An extreme example, but still. Other less extreme examples would be in international markets where the base currency has declined - nominally the houses are more expensive, but in real terms could have lost over 50% of value. If the housing market is relatively flat (and the currency is stable), then owning still typically provides you with benefits, such as equity accumulation.