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Comment by ajross | Hacker News Reader

> If however you care about the housing development decisions that will incentivise owner occupancy

Genuine question: who, precisely, cares about "incentivising owner occupancy" as a policy goal? What interest does that serve and why should the government prioritize maximizing that metric?

Basically right now we measure "what fraction of homes are occupied by an owner" and not "what fraction of people live in their own home?". It seems bleedingly obvious that the latter is the number we should be maximizing, if either. And in particular it seems to me that a lot of argument about the former is actually using it as a proxy for the latter anyway.

No one cares about the poor homes who don't have local owners!

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If you live in a place which is used only for vacation homes, or worse, only as investment objects, you know the value of owner occupancy.

Non-occupants contribute very little to the actual value of a place - they don't work here, they don't buy here. But they capture much of the value of other people trying to make the place a pleasant place to live, though rising real estate values.

This depends heavily on the industry of the area. Go to a college town and you will find owner occupancy is not that big of a deal. Go to a luxury resort town and they literally make their money from non-residents transiently moving through.

I don't think you can get any of these situations non-organically. But schools and worker dormitories have a lot in common. More than most seem to admit to.

So long as the percentage of people who live in a home they own is high, there's not a great reason to care about owner occupancy.

You're just using it as a proxy for people owning homes. It's not a given that the two numbers are always opposed.

It's very easy to see that owner-occupancy is an incoherent metric.

Stipulate that owning a home is good.

As the number of homes goes up, owner-occupancy necessarily goes down (you can only occupy one home at a time). Homeownership might rise or fall while this is going on. But that doesn't matter; the number of homes going up is good, so the fact that the metric falls when it rises tells you that either (1) the metric is "evil", rising when bad things happen and falling when good things happen; or (2) the metric is incoherent and doesn't carry information about whether things are going well.

> As the number of homes goes up, owner-occupancy necessarily goes down

Not necessarily at all. Plenty of people rent who would like to own homes too

All you have to do is let the number keep going up. Yes, it's a necessary outcome.

Here's a hypothetical: if everyone owns a home, no one rents homes anymore, right? I mean why would you?

So why would anyone buy a second home in that scenario? Maybe as a studio or whatever, perhaps. But as homes become less useful as a rental investment, the number of non owner-occupied homes seems like it will decrease too?

The theory behind it is that 1) economic growth generally accrues to land values so distributing land ownership is one way to distribute wealth and 2) people generally treat the things they own better than the things they rent or consume.

Incentivizing ownership is more closely aligned with objective (1) while owner-occupancy is more closely aligned with objective (2).

These don't work in the presence of capital's outsized returns though, which allows people who (for whatever reason) have access to more capital to recursively seize more of the growth in land values from objective (1) and therefore price out objective (2).

> distributing land ownership is one way to distribute wealth

Right, so you want to know how many people own homes, not how many homes are "occupied" by an owner[1], which is at best a proxy, right? Sounds like you're agreeing with me but just getting the sides of the argument mixed up?

[1] As the article points out, a single person can in fact "occupy" more than one home!

It's also a pretty dubious metric for wealth equality anyhow. If 100% of people owned their own home, then some fraction owning additional ones that no one lived in wouldn't really matter; the value of them would surely not be as high in a world where there was no renting or homelessness, and even if it was, I'd still take that over the alternative where every home is occupied by an owner but there's still not enough to go around for everyone.

That is correct, I am defending neither the metric nor the overall policy goal. I'm just articulating why it is/was one.

> Genuine question: who, precisely, cares about "incentivising owner occupancy" as a policy goal? What interest does that serve and why should the government prioritize maximizing that metric?

Culturally, in many countries it helps with household formation (coupling, starting families), which, in an age of low birth rates, can be useful.

A key difference is illustrated in TFA. To maximize fraction of people owning a home, you dislike people renting or living with a homeowner. A spouse that marries a homeowner, for example. It would be "better" if they broke up and owned their own separate homes. Or perhaps they could buy two homes, one for each. Or they could by two homes and rent a third to actually live in - same metric value.

To maximize fraction of homes with their owner living inside, you focus on the ownership _and_ the lifestyle choice. A family living together is the best use of land in this case. A family renting a side room to a college kid is still the best use of land. If every home were lived in by its owner, you could still have 90% of your population renting and not building generational wealth.

> A spouse that marries a homeowner, for example. It would be "better" if they broke up and owned their own separate homes.

No, if you look at the first example explaining how the two metrics are calculated, it is clear that both spouses are considered homeowners for HPOP.

> A key difference is illustrated in TFA. To maximize fraction of people owning a home, you dislike people renting or living with a homeowner. A spouse that marries a homeowner, for example. It would be "better" if they broke up and owned their own separate homes. Or perhaps they could buy two homes, one for each. Or they could by two homes and rent a third to actually live in - same metric value.

Or they could... both own the home? Independent of the rest of your argument, this is a pretty weird hypothetical case to illustrate your point. Joint property ownership is way more common than any of the "alternatives" you're suggesting, so it's hard to take what you're saying seriously when you've dismissed the obvious way that this would work for the overwhelming majority of married homeowners.

Yes, we're not talking about reality, we're talking about the measures of it. A metric would fall down on corner cases, so identifying the corner cases is how you determine if a metric is a good one.

"% people owning homes" is maximized by joint ownership, as well, but the corner cases are interesting: It is lower with big families living together or when anyone rents.

On the other hand, the "% homes lived in by owner" metric falls down in a much more realistic way: When there are fewer homes and they are lived in by owners, you can still have 90% of your people renting apartments while this metric hits 100%

I feel like this could just as easily be accounted for as "are you paying rent to the person who owns it or not?", which rules out family members.

Yes, that would be a new metric, though, wouldn't it?

What's the goal - defend A vs B?

More importantly, nobody cares about the people where renting is their ideal condition (at least for now - in different situations different ways of living are ideal). There should be nothing wrong with renting. Owning your own should be a worse choice if you will live there for less than 5-10 years. Owning a home should be only slightly better if you will live there for more than 10 years - not enough better to make up the hassles of owning.

If you rent make sure you vote. Make sure you have an informed vote, all too often cities will put rules on rental units that make renting worse for you. (bad tenants and bad landlords exist - good tenants and good landlords need protection from the former). Likewise while rent obeys supply and demand, when property taxes go up that factors into supply and will make rent go up indirectly - is it worth it? (I cannot answer the later question - the more important consideration is make sure the taxes are similar for rental and owned units otherwise you are a renter are harmed)

I didn't vote when I rented in San Francisco for a few years because I had no intention to stay, and thought it immoral to disenfranchise the locals. Actually in my opinion you shouldn't be able to vote until you've lived somewhere for at least 5-10 years. Certainly even if you can, you shouldn't if you know you're only there temporarily.

I don't see why you think owning should only be slightly better after 10 years; if you don't want to deal with maintenance directly, you could always hire a management company as if you were the landlord and renter, but there's a benefit to you and everyone around you when you are invested in your home and community.

Risk is why owning needs 10 years. If the economy collapses you value goes down, by 10 years it will likely either have recovered, or at least not be done much. If the economy goes down and you lose your job in the process you have to sell to that down market and lose money.

Management companies have a terrible reputation. While you can use them, it is likely they will be much more costly than doing things yourself. Real estate investors tend to hire their own people for management even though this seems like the perfect thing for them to outsource because they have been burned so often. If they work for you great, but beware.

Even if you find a good management company, if the roof it 23 years old (expected lifespan 25 years) you should expect the big bill to replace the roof - over 10 years this works out since there will likely be one such big bill but not many. However if you live there less than 10 years these big bills will hit you.

The point is if you're renting, you're already paying for those things while also introducing a middleman and losing autonomy. There's no reason why renting "should" be a better choice even on a relatively short timeframe. e.g. if more were automated to reduce transaction costs, and if the housing market were more stable, then it seems like it'd obviously be better for society for people to own even if only for a few years. On longer timeframes, we should certainly want people to own; we want people to view their surroundings as something they should take care of.

You might want to maximize owner occupancy because you care about the poor homes who don't have local owners - as an owner living in the home might be better incentivized to take care of it and provide decent living conditions, for example.

Allowing people access fairly illiquid and predictable housing allows and incentivizes them to prioritize things on longer timelines which is good for society.

You are the second reply that seems to have misunderstood what the article is about. The point is that the current metric is not a measure of how many people own homes, even though everyone thinks it is.

I think that single family homes as a speculative asset needs to be done away with. If all this energy and investment went to purchasing, say, agricultural land, then more "little" people could own that and protect against institutional investors. Small landlords were only good because they kept institutional investors away, but now that they can't purchase more homes, the small real estate investor's money would be better used to hedge against market capture in the next thing up the hierarchy of needs, i.e. food. If we keep walking this back, then eventually we can prevent assholes from speculating on basic needs.

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