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Comment by snowwrestler | Hacker News Reader

> A society that views housing as an investment means that we wind up adopting housing policies that lead to people being priced out (i.e. regulatory capture).

No. Housing that appreciates at exactly the rate of inflation can still be a good investment and a great tool for building wealth.

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Homeowners aren't necessarily satisfied with that though, and they have voting power. Prop 13 is basically a voter-approved way of guaranteeing the upside of stratospheric rises in property value without reaping any of the downside (increased tax reflecting said skyrocketing property value).

I agree with you. I think articles like this one contribute to the problem by perpetuating a false sense of what housing prices should do to be a "good investment."

Prices go up because demand is higher than supply. No other reason.

If cities doubled the number of houses built any year the average price went up by 5% or more, this wouldn’t be a problem.

The tax rate could even be negative.

>Prices go up because demand is higher than supply. No other reason.

If the government mandates that the price of something is X, and X is higher than the price is now, prices go up.

Also, remember than nominal price and economic price are distinct. “Price” needs to include all tax subsidies and other incentives/ dicincentives.

No they don’t. See the USSR, real prices were completely removed from what the government set. If SF set the price of a house to 100k, people would just bribe each other the difference.

And voters put people in power who restrict supply and thus guarantee profits for homeowners.

With how small polities are in the Bay Area this leads this to everyone pushing the burden onto someone else. With a large enough polity responsible for zoning (e.g. New York City's five boroughs) the pressure to add housing becomes too large to completely ignore.

Homeowners have no more "voting power" than renters.

True. Although since they are literally more invested in their community, they tend to be more tenacious about it.

I have observed the opposite. Slum lord owns over 50 rental properties, but does not live in the city, and tenants are registered voters of the municipality.

My anecdote for the morning.

I wouldn't normally think of absentee landlords as the central example of a homeowner. Where do you live that the majority of housing units are owned by absentee landlords?

Rural incorporated city with a population of less than 5,000.

Homeownership is generally more correlated with wealth and financial security, which is more correlated with political involvement and having the time and the money to do so.

Short of massively expanding the poor's ability to vote (making Election Day a holiday, putting it on a weekend, mail-in voting) this holds true in American elections.

I came up with a clever solution to the Prop 13 problem: tax the sale of that property with all of the previous savings if they ever sell it for a profit. So sure, you can stay in the house you grew up in, but if you're thinking you can get that million+ dollar pay-day because the land under your tear-down is now worth a boat load...

It might make it sting a bit less buying a single-family home in San Jose for 1.5mil and knowing that you're paying 10x the tax of your next-door neighbors.

This would just trap people in their homes and exacerbate supply problems. Empty nesters would face a huge tax bill for vacating their home even if they sold and went to another state, so they might stay in a house that is way oversized for their current needs and take it away from someone else.

How so?

It costs thousands to buy a house

It costs thousands to sell a house

It costs thousands to maintain a house (I once spent, over $10,000 in one month on repairs)

It costs thousands in property tax and insurance

You pay thousands in interest and maybe PMI.

If the asset doesn't appreciate faster than inflation, where's the wealth building coming from? Sure, I'm not paying rent, but, honestly, it ends up being mostly a wash once you factor in all the expenses I am paying.

I bought a house because I wanted to own a house, not because i thought it would build wealth.

You're paying all the transaction costs and maintainance costs and tax and insurance costs when you rent too. The landlord passes them on to you in your rent.

One thing that can make it better to own (in the US) is that mortgage interest is tax deductible (at the federal level). Rent typically is not (although some states make rent tax deductible because voters naively believe this is a subsidy to renters and not to landlords).

Not always the case because the market sets the rent - not the owners expenses

In CA I might be paying double the tax than my neighbors but I can’t charge more rent than them

Yes, but perennially unprofitable units are going to leave the rental market. So it's not like owners' expenses are not an input into the market price.

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