4 ms·
I have read so many of these posts on HN, and invariably it turns into an argument between: A. Housing should be available for everyone in large cities at a pr
by jschveibinz 4y ago
I have read so many of these posts on HN, and invariably it turns into an argument between:
A. Housing should be available for everyone in large cities at a price they can afford; and
B. There is no right or economic solution to affordable housing for everyone who wants it, especially in a dense city.
I don’t intend to choose a side in this argument, but here are the “facts” (or approximations) that must be considered in this argument:
1. Land in the U.S. is generally owned by individuals, or by businesses with shareholders (ie. people), not the government.
2. Individuals owning land and buildings are just regular people (or groups of regular people as investors) in many cases, not “bilyunares”.
3. How do regular people own property and buildings? There are three ways:
a. People invest in Real Estate Investment Trusts (REIT) through their savings and/or 401k or other retirement accounts.
b. People invest in banks, or deposit money in banks, which is used to create loans (mortgages) to purchase land and buildings.
c. People pay taxes, and a portion of those taxes goes toward tax credits and Housing and Urban Development (HUD) Section-8 subsidies. The U.S. government spends $6 billion per year to finance new housing for qualifying people.
4. Rents and escalations are both market-based and contractual. The rent collected pays for the cost of upkeep and routine maintenance as well as the mortgage obligations and taxes. With inflation, the cost of everything goes up, and this must be reflected in rents.
5. The most desirable locations will have the highest land prices and correspondingly the highest rents. Desirability results from weather, safety, activities, travel or transportation options, and most importantly: work opportunities.
It would be refreshing to see more of these “facts” (and many more I haven’t mentioned) included as part of the debate.
Have fun and carry on!