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Comment by mars4rp | Hacker News Reader

a war between home owners and renters! as a person that recently bought a house I don't want my house price to go down too much, I put everything I have in it. but I really know this is the problem for renters and it needs to be solved. when a group uses government for personal gain, other groups has to pay the price! it is called democracy, 49% has to pay for 51% !

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the home-as-an-investment-for-profit mentality leads to some really poor social interactions. I wish we had different social norms around housing.

For instance, after a 1980s crash, Tokyo's housing norms shifted and the result seems really healthy: https://www.ft.com/content/023562e2-54a6-11e6-befd-2fc0c26b3...

It does indeeed. I need to crack the paywall on that FT item, but I've had my own recent epiphany on asset price inflation of maslovian goods (and housing in particular).

I'm thinking a lot about land tax.

https://www.reddit.com/r/dredmorbius/comments/608w97/asset_p...

> I need to crack the paywall on that FT item

https://archive.fo/Pf2Uu

Interesting article. I wonder if any Japanese (or someone familiar enough with the culture) could comment.

Thanks, yeah, I got through -- googling the link gets through as well.

If I bought a house I would be happy if it's price stayed the same over the years, or even slightly decreased. As long as I come out on top compared to the alternative (renting) I'm OK.

and, thanks to the mortgage interest tax credit, you probably will. Get rid of that though, and suddenly there's no economic incentive to own property.

The MITC is a hugely regressive policy.

I must be doing it wrong. We bought a house in AZ with a 15 year, 2.99% interest rate. The MITC made almost no difference, even for the first year where I was paying mostly interest.

you need to spend more money on your house then.

You get back roughly 30% of your paid mortgage interest. But yes, you should have taken a 30 year fixed if you wanted a larger credit. Its free leverage.

You'd need to have enough deductions to itemize without the mortgage interest deduction and be making well over six figures for that to be the case. I personally don't come close to itemizing without mortgage interest, so I was seeing far less than that. My wife and I combined were barely in the six figures (taxable) when we actually owned our house as well, so we got back about $1k in taxes on about $12k in interest.

Paying more in interest in order to get more back on your taxes is a losing proposition.

Not just more in interest, you're also reducing principal so there's some opportunity cost from an investment perspective.

Really comes down to how long you intend to stay in the home.

> Get rid of that though, and suddenly there's no economic incentive to own property.

How do you figure that? What about cost stability? What about not losing 100% of your payment (that is, retaining some as equity)?

I'm not saying there is always an incentive; some markets favor renting over buying in spite of the MITD. However, saying the only reason buying is financially attractive makes no sense.

Edit: corrected C (credit) to D (deduction), since it is technically correct and makes a big difference in it's usefulness.

rental rates are exactly the same thing as interest rates (+/- wear and tear and so forth). what you retain in equity, you would equally retain by simply not paying into some other investment. There's nothing special about owning your home, there's no arbitrage to be had beyond the MITC.

> rental rates are exactly the same thing as interest rates (+/- wear and tear and so forth).

In what world? I have never seen a market where rents were below P&I for a comparably-priced house[1]. I would love to see a real example of this.

[1] Note that this does not automatically make buying better, as rent factors many costs P&I does not.

Because if not there would be an incredible opportunity for arbitrage.

Why does the price matter? I recently bought a house. There was "opportunity" in a "up and coming areas." It might have had up sides, but I didn't want the risk either. If the house price goes up I won't realize any of the gains until I sell it. That's likely going into another house. If the market moves as a whole then the price doesn't really matter (it would make "upgrading" more expensive). So I'm not worried about short term fluctuations in price. I, honestly, just want the price to stay the same.

because I can't sell my house and move to another one, I am stuck in this one until I die!!! I owe 80% of my current house value, if prices goes down even 10% I lost half of my down payment !!!

Well, yeah. That's why you can't finance 100% of the house and that's the problem with paying the minimum 20%. If the value drops 10% and that applies to the whole neighborhood, you still have about the same downpayment for a comparable house. You really don't want to be moving around often, anyway. If the house stays the same and you move in a year or two (before you build much more equity) you lose money in fees...not to mention what a pain in the ass moving it.

The only time your'd fully realize any gains or losses (outside of being upside down) is when you downsize or move to an apartment. That's never really anyone's goal. A house is a terrible investment tool and shouldn't be seen as one.

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