There are ways to disincentivize toxic forms of investment (especially speculation) without banning it. A high land value tax, for example, would simultaneously increase investment and decrease speculation.

I don't see how a high land value tax increase investment & decrease speculation? If your talking about flipping homes that's one thing but REIT ownership isn't home flipping for the most part...

High LVT means you pay a high tax on the land itself and little or no tax on what you do on top of that land. It encourages highly efficient land development which means increased supply of commercial and residential units (thus reducing rents), and it makes lots of speculation prohibitively expensive. Since holding undeveloped land is just as expensive as holding developed land, you’re going to want to put it to productive use sooner rather than later.

Thats sounds a solution for undeveloped land in urban areas though REITs are buying up the housing stock which is different.

If I understand your solution correctly it also puts a higher burden on the rest of the population who then have to pay higher land taxes each year (politically unpalatable) and I would argue that REITs probably have more capital to be able to pay off higher taxes where cranking up land taxes on the population makes home ownership more challenging.

They are fundamentally the same problem -- profiting off of owning something fundamentally scarce that you did not produce, i.e. rent-seeking. When the taxes are proportional to the most productive use of the land you own it is less profitable or sustainable to manipulate the housing market.

The strictest Georgist philosophy would hold if you happened to homestead in the heart of Manhattan your family will eventually have to choose between paying the price for holding that piece of land hostage from the rest of society or letting someone else make use of it.

In practice, places like Denmark and Estonia make exemptions for owner-occupied dwellings.

... and pricing out existing residents in low density housing by taxing them to oblivion.

I never understood this argument. People are not priced out of their homes. Their homes are rising in prices so they actually have assets to match the price increase. Yes they might not be able to afford the tax, but they have a million dollar asset that they could use. The whole point of the tax is to disencent a single person living in a huge house all by themselves.

The argument is that you shouldn't be forcing people out of their homes. The reason you don't get the argument is that you view people's property as something you should optimize for others, while the people making the argument are believers in strong property rights, especially that they want to be left alone without oppressive government actions. The other half of the argument is that your terms are vague. Not every million dollar house is huge. It could be used to price people out of normal SFH just because the land is zoned in a way that allows higher density housing.

You're literally proposing a scheme that views removing people from their homes as beneficial. Your values don't match with others. That's the disconnect.

And by the way, that increase in value over the years is because other people want to live in that area. Perhaps we should disincentivize that instead of punishing the people who made it a nice area to live in.

This would only work if the assessed value was the actual price i.e. if the agency making the assessment had been bound to buy the property at the price it has assessed. Of course, if such an obligation existed, the land would not have high value in the first place.

Only residents who own tons of land they aren't doing anything productive with.

The whole argument is how to make housing more affordable to live in. Your argument is ... pay more for land tax to avoid speculation however if you live somewhere in order to pay for it you need to consistently be more productive than the speculators (who would just charge the land tax to the renters anyways). Which doesn't solve the problem in any way shape or form.

It does because taxes don't disappear. Say we tax land at 4% and the value of all the land in the US is 100k per person. That means the average person pays an extra 4k and each person receives a $4,000 check. If you own an average amount of land you aren't any worse off.

But what is considered average can change. This is especially true since the land value is not uniform like your hypothetical example. Any system like this can be manipulated for one group to use against a minority group.

That might be how it starts, but history shows rates balloon over time. We already have senior being kicked out because of property tax. Your definition of "tons" of land is vague and may be used against people who have moderate amounts of land (.5-1ac).

At the levels where an LVT is effectively coercive, it’s functionally indistinguishable from rent paid to the government for land you don’t actually own.

I expect most citizens would recognize this and any effective LVT would be politically DOA.

The fact that property taxes exist at all, combined with the fact that failure to pay property taxes means the government takes "your" land means you are in fact renting the land from the government. The size of these taxes is irrelevant.

I invite you to make that sale to the American voter.

My point is that Americans who own one or more plots of land definitely do NOT believe they are renting that land from the government. Ownership is, of course, a degree of control and everything is a matter of degree. Meaningful LVT would be a qualitative change in a home- or farm- or business-owner’s degree of control over what they heretofore considered their property, and they’d recognize that.

To be clear, my position is that property taxes should not exist at all. An LVT would be doubling down on an already immoral tax. Whether it's pennies or 50% of the land's value, that still makes it the King's land, which I find abhorrent.

> At the levels where an LVT is effectively coercive, it’s functionally indistinguishable from rent paid to the government for land you don’t actually own.

I don't see how this follows. Would you mind explaining?

I mean property tax is already rent.

Property tax is rent like a condo fee is rent: It at least approximates a (progressively, in most tax schemes) assessed user fee for community services. The size of the fee is proportional to services rendered.

The LVT as envisioned by its advocates isn’t like that. It’s a fee—largely determined by market forces—to continue to occupy and make use of “your” land. If the government can insist you pay some market-set cost to remain on a plot of land, you don’t own it in the way we classically think about land title ownership. You’re not the market participant, the government is.

Land value tax means you don’t pay any extra tax for developing your property, but you do pay extra tax if the neighborhoods get more expensive. Ergo, incentive for investment and disincentive for speculation.

Suppose you do a “buy and hold” strategy on a neighborhood that is gentrifying. The increased taxes you pay each your will eat into your profits. If you sell, the buyer will have have to pay those taxes too, so the value will be lower.

A very high real estate tax with huge discounts for a single primary homestead makes investment less profitable.

That won't fix the current problem. That would only potentially prevent it from reoccurring to the current levels. Landlords pass tax onto renters. Renters may seek to buy a home, but if supply is locked up by landlords, they may just be stuck.

That's just a less efficient, and less accurate land tax.

The solution is high property taxes offset by high homestead tax exemptions.

You can crowd out usury private investment (which this specifically is an example of) with government investment. Have the Fed buy treasuries, use federal funds to build and manage affordable housing.

Capital is make believe, a fiction, rows in a database. Physical laws are mandatory, everything else is a shared delusion or a suggestion. The rules can change at anytime with enough will.

Broad strokes, if Capital is primarily serving a small minority while the majority suffers for it, the tool (capital allocation) is broken and it is time to reevaluate the implementation.

Getting the federal government to manage all rental properties sounds awful. I sent a request the IRS last September and they still haven't replied yet with anything but letters saying they're backed up.

This is not very imaginative. Think how federal dollars are going to small jurisdictions to deploy municipal fiber, not HUD being your landlord. The federal gov is the VC, local government are the startups, sort of, if you want to twist the startup ecosystem analogy. You’re provided funds with strings and milestones; if you don’t perform, your funding is pulled (or something similar).

With regards to the IRS, even though there are occasional delays, I’ve always had a top notch experience even when my own mistakes would have incurred thousands of dollars in penalties (which were waived more than once). If you want effective delivery of government services, you must fund them at the necessary levels. Effective government is not free.

You realize that we are already running trillions of dollars in deficit for the programs we already have in place? The first step, should be to lower the deficit and actually fund the programs we have in place. We cannot just keep printing money without worsening the deficit and worsening the inflation. Yes, consumer sentiment is all hopes and dreams, but monetary policy is not. There are real world implications.

We’re going to inflate that debt away, like all developed nations with a declining fertility rate will do (Japan leads the way for us). Extend and pretend. Again, it’s not real! It’s just numbers in a database.

For those concerned about sovereign debt, that should’ve been thought about before running it up on unnecessary conflicts (which there have been many!) and other unproductive efforts (tax cuts for the wealthy). Real needs coming up, and no excuses because of previously suboptimal governance. Lots of assets and wealth in the US to tax for those who really want the debt line go down, but if debt line doesn’t go down, nbd.

If debt doesn't matter, then why do any of us pay any tax? We can just replace all taxes with more debt.

Taxes and debt, while on the surface appearing to be similar obligations, have drastically different recourse options and enforcement mechanisms. Debt creates money, and if you subscribe to modern monetary theory, taxes destroy money.

That money (or some portion of it) is currently flowing into the housing market via Freddie and Fannie and the loan guarantees provided for 30 year fixed.

You could imagine other programs that could encourage renting, for example (no thought has been given to this, just an example/idea) - federal guarantee that you would pay NO capital gains tax if you could prove that you continued to rent out the property and never increased rent more than 1%, say.

IMHO cities need to limit how many large multi-national conglomerates are allowed to build huge rental complexes.

A large % of the high density housing being built around Seattle is rental only, all that does is funnel money out of the city. Residents don't get to build equity, and rental prices keep going up year over year, vs mortgage payments that, except for the property tax portion, stay the same over 30 years.

Also large rental complexes don't build communities.

Someone who bought a small 2 bedroom house 10 years ago and who now rents it out, those people aren't the problem. Heck odds are they are renting that 2 bedroom out for less than what a large corporation would charge.

When they don't come in and build out those large rental complexes those very well paid engineers rent/buy every SFH for miles causing the absolutely insane gentrification we've seen in San Francisco that pushes everyone out.

> those very well paid engineers rent/buy every SFH for miles causing the absolutely insane gentrification we've seen in San Francisco that pushes everyone out.

I used to live in a large, over 100 unit, town home complex.

Central to the complex was a very large open green space, larger than most suburban yards.

Over the years, about 50% of the units are now rented out, typically at a price lower than in the nearby built for rental apartment complexes. Individual landlords prize stability in tenants more than maximizing short term value, also if a person is only renting out 1 unit, that unit being vacant for a month or two is a lot of lost income, raising rent by $200 and then losing out on 4k of rental income due to having to lose then find a new tenant is not something a smart landlord does on a yearly basis.

Prior to that I lived in a luxury condo complex in a very nice area that was again, lots of rental units. From what I gather, soon to be retirees had bought in and were renting the units out until they they needed to move into them. They also prized stability and boring tenants over maximizing monthly income.

The point here is, within reason, today's fancy high end condos are tomorrows reasonably prized housing.

Will the 50 story skyscraper condos ever be reasonably prized? No, of course not, but if someone dropped 150,000 units of medium density housing into Seattle, I bet that in about 5-10 years housing prices would start to come down.

The other issue I have is the absurd number of 4 story town homes being built, which should instead be 4 story condo complexes. Insane square footage is wasted on stairs, and no one over 35 can live in those places, and raising a family in them is either impractical or horribly annoying. (Good for baby gate sales though...)

If it were up to me I'd remove elevator requirements for 4 and 5 story condo complexes in return for having the bottom floors requiring ADA units.

Most small landlords don't do the accounting properly and are losing money; this is disguised by the favorable depreciation and the rapid property price appreciation.

For example, many small-time landlords would have been better off just buying a much more valuable property to live in themselves, than buying one to live in and one to rent. Eg, buy a $400k house instead of two $200k houses and renting one.

Imagine if housing was cheap enough that paying the mortgage was around the same as what it now costs to rent.

There definitely needs to be some rentals, but I believe that there needs to be controls over how many and the rental price.

As someone that happily rents (I enjoy the increased optionality that comes with this option), the constant push to get everyone to own a house seems weird to me. Yes, we should make it possible to own a home, but it doesn't need to be the only option.

Also, rentals tend to be higher density than houses that are owned. If there is a housing crisis, this seems like a desirable thing. Ex: roommates (yes, possible with a house, but less likely), etc.

same. i rent largely because i haven't prioritized buying. (i.e. the money i could have saved for the down payment went to accelerated student loan payoff, cars and fun stuff)

aside from the federal tax breaks and very high amount of leverage ($40k to get a loan on a $200k unit that you _might_ be able to resell at $300k to get into a larger $400k unit that you _might_ be able to resell at $500k to get into a larger $600k unit...), I never saw, and still don't see, the benefit of home ownership.

actually, that's not true. for people with families who need (or "need") stability, home ownership makes a lot of sense. you're going to be in the same town until the children reach maturity...might as well get a loan on a house since you're going to stay put for a while. cheaper than hoping that your landlord doesn't bump the rent up.

however, we are not having children, have moved three times in the last six years, and spend a lot of time traveling. i very much like emailing my landlord "hey, weird noise" and they bring in their contractor friends to look into it on their dime

i do hate how there is this sense that you should feel "bad" for not owning, i.e. renters are always pictured as troubled people in financial distress who don't have a choice but to rent.

My mortgage + insurance + taxes is a lower monthly payment than what my rent was at the time I bought my house. Compared to that same unit renting today, its several hundred dollars a month cheaper. It has over twice the square footage and a private garage. This is in a pretty big metro area, not the middle of nowhere.

One of the biggest benefit of owning is a hedge against housing inflation. Its not a perfect hedge, I do acknowledge. As property values increase my taxes go up, as housing materials increase in cost the cost to repair it goes up. But the amount my taxes will go up in a year is far less than how much I've been seeing rents shoot up.

You're also shouldering maintenance which is often not calculated well; the depreciation allowance the IRS allows for rental properties is a rough estimate but it's not perfect - it estimates that the property (house, not land) will be worthless in 27.5/30/40 years, depending on if you take GDS, ADS, or it was placed in service before 2018 - you usually want the fastest depreciation possible but there are reasons not to choose such, involving capital gains on sale, etc.

They're "small" expenses but if you track out the various things and divide them over the ownership period, they do add up.

E.g. - current house, here 5 years, so far: furnace and A/C, $9k, fence, $14k, landscaping and misc, $2k, tools and supplies, $3k, plumber and window repairs, $2k. So about $6k a year, double my taxes and half my mortgage again. And I haven't even hit the big ones (and didn't count appliances as those were "optional" purchases).

Owning is still a good idea for many, and has benefits, and renting will almost by definition be more overall, but it's not a given. You note the main advantage - stability. If you're on a fixed loan (whether it be 5, 10, 20 or 30 years) your payments are calculable years in advance and you get to pay much with tomorrow dollars, which are almost always worth less than today dollars.

But you do have to want to stay in the area for years.

Did you account for the opportunity cost of your down payment? If you chose to continue to rent, you could have invested your $100k or whatever down payment in the stock market for ~7% a year.

On the other hand, you have to count the mortgage interest as a cost but not the mortgage principal repayment.

The increase in valuation in my house far exceeds 7% annualized. Compared to index funds and other investments over the few years I've owned it's far outperformed any other "investment".

Obviously, this won't hold true for all time-frames, and I'm not even necessarily a fan of thinking of primary residences as investment vehicles, but if you're going to compare it for opportunity cost it's still not necessarily a home run comparison.

How much equity do you have in the house? 5%? More?

Due to house values rising considerably in the years we've owned, it's actually pretty high considering we're only a few years in. We only put 10% down but we were able to get rid of PMI in only a year because of home prices skyrocketing.

I have good news for you! How many rentals are available is closely controlled in most parts of the US. This is one of the things zoning accomplishes. It's possible that the outcome may differ slightly from what you want, however.

Rent controls are unfortunately very similar in key ways. They've been tried, and the results may not quite line up with what you might be hoping for.

> How many rentals are available is closely controlled in most parts of the US.

Technically true, but practically false. Yes, zoning exists in most of the US. And yes, most people have no trouble converting a region to residential zoning. I've known people on both sides, and most of the problems are the opposite - people who want to run businesses in a residential zone. I've yet to meet a single person who couldn't go the other direction.

There's a process to getting approval to build a house/apartment complex. You simply follow the process and get approval. Most of the US is not the Bay Area, Seattle or NYC.

The point I was attempting to make is that we have and use the tools to control the quantity of rental housing available. Using those tools has not made renting as cheap as owning. Those tools generally help accomplish the opposite. With that in mind, there's perhaps cause to question if "controls over how many" that yardstick suggested will accomplish their aim.

So yes, you're absolutely right, technically true. In practice, they fundamentally don't do what the user wants them to do because that's not what caps are capable of doing. The tools don't work that way.

When I bought my home 4 years ago my mortgage was ~10% more per month than the apartment I was renting. Looking at the apartment complex's website, it looks like the same apartment is now about 60% more per month than my mortgage.

In much of the US (read, in the Midwest where I am right now).. mortage monthly payment is indeed cheaper, sometimes a lot. And this is after taxes / repair issues.

Renting is very much a poverty trap where the poor with bad credit get poorer and worse credit.

Depends on where you live - this "renting is a poverty trap" only applies to certain places and depends on home values constantly increasing. If home values crash where you live then you spent years putting money towards a worthless asset.

> If home values crash where you live then you spent years putting money towards a worthless asset.

It's still a roof over my head regardless of how much it's worth. And more importantly, how much it's worth is completely irrelevant unless/until you want to sell. And if you do want to sell, and home values have crashed, then the next house you buy will also be cheap!

The OP is talking about a situation where it would be cheaper to rent your home in the future, than make mortgage payments on it.

Yes, but are we splitting the payments between principle and interest? In most cases, after a number of years, the rental cost easily exceeds interest + insurance + tax for the same size property.

Yes, it often seems the rental cost will be less than your monthly payments, but do realize that you lose all the rental cost, but not all your monthly payment.

Its simple to demonstrate scenarios where a loss in property value ends up being more expensive for the homeowners than renters in the long run. We had a crisis in 2008 because of this.

There are online rent vs buy calculators that you can use to generate these scenarios.

https://www.calculator.net/rent-vs-buy-calculator.html

Plug in negative appreciation for property values and watch how the comparison tilts.

Renting is always worth 0 as equity, so it's a total loss regardless.

* It guarantees you do not lose money if the home values around you drop

* It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you.

* If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying.

Look, buying is mostly great. It's one of the biggest builders of wealth for most Americans. But from a purely numbers game, it's not so clear "rent is just losing money".

1. True, but housing prices rarely drop in desirable areas (usually where good jobs and schools are). If, for some reason, you decide to stay in a town with a dying industry, then yes, this is true.

2. So does a fixed-rate mortgage. Even better, refinancing a mortgage during a low-rate period (e.g. 2012, 2020) actually lets you reduce your payment, while contributing more to equity. How often do you have an opportunity to reduce your rent?

3. Saving 50% of what exactly? You can put the down payment into an index fund, yes, but remember than the house is an asset that gives you 5x leverage initially, assuming 20% down. You can't get 5x leverage at your broker, and even if you could, playing with 5x leverage on the stock market is insanely risky compared to real estate.

> But from a purely numbers game, it's not so clear "rent is just losing money"

It's pretty clear actually. They've compared retirees who rented all their life vs home-buyers. The difference in wealth was striking, a factor of 6x-7x if not more.

What's not clear is whether that trend will continue in perpetuity under the conditions of declining population.

So say global warming continues. Huge chunks of Cali aren't fit to live in. Salt Lake dries up. What happens to all of those home values?

Home values rising historically is good, but I don't think a clear win through all time. There is no instrinsic reason a house value should rise faster than inflation. You can always build a new house for cost X. Buying existing means that new house supply is too low or too costly.

I don't look at a house as an appreciating asset, that would be stupid. Market forces control the price, and those are predominantly out of your control.

But for what I've paid in rent over the years, I could have paid for entire dwellings. And had the freedom to fix and alter things per my desire.

> It gives you a fixed monthly houseing cost.

Renting is the opposite of a fixed monthly cost, since rents go up all the time. If you rent, you can't tell me what your rent will be in ten years. I can tell you what my mortgage will be, exactly the same as today.

> No "10k new roof" or "1k new stove" suprises hit you.

If these bother you, you can sign up for house maintenance insurance programs to give you a fixed monthly cost. I'd recommend against that since they make a profit off you, you're better off putting that money into an investment account and withdraw from there when you neeed it.

> No "10k new roof" or "1k new stove" suprises hit you.

New roof costs are pretty much never a surprise. You should know when you buy the house how much life is left in the roof and plan accordingly. If a natural disaster occurs that destroys your roof, insurance will cover it.

Appliance costs? Yeah, they are often surprises. Hard to find reliable appliances any more.

Oh, and it's hard to get a $10K roof these day :-)

> If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying.

Yeah, I always wondered if I should do this analysis for my house, and I'd be curious on studies on how this would play out in most cases. For me, right from the get go the rent on a comparable house exceeded the monthly interest + tax + insurance (excluding principle). The tax benefits more than paid for all the maintenance costs. So the main questions would be:

1. How much would the down payment be worth in an index fund?

2. How much would the principle payments monthly in an index fund be worth?

I suspect that I'm ahead of the market significantly, what with all the crazy house appreciation (that alone is about 8x my down payment), and rents are quite high - easily increased by over 70% since I bought the house.

The real wealth building doesn't come within a generation from asset appreciation. That's just speculation, the market can screw you.

But once it's paid for, it's paid for. Now you just need maintenance and taxes, easier on a fixed income. And it's easier to build intergenerational wealth if one of your children doesn't need to blow money at all on rent or home purchase.

> * It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you.

When the new roof goes in, what happens to you as a renter? I'm pretty sure you still have to pull together 4k for moving/security deposit/first several months

It guarantees that you can be forced to move at a whim. Twice I've had to move, once during the school year, because the landlord died. And they'll steal from your security deposit. Good landlords are young great people. Corporations are scum.

This is true only if you place zero value on "having a roof over my head".

But renting also guarantees you will never have negative equity.

Negative equity with a roof over your head is better than on the street. Your equity going to zero is still cheaper than raising a family to adulthood in a rented place.

I agree there are lots of upsides to having a house. I definitely get some used car salesman vibes whenever someone tries to sell up the upsides of negative equity, though. Having no chance to have negative equity is pretty much unequivocally one of the few absolute advantages of renting. The other being (typically) lower transactional costs for short term occupancy.

Negative equity means little. So what if it's worth less when you sell than when you buy? Compare the net on that with the loss you take from renting.

Only a fool treats their dwelling as an appreciating asset anyway. It's subject to market forces.

Absolute statements rarely hold up when you shine a light on them.

That's sometimes true, but there are a lot of nuances to it.

I mean, in San Francisco or the Bay Area in general, renting is a ton cheaper than owning at current prices. People still buy, because it’s nice knowing your landlord won’t get the cheapest contractor that’ll drill into asbestos in your kid’s room when something happens.

That's never going to be the case because of equity. Of course government-owned housing can be sold for use rights only with no equity, but that's 'socialism' which Americans have been viscerally conditioned against.

The concept of credit score isn't something that has always existed in humanity. It's something that we can go on without, even more so given the ridiculous profitability of banks

Credit scores are probably the most useful metric for a person in general. The reason isn't because it's an assessment of creditworthiness, but it saves the time interviewing each person for each loan, asking for quite literally thousands of pages of documentation proving they are creditworthy, etc.

If you recall how these things were done before credit scores it was not pretty. Without them lending would virtually cease to all but the most obviously creditworthy people.

I generally agree the system for credit scores needs to change. In particular it should not be controlled by a veritable monopoly. But this does not discount the utility of it in general.

It's also a way to work around the housing discrimination laws.

If banks stopped lending based on creditworthiness they'd be doing a lot less lending causing far more people to not be able to afford a house.

IMO they need to change their model. If someone has been affording rent at 2k for many years, then they can afford a mortgage at 1.5k, that's not the case nowadays.

Renting on a yearly basis at $24k/year is very different than committing to the deed transfer on land + house at $18k/year on a 30 year term.

For one, rent can get more expensive, vs a fixed rate mortgage which doesn't.

It hasn't always, but something of the sort _has_ existed for a long long time: https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

Like IQ tests, the credit score has egalitarian roots, but modern day activists think they're discriminatory and should be abolished.

Credit score is hilarious. Until I was like 30 I paid for literally everything with cash. Everything. Never missed a bill. My credit report/score came back "unreportable." Not a shred of data to go off of. I was unable to obtain any credit card. I ultimately had to go to a bank and place $1500 in what was basically a 0% CD for the duration of my credit card, with the agreement my bank would just take it if I didn't pay. After a couple of years of paying that religiously they allowed me to unsecure the funds, but I still had shitty credit afterwards.

Every new immigrant has that problem. I deposited $500 in a credit union and took a secured loan of $500 for 2 years. Did the same at another bank. Also took a secured credit card, as parent comment described. That bumped my credit score up pretty quickly.

Dave Ramsey talks a lot about that - to have a good credit score you’ve got to take on debt, which is counterproductive for a lot of people.

The IQ test does not have egalitarian roots, it was simply a tool designed to diagnose people with severe learning disabilities and was later abused to give a metric to people to feel smug about themselves. It doesn't have significant correlation with any meaningful success metric as soon as we disregard the people with learning disabilities.

you don't do someone a favor when you lend them money they can't pay back.

Apartment complexes are for more economically efficient compared to single family homes. We need to incentivize these instead of letting them buy up homes meant for a single family.