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Would it? Or would it simply push home ownership further out of reach and favor landlords with capital?

vkou 5y ago
To rephrase my point: What do you think would happen to the price of the average home if we printed, and handed out, each man, woman, child, and dog in Canada a million dollars? My guess is that it would increase by ~2.6 million. But it would certainly level the playing field between the average person and 'the landlord with capital'. So if we are so concerned about keeping the average Joe up with that landlord, why don't we go ahead and do it? [1] It's not like it's hard to run the printing presses! [1] Unfortunately, we do do it, except instead of just handing this money out, we wrap it up in decades of indentured mortgage payments, instead. The net result is the same, with the addition of a colossal wealth transfer from borrowers to lenders.
- oneoff786 5y ago
  No I don’t think that argument holds. A hand out is not a loan. It’s also possible that even if loans raise home prices, that there’s a floor to this effect if loans are shrunk. Many companies and people buy homes currently for investment rentals. They’re competing with homebuyers. Strictly speaking I would expect the share of homes owned by landlords to rise even if prices fall.
  - vkou 5y ago
    > A hand out is not a loan. It has the same inflationary effect on the economy. Under fractional reserve banking, loans inject money into the economy, increasing prices. The lower interest rates are, and the longer mortgage terms are, the more such money gets injected.
- sangnoir 5y ago
  On the flip side, what do you think would happen to home ownership if the mortgage terms were set to be 1 year max? That ought to really lower the home prices, right? My guess is most homes on the market would be bought by private equity firms and retirement funds. There are a lot of confounding factors; just changing mortgage terms is not sufficient.
  - vkou 5y ago
    Building a modern home requires more than 1-person-year of resources and effort, so a 1 year mortgage term wouldn't make any sense. You can't make something out of nothing, so obviously, there would be a pricing problem in that situation.

vkou 5y ago

To rephrase my point: What do you think would happen to the price of the average home if we printed, and handed out, each man, woman, child, and dog in Canada a million dollars? My guess is that it would increase by ~2.6 million. But it would certainly level the playing field between the average person and 'the landlord with capital'. So if we are so concerned about keeping the average Joe up with that landlord, why don't we go ahead and do it? [1] It's not like it's hard to run the printing presses! [1] Unfortunately, we do do it, except instead of just handing this money out, we wrap it up in decades of indentured mortgage payments, instead. The net result is the same, with the addition of a colossal wealth transfer from borrowers to lenders.

oneoff786 5y ago
No I don’t think that argument holds. A hand out is not a loan. It’s also possible that even if loans raise home prices, that there’s a floor to this effect if loans are shrunk. Many companies and people buy homes currently for investment rentals. They’re competing with homebuyers. Strictly speaking I would expect the share of homes owned by landlords to rise even if prices fall.
- vkou 5y ago
  > A hand out is not a loan. It has the same inflationary effect on the economy. Under fractional reserve banking, loans inject money into the economy, increasing prices. The lower interest rates are, and the longer mortgage terms are, the more such money gets injected.
sangnoir 5y ago
On the flip side, what do you think would happen to home ownership if the mortgage terms were set to be 1 year max? That ought to really lower the home prices, right? My guess is most homes on the market would be bought by private equity firms and retirement funds. There are a lot of confounding factors; just changing mortgage terms is not sufficient.
- vkou 5y ago
  Building a modern home requires more than 1-person-year of resources and effort, so a 1 year mortgage term wouldn't make any sense. You can't make something out of nothing, so obviously, there would be a pricing problem in that situation.