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If housing is an unattractive financial asset, how are investors motivated to create housing? Without owners there needs to be either easy credit or state fund

by glass3 4y ago

If housing is an unattractive financial asset, how are investors motivated to create housing? Without owners there needs to be either easy credit or state funded housing. However, without a free market there needs to be a way to prevent abuse. Housing has to remain attractive but there is no need to artificially inflate housing value by limiting supply. With enough supply, rent should go down to production costs plus reasonable profits. Real estate is a secure investment so interest rates on government bonds should be the upper bound for those reasonable profits.

aiisahik 4y ago
Firstly let's be clear that the supply of land is fixed. The only limitation is that of the housing that goes on top of the land - the amount, density and quality. Housing should be a highly financially attractive to build. The land under the housing should be highly unattractive as a financial asset. There is a clear difference between the two. The distinction can be made by taxing the capital gains from LAND very different from the gains from improvements. If you tax the capital gains from land at 75%, I promise you will get the same amount of building but a lot lower overall housing cost. You can also lower interest rates for housing construction/refurb companies but also remove the tax incentives for actual home ownership.
thomasahle 4y ago
> If housing is an unattractive financial asset, how are investors motivated to create housing? They say it should be unattractive to hold, not to build and sell.
- glass3 4y ago
  If it is not attractive to hold then there will be nothing to rent.
  - aiisahik 4y ago
    I actually agree that it should be attractive housing management companies to own and manage property. If they do a good job they should see a good risk adjusted reward in their business. What they should NOT be doing is have a business model that is based on the capital appreciation of the land if they sell the property. This can be achieved by ensuring their cost to purchase is reduce by lower interest rates but the capital gains of the land are tax very heavily.

by glass3 4y ago

aiisahik 4y ago

Firstly let's be clear that the supply of land is fixed. The only limitation is that of the housing that goes on top of the land - the amount, density and quality. Housing should be a highly financially attractive to build. The land under the housing should be highly unattractive as a financial asset. There is a clear difference between the two. The distinction can be made by taxing the capital gains from LAND very different from the gains from improvements. If you tax the capital gains from land at 75%, I promise you will get the same amount of building but a lot lower overall housing cost. You can also lower interest rates for housing construction/refurb companies but also remove the tax incentives for actual home ownership.

thomasahle 4y ago

> If housing is an unattractive financial asset, how are investors motivated to create housing? They say it should be unattractive to hold, not to build and sell.

glass3 4y ago
If it is not attractive to hold then there will be nothing to rent.
- aiisahik 4y ago
  I actually agree that it should be attractive housing management companies to own and manage property. If they do a good job they should see a good risk adjusted reward in their business. What they should NOT be doing is have a business model that is based on the capital appreciation of the land if they sell the property. This can be achieved by ensuring their cost to purchase is reduce by lower interest rates but the capital gains of the land are tax very heavily.