The optimal situation would more or less be every family owning a single home.
A) This is not the optimal situation, and
B) Owning a home, and being able to profiting off it appreciating are not the same thing and the latter is the problem
If house prices go down equally across the market, single home owners don’t really lose out
Yes they do, this is such a fucking common argument and it’s just straight up false.
If you have a million dollar home that you raised your family in, and now want to downsize into a $400k town house, you’d currently get $600k in cash freed up to spend on whatever you wanted.
If house prices drop by 50%, you’d sell your $500k home, buy a $200k town house, and you’d have $300k in cash.
The majority of people who would lose money are the MAJORITY of people who own homes, which are single home owners.
That homeowner stands to lose a lot of money if a politician says they will pass a policy that drops home prices by 50%, so they wouldn’t vote for that politician.
People like you keep proposing “build more” like it’s going to work.
Let me ask you this, how many houses would we need to build to drop national house prices by 50%?
The simple answer is “you can’t realistically do that”
No developer can be forced to lose money in the long term, and they quite literally couldn’t build housing at 50% of current prices even if the land itself was completely free.
The state could take on a stupidly massive debt to build homes at a loss, but then instead of paying higher rents/housing prices, you’re just paying higher taxes.
Currently, there’s no realistic way forward. It needs to get far worse (fewer homeowners, so that the balance of voting power shifts to renters) before we can start passing policies to make it better. I expect it to be about 20-30 years before that happens, and then it’s probably going to be 20-30 more before the results get realized.
You’re right, if homeowners downsize they’ll lose out with lower prices. People don’t downsize very often.
But what policies are you talking about? How can the answer be anything other than increasing the supply of housing (or decreasing the demand i.e. the population)? Prices are only as high as they are because people pay them because they don’t have any other options. Rent is high because demand is high relative to supply.
The only thing I can think of would be higher taxes specifically in places with high house prices in order to fund huge investment in poorer areas to make them more attractive to people and businesses.
Hence why my proposal (land value taxes) incentivizes them to do so by taxing people based on how much land they use (and how desirable that land is) and returning it equally to everyone. Live in a smaller place like a condo? Benefit to you. Want to live in a detached house with a big yard in a desirable area? Pay everyone else for the privledge. Have 5 people in your 4 bedroom home? Excellent. Have 2 people in your 5 bedroom home? Pay everyone else for the privledge.
How can the answer be anything other than increasing the supply of housing (or decreasing the demand i.e. the population)?
This is the key, and the simple answer is that it’s not that simple.
There are multiple factors to demand for housing, it’s not just “X million people need a house”
The price of housing reflects ALL of the factors of demand, and one of those factors currently is causing all of the problems. The factor that’s at fault is that buying a house will make you money (or at least not lose you money) in the long run.
Think about it for a second. If you’re looking to buy somewhere to live, and you know that despite it costing a lot, you won’t lose money on it and will get that money back later for retirement, how much are you willing to spend? Compare that to how much you’d be willing to spend if you knew that you would lose money every month.
This isn’t hard to actually understand, take a simple tax idea (it’s not realistic, it would crash the economy to do it all at once)
The government comes along and says “there’s a 100% tax on any increase in the value of the land (not including the building) when you sell it” on top of the monthly/yearly property tax amounts you’re already paying.
What would happen to housing prices for most places? They would instantly drop, and a lot in some places.
Did we change the supply? No
Did we change the demand? There’s still X million people that need a home, so we didn’t change that factor in any way
Did the price change? Yes
Why? Because people were willing to spend more money on a home than they got in value from simply living there, because they were valuing it as an investment in addition to the living space. Now any home buyer coming along won’t be able to realize that value, so they’re not going to be willing to spend as much money. It hits investors even harder than regular people, that appreciation over time was a huge amount of their profit.
TL;DR;
If something is an investment, the prices will continue to climb up until it’s no longer profitable. If you want home prices to go down and be priced only based on their usefulness as accommodation, you have to make them not an investment.
A) This is not the optimal situation, and B) Owning a home, and being able to profiting off it appreciating are not the same thing and the latter is the problem
If you have a million dollar home that you raised your family in, and now want to downsize into a $400k town house, you’d currently get $600k in cash freed up to spend on whatever you wanted. If house prices drop by 50%, you’d sell your $500k home, buy a $200k town house, and you’d have $300k in cash.
The majority of people who would lose money are the MAJORITY of people who own homes, which are single home owners.
That homeowner stands to lose a lot of money if a politician says they will pass a policy that drops home prices by 50%, so they wouldn’t vote for that politician.
People like you keep proposing “build more” like it’s going to work. Let me ask you this, how many houses would we need to build to drop national house prices by 50%?
The simple answer is “you can’t realistically do that” No developer can be forced to lose money in the long term, and they quite literally couldn’t build housing at 50% of current prices even if the land itself was completely free. The state could take on a stupidly massive debt to build homes at a loss, but then instead of paying higher rents/housing prices, you’re just paying higher taxes.
Currently, there’s no realistic way forward. It needs to get far worse (fewer homeowners, so that the balance of voting power shifts to renters) before we can start passing policies to make it better. I expect it to be about 20-30 years before that happens, and then it’s probably going to be 20-30 more before the results get realized.
You’re right, if homeowners downsize they’ll lose out with lower prices. People don’t downsize very often.
But what policies are you talking about? How can the answer be anything other than increasing the supply of housing (or decreasing the demand i.e. the population)? Prices are only as high as they are because people pay them because they don’t have any other options. Rent is high because demand is high relative to supply.
The only thing I can think of would be higher taxes specifically in places with high house prices in order to fund huge investment in poorer areas to make them more attractive to people and businesses.
Hence why my proposal (land value taxes) incentivizes them to do so by taxing people based on how much land they use (and how desirable that land is) and returning it equally to everyone. Live in a smaller place like a condo? Benefit to you. Want to live in a detached house with a big yard in a desirable area? Pay everyone else for the privledge. Have 5 people in your 4 bedroom home? Excellent. Have 2 people in your 5 bedroom home? Pay everyone else for the privledge.
This is the key, and the simple answer is that it’s not that simple.
There are multiple factors to demand for housing, it’s not just “X million people need a house”
The price of housing reflects ALL of the factors of demand, and one of those factors currently is causing all of the problems. The factor that’s at fault is that buying a house will make you money (or at least not lose you money) in the long run.
Think about it for a second. If you’re looking to buy somewhere to live, and you know that despite it costing a lot, you won’t lose money on it and will get that money back later for retirement, how much are you willing to spend? Compare that to how much you’d be willing to spend if you knew that you would lose money every month.
This isn’t hard to actually understand, take a simple tax idea (it’s not realistic, it would crash the economy to do it all at once)
The government comes along and says “there’s a 100% tax on any increase in the value of the land (not including the building) when you sell it” on top of the monthly/yearly property tax amounts you’re already paying.
What would happen to housing prices for most places? They would instantly drop, and a lot in some places.
Did we change the supply? No Did we change the demand? There’s still X million people that need a home, so we didn’t change that factor in any way Did the price change? Yes
Why? Because people were willing to spend more money on a home than they got in value from simply living there, because they were valuing it as an investment in addition to the living space. Now any home buyer coming along won’t be able to realize that value, so they’re not going to be willing to spend as much money. It hits investors even harder than regular people, that appreciation over time was a huge amount of their profit.
TL;DR; If something is an investment, the prices will continue to climb up until it’s no longer profitable. If you want home prices to go down and be priced only based on their usefulness as accommodation, you have to make them not an investment.