3 ms·

> You're proposing people no longer live in homes? I’m confused by how you got that from what I said. I’m saying that housing should become a bad investment so

by paulgb 3y ago

> You're proposing people no longer live in homes? I’m confused by how you got that from what I said. I’m saying that housing should become a bad investment so that people can live in it. If the price of a house doesn’t appreciate year over year, it’s not profitable to leave it empty — either it will be rented or it will be sold; either way someone will be housed.

huevosabio 3y ago
Exactly, the housing market should look more like the car market (minus the dealers). Houses should depreciate in value as they age. Most buyers looking something that fits their _living_ needs rather than their financial plans.
- prawn 3y ago
  Being pedantic, but I imagine the houses generally do depreciate, and it's the land that appreciates. Land value alone where I live would be 3x what we paid for the land and house 15 years ago. And I can't see how land won't appreciate if you have a growing population, some level of immigration, and some portion of commercial investment in the sector. You can argue against the last item, but good luck getting that over the line at an election. I think we'd have absolute lawlessness first. The frog is being slowly boiled first, unfortunately.
  - pandaman 3y ago
    Also, only a fraction of a house value is in the physical structure, and only that deprecates. The rest is in permitting and coding, which appreciates too.
  - huevosabio 3y ago
    Not pedantic, but spot on! In the main US metro areas land is >70% of the value of property [0]. Which is why Land Value Taxes (LVT) are an important piece of the strategy. Heavily or entirely taxing the value of the land but not the buildings allows you to discourage speculation and recoups the value that is generated by the society while not burdening new development. That said, AFAIK, Japan has been able to foment a market where houses do depreciate, even in Tokyo which has grown considerably. I don't think they have LVTs but the ability to just keep building and their willingness to tear down old (>30 yr) buildings helps a lot. [0] https://gameofrent.com/content/is-land-a-big-deal https://gameofrent.com/content/is-land-a-big-deal
    - prawn 3y ago
      I think one argument against this sort of thing is that it can price out an older person or someone inheriting a property. What's the recommended approach for situations like that? Time for them to sell the ancestral property and downsize? We've recently added a land tax here in South Australia, but your first property is excluded. The tax was very unpopular with property developers who lobbied aggressively, which could be one sign it's the right direction! It had to factor in ownership of land through shell companies because sometimes developers create an entity per venture. But I doubt the tax is aggressive enough to really help young aspiring home owners. House prices are still brutal and still growing.
      - huevosabio 3y ago
        I think exempting is probably a bad idea, but tax deferrals like the one Texas has [0] are a good way to ameliorate this, : ``` Texans may postpone paying current and delinquent property taxes on their homes by signing a tax deferral affidavit at the (NAME) County Appraisal District office if they are: • age 65 or older; • disabled as defined by law • qualified disabled veterans, their unmarried surviving spouses, or their unmarried children under age 18, if no surviving spouse; or • unmarried surviving spouses of U.S. armed service members killed on active duty and their unmarried children under age 18. Once the affidavit is on file, taxes are deferred — but not cancelled — as long as the owner continues to own and live in the home. Taxes accumulate with 5 percent interest per year. The law extends the tax deferral to the surviving spouse of the person who deferred taxes on the homestead if the surviving spouse was at least 55 years old when the deceased spouse died. ``` [0] https://comptroller.texas.gov/taxes/property-tax/docs/deferral-elderly-disabled.pdf https://comptroller.texas.gov/taxes/property-tax/docs/deferr...
clipsy 3y ago
I don't want to speak for anyone else, but from my view making housing a bad investment while keeping it a sound financial decision for potential homebuyers is -- at the very least -- a difficult needle to thread. Being a "good" or "bad" investment is not some magical separate thing but a fundamental and integral part of determining whether home ownership is a smart decision.
- paulgb 3y ago
  By bad investment I mean bad by the standards of an investment: it’s not something you’d buy because you expect appreciation. I don’t mean that you would expect it to lose value (beyond the usual depreciation of a physical asset). Good point though, thanks for giving me a chance to clarify.
  - clipsy 3y ago
    Again, though, I think you are imagining a hard-and-fast distinction where there is none. Fundamentally, if I'm considering buying a house, I have to ask myself what the projected financial outcome is if I buy a house versus if I invest the potential down payment and continue to rent. Asking people not to make this analysis is asking them to throw rationality out the window, and I'm not sure how that would help the situation in the slightest.
    - paulgb 3y ago
      People should totally make that assessment, I just think the conclusion should be roughly “I will break even”.
- michaelje 3y ago
  It doesn’t have to be a good or bad investment. It can be something you pay for and use, and it provides actual utility. We could make owner occupiers first class citizens in our own society, having housing as primarily for housing people, with investment purposes secondary.
  - 3y ago

by paulgb 3y ago

huevosabio 3y ago

Exactly, the housing market should look more like the car market (minus the dealers). Houses should depreciate in value as they age. Most buyers looking something that fits their _living_ needs rather than their financial plans.

prawn 3y ago
Being pedantic, but I imagine the houses generally do depreciate, and it's the land that appreciates. Land value alone where I live would be 3x what we paid for the land and house 15 years ago. And I can't see how land won't appreciate if you have a growing population, some level of immigration, and some portion of commercial investment in the sector. You can argue against the last item, but good luck getting that over the line at an election. I think we'd have absolute lawlessness first. The frog is being slowly boiled first, unfortunately.
- pandaman 3y ago
  Also, only a fraction of a house value is in the physical structure, and only that deprecates. The rest is in permitting and coding, which appreciates too.
- huevosabio 3y ago
  Not pedantic, but spot on! In the main US metro areas land is >70% of the value of property [0]. Which is why Land Value Taxes (LVT) are an important piece of the strategy. Heavily or entirely taxing the value of the land but not the buildings allows you to discourage speculation and recoups the value that is generated by the society while not burdening new development. That said, AFAIK, Japan has been able to foment a market where houses do depreciate, even in Tokyo which has grown considerably. I don't think they have LVTs but the ability to just keep building and their willingness to tear down old (>30 yr) buildings helps a lot. [0] https://gameofrent.com/content/is-land-a-big-deal https://gameofrent.com/content/is-land-a-big-deal
  - prawn 3y ago
    I think one argument against this sort of thing is that it can price out an older person or someone inheriting a property. What's the recommended approach for situations like that? Time for them to sell the ancestral property and downsize? We've recently added a land tax here in South Australia, but your first property is excluded. The tax was very unpopular with property developers who lobbied aggressively, which could be one sign it's the right direction! It had to factor in ownership of land through shell companies because sometimes developers create an entity per venture. But I doubt the tax is aggressive enough to really help young aspiring home owners. House prices are still brutal and still growing.
    - huevosabio 3y ago
      I think exempting is probably a bad idea, but tax deferrals like the one Texas has [0] are a good way to ameliorate this, : ``` Texans may postpone paying current and delinquent property taxes on their homes by signing a tax deferral affidavit at the (NAME) County Appraisal District office if they are: • age 65 or older; • disabled as defined by law • qualified disabled veterans, their unmarried surviving spouses, or their unmarried children under age 18, if no surviving spouse; or • unmarried surviving spouses of U.S. armed service members killed on active duty and their unmarried children under age 18. Once the affidavit is on file, taxes are deferred — but not cancelled — as long as the owner continues to own and live in the home. Taxes accumulate with 5 percent interest per year. The law extends the tax deferral to the surviving spouse of the person who deferred taxes on the homestead if the surviving spouse was at least 55 years old when the deceased spouse died. ``` [0] https://comptroller.texas.gov/taxes/property-tax/docs/deferral-elderly-disabled.pdf https://comptroller.texas.gov/taxes/property-tax/docs/deferr...

clipsy 3y ago

I don't want to speak for anyone else, but from my view making housing a bad investment while keeping it a sound financial decision for potential homebuyers is -- at the very least -- a difficult needle to thread. Being a "good" or "bad" investment is not some magical separate thing but a fundamental and integral part of determining whether home ownership is a smart decision.

paulgb 3y ago
By bad investment I mean bad by the standards of an investment: it’s not something you’d buy because you expect appreciation. I don’t mean that you would expect it to lose value (beyond the usual depreciation of a physical asset). Good point though, thanks for giving me a chance to clarify.
- clipsy 3y ago
  Again, though, I think you are imagining a hard-and-fast distinction where there is none. Fundamentally, if I'm considering buying a house, I have to ask myself what the projected financial outcome is if I buy a house versus if I invest the potential down payment and continue to rent. Asking people not to make this analysis is asking them to throw rationality out the window, and I'm not sure how that would help the situation in the slightest.
  - paulgb 3y ago
    People should totally make that assessment, I just think the conclusion should be roughly “I will break even”.
michaelje 3y ago
It doesn’t have to be a good or bad investment. It can be something you pay for and use, and it provides actual utility. We could make owner occupiers first class citizens in our own society, having housing as primarily for housing people, with investment purposes secondary.
- 3y ago