The extent to which boomers think they "deserve" to be paid huge sums of money to walk around their own homes for 30 years is so bizarre. "But I made a GOOD investment!"
The past lack of Millennial organizing on home supply is disappointing. But it's difficult when so much of the activist oxygen is consumed by SJW issues and when the voting base of Millennials is so transient and diverse.
But like any cartel, I think the housing syndicate only breaks when it becomes too hard for new entrants to join the cartel. Historically, if you're an ambitious and successful Millennial in the bay area (for example), the incentive has been to just buy a house yourself and join the cartel.
Home prices I think are finally getting high enough that Millennials (and Zoomers) realize that the cartel is unsustainable and buying into it is just asking to take a financial bath later on down the line. That's the hope anyway.
Just another area of American society that is being poisoned by R>G dynamics...
(2) ratchet down the Mortgage Interest Deduction. if the limit is $750k today (I think that's right?) then imagine taking out a $750k 30 year mortgage today, at the prevailing rate, and schedule the amount of mortgage principal on which you can deduct interest to fade out, at the same rate that this imaginary mortgage would decline.
(4) Start a sovereign wealth fund, with shares _only_ available through a government program, purchased in a similar manner to an ETF. Create a _new_ (not carved-out) FICA deduction that pays into it, basically creating a national 401(k), without the exorbitant program and fund fees paid by most 401(k)s.
So now you get some seed wealth by way of the Baby Bonds program (with extra bonuses if your parents are lower-income), and then during your adulthood, you have the "forced savings" through the FICA add-on. And you have the option, just as you have with existing retirement savings programs, to make yourself a loan out of those funds to buy a home if you _really want to_, but homeownership is no longer preferable to renting _purely_ on financial terms; you'd do it because, e.g. you want to be able to renovate a house to match your tastes. (As a renter, you're not going to do a fancy kitchen reno just because you like to cook a lot, because you might not be the one using that kitchen in five years.)
I'm curious if you've ever heard from people that work in homebuilding? I'm a former libertarian like yourself and used to believe in all the deregulation stuff too. It makes sense as a model in your head, but there is quite a bit of evidence that at the end of the day... regulation is of minor import in the amount of housing in a location.
Cameron Murray has studies of deregulation in Australia where it did not result in much more housing; areas that were deregulated. There are also many people that work in housing that cast cold water on the idea that deregulation will result in more homes being built: Logan Mohtashami is very good on spelling out why this is the case. I've owned equity stakes in some of the largest homebuilder companies around: Toll Brothers, Lennar, TMHC. If you look at their prospectuses, most of them are often sitting on huge tracts of land that are undeveloped and only ever develop just a teeny fraction of what is possible for them. Mohtashami often says something like economists don't think about the individual demand curve of the builder. They are there to make money; not flood the market and hurt their profits.
Because I'm a former libertarian... I have come to realize that a lot of the STRONG libertarian premises were never that true. In crypto, the decentralization is ALWAYS better premise...
Anyways, I think you should be open minded that the deregulation premise isn't true
That's a fascinating paper. It's basically saying that there's plenty of land capacity available for building in Brisbane, but developers are able to wait for house prices to rise before they build more housing. Reminds me of oil-producing nations which were in no hurry to produce oil (when oil prices were rising), regarding their oil reserves as being like money in the bank.
The immediate question that comes to mind, not explored in the paper: What's the typical return on investment for a project? I would think that if returns are high enough, a developer would want to go ahead with a project instead of waiting.
I'm in Vancouver, where it's typical for individual projects (like a six-story rental building) to require rezoning, which in turn requires a public hearing and then a decision by city council. Council almost always says yes, but it's a slow process. Here it seems pretty clear that land use restrictions are a significant constraint.
Dear G*d, zucchini, seriously? Those things are like weeds. They're notorious for producing so much that you end up leaving baskets of zucchini on your neighbor's doorstep without even asking if they want any. You think a little shade is going to deter them?
The extent to which boomers think they "deserve" to be paid huge sums of money to walk around their own homes for 30 years is so bizarre. "But I made a GOOD investment!"
The past lack of Millennial organizing on home supply is disappointing. But it's difficult when so much of the activist oxygen is consumed by SJW issues and when the voting base of Millennials is so transient and diverse.
But like any cartel, I think the housing syndicate only breaks when it becomes too hard for new entrants to join the cartel. Historically, if you're an ambitious and successful Millennial in the bay area (for example), the incentive has been to just buy a house yourself and join the cartel.
Home prices I think are finally getting high enough that Millennials (and Zoomers) realize that the cartel is unsustainable and buying into it is just asking to take a financial bath later on down the line. That's the hope anyway.
Just another area of American society that is being poisoned by R>G dynamics...
If you're a middle class person in America, the government will subsidize your attempt to build wealth if and only if you do it through housing.
We need the government to shift toward subsidizing alternate forms of wealth building. My program would be:
(1) implement Cory Booker's "baby bonds" / universal basic wealth concept ( https://www.vox.com/policy-and-politics/2018/10/22/17999558/cory-booker-baby-bonds )
(2) ratchet down the Mortgage Interest Deduction. if the limit is $750k today (I think that's right?) then imagine taking out a $750k 30 year mortgage today, at the prevailing rate, and schedule the amount of mortgage principal on which you can deduct interest to fade out, at the same rate that this imaginary mortgage would decline.
(3) If wiping out the MID is too difficult a lift, then create a renter's credit that balances out incentives so that homeowners aren't drastically subsidized relative to renters. (Also a concept that Booker was into. Harris also ran on a pretty good renter's credit. https://www.vox.com/future-perfect/2019/2/2/18205913/rent-kamala-harris-cory-booker-poverty )
(4) Start a sovereign wealth fund, with shares _only_ available through a government program, purchased in a similar manner to an ETF. Create a _new_ (not carved-out) FICA deduction that pays into it, basically creating a national 401(k), without the exorbitant program and fund fees paid by most 401(k)s.
So now you get some seed wealth by way of the Baby Bonds program (with extra bonuses if your parents are lower-income), and then during your adulthood, you have the "forced savings" through the FICA add-on. And you have the option, just as you have with existing retirement savings programs, to make yourself a loan out of those funds to buy a home if you _really want to_, but homeownership is no longer preferable to renting _purely_ on financial terms; you'd do it because, e.g. you want to be able to renovate a house to match your tastes. (As a renter, you're not going to do a fancy kitchen reno just because you like to cook a lot, because you might not be the one using that kitchen in five years.)
Will,
I'm curious if you've ever heard from people that work in homebuilding? I'm a former libertarian like yourself and used to believe in all the deregulation stuff too. It makes sense as a model in your head, but there is quite a bit of evidence that at the end of the day... regulation is of minor import in the amount of housing in a location.
Cameron Murray has studies of deregulation in Australia where it did not result in much more housing; areas that were deregulated. There are also many people that work in housing that cast cold water on the idea that deregulation will result in more homes being built: Logan Mohtashami is very good on spelling out why this is the case. I've owned equity stakes in some of the largest homebuilder companies around: Toll Brothers, Lennar, TMHC. If you look at their prospectuses, most of them are often sitting on huge tracts of land that are undeveloped and only ever develop just a teeny fraction of what is possible for them. Mohtashami often says something like economists don't think about the individual demand curve of the builder. They are there to make money; not flood the market and hurt their profits.
Because I'm a former libertarian... I have come to realize that a lot of the STRONG libertarian premises were never that true. In crypto, the decentralization is ALWAYS better premise...
Anyways, I think you should be open minded that the deregulation premise isn't true
https://ideas.repec.org/p/osf/osfxxx/r925z.html
We really need a land value tax, or barring that, a vacancy tax, to deter people from just speculatively sitting on land.
Sorry, this is the more relevant paper on deregulation.
https://ideas.repec.org/p/osf/osfxxx/zkt7v.html
That's a fascinating paper. It's basically saying that there's plenty of land capacity available for building in Brisbane, but developers are able to wait for house prices to rise before they build more housing. Reminds me of oil-producing nations which were in no hurry to produce oil (when oil prices were rising), regarding their oil reserves as being like money in the bank.
The immediate question that comes to mind, not explored in the paper: What's the typical return on investment for a project? I would think that if returns are high enough, a developer would want to go ahead with a project instead of waiting.
I'm in Vancouver, where it's typical for individual projects (like a six-story rental building) to require rezoning, which in turn requires a public hearing and then a decision by city council. Council almost always says yes, but it's a slow process. Here it seems pretty clear that land use restrictions are a significant constraint.
One particularly interesting project: there's a parcel of land close to downtown Vancouver where city zoning is not a constraint, because the land belongs to the Squamish Nation. They're planning to build 12 towers of up to 59 stories, for a total of 6000 units of housing, mostly rental. https://www.economist.com/the-americas/2021/03/27/how-a-canadian-indigenous-group-could-outwit-nimbys
Dear G*d, zucchini, seriously? Those things are like weeds. They're notorious for producing so much that you end up leaving baskets of zucchini on your neighbor's doorstep without even asking if they want any. You think a little shade is going to deter them?