Direct cash still has this effect. $1500 to subsidize rent that is $1500 to property owners.
We saw this with the 2009 mortgate crisis - banks got bailed out and evicted homeowners. Had we paid the homeowners, I suspect most would have just brought their mortage current.
The tenants no doubt received direct stimulus payments and never paid a dime of it in rent. There’s a reason why section 8 et al are paid directly to the landlords.
Hell, it’s the rationale thing to do anyway. If there’s a rent moratorium, you’re getting checks from the government, and you don’t have a particular large security deposit, why wouldn’t you skimp on the rent?
The landlord cannot evict you. Cannot call the police. Cannot really do anything. In fact, the landlords only chance of getting paid is to cajole you into signing up for rent forbearance.
One way to alleviate this problem is to have a harsher tax on vacant properties to punish using housing as a store of value and creating artificial scarcity in the market, e.g. like how the DeBeers corporation made diamonds artificially scarce and scammed the world for the past century selling a shiny rock.
https://astralcodexten.substack.com/p/your-book-review-progr...
And if it's done similar to an appraisal they see what market price is for a sale (which combines the value of the building + land). Then they can estimate how much it would cost to rebuild that building if it were completely destroyed. That's the value of the improvements. The remainder is the amount someone implicitly paid for the land.
Someone can always come up with a contrived example to find a short coming in a rule or law. That doesn't make the law not sound or wise.
"Speeding shouldn't be illegal. What if there is a tornado behind you and you need to rush to get away from it, but you go faster than the speed limit to save your life? See, we can't have laws for speeding."
So I'm going to try to say something different.
1. Here is the article that convinces me it is very possible to assess land separate from improvements. It details several strategies for doing so. Also properties are assessed in these ways already in many places. https://astralcodexten.substack.com/p/does-georgism-work-par...
2. Accuracy of assessment does not need to be super high for this idea to work. You just need an assessment with the intent of assessing unimproved land. The tax does not need to be literally 100% of unimproved land value, it just has to be a high percentage. Let's say there is a +/- 30% accuracy of unimproved land value assessment. We can have a 70% tax on that assessed value. Some people would in actuality be taxed at 97.5% of land value, and some people at 52.5% of land value. Perhaps the unfairness of this discrepancy is a true downside. However, one could argue the same about property taxes now.
The bigger issue is with vacant properties being used as cash stores.
Sure you can. Unimproved value of the land is simply the value of the lot as a whole minus the value of building that sits atop (well, improvements aren't always buildings, but that's a simple example). You can approximate it by comparing it against the transaction prices of nearby lots that aren't improved, or by taking the construction cost out of the purchase price of the lot.
> is popular with politicians
Land value tax in general isn't that popular around the world, and Henry George's version of it, where all tax is replaced with just a land value tax, even less so. As far as I'm aware, there is literally no jurisdiction in the world whose sole tax revenue is from LVT. Economists and idealists like land value tax; politicians, who derive a lot of power from the wealthy landowning class (who in turn would be the most hurt by LVT), not so much.
> The bigger issue is with vacant properties being used as cash stores.
Land value tax would be an excellent way to curb real estate speculation.
https://en.wikipedia.org/wiki/Taxation_in_Denmark#Land_value...
Well...kind of. It's pretty bad in a lot of places. There aren't enough homes in the places people want to live.
It has nothing to do with supply - there are more houses now than can be occupied in the US. It has everything to do with misusing the supply we have.
It has everything to do with the supply of housing and how it's been severely constrained over the years.
At some point, enough is enough and you have to accept that there’s no room for more housing without ruining the city. You could focus on reclaiming AirBNBs and vacant housing and you might be able to make a dent in the problem.
Just announce that your city is full and tell everyone to move on. Ruining the city will make landlords money and everyone unhappy.
So Manhattan isn't worth anything to anyone? Funny, I thought it was one of the most valuable and productive places in the country and there were still swarms of people wanting to live there.
This is accomplished by some clever technology the Italians use: they are able to stack dwelling units on top of one another.
In many ways, it was a more pleasant place to live, since I could walk or bike to so many places.
???
There's no need for 'collusion' - term is 'inflation' - which will 100% happen when we start printing money at that scale.
It's unavoidable, almost by definition.
Housing costs are already skyrocketing and this is moving into rents already, at least largely in part because of of massive Fed Stimulus. In the short run it might be better to just give some cheques to people, but not over any period of time.
So you get 0% inflation when we give money to the rich and bail out the banks, but as soon and you give a hobo $50 the entire economy crumbles and inflation spikes, right? Very conveneint ideology
You fabricated a bunch of ideas which have nothing to do with what I said.
'Very convenient fabrication'.
--> If you put a lot more dollars into the real economy by direct distribution, then rents will go up via systematic collusion. Most of that money handed out will be captured by landlords.
That has nothing to do with with what may or may not happen if you concentrate money in the financial sector via whatever means.
The fact that housing is in such tight demand in certain areas is not an argument against UBI. To solve that problem we need to build more houses.
https://www.motu.nz/assets/Documents/our-work/population-and...
That said: "Larger rent increases were observed among those who received larger increases in accommodation payments."
We're talking about a mortgage on the rental property itself not on the landlord's personal residence.
Yes. Everyone in this conversation understands that. There's no relation between the amount and terms on your mortgage for your rental property and the market price to rent a given unit.
If I take a 20 year mortgage does that mean I should charge more rent than if I took 30 years because my payment is higher? Should I drop rent by half when I'm done paying my mortgage since I no longer have a payment? It's nonsensical.
There's especially no reason to expect that rent should cover 100% of the principal fraction of your mortgage payment. Taxes, maintenance, interest, etc. are pure costs which are understandably passed on to tenants. The principal fraction of a mortgage payment is not a cost, it is building your equity.
If rent is covering all costs and "only" 50% of the principal fraction of your mortgage payment you're still making a profit. Because you're paying, let's say, $1000 of the mortgage payment with your own money, but you're getting a $2000 increase in equity.
I know other landlords with multiple units. If they don't think something will be an income producing property, they won't buy.
Price to rent ratio varies very widely between different markets. If you don't want to buy in a market with a high price to rent ratio that's fine. There's simply no rule that guarantees a price to rent ratio such that rent covers all costs plus the full payment on a 30 year mortgage in all markets at all times.
By renting instead of buying, you don't incur any of the costs or headaches associated with with home ownership or repair. There are also plenty of people who are only living in one place for a limited period of time, and additionally, plenty of corporations will rent out homes in decent locations if their employees need to be there for extended projects.
Maybe it doesn't work that way in other markets, but you'd have to be nuts as a renter to pay enough to cover your landlord's mortgage.
A 3 bedroom, 2 bath home in a decent but inexpensive part of the DFW where I live will run you $2K per month. These prices will skyrocket as rental prices catch up to the mortgage market. But just for comparison, 2 years ago that same house would have been on the market for about $220K and would have had a monthly mortgage of about $1200 a month on a 15 year loan or $800 or so on a 30 year loan.
Also I’ve never rented anything for less than what I could own something comparable. Maybe you can in some markets. But generally I expect to pay more monthly. It’s a trade off for avoiding everything that comes with home ownership. Down payments, maintenance, and the overall commitment. It’s hard to just pick up and move when you have to go through the process of selling, making contingent offers on another place, multiple closings, all that.
I have been a renter in NYC, Seattle, and the Bay Area; every single time, I looked up how much the property last sold for and calculated how much a mortgage on it would cost me per month. My rent was normally 70%-80% of the expected payment on a 30 year mortgage.
I was never paying below-market-rate rent, either! Maybe it doesn't work out this way if you're renting in an area with lower average property values?
That is a reason why you invest in the first place.
Property ownership is a market barred from entry by a high buy in cost to account for some risk - but the risk is rather minimal and most properties are going to be value accruing over time. We can observe this by looking at how cheap general property insurance tends to be (unless you're in a really risky area - i.e. building a house in a flood plain).
It is, but I think I would find reasonable getting a mortgage if it does not impose a load on my finance by having it rented.
I paid $1400/month for rent on a place in Alameda, CA. The last recorded sale of the property was for ~$400,000 a couple years before I moved in. That mortgage would be ~$2400/month given average interest rates at the time.
It's a fair point that UBI would result in some shift in market dynamic. But ultimately, most people will still want to get a job to supplement the UBI income, and high demand areas will remain high demand.
Anyways, it'd still be better than quantitative easing, the current approach to keeping the economy running now that they can't lower reserve ratios or interest rates anymore, wherein (roughly) the government prints money to shove into the stock market so people who are already rich keep getting richer.
Traditionally, humans have to live where they can find a flow of capital via the jobs available. If every human has a baseline flow of capital attached to them specifically, regardless of where they live, it potentially opens up a ton of possibility in where people can live, because they can do less well paying jobs but still live a good life.
The reasons for this are complex, but in short it is likely due to a mixture of cost of living (disability benefits go farther in LOC areas), economic opportunity (disability is "more attractive" when job opportunities are scare), and demographics (older, more blue collar, etc...). But regardless of how or why these discrepancies exist, we have essentially created a system which incentives our population to self-sort geographically based on their ability to contribute economically. That is of course problematic in and of itself, but this also means we have a real life pseudo "UBI experiment" that we can evaluate. And if you look at the data, nearly all of the states with high disability percentages are low cost of living states, particularly when it comes to housing prices.
So anyone who complains about how UBI would increase housing costs needs to first account for the fact that large swaths of the working age population are already receiving benefits similar in level to a UBI (disability is about $1600/mo). And despite the higher concentration of beneficiaries in areas like WV, we haven't seen much of any impact in real estate or local inflation. If anything we have seen the opposite.
[1] https://www.mathematica.org/dataviz/state-disability-maps
I'm still not sure whether or not UBI will be a success, but there are some reasonable arguments in its favor.