Comment by murgindrag | Hacker News Reader

Comment by murgindrag | Hacker News Reader

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I'm not sold on the Economist article. I do believe in home ownership. The idea that a person spends a lifetime in the same home and community is a good one. We're tribal creatures, and you want a tribe -- you want people to know their neighbors, have community BBQs, and live in real communities. You want enough of a vested interest in municipal politics that democratic structures work. You want kids growing up with the same friends in school.

The flips side can be pretty dark too. For example, there are are plenty of stories of poorer communities, especially African American tenant ones, being broken up and priced out by gentrification of rental markets.

Ownership is less economically efficient, but much more resilient. Once a mortgage is paid off, you've always got a roof overhead. You just need to earn enough for food, clothing, and medicine.

I think the trick would be to implement significant differences in land tax based on:

* a home you live in; versus

* an individual investment property (e.g. if you own 2-3 homes); versus

* an institutional investment property (e.g. investment fund owns hundreds of homes)

I don’t think the article is saying ownership is a bad thing in itself, but that the vast resources that have been poured into promoting and subsidising it have had some pretty undesirable consequences.

Here in the UK we have started imposing tax penalties on buy to rent that disincentivizes owning more than one or two rental properties. The problem with punishing institutional investors is it would take huge amounts on investment out of the housing market, just as we have a massive need for more housing. We need more houses for people to buy and more new housing available to rent. Rental properties by themselves aren’t a problem, it’s taking houses out of individual ownership and transferring them to the rental sector that’s the problem.

Home prices are up because there is no supply. There's no supply because people can't afford to build houses. The issue isn't home ownership, it's the lack of it.

An LVT might work but I think it is only ethical if you advantage primary residences with a complete lack of tax.

It can’t simultaneously be true that people are paying huge sums fir houses, driving prices up, and they can’t afford to build new houses. New construction is generally much cheaper than buying an existing house. The lack of new house building is reluctance to grant planning permission due to NIMBYism.

One of the points of an LVT, among other things, is to encourage little old ladies living in 4 bedroom houses to move somewhere smaller. It’s actually a very equitable tax that reduces distortions in markets and reduces inequality. I highly encourage you to read up on it.

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

People aren't paying huge sums for houses or paying for new construction, property developers are.

Investment in the housing market drives up supply of buildings, and drives up the cost of the land underneath them. In high-cost markets, most of the cost is the land, not development on that land.

You can waive the higher taxes for very high density developments. Skyscrapers to require investors, and that is beneficial.

A progressive land tax would encourage investors to have few but high quality/density properties. The tax would be something like 2% for the individual home owner with less than 1000m^2 of land and 10% for companies owning 5000m^2 or more land.

They're not imposing tax penalties, they just got rid of the tax breaks.

You can no longer claim a mortgage as an 'expense' when calculating your profits.

That's not how it works for other companies, loan repayments are not classified as an expense to reduce your profits.

So now they have to pay the same tax rate as other businesses, where before they were getting a huge tax break.

To be 100% completely honest, home building needs to be one of our basic skills taught in school. That along with chopping down the building codes for small homes to be extremely simple. I'm not saying we support shanty homes everywhere, but the problem we have is that investors are buying up all the perfect homes and most homes are perfect homes. Maybe we should have less than perfect homes that aren't valued so high and sought out by investors that live in China.

This is incredibly true.

Homes don't even need to be that small. Buying a chunk of land with enough trees to build a home is <$5k, if you're willing to live in the middle of nowhere.

You need the equivalent of a Ph.D in zoning, permitting, and municipal regulations to do that, though.

And if each high school class, as a year-long class project, build a home, I think my kid would get a better education and we'd have more homes.

Plus, most people need to bring in specialists to do all the maintenance because we have no idea how our homes work. I'd like to run ethernet in my house, and I have no idea what's inside my walls, how to get in there, or how not to break things. That's embarrassing.

> community BBQs, and live in real communities

The sad reality is that people want their own BBQ and not really mix with their neighbours. That’s what poor people have to put up with, so to speak.

I massively disagree - the reason people want their own BBQ is that they dont know, and hence dont trust their neighbours. My parents knew ~100 people on the same street, these days average person know zero.

Ownership is important, it's a personal investment. For millenials all of our money is going to the boomers etc we rent from, those of which who do own property (because I know many of them don't) make it big on buying when house prices were actually reasonable, then downsize their house in London and get a nice big house build in Spain to retire to.

When millenials reach retirement age, a house, as for all previous generations, is the best option for financial security for retirement/end of life. Fewer and fewer of us will have that option I think.

Unfortunately “community barbecues” oftentimes meant “barbecues with people who are exactly like me and who think exactly like I do”, an attitude which has had a pretty corrosive effect on democracy in the near past.

Otoh we’re self sorting more than ever aren’t we?

I would bet that the people in your neighbourhood (weak self selection) are going to have greater diversity of opinion than whatever bubble we currently exist in (strong self selection).

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