Honestly, there's nothing immoral about charging market rates.
What's immoral is preventing construction of housing to allow supply and demand to meet. What's immoral is zoning rules that allow prices to rise well above the level of what would historically have been considered affordable.
Obviously, from looking around, we cannot rely on people to just not raise prices to market levels in exchange for feeling good about themselves. We need to take action to lower the price of housing.
Housing cannot be both affordable and a good investment.
We desperately need to stop thinking of housing in terms of investment at all.
Housing is for people to live in. That's it. Any other purpose is a long-distant second to that. The fact that it has become primarily an investment product is what's causing all the pain.
Japan got burned by real estate investments in the 80s and now real estate isn't considered an investment, so housing in even Tokyo is affordable. It also helps that housing structures are considered as a deprecating asset, to be rebuilt every 30-40 years.
We must live in a different world. I’ve been reading articles for years about Tokyo house prices being a huge problem, and that young people are depressed and checking out because they see no way to climb the ladder in Tokyo. A quick Google search confirms I’m remembering correctly. Tokyo has the same real estate issues as any major western city.
Ah, the problem with that is that you can’t earn enough money, the housing prices are sane but the salaries for workers is not. But there aren’t really the same codes as the west, so you can rent something for $2-300/month. Kids can get by on low salaries they way, but buying is out of reach even. If the prices are affordable by our standards.
You can pull up either narrative in Google by searching specifically for it. Tokyo is cheap, Tokyo is expensive, etc… eg
Japan federalized zoning rules meaning cities can't arbitrarily deny housing. This allows supply and demand to meet, leaving housing approximately at the cost of construction.
I agree but speculation is usually on the basis of prices going up. If prices don't go up there's nothing to speculate on. The shrinking population only affects demand - but price is at the nexus of supply and demand. So you can achieve that by dropping demand or raising supply. The argument that demand affects price is an implicit argument that supply does too.
Housing HAS to be a good investment, not in the sense of something that beats inflation, but something which appreciates at the same rate as inflation. The whole point of a 30-year fixed mortgage is that you pay off the mortgage in your working years and then enter your retirement only having to pay the property taxes. This allows you to retire on a smaller nest egg AND pass generational wealth on to your heirs.
Uh, none of that means housing has to be an investment. The point of a mortgage is that it helps you buy a house and pay it off over time, nothing more. We don't talk about cars being an investment just because people take out 7-year auto loans.
Moreover, passing on generational wealth shouldn't be a feature we want to make easier. You don't want a to push society in the direction where generational wealth is required to live a good life.
Your first paragraph is because cars depreciate. Cars are thus the opposite of an investment, barring a few collector models which never got driven much.
Paragraph 2 reeks of "I know what to do with other people's personal property better than them." If you pay that house off and die, it's in your will and it's yours to pass on to whoever you want. We should absolutely be incentivizing that kind of responsible behavior and respect for long-term financial planning and thinking over real estate getting gobbled up by megacorps to rent out.
> Your first paragraph is because cars depreciate. Cars are thus the opposite of an investment, barring a few collector models which never got driven much.
Right, and in countries with sane planning laws the same is true of houses.
> If you pay that house off and die, it's in your will and it's yours to pass on to whoever you want. We should absolutely be incentivizing that kind of responsible behavior
Locking up as much prime real estate as possible for your family forever isn't being "responsible", it's a "fuck you, got mine" move. In places where housing is limited it should go to those who need it most, not to those who were lucky enough to have parents who were rich, or happened to buy in the right place at the right time.
Housing would depreciate too if we didn't have artificial scarcity policies designed to make it an investment. Saying that housing should be an investment because we've designed it to be an investment is circular reasoning.
Re #2: it's obvious that most people aren't the most objective when it comes to their offspring. That's why we should have policies that discourage overallocating resources to an unqualified child of a rich parent.
Finally, "personal property" is a construct of law. Something is yours because society has decided it's yours. If the laws change, and if you can't physically defend your property, then it's not really yours any more, is it?
Human rights are inherent in our existence as human beings. Or created by God if you believe in Him. They aren't "constructed by society," and this last paragraph is borderline advocating violence because you think some people have too many things.
News flash: this noble group of disinterested autocrats you think can allocate people's property better than themselves doesn't exist. They're the same biased schmucks as the rest of us are.
Housing also depreciates. We just have a lot more land appreciation, and apply high maintenance costs to our housing to counteract as much depreciation as possible (we pay down depreciation more immediately).
> Honestly, there's nothing immoral about charging market rates.
I think the debate is far more nuanced than that. Dislodging families, eliminating the ability to save for retirement, sucking up capital that could otherwise be put to economic use, etc. are all worthy of discussion without flushing it away via the term "market rates".
It's not like landlords are doing remodels and making their property more valuable. Every landlord I've ever had does just about the bare minimum. There's simply no competition. I don't know how we can have a "market rate" without anything that really looks like a market. They've lucked (or manipulated) themselves into a situation where their property value goes up while their costs stay fixed and they're using their good fortune to squeeze others.
There's a reason we use the term "rent-seeking" for businesses that want to get guaranteed income without having to improve their product. I'd certainly consider it immoral.
> What's immoral is preventing construction of housing to allow supply and demand to meet. What's immoral is zoning rules that allow prices to rise well above the level of what would historically have been considered affordable.
I don't see these as separate issues. Rising rents influence property values and vice versa. Many of these landlords are the exact people opposing new construction or rezoning.
>We need to take action to lower the price of housing.
Who's "we"? The problems you cite, zoning rules etc., are all local issues caused by the people in those places voting for leaders who maintain these anti-housing policies, because it's good for their home values. And it's not just the homeowners; the renters have a vote too, but I don't see them voting for anyone who wants to change zoning laws and increase density.
>Housing cannot be both affordable and a good investment.
True, but obviously most Americans prefer the latter. Just look at many of the comments right here: people advocating for "generational wealth" and how housing must be an investment.
The problem is Political. Municipal governments only have an obligation to the people who currently live there. They owe nothing to people who want to live there if it was more affordable. They owe a lot to the people living in the community who want to raise their property values.
"We" can fix it at a State or Federal level. The President represents everyone in the country. Including the people who live in a place and the people who want to move there from another State
That's the only way, because, as you said, municipal governments only answer to the people who live there. Here in Japan, they passed a national zoning law decades ago that prevents localities from enacting their own zoning legislation, and makes uniform (and extremely permissive) zoning across the whole country. Basically, if you own land, you can build housing there if you want, unless it's one of the uncommon heavy industrial zones. So there's no real shortage of housing; if it's profitable to build, they'll build it.
Lots of people complain that the result is chaotic-looking neighborhoods where there's no way to get the buildings to look similar to each other, but I really like not having to deal with all the crime and homelessness that results from the western model.
Japanese zoning is better in another way.
http://urbankchoze.blogspot.com/2014/04/japanese-zoning.html
Japanese do not impose one or two exclusive uses for every zone. They tend to view things more as the maximum nuisance level to tolerate in each zone, but every use that is considered to be less of a nuisance is still allowed. So low-nuisance uses are allowed essentially everywhere. That means that almost all Japanese zones allow mixed use developments
What's immoral is preventing construction of housing to allow supply and demand to meet. What's immoral is zoning rules that allow prices to rise well above the level of what would historically have been considered affordable.
Obviously, from looking around, we cannot rely on people to just not raise prices to market levels in exchange for feeling good about themselves. We need to take action to lower the price of housing.
Housing cannot be both affordable and a good investment.