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  #1  
Old Posted Jan 18, 2020, 5:24 PM
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Home Ownership Is The West’s Biggest Economic-Policy Mistake

Home Ownership Is The West’s Biggest Economic-Policy Mistake


January 16, 2020



Read More: https://www.economist.com/leaders/20...policy-mistake

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.....

Vibrant cities without space to grow; ageing homeowners sitting in half-empty homes who are keen to protect their view; and a generation of young people who cannot easily afford to rent or buy and think capitalism has let them down. As our special report this week explains, much of the blame lies with warped housing policies that date back to the second world war and which are intertwined with an infatuation with home ownership. They have caused one of the rich world’s most serious and longest-running economic failures. A fresh architecture is urgently needed.

- At the root of that failure is a lack of building, especially near the thriving cities in which jobs are plentiful. From Sydney to Sydenham, fiddly regulations protect an elite of existing homeowners and prevent developers from building the skyscrapers and flats that the modern economy demands. The resulting high rents and house prices make it hard for workers to move to where the most productive jobs are, and have slowed growth. Overall housing costs in America absorb 11% of GDP, up from 8% in the 1970s. If just three big cities—New York, San Francisco and San Jose—relaxed planning rules, America’s GDP could be 4% higher. That is an enormous prize.

- As well as being merely inefficient, housing markets are deeply unfair. Over a period of decades, falling interest rates have compounded inadequate supply and led to a surge in prices. In America the frenzy is concentrated in thriving cities; in other rich countries average national prices have soared, especially in English-speaking countries where punting on property is a national sport. The financial crisis did not kill off the trend. In Britain inflation-adjusted house prices are roughly equal to their pre-crisis peak, while real wages are no higher. In Australia, despite recent falls, prices remain 20% higher than in 2008. In Canada they are up by half.

- Yet there has been some progress. America has capped its tax break for mortgage-interest payments. Britain has banned murky upfront fees from rental contracts and curbed risky mortgage lending. A fledgling YIMBY—“yes in my backyard”—movement has sprung up in many successful cities to promote construction. Those, like this newspaper, who want popular support for free markets to endure should hope that such movements succeed. Far from shoring up capitalism, housing policies have made the system unsafe, inefficient and unfair. Time to tear down this rotten edifice and build a new housing market that works.

.....



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  #2  
Old Posted Jan 18, 2020, 5:40 PM
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Donald Trump was right

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  #3  
Old Posted Jan 18, 2020, 5:50 PM
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The American dream still exists in smaller cities, at least here in Canada. The outer suburbs of Montréal are a bargain.
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Old Posted Jan 18, 2020, 6:01 PM
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Donald Trump was right

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Identifying that there's a problem is the easy part since a big enough problem tends to be obvious to practically everyone. The hard part is correctly identifying the source of the problem and proposing appropriate solutions.
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Old Posted Jan 18, 2020, 6:13 PM
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I guess that makes the 99% movement a decade before him downright prophetic
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Old Posted Jan 18, 2020, 8:20 PM
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Home ownership was never interesting to me, even when others would make the case that it was. I plan to travel a lot and donate to a lot of causes. The least I would own would be a condo.
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  #7  
Old Posted Jan 19, 2020, 12:53 AM
llamaorama llamaorama is offline
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"Home ownership is too expensive! Let's give up on it and make it impossible!"

Screw the economist and this neoliberal garbage. I guess only the rich should be free of wasting money on rent and able to build family wealth?

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Time to tear down this rotten edifice and build a new housing market that works.
And what is that exactly? In what sense would it work? What's the desired end game? By what metrics do our economic know-better overlords measure success? High interest rates and down payments so if you eat rice and beans daily maybe by age 50 you can buy a lovely flat, just like in Germany and much of Europe?
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Old Posted Jan 19, 2020, 1:53 AM
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And what is that exactly? In what sense would it work? What's the desired end game? By what metrics do our economic know-better overlords measure success? High interest rates and down payments so if you eat rice and beans daily maybe by age 50 you can buy a lovely flat, just like in Germany and much of Europe?
the desired end game is a sustainable, inclusive future.

land is finite. unrestricted ownership of it combined with restrictive zoning (to "protect" people's investments, of course!) forces unsustainable sprawl as population increases or patterns of settlement and economy shift. it's a fundamentally broken model. the people owning the property control the only means (density) by which the amount of it could be expanded to meet the needs of a growing society.

at some point residences went from "something you need to live like food, water, health care, clothing" to "generational piggy bank." the current system MIGHT make sense if there was a massive tax on inherited real estate.
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  #9  
Old Posted Jan 19, 2020, 7:19 AM
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The real solution is to make it illegal to own a home that you don't live in. One home per person maximum. Everybody wins except for landlords.
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Old Posted Jan 19, 2020, 1:59 PM
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The real solution is to make it illegal to own a home that you don't live in. One home per person maximum. Everybody wins except for landlords.
...and investors, and tenants, and families. My wife and I own her parents house, for a variety of reasons. Not sure why that should be disallowed.

I read that article and have no idea what they're talking about. The premise is wrong. Housing ownership has been a fantastic wealth-generating vehcile that distinguishes the Anglosphere from other developed nations. The UK is overall poorer than Germany but millions of UK households are much better off than their German counterparts due to homeownership. Germans traditionally rent, or if they own, inherit homes.
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Old Posted Jan 19, 2020, 5:30 PM
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I can't read it because of the paywall but sounds like the premise is somewhat correct and the examples are wrong. NYC and SF have the lowest home ownership rates in the country, and the most consistently vibrant economies. Other parts of the country, particularly in the Rust Belt, have high rates of home ownership and economies that have struggled to renew for the information age.
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Old Posted Jan 19, 2020, 5:39 PM
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^ The examples are spot on, they're saying housing is completely fucked in those cities and it is.
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Old Posted Jan 19, 2020, 6:01 PM
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^ The examples are spot on, they're saying housing is completely fucked in those cities and it is.
But it's not. Housing is more efficient in New York than it is in Detroit. People in New York don't pay more in taxes than their houses are worth because of upside down markets.
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Old Posted Jan 19, 2020, 7:24 PM
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Quote:
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The real solution is to make it illegal to own a home that you don't live in. One home per person maximum. Everybody wins except for landlords.
So, there would be zero rentals? EVERYONE WINS!
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Old Posted Jan 19, 2020, 7:54 PM
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But it's not. Housing is more efficient in New York than it is in Detroit. People in New York don't pay more in taxes than their houses are worth because of upside down markets.
k tell that to the thousands of New Yorker's who leave for states like NC so they can actually buy a house.

There is nothing efficient about obscenely unaffordable housing markets.

Nobody in Metro Detroit pays more taxes than what their home is worth and home ownership is attainable. Nice alternative facts though.
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Old Posted Jan 19, 2020, 8:15 PM
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k tell that to the thousands of New Yorker's who leave for states like NC so they can actually buy a house.

There is nothing efficient about obscenely unaffordable housing markets.
New York's housing market is obviously not unaffordable. Is it a market that is structured for +50% home ownership? No, it's not nor has it ever been. New York's market looks more like most of America did before the federal government implemented policies to expand home ownership.

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Nobody in Metro Detroit pays more taxes than what their home is worth and home ownership is attainable. Nice alternative facts though.
This was one of the major factors of so many houses in Detroit becoming vacant over the past 15 years. Wayne County evicted thousands (maybe hundreds of thousands) of families because the tax assessments were ridiculous compared to the market value of the properties.
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Old Posted Jan 19, 2020, 9:01 PM
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I don't think home ownership is a policy mistake, the mistake is that most our policies are structured and biased towards an assumption that most will be homeowners, while land use policy these typically works toward restricting housing development, at least in our most urban cities. I know the article blames homeownership itself for this lack of housing, but I don't think it's as dire as it makes it sound. The politics behind increasing housing is hard, but not impossible.
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  #18  
Old Posted Jan 19, 2020, 9:14 PM
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Originally Posted by iheartthed View Post

This was one of the major factors of so many houses in Detroit becoming vacant over the past 15 years. Wayne County evicted thousands (maybe hundreds of thousands) of families because the tax assessments were ridiculous compared to the market value of the properties.
Homes were over-assessed but not more than what they're overall worth and there are many relief programs in place currently. Foreclosures have plummeted to barely any in Detroit now so this issue moving forward is fixed.

But this is all irrelevant since slow tax re-assessments, housing crash and foreclosures are not exclusive to da rUStbeLT (I think I recall Las Vegas having the worst foreclosure rate in the country) and have nothing to do with the current housing crisis. If you wanna talk efficiency there's who knows how many thousands of luxury units all over NYC that are sitting empty and the only purpose they serve is as a piggy bank all while many domestic New Yorker's leave for other states because the market is akin to a serfdom otherwise they're renting with 5 roommates in a shoebox. That's the opposite of efficient.

Your entire premise about efficiency is terrible if you're trying to argue that there's something more functional about renting for cities since the foreclosure crisis just increased the amount of renters.
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Old Posted Jan 19, 2020, 9:17 PM
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k tell that to the thousands of New Yorker's who leave for states like NC so they can actually buy a house.

There is nothing efficient about obscenely unaffordable housing markets.

Nobody in Metro Detroit pays more taxes than what their home is worth and home ownership is attainable. Nice alternative facts though.
The New Yorkers leaving for NC are mostly from areas where housing values or more or less the same..aka Upstate. They are getting away from a sluggish economy and high taxes not so much the prohibitive cost of home ownership seen in Downtstate.
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Old Posted Jan 19, 2020, 9:42 PM
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Originally Posted by The North One View Post
Homes were over-assessed but not more than what they're overall worth and there are many relief programs in place currently. Foreclosures have plummeted to barely any in Detroit now so this issue moving forward is fixed.

But this is all irrelevant since slow tax re-assessments, housing crash and foreclosures are not exclusive to da rUStbeLT (I think I recall Las Vegas having the worst foreclosure rate in the country) and have nothing to do with the current housing crisis. If you wanna talk efficiency there's who knows how many thousands of luxury units all over NYC that are sitting empty and the only purpose they serve is as a piggy bank all while many domestic New Yorker's leave for other states because the market is akin to a serfdom otherwise they're renting with 5 roommates in a shoebox. That's the opposite of efficient.

Your entire premise about efficiency is terrible if you're trying to argue that there's something more functional about renting for cities since the foreclosure crisis just increased the amount of renters.
You're talking about two different things. The subject is home ownership, not the cost of renting.
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