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Comment by bitwize | Hacker News Reader

Millennials want to live in cities.

Specifically, millennials want to live near city centers, where they can commute to work by foot, bike, train, bus, or Segway. Basic laws of supply and demand dictate that the value of property, and the rents, must go up, since as society urbanizes there are an increasing number of people vying for a fixed amount of real estate.

Part of the American dream of owning a home was predicated on the fact that land would be developed outside the major cities, and homeowners would use newly affordable automobiles to get to their workplace and anywhere else they might want to go. Which led to drab, soulless, lifesucking suburbs and an obsession with gas-guzzling, air-polluting, global-temperature-raising motor vehicles. Ewwwwwwwwwww. How bourgeois, how planet-unconscious, how typically American.

So while millennials may not particularly dislike owning homes, they have made lifestyle choices that tend to make home ownership more difficult. Unfortunately, those are the constraints of modern capitalism. Personally, I think we need to rethink our whole economic system. It'd be great if someone came up with an alternative economic system in which one can have one's cake and eat it too, but until that happens we're stuck with the situation we're in.

Meanwhile, houses in the boonies are cheap. If you can remote-work your way into a boonie lifestyle, you can own a home on a rather modest income indeed.

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As long as we're using capitalism to explain what is happening, then by all means let's use more capitalism in the US housing market.

1. Remove all government sponsorship of mortgages, gradually spool off all existing GSE mortgages into private markets. Possible exception: owner-occupied homes, limit one per

2. Remove all implicit government backing of insurers and re-insurers of anything having to do with mortgages.

3. Remove mortgage interest deduction.

4. Valuations reported to IRS, property insurers, permitting offices and bank loans link back to publicly-available property tax records.

5. Property developers, not taxpayers, pay for initial costs to extend infrastructure, foot the bill for floating the bonds to maintain the extensions, and residents moving in must pay into the bond fund over time, gradually paying off the initial buyers of the bond; bonds are reissued as old bonds mature.

6. Bill back costs of developing (up to inner core density, with adjustments to purchase fast public transport into inner core) further out from urban core back to inner core residents as increased property taxes spread over 7 years, if inner core residents vote down densification, and rebate some of the collected funds to developers of outer core.

7. Standardize all government building codes to a single set, specifying function/intent/goal and not form, thereby allowing offshore for example factory-built modules to access a contiguous national market, or alternative construction techniques without lengthy permitting.

These and other measures that open up competition for real estate development would be wildly politically unpopular in most areas and constituencies of the US. The US real estate market is superficially capitalist for a number of very interconnected reasons, and I've observed similar dynamics in other nations I've enquired about property within. Property is an extremely special-case asset, with privileged market protections/distortions few other asset categories enjoy.

While the rest are generally sound, Number 6 abandons the market and capitalism in favor of government intervention again, which is unfortunate and invites the system to be abused and gamed by the usual set of cronies. I'm against it.

Number 1 should avoid use of the proposed exception for the same reason that mortgage interest shouldn't be deductible: it's a subsidy that distorts the market and is unfair to the good people who are still renting (who are, broadly speaking, probably not as well off in general, so it's a regressive subsidy where we pay the rich).

You should add a #8 to remove all government subsidies of flood insurance and similar vehicles, especially along rivers and coasts, as they're basically paying people money to build homes (often luxury or vacation homes) in dangerous places.

Agreed on all points. I put in #1 because a substantial number of HN readers are highly invested in the US residential property market, and in past conversations with people who were similarly invested, not mentioning that exemption turned into a dismissive non-starter conversation. My concession to even get a conversation started at all with those folks. Upton Sinclair comes to mind: It is difficult to get a man to understand something, when his salary depends on his not understanding it.

#6 is an attempt to reconcile the following challenge. Well past the point when developers could foot the bill for infrastructure expansion, we continue levying taxpayers to pay for it all while property developers reaped the majority cash benefits the soonest from the expansion. This heavily subsidizes inner core residents who get there earliest, and regressively penalizes later generations and residents settling the outer rims with increased infrastructure costs that increase as the square of the distance from the core, while outer rim density-based tax revenue functions more linearly. We're saddled with the legacy, but how do we allocate the true infrastructure expansion costs of growing outwards instead up/downwards, not to speak of remedying past distortions that have magnified effects today? I'm fine with not going with my #6 as I'm highly dissatisfied with it as well, but would welcome other cost allocation mechanism ideas, any to offer?

#9 Remove all subsidies, deductions, and tax credits. Including those involving land banking. [1]

#10 All commercial property tax subsidies/waivers/rebates/etc. must pass by a super-majority vote of the ones who pick up the tab for the gap.

[1] http://usa.streetsblog.org/2013/01/09/450-billion-in-federal...

I don't have data to back this up but in regards to #1, wouldn't most people who are paying mortgage interest be middle class? Wealthy enough to own a house but not to buy it outright? I also believe that if you own multiple homes, you can only deduct this on your primary residence. I've always felt this is a small tax break for middle class.

Then lower the middle class taxes so people can choose how to keep the savings, instead of being forced to buy a house to take advantage of a specific tax break. (I'm being the devil's advocate here, I realize some taxes (or breaks) exist to incentivize behaviour.

When mortgage interest rates are relatively low like now, I would think even wealthy people would want mortgages. By using a mortgage instead of paying cash, it would be possible to buy more property (a fancier home, a vacation home or rental properties). Or they could invest more in higher-yield investments like stocks.

The high cost of housing is simply cause by the market failure or market inefficiency of zoning density restrictions which benefits landlords/land holders over the renters and those who wish to buy housing. Prices are higher because of scarcity and the scarcity is politically induced called "rent seeking". This rent seeking was first explained by David Ricardo regarding the "Corn Laws" which were a tax on imported grain causing workers to pay more for food/bread. Farmers received more money for their grain, but the landholders of the land the famers used simply charged higher prices.

Fix the market failure and free markets will create more housing. Renters will pay less for housing, there will be less commuting which causes less pollution. There will be more disposable income which can be used to pay for goods and services thus stimulating the economy and employing more people.

There are practical issues with #7, to standardize on a set of building codes across the entire US would make all construction needlessly more expensive for anything but offshore pre-fab modules. If you have to do California earthquake slab treatment in Missouri, that's not economical. If you need to support all the drainage, roof, and siding rules of the Northwest in Arizona, you're probably unable to efficiently handle all the plaster and cooling efficiency rules in place down there.

I'm sure there's a large core subset of rules that would allow prefabicratiom of framing, for instance, but as a guy who JUST finished building a house, I can tell you that it isn't the framing that gets you. Permits and land are by far the single biggest line item expenses.

I suspect they said the same thing about cars in the old days, and mass production kind of papers over those little differences.

Besides no one mass produces foundation slabs which would vary on frost depth, they mass produce kitchens and living rooms and bedrooms.

Also for sheer cost of truck shipment reasons most houses would be manufactured near where they stand, perhaps across a state line maybe two small ones at most, sure.

I would agree with the "its mostly a money grab by the system" as being accurate. $25K of wear and tear on that planning commission rubber stamp, uh huh. Cable company can connect service for free in a couple hours of labor but the electric company is required for an occupancy permit, and they know it, and they think they can squeeze $10K out for new service installation, uh huh.

Mass production definitely papers over the inefficiencies, but I wonder if it would be needlessly burdensome to try and make building products and rules that are everything for everyone. We've already seen huge debacles with things like LP siding that would last decades in the southwest that started breaking down and growing mushrooms in the Northwest after like two years.

The difference with cars is that save for some small tweaks, you're not dealing with completely different driving environments for decades or centuries on end. California has their own emissions standards, which they manage to meet (or cheat). But largely fuel efficiency is fuel efficency. Safety is safety. A seatbelt works the same whether it's rainy or sunny.

Houses should be designed to emphasize the local environment needs. I don't want a flat roofed stucco house in Portland. That would be a freaking nightmare.

I'm sure there's a set of federal regulations that could be applied to new construction, plumbing and electrical codes could probably mostly apply. General safety and minimum wind shear requirements. But the vast majority of the codes we had to deal with were regional and dealt with water runoff, moisture build up prevention, soil erosion, and a list of other things that I could see as being entirely not applicable to other areas of my state, let alone the rest of the country.

I have an interesting analogy that's even better than automobiles. Clothing. Mass produced clothing. Kids pajamas federally required to be fireproof, no problemo. Almost everyone in the entire country wears mass produced clothing. Yet there's incredible variation in style. I don't have to wear a skirt, but my wife can if she wants. I can wear a sweater on a cold day while people on Florida beaches are nude or close to. Yet its all successfully mass produced.

I was going to use industrially produced food as an analogy although maybe that's not seen as a winner. But its not out of business, which is something, I guess.

I think the premise is sound, but also basically where we are today. With the clothing analogy you buy the individual items (or not) and put together the outfit of your choosing.

As it stands I can pick one of a dizzying array of products that adhere to all kinds of regulation across many jurisdictions.

However, where it begins to be problematic is if we (returning back to clothing) say ALL belts must be 4" wide and made of genuine leather. Well, now that coat you wear that has a belt around the waist that is purely decorative is completely out of regulation and can't be used. Even though you and I both know it's just fine. Or the swimsuit that ties around the side gets classified as a belt because of some inane interpretation. You'll get that times a thousand for every single room in the house.

Like the argument I had to have with the plumbing inspector about my ridiculously expensive dishwasher not needing a breather valve because it had mitigating features built in. Showed him the spec sheet that called it out and pulled up customer support with him there. In the end? The rules say breather valve, put one in. No common sense or room for interpretation. The intent is to keep dirty water from back flowing into your dishwasher. But now years later you have minions that don't understand the intent, they just know what the regs say.

With #7 I envisioned (half-baked idea, I haven't thought through the implications, just an annoyance that I can fortunately ignore for the moment) an effort to produce a national building code affording us a one-time opportunity to restructure the code's presentation from specifying "how" to "why" as the lead-in, and the "how" as an example reference. I envisioned the building code instantiated as live data feeds of various metrics like earthquake data from the USGS, historical weather, flooding data from FEMA+US Army Corps of Engineers+USGS, soil surveys from USDA, etc., and for a building type and precise location you specify (commercial or residential, single-story/multi-story/highrise, etc.), only relevant code is extracted and received either electronically or in hardcopy, with a data package representing all relevant code.

Building plans are drawn up including metadata references to relevant code section(s) from the beginning. This part still requires human judgement and negotiation of which section(s) are applicable, but perhaps an online marketplace of pre-configured plan modules with pre-certified section(s) tagged to the module's components can help mitigate that complexity.

Merchants would certify products they sell are compliant with the "why" of specific section(s) through a number of insured certification authorities, who become (perhaps limited) jointly liable for their issued certifications against gross negligence (to avoid rubber-stamping behavior). Products are shipped with a cryptographically-signed RFID stamp ensuring authenticity and enabling remote building inspection. Can't avoid all "how's", like for example spot-checking to see that bare copper isn't laid exposed to house insulation because someone stripped off too much wire insulation and couldn't be bothered to re-run or fix the mistake. But with all the data we collect today, there has to be a better way to permit, construct and inspect buildings.

Then we open up the housing market to vendors with better mousetraps to solve the "why's" expressed in the building code, adding enormous dynamism to the economy.

If you do #3, you'll just have people forming companies for the sole purpose of buying a home and getting the same exact deduction, since interest on debt is not taxable for companies (it's a business expense like any other, and taxes are levied on profits, not revenue). This will be especially easy for people who are not on a salary (contractors, etc) to start with.

#3 would actually be pretty devastating to a lot of middle class people if you didn't give them some other tax cut or credit. You'd at least want to phase it out gradually so people can adjust for its impact.

One more: stop directly manipulating the Fed Funds rate -- in fact, get rid of it altogether. You could argue that the Fed can safely provide a backup reserve fund with an above-market interest rates for banks, but to set direct price controls on the rate at which private banks lend to one another is absolutely ridiculous -- on par with failed Soviet-era command economies (or Venezuela). Eight years of near 0% interest rates has put us in the same situation that we were in back in 2007. The interest rate problem is actually worse, although we don't have Fannie Mae snatching up bad mortgages like they were during the last boom.

It sounds like you have a misunderstanding of how the Fed manipulates the rate that banks lend to each other at. For a summary, the Fed tries to influence it by changing the rate that banks required reserves pay, but banks themselves negotiate the rate they lend to each other at. See: https://en.wikipedia.org/wiki/Federal_funds_rate#Mechanism

Someone who equates the Fed to Soviet-era economic planning misunderstands more than just how the Fed manipulates rates.

Mechanism aside, do you actually believe it's different? A price control is a price control, and it distorts information in the market, which is normally represented by price. I'd highly recommend you read up on the influences of the last boom and bust: https://admin.fee.org/files/doclib/houseunclesambuiltbooklet...

You are right. Another common misconception is that banks are limited by they reserves in the quantity of money that they can "create".

Banks search for reserves after finding customers to lend. If they are not able to find it in the interbank market, they always can go to the central bank. It's by manipulating that rate that the central bank have some control in how "hot" the economy is. If the central bank wants to cool the economy it will make money more expensive to the private banks. Selling bonds to the private banks have also this effect.

It's the responsibility of private banks to grant that the new created credit is used in solid business.

If there are not demand for credit or there are not solid business, never mind how much reserves there are in the system.

Thanks for posting that; I definitely misunderstood the mechanism. The effect is the same though (price control on base interest rates), just with a more convoluted series of steps.

The scarcity of housing in cities is artificial. Most cities have a class of elderly landowners who enjoy their unobstructed views and high property values and have the time to sit in planning meetings all day and will fight tooth and nail against any new construction, using both liberal (gentrification) and conservative (crime and crowding) arguments.

The development obstruction is real. If you don't believe me then join Nextdoor for a neighborhood that's in the bay. You will find a group of highly dedicated and organized individuals who's sole purpose in life is to prevent any new high capacity zoning or construction.

I've lived in Paris where it is the same, or even worse because there are historic buildings everywhere. Now I live in Japan where it is the polar opposite. I live in a very dense area of Osaka in a building built in 2013 for the same price than my way smaller and very old place in Paris. If only Europe and North America could be like that...

Interesting, any insight to why the Japanese body politic expresses a stronger preference for new and denser construction? I've heard anecdotally that Japanese culture specifically (and Asian culture more loosely) tends to shun "used" housing far more than the US market, but haven't been able to find any reference to support that hearsay.

That is broadly true -- used houses have negative value here in Japan, as you need to first tear the thing down so that you can build whatever it is that you want.

In Japan, things shake. A lot. Earthquake damage adds up pretty quickly, and is stupidly expensive to engineer against, so most houses are built with an expected lifespan of probably somewhere around 50 years.

They're certainly safe, but there is a strong expectation that a family will live there until the kids move out and the parents retire.

Highrises are economically preferable for a number of reasons. Japan has both an excellent rail transit network and sane zoning laws. So you end up with a cluster of highrises around a train station, where the bottom 1-3 levels are devoted to shopping, recreation, and everything else that you would see in a typical shopping mall.

Life revolves around the rail network, at least in Tokyo. You don't as much go from the Ikebukuro Ward to the Shinjuku Ward as you go from Home to Ikebukuro Station to Shinjuku Station to Where It Is You Want To Go.

I don't see this ever happening in the US, but that's not necessarily a bad thing.

Personally, I would much prefer a larger number of slightly smaller cities, with companies either going fully-remote, or establishing a federated group of (drastically cheaper) offices in multiple cities. You end up with a lot more local flavor, but without the SF or NYC rents.

... but Paris is one of the densest cities in the world? Nearly twice the density of Osaka.

https://en.wikipedia.org/wiki/List_of_cities_by_population_d...

The problem with those listings is they count by the city's full area and not just the urban area. So for example Hong Kong is often listEd low. Go to HK and you'll quickly understand why that way of measuring is wrong.

It's not really a fair comparison because Osaka has twice the area of Paris. My ward has the same density than Paris.

The scarcity of housing in cities is not entirely artificial. Sooner or later you hit infrastructure limits. Remember that article about parts of New York City literally running out of space on the streets for pedestrians?

There are still neighborhoods in Queens, Jersey, and Brooklyn that are under 20m from Manhattan and still woefully underdeveloped. Also, that article was specifically about FiDi which is like that because it's so old so the streets aren't wide enough.

"Woefully underdeveloped" is an exaggeration though. There aren't many underdeveloped neighborhoods under 20min from Manhattan, and even then, they're still denser than just about anywhere else in the US.

On the NJ side, Hudson County is very high-density, aside from the Meadowlands which aren't suitable for construction. For one extreme example, Guttenberg NJ technically is the municipality with highest population density in the entire US! Or for a more mundane example, Newport in Jersey City is pretty much all high-rises.

Similar story in Brooklyn for the parts closest by subway to Manhattan. Downtown Brooklyn added so many new giant rental towers that rents actually dropped the past year. Williamsburg got a bunch of waterfront towers last decade and now doesn't have the infrastructure to support more housing. DUMBO is all large buildings that have been converted to lofts. Brooklyn Heights is lower in density, still very few single-family buildings in the first place, and largely landmarked/historic.

Queens is the one place where I'd partially agree with you, but even then, Long Island City has a ton of high-rises. Slightly further out, Sunnyside, Woodside, and Jackson Heights are relatively lower density, yes. But still denser than many major US cities.

I lived in a 1 bdrm in a nice neighborhood in Queens walking distance from the subway, <20m to Manhattan, for quite a bit less than I would pay for a 1 bdrm in Boston. NYC's extensive housing stock and transit network do yield results.

Short term, close the street to non-human powered transportation. Long term, add a new subway line or station.

I'd be curious what is the source of the claim that "most cities have a class of elderly landowners..."

I suspect these are cities which employ controls to cap the taxes on the property owned by elderly people.

If the city employs an age-blind property tax, then elderly people on fixed incomes get taxed out of their residences, which is an equally problematic phenomenon.

Most people are on fixed incomes, full stop. If you are in a home that you can't afford the taxes on, you should sell said home.

Anything else is how you end up with 60 thru 90 year olds living in housing that was never designed for them, both in that it is too large, and is missing elderly friendly features such as a single story layout. Sure, you can add these things on after the fact if its a single family home, but it often would make more sense to dump the 3 to 4 bedroom home (that you are expanding to 4 or 5 bedrooms with this reno) and get a place with a much lower maintenance burden and way fewer rooms.

Sadly, we often distort reality here in the US with subsidies that incentivize poor decisions such as living out retirement in the home you raised your kids in, despite the burden that puts on those living there, their family, and the community around them.

We should encourage the best possible outcome for everyone involved, by getting rid of tax deductions for having a mortgage against your home, or being over a certain age, as that will commoditize housing and allows people to live closer to where they need to be at a much lower cost. Otherwise, subsidies like this drive up housing costs and you end up like many American Cities.

If I were 80 years old I would be very upset if I were forced to move from my home where I had spent the last forty odd years because of rising taxes.

I think we can find ways to deal with this problem without forcing people to sell their homes. Problems related to old people can often be solved by making sure that they don't perpetuate and waiting.

Michigan has Proposal A, which limits property tax rise to inflation (or something close), until sold when it reverts to the current valuation. IIRC, it is exactly to counter throwing older people out of their homes, and other people who do not wish to lose their homes because of sometimes crazy increases in property value.

It's not too difficult to allow the elderly to defer the tax until they die or choose to sell.

If the house is passed on to a child, they are forced to sell whether they can afford the taxes or not because now they have decades of built of tax debt they need to pay off out of the estate. If you defer until sale and the elderly person sells when they can't take care of themselves anymore, they have less money with which they can get a new residence.

Sure, I wasn't suggesting that a special tax break created for elderly who wish to avoid moving out of a house they were fortunate enough to buy for far less than its current market value should continue to apply when they no longer need the house.

Why wouldn't you organise things so that property-owning dynasties aren't able to freeload off the appreciation in their property values accruing from the work and taxes paid by others?

What's wrong with saying "you could afford this when it was taxed at x% and valued at $y, but now it's taxed at 1.5x and 2y, and you can't afford it, and you should move?"

I'd much rather sell a $500k house and move because the monthly tax bill is too much for my cash flow than stay there and have the thing repossessed because I owe $15k, then I get nothing.

This is more of the "I'm entitled to ___________" mindset coming out of the baby boomer generation. Yes you paid for your house, but there is a monthly tax requirement to keep it. If you paid the house off in full but can't pay the monthly taxes, you can't afford that house.

What's right with government spending continuously increasing, necessitating the increase in taxes such that people are forced to sell their possessions to pay for it?

>I'd much rather sell a $500k house and move because the monthly tax bill is too much for my cash flow than stay there and have the thing repossessed because I owe $15k, then I get nothing.

You might feel differently if you spend the last 40yr there and intend for your children to inherit it.

I can move into a small place and give my kids $400k plus a house they can rent out, or I can refuse to accept reality, go many tens of thousands of dollars into debt to the state, get my home taken away with no remuneration, have that debt attached to my estate to further eat into their inheritance, and my kids have to then house me and they get nothing.

Owning a home is not a right, it is a privilege, and a privilege that is based in part on you paying your fair share of taxes as determined by the government you help elect.

Many people feel a strong connection to the place where they spent a large part of their life. I think it is a reasonable goal for a society to enable people to build a home and stay there for the rest of their lives. Forcing people to move seems wrong to me.

Especially for old people it is very hard to get ripped out of their neighborhood. You don't easily relocate your live at 80 (or even at 65) and form new bonds to your neighbors, find new places where you spent your time etc.

Sure, many old people feel a deep connection to their place of abode, but often it would make much more sense for them to relocate within their community, or move to where their friends are moving.

I've seen this scenario play out many times, you can either stay put and deal with the large maintenance burden of an older house, while all your friends move or die off, or you can join them and move to a more central location where you don't need to worry about the roof leaking, or the sump pump not working.

Is this OK if you were 35 years old?

I don't see why this is an issue. Are the elderly so populous that they can force tax benefits for only themselves?

If more young people move into an area, rentees or not, they're eligible to vote and should be a large voting block all their own.

I'm surprised than in San Fran, supposedly a tech mecca, there isn't a strong opposition coming from young, able bodied tech workers, with oodles of money on their hands.

>Are the elderly so populous that they can force tax benefits for only themselves?

They didn't call it a baby boom for nothing.

>If more young people move into an area, rentees or not, they're eligible to vote and should be a large voting block all their own.

Young people can't move in if you ban building more housing, now can they?

>I'm surprised than in San Fran, supposedly a tech mecca, there isn't a strong opposition coming from young, able bodied tech workers, with oodles of money on their hands.

Once they buy, they, too, benefit from these laws. Also: they make up a small portion of the population

> They didn't call it a baby boom for nothing.

Perhaps, but young people are the children of baby boomers so there ought to be more of them.

Statistics seem to show that intuition is correct:

"Millennials have surpassed Baby Boomers as the nation's largest living generation, according to population estimates released this month by the U.S. Census Bureau. Millennials, whom we define as those ages 18-34 in 2015, now number 75.4 million, surpassing the 74.9 million Baby Boomers (ages 51-69)" [1]

That still doesn't mean that there isn't a greater than expected share of elderly citizens in San Fran. Parts of Florida are quite like that.

Were you saying that there are more elderly citizens (51+) in San Fran than young?

[1] http://www.pewresearch.org/fact-tank/2016/04/25/millennials-...

Tech is only 10% of the SF workforce. The rest of the area gets way too much out of inflating housing prices and potential job competitors' rents while being immune to the downsides due to rent control or Prop 13.

Also, what tends to happen is that the young folks move into commuting distance of the centralized jobs. If you BART into SF from the East Bay because you can't afford an apartment in SF, you can't vote for housing policies that would build apartments that you'd be able to move into.

Young people don't vote; they're busy working, and too cynical.

Retirees vote en masse. Thus the host of government programs taking money from the youth and unborn and giving it to the elderly.

Which makes the "FYIGM" mindset all the more dangerous. I've seen plenty of people even on HN say some version of "well it was tough when I was younger but it all worked out so we shouldn't change things to my detriment now"

It's like hazing. "Pay your dues" is just going through initiation.

One of my favorites was hearing my professor say, "Now that I have tenure, I think it's a wonderful system!" He had been complaining about the tenure system as capricious, foolish, etc. for a while. He's a great guy, so it's not that he changed his mind, exactly. He knew all his past criticism was still relevant, but he was acknowledging his strong disincentive to fight the system.

When I was renting apartments in Cambridge, MA, there was always a clause inserted that the tenant was responsible for tax increases, to ensure that tenants also carefully considered the costs of potential tax increases against the possible upside of the increased spending.

I thought that was fairly clever, and should I ever become a landlord, you can be sure that I'll include that clause if legal in the area I'm renting. (The reality is that the tenant is the one bringing the money that pays the property tax anyway; this clause just makes it explicit and helps align the landlord and tenant's interests.)

Language was similar to this (found on the web):

However, if in any tax year commencing with the fiscal year ____________ the real estate taxes on the land and buildings, of which the leased premises are a part, are in excess of the amount of the real estate taxes thereon for the fiscal year ____________, (herein called the “Base Year”, and being the most recent year in which the Lessor has actually received a real estate tax bill for the leased premises) Lessee will pay to Lessor as additional rent hereunder, when and as designated by notice in writing by Lessor, ___________ per cent of such excess that may occur in each year of the term of this Lease or any extension or renewal thereof and proportionately for any part of a fiscal year. The Lessor represents to the Lessee that the term rent set forth in the immediately preceding paragraph (A) does not reflect any real estate tax increase subsequent to the said Base Year. Notwithstanding anything contained herein to the contrary, the Lessee shall be obligated to pay only that proportion of such increased tax as the unit leased him bears to the whole of the real estate so taxed, and if the Lessor obtains an abatement of the real estate tax levied on the whole of the real estate of which the unit leased by Lessee is a part, a proportionate share of such abatement, less reasonable attorney’s fees, if any, shall be refunded to said Lessee.

And money creation infinite, only held back by demand.

"Millennials want to live in cities."

Says who? The article doesn't:

"Overall, more than 80 percent of millennials already live in suburbs and exurbs, and they are, if anything, moving away from the dense, expensive cities"

Some of it is due to cost, as it has always been, but there are hundreds of other lifestyle factors at work. Backyards are neat too, as it turns out. So are excellent public schools. So is your child riding their bike to the park.

Nearly all of my friends and I lived in the city after college, got married, had kids, and moved to the burbs...just like our parents did.

I think you protest too much. I've lived in both the cities and suburbs. I prefer the cities. As a family with an solo child the suburbs was mentally draining for our boy. What's the use of the backyard if you're playing by yourself. The park was too far away for him to walk and he had a good chance of being the only kid there, because of backyards. And finally, everyone was so damn insular. In the year we lived there we only knew a few neighbors.

I'm in a low tax state which means the schools are chronically underfunded. Our school in the suburbs relied on parent fundraising to cover a lot of extracurricular stuff. Our city school relies on the density of the student body and the density of property taxes to fund extracurricular programs. It seems like everyday he's sent home with something he wants to sign up for. We sold he car, bought bikes, and ride everywhere including the park.

We gave the suburbs a shot, it didn't work, so we left. My brother, on the other hand loves it. Big house for him and his spouse, the kids, and their dirt bikes.

> The park was too far away for him to walk and he had a good chance of being the only kid there, because of backyards. And finally, everyone was so damn insular. In the year we lived there we only knew a few neighbors.

Did the other kids in your neighborhood mostly play in their backyards or inside at home?

When I was a kid, we were expected to go out and play in the front yard, or the street, or go ride our bikes to a park or open field or creek or convenience store, with the main restriction being that we be back for meals. Most suburbs kids were what would now be called a "free range" kid.

When families would go to a sporting event, or to a movie, or on a camping trip, it was common for their kids to be allowed to invite a friend to come along. There was enough interaction between the kids of different families that the parents had to talk on occasion, and so families tended to become acquainted somewhat through the relationships among their kids. If their kids participated in organized sports, parents would meet and talk with other parents in the stands while watching the games.

I wonder if the decline in free range kids is what caused the empty parks and insular behavior you experienced?

They were at home. Whether they were inside or in the backyard I can't say, big shrubs and picket fences. Some of the kids were whisked from school directly home by car even though it was a reasonable walk. These parents have an unreasonable fear that someone is going to kidnap their special snowflake.

We're back in the city now, not the downtown corridor but where the residential apartment buildings are. Lots of kids here. 3 parks within walking distance. 1 has an Olympic pool and kids splash pool. And in the week he's been enrolled lots of new friends. He's learning Spanish as well, not school Spanish but actual living Spanish. If he's like his father he'll learn the curse words first :-)

I think the poor planning of suburban neighborhoods caused the decline. Parks are too far apart. There are no sidewalks. Everyone is in a cul-de-sac making it difficult to pass by. I believe the suburbs are designed to be actively hostile to social interaction. This is the same adults as well as kids.

Schools are funded largely by property taxes, so the tax climate of your state has little to no bearing on how much money your school has, and certainly no bearing on how well they spend what they have.

If only that were always true: https://en.wikipedia.org/wiki/Robin_Hood_plan

In Austin we paid $406 million in state recapture in 2016. That's one third of AISD's budget for the year. That money doesn't come back to us, to be clear. I wouldn't be surprised if something similar were in place in other states.

In addition, I believe the state has plenty of laws that control what each county can do tax-wise, I'm too lazy to find them all right now. My point is that the state matters a lot.

(Note: I'm not saying that I'm against any of this, necessarily.)

Schools are funded through a mix of local, state, and federal funds. And the tax climate definitely does have an impact. Which I why tax heavy states such as NYS, Taxachusetts, and Connecticut do substantially better on standardized tests.

>If you can remote-work

Lots of people can't. Most people don't work in tech, and probably can't. Telling service workers to live in the boonies and commute an hour and a half by car to their minimum wage job is stupid and tone deaf, obviously there are better solutions.

>use newly affordable automobiles to get to their workplace

Many metro areas are so congested automobiles are no longer the convenient affordable choice they used to be. For some mass transit is less about being planet-conscious and more about not wanting to sit in traffic for half the day and spend $300/mo on parking.

Property is hardly an optimal free market and there's lots of things we can do to improve the situation other than making fun of "Millennials". Most people I know would happily pay less to live outside of the city so long as they were still well-connected to the city center by the transit network. Expanding and improving commuter rail access and building denser more appealing suburbs will be big wins imo.

They can work in Kansas City instead of Manhattan or SF. I'd say the majority of folks never consider moving out of the big population centers (by definition, actually). And its a really good idea, not just because of housing and density issues, but other quality of life measures.

Cities are expensive for everyone. Not everyone has the luxury of being able to frictionlessly relocate. There's a reason lots of people live where they do. Telling people to "just move" is not a real solution.

Telling people its hopeless is actually not a solution at all. And those people 'just moved' to NYC after all.

City projects take decades to take shape. It's not hopeless, it just takes time and political will. There are people advocating for greater zoning capacity, streamlined permitting processes and investment in mass transit, among other things.

>And those people 'just moved' to NYC after all.

When the rich get priced out of downtown, they don't move to KC. They move to cheaper areas outside of downtown and drive up prices for lower-income people living there. When four young professionals pile into an old single family home because there aren't enough apartments, that drives up prices for families who have one or two sources of income, not four. This affects everyone who lives in a city, not just wealthy transplants. Yuppies are not the ones being displaced. The solution is a steady increased supply of market-rate housing.

> "The solution is a steady increased supply of market-rate housing."

Politically induced zoning density restrictions which benefit landholders over tenants and those who wish to buy housing should be reversed and then allow markets to create more housing. The cost of the high cost of housing is for this reason -- a market failure called "rent seeking." Fix the market inefficiency, -- the market failure -- and everyone but landholders benefit.

There is a huge gap between "not frictionless" and "impossible". Sometimes, people have to make hard choices. The reality is that if you want to live in a trendy/convenient/nice part of a major city, then you will have to pay for it, because EVERYONE wants to live there.

Sometimes, you just can't have everything you want.

It's not just the trendy parts. Eventually even nearby suburbs become very expensive. Yuppies are not moving to KC, they're pushing the poorest city residents further and further away from the city. It's fantasy to think it's the relatively well-off who will have to move, or that the poor people who are being displaced have that much mobility. Just look at all the people trapped in economically depressed rural areas, why don't they all "just move"? Lots of Americans have literally no savings and very little job mobility and moving a long distance is pretty much impossible.

The quality of life of Kansas City vs Manhattan is not an increase, or at least, very likely not for most people living in Manhattan. The "American Dream" of having a house full of rooms you don't need, 2.5 kids and a yard for the dog isn't all that appealing to a lot of people. Many of these people are pretty happy to be living in cultural centers where they don't need to own a car. Most of the cost of living savings you get moving out you lose in salary adjustments, car payments, and lack of small housing.

I've done Southern suburbia life, and now North East city living and I can tell you N=1 you'd have to pay at least 5x my salary to even tempt me into going back.

Manhattan has 500K fewer people than the greater KC MSA and there's only one Manhattan but uncountable number of cities across the country.

The marketing message might be that urban living is the only acceptable life choice solely because of the date of your birth (astrological reasoning) but apparently only a very small percentage of people are getting that message. Enough are, such that prices are out of control in the fad areas, but almost no one lives there on a nationwide basis so it doesn't matter as a national issue, which is why its not getting fixed.

A good analogy is every christmas season has "the toy" that is in insane demand that perhaps 95% of the population do not want, but the demands of an extremely vocal tiny minority always result in a human interest story on TV. Doesn't mean its important or a universal desire for all humanity, just means its good clickbait.

There's a luxury downtown apartment building a block from where I work that I acknowledge exists. Approximately 120 rental residents have gotten the message that urban is the only way to live and suburbs are passe and unstylish, and they pay five times my mortgage in rent for the "privilege". However, I live in a burb 20 miles away with an eighth of a million other people unwilling to pay five times more than our mortgage as apartment rent. And our schools are top of the line as opposed to the urban district being reported as worst in the nation. Similar, predictable street crime stats. And my burb doesn't have panhandlers lining the freeway ramps and homeless people pooping on the sidewalk, but somehow I survive the lack of those cultural attractions at my home.

>almost no one lives there on a nationwide basis

"About 1 in every 38 people living in the United States resides in New York City." [1] I wouldn't call that "almost no one".

>There's a luxury downtown apartment building a block from where I work that I acknowledge exists.

I wouldn't complain, if those "luxury" downtown apartments didn't exist, your nice little suburb would be more expensive, those people have got to live somewhere. "Luxury" is a meaningless buzzword that developers like to put on their marketing materials.

[1] https://www1.nyc.gov/site/planning/data-maps/nyc-population/...

You need to compare the size of the numbers. My eighth of a million person burb can adsorb 120 people from one luxury apartment without a peep. We have a little private college where 3000 people appear and disappear every year with barely a peep in the market. Of course there is a building boom downtown of exclusively luxury apartments, nothing under say $3K/month, plenty up to $5K or probably higher.

I earn a 95%th percentile income for my area. The only urban housing being built is for people paying 5x as much as my income. That is a very small fraction of the local population. If income were linear instead of exponential that would be less than 1% of the population can afford urban living, the other 99% will have to live in the burbs or somewhere other than urban areas. If someone earning five times my income were kicked out of their apartment, they'd likely be living in a place much nicer than my burb, not that its anything bad, but its probably only the 3rd wealthiest burb in the area. There would be effects in the border areas where 120 people would be pushed downwardly mobile thru all the neighborhoods.

Different strokes for different folks man. It's not the siren song of the marketer's pyrite that draws people to the cities (and I'd love to see your numbers considering the total population of Kansas is a quarter of nyc alone). Living in a tiny town 20+ miles from the city center honestly sounds like hell for me, and many of the people I know; we have no interest in ever starting a family, in owning a car, in restricting our options for food and culture, hell in some cases even home ownership. Clearly the opposite is the case for you and that's ok, just, don't pretend like you have some cosmic truth figured out.

KC's not much better for a family if you want to actually live in the city. The schools there suck so you'll be paying for private school, housing of more than two bedrooms is rare and (by local standards and considering local wages) very expensive outside of dangerous run-down neighborhoods.

Granted the 'burbs aren't that far away compared to other cities—but our public transit's also terrible (likely too spread out to every have great public transit, no matter what) so you'll always be driving.

>Most people I know would happily pay less to live outside of the city so long as they were still well-connected to the city center by the transit network.

Nailed it. If I could drive 10-20 minutes and catch a high speed rail of < 1 hr to get to work, I would certainly do so.

Instead I rent a room from a person much wealthier than I a mile or 2 from the city center.

One solution is to revitalize second- and third-tier urban centers. Places like Nashville (already hot), Tampa, Detroit, and Indianapolis. Perhaps even Lincoln, Nebraska, and Birmingham, Alabama. Not everyone can live in Manhattan itself but the density, services, and lifestyle millennials want can be recreated elsewhere where land costs are practically zero. An art scene, a food scene, some condo loft conversions and trendy commercial space; it's a sort of county-level cultural CRISPR process. Smart entrepreneurs are already hard at work on this but it's an effort in which I think Government could provide massively effective incentives to accelerate the outcome.

You've hit the nail on the head.

The trick is to discover and curate small city life so that one can live in a small city without feeling like one went back in time. Then you get to have your cake and eat it too.

We live in a very small city (metro pop 500-600k so maybe 1/4 the size of Nashville and 1/2 the size of Birmingham), and when my wife and I were dating we lived in an apartment downtown. It was great! Only two things made us move.

1. We wanted a big dog, and that's a non-starter for 90% of apartments.

2. Property taxes were 3-4x what they were just a mile or two outside of the city center.

Millennial here.

This doesn't describe me or most of my friends. Sure, I know a couple of people who have moved to the city, but most of us have chosen to stay in the suburbs.

Most of the people I went to college with and still keep in contact with either a) rent or own a house in the suburbs or b) live in a suburban apartment complex (i.e. sprawling fields of 2-story buildings).

I personally split the difference and rent a townhouse in the suburbs.

I have one friend who lives in one of those suburban mixed-use developments that's becoming popular now, but that's only because he's legally blind and can't drive. He's told me multiple times that if his retinas worked right, he'd own a car and drive everywhere.

I love the suburbs, I love sprawl, and the same goes for most of my friends. I also hate noise and hate crowds. We don't want to live somewhere that has a "soul": we just want a place that's safe to live and have lots of space. My friends who have kids also want a place that has good schools. We're pretty bourgeois and proud of it. We're not hipsters, and in fact we're more likely to make fun of hipsters than anything.

The opposite describes me and most of my friends. ;) I suppose it makes sense that suburban people meet suburban friends and urban people meet urban friends.

That said, I don't think people in urban areas would say they love crowds or noise (and I really don't think I encounter much of either in central Austin). I'm curious what you do with all of the space. The idea of loving sprawl is odd to me.

I grew up in the burbs and hate the idea of raising my kid in a place where so much of your time is spent in a car. The idea of getting a car to go anywhere or do anything crushes my soul. I think if I moved out of the city I'd mostly miss being able to walk/bike (or bus) to so many things.

> I suppose it makes sense that suburban people meet suburban friends and urban people meet urban friends.

That's true.

And it also helps that I work in the suburbs (at both my current job and my last job): all my coworkers live in the burbs too, even the ones who are the same age as me (32) or younger.

Of course, I live in the Dallas area, where 90% of the tech industry is in the northern suburbs, and so are all the ethnic enclaves. You want to work in the tech industry? If you live in the city, you'll have to commute to the suburbs, so living in the burbs means you have a shorter commute. You want authentic {insert Asian ethnicity here} food? You have to go to the suburbs for it.

> I'm curious what you do with all of the space. The idea of loving sprawl is odd to me.

I have a lot of stuff. Also, I just like to have room to breathe; I'm slightly claustrophobic.

And I just really like the look and feel of the way the northern suburbs of Dallas are laid out. I don't know if I can put it into words; it's just aesthetically pleasing to me.

I've recently been toying around with the idea of moving out of state (because a. political reasons, and b. after my cat died last week, I kinda want to disappear and start over where I don't know anyone), and for aesthetic reasons the only other parts of the country that appeals to me are parts of SoCal, specifically Torrance and Orange County. They're the only places that have the same kind of aesthetics I like about the Dallas burbs.

> I grew up in the burbs and hate the idea of raising my kid in a place where so much of your time is spent in a car. The idea of getting a car to go anywhere or do anything crushes my soul. I think if I moved out of the city I'd mostly miss being able to walk/bike (or bus) to so many things.

I'm actually childfree, so I have no intention of raising a kid, but if I did, I'd like to raise my kid in an environment like the one I grew up in. I had a front yard and a back yard to play in, trees to climb, a large neighborhood to walk and ride my bike around. I still have fond memories walking or riding my bike down the winding alleyways and residential streets of Far North Dallas. I feel sorry for my friends' kids who are growing up in apartments (suburban apartments, yes, but still apartments). Apartment complexes just aren't conducive to that kind of atmosphere.

There was no crime, no homeless people shouting things at me on the street. I went to highly-rated public schools... my family didn't have to worry about burning $$$$ on a private school just to get me a good education.

Oh, and speaking of homeless people shouting things at me on the street... that regularly happened to me when I worked downtown from 2012 to 2014. I constantly had homeless people demanding I give them money or cigarettes, and they'd call me a liar when I told them I don't carry cash or that I quit smoking. I wouldn't want to subject a kid to that. During that time, I fervently wished I had a car so I could just roll up the windows and not have to deal with them. I'll always equate "not taking a car to go somewhere or do something" with "being subject to street harassment". Oh yeah, and when I worked downtown, I was too early in my transition for me to really get catcalls; if I worked there now, I'd probably be catcalled to hell and back. No thank you. I'd rather have the safety and the security of a car when I go places.

Also, your name sounds really, really familiar. I think we may have gone to high school together. Did you go to HS in Richardson, TX in the early 00s?

(no, you won't recognize my name... I changed my whole name -- first, middle, and last -- a few years ago)

Plano and then UTD in that timeframe, my contact is in my profile.

I'm glad you like North Dallas, I enjoyed it as a kid, but hated it once I moved to uptown Dallas and saw what a walkable life could be like. (To be clear: uptown was just an intro, I don't find the area that appealing anymore)

And also to clarify, I'm not in a downtown highrise, and don't think I would enjoy one at my age. I have a house with a yard but it's about a mile from downtown and walking distance to a lot of great (and not so great?) stuff. I hope my kid(s) will have the best of both worlds. I also want them to see more socioeconomic and racial diversity than I did. This is definitely a privilege, but I did have to make tradeoffs (I could have a much larger home further out, or could have already paid off one of the same size elsewhere, etc).

+1. I'm 29. I moved to Dallas from NYC in May and absolutely love it (when I'm there! I travel more now).

Wouldn't trade it back for anything.

Our apartment (in the suburbs!) is great, driving everywhere is great, trees on trees on trees are great, the food is great and we manage to find something to do every weekend. Ironically enough, everything I need is about 5-10 minutes away from my apartment now. Walmart is 2 minutes away. TWO MINUTES!

This was not the case at all when I was in NYC.

I'm the opposite; went from Dallas to NYC, and I dread the idea of going back to afford a house.

Everyone's different! I also grew up in NYC so I can see how living there might be attractive. I always recommend to folks that haven't to give it a try. It wasn't for me, but it might be for themB

You all have so much space, but how you choose to use it is a bit disappointing. There is no shared space. No bike lanes, ok, I understand that, but in most places in town, there aren't even side walks. No town squares, no city parks, just endless rows of little castles, accessible only by car. Crossing the street on foot is illegal. Even to go running or cycling, I'd have to drive somewhere first.

There are enough things to like, but this aspect is something I'll never get used to.

A lot of these problems are part of this long standing idea that everyone would be traveling by car, which leads to the creation of the cheapest and least thoughtful roads possible. These ideas seem to be gradually fading, even in the small town where I live there's a big project up to add bicycle lanes and improve sidewalks.[0]

[0]: http://www.masslive.com/news/index.ssf/2017/02/easthampton_t...

A friend mentioned they successfully petitioned against a sidewalk on their side of the road, they don't want people walking by their property. These are cultural differences that Hollywood doesn't prepare you for.

Gaslighting. You're poor, but that's OK because you never wanted money anyway and its far more important to do other things than to have money and the accompanying lifestyle.

Now pay no attention to who has siphoned the money you would have had out of the system so you can't have it, isn't it more important that you hug trees?

Cities have soul, I mean, spirits, I mean lots of places to buy spirits, I mean bars, and alcohol consumption is the only important cultural activity in life, why being drunk is the definition of being cultured.. Other than that, there's nothing to do in the city other than cultural activities that tend to be too expensive (if you had money you'd be living in the burbs and commuting to the activity like all the participants) and nobody on a percentage basis attends those cultural activities. Probably 100000 people say how great it is that we have a theater for off broadway musicals for every person who buys an actual over priced ticket. There are no bars in the burbs (LOL). In fact there is nothing to do in the burbs. Yup people should definitely be encouraged to stay away and stop crowding my burb.

> by Segway

What planet are you living on where this is true? Do you work for Segway's marketing department or something?

I think the post makes more sense if you replace 'Millennial' with 'Exaggerated caricature of a Hipster'.

Come now. Everybody knows the fixie is the hipster ride of choice.

are unicycles out now?

Perhaps he meant those hoverboards that don't actually hover.

Rental prices are being held artificially high by large private equity firms. They're going bankrupt because no one can afford them. Obama bailed them out on his way out the door which will keep rent artificially high for years to come.

http://www.nakedcapitalism.com/2017/01/the-obama-administrat...

>Meanwhile, houses in the boonies are cheap. If you can remote-work your way into a boonie lifestyle, you can own a home on a rather modest income indeed.

You can, but then you're stuck with all the downsides of living in the boonies: you're far away from any cultural activities, shopping, good grocery stores (i.e. not Walmart), and all the people around you are probably culturally very different and even downright distasteful, unless you happen to like extremely religious and conservative people asking you about your personal relationship with Jesus or what kind of guns you like.

And this isn't all "boonies" either; some of them are pretty pricey. I live about 75 minutes from DC in a pretty rural area currently, and houses here are not that cheap. However, if I moved near some family members (about an hour SW of Richmond VA) houses there are much cheaper. And the benefits are somewhat similar: either way it's roughly an hour to get to some decent shopping, though DC's stuff is much better than RVA's, but RVA does have some cultural attractions plus some higher-end shops, just not as much as DC. But being surrounded by people you have no interest in meeting kinda sucks; at least when you're right in a city it's easier to find groups or people you get along well with who aren't too far away.

Anyway, this all assumes remote work. For the Millenials, this might not be that helpful. Most jobs still require you to be on-site, and that's not going to be doable if you live in the boonies and don't want a long commute. And that's just computer work; very little non-computer work can be done remotely.

What we really need is real estate development laws which push for the construction of more affordable housing, though that would probably mean more high-rise condos, rather than single-family houses. Instead, developers always target the high end of the market, building "luxury condos" and the like. There's a limited amount of real estate anywhere, so the obvious solution is to build up, not out.

Finally, another thing about those "cheap" houses in the boonies. I live in one of those currently, and the heating bills are atrocious. New, nice houses out here are expensive; the cheap ones are older and horribly inefficient. They're not building a lot of new houses in the boonies, so it's mainly older stuff. The new houses in the boonies are giant mansions built by rich people as getaways. Any "new" houses in the boonies are crappy little manufactured homes.

What's wrong with the grocery at Walmart??????

It sucks.

Don't get me wrong, it's not completely unusable. For the basics and pre-packaged foods, it's fine. But the selection is limited, and they don't have that much in the way of fancier brands. Also, lots of people complain that the produce section in Walmart is generally poor.

Where I am, Wegmans is a much better choice. The prices are just as good, and the selection is far, far better, and they have much better produce and deli sections, plus seafood, meat, etc. which Walmart doesn't seem to have at all where I am. And Wegmans isn't that high-end (it covers both regular brands and some fancy brands too): there's also Whole Foods and Trader Joe's which will have stuff you won't find at Wegmans, let alone Walmart.

This shift was already happening with "gen X" - you are describing my attitude. But owning a home was never a "dream" for me - honestly it's kind of a hassle. I've recently been thinking about selling mine, turning all that imaginary equity into real money, and going back to renting. I'd be able to move back in closer to where the action is, and I'd waste less of my time and money dealing with unpredictable maintenance problems. Homeownership can be an OK investment, but it's not really that great, and you can have a lot more flexibility and security if you just stick all that money into an index fund.

Geometry says you can fit exponentially more people near city centers as the radius of the dense center grows linearly. IOW, marginal increase in dense city housing should be cheap per apartment.

How is that a constraint of modern capitalism? Because capitalism wouldn't build ugly, cheap skyscrapers in the town center?

Even if you build government housing in town centers and give it to people for cheap, you haven't really changed the dynamics. You only subsidize a lucky set of people (the ones who get to live near the town center). How will they be chosen? Adherence to the party line?

People live in suburbs and use automobiles though - and the price of houses in suburbs is still too expensive to buy (unless you're talking > 1-2 hour of travel time per day).

Boonies aside (that's not the suburbs, that's literally in the middle of nowhere, and in a work environment where more and more managers don't allow remote-work), I don't think your argument holds water.

I live in a suburb where you can see the downtown buildings from our front porch. I could walk if I wanted to. Our mortgage is roughly 25% more expensive than our rent was when living downtown, including the property taxes.

I think a lot of people on HN would do well to remember that any time you're discussing real estate, places like NYC and San Francisco are very much the exception, not the rule.

What suburbs are you talking about? I know people who have chosen to live way the hell out and give themselves a nasty commute, but price was rarely the driver.

As for travel time, unless you are really lucky I don't think it is possible to consistently have less than 1 hour of travel time per day unless you move house every time you change jobs. Even in NYC moving just a few blocks can add or subtract 15 minutes to your commute.

damned if you do, damned if you don't.

Want/have to move into ig cities for work->you want to live bourgeois style city center.

want to stay in the boonies for cheap housing/nature/lifestyle-> you think you are entitled to a job here, jos aren't coming to you, you have to move to big job centers...

Uh, not all of us do? I hated living in NYC.

Imagine, for a second, that there is no tax benefit to home ownership. In such a world, there is basically no reason to own a home. The cost of renting a home is about the same as the interest on a mortgage. The money that would go towards "principle" instead goes into your bank account.

The interest that you pay on a mortgage is tax deductible, which is essentially a subsidy exclusively available to people who make more than the amount of money required to own a home where they live. This subsidy for decentralized living is equivalent to a tax on the vastly more efficient centralized plan.

It's not intrinsic to our economic system.

The cost of renting a home is about the same as the interest on a mortgage _when you purchase_.

If you purchased around my house two years ago, your mortgage would be less than $800. But current rates have it at about $1,300. As a rental, you can start renting that at $1,300/month even though you bought in when market rate was $800.

Plus, there's a huge number of tax benefits to investment property ownership, far more than for owner-occupied [1]. If you're going to remove the tax advantages of owner-occupied, you should also reduce the benefits of investment properties. But then you'll likely see rent rates hike as a result and the bar will tip in favor of ownership again.

[1] http://www.nolo.com/legal-encyclopedia/top-ten-tax-deduction...

The cost of renting a home is about the same as the interest on a mortgage _when you purchase_.

It depends on the market. Price to rent ratios can vary a ton.[1] The link is from 2016, but the extremes are:

San Francisco 48x (housing price is 48x monthly rent)

Detroit 6.5x

The neutral rent to price ratio is ~15. If it's higher than that, it's better to rent. If it's lower, it's better to buy.

[1]https://smartasset.com/mortgage/price-to-rent-ratio-in-us-ci...

Yes, I would also remove investment property tax benefits, were I emperor, but it would not cause rental rates to rise.

That's not how the rental rate is decided. The rental rate is based on vacancy and income, ie supply and demand. If rental is harder to make money on, the only effect will be to drive down the cost of the property as the actual number of houses is fixed.

Your not including the always-rising cost of housing into your argument.

When you buy a mortgage in the US, the payment and interest is fixed. Even taxes are, occasionally, protected from market inflation. When you rent a home, you have absolutely none of those protections. Rental costs go up, nearly every year, for the rest of time immortal.

Even if there is no tax benefit to home ownership, I would always choose ownership, because it's the only way to protect myself against extreme housing cost increases. (And before someone says "that's just NYC and SF, live somewhere cheaper" I'm already in small-town Midwest US, even here 10-15% yearly rent increases are common).

The income tax credit means that people largely buy the most expensive home they can get. This has a very serious effect on the market value of real estate, and means that the cost of housing increases non-linearly with the number of people in the middle income bracket. Those extreme housing cost increases are result of the tax credit, and an increase in the number of people able to take advantage of it.

Were unemployment to rise, the price of real estate would similarly drop non-linearly. The price of your house is extremely volatile, don't let anyone convince you otherwise.

> The cost of renting a home is about the same as the interest on a mortgage.

What's your source for this? I've rented in and around the Boston area for 10 years now, and my husband and I just purchased a home last week. Our rent for a 975 sqft 2br apartment on the seventh floor of a large complex out in the suburbs was $2,100/month. No balcony, no yard, no storage, although utilities are included. We definitely weren't getting a good deal, but our rent had increased from $1800 over the last 3 years.

Our house is in a better location (more convenient to public transportation, better schools, "cooler" restaurants), much bigger (1410 sqft, 3br/1.5 bath, office, plus unfinished basement with 6'6" ceilings, attic, front and back decks, backyard, 2 car detached garage), and our monthly costs -- INCLUDING taxes and estimated utilities are $3,200/month. Renting a house like this would run you $2400-$3400 month, if Craigslist is any indication (searched for 3br full houses in the same neighborhood as ours -- near a college, lots of rentals).

So, yes, we're on the higher end of rent, and we have to do our own repairs, but the costs of rent are paying for far more than just interest on a mortgage. The tax benefit is nice icing on the cake, but it barely factored into our decision to buy, rather than rent.

The "source" is a pretty typical economic argument. The opportunity cost of a home is rent. A home is for living in, that is how it gets used. The cost people will pay to live in that home is determined by supply and demand.

so a house just sits there, generating money. This means that it has an investment value. That value is "determined" by the cost of comparable investments because of arbitrage. If I have some money invested making less than 1 rent/month (minus expenses and so forth), then I will happily buy the house for that money. Likewise if there is some cheaper investment which will give me the same return on my investment, I will sell the house and switch, pocketing the difference.

One example of such an investment is the mortgage itself. as a bank, by signing a mortgage with someone, I am extracting the interest rate on the value of that house every month (plus some portion of the principle).

You're missing the part where not everyone can pay for the down payment or qualify for a mortgage (or buy the house outright, for that matter). Even if you can, it's a nail-biting month or so of crap just to go through the process. And even THEN, you're basically forced to stay in one place for the foreseeable future, or you risk losing a lot of money, and going through a ton of stress all over again. This creates an economic inequality that tilts in favor of the people who are able and willing to buy a house.

I mean, you can sit there all day and say "well, it doesn't make sense that people would buy instead of rent if it were economically disadvantageous, so the market must be relatively balanced." But that's simply not the case. You can look at actual numbers to show you this.

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