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If your argument is the government should be far less involved in housing and stop monkeying with the currency so much, then I'm with you. But unless you're an

by tsotha 11y ago

If your argument is the government should be far less involved in housing and stop monkeying with the currency so much, then I'm with you. But unless you're an absolute dictator you have to live in the environment in which you find yourself. People who buy real assets risk the possibility they'll go down in value, too - a lot of people where I live got wiped out in 2008.

branchless 11y ago
Yes but it's better to not think "ah I see we are in a bad situation let me try to get on the side of the exploiters and get me a piece of the pie". It's just wrong, they are exploiting people. Some did get wiped out in 2008 - those who got in late. Not MMM blog man who has "retired" but still takes rental income based on the differential between buying back before 2000 or so before housing was financialised and the cost of renting now. This doesn't take finance knowledge you just have to be born at the right time. So many blogs have "yeah I saved a bit and my 3 houses quintupled in value and I wasn't handing over half my pay to a landlord like kids now...so let me give you some advice!" For too many for too long housing has been a one way bet. And because they are creating nothing that money comes from the labour of others. The more productive we become the greater the economic advantage of the land and therefore the greater the rent. If we all work harder and/or smarter the landlord gets it. And if we all try to get our slice of the pie we go to hell in a handcart. Together.
- tsotha 11y ago
  I don't see that anyone is being exploited here. Pre-2008 in my area rents were far below the equivalent house payment because there were more people who wanted to own property and rent it out than there were people who wanted to rent. In effect the renters were subsidized by buyers who were betting on rising home prices. Historically, in the US at least, as a land owner your appreciation tracks the CPI pretty closely. It will go out of whack for a few years, but then there's a correction. I just can't buy into your exploiter-exploited mindset.
- zrail 11y ago
  I don't understand your argument. Everyone has to live somewhere. For some people, that means renting. Someone has to own the building they live in. It's not like the person who owns the building does nothing to earn their rent. Building maintenance, loan servicing, taxes, insurance, vacancies, all of that and more has a cost (just ask a homeowner). From what I understand, 4% annually is a good return after expenses. If you're arguing specifically about rents in the Bay Area, then sure that's a problem that needs to be fixed. But blaming the property owners for high rents is sort of blaming the messenger, no? No additional land and laws that prevent building upwards directly leads to higher rents because of increased competition, and high salaries at tech companies (combined with a bunch of other externalities like private buses) just makes it worse.
  - branchless 11y ago
    hah - suddenly the reply button appears - i guess it's a timeout to stop rage replies. I replied above. Take it or leave it :-)
  - hkmurakami 11y ago
    >But blaming the property owners for high rents is sort of blaming the messenger, no? In the Bay Area, property owners directly influence the community rules and laws that restrict the construction of high density developments. This is the case in both SV and SF. I don't blame the land owners -- they are acting in their self interest, as they have the right to be doing.
    - sokoloff 11y ago
      Is there some kind of crazy "only land owners can vote" policy there? Or is it like everyplace else in the country: all residents can vote?
- branchless 11y ago
  Can't reply to your reply Zrail. Due to the financialisation of housing the yield has not been 4%. People have gotten massive appreciation on their land which has left them with a lot of equity if they bought before banking went insane (pre 1990-1997). The primary cost of housing is the land, not the cost to build, not the upkeep. The land. And the land price is set by available credit. Banks can create credit at will. They only have to stop when the price of land reaches the maximum and individual can service monthly in interest on the debt. With ZIRP this has reached insane levels. All of it is utterly unrelated to either wages or the cost to build. I'm not blaming "home owners". I'm blaming speculators who are buying more than one home. A place to live and a place to extract economic rent from others. These guys are the foot soldiers for the banks. An army of exploiters in a zero sum game devoid of wealth creation. Financial speculation in an item pushes prices way beyond their reasonable utility. For example the tulip bubble - people didn't want to live in a tulip but up the price went as speculators piled in. If you're cool with that then fine. I'm not.
  - sokoloff 11y ago
    Imagine the opposite extreme. No one is allowed to own a dwelling they don't live in. Graduate college, get a job, and want to live someplace? Pony up to buy a place, hope you have the 10-20% downpayment bucko...because there's no housing for rent. Every time you move, you're on the hook for 5-8% of the total value of the house in commissions and fees. You think that UHaul truck was expensive? Wait until the moving costs are that plus $15K each time. (which comes out of/delays your next downpayment savings) Suddenly, the availability of short and mid-term rentals seems like an economic good compared to a world where there were none of those dastardly "foot soldiers for the banks".
    - branchless 11y ago
      Rentals are fine but without massive equity accumulation. Speculators are enabling banks to push up prices and then new speculators buy in at high prices and lock in high rents as they need to pay back huge amounts of interest to the banks. We basically need land value tax to discourage land speculation and to inhibit the huge unearned income flowing to land owners. And once this tax is introduced get rid of labour tax.

by tsotha 11y ago

branchless 11y ago

Yes but it's better to not think "ah I see we are in a bad situation let me try to get on the side of the exploiters and get me a piece of the pie". It's just wrong, they are exploiting people. Some did get wiped out in 2008 - those who got in late. Not MMM blog man who has "retired" but still takes rental income based on the differential between buying back before 2000 or so before housing was financialised and the cost of renting now. This doesn't take finance knowledge you just have to be born at the right time. So many blogs have "yeah I saved a bit and my 3 houses quintupled in value and I wasn't handing over half my pay to a landlord like kids now...so let me give you some advice!" For too many for too long housing has been a one way bet. And because they are creating nothing that money comes from the labour of others. The more productive we become the greater the economic advantage of the land and therefore the greater the rent. If we all work harder and/or smarter the landlord gets it. And if we all try to get our slice of the pie we go to hell in a handcart. Together.

tsotha 11y ago
I don't see that anyone is being exploited here. Pre-2008 in my area rents were far below the equivalent house payment because there were more people who wanted to own property and rent it out than there were people who wanted to rent. In effect the renters were subsidized by buyers who were betting on rising home prices. Historically, in the US at least, as a land owner your appreciation tracks the CPI pretty closely. It will go out of whack for a few years, but then there's a correction. I just can't buy into your exploiter-exploited mindset.
zrail 11y ago
I don't understand your argument. Everyone has to live somewhere. For some people, that means renting. Someone has to own the building they live in. It's not like the person who owns the building does nothing to earn their rent. Building maintenance, loan servicing, taxes, insurance, vacancies, all of that and more has a cost (just ask a homeowner). From what I understand, 4% annually is a good return after expenses. If you're arguing specifically about rents in the Bay Area, then sure that's a problem that needs to be fixed. But blaming the property owners for high rents is sort of blaming the messenger, no? No additional land and laws that prevent building upwards directly leads to higher rents because of increased competition, and high salaries at tech companies (combined with a bunch of other externalities like private buses) just makes it worse.
- branchless 11y ago
  hah - suddenly the reply button appears - i guess it's a timeout to stop rage replies. I replied above. Take it or leave it :-)
- hkmurakami 11y ago
  >But blaming the property owners for high rents is sort of blaming the messenger, no? In the Bay Area, property owners directly influence the community rules and laws that restrict the construction of high density developments. This is the case in both SV and SF. I don't blame the land owners -- they are acting in their self interest, as they have the right to be doing.
  - sokoloff 11y ago
    Is there some kind of crazy "only land owners can vote" policy there? Or is it like everyplace else in the country: all residents can vote?
branchless 11y ago
Can't reply to your reply Zrail. Due to the financialisation of housing the yield has not been 4%. People have gotten massive appreciation on their land which has left them with a lot of equity if they bought before banking went insane (pre 1990-1997). The primary cost of housing is the land, not the cost to build, not the upkeep. The land. And the land price is set by available credit. Banks can create credit at will. They only have to stop when the price of land reaches the maximum and individual can service monthly in interest on the debt. With ZIRP this has reached insane levels. All of it is utterly unrelated to either wages or the cost to build. I'm not blaming "home owners". I'm blaming speculators who are buying more than one home. A place to live and a place to extract economic rent from others. These guys are the foot soldiers for the banks. An army of exploiters in a zero sum game devoid of wealth creation. Financial speculation in an item pushes prices way beyond their reasonable utility. For example the tulip bubble - people didn't want to live in a tulip but up the price went as speculators piled in. If you're cool with that then fine. I'm not.
- sokoloff 11y ago
  Imagine the opposite extreme. No one is allowed to own a dwelling they don't live in. Graduate college, get a job, and want to live someplace? Pony up to buy a place, hope you have the 10-20% downpayment bucko...because there's no housing for rent. Every time you move, you're on the hook for 5-8% of the total value of the house in commissions and fees. You think that UHaul truck was expensive? Wait until the moving costs are that plus $15K each time. (which comes out of/delays your next downpayment savings) Suddenly, the availability of short and mid-term rentals seems like an economic good compared to a world where there were none of those dastardly "foot soldiers for the banks".
  - branchless 11y ago
    Rentals are fine but without massive equity accumulation. Speculators are enabling banks to push up prices and then new speculators buy in at high prices and lock in high rents as they need to pay back huge amounts of interest to the banks. We basically need land value tax to discourage land speculation and to inhibit the huge unearned income flowing to land owners. And once this tax is introduced get rid of labour tax.