4 ms·

All these programs that subsidize the cost of borrowing merely drive up the price of houses. This is why things like the mortgage interest deduction or zero per

by rsj_hn 6y ago

All these programs that subsidize the cost of borrowing merely drive up the price of houses. This is why things like the mortgage interest deduction or zero percent financing are not in the long term interests of home buyers when they are "scaled up", and when they are niche programs they are basically a convoluted form of charity. There is nothing wrong with that, some people like their charities to be convoluted and have a penchant for financial engineering, but at the end of the day charities, by definition, cannot scale: A large group can give money to a small group, but when the society as a whole gives money to itself then it is no longer charity, it's just spending money on yourself in a convoluted way.

Spooky23 6y ago
Not always. The program I described was really a way to transition folks into a sustainable lifestyle. Rents in this place are more than property values, so training to let working class people afford a home and rent the downstairs bring stability to the family and he neighborhood. Real estate is insane because we’re in an era where wealth is being shoveled into a few peoples hands, and we are literally printing money to extend a boom cycle for as long as possible without regard for the future. The house I grew up in Queens was purchased by my folks in 1976 for $15 and recently sold for $1.3M. My dad was a clerk for the city then, and my uncle, now a millionaire across the street was an able seaman.
- rsj_hn 6y ago
  I am not saying Habitat for Humanity (or any charity) is bad, nor am I trying to discourage anyone from giving to charity. I'm pointing out that what works in a small scale charity does not work for addressing social problems at scale, and in fact is often (more often than not) harmful when done at scale. This is because the specific things that charities are good at: giving stuff to small groups of people, is not really a path forward for problems faced by society as a whole, with the exception of the problem of poor people not having enough stuff. But when you try to use this approach for, say, housing policy, then you get bad outcomes. We have had in this country a long term, bipartisan consensus that home ownership should be subsidized. The end result is transfers from renters to home-owners, record high homeownership rates, and many people buying homes because it's a way to make leveraged bets on asset prices at taxpayer expense. There are many people who have no business owning a home but who feel they must do so in order to not be left behind in this game of leveraged bets. The result is a toxic tangle of cross-subsidies between the real-estate and financial sectors and a whole army of various parasitical industries that has sprung up to feed on these subsidies -- everything from real estate brokers, title insurers, inspectors, appraisers, a virtual caravan of people lined up at the trough of our housing subsidies, all in the name of "helping the middle class" afford homes. When you have such a terrible problem of mispricing and people chasing after windfall gains, the idea that the industry should be approached as a type of charity is really the last thing you want to do. If you want to give money to a poor person, then by all means do so, but that's not a path forward for national housing policy.
  - tareqak 6y ago
    > There are many people who have no business owning a home but who feel they must do so in order to not be left behind in this game of leveraged bets. Who has no business owning a home?
    - closeparen 6y ago
      * Won't stay long enough to break even on transaction costs. * Price to rent ratio very high, just need somewhere to live. * Achieving ownership requires moving to sprawl and taking on a ruinous car commute. * Ownership used to justify overspending on housing because "it's an investment." * Need to go broke to scrape together the down payment. * Don't reliably earn enough to pay the mortgage, and no savings. * Don't have the temperament or the means to do maintenance.
  - dslkfjg 6y ago
    >> leveraged bets on asset prices at taxpayer expense But doesn't the tax code distinguish between a house which houses its owner and one which doesn't? I don't think investment homes are treated tax-wise the same as normal homes. I am not aware of tax advantages being extended to investments just because those investments are houses, but maybe I am wrong?
jshen 6y ago
Not if they help generate new housing, which it seems some of them do.
dredmorbius 6y ago
This is why Phillips's full program is based on three tiers: supply (addressing the amount of housing available), security (tenants' rights), and subsidy (assistance to those with specific needs). You need at least all three components. I'd suggest wage support (UBI / employer of last resort) being another leg that would help, given the relationship of rents and wages economically (wages tend to or below subsistence, rents to all consumer surplus). But this seems a damned good start.

by rsj_hn 6y ago

Spooky23 6y ago

Not always. The program I described was really a way to transition folks into a sustainable lifestyle. Rents in this place are more than property values, so training to let working class people afford a home and rent the downstairs bring stability to the family and he neighborhood. Real estate is insane because we’re in an era where wealth is being shoveled into a few peoples hands, and we are literally printing money to extend a boom cycle for as long as possible without regard for the future. The house I grew up in Queens was purchased by my folks in 1976 for $15 and recently sold for $1.3M. My dad was a clerk for the city then, and my uncle, now a millionaire across the street was an able seaman.

rsj_hn 6y ago
I am not saying Habitat for Humanity (or any charity) is bad, nor am I trying to discourage anyone from giving to charity. I'm pointing out that what works in a small scale charity does not work for addressing social problems at scale, and in fact is often (more often than not) harmful when done at scale. This is because the specific things that charities are good at: giving stuff to small groups of people, is not really a path forward for problems faced by society as a whole, with the exception of the problem of poor people not having enough stuff. But when you try to use this approach for, say, housing policy, then you get bad outcomes. We have had in this country a long term, bipartisan consensus that home ownership should be subsidized. The end result is transfers from renters to home-owners, record high homeownership rates, and many people buying homes because it's a way to make leveraged bets on asset prices at taxpayer expense. There are many people who have no business owning a home but who feel they must do so in order to not be left behind in this game of leveraged bets. The result is a toxic tangle of cross-subsidies between the real-estate and financial sectors and a whole army of various parasitical industries that has sprung up to feed on these subsidies -- everything from real estate brokers, title insurers, inspectors, appraisers, a virtual caravan of people lined up at the trough of our housing subsidies, all in the name of "helping the middle class" afford homes. When you have such a terrible problem of mispricing and people chasing after windfall gains, the idea that the industry should be approached as a type of charity is really the last thing you want to do. If you want to give money to a poor person, then by all means do so, but that's not a path forward for national housing policy.
- tareqak 6y ago
  > There are many people who have no business owning a home but who feel they must do so in order to not be left behind in this game of leveraged bets. Who has no business owning a home?
  - closeparen 6y ago
    * Won't stay long enough to break even on transaction costs. * Price to rent ratio very high, just need somewhere to live. * Achieving ownership requires moving to sprawl and taking on a ruinous car commute. * Ownership used to justify overspending on housing because "it's an investment." * Need to go broke to scrape together the down payment. * Don't reliably earn enough to pay the mortgage, and no savings. * Don't have the temperament or the means to do maintenance.
- dslkfjg 6y ago
  >> leveraged bets on asset prices at taxpayer expense But doesn't the tax code distinguish between a house which houses its owner and one which doesn't? I don't think investment homes are treated tax-wise the same as normal homes. I am not aware of tax advantages being extended to investments just because those investments are houses, but maybe I am wrong?

jshen 6y ago

Not if they help generate new housing, which it seems some of them do.

dredmorbius 6y ago

This is why Phillips's full program is based on three tiers: supply (addressing the amount of housing available), security (tenants' rights), and subsidy (assistance to those with specific needs). You need at least all three components. I'd suggest wage support (UBI / employer of last resort) being another leg that would help, given the relationship of rents and wages economically (wages tend to or below subsistence, rents to all consumer surplus). But this seems a damned good start.