Re:Low interest rates in advanced countries have pushed mone...
by seanmcdirmid on Wednesday November 24, 2021 @09:36PM
(#29337678)
> Interest rates only apply to people borrowing money, which is the thing that promotes speculation. It even promotes speculation among people who are living in the houses, because then they try to buy a bigger one until so does everybody else. With the result that everyone ends up in the same house they would have before, but pays more for it.
Yes, interest rates also promote speculation. But they aren't the only thing: if you amassed capital, you wouldn't need loans but could still speculate on the property market. Property taxes then act against such un-leveraged speculation.
> Property taxes apply even to people paying their own money for their homes, which is an undesired side effect. It makes it more expensive to own a home, which is the thing we were trying to prevent.
Property taxes represent the reality that living somewhere costs money beyond the initial outlay to buy the property. They also makes it more expensive to rent a home, but it is money that needs to be paid anyways. Roads, schools, and other city/county services don't fund themselves. By tying it to property ownership rather than use fees, it creates a built in disincentive to hold property and not use it productively (because those taxes have to paid if you use it or not).
> The price of the house is the same and now you're making twice as much money, so the loan officer is more comfortable giving you the loan, not less.
If inflation is high, the loan officer isn't really comfortable giving you that loan at all. If the high inflation happens overnight and then stops...that's a different story, but that usually causes a free fall in confidence anyways.
> The amount of density needed for that in San Francisco is different than it is in Houston.
Dense cities are more expensive than less dense cities. Not because they are more dense, but because they are more desirable. Increasing SF density doesn't make it cheaper to live there if it also increases its desirability. More demand just springs up to account for the new units. You have to do something like Singapore has done instead: make housing production and distribution more public (ironic, given that Singapore is often considered the most libertarian country out there).
> If you deal with zoning then you deal with speculators, because increasing the housing supply by a sufficient amount prevents prices from skyrocketing,
That has never shown to be true at all. The Chinese have tried this, and...without a property tax anyways, it has just led to a lot of bought for but empty apartments. A better alternative might be Japanese style depreciation (require that housing be rebuilt every 30 years, hey, it also means a lot of construction jobs).
Yes, interest rates also promote speculation. But they aren't the only thing: if you amassed capital, you wouldn't need loans but could still speculate on the property market. Property taxes then act against such un-leveraged speculation.
> Property taxes apply even to people paying their own money for their homes, which is an undesired side effect. It makes it more expensive to own a home, which is the thing we were trying to prevent.
Property taxes represent the reality that living somewhere costs money beyond the initial outlay to buy the property. They also makes it more expensive to rent a home, but it is money that needs to be paid anyways. Roads, schools, and other city/county services don't fund themselves. By tying it to property ownership rather than use fees, it creates a built in disincentive to hold property and not use it productively (because those taxes have to paid if you use it or not).
> The price of the house is the same and now you're making twice as much money, so the loan officer is more comfortable giving you the loan, not less.
If inflation is high, the loan officer isn't really comfortable giving you that loan at all. If the high inflation happens overnight and then stops...that's a different story, but that usually causes a free fall in confidence anyways.
> The amount of density needed for that in San Francisco is different than it is in Houston.
Dense cities are more expensive than less dense cities. Not because they are more dense, but because they are more desirable. Increasing SF density doesn't make it cheaper to live there if it also increases its desirability. More demand just springs up to account for the new units. You have to do something like Singapore has done instead: make housing production and distribution more public (ironic, given that Singapore is often considered the most libertarian country out there).
> If you deal with zoning then you deal with speculators, because increasing the housing supply by a sufficient amount prevents prices from skyrocketing,
That has never shown to be true at all. The Chinese have tried this, and...without a property tax anyways, it has just led to a lot of bought for but empty apartments. A better alternative might be Japanese style depreciation (require that housing be rebuilt every 30 years, hey, it also means a lot of construction jobs).