Public-ownership rental as a third option to renting or owning a house
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1) Public funds provide capital to build a new dwelling; individuals move in at rates similar to market rent.
2) Rather than rents paying a landlord, rents act like principal payments on a personal mortgage - e.g. I own $10,000 worth of shares of the property after paying $1,000/mo for ten months.
3) Eventually, I own enough of a share of the property that I no longer have to make payments, similar to having paid off a mortgage. I'd be responsible for upkeep (e.g. roof repairs), property taxes, that sort of thing.
What I'm not understanding, though, is how this passes down. If I'm a partial owner and move, doesn't the next buyer have the same issue raising capital that the model tries to address? Does it not also mean that I could become a landlord in my own right, and begin renting to another occupant, who stands to build no wealth themselves?
Plus, there is a notion in the article that this would be an incoming-producing asset and that income is presumably coming from the rents paid. Unless this is a massive Ponzi scheme, there's consumption going on (and therefore you're not building equity with all of the rent payments).
There's no realistic way you're going to have 100% (and likely not even 50%) of a rental payment going to building equity.
Basically, folks would sign up for home ownership education, do a bunch of stuff related to maintenance, etc and shop for a two family. The housing authority (through a grant) would essentially provide a loan for 20-30% of the purchase price for down payment and some repairs. The loan would be forgiven in 5 years.
It was pretty transformative and really changed lives for the better. About 90% of the participants made it through year 5.
Handling EVERY case is much more difficult (not that we shouldn’t expand HfH-style programs). A multitude of solutions are needed and trying to limit the types is part of the problem.
Real estate is insane because we’re in an era where wealth is being shoveled into a few peoples hands, and we are literally printing money to extend a boom cycle for as long as possible without regard for the future. The house I grew up in Queens was purchased by my folks in 1976 for $15 and recently sold for $1.3M. My dad was a clerk for the city then, and my uncle, now a millionaire across the street was an able seaman.
We have had in this country a long term, bipartisan consensus that home ownership should be subsidized. The end result is transfers from renters to home-owners, record high homeownership rates, and many people buying homes because it's a way to make leveraged bets on asset prices at taxpayer expense. There are many people who have no business owning a home but who feel they must do so in order to not be left behind in this game of leveraged bets. The result is a toxic tangle of cross-subsidies between the real-estate and financial sectors and a whole army of various parasitical industries that has sprung up to feed on these subsidies -- everything from real estate brokers, title insurers, inspectors, appraisers, a virtual caravan of people lined up at the trough of our housing subsidies, all in the name of "helping the middle class" afford homes.
When you have such a terrible problem of mispricing and people chasing after windfall gains, the idea that the industry should be approached as a type of charity is really the last thing you want to do. If you want to give money to a poor person, then by all means do so, but that's not a path forward for national housing policy.
Who has no business owning a home?
* Price to rent ratio very high, just need somewhere to live.
* Achieving ownership requires moving to sprawl and taking on a ruinous car commute.
* Ownership used to justify overspending on housing because "it's an investment."
* Need to go broke to scrape together the down payment.
* Don't reliably earn enough to pay the mortgage, and no savings.
* Don't have the temperament or the means to do maintenance.
But doesn't the tax code distinguish between a house which houses its owner and one which doesn't? I don't think investment homes are treated tax-wise the same as normal homes. I am not aware of tax advantages being extended to investments just because those investments are houses, but maybe I am wrong?
You need at least all three components. I'd suggest wage support (UBI / employer of last resort) being another leg that would help, given the relationship of rents and wages economically (wages tend to or below subsistence, rents to all consumer surplus).
But this seems a damned good start.
And what level of gov't buy-in do you need? US Congress, State, County, City?
Was just speaking with my dad about programs - he has a ton of ideas because our hometown area is characterized as one of generational poverty and working poor.
Nicely, this wouldn't address intergenerational poverty, nor threaten the landed gentry.
A simple solution congruent with these principles could be:
Selling the house should be restricted to yield the amount of money you put in. This excludes money spend on repairs, etc., and is to be adjusted for inflation.
You can keep living in the house as long as you are alive. Once you are dead, you lose the house and the inheritance will be the same money you would get from selling the house/apartment under the regulated terms.
The next renter of the regulated public housing apartment would just pay rent again until they have enough in their portfolio and then stop to have to pay rent.
Where would this money come from, though? You only make money on the property when you sell it to someone else, so who is buying it? Not the next renter, because they are supposed to be buying into equity, not paying someone else's profit.
I think there's some cognitive dissonance in the proposal. The idea that you can live for free is just not possible in the modern, capitalist world. Rent is something that every entity has to pay - including owners (which is the imputed rent, or the opportunity cost of the capital placed into the building/land, or the interest payment).
If the gov't fronts the capital to build, but don't receive rent, then it's the same as tax payers footing the interest cost of that capital. So those who would be in this public-ownership housing is effectively receiving an interest free loan for the house, and their payment represents equity, and that's such a good deal that there'd be unlimited demand for this sort of housing.
You can't solve skyrocketing housing prices by simply increasing access to capital... that is just going to exacerbate the problem
Do the neighbors vote on their next neighbor? The city council? An impersonal bureaucracy? What factors does it consider? Are there priority quotas for people meeting certain criteria? What criteria? How many people? Who decides? Who decides if an individual meets the criteria? How do we keep them honest? Can their decisions be appealed, can normal people afford to appeal them?
I don’t think it’s impossible to come up with good answers here, but that’s the work. The mechanism design here is extremely important, and it’s not “simple.”
https://islandpress.org/books/affordable-city
The ebook is a $5 download, which I'd strongly encourage for the curious.
This happens frequently in new build housing in the UK but it is not without its problems.
The only way this could work is if the property was sold to a third party and the profits of the sale were distributed according to how much you paid in, the obvious problem with this is that the government won't own the property anymore.
But few paragraphs below under his proposal those who choose to participate are awarded “the opportunity to begin generating wealth immediately, from the minute they form their first household - a leap forward for both racial and generational equity”.
That’s a possibility, sure, but what about the property potentially losing value due to supply pressure or changing job market conditions? Aren’t the homeowners under his program as likely to develop hardcore NIMBYism as under any other financing scheme?
Nt saying the article is not contradictory, maybe it is, just pointing out that "wealth" is a flexible concept.
1) You take a bunch of public funds and buy houses.
2) You rent those houses out at market rents
3) You pay off all expenses with the rent
4) You take what's left over (the profit) and use that to increase the renters ownership share, and pay a dividend to other people who have the ownership share
It's just a super weird inefficient way to give renters money. Instead you should just give them money...
1) Public funds provide capital to build or buy a dwelling. Public owns dwelling outright.
2) Individuals rent dwelling at market rate. Part of this money goes towards paying off inflation and the time value of money (equivalent to paying down mortgage interest), part goes to a fund in the individual's name (equivalent to paying down mortgage principal).
3a) Saved funds reach price paid for home. Ownership is transferred, public keeps the funds.
3b) Individuals leave early. The chunk of their payments that went to their fund is refunded.
The proposal in the article looks like it's much more ambitious, and designed as a national program. This allows the fund to follow the individual, instead of being tied to a property. Instead of having the refund/buy option, it always pays back a dividend. So if you've paid enough rent that you're getting $200/month back, and you move, you still just get $200/month back.
https://www.sharetobuy.com/guides-and-faqs/what-is-shared-ow...
"The purchaser pays a mortgage on the share they own, and pays rent to a housing association on the remaining share. [...] The purchaser has the option to increase their share during their time in the property via a process known as ‘staircasing’, and in most cases can staircase all the way to 100%."
What on earth does not equitable mean in terms of distributing losses?
Secondly "living at the mercy" hold on, renters aren't tenant farmers who can't leave their lord's land. People do actually choose to live in expensive rented accommodation. They make the choice that the property location etc is worth more than the cash, to them.
"You can only find work in a big metropolitan center that demands 60% of your salary in rent? Though luck..."
Let's say that you work in London... if you are 1h away from your work, you're still likely in zone 3 or 4, which is pretty expensive.
Your choices then are: a 1h30/2h commute (each way) or giving up on having a place only for yourself, and start flatsharing
A single-family home (whether it be a shack or a million dollar mansion) in a city center with high land value is depriving the city of a lot of potential utility and should be taxed in proportion to that.
This is the central idea of Georgism, and it extends neatly to other things which are not the product of anyone's labour, like natural resources, pollution, or even issuance of credit (currently the banks have a monopoly on the power to create money/credit).
It's all very interesting, a nice balance which retains the good features of markets but prevents or at least limits the harmful stuff: rent-seeking leeches, pure speculation divorced from fundamentals, etc.
> especially in cities
This reminds me of the “Lockean proviso”:
Nor was this appropriation of any parcel of land, by improving it, any prejudice to any other man, since there was still enough and as good left, and more than the yet unprovided could use.
That is to say, taking natural resources, labouring, and keeping the profits of that activity, is only legitimate insofar as there is still “enough of it, and as good, in left in common for others”.
> The true value of land has much more to do with the services nearby
Oh absolutely! If a road is built, shops, the neighbourhood improved, schools, businesses, jobs, and therefore the desirability of your land increases... it's you that has to pay society back for what it has given you! It's not the resale value of your land that should rise.
Suggesting that there are careers that only exist in the largest cities seems like an odd thing for you to introduce into the conversation.
I think you mean you need to dedicate career-level resources to locating a job that pays a meaningful amount more than the one you have - then beating out the hundreds of other job applicants while assisting your kids thru 4 hours of evening homework, battling a chronic health condition, performing routine household upkeep and cleaning, spending 8 hours a week trying to turn health insurance into usable appointments and the several other hours of mandatory obligations.
This assumes we are considering the sort of scenarios faced by typically, struggling folks - and we aren't treating challenges as if they exist in isolation.
> a cheaper apartment,
After looking you find an absurdly small number and their condition is substandard at best. The roaches, noise and maladjusted neighbors guarantee you won't get more than 5 hours sleep most nights. Moving into one of them would cost $4k out of pocket after all of the various expenses and deposits are totaled up.
> or move somewhere else.
Folks who have enough $$$$$$.$$ to wholly fund a move to another city probably aren't struggling to the point where they need to move.
to equalize the outcomes based on group identities, based on the concept that identity is all that matters and choices, hard work and circumstances don't
And indeed, they do pay more.
That is literally explained in your quote. An inequitable distribution is one where a higher percentage of individuals in specific minority groups suffer losses compared to society as a whole.
Also distribution as unequal could be taken like taxes and a negative allocated to the unfortunate instead of the results forming the distribution.
I think this would lead to regression to the mean irrespective of the level of personal effort involved. Anything that deviates in outcome needs to be force-equalized.
Also, the root cause isn't housing prices, it's a lack of supply because of NIMBYs, a lack of fast/cheap transportation, developing for maximum traffic/commute times like LA, and a lack of development around walkable/self-contained living areas.
> Since the 1960s, San Francisco and the surrounding Bay Area have enacted strict zoning regulations. Among other restrictions, San Francisco does not allow buildings over 40 feet tall in most of the city, and has passed laws making it easier for neighbors to block developments. Partly as a result of these codes, from 2007 to 2014, the Bay Area issued building permits for only half the number of needed houses, based on the area's population growth. At the same time, there has been rapid economic growth of the high tech industry in San Francisco and nearby Silicon Valley, which has created hundreds of thousands of new jobs.
(Supply << Demand) -> Price goes up.
If we're to solve the housing affordability crisis, city councils simply need to drop onerous zoning regulations and permit construction such that supply can meet demand.
Anything short of this is just a beat-around-the-bush bandaid that hasn't and won't achieve anything. For instance, rent control. What a regressive concept, with tons of unintended consequences.
[edit] for real do you think there'd be a housing shortage or affordability crisis if the entire southern and western 3/4 of San Francisco was allowed to build up from 4 stories to 6? Basically everything other than districts 3 and 6. [2] That'd easily add 50% more housing.
[1] https://en.wikipedia.org/wiki/San_Francisco_housing_shortage
[2] https://voterguide.sfelections.org/en/san-francisco’s-superv...
Trying to mimic 1960s TV neighborhoods thru single use zoning regs has not served our country well.
The fact that you can (eventually) build a 2 story apartment building on that plot of land is already priced in.
If you like it this way then enjoy the needless suffering and economic inefficiency, it can only get worse. Turning one city into an "ugly" 10 million metropolis could have spared a dozen other cities.
>Turning one city into an "ugly" 10 million metropolis could have spared a dozen other cities.
"Great, turn one city like that and spare the rest... just not in my city.
We do not have to ban single family homes. We do have to stop banning everything else.
We shouldn't build houses for a society that doesn't exist anymore.
Why does one specific form of housing need to be legally required instead of just letting people build the type of housing that they want?
I don't think that this argument really addresses the point that vilifying something might be hurting the problem more.
But those programs should be implemented as subsidies, not price controls! The only reason we're so reliant on the latter is it is more easy politically to put the costs on suppliers and hope the electorate doesn't notice that you're actually exacerbating the problem.
Subsidies for historic populations without price controls would be a windfall for landlords, and an accelerant to runaway general unaffordability. You could probably split the difference with weaker rent controls and subsidies that make it look like stronger rent control from the renters side, which might mitigate the worst problems of either policies (albeit, at thr cost of combining thr problems of both.)
What would probably be better is to find a way to lean into displacement, or at least accept it, while giving displaced residents a stake in the unleashed value.
Strong rent control but with a buyout option where the the bought-out renter gets some share of the excess (compared to what they could have been charged with rent control) rent over a specified period with some floor might be an option.
How is it a windfall for landlords? If the rent prices are going up, they will be making the money regardless of whether the renter is paying for it or the government is paying for some of it.
If your point is that a subsidy will shift demand and increase the price, that is exactly what we want! A price signal to the market to build more housing to accommodate everyone who wants to live there including displaced communities!
> lean into displacement
What does this mean? I think there is some level of societal interest in preventing displacement, there are negative externalities from displacement that the market can't properly price in.
As long as that same government is using law (ie. violence) to prevent building more housing, no amount of subsidies can be effective.
What do you intend landlords do? Hire an army to defend cheap housing from the government?
Yes, law includes the threat of coercion, I don't see what adding that little tidbit does to improve your point.
Subsidies for a population that otherwise couldn’t afford it will accelerate the rate at which market price increases, especially since those subsidies will also increase as the market price does. It’s like student loans and college prices, but worse.
It's not worse if there is cost-sharing.
And as I said above,
> that is exactly what we want! A price signal to the market to build more housing to accommodate everyone who wants to live there including displaced communities!
Inevitably, trying to keep displacement from happening is going to increase prices for newcomers. The question is whether we want to do that in a way that incentivizes increasing supply or one that keeps people out.
And, as basic economics will tell you, sending such a signal to a market is a windfall for people that already own the underlying asset in that market--i.e., landlords. They get a windfall because they bought the asset when the market undervalued it (because the price signal was not being sent).
Landlords benefit from dezoning; increased density increases the rent value realized per unit of land area, even if it might decrease it per unit of living area, even without subsidies (and the slumlords that go whole hog on density will make those islands of private communities that don’t even more valuable, so long as the crime and other unattractive effects of the former can be kept out of sight, out of mind, from the latter.
The people opposed to dezoning aren’t landlords, they are residents who prefer low density conditions.
Why?
‘Historic populations’ is a euphemism for Black in most cases.
In most large cities I’ve lived in, there is typically a section of town plagued by bad schools, high crime, bad infrastructure, and crumbling residences, and it is usually monoethnic.
Why is this a good thing?
It seems that whites in the more affluent areas and suburbs are willing to throw a lot of money at these ‘historic’ populations so that the residents won’t move to their side of town.
Kinda perverse.
‘Ethnic’ neighborhoods in large cities are quaint. Sometimes they become tourist attractions. But, in large part, many are simply ghettos and the faster the ethnicity is integrated into the larger housing market, the better for everyone.
See: gentrification.
Rent control laws are a different beast altogether because they are not means tested typically.
It actually does (kind of), the problem is that the gap between "not profitable" and "affordable" is a chasm. Someone who is currently paying $350/week rent with minimal savings behind them (which statistically is an optimistic assumption) is not going to be able to find a 10% (or maybe higher) deposit on a $500,000+ property.
The other issue is that right now we're experiencing massive inflation of house prices. Median house value in NZ increased 24% in March - that means you'd need to save around $2000/week just to not lose ground. It's madness, I'm glad I bought at what I thought was the top of the market in March 2000.
You could even do a construction project and bill the land lords for that directly. In an even crazier universe they would get something in return for the [forced] investment.
House prices will go down, and more people will be able to buy. For others, there is public-ownership rental and even public housing (that would be of much higher quality than today)
How is that any different? If it's more difficult then it inherently consumes more time and/or money - given that money is (arguably) how we measure the value of labour I don't see any way of escaping this.
This is specifically addressed in the introduction to The Affordable City, and is why "Supply, Stability, and Subsidy" are a three-point policy.
Without supply, yes, subsidies are swallowed up by landlords, and stability (tenants' rights measures) benefit a small minority. Without subsidy, those temporarily or permanently disadvantaged still lack housing or assurance of it. And without stability, tenants remain at risk of being abused by landlords.
(If this sounds like "please read the book", it's because it is. I'm not yet sold, but the proposals seem far-better fledged than most I've seen.)
Currently the incentives are broken. If you buy in you’re incentivized to limit any future growth to capitalize your ownership of restricted supply. This takes many forms, but zoning, “neighborhood character”, “environmentalism”, noise, shadows, etc. - it’s all about supply restriction.
If there was a way for everyone to get the increased value that came from growth more explicitly then I think the political incentives would shift. You’d still have to overcome some status quo bias, but at least there wouldn’t be a direct economic incentive for owners to restrict supply.
No idea how something like this could be structured.
At least new RHNA numbers seem good, I’d also like to see something that revokes prop13 protection for localities that block new housing. If you’re going to fuck everyone else over, you should at least have to pay for it.
One dumb top of the head idea is a new development "tax" to existing owners within a certain radius. It is pretty perverse in its self. Hopefully it would be offset by absense of NIMBY costs. Probably not the best concept by any means and had loads of flaws I haven't noticed but it could technically help.
The pandemic was a natural forcing function that brought rents down significantly.
Instead of cramming more people onto the same set of square mikes, how about we develop more (non coastal) places for people to aspire moving to instead?
Not everyone has to or should move to California.
One improvement would effective transportation that makes the outlying locations nearly as attractive for commuting purposes.
The Shane Phillips / Lewis Centre proposal specifically addresses equity rights in addition, which is at the very least rare, if not novel.
(There are some co-housing / co-op structures which have some similarities, these are largely smaller scale.)
People need their houses to not deprecate and to roughly increase by value of the work put into the house during their time lived there.
hell even i'm considering taking out a loan against my increase in equity from the last two years to buy a plane because interest rates are so low.
If you have a conforming loan, then whoever is collecting interest is basically insured by the US taxpayers.
I’ve lived in 80/20 buildings. None of the things you list make them a “joke” except the number of units.
Yes, the 20% apartments aren’t as nice, don’t get to use the gym for free, and in a couple of cases had a separate entrance.
So what?!? They were still massively subsidized and had giant lotteries for people that would have loved to get them.
No, outrage mongers notwithstanding, the real issue is that the programs are incredibly inefficient. The builders get millions of dollars of tax benefits for each of those lottery units.
Why house one lucky family in the most expensive part of town, and give four families nothing, when you could get rid of the program, not waive any taxes, and use the tax money from the luxury building in the fancy part of town to house all five families in a working class part of town?
Like so much of contemporary upper-middle class driven leftism it’s about the appearances—-hence the outrage over poor doors—-rather than actually helping people.
Privileged people want curated poor neighbors (bonus points if they are “diverse”) as an amenity.
(Sadly rail is often opposed by the luxury areas - the Santee extension of the Trolley was campaigned against as “importing crime”.)
Is it really helping them to force them to move far away?
Unfortunately unaffordable housing is a problem with many causes, not one simple root cause that explains everything to the detriment of all other factors.
* If you are not familiar with distributism, see this primer: https://shaungallagher.pressbin.com/blog/distributism-for-ki...
As I was writing this, the term "sundown law" came to mind.
That neighbor was a doctor that ran clinical trials. The discussion with him on HOAs and other topics left me disillusioned in so many ways.
The entire point of my earlier message was to point out that HOAs of the form I've seen are not a means to encourage diversity or inclusion. Rather, they are about maximizing home values by ensuring conformity to the target market.
For simplicity, I'm omitting the issue of the members building equity over time.
If they could afford to buy property to get started, it seems like it’s a different group of people than the article contemplates. Or perhaps I dramatically misunderstand your proposal.
My thought too. There is cooperative housing that is run this way, though not on a large scale (that I know of).
In exchange for deed-restricting certain units to BMR, developers receive over concessions and density bonuses. BMR units are restricted to sale only to individuals or families that make under certain amount (indexes to inflation and area incomes). They get financing from preferred lenders under good terms. Equity is built up from principle payments and some appreciation. The catch is that when they sell, they need to sell to another BMR-approved person, which caps appreciation.
It’s not a goldmine, but better than renting (usually).
The article's author has in fact written a book on the subject, a chapter of which is exerpted here. (I've chosen the chapter title rather than article title for the submission.) The previous article had somehow managed to completely omit mention. The book itself is The Affordable City, by Shane Phillips, from Island Press:
But I don't think https://www.planetizen.com/features/110948-affordable-city-o... (the URL you submitted here) is a very good alternative—it seems kind of boring (mostly platitudes and cheerleading), and doesn't seem to cover the interesting bit, which is the specific proposal that you reference. So I've changed the URL back to the Atlantic article for now, with a variation of the subtitle which references that specific idea.
If there's a third article which is even better, we can change it again.
The Atlantic piece at least eventually gets around to describing the proposal. It manages to completely avoid any mention of the author's book (which I'd submitted as an addition), which is ... several shades of perplexing. The chapter extract also isn't the best though at least it points to the larger work. The two items in tandem ... kind of help get the message through?
(I'm doing some further digging on the initiative, proposal, Lewis Center, and Phillips in parallel with the discussion here. In a world of pretty tired and unimaginative suggestions regarding housing, this at least has some novel and possibly even likely elements, though it probably needs to be combined with other initiatives, most especially those discouraging idle land and real estate asset inflation. Phillips could use some coaching on persuasive writing and outreach as well....)
This is good for now.
https://shelterforce.org/2017/04/25/will-limited-equity-co-o...
To make it accessible to all necessary income levels, it may need government subsidy, and has sometimes had it in the past (just as obviously government-owned housing would be assumed to get subsidy). But tenant-controlled cooperatives seem preferable in all ways to straight-out government ownership (which yeah, isn't that just public housing), and limited-equity tenant-controlled cooperative ownership has a pretty successful track record in the US and other places.
https://nationalcooperativelawcenter.com/co-ops-are-better-a...
However, these aren’t just open to anyone. You need to know people to get in. It’s a self policing community that takes care of each other over generations. Even if you’re “in”, you’ll likely be on a waiting list until availability opens up.
There are even more of them in Europe, although you're generally expected to pay a significantly higher amount up front and actively participate in common area maintenance and (in some cases) participate in social activities and the like.
For instance, anywhere reasonably commutable to NYC and close to a train line is going to probably have 10’s of thousands a year in property taxes...
In certain areas the land is worth more than the structure on it. The east coast has a good bunch of that.
There was a big review on Progress & Poverty over at Astral Codex Ten recently on the subject: https://astralcodexten.substack.com/p/your-book-review-progr...
This proposal seems to address the same problem, but the mechanism is pretty different, and I'm wondering if it improves upon what the Georgists have already proposed, or if it is less efficient by being different.
The public ownership rental option goes nowhere without a capability to acquire (and retain) properties for the programme, and the ability to move unproductive or underproductive real estate into same.
California's property tax situation (e.g., 1977's Proposition 13) makes this an all but unsolvable problem for that state. Short a countervailing proposition, a (state) constitutional amendment, or a state or federal supreme court reversal, that law is going nowhere, and is pretty much a Land Value Tax's antiparticle / kryptonite.
One potentially promising alternative is the growth of land banks, mostly in the Eastern and Midwestern US, notably Illinoios, Ohio, and New York, possibly elsewhere. Though not based off a land value tax, tax-delinquent properties are acquired by the land bank which then attempts to return them to productive use. Pairing the land bank and public ownership rental models strikes me as a potential viable route to expanding both concepts.
This is just an example how this might be solved in other countries. I think however the private pension fund system in Switzerland has many problems: firstly the employer selects the organization for you and not you yourself (Chilean system), and secondly for some people working in the trade it is a secure get-rich scheme, and that's not all.
(A note: both arms of the systems, the private pension fund system and the public pension, are mandatory.)
In his book, and the chapter exerpt I've linked in an earlier comment, Phillips explains why all three elements are key.
Co-ops (or similar co-housing or community-housing arrangements) cannot of and by themselves address the greater supply problem, or provide subsidies for at-risk, disabled (temporarily or permanently) individuals, children, or retirees. They're useful, but insufficient.
If you really must run your shop in that ultra expensive location you just pay for it. If you cant afford it you simply do not have what it takes, the area is not for you and you should leave. Make room for a business that belongs OR turn the building into housing.
You would still have home owners who want to continue to ride the housing ponzi but they would be directly opposed by corporations.
The revenue should be reserved for subsidies on constructive construction. Free money for anyone who [partially] solves the problem.
If housing pressure is too high, tax corporations more.
It's always "tax more to solve problem X, as long as the target of that tax isn't me".
Before you plant down your office in some densely populated area you make a cost benefit analysis. The housing problem is part of the cost. We've traditionally expected others to deal with it (read pay for it) but it doesn't work. Or put differently, we've failed employers in creating housing for their employees. So now that we've proven ourselves incompetent we might as well put the puzzle in front of those who created it.
It's easy to ignore your staff being unable to afford a roof over their head if you are relatively unaffected by it. The moment you get billed for it you can assign the task to someone and create a budget. If there are also subsidies we can expect corporations to attempt to solve the puzzle.
If they are unaffected by the problem it is really hard to get some solution going internally. Who knows, perhaps they are more competent than the rest of us? If not the number of jobs (demand) can be scaled down to fit supply.
People want to move to expensive areas to work because companies chose to create their jobs there.
If a business is not profitable enough to be there they should move some place else. If you want to allow mediocre businesses people will have to sleep under the bridge, on the sofa with friends or find some other way to live packed up like sardines. The mediocre salary demands it.
We can apparently fit a lot more jobs in a city than it can deal with. The jobs are not the scarce resource. They will continue to exist some place better. Some place where the salary buys a good life.
So if there were a good way to overcome the political power of homeowners in maintaining regulatory restrictions that prevent the expansion of housing supply, so that the private sector could respond to market forces and expand housing supply, that would be preferrable.
According to one analysis, it would only take de-regulating three US cities' housing markets: New York, San Francisco and San Jose, to boost US economic growth on the order of over one third over a span of 45 years:
https://www.aeaweb.org/articles?id=10.1257/mac.20170388
So here's one potential solution: federalize control over these three cities' zoning rules, in order to remove all of their zoning restrictions on building density, while investing resources into speeding up their permit approval process.
This is similar to Japan's housing laws, where the national government decides zoning rules in all cities, including in major economic clusters / key job markets like Tokyo.
Abstracting away ownership from the property to a collective legal entity ignores the main reason why people 'own' property in the first place - property needs to be actively maintained, and when it's not, those affected need to be able to identify and movitiate a responsible party.
Even when you own stock in a cooperative, you're responsible for the part you live in. Once you tie in financing, insurance, and utilities, you're left with something that looks an awfully lot like property ownership, except with a slightly different fee structure.
no, the main reason people own property is to extract profit from it (or extract utility - essentially the same thing). Maintenance is merely a hinderance that they put up with in order to maximize said utility/profit extraction.
If it were possible to create a property with no need for maintenance, the owners would opt for that!
I'm sure a lawyer or someone with a better understanding of the history behind all of this can chime in, but the concept of ownership is very much tied to the state's need to know who is responsible for each piece of land, whether for taxation, ensuring upkeep, or for resolving court disputes.
Unless your home insurance rises every year and your monthly ownership costs double in 4 years.
Many of us lost houses in the oughts to exactly that.
“Also SaaS and the cloud is the future of everything”
HN summed up but they don’t seem to see the connections.
Large buildings are harder to maintain and require more specialized labor.
Means testing and segregation also impacted public housing in the US. (Better not make too much money or you'll have to leave!)
There are several instances of successful public housing efforts in the US and Europe, typically more low rise or mid rise distributed properties.
If you’re a developer, then fighting against this group will take a lot of resources and it’s risky, so you can’t bet on medium density to make it worth it, you have to aim for more.
This assumes that you exist first and foremost to work jobs, and anything that impedes this is bad and needs to be optimized away. This is very American, very contemporary - don't accept it as universal.
Move a little to the side in time and in space and people are "from somewhere", live there, and optimize their life to improve them living there - possibly by taking jobs in the vicinity.
Maybe the real problem is that the only way to have income is to have a job. But that's another story.
In California, 75% of renters support building more housing, 51% of owners support building more housing, and yet housing gets built at a glacial pace. I'd like to know why this is. Some wild-ass guesses:
1. A majority of Californians support housing being built, just not too close to where they are
2. The 75% or Renters and 51% of homeowners skew younger and are thus less likely to vote or complain at community board meetings
3. The permitting process in municipalities near me is so byzantine that it's expensive in both time and money to build new construction; the added time could be particularly problematic because that's greater risk that housing prices will plummet before construction is complete.
I was far better off renting when I moved to this town. I had a down-payment, but my rent was less than the just the interest on my mortgage for a condo would have been and I likely would have had a commute instead of a sub 10 minute walk.
Instead I invested my money and was able to buy a house after the housing crash. For the house I purchased, I ultimately paid about half the original asking price.
If you are forced to pay someone else to live in a house, then you are on the losing side of the power dynamic.
The above anecdote was in the crazy real-estate market of coastal California. If you generalize for the rest of the country though, housing prices track inflation on average, so if you are leveraged 5:1 you can expect to gross 5x inflation on your house before you account for taxes, interest, insurance, and maintenance.
You may end up ahead of the market at that rate, but it's not exactly a sure thing. It's not unreasonable to say that the flexibility of being able to move will improve your lifestyle by more than the difference.
OTOH, we can say that 100% of the people who own houses have the means to own a house, but obviously much less than 100% of the people who rent have the means to buy a house, so the point is taken.
https://slate.com/business/2016/01/bernie-sanders-made-burli...
We should be working towards the practical goal of making owning a home practical again. I don't want to live in some box owned by a collective.
I’m sure there’s other aspects I’m missing which make this a bad idea but there’s something that doesn’t feel right about people owning 2-3 homes while others can’t get on the property ladder.
housing is only expensive where land is expensive - city centres. The Government is able to take long enough view to do this. Any commercial actor will be against this due to rent seeking / market cornering.
What is doable in near / short term is to move government agencies out of big cities into smaller ones and start drawing people by creation of stable employment. Right now everyone is more and more forced into the same 1-5 cities per country if you want to have a well paying job. And you have to have one to pay for college / medical insurance.
I think my point is clear also not very groundbreaking. It's only that people who could do this are 50+/old and have a conflict of interest - they want to prop up their house value.
Their model seems to work well. I think this is the way. Capitalism seems to be oddly unprepared, if you just drop the profit drive in the middle of things. Seems like you can make the system sell itself out.
I care how much I pay. I don't give a shit who gets it.
If people do it as a business, it'll drive the price of housing up even more, and since businesses have more capital than workers, the latter will be priced out (if lucky, they'll be able to afford a 90% LTV which will take decades to repay, but most workers cannot afford it on their own)
If you care how much you pay, you care about who is extracting money out of you
The whole premise appears telological - landlords are intrinsically bad ergo everything they do will make the housing situation worse.
The latter aren't fulfilling housing demand: they are capturing it by outcompeting people who cannot afford property prices (prices driven up by buy-to-let demand).
You say that landlords are intrinsically bad: lots of people agree with you on that... I stop short of it, since there's a minority of people for which renting is a preferable solution (at least temporarily) and nationalising the whole housing market is infeasible.
Like many US markets, local rental prices have ~doubled in the last two years. As in every case of price gouging, sufficient supply would have prevented the opportunism that is presently causing broad harm.
Huzzah for supply and demand, I guess.
Increase the supply through deregulation or incentives and we won't have this problem.
Which is why something that works the way a Georgian land value tax is designed is ultimately necessary.
Or put another way: zoning isn't the only tool used by NIMBYs.
The problem is institutional, and is based in the same economics (inelastic supply of land) that makes a land-value tax so effective. If by any means possible an entity or consortium of them can restrict new development in an area, then as a whole their ability to capture consumer surplus value through economic rents increases.
This can be holding units off market, limiting density, restrictions on various utility hookups (typically sewerage and water), redlining, title insurance, homeowners' insurance, and more. I've found direct documentation of such practices dating to 1937, and long preceding that.
When recently the mechanized industries, particularly in metal, entered the housing field with the production of “prefabricated houses”, they were met by the resistance of property holders, especially of the banks, who hold mortgages on about 58 percent of all 1933 value of all urban real estate,149 and who fear that an influx of cheap modern dwellings would subtract substantially from the market value of existing structures.150 These banks and loan companies have been unwilling to finance prefabricated houses except in rare exceptions and then on a limited basis. Lumber companies and manufacturers of other materials which are being displaced in the production of prefabricated houses, have sought to prevent their construction through building-code restrictions and by organizing boycotts by dealers and building crafts. Moral and ethical rationalizations have been used against prefabricated houses. The director of the New England division of the American Institute of Architects in May 1934 attacked prefabricated houses as tending “to substitute a life of vagrancy for responsible citizenship in the community”.151 The author of an article entitled, “Houses Cannot be Built Like Automobiles”, who speaks on behalf of architects against prefabrication, argues plaintively, “Spiritual, mental, and physical well-being is enhanced always by the exercise and development of individualism, especially when related to the home and its environment. Housing that fails to respect these human values must be considered among the ‘chats’ to be discarded”.152
Planned public housing projects such as slum clearance which afford the most efficient methods of utilizing advanced technologies in the building industry, crash against the wall of vested private-property interest. They meet the combined opposition of the owners of obsolete buildings, that nonetheless are still profitable, of landowners who demand prohibitive prices, of holders of mortgages who fear a depreciation of housing values through the increase in available homes. Achievements in building technology lie sterile in the face of the opposition of these interests. It has been calculated that at the rate of replacement between 1921 and 1933 of homes and apartments, the American house will be in use 142 years.153 Such slow replacement, based on profits derived from old houses, impedes the building of new structures, however pressing the housing needs for the mass of the population of the United States may be.
Bernhard J. Stern, "Resistances to the Adoption of Technological Innovations", 1937 https://archive.org/details/technologicaltre1937unitrich/pag...
Markdown: https://rentry.co/szi3g
This is a step towards socialism.
Thanks but no thanks.
Maybe it's just a big anti communist plot, or maybe it's just human nature to not take care about things you do not own.
Public transport works well when your city prioritizes it. I spent my youth living in places that don't and I literally cannot imagine going back.
Litteraly where I stopped believing you.
It's dirty. Only DC has a somehow-clean subway, which stands out as a nice exception to the rule.
And when there is critical mass. Public transit works in dense urban centers, because it's less worse than driving and parking. It doesn't work in smaller towns. There, it just becomes something that everybody pays for but a tiny minority of people ever use.
I've noticed it got cleaner after COVID happened. Before COVID... It was world's most disgusting subway I ever been to: filthy, sketchy and leaks rust on your head.
Change happens. Stability can’t be decreed.
If there is 0% tax up to 10k
20% up to 40k
40% from 40k
And you got a good job and want to live like your colleagues, likely your costs of living will take up all salary up to 40k. Then above that for any 1000 you make, you have to give 400 to the state. Let's say you make 60k. So 20k will be taxed at 40%. It will take you over 8 years to save 100k. If 40% bracket was removed, then it would only take you around 6 years to save. So the difference is 2 years of sacrifice. If you had that extra money, you could spend 2 years on improving your skills, starting a business etc.
For some reason I see both sides want to keep progressive tax - the left wants it, so that people keep being poor and therefore their clients. The right wants it, so that the rich amongst them can feel special - as the club is kept being small.
I think how tax affects people from poor backgrounds should be looked into.
Knowing that I have to build my own retirement really makes me resent that so much of what I earn is going to the state to pay for what, a few shitty public art sculptures that no one likes, a crumbling public transport system that somehow has all the money in the world to pay for all sorts of diversity programs but not enough to actually deliver the services everyone thinks they should, and health department bureaucrats that are more interested in bogging healthcare providers down in paperwork than actually letting them tend to the sick.
It's all very tiring.
Meanwhile, without progressive taxation, in the US, your income taxes would average $12,075 your FICA (which is flat) would average another $8,581. With an average income of ~61,000 that means everyone would write a check for 33% of their income to the government. This means those making more than around $250,000 a year would pay less, and other people would pay a lot more.
I think you need to think about what the alternatives to progressive taxation look like.
(If you want to talk about treating capital gains as normal income, that's a completely different topic that would advantage poor people.)
But the last line I wrote was addressing this issue. We should prevent the wealthy from bypassing income tax. That is a different issue from what the taxes will look like.
US Federal tax brackets are at https://www.irs.com/articles/2020-federal-tax-rates-brackets.... Notice that the standard deduction of $12400 for a single filer and $24800 for married filers means that the first $12400 or $24800 is not taxed.
In contrast to that progressive tax, there are things like payroll tax (social security, medicare), sales tax, and all those taxes on phone and cable/internet bills that (proportionally) hit the poor much harder.