Why would those who do own houses want to see their assets depreciate because of increased supply etc.
Which is a perfectly understandable reaction on the surface, but it ignores the long-term impacts of such a situation. Granted, we humans are terrible at thinking about the very long term.
An example I think many of us that live in places like the SF Bay Area, Seattle, Boston..etc have seen is that at some point, high housing prices start damaging other parts of the local economy. Younger people can't afford to move to the area, so the demographics start slumping towards older people; eventually that will lead to the collapse of some pay-it-forward kinds of social services. Businesses have to pay extremely high wages to be able to find workers that want to work there and are able to afford to live within a reasonable distance; Some of this is solvable via automation/remote work, but I don't think you're going to have your mechanic or your cleaners doing telework. A lot of businesses cannot sustain those sorts of wages without severely increasing prices, but then you get people complaining that their local coffee shop has to charge $15 for a cup of plain black coffee.
I think we just haven't yet seen the fallout from the housing affordability problem fully unfold yet. Unless something changes, we'll be seeing more and more effects from this in the coming years.
But back to democracy, why should we care if parties are only elected for 3-5 year terms?
Absolutely it's going to end in disaster, but also, that's just how the system is currently designed.
Why do people treat houses like financial instruments? I think it's a combination of the cost, dual functionality, and devaluation of money. When something costs a significant amount of your labor over your lifetime, you want to make sure it does a little more than keep you dry. If all it does is keep you dry you could live in a tent. If you're looking for a place to invest capital, and you need a place to live, why not have that serve both purposes? And finally, if you want to save your capital, sticking cash on a shoebox or a checking account simply won't do, it will lose purchasing power.
I think these all have the same solution. Houses are expensive because they grow in nominal terms while our labor does not. People who want to invest can't afford that and a home at the same time and so have to use their home for both. And devaluation of money... I think the solution to the housing crisis we are in is simply money that cannot be devalued.
This just means assets are getting more concentrated, effectively increasing inequality. Increased inequality usually means the ones with capital become a greater force in the market, not a weaker one.
So the politicians either keep housing as a good investment (un-affordable) and piss off the younger people who can't afford to buy, or they make housing affordable (bad investment) and piss off the older people who already have houses.
They can't win either way.
I personally think housing should never have been made an "investment", and we should start taking steps to move it away from that. It's a basic human nessessity, and like water or food, everyone should have access, and it shouldn't be something that people make wild profit from.
Go make wild profit from commercial real estate or cars or golf clubs. Not houses people need to live in.
We need to take these steps:
Step 1: Only humans can own houses (no corporations, no business, no hedge funds or whatever else)
Step 2: Limit the number of houses any one human can own, until it's eventually only one per person (a rich couple could still have one each, but not more)
These steps may take 10 years to phase in, but they will make a big difference and be worthwhile.
For Step 2 though, what about instead of limiting how many houses you can own (as there will probably be significant legal challenges to that) what about progressively punitive property taxes on additional properties. Every house past the first pays 10% more annual property taxes than the previous one. By the time you're on your 10th house, you owe more than the value of that house every single year in property taxes. That gives those with really large amounts of fuck-you money the chance to still have those sorts of houses, but they operate at a pure loss, and we all get the benefit of that tax money.
What you're saying makes logical sense, though I think as soon as you make a carveout, it will get exploited.
Many countries around the world have a housing crisis. There is no reason for a house to be held for some decendant to have it later. People need houses to live in NOW, not for them to be tied up waiting for some person to have it sometime in the future.
It's ruthless, but I would just as soon force them to sell it so someone else can use it. Like drinking water or food, it is not reasonable to horde a limited resource which then means others miss out.
> For Step 2, what about progressively punitive property taxes on additional properties. That gives those with really large amounts of fuck-you money the chance to still have those sorts of houses, but they operate at a pure loss, and we all get the benefit of that tax money.
Still doesn't fix the problem.
We don't want more tax money, we want houses for people to live in. A billionaire could still own 100 houses and just run them all at a loss and not care. That's 99 people that now don't have a home because one person is greedy.
> as there will probably be significant legal challenges to that
Well, yes. We're talking about changing the LAW to make this thing explicitly illegal. That means there will be people that won't like it, and interestingly enough it will only be the greedy people who are hording and stopping other people having houses that will be upset. That is what we want. If those people are not upset, we're not doing enough to stop them ruining society for everyone else.
The ruthlessness is part of the problem. You need some escape hatches, or you strongly incentivize a lot of people to not go for this. You want to give those on the fence a reason to go to your side of it.
> We don't want more tax money, we want houses for people to live in. A billionaire could still own 100 houses and just run them all at a loss and not care. That's 99 people that now don't have a home because one person is greedy.
Well, I would argue that having to pay 1000% of the houses' value every single year will be beneficial to the rest of us. Yes, sure, it takes some houses off the market, but a $1m house would be generating $10m in tax revenue every single year for the locality. At that sort of return, let them have their 100 houses. We can use the money they pay to fund building more housing or maintaining infrastructure.
I'm willing to let a few dozen billionaires have their vanity homes if it means we get to absolutely fleece them for the privilege.
By very definition if we do literally anything that makes housing more affordable, we make it less of a good invetment, which means a lot of people will not go for it. We already covered that in my first comment.
Old people that own houses want them to be a good invesment.
Young people that do not own houses want them to be affordable.
Pick one group to make happy.
> We can use the money they pay to fund building more housing
Now you're complicating the issue and getting away from the core issue/problem here. Yes, building more houses would be great, but that is NOT the fundamental problem here.
The fundamental problem that has to be addressed first, is that housing can not simultaneously be a good investment AND be affordable. We MUST fix that first.
This sounds very simplistic. The majority of homeowners don't care.
You talk a lot about investment but if you ask homeowners if their house is an investment or a home, the majority will say the latter.
For homeowners who want to live in their home (as opposed to house flippers) the value of the house is not relevant. They live there, they plan to continue living there. Having the value go up is not good, it just means paying more taxes for the same home. It's better for the value to remain constant or even go down (same home, less taxes, yay!)
> housing can not simultaneously be a good investment AND be affordable
That's impossible from simple economics. As long as there is inflation (and there will always be inflation, it is a goal of the fed), a durable good cannot go down in price over the long haul (unless the whole city collapses like Detroit, but that's not good for anyone either). What you wish for is impossible.
What do we mean by "good investment"? When I use that term, I generally mean something close to "someplace I can put my money and have it grow faster than inflation".
In that sense, something that is a "good investment" will tend to get more expensive over time in real dollars (by definition).
If housing is affordable at some moment in time and is a good investment, it will increase in real price until it becomes unaffordable at some moment in time. This argument is the fundamental reason that it's bad economic policy to try to make housing into an investment, but rather to have policies that tend to make it a poor investment, in order to preserve affordability.
Housing is not a share of stock, it's a place you live in. So by good investment, I think the criteria is not that it beats any kind of index fund, but simply that it beats renting. Because you have to live somewhere. Either rent or buy.
> to try to make housing into an investment
What does this mean? Who is trying this? What do they do?
As a homeowner who is reasonably (best I can) politically aware and always vote, I have never experienced these forces trying to make housing an investment. It's never been on the ballot here.
> have policies that tend to make it a poor investment
I believe that's impossible. Only way would be a dictatorship that says your house will be taken away from you and demolished every 30 years, or something like that. Would you want to live in such a world?
By that logic, a used (rather than new) car is a good investment as well. Since they're a good investment, I guess I should load up on used cars.
I'd prefer if step 1 was something like "remove government subsidies to people who buy or own real estate". And step 2: Build publicly owned apartments.
Why should a company own a residential property for the purposes of renting it out and spinning a profit? I'm saying we must remove that if we want housing to be affordable.
> I'd prefer if step 1 was something like "remove government subsidies to people who buy or own real estate".
This is such a classic misunderstanding of the problem. Government subsidies are not the core problem here, and they have extremely minimal impact on the cost of housing, or the availability of housing for sale.
> And step 2: Build publicly owned apartments.
As we know projects like this take forever and go through literally decades of red tape and bureaucracy. There is a much simpler and faster way that will address the crisis NOW. Let humans who need a house to live in buy the houses that already exist but are being horded by companies and other people whose sole purpose to own the house in the first place is to spin a profit.
We absolutely should not let companies like Nestlé buy all the available drinking water on the planet so they can sell it for high profits, so why the hell are we letting companies (and people) buy all the available housing for the purpose of renting it at a profit?
Knowing the deep aversion to risk the owners of these companies have I guess it would only take one successful ruling to discourage pretty much the whole market and significantly reset house prices.
Private landlords would take a bit more finagling given that renters also dream of one day owning multiple homes they can rent out but maybe one could sweeten the pot by finding ways to help folk retire more easily?
Implementing this may take winning a national election and a non-trivial amount of social engineering but it's not like it hasn't been done before in other places at other times.
I do like your ideas.
This is precisely what needs to stop.
As soon as you have some people buying multiple houses to make a profit from, you make housing un-affordable, and there are not enough to go around because some people have many.
We do because private companies are often good at running things and usually their profit is small compared to the benefits they bring by being competent and professional. This is far from always the case, of course, but in my experience the renting market works well and I'm happy I don't have to deal with the hassle of owning an maintaining part of a building.
> Step 2
So you've almost completely eliminated rentals from existing, is that good?
From these discussion, it seems there are people who like and want to rent.
It seems odd for people to not consider the highly beneficial aspects to some tenants of a useful/viable rental market existing.
I’ve been paying more attention to the intractable social problems such as housing as similar to the talk about offshoring of US manufacturing 10+ years ago.
I have family in the mid-west who suffered downward pressure on their wages. Meanwhile the technology industry wages are skyrocketing. Money in the economy, but not for them.
They have turned towards the more radical political factions who promised to help. I witnessed suffering people welcome chaos as a force for change.
I want to know who is benefiting from the housing crisis? I bet they’re entrenched in legal and moral loopholes, and lobbying that reforms will lower your home value and put your ‘investments’ underwater.
That’s what I’m thinking about. And I’m reminded that leaving the EU seemed, as seen from the US, like it would be difficult. But the UK managed to do it, for good or bad.