https://ercouncil.org/2018/chart-of-the-week-week-46/

For those a bit challenged, here’s a list of high income east eu countries:

https://en.wikipedia.org/wiki/World_Bank_high-income_economy

If you managed to fix a housing crisis, the only way of doing so is torpedoing retiree financial assets (mix of personal home equity and pension fund), which would shortly cause an increase in entitlement transfers to sustain retiree standards of living. The only way to ease the combined tax and rent-seeking load on younger workers is to reduce the total transfer to non-workers, and the political balance of power forbids this, so things will remain fucked.

I see at least two kind of schools on housing, one who talk about cheapness, typically from USA, Japan and few others. Another who talk about forever and ever duration, typically from south EU. Both have reasons and both to the extreme prove to be a disaster:

- in the JP/USA model a simple strong wind or a flood (from EU perspective) suffice to demolish houses, making big damages etc

- in the southern EU model houses are VERY old, they do not respond then to current needs and evolve them being not design to do so is a nightmare

Some countries choose the "division" model, like almost in the entire north-America with their residential-only suburbs, some mix at unbearable high density. Both models prove to be disastrous: the suburb model impose too much travel and being tied to some "district" nearby became a graveyard when the district change; too dense southern EU and Asian cities suffer the opposite issue: little travel is needed but things are so concentrated that there is no room to evolve.

Old Romans have a proverb: in medio stat virtus, "in the mean live the virtue", and I think that's well valid for housing... Too much dense => fail. Too little dense? Fail as well. Too diversified => fails, too much scaling issues. Too subdivided? => fails can't survive for long. Unfortunately evolving from a model to another, no matter if the change is good or bad, take MUCH, MUCH, MUCH time. Around homes we need infrastructures, like roads, aqueducts, power lines, TLCs, ... building a single home might be quick and easy BUT change the infra around normally is not. We still do not have the '30s dream of flying homes or semi-autonomous starships that can be moved easily everywhere... So far we do not even have flying cars (while they might be there technically)...

That's not much tied to richness: poorest countries have their housing issues as well, just in different terms. It's tied to the lack of Star Trek alike replicators and tech. Something that's not on the horizon nor for the rich nor for the poor. Is something we can and should tend to, but knowing it's far away.

Undertaxation is at the root of investment bubbles.

Accumulating economic energy devouring the containment of the system that created it, as at the root of the root of the rootproblem.

We need a dependency manager for discussion topics.

For most of us poors, money is a tool we need to survive. For the people who have the bulk of it, it's a weapon. And we're the targets. They love blowing us up; it's what they do. They care more about making others suffer than the material comforts (to which hedonic adaptation accrues quick) money affords. Putting the few "good jobs", the few jobs that offer us even a sliver of a chance (like 1%, but we're expected to work as if it were 95%) of being something more than an exploited worker, in congested and dysfunctional expensive cities is something they do because it's hilarious to them.

Barring a complete and final overthrow of corporate capitalism, you can't escape this crapsack world. The important land is already owned by reptilian shitasses. Billions of people are going without drinking water while a bunch of psychopaths fly around in private jets, destroying the planet because they find it comical.

> since the second world war, governments across the rich world have made three big mistakes. They have made it too difficult to build the accommodation that their populations require; they have created unwise economic incentives for households to funnel more money into the housing market; and they have failed to design a regulatory infrastructure to constrain housing bubbles.

The monotonic rise in the cost of housing is because of speculation. But this speculation is "legitimate" capitalism. The corpocracy certainly discourages the leftist notion of limiting capitalism.

> Housing is also a big reason why many people across the rich world feel that the economy does not work for them.

Housing is one of the reasons. Food, healthcare, and the environment are other reasons.

No, nothing changed, if anything it got worst post covid. The only countries that can do something are singapore and china, who are rationally treating housing as a basic need similar to food. In the western world things will probably never change on that front. The boomers built houses because they knew they d be appreciating forever - and they did, beyond their wildest dreams, while the economists were cheering. Millenials and GenZ will not touch housing because it's not an opportunity, and the barrier to entry is too high. Instead of housing bubbles, GenZ creates meme stock and crypto bubbles, and whatever comes next with the metaverse. Housing is very broken in europe, germans are building houses in the south where it's still cheap for their retirement. The housing stock will keep consolidating to fewer and fewer people, while the middle class will be using remote work for location arbitrage.

All of these trendy YIMBY schemes are great. All they need is a proviso requiring all the targets of the schemes to stick around while their neighborhoods and schools go downhill.

When houses and new developments get snatched up by investors and landlords as buy-to-lets (or even by Blackrock and pension funds), there is little outrage and calls for restricting who can buy them. The same argument is rehashed over and over and over again. Just build more houses!

I feel that there is a disconnect between these two schools of thought. I personally believe that, while indeed more houses should be built, we should also have a serious discussion about whether houses should be sold en-masse to very wealthy investors

Population is the problem.

This is because the 'rich' people countries are having a population explosion despite the native 'rich' people havong a negative birth rate.

You can do the math as to why.

Housing has never been this much of a problem up until the past decade or two.

Also it's not necessarily correct to say you require land-based infrastructure; you can be somewhat independent from the shore for long periods on a sailing boat since people do ocean crossings all the time, you obviously don't need fuel for propulsion, you can generate electricity with various renewables like solar, wind, and the boat's motion through the water under sail, and your water supply comes from the sea via a reverse osmosis machine. Provided nothing breaks beyond your ability to repair it you're effectively limited only by what food you can carry.

It's really not, at least when you compare OECD countries with one another.

For instance, per capita healthcare spending in the US is 11.4K. The OECD average is around 5.7K

Now, there are a lot of reasons for this gap:

1. Salaries are higher in the US. Health care workers are much better compensated there than, say, in France or Spain.

2. The US has a much lower population density. There are a lot of fixed costs with health care. There are real cost advantages to having a large majority of your population in dense urban areas.

3. The US is first to market/first to adoption for a lot of medical innovation. The R&D costs for anything health care related are enormous. Early adopters bear the brunt of these costs.

4. The US has a hybrid health care model. The two countries that use this model, the US and Switzerland, are one and three respectively for per capita health care spending.

Also there is the fact that much of the urban West had been destroyed in the incredibly brutal fighting of WWI, the Russian Civil War and WWII which left as many as 7 million unhoused orphans alone. With these considerations it's not as easy to ascribe the lack of housing to the Soviet political economy. Remember, the Soviet Union didn't get a Marshall plan like Europe.

The housing projects under the post Stalin premiers eventually mitigated much of the problem but there appear to have been chronically homeless still that were largely jailed (an outcome ironically similar to what we see in the U.S.).

https://www.statista.com/statistics/1249206/us-ussr-comparis...

This is how the system is actually designed. Social security is a mandatory annuity/savings and disability insurance program. Many countries also have mandatory contributions into their 401K (OECD Pillar 2) equivalents.

Even in the US, where these contributions are mandatory, the tax code is set up to make them extremely desirable for the employer and the employee.

> loans for everything is standard now

Stopping this would be as simple as having an indebtedness line added to the tax code. In many countries, there is a maximum level of debt that a person is allowed to carry. Companies aren't allowed to issue new debt if the repayment for all of their current debt exceeds some percentage of their income.

But you're right, there's no political will to do anything like this since consumer debt helps to fuel the economy.

There's an economic analysis trick that can cut through a hell of a lot of cruft and confusing abstraction - whatever happens with the dollars and financial instruments you ignore, and you take a pure look at the real goods and services involved. In these terms, the landlord/tenant relationship looks like "some guy makes a bunch of widgets and only uses some of them, selling the rest for rent money. The rent money can be used to buy those widgets, letting the landlord consume that many widgets without physically making them. Generalize this about generic 'stuff' instead of just widgets."

This is what bothers me about your suggestion to redirect money from non-rent economic activity. How do you want to redirect the widget consumption to make the actual physical changes necessary to have additional productive economic activity? Do you want to apply the squeeze to landlord, tenants, or both? And again, I'm not asking where the money comes from because it's completely irrelevant to this analysis: a more productive set of businesses will require more machinery, warehouses, etc. The labor and material used for these come at the expense of making other stuff, and this physical investment of real goods and services is someone's stuff that they made without consuming.

Like, the lack of an answer to this question is really what makes me think this solution is wishful thinking. There's many answers to the question of who gets squeezed in terms of real consumption, but with very different consequences:

1) Nobody gets squeezed. Workers produce and consume the same, there's the same amount of real businesses, and the same amount of non-worker consumption. The difference is something like "instead of your job paying $4000/mo (after tax) while rent is $2000/mo, now your job pays $3000/mo and rent is $1000/mo". You still have the same excess production over consumption, but more of it gets siphoned off by your employer instead of your landlord.

2) Landlords get squeezed. Rents might get reduced, but this isn't necessary - what matters is landlord consumption goes down. If rents are lower, then workers have excess consumption available, but they forgo it in favor of productive investments in new businesses. If rents don't go down, then landlords forgo this consumption in favor of productive investments in new businesses. Either way, it's landlord consumption that is reduced, the only thing that changes is the nominal owner of these businesses.

3) Workers get squeezed. Rents might or might not change, again, and it's only relevant for who the on-paper owner of these new businesses are. If rent is the same, then workers have to save more and forgo more consumption to make the businesses exists. If rents change to finance this, then they go up so that landlords can build businesses without reducing their consumption.

4) Mix-and-match between the effects of various changes. You can literally get all three of the previous situations simultaneously - businesses get better at underpaying employees for their owners' benefit, landlords consume somewhat less, and workers also consume less, all while rents do anything.

In summary, allocating more investment into non-rent economic activity requires someone to not consume the real goods and services that go into making these businesses. It's some combination of the renter and the landlord depriving themselves of consumption, and if neither consumer budgets on the question then you've merely changed the financial description for why identical real transfers are happening.

https://www.sfgate.com/bayarea/article/how-many-vacant-homes...

https://sfist.com/2022/02/01/report-10-of-san-franciscos-hou...

Next, the housing shortages in other previously-afforded cities are being bought up by... other Americans, some moving from such expensive metros. That boom that happened during the pandemic might finally be reversing:

https://fortune.com/2022/08/16/bubbly-housing-markets-are-sh...

>You gotta reach back to over a hundred years ago to find an example?

So, by 'never', you meant somewhere around 60 years? 75 years? I ask because you discount my 80 year-old example (chosen by availability because I'm reading an interesting book on the economics of Nazi Germany right now) as if it couldn't possibly be relevant because it's so long ago, while appealing to 'never' to attempt a weighty claim.

>The population in the US is the highest it's been in history.

And I hope that will continue, though things look bleak in that regard.

>You're using a bullshit metric like growth rate which is a percentage of constantly increasing number? 1% of 100 is the same as 50% of 2. Of course the growth rate goes down as the population goes up.

Yes, I'm using a percentage term for growth rate because it is appropriate for the comparison, unless you believe in some immutable constant carrying capacity for the US. Adding 1 million people to 10 million is not remotely similar to adding a million to 330 million, but that's the version you're arguing for.

>The natives to the country have a declining birthrate. This is the responsible thing to do.

Responsible to what? It's suicide by an entire species, not to mention dooming your descendants to lower standards of living as the viability of specialization gradually decays.

I'm out of time to respond to this comment, but your remaining points are equally in need of correction.

Things will never get better in their original countries if everyone want's to go to a few very small parts of the world.

And things will eventually be undesirable in the places everyone is trying to immigrate to.

Whatever happened with staying in one place and making it better?

The ridiculous thing is that, since the SALT deduction cap went into effect (and so narrowly avoided the axe this past week, ugh), people who live in states with high property taxes end up being able to deduct only a small amount of their property taxes on their primary home, but if they own investment property, they can typically still deduct all of it -- and I believe they can deduct on their state taxes as well, whereas the SALT deduction is only available at the federal level.

They now have the added buffer of rental/leasing agencies! Many of these are fly-by-night and skirt or outright ignore inconvenient laws like renter's rights.

Repairs? Cost sink, just don't renew complaintant's lease. Bonus you get to raise the rent again!

Want to get in touch with the owner? Most times you'll have to look up tax records and hope it's actually in the owner's name.

Makes rental properties probably 90/10 profit/cost.

I know people on both sides of the equation and it's more than a little insane the entitlement some landlords feel.

Imagine the alternative, where all the depreciation rules you describe above don’t exist, and landlords have to pay a bunch more tax. In that world, the government has some extra money in the coffers, but how does anyone else benefit? Rents will not go down because landlords have to pay more tax, in fact quite the opposite will happen.

Really, I get that you might have moral feelings of unfairness about it, but you are focusing on a minor aspect of the housing market that only has positive impact on rents by bringing them lower.

We should be doing the opposite.

if the government can print money, what's the point of collecting money through taxes?

EDIT: Lots of propaganda in these comments painting individual homeownership as the cure for our housing crisis. It's not. It's the cause.

Close on one property within 180 days.

Finding tenants has taken a significant amount of work as well. There are commercial brokers that act as matchmakers, but you still have to meet with the tenants, walk them through the space, talk about what kinds of modifications they want, figure out if the timelines are compatible, and do a little bit of due diligence. She does quite a few of these where the details don't quite work out because the tenant is looking for a different style of building, easier in-out for the parking, improvements we'd never agree to, etc.

The process of transitioning the properties to commercial was also time-consuming. Commercial has entirely different requirements, and upgrading the parking, accessibility, etc. took a lot of time, money, and back-and-forth with the city.

Although, that's effectively a tax on inheritance that's due at sale, which would probably be a fairly big incentive against ever selling, and instead structuring it as a long-term lease.

- bank can lend money to pay for the tax - collateral is big enough

- if you cannot pay immediately, state can have share of your property

- ownership could be transferred from the parent to the children before death, so the tax is not that big

It's also conceivable that nobody really knows, that there is no common land registry that really matches the reality 'on the ground', ie the people considering themselves owners and receiving rents. In such a situation it would be very hard to make transactions, hence why it might appear impossible to buy real estate in some areas.

Then, from this tax, we can pay "forward" every adult tax payer (not children, only adults) a fixed amount that pays the cost of an imaginary nationwide median cost of a two bedroom unit. Only adults, all adults, regardless of whether you have no child or eight children. Must file a federal income tax return to qualify. Median nationwide cost somehow calculated and weighted by population, hopefully updated more than once a decade.

Everybody from Amazon.com to Walmart pays this land + building tax regardless of whether they are in Manhattan, New York or Deport, Texas. No exceptions.

now add in asset forfeiture driven by legally mandated black markets and the picture is ever so slightly more complete.

https://turbotax.intuit.com/tax-tips/home-ownership/deductin... seems to indicate there's a cap on the amount, as well as number of homes (only primary and secondary, not third, fourth etc)

Or are people going around those caps somehow?

That doesn't change my point that the only way you can pay no tax is to have less than a 3.7% ROI before mortgage principal payments.

Again, that's a bad investment. If they put the money in the stock market or a better real estate market and got a 7% return, that would be 60% higher, even after taxes.

Sure, you build equity in the properties, but you'll have to pay all those taxes you've been putting off if you ever try to use that equity. I guess the kids could sell it before they depreciate it, but I can't imagine who would intentionally waste the potential of their money so they don't have to pay the (low) capital gains tax. Again, you'd make more money paying taxes on any almost investment making over 4.3%.

Generally when we see upzoning advocacy it's neighbourhood wide if not city wide.

https://www.ird.govt.nz/pages/campaigns/interest-limitation-...

It’s fairly limited in Japan at least, but it does a lot to offset property taxes.

But once you have them, they're hard to get rid of. When they were in charge for 40+ years, Labour defended them because they wanted to push for homeownership so working people didn't have to live at the mercy of landlords. In the 80s I believe they considered changing it, but then the Conservatives (who of course benefit disproportionately from the deduction) were in a position to block it. These days there is an interest deduction on ALL loans, not just mortgages. Why and how that happened I have no idea.

Maybe, parents are having less kids because they can’t afford to move to a place with an extra bedroom.

[1] https://news.ycombinator.com/item?id=32491901

It's not possible to remove zoning completely. That's severe hubris, thinking that we introduced zoning to begin with for no legitimate reason. That's not true - it's necessary to plan city infrastructure and that requires zoning. Removing zoning altogether would be an unmitigated disaster.

There is no easy clean solution like "remove all the rules". You can't get government out of the business of city planning and basic infrastructure, and that's in more words what you mean.

There is a difference between good policy and bad policy. We need good policy. The only solution is that local governments somehow make better choices.

Governments love home owners. They are typically stable citizens in the work-force, law-abiding, reliable, etc. They have a high time preference and have every interest in maintaining the status quo, safety, anything that makes society pleasant.

Summit County is currently in drought. Where is more potable water for more residents going to come from? (That‘s a pretty big problem in most of the West as drought conditions show no sign of improvement.)

The cities are located where they are, because barring major changes transport costs going from cheapest to most expensive are navigable waterways > rail > road > air. Flying out of small airports is pretty expensive and not something that most Americans can afford to do regularly.

A counterargument to this is that population growth has not been very high in the past few decades: https://fred.stlouisfed.org/graph/?g=SUL3

You certainly have valid points, especially in San Francisco. Nevertheless, looking at the broader market, outside of California, the market appears to be working: builders find a way to build what will sell and maximize their profits. Last week, I drove around a planned community in a middle-America state. Developers started building houses around ~2010 and are still building out the area. These developers had no problem building thousands of homes that were selling well until very recently.

Also it isn't even as good as mminer237 mentions, as many states also have a much lower exemption, and there is work in congress to get rid of the step-up in basis (a bad thing, imo) and to reduce the $12MM lifetime gift & estate exemption (a very good thing).

So yes, there are some advantages, but OP is vastly exaggerating as if it is some freebie to landlords when it is not. There were some freebies introduced in the bills in the Trump term for the type of LLCs that Trump runs, but IDK if they were fixed in legislation in this term.

If you want a general complaint, perhaps the angle is that capital is taxed much less than labor, under some notion that lower taxation is necessary to get people with capitol to actually deploy it in investments. I think that is provably false, and certainly does not require the level of tax code favoritism it currently enjoys.

[0] source: tax & estate attny at biglaw firm in the household, although this is just from info absorbed by osmosis over years and is NOT a detailed legal analysis.

https://www.youtube.com/watch?v=79KzZ0YqLvo

You're ignoring what was written: if the building has value 0, then it is not maintained to keep the value up. Of you kept the value up, then it would not have an effective price of 0.

Of course most people put money into properties exactly to keep value up.

>also writing off all of those expenses

Writing off expenses does not make them free - you are still paying for them - out of otherwise profit. It just means you get taxed on net profit instead of taxed on property gross income. But you are still losing money.

Writing off expenses is not some free money giveaway.

The point was to illustrate that OP ignored costs involved for landlords in the thought experiment.

https://rentprep.com/evictions/when-can-i-evict-a-tenant-for...

I think the modern doom and gloom era is very depressing. I am a technocrat and a futuristic optimist.

For me, the modern popular vision of future is not worth living for.

That's if there are available builders. It took my mother the better part of a year to get her roof replaced, because there was no one available to do the job. I'd also argue that the place she lives in rural VA is pretty awful in most respects other than having space and she's not all that far from a town.

My hunch is that the housing crisis is simple supply and demand. People want to live in cities because of the better access to entertainment, amenities, and services. There aren’t enough houses to fill that demand. There’s no great city on earth that has a glut of housing. If there were, people would flock to that city to fill the housing. I think that’s the very nature of a city. In some sense, the more people that want to live in a city, the higher the quality of the city. That’s also directly correlated with housing cost, sadly.

It's pretty difficult to fit a massive apartment building on a house sized plot between two massive apartment buildings. The prices you will be offered are not what your neighbors were offered. There will also be pressure on you to sell because your neighborhood is now shit. Your house prices may still, all that being considered, have massively risen since you bought the house. The property taxes also rose proportionally, sucking away your equity.

Any reply to this other than vague sarcasm?

What I meant is an ability to be within the reach of any other person within an hour.

Using zoom for 3 years now (for obvious reasons) - I find it inferior to the private in-person communication. Problem that you need to schedule a meeting, which adds some formality and is usually harder, while you can have a pleasant chat with even a rich and powerful person while accidentally meeting them in a hall. For scheduling a zoom call, you need to find an excuse. To chat in a hall with someone - you don't need and excuse.

And don't call it a "collapse": a change is not necessary to the worse, sometimes it is to the better.

Because you know none of it actually pays for the building, it's just all for the artificial scarcity.

This doesn't explain why rent for apartments is cheaper in Tokyo than in the greater metropolitan area of similar cities in other countries like the US.

The concern about decrease in home prices is just cover from accusations of discrimination, although keeping home prices high is a necessary component. But maximizing them is not.

Single families can compete against 2 families for the land, it is a lot harder when you can fit 10 units on the same property.

In this example, I'd say it is very legitimate that the Bob has over time more influence how local things are run, since he's a long-time local that has to live with it. All the others are transients that come and go.

I also think it's not right to create this kind of arbitrary, large tax break that only applies in specific circumstances. I think if we're going to have a capital-gains tax (and maybe we shouldn't), then we should keep it simple and not have carve-outs.

If I sell my house while I'm on my death bed, I pay all the taxes. If I wait a week to die first, and then my heirs sell, no tax. This is wrong and unnecessary.

https://nypost.com/2022/07/23/nancy-and-paul-pelosi-are-trad...

What? Of course Fannie and Freddie guarantee the MBS they issue. Which is an implicitly a guarantee from the US government. Otherwise they'd trade at much wider credit spreads, which would in turn lead to higher rates for home buyers. You don't have to take my word for it, here's the New York Fed's own words:

For agency MBS, the GSEs and Ginnie Mae promise full and timely payment of principal and interest, a guarantee that is either explicitly or implicitly backed by the federal government[1]

> You want to tax homeowners as if they paid themselves rent?

Alice, who has a 20% income tax rate, owns a house and rents it to Bob for $25k/year. Bob also has a 20% income tax rate, owns an identical house and rents it to Alice for $25k/year.

In total the government collects $10k/year in tax revenue from Alice and Bob from their rental income. Now let's say Alice and Bob swap houses and move back into their owner-occupied properties. This is an economically identical situation (remember the houses are identical). Both still own one home. Both are still consuming housing that's worth $25k/yr to them. Yet the government collects no tax revenue. Exempting the implicit value of rent is a subsidy favoring owner occupied housing.

> imputed rental value (which is likely not even legal)

The IRS already taxes tons of benefits based on the imputed income, even if no cash changes hand. For example, if your employer provides you life insurance, you have to pay income tax on the actuarial value of the policy even if you don't die during the coverage period.[2]

> then you will increase the cost of home ownership,

Not if the supply of housing is completely inelastic. Any increase in housing taxes will result in a commensurate fall in the sticker price that matches the tax increase. Economists have known this since Henry George.

[1]https://www.newyorkfed.org/medialibrary/media/research/staff...

[2]https://www.duq.edu/assets/Documents/benefits/_pdf/Imputed%2...

Of course you would really rent a 500k property at something more like 2500 a month but even then you'd need a down payment near 200k to start making a profit.

> Everyone wants to do what you are doing.

As with any other asset that makes money, there are reasons why property prices are what they are, and if it's a magic ticket to free wealth, you have to ask yourself why professionals with deep pockets aren't grabbing every property and driving prices up even further. In the case of properties that are within the reach of upper-middle-class earners, professionals are not willing to pay the prices that overexcited individual amateurs are.

> isn't your tenant basically paying off each property

...and it's special logic like this that convinces people that there's free wealth to be had. But there's no magic. There is a price. There is income. There are costs. There are assets that depreciate. The land is an asset that appreciates. That all adds up to a return on the investment. Professionals calculate the return and compare that to other things they could do with their money.

Amateurs (like us) just buy and hope and feel good because we're doing something that feels like rich person stuff. We're doing fine with our properties, but we'd be doing fine putting our money into index funds, too. In case it's not clear, I don't think our properties will turn out to be great investments for us unless the speculative aspect pays off big. But my wife actually enjoys the work of finding tenants, handling building maintenance, designing and overseeing improvements, etc., so we implicitly price her time at zero.

Let me repeat that to let it sink it: I think we'd be just as well off putting our money in the stock market. The main reason we've put a significant amount of our money in real estate because my wife enjoys it and doesn't mind putting a lot of personal work into our properties for free.

I'm not sure that's the case for the majority of the country. At-least it's not here in my greater metro area (suburbs or rural... yuppie downtown areas... perhaps, but again, downtown is not majority for most places)

How about that principle of one person, one vote.

You and anovikov reach different conclusions because you're looking at different time scales. You're citing returns from 1870-2015; he's citing returns for the last 40 years, 1980-2020. The comment and paper you linked itself explains why: housing and equity returns were very comparable from the period 1870-1945, but equities significantly outperformed from 1945-present. I would bet on suburbanization as the cause: the U.S. embarked on a massive homebuilding project from 1945-2000, which kept supply high and prices relatively low during that period. Returns to housing since 2009 (when the bottom fell out of the homebuilding market) have much more closely matched equities.

Yes, I got that. Housing has been such for well over 100 years, right?

It is not treated as a service or utility because, well it is neither of those things at all.

Even if you somehow forced it into such a market, the value would still likely be the same cost to a homeowner, since there is not going to be some free lunch here. People willing to pay $X to live at Y will continue to be willing to do that. Services and utilities do not mean free or low cost.

>treat or normal clothing as an asset class

Because it is cheap, it wears out, and goes to zero value. You really don't want the value of your house to be zero, meaning it has no utility to anyone, including you.

Zillow tried that and lost over a billion dollars - I'd expect lots of those purchases are not the money makers you think they are.

>Which increases faster than incomes.

Not for the same size houses - the median house now is many times the size of a median house from 1950, and a few times the size of a median house from 1970. If you buy the same house previous generations bought, you'd find prices relatively the same.

>Hence the way each generation has a declining rate of home ownership.

That's not what historical data shows [1,2], going all the way back to 1900. Each generation has had higher ownership rates at equal points in life than each previous one, except perhaps a recent one due to the 2008 crash, but they're catching back up again.

Certainly there is no way you can claim each generation declines and see the same data FRED and Census post.

For example, FRED shows that Q2, 2022, at 65.8% is higher than all of history except the decade before the crash, and it is trending up again.

[1] https://fred.stlouisfed.org/series/RHORUSQ156N

[2] https://www2.census.gov/programs-surveys/decennial/tables/ti...

The best thing you'll get is a campaign promise to do something about it, but not much action. The only way something will actually be done about it is if the effects of it become economically catastrophic or people start rioting en masse.

I saw this recently in a fight over parking regulations - all the homeowners wanted strictly regulated street parking in neighborhoods, but none of the renters did. Both parties showed up to the council meeting discussing the regulation. Guess who won? Adding insult to injury, existing laws give owners a process for obtaining extra parking passes for guests, while renters get no such option and need to take a bunch of documents to city hall to get a pass when they move in. For street parking.

True! It's exactly what happens with, for example, the richest man in the world right now. Everyone loves him because they think he has so much merit, but he's just a glorified recruiter and/or magnate, he doesn't have any technical knowledge at all.

Here's a mortgage statement from US Bank showing the rate: https://imgur.com/a/Nq597zF

That is irrelevant. The point was the role of other vehicles in investment properties, wherein the GP diverted into arguing about the specific numbers being used.

> The point is if you have 200k to put into a rental property you are already wealthy way beyond an average American.

That's your point, which is not in dispute.

1. The land value.

2. The structure value.

3. The right to have this structure on the lot.

That is, if you tore down the structure you wouldn't generally be able to build anything anywhere near as large, because the building predates zoning.

Assessment ignores (3), and groups it in with (2), which then depreciates. Which isn't right, because (3) doesn't depreciate

You'll find very few people that actually want to whole-hog entirely get rid of capitalism. When you find people critiquing it, it's generally from the vantage point of "this is a rough edge that needs addressing via some government intervention". Housing (in addition to healthcare, education, transportation, and countless other areas) seems like one case where this is very obviously true.

Whenever I talk to my young friends about Social Security's trust running dry in a decade they just handwave it away with stuff like: the government will just print more money or blame jeff bezos

There is a gigantic country and world out there.

It just kills the discussion because it’s such an outlier.

I would not be a popular king, but it’s better to be feared than loved, I guess. I do understand what site I’m on.

> They will stay "aspiring" for the rest of their life.

They have a very viable option, which is to leave SF and go somewhere else where they can stop aspiring and afford to actually become homeowners if that's what they want.

I speak from first-hand experience, although in my case it was Manhattan not SF. I very badly wanted to live in Manhattan but no matter how I sliced the numbers, there was no way. Too expensive.

I didn't remain "aspiring" for the rest of my life though. I gave up on that dream and moved and bought a house elsewhere. It's worked just fine.

I agree though that a lot of suburbs are just wastelands and I would consider them to be depressing places to live. But people seem to love them for some reason. A lot of these places don't even have sidewalks but I guess it makes sense as there isn't really anywhere to walk to.

Sooo... the last thousand some years, given that feudalism was widespread by the 11th century (and housing was absolutely an investment before that). Basically - half of recorded history (~400bc for Europe), and longer than the United States has existed.

I don't understand what you think this comment means...

https://www.frbsf.org/wp-content/uploads/sites/4/wp2017-25.p...

Housing is only "scarce" in desirable places, and that's simply tautological. The sum of unfulfilled desires is the contrapositive of scarcity.

Housing is a market in which a very tiny percentage of goods are up for sale at any particular time, and the projected prices of those goods are heavily shared among a huge network of people who profit when the prices are high. The owners of those goods are often heavily leveraged, and can't afford to lower the price significantly, and the transaction and mortgage costs push them to raise the price to cover those costs at the next place they buy.

> They can only extract so much wealth from housing before people move for alternatives.

No such alternative, which is why the market is as lucrative to exploit as health care. Finding an "alternative" to health care is just to find another type of health care, and if you find an alternative to being housed, you've just found a new kind of house.

LOL, I wish. Renting in Munich for enough money that I'll never be able to save enough for a downpayment. If I ever want to own my home, I'll have to move to the German equivalent of Alabama, with all the issues that come with that.

> The fix is to enable builders to build enough housing, and not just single family detached housing, by removing regulations which allow NIMBY-ism.

Where? Seriously, where?! Urban areas literally don't have enough space left any more to build any kind of building at affordable prices (plot values have sometimes doubled over four years here [1]), not to mention the associated followup costs of high-density populations (you need expensive subways as public transport at some point, denser / more anonymous populations leading to lower societal cohesion and rising crime as a result) or the fact that most urban areas simply are unsustainable regarding climate change in the long term (no trees to provide shade = lots of heat).

[1] https://www.sueddeutsche.de/muenchen/muenchen-grundstueckspr...

If you want to watch Netflix and forget about what's happening outside, that's your choice. But we are completely destroying this planet in every way.

There are lots of mouths to feed every day depending on systems that are not sustainable and may collapse. https://www.youtube.com/watch?v=RjsThobgq7Q

If you go camping and have limited amount of food rations, water, etc, you will make sensible decisions about how to consume the supplies you have. This is very similar.

For two, the standard deduction is better seen as a personal exemption (which it subsumed), giving everyone a level of income that they don't have to pay tax on. Especially given that business expenses generally flow through as direct subtractions regardless of the standard deduction.

There is definitely tension between allowing deductions to account for actual income fairly, and the resulting (de facto) requirement that everyone do minutiae accounting for their personal finances.

eg https://www.silverstarcarwashes.com/latest-news/silverstar-c... (this is of 6 planned)

Because of the city tax conditions and depreciation schemes available, enough capital will turn a net negative run cost into a positive capital sale in less than 10 years. It's the same thing as flat asphalt parking lot developments that covered southern california commercial land until the 90s.

It seems to be a gamification of city growth incentives.

It seems like a strange thing to have powerless concerns about as voting only selects a representative. In my experience, the most likely candidates are all reasonably suited to the job, leaving it to matter little who ultimately wins. Even if you are powerless it is not that big of a deal, being the most inconsequential part of the process.

The real work happens after the vote has taken place when you have to start engaging with the selected representative on the regular to make your perspective known. It is guaranteed that you didn't elect a mind reader. It is not clear if the younger generations are aware of that. This may be why they feel powerless.

It my youth the message was always "contact your local representative", but in recent times that message has changed to "how could <insert political figurehead> do this to us?" There is some apparent degree of learned helplessness at play; perhaps because greater media exposure gives us insights into places with strong dictatorships and we project their conditions upon ours.

Invariably, those with enough land ownership ties will ultimately run into municipal issues that will require approaching council, at very least forcing a deeper understanding of government upon them. This may also help explain why those who own things are apparently more engaged politically.

Not really. The way out is higher density. What we care about isn't land price, it's housing price - in other words, how much does it cost for people to get as much housing as they need. Lowering housing costs and rising land costs are perfectly compatible if you don't artificially restrict lots to 1 unit as most of the country has done.

I remember when Mayor DeBlasio (https://en.wikipedia.org/wiki/Bill_de_Blasio) was running for Mayor in NYC. He was hugely against high-rise high-density condos in Brooklyn adjacent (4th Ave) to expensive $2M+ brownstones (incidentally where he lived, in Park Slope!)

He was the "left" candidate and didnt seem to understand the concept of supply and demand. Nor the concept that no every city dweller can afford a $2M brownstone.

The problem is that Left and Right alike wants to perpetuate the system because they are all so fully bought into the system. I'm sure Mayor DeBlasio fully understood the economics here, but supported NIMBYism because he and his money base wants to keep their wealth.

That also means this isnt a left or right issue, its more of a hopeless issue. The only way out is to buy into the system and join them.

This is the short term fix, and I completely agree with you.

The long term fix is, aside from letting local governments make minor regulatory changes to facilitate denser urban construction, to simply do nothing.

Cities are expensive. People will (and are) moving away from HCOL areas because of this. Businesses are adapting (e.g., with remote work) to hire people living in MCOL and LCOL areas. At the same time, new economic agglomerations are springing up in these areas to support growing populations.

Given enough time, two things will happen. Many of these MCOL and LCOL areas will become more expensive. Some will urbanize. Some wont. Second, eventually, people living in the areas that don't urbanize will realize that they actually would enjoy living in a HCOL area. And the cycle will continue.

Of course, vinyl windows, cheap flooring, builder grade kitchen and bathrooms bring the cost down significantly. But it still adds up. Foundations aren’t cheap.

Thats what puzzles me.

What changed in the dynamics of the american society in such way that new cities are no longer built? I get it in europe there barely and land left to develop, but the us and canada have plenty.

* You get to option the car with exactly the features/colors you want.

* People will pay a premium for something brand new.

* Financing for used cars usually carries a slightly higher interest rate.

* The actual cost at the dealership can vary significantly depending on the make/model/dealership

What it means to be projecting?

According to Karen R. Koenig, M. Ed, LCSW, projection refers to unconsciously taking unwanted emotions or traits you don't like about yourself and attributing them to someone else. A common example is a cheating spouse who suspects their partner is being unfaithful.

I've not taken any of my views and projected them anywhere.

you simply look around, and you can find TONS of so called "Social justice warriors" demanding more public transit, more density..

Usually under some "Stop urban sprawl" mantra - who gives them the right to enforce how others want to live?

They do guarantee some loans, as I wrote above. The marketing blurb you copies cleverly does not state they will guarantee any mortgage loan.

If they did, the housing crisis would not have been such a crisis - the crisis happened when so many investors realized the loans they bought could crash and cause them massive losses - precisely because FM does NOT guarantee all loans.

They guarantee certain loans (conforming loans), and charge a fee to investors for this when they purchase MBS from Fannie Mae. Conforming loans make up under 40% of all mortgage loans. Of all conforming loans made, Freddie and Fannie end up purchasing about 60% of those.

It may be that they stopped buying loans they deem too risky, but that didn't use to be the case.

Sure. But why does it get such a sweet deal?

It's because we want to encourage business, since businesses produce things of value.

But how much does a landlord actually produce things of value, and how much is he just extracting value others are producing (a.k.a "rent")? That's an important thing to consider when we look at having this tax/tax break or not.

I know we like to give the benefit of doubt here on HN, but that crosses a line. Landlords are known to perhaps not take the best care of their property, but in general, even if a tenant totally trashes the place it isn't too hard to strip down whatever got abused and rebuild it. Same thing happened to us when we rented a property. Tenant did as much damage as you can imagine with pets and abuse short of ripping wires and pipes out of the walls. It was really annoying to fix, but not hard. In the [late] 2020 real estate market it was easy to sell it and the house appreciated like 30-40K since we sold it easily.

So you either left them out of your math, or you planned to do zero upkeep (hence, "nobody would rent it")

Nope, pointing out that in order to keep the house rentable, the landlord has in put money into over all those years, which the OP left out.

A house that has had no money spent on for 30 years would not be rentable, right?

So depreciation is not a free ride.

Any number of things can result in houses being destroyed and become worthless prior to that time, including damage from earthquakes, fires. Additionally poor initial building standards, or changing building standards, or new regulatory barriers can make certain properties become not just worthless, but have an active cost to their owners and therefore have negative value.

Long term rentals - the gains are minimal given how much capital is completely locked in that property and not doing anything else. If you are lucky, you have long term nice tenants and stuff generally doesn't break (ie heating/wash machine bursting and flooding everything, including 5 apartments below). If unlucky, 1 bad accident that needs to be fixed asap will wipe out any income you have for given month, if not more.

Utterly random example - I got locked out (if thats the proper term) last sunday evening, went for a walk and big weird key wasn't turning in our old very massive (15cm thick & heavy) doors that look like they could handle a nuclear blast. Called some emergency services for this and they opened it, but showed me the lock basically disintegrated and I was lucky they didn't have to drill huge hole in those doors to get in and pay tripple the cost. The cost for new lock in those doors with all work? 2400 Swiss francs (cca 2500$), and that was work week rate of one of the cheaper agencies doing this, albeit in Geneva, one of the most expensive places to live. For a freaking lock that is just old design, fitting some 50 years old doors. Guess who pays that? Well me but I will get 100% reimbursement from agency who will get it from owner.

Properties are great if you inherit them and suddenly have a nice passive income (and management worries). Or if you are lucky with timing and in 10 years they jump 3x with value. Thats over now. I wouldn't invest in properties now unless its for primary residence and then a lot of emotions and other concerns come into equation, but financially its not great.

Obviously that wouldn't actually happen in real life, which I think is the GP's point.

Here is some data that solidly debunks your disguised claim of "trickle down":

https://www.epi.org/publication/ceo-pay-has-grown-90-times-f...

http://www.ibew.org/media-center/Articles/19Daily/1908/19082...

The millions of marine animals drowning in single use plastic bottles will concur with you.

- you buy the property that you personally will live in

- you buy some other property and let it out to tenants or businesses

- you are a pension fund, mutual fund, hedge fund, day trader, bank, HFT etc which trades in derivatives based on mortgages

The first two have been going on for centuries at some level. The third only really got going at the point house prices completely disconnected from inflation.

It... doesn't seem like we do? I mean, it's not like pre-1990 we had skyrocketing unemployment and underinvestment in business, and lowering capital gains taxes fixed it.

The fact of the matter is that people with capital want to invest and grow that capital. It is absolutely false that if that activity is taxed, it will disappear. Just as obviously, if all capital gains are taxed at 100%, it will disappear. The question is the balance - how much to tax it so that the wealthy don't merely get wealthier at everyone elses' expense.

It may also be a good idea to tax underutilized capital, as land is taxed.

And the cost of buying a property and outsourcing its maintenance is 0 right?

The landlord magically pulls a home out of thin air and some group of people maintain for them for free?

>>Landlordism is parasitic in the literal sense of the word. Landlords get rent and capital appreciation for doing nothing but possessing an ownership title. The propertyless pay the propertied a premium to live.

This applies to any investment, including things like 401K, pensions, getting an education, or even taking care of one's health.

Why should anybody in an economy be better off than the other part of the population by being disciplined, making routine and early investments?

Good news is you can plan and start working to go over to the winning side by taking action on it today. Or you can call others 'parasites' for making smart decisions you don't make. Calling others names might mask your own failure, and downplay their achievements, but is unlikely to change anything for your or for them.

Hm - the same could be said about your 401(k), but you probably expect to live off of it at some point in your life, right? At worst, buying and renting properties is a (risky) investment.

Next, instead of picking a window wrapping the biggest housing bust in a century, pick various decades and see how normal volatility behaves - and you might find this variability not uncommon.

In fact, from your own source, Figure 1 - the percent of rented properties is, well, nearly constant over the entire window (31% rented in 2007, 37% rented in 2017). And somewhere in there mortgage laws got significantly tighter - no need for pesky investors to be the cause of less mortgages.

So go figure, right? Lots of reasons and complexity in there.

Who do not actually pay for any repairs or upgrades to the property (that is the landlord's responsibility, and who in addition take an extra 5-20% of the rental upfront. Yes, it "outsources" actually dealing with the rental property and renters, but has no impact on the costs other than making them higher.

Take this area, plenty of plots now housing cows. Distance to city centre (by car!) is 20 minutes.

Same thing to the North West, in between Munich, Grobenzell, Puchheim...

Buddy you are buying into the horsecrap being told by current homeowners. "It's full!"... Nope, not really. Just like in the Netherlands, about 50% of land in Germany is farmland. And even outside of big cities like Amsterdam and Munich there's plenty of space left. But you're not allowed to build there, let alone build high apartment complexes...

Being able to leave something to your descendants is a critical part of society. If people know they cant leave anything behind they start acting differently (and not in a good way). I understand a key part of communism is you and your family own nothing, but trust me you don't want people to have a use it or lose it attitude towards everything.

Do you think they don't attempt to keep the house prices from crashing ? (also known as getting more affordable).

I think it's obvious that the US government is very interested in maintaining and increasing the monetary value of homes and real estate.

Here are some ways they influence them off the top of my head

1) monetary policy (Changing interest rates to encourage borrowing) 2) Subsidizing mortgages (Fannie mae, Freddie mac) - allows people to borrow more and so spend more 3) Zoning (reduces the amount of available land) 4) Bailing out banks involved in real estate 5) Tax relief for home ownership 6) Mortgage interest relief for home owners etc etc

If the landlord spends a single penny in paint does that make up for getting an asset that’s considered zero value but still gets to be sold for hundreds of thousands?

You're assuming a cause effect relationship. The far more likely causes of this are automation (allowing more work done by machines than people) and globalisation (allowing reach of larger markets).

That's the mechanisms. As for the philosophy: I don't buy the idea that a CEO getting richer hurts me. What's important is that my standard of living is better than my parents', and my children's will be better still. If someone wants to risk it all for a big win then good for them. They will probably fail, and lose years off their life, but occasionally they will succeed. Only pointing at the people whose risk-taking paid off and saying "See!" is not a good way to understand (or communicate) the full picture of what's going on when people invest or run their own company.

This gets into an interesting "can of worms" problem.

My background is finance which tends to be clustered around "financial hubs" (London, New York, Toronto...).

Again, I will keep my "Toronto" perspective as I am most familiar with it.

Why are all the banks located on "Bay street"? Because if you dont have a "bay street" address you are a "nobody". This odd mentality can be found globally, "wall street" , specific "pockets" of London.

The "big 5" banks here COULD build places in smaller urban areas, but those lack the "power" of that Bay street address.

Now that we established that for odd reasons you have to be located in "bay street" there is also the view that you must be "seen". Remote work is a career killer in Finance.

One large Canadian bank has started the "we want you back in the office" discussions :

https://financialpost.com/fp-work/rbc-staff-back-office-more...

RBC CEO asks staff to come into the office more often 'Technology can’t replicate the energy, spontaneity, big ideas, true sense of belonging and fun' of being in the office, CEO says

Now RBC has issued a press statement on this, the other Canadian banks will quickly follow suit (they move in lock-step with one another).

So.. work in finance, you need to be on "bay street" monday to friday. You don't want to commute, increase demand to live in Toronto.

Basic economics show that increased demand leads to increases in pricing..

See this :

https://www.blogto.com/real-estate-toronto/2022/08/toronto-r...

Most people who do manage to afford to live in Toronto still have to commute. you can get condo's right in the downtown core, but they are insanely expensive.

So the debate he had was a ~30 min commute and a "toronto" address vs a 45-60 min commute and an address in a small city outside Toronto.

I worked in toronto a very long time, dont know many people who actually lived there. Most commuted from cities in the GTA (Greater Toronto Area).

Sometimes the commute is sort of unavoidable.

What are the options to avoid a 30 min commute if you work in a specific industry which prefers "on site" work, and that company owns property in a city you cant afford to live in?

You can change industries, etc.. but those are personal choices.

Owners of monopolies stand to benefit from not just a reasonable return on investment, but an excessive return on investment proportion to their contribution to society.

Many countries and societies have handled this in different ways, such as the idea of the commons, or Norway's taxation of oil extraction, or land value taxes and land leases.

> You feel like you are salty that you couldn't get a hold on such a resource in time.

I am a software developer, and as such am able to comfortably acquire land in a good location and provide for my family. However, many of my generation are unable to, unlike previous generations, because the good locations have all been taken by the previous generations. This is why we see enormous poverty next to enormous progress, because late comers to the party are so far behind as to be basically unable to "get on the ladder". The ladder is being pulled up before their eyes.

A great solution to this is to tax the excess economic rents that monopolies create, rather than taxing labour and capital. Henry George is the most famous proponent of such a system, and you can find out more here: https://www.gameofrent.com/ or at astralcodexten's book review of Progress and Poverty.

This means that those who contribute to society through labour and capital are not discouraged from doing so, but those who leech off others through monopoly rent extraction return that rent to the society that created it in the first place. This is a far more just and equitable solution.

Of course, many existing monopoly owners (e.g. landowners, and particularly property investors) hate the idea, because people tend to act in their own self-interest to the disadvantage of others.

So they have to inherit a $12m estate before they're taxed, if it's less, no estate tax.

And they don't pay taxes on that $12m if they're over the $12m, only the amount that it's over that $12m. If it's worth $12,000,001, they pay taxes on only $1.

Sources: https://www.forbes.com/sites/ashleaebeling/2021/11/11/new-hi...

Communism is, primarily and essentially, about the end of money. Other features of socialist countries are largely the result of how some theorists planned to achieve communism, although they invariably fail. (Some people insist on adding "so far".) Some communists on Quora directly addressed the question of homeownership here:

https://www.quora.com/What-is-the-general-view-on-owning-pri...

Somehow, all kinds of unrelated policies get called "communism" or "Marxism", even when they directly contradict what Marx said (e.g. restrictions on gun ownership). I don't think it's helpful to policy debates to have this syncretistic demon hanging around appropriating the bad name of communism.

If you’re lucky enough to receive a house as an inheritance, you pay tax on that, like every other income.

That's why it's a bunch of white people with title now, rather than all being native americans

You mean like how all the Interstate Highways got built? Except that wasn't "effectively", it was literally.

What you'll end up with is people "relocating" for a year to avoid paying inheritance tax.

My house is 25 years old (bought it new) and from your list, the only things I've done is exterior paint and water heater.

I've also done cosmetic landscaping but that was strictly optional, as I like to work on the yard.

1 - No national election day holiday, so wage-earners often have to forgo income to vote.

2 - Long lines, too few voting stations, exacerbate point 1

3 - Inconsistent voting laws as you cross municipal boundaries (mostly state to state).

3b - particularly WRT mail-in/absentee ballots.

4 - constant undermining of the voting system as a whole by the GOP. This has really ramped up in the last ~8 years, but it's been there much longer.

The first 3 are more likely to impact poorer citizens, who are also more likely to rent their homes.

We'd do well as a country to allow nationwide mail-in voting.

https://thehill.com/opinion/campaign/561886-whos-not-voting-...

This is however contrasted by the confusing bit that not being registered was the biggest reason people didn’t vote, above apathy and political disengagement.