5 ms·

Land value tax and appatments. The vast majority of people will rent, the rent will be stable, and it will mostly not go to do-nothing lanloards. Mass ownershi

Land value tax and appatments. The vast majority of people will rent, the rent will be stable, and it will mostly not go to do-nothing lanloards. Mass ownership of appreciating assets is a very unstable situation, and also unclear what it even means. It is better to increase wealth through public goods.

notch656a 5y ago
Land would appreciate significantly less if housing and zoning regulations were eliminated. While there is value in being near a city core, land isn't a strongly constrained resource. Meeting the onerous requirements to build a home near this city core continually grandfathers in present-day land owners with buildings from the early 1900s while requiring entirely different standards for the next generation. We have intentionally sabotaged the ability for our youth to afford houses under guise of safety while simultaneously grandfathering in our own shitty run down structures that were built under much looser requirements. The result is land with a shitty old structure can be worth almost as much as a new one, under this restrained and captured supply.
- tagami 5y ago
  A bit off OP's topic, but in California ADUs (Accessory Dwelling Units) are now legal in all residential zoning districts. This effectively opens up the urban core for homeowners that wish to develop out their property. A smart first time owner will take advantage of this and effectively create an additional 1 or 2 living units (Primary residence+JADU+ADU) that can cover the new mortgage.
  - Ericson2314 5y ago
    There was just a Chronicle article on this https://www.sfchronicle.com/bayarea/article/San-Francisco-ADUs-are-being-built-mostly-in-the-16758730.php https://www.sfchronicle.com/bayarea/article/San-Francisco-AD... Honestly, I agree with one of the quoted people that ADUs are just a political hack to get a half-measure by the NIMBYs. Even if we converted all the garages it would an extremely inefficient way to construct more housing. There was talk of trying to do financing for poor people to do the conversions, but insofar that that works I think it is likely to push up construction prices because ADUs are so inefficient. (Conversely, the externality of decreased parking is quite good. I don't want to neglact that.) If we really care about housing and equity for the poor, we should allow poor homeowners to trade in for a new condo if the entire block agrees, and then redevelop it at a massive scale. Far more housing, still equity for them, and once you bootstrap the process no one even need be displaced out of the neighborhood. Win-win
HarryHirsch 5y ago
also unclear what it even means It's very clear what it means - inflation. Consider a farmer in Zimbabwe who buys a used truck for 10000 Zimbabwe dollars to bring his produce to market. A few years later, he sells his truck for a million Zimbabwe dollars. He is a millionaire! But he still is a farmer and needs a truck to move his produce. Another used truck would set him back 5 million Zimbabwe dollars. It can't go on like that. At some point the chunk of money that shelter takes out of the monthly paycheck can't grow further.
- notch656a 5y ago
  The biggest driver, arguably, of elevated home prices in the past 2 years has been [real ] interest rates that are effectively negative against inflation. The result is buying of property under fixed rate loan to short the USD.
  - Ericson2314 5y ago
    That's not true. Most homes are still being bought to live in. The supply of SFH in decent places is just always too puny to meet housing needs. Cashing out comes with the hassle to move, and is less attractive during pandemic. Rich people that want to decamp boost up demand in the select few popular remote places. That was the 2020 story. Recently I am less sure exactly what's going, but yeah, single family homes are the worst!
    - notch656a 5y ago
      People have always wanted to buy homes to live in. I'm talking about the large increase in prices in the last 2 years. [negative real] Interest rates are definitely a big reason for the asset appreciation.
      - Ericson2314 5y ago
        Even if that is the case, SFH for being stupid not interest rates for being low is the proper scapegoat. The rest of the inflation is due to pandemic-related supply side dysfunction, and fossil fuels which are even more subject to random things like OPEC whims. Raising rates to bring down SFH prices and not reforming the SFH system would be colossally stupid.
Ericson2314 5y ago
Some counterintuitive things: - the floor rent is too damn high, but the land rent is two damn low - Ownership is very hard to price, but the existance of the instutition of ownership is a choice! By raising the land rent the price of ownership shrivels up, and that clamps down on the risks from this volatile and ill-defined problem. - Rent is just better, what is bad is rent paid to owners, integrating the flow into the stock. Rent that cycles right back around as citizen divdend or gov services stays as a flow and is good. (And what ever evil inclinations states might have, profits are not one of them in the fiat era. (States == federal government in this case. State, local, and invididual departments could still be money grubbers.))
fuzzer37 5y ago
> the rent will be stable, and it will mostly not go to do-nothing lanloards. I see you've never rented before.
- Ericson2314 5y ago
  I am renting right now with a shitty do-nothing landlord, and in a dispute over maintainence --- the boiler is leaking and smoking up my apartment. I am under no such illusions. Landlords maintain power through the restriction of supply. They don't need to actively do it, the single-family-home complex does it for them. Land value tax (+ land use regulation reform) demolishes that. Appartment management, divorced from land speculation, will become the boring low-margin business it deserves to be.

notch656a 5y ago

Land would appreciate significantly less if housing and zoning regulations were eliminated. While there is value in being near a city core, land isn't a strongly constrained resource. Meeting the onerous requirements to build a home near this city core continually grandfathers in present-day land owners with buildings from the early 1900s while requiring entirely different standards for the next generation. We have intentionally sabotaged the ability for our youth to afford houses under guise of safety while simultaneously grandfathering in our own shitty run down structures that were built under much looser requirements. The result is land with a shitty old structure can be worth almost as much as a new one, under this restrained and captured supply.

tagami 5y ago
A bit off OP's topic, but in California ADUs (Accessory Dwelling Units) are now legal in all residential zoning districts. This effectively opens up the urban core for homeowners that wish to develop out their property. A smart first time owner will take advantage of this and effectively create an additional 1 or 2 living units (Primary residence+JADU+ADU) that can cover the new mortgage.
- Ericson2314 5y ago
  There was just a Chronicle article on this https://www.sfchronicle.com/bayarea/article/San-Francisco-ADUs-are-being-built-mostly-in-the-16758730.php https://www.sfchronicle.com/bayarea/article/San-Francisco-AD... Honestly, I agree with one of the quoted people that ADUs are just a political hack to get a half-measure by the NIMBYs. Even if we converted all the garages it would an extremely inefficient way to construct more housing. There was talk of trying to do financing for poor people to do the conversions, but insofar that that works I think it is likely to push up construction prices because ADUs are so inefficient. (Conversely, the externality of decreased parking is quite good. I don't want to neglact that.) If we really care about housing and equity for the poor, we should allow poor homeowners to trade in for a new condo if the entire block agrees, and then redevelop it at a massive scale. Far more housing, still equity for them, and once you bootstrap the process no one even need be displaced out of the neighborhood. Win-win

HarryHirsch 5y ago

also unclear what it even means It's very clear what it means - inflation. Consider a farmer in Zimbabwe who buys a used truck for 10000 Zimbabwe dollars to bring his produce to market. A few years later, he sells his truck for a million Zimbabwe dollars. He is a millionaire! But he still is a farmer and needs a truck to move his produce. Another used truck would set him back 5 million Zimbabwe dollars. It can't go on like that. At some point the chunk of money that shelter takes out of the monthly paycheck can't grow further.

notch656a 5y ago
The biggest driver, arguably, of elevated home prices in the past 2 years has been [real ] interest rates that are effectively negative against inflation. The result is buying of property under fixed rate loan to short the USD.
- Ericson2314 5y ago
  That's not true. Most homes are still being bought to live in. The supply of SFH in decent places is just always too puny to meet housing needs. Cashing out comes with the hassle to move, and is less attractive during pandemic. Rich people that want to decamp boost up demand in the select few popular remote places. That was the 2020 story. Recently I am less sure exactly what's going, but yeah, single family homes are the worst!
  - notch656a 5y ago
    People have always wanted to buy homes to live in. I'm talking about the large increase in prices in the last 2 years. [negative real] Interest rates are definitely a big reason for the asset appreciation.
    - Ericson2314 5y ago
      Even if that is the case, SFH for being stupid not interest rates for being low is the proper scapegoat. The rest of the inflation is due to pandemic-related supply side dysfunction, and fossil fuels which are even more subject to random things like OPEC whims. Raising rates to bring down SFH prices and not reforming the SFH system would be colossally stupid.

Ericson2314 5y ago

Some counterintuitive things: - the floor rent is too damn high, but the land rent is two damn low - Ownership is very hard to price, but the existance of the instutition of ownership is a choice! By raising the land rent the price of ownership shrivels up, and that clamps down on the risks from this volatile and ill-defined problem. - Rent is just better, what is bad is rent paid to owners, integrating the flow into the stock. Rent that cycles right back around as citizen divdend or gov services stays as a flow and is good. (And what ever evil inclinations states might have, profits are not one of them in the fiat era. (States == federal government in this case. State, local, and invididual departments could still be money grubbers.))

fuzzer37 5y ago

> the rent will be stable, and it will mostly not go to do-nothing lanloards. I see you've never rented before.

Ericson2314 5y ago
I am renting right now with a shitty do-nothing landlord, and in a dispute over maintainence --- the boiler is leaking and smoking up my apartment. I am under no such illusions. Landlords maintain power through the restriction of supply. They don't need to actively do it, the single-family-home complex does it for them. Land value tax (+ land use regulation reform) demolishes that. Appartment management, divorced from land speculation, will become the boring low-margin business it deserves to be.