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>> It also reduces tenant mobility > rent control basically traps people in a single apartment for the rest of their lives. so does buying a house. still, som

by cyphunk 12y ago

>> It also reduces tenant mobility > rent control basically traps people in a single apartment for the rest of their lives. so does buying a house. still, some people tend to appreciate it regardless of how bad the added lack of mobility is for them.

bkjelden 12y ago
Owning a home means you are subject to housing market fluctuations. If you want to move elsewhere, and housing prices have gone up substantially, you have increased equity in your current property to cover the increased cost elsewhere.
spankalee 12y ago
You're completely ignoring equity. Mortgage payments are based on the loan amount, not the value of the property. Excluding transactions costs, if you buy a $X house and have $Y month payments, then the property value doubles to $2X, you can sell and still buy another house that costs $2X, add $X to the down payment, and still have a $Y/month mortgage. So if you own a home, not only do you have mobility, but if you move to another house of lesser value you can extract equity without increasing monthly costs. Now Prop 13 is what restricts mobility for homeowners, because property tax can be 10x on a new purchase if you've been in the old house long enough. Rent control and Prop 13 both need to go.
- cbd1984 12y ago
  > You're completely ignoring equity. You're assuming equity is guaranteed. If you buy a house at $X, and it adjusts to $X/2 because of speculation or job losses in the area, you're still paying down the $X + $Y mortgage, where $Y is interest, fees, and whatever else the bank tacks on, now or in the future, and have no way to recoup your losses. And you still have to pay property tax, based on the assessed value of your property circa pre-collapse.
  - twblalock 12y ago
    I know people who had their homes re-assessed in 2009-2010 and their property taxes decreased significantly from the pre-collapse amount.
  - djrogers 12y ago
    > If you buy a house at $X, and it adjusts to $X/2 because of speculation or job losses in the area, Historically that is almost unprecedented - and no, a few thousand homes in a couple of areas does not make it any better an argument. Over time, property values go up - it's not a theory, it's a fact. >you're still paying down the $X + $Y mortgage, where $Y is interest, fees, and whatever else the bank tacks on, now or in the future The bank can't 'tack on' arbitrary 'fees, and whatever' in the future on any decent mortgage - in fact I've never seen a residential mortgage that allowed that. If you don't get a fixed rate mortgage then your rates may rise, but that's an argument against variable rate mortgages, not home ownership. > And you still have to pay property tax, based on the assessed value of your property circa pre-collapse No, at least not in California - counties were required to reassess property value down after the crash, and they did. In fact from what I've seen they haven't been assessing value back up enough to keep up with the market.
  - dragonwriter 12y ago
    > And you still have to pay property tax, based on the assessed value of your property circa pre-collapse. Most jurisdictions have regular reassessment schedules, and while some have formulas that delay or limit the effect of market value increases, most don't for decreases which take full effect immediately.
tptacek 12y ago
They stop appreciating it pretty fast when they're underwater and need to move for a job. See: 2007. Part of the contract between a lessor and a tenant is that the tenant is making some sacrifices in exchange for the ability to leave their apartment any time they want to. You can't have it both ways. It seems to be a strange and repeated message board blind spot that we're very alert to equity in upside, but not in opportunity cost. The same thing happens in virtually every HN discussion about the stock market. Everything always seems to be based on the notion that prices are always rising, and our only concern is sharing those profits as uniformly as possible. No. The market is fundamentally structured around the likelihood that prices can go either way.
- klipt 12y ago
  But pretty much everyone assumes that over the longterm, the market will rise. Otherwise everyone investing in index funds for retirement is screwed.
jeffdavis 12y ago
First, renting is supposed to be an option for mobile people. Renters' mobility is more important than homeowners' mobility, who have self-selected to be somewhere for a while. Second, rent control generally makes you more and more stuck each month. Selling your home and buying a new one is a one-time hit, and if there is sufficient motivation, it will happen after a while (technically, brokers' fees increase with the home value, but they are 6% or less, so doubling the broker's fee is a lot more palatable than doubling your rent). Third, home ownership offers other options, like renting it out, if Prop 13 keeps you stuck with the house. Fourth, home ownership is not subject to the tension between a tenant and a landlord who doesn't want them there.

by cyphunk 12y ago

bkjelden 12y ago

Owning a home means you are subject to housing market fluctuations. If you want to move elsewhere, and housing prices have gone up substantially, you have increased equity in your current property to cover the increased cost elsewhere.

spankalee 12y ago

You're completely ignoring equity. Mortgage payments are based on the loan amount, not the value of the property. Excluding transactions costs, if you buy a $X house and have $Y month payments, then the property value doubles to $2X, you can sell and still buy another house that costs $2X, add $X to the down payment, and still have a $Y/month mortgage. So if you own a home, not only do you have mobility, but if you move to another house of lesser value you can extract equity without increasing monthly costs. Now Prop 13 is what restricts mobility for homeowners, because property tax can be 10x on a new purchase if you've been in the old house long enough. Rent control and Prop 13 both need to go.

cbd1984 12y ago
> You're completely ignoring equity. You're assuming equity is guaranteed. If you buy a house at $X, and it adjusts to $X/2 because of speculation or job losses in the area, you're still paying down the $X + $Y mortgage, where $Y is interest, fees, and whatever else the bank tacks on, now or in the future, and have no way to recoup your losses. And you still have to pay property tax, based on the assessed value of your property circa pre-collapse.
- twblalock 12y ago
  I know people who had their homes re-assessed in 2009-2010 and their property taxes decreased significantly from the pre-collapse amount.
- djrogers 12y ago
  > If you buy a house at $X, and it adjusts to $X/2 because of speculation or job losses in the area, Historically that is almost unprecedented - and no, a few thousand homes in a couple of areas does not make it any better an argument. Over time, property values go up - it's not a theory, it's a fact. >you're still paying down the $X + $Y mortgage, where $Y is interest, fees, and whatever else the bank tacks on, now or in the future The bank can't 'tack on' arbitrary 'fees, and whatever' in the future on any decent mortgage - in fact I've never seen a residential mortgage that allowed that. If you don't get a fixed rate mortgage then your rates may rise, but that's an argument against variable rate mortgages, not home ownership. > And you still have to pay property tax, based on the assessed value of your property circa pre-collapse No, at least not in California - counties were required to reassess property value down after the crash, and they did. In fact from what I've seen they haven't been assessing value back up enough to keep up with the market.
- dragonwriter 12y ago
  > And you still have to pay property tax, based on the assessed value of your property circa pre-collapse. Most jurisdictions have regular reassessment schedules, and while some have formulas that delay or limit the effect of market value increases, most don't for decreases which take full effect immediately.

tptacek 12y ago

They stop appreciating it pretty fast when they're underwater and need to move for a job. See: 2007. Part of the contract between a lessor and a tenant is that the tenant is making some sacrifices in exchange for the ability to leave their apartment any time they want to. You can't have it both ways. It seems to be a strange and repeated message board blind spot that we're very alert to equity in upside, but not in opportunity cost. The same thing happens in virtually every HN discussion about the stock market. Everything always seems to be based on the notion that prices are always rising, and our only concern is sharing those profits as uniformly as possible. No. The market is fundamentally structured around the likelihood that prices can go either way.

klipt 12y ago
But pretty much everyone assumes that over the longterm, the market will rise. Otherwise everyone investing in index funds for retirement is screwed.

jeffdavis 12y ago

First, renting is supposed to be an option for mobile people. Renters' mobility is more important than homeowners' mobility, who have self-selected to be somewhere for a while. Second, rent control generally makes you more and more stuck each month. Selling your home and buying a new one is a one-time hit, and if there is sufficient motivation, it will happen after a while (technically, brokers' fees increase with the home value, but they are 6% or less, so doubling the broker's fee is a lot more palatable than doubling your rent). Third, home ownership offers other options, like renting it out, if Prop 13 keeps you stuck with the house. Fourth, home ownership is not subject to the tension between a tenant and a landlord who doesn't want them there.