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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

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.
  - sokoloff 11y ago
    I suspect that would end up quite regressive, as the renters would end up paying the land tax on the buildings they rent (indirectly, of course). Many of the lower income renters pay little net tax (often negative with EIC) today.

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.
- sokoloff 11y ago
  I suspect that would end up quite regressive, as the renters would end up paying the land tax on the buildings they rent (indirectly, of course). Many of the lower income renters pay little net tax (often negative with EIC) today.