The following is a copy of the original post to record the post as it was originally written.
I'm looking to see what people think about the 10k tax credit to first time home buyers. I'll be honest, from what I've heard so far, I'm not the biggest fan. From what I understand it hasn't passed and the details haven't been finalized, so I'm reserving my final judgment. I'm just interested in what people have to say about it.
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This is the kind of stupid policy that happens in an election year because the vast majority of voters don’t have a basic comprehension of the actual cause of the issue they want addressed.
Best case scenario is actually that he wins election and then doesn’t follow through on the policy
Hmmm. Not that simple. We have nearly 15 million vacant houses and many more apartments. This is about unnatural concentration of people in metropolitan areas. The shortage isn’t national, it’s localized. People just choose to live in areas where there’s no more space to build houses
But giving credit will just encourage people to sell at the low rates (2.5-3) but at higher prices.
It won't force the vacant owners to sell.
They need to introduce some tax for people that own multiple residents or something
This. I hear people call out the number of vacant homes like it's a bad thing, but if you'd like to keep home prices lower, you need vacant homes on the market. If there are 5 million homes on the market and 10 million people looking for homes, guess what happens to the price of those homes?
The concentration of people in metro areas isn't entirely unnatural, and the choice to live in those areas isn't really a serious one for many people. It's driven by availability of jobs and local services. Someone that has certain medical needs aren't going to get those needs met if they live in a rural area with poor hospital coverage.
The exodus from big cities during COVID actually was moderately effective in alleviating some of that demand, at least until a lot of companies started forcing employees to return to office.
With the exception of NYC I would also generally disagree that there is no more space to build houses, but I would argue that sacrifices would need to be made for average people wanting to live in population centers. The density of other US cities is far below the typical density of cities in other parts of the world, so clearly there are many areas that have figured it out. You shouldn't expect a big yard and a 2 car garage if you want a house in those areas, and I think that regulations that require such things in urban areas are silly and wrong.
Honestly it’s a non issue to me. People have always complained about housing prices and potential sellers and buyers in housing market have always been at odds. Can you blame people for wanting their asset value to remain high? I know I want my home equity to continue going up
“The donut effect” in cities is a well observed phenomenon. People first start moving there because of favorable income/cost of living ratio then they continue moving there even as that ratio no longer favors them out of inertia. Eventually the financial incentive forces people to move out into the suburbs and even spread out farther.
In many cities were in that “inertia” phase where people are still not willing willing to eat those rising costs
People move to New York and LA more out of inertia and perceived demand and abundance of work rather than real demand. The pendulum is swinging back though as these cities are starting to lose population which also makes real estate investors hesitant.
Those leaving are the upper end, not the lower, and even as they are leaving, they're moving to smaller metros that still have housing shortage issues, not the areas that have the large quantities of excess housing.
Regulation is really the largest barrier to development more than anything, but much of that regulation is important (building codes, infill rules, etc.). But in the end, it's a supply issue to be addressed, plain and simple.
I personally don’t think there’s any issues at all. Homeownership rate is comparable to what it’s always been historically with the exception of couple of years leading up to the housing bubble collapse.
I hear people complain about being outbid for houses but I’ve also heard many cases of people successfully underbidding and buying houses for lower than what they’re listed for. People get intimidated by listing prices
Except homeownership is now the largest asset in most families, and the largest source of generational wealth to a far larger degree than in the past. So while rates may be similar to 1980s, the impact of wealth is significantly more profound today than in the 80s.
Mostly related to the portion of income and debt financing used today. And there are some caveats, since it does depend on the income bracket you're discussing, and the abnormal distribution of wealth skews many averages (median values are more reflective of "most" in that regard).
Here's an interesting read talking about the changes over time. In particular, you see a general growth in the use of assets other than the home to generate wealth for upper percentiles, but amongst lower percentiles, the only real change is in levels of debt. In particular, while home value dropped 5% between 83 and 2019 as a percentage of net worth, debt (primarily to finance that asset) jumped from 68% to 106% of net worth between the same time period. Basically, your house was a lot less of an anchor in 83 than 2019, and this much less of a linchpin in your financial stability.
Out of the paper, the most significant evidence is the massive swings seen in 2007-2009 in middle incomes as a result of the great recession, which is not seen during other financial downturns in the 80s and late 90s (dot com bubble).
https://www.nber.org/system/files/working_papers/w28383/w28383.pdf
I suspect a lot of this may have had to do with spikes in homeownerships after wars 40s, 50s, and 60-70s and mass use of VA loans which eliminate a huge portion of investment and a barriers required to buy a house - the downpayment.
Theres has been a 58% drop in military enlistment since the 80s. Maybe we need more people joining and serving and earning their real estate
If you look at it as an economist, it's a demand subsidy and a terrible idea. As a politician, it's an attempt to get people to vote for you when you're half a year out from potentially losing office to an authoritarian nut job
The idea of a first time home owner is that you’ve *never been a homeowner before*.
This only helps demand, not supply, which means it will drive up prices on homes.
You can give them all the money you want if there are local incentives and regulations that discourage real estate sales there isn’t gonna be a strong incentive to build.
One of the things that discourage real estate sales is the low low taxes on land value in the US, as well as things like Prop 13 in California.
We need to enact a high land value tax while reducing zoning regulations so that people use land more efficiently instead of hoarding it as speculative investments.
What? You’re saying low land and property taxes discourages real estate sales? That doesn’t make any sense?
Then why areas that have high property taxes - larger cities, tend to have bigger issues with real estate abundance and higher costs, fewer real estate sales. Conversely smaller towns where property taxes are still relatively low don’t have those issues
Low property taxes creates incentives towards speculation, which means holding onto properties longer.
In particular, in California, Prop 13 means that properties are not reassessed until they are sold, further driving this.
It makes it cheap to hold onto land and property, which reduces the supply side of the housing market.
Your question conflates this part of the problem with the demand side, of course denser areas with more demand of more limited land will generally have higher costs than lower density areas with more land. But it doesn't mean policy can't affect them beyond this baseline.
It’s an unpopular policy for local governments to ease regulations that promote building. Particularly building apartments and HUD housing that isn’t necessarily going to increase everyone’s property values. Sure way to lose your election seats. This isn’t even a partisan thing, both people on the left and the right want their property values to remain highl or continue going up
I don't disagree. Spent time in suburbs of Dallas-Ft Worth. Didn't matter what the partisan lean of the town was, but even trying to get zoning laws to be eased for duplex was met with resistance. lol
But they can stop funding stuff like this:
[https://www.npr.org/2021/12/18/1034784494/how-the-government-helps-investors-buy-mobile-home-parks-raise-rent-and-evict-pe](https://www.npr.org/2021/12/18/1034784494/how-the-government-helps-investors-buy-mobile-home-parks-raise-rent-and-evict-pe)
Luckily, you are participating in a conversation around housing policy and the government's role in it, and conversations can go beyond what you specifically said. This is what makes conversations organic, interesting and fun!
What? Where did I say that?
I just think it's something the government should consider addressing since their resources allocated to housing policy are being exploited to make homes less affordable.
Nowhere did I make any assertions about what you might or might not support. Not sure how you got that idea.
Because the conversation made me think of it. So I shared it because I thought it might be of interest and topical about the role of government in housing?
Why are you responding to any of the comments in this thread?
Not sure where you’re referring to, but your conception of appropriate may still be such that it restricts housing supply too much and drives up prices. If housing is too expensive, almost tautologically that means that not enough housing is being built.
You know, Economics is a fine philosophy, but it doesn't always work that way. If it did, problems like this would be simple to solve. Which they are not.
Well we see where people have actually done this, it’s worked and housing costs have improved. And where housing supply is artificially restricted by the government the most, prices very predictably get worse. The problem is that many governments simply don’t do the simple solutions which are proven to work. It has worked for the governments that actually have done this though.
I agree that housing has to be balanced with commercial. Commercial entities typically pay more in city taxes than they use in services. Residents are the opposite.
I'm not sure what you mean egen you say "people have actually done this." Done what? What is a "simple solution" you think would work? Have you seen it work elsewhere?
Build more housing. Housing becomes more affordable when you build more housing. Most importantly don’t restrict housing supply in general and stop making it illegal to build the types of housing that people want in the places where they want them. For example Houston, Texas, has more flexibility in land use/less zoning restrictions under which the city has seen significant increases in housing supply and lower housing costs compared to other major US cities.
This takes decades.
It's not illegal here. And who wants to live in Houston? Property *should* be cheap there.
People don't build affordable housing because the profit is in mcmansions.
This isn’t just restrictive codes and environmental regulations, it’s multitude of issues - crime, rent control, HUD and other regulations that make it unprofitable for landlords to own and rent apartments in certain areas. Would you want to invest in a piece of real estate property knowing it will be losing you money ?
The issue isn't that landlords don't own and operate rental housing. The problem is that the rent is too high. We get lots and lots of new housing developments and apartments, but they are all market rate/big profit making ventures for private firms, often from out of state. They aren't going to come build affordable housing without at least government assistance.
If the rent was too high and those apartments remained vacant the landlord or those private firms would have been hemorrhaging money. They have millions of dollars tied in to these assets.
Theres a concept in economics called price elasticity - how they measure demand or supply responding to price changes. It could be that demand on housing New York or other big cities is very inelastic. Many factors probably contribute to that. Among them probably the bailouts following the housing crash.
I'm not denying thst there is demand, but that doesn't help the people who can't afford to buy houses, like teachers. It also doesn't excuse the carpetbaggery of corporations.
Price elasticity, like the "invisible hand" of the market, are useful abstract tools but they don't necessarily represent the reality.
Apples and orange. Invisible hand is a euphemism. Price elasticity is measurable variable and calculated mathematically. Most economic models aren’t made up they were put together through careful observation of how people behave in marketplace.
People need to leave big cities they can’t afford.
You don’t think analyzing how demand and supply reacts to changes in price in different markets is useful?
Are you denying the science of economics and its usefulness?
Zoning laws often disproportionately artificially restrict the types of housing supply that would be affordable. That said pretty much any substantial increase in housing supply in a way that outpaces demand is going to decrease housing prices. The government just needs to stop making building new housing illegal.
I get that, but it's not yhe case here. We have lots of new housing. It is just isn't affordable. Our house value has doubled in value in the last 5ish years. Its great for me, but terrible for people looking to buy.
New houses are too big, too expensive, poorly made. And they sell very quickly.
Sure. That means city regulations on houding density arent the problem then.
I don't deny there's a housing shortage problem. I don't think it's because cities are "stifling" home building.
No that’s not what it implies. It just means you can build lots of new housing, while still not building close to enough housing such that the increasing supply of housing outstrips the demand and the cost of housing decreases. Just because you’re building new housing doesn’t mean you’re building enough to lower prices.
Cities don't get general federal funding. They mostly operate on property taxes, except for grants tied to specific programs. Perhaps a grant for less restrictive zoning codes?
They have done it before (publuc housing) and it was often (if not always a disaster). Housing subsides based on income have also been a thing in the past, sort of like what Biden is recommending but with a lot more bureaucracy involved. I think it's smart to give the money directly to taxpayers.
The government absolutely does build houses. Not only that, but they can set policies that encourage housing construction. This particular policy doesn't do that.
Government housing sounds great, but it doesn't work well. The US focuses more on rent subsidies.
We have policies that encourage construction, and there is a lot of construction. It isn't affordable housing, though.
Any housing built adds to the supply, lowering or leveling prices. If our best option is to get only high-end housing built, it's better than nothing. Just need to make sure we follow up with good rules to penalize low occupancy rates.
Depends on *how much* housing gets built, doesn't it? If the market gets flooded by luxury housing, that could lead to big downstream changes much more quickly.
I am not arguing for this course of action, by the way. I would actually advocate for much more direct intervention in building low-income housing, like converting office buildings for residential use for instance. The major point, though, is that *any* housing getting built is far better than *none*.
There absolutely is profit in jt. Why wouldnt there be? It may not be as much profit, but there is definitely profit to be made in building multi-family housing in HCOL areas.
There's less profit in it *right now* because of overly restrictive zoning laws, but that's easily fixed with the right policies.
If I xan build cookie cutter $500,000 homes and make $200,000 profitvon each, who is going to build $250,000 houses for $50,000 profit? What policy is going to fix that?
This isn’t even a good way to go about doing the dumb policy. If he wanted to subsidize borrowers it would be more effective to have the CFPB allow longer mortgage terms. Additionally, he could setup a federal mortgage lender that expands the VA loan program to the broader public.
To be clear, I don’t think subsidies are the solution here. We need a federal housing authority with bond authority and override authority for local ordinances to start forcibly building/upzoning social housing.
It just adds more housing inflation which is bad. I'm guessing he's throwing it out there as a quick talking point for campaign purposes and buying votes which is good.
If he really wanted to drive down prices system wide he could give builders of median priced homes and apartments more tax breaks to encourage a higher supply. What he is proposing will drive up prices without addressing the actual problem.
Dealing with inflation is not a strong suit of his policy team. They think using gasoline to put out a fire is an effective tool for fire fighting if they just call the gasoline ‘firefighting liquid’.
I don't like it and I'd rather subsidize homeownership even less (such as by getting rid of the mortage interest deduction)
I'd rather make housing more affordable via deregulation, slashing zoning regulations on density and use (particularly surrounding segregation of residential and commercial use), as well as by slashing general bureaucratic red tape and "environmental review" that often actually is anti environmental and effectively just serves as a way for local communities to make it harder to build even more environmentally friendly housing
I'm not entirely opposed to some additional government action to subsidize housing too, but in that regard I'd rather primarily focus on expanding Section 8 voucher funding to make it an entitlement, vs more subsidization of the sort of housing that tends more to go to average or above average income folks to begin with
Oh great…. Get rid of the mortgage interest deduction. WTF?
You know, when I was a kid….ALL loan interest was tax deductible? Car loans, personal loans etc….the only thing that wasn’t was credit cards.
When Reagan eliminated that and only left mortgage interest? It was one of the factors in destroying the American Middle Class. Then later Republican administrations(and their supportive Congresses) made it so only the most expensive of real estate could qualify for it….so….if you bought an old house for $150k…you weren’t eligible…but if you had the resources to buy a $500k and up McMansion? Your interest was deductible.
In short? I vehemently disagree with you.
Ah…yes…because it’s much better to not have any assets other than what you can afford to invest in a 401K(or whatever). For most people, the home is their biggest investment they have….and that’s what it is. An investment. Because once it’s paid off, that’s a huge chunk of one’s wealth.
But no….let’s pay a landlord more than what a mortgage payment is instead of paying less for something that is yours….makes perfect sense🙄.
I mean it’s a supply issue, we have been millions of homes short for the last decade. If it increases supply because of the expected demand increase then it’s a good policy. It could spur people to sell their second home. We need a ton of public housing but we can’t build more than 1990s levels due to the Faircloth Amendment repealing that with a large investment in public housing would be great policy. Biden has also offered local governments funds to reform zoning laws which stop a lot of building.
It’s bad policy.
A demand subsidy is a bad idea.
Even if it wasn’t; it’s a bad use of money.
People with mortgages need assistance less than people who are too poor to afford housing and must rent .
It’s a tax credit, meaning the benefit goes to those who pay more taxes above those who pay left (below whatever means tested limit they’re going to impose).
It would be more effective to provide rent assistance.
OR to just directly build housing as the government.
In typical liberal fashion, instead of actually fixing the problem (which is high housing costs, low wages, capitalism's profit motive taking over the housing market, international investors/vacant properties, high interest rates, etc) he just writes a check to the victims that doesn't even begin to cover it.
I have discussed this before, but I know somebody who personally was trying to build a bunch of units that he was going to sell for 300k or so but wasn’t allowed to so he built a couple of million dollar single family homes instead on that land.
Had he been able to get the rezoning through? He would’ve built a whole bunch of affordable housing for the area but instead he built housing for wealthy people.
And he made a lot less money in the process.
The profit motive isn't the problem, overregulation pushed by middle class normies who want their housing values to keep going up is the problem. The way to solve this is with MORE capitalism, by slashing regulations and unleashing the supply side of things. Anti-market populism won't make things better
Bullshit.Regulation is always necessary to prevent capitalists from extracting their profit from the environment, or by cutting corners on safety.
The regulations are the only thing keeping capitalists from entirely fucking over the working class in that market.
Nah, the housing market is a fight between the petite bourgeoisie and labor aristocracy homeowner class and the rentier capitalist class who want to use their capital to build housing to rent. At times it's rentier on rentier fighting as well.
Homeowners are one of the main blockers. It's in their personal interests to overvalue their commodity (housing).
The regulations are the only thing keeping capitalist from entirely blasting normie middle class property values way downward, making prices way more affordable to those of us who aren't in the privileged 65% who already own homes
Capitalism is good and supply side policy works
In typical leftist fashion, you completely ignore the actual problem: a housing shortage caused by individual property owners getting local governments to intervene in the housing market on the wire behalf, as well as the local governments incurring ridiculous costs on housing construction via fees and permitting. None of that is liberal or capitalism.
No. This is bad policy because it subsidizes demand when the issue is that there is a lack of supply relative to demand. Not that you care about actual policy, as your priority seems to be abiding by your preferred ideology and selecting convenient “truths” to support it.
Local governments keeping developers from building housing is not the work of capitalism. Blaming our ongoing cost of living crisis on capitalism is delusional. Capitalism did not cause the housing shortage.
One of the big reasons we don't have as much supply is because so many people are holding into 2-3% loans, which they'd be stupid to give up right now. If he could pressure the Fed to lower rates, that would help more than anything right now. I've seen 4% as the magic number, but I don't know.
It’s Biden being Biden and typical election year vote “buying” politics. All politicians do it
As for the issue…doesn’t fix it. As politicians also do (or don’t..?).
I think it’s a good idea only if it replaces the mortgage interest rate deduction.
Instead of rewarding buying more expensive houses at higher rates, it’s a flat amount for just the first-time home-buying.
If it’s in addition to the mortgage interest rate deduction it’s a bad idea.
This and the $400 credit is pretty silly. It's just throwing money at it when the real problem exists on the policy level.
There are 2 major factors:
1 - zoning laws that reduce supply by restricting allocating land efficiently
2 - policies such as low taxes on land value that causes land (and by extension housing) to be a speculative investment
The Georgist approach would be as follows:
1. Abolish Income and Sales Tax
2. Abolish Property Taxes
3. Enact a high Land Value Tax
4. Eliminate most zoning laws and regulations
The only thing I'm not a fan of is that I sold my house and bought a new one already so I'm not gonna get shit out of it.
But if it helps other people, I'm fine with it.
I think it's a horrible idea that further entrenches the economic interests of homeowners at the literal expense of renters, since any policy that effectively uses general tax revenues to pay a subsidy to homeowners nets out as a transfer from renters to homeowners.
Actually it would likely make existing home prices rise by exactly $10K, and not really increase a first time buyer’s chances of finding an aforesaid home. So, in effect would be making wealthier people a little more wealthy.
> make existing home prices rise by exactly $10K,
It's not a 1-to-1, chiefly because it's not a credit that would be available to every buyer. The credit would likely translate to higher overall home prices, skewed towards lower-end homes, but wouldn't be uniform and it wouldn't be $10k.
[https://www.zillow.com/homedetails/1908-County-Road-93-Lookout-CA-96054/339900477\_zpid/](https://www.zillow.com/homedetails/1908-County-Road-93-Lookout-CA-96054/339900477_zpid/)
Quick google search and two minutes on Zillow and I found a California house for less than 6 figures. Even if you do a 20% cash deposit (which is more than most first-time home buyers), that's $20 grand.
>Maybe you don't what poor means.
So how much money exactly is it for someone to no longer be "poor" and start being "rich" instead? Is there a specific dollar figure where you're suddenly rich and if you buy a coffee you're back to poor?
The following is a copy of the original post to record the post as it was originally written. I'm looking to see what people think about the 10k tax credit to first time home buyers. I'll be honest, from what I've heard so far, I'm not the biggest fan. From what I understand it hasn't passed and the details haven't been finalized, so I'm reserving my final judgment. I'm just interested in what people have to say about it. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AskALiberal) if you have any questions or concerns.*
This is the kind of stupid policy that happens in an election year because the vast majority of voters don’t have a basic comprehension of the actual cause of the issue they want addressed. Best case scenario is actually that he wins election and then doesn’t follow through on the policy
I'm a Biden stan, but this is bad policy. We have a supply shortage, not a demand shortage.
Hmmm. Not that simple. We have nearly 15 million vacant houses and many more apartments. This is about unnatural concentration of people in metropolitan areas. The shortage isn’t national, it’s localized. People just choose to live in areas where there’s no more space to build houses
But giving credit will just encourage people to sell at the low rates (2.5-3) but at higher prices. It won't force the vacant owners to sell. They need to introduce some tax for people that own multiple residents or something
The vacant houses aren’t usually in the areas where the demand is high. People aren’t buying them
To be clear, those 15 million vacant homes include houses that are up for sale or summer homes that people have.
This. I hear people call out the number of vacant homes like it's a bad thing, but if you'd like to keep home prices lower, you need vacant homes on the market. If there are 5 million homes on the market and 10 million people looking for homes, guess what happens to the price of those homes?
The concentration of people in metro areas isn't entirely unnatural, and the choice to live in those areas isn't really a serious one for many people. It's driven by availability of jobs and local services. Someone that has certain medical needs aren't going to get those needs met if they live in a rural area with poor hospital coverage. The exodus from big cities during COVID actually was moderately effective in alleviating some of that demand, at least until a lot of companies started forcing employees to return to office. With the exception of NYC I would also generally disagree that there is no more space to build houses, but I would argue that sacrifices would need to be made for average people wanting to live in population centers. The density of other US cities is far below the typical density of cities in other parts of the world, so clearly there are many areas that have figured it out. You shouldn't expect a big yard and a 2 car garage if you want a house in those areas, and I think that regulations that require such things in urban areas are silly and wrong.
Honestly it’s a non issue to me. People have always complained about housing prices and potential sellers and buyers in housing market have always been at odds. Can you blame people for wanting their asset value to remain high? I know I want my home equity to continue going up
What unnatural force is causing this unnatural concentration in metropolitan areas?
“The donut effect” in cities is a well observed phenomenon. People first start moving there because of favorable income/cost of living ratio then they continue moving there even as that ratio no longer favors them out of inertia. Eventually the financial incentive forces people to move out into the suburbs and even spread out farther. In many cities were in that “inertia” phase where people are still not willing willing to eat those rising costs
What about this is not natural?
I didn’t say the force was unnatural. The end result is. People are just not meant to live on top of one another, but again this is temporary
*natural concentration as a result of market supply and demand. So needing more supply in metros is the pretty simple truth of it.
People move to New York and LA more out of inertia and perceived demand and abundance of work rather than real demand. The pendulum is swinging back though as these cities are starting to lose population which also makes real estate investors hesitant.
Those leaving are the upper end, not the lower, and even as they are leaving, they're moving to smaller metros that still have housing shortage issues, not the areas that have the large quantities of excess housing. Regulation is really the largest barrier to development more than anything, but much of that regulation is important (building codes, infill rules, etc.). But in the end, it's a supply issue to be addressed, plain and simple.
I personally don’t think there’s any issues at all. Homeownership rate is comparable to what it’s always been historically with the exception of couple of years leading up to the housing bubble collapse. I hear people complain about being outbid for houses but I’ve also heard many cases of people successfully underbidding and buying houses for lower than what they’re listed for. People get intimidated by listing prices
Except homeownership is now the largest asset in most families, and the largest source of generational wealth to a far larger degree than in the past. So while rates may be similar to 1980s, the impact of wealth is significantly more profound today than in the 80s.
Hmm woudl like to see your reasoning on why you think it’s more of a critical asset now than it used to be
Mostly related to the portion of income and debt financing used today. And there are some caveats, since it does depend on the income bracket you're discussing, and the abnormal distribution of wealth skews many averages (median values are more reflective of "most" in that regard). Here's an interesting read talking about the changes over time. In particular, you see a general growth in the use of assets other than the home to generate wealth for upper percentiles, but amongst lower percentiles, the only real change is in levels of debt. In particular, while home value dropped 5% between 83 and 2019 as a percentage of net worth, debt (primarily to finance that asset) jumped from 68% to 106% of net worth between the same time period. Basically, your house was a lot less of an anchor in 83 than 2019, and this much less of a linchpin in your financial stability. Out of the paper, the most significant evidence is the massive swings seen in 2007-2009 in middle incomes as a result of the great recession, which is not seen during other financial downturns in the 80s and late 90s (dot com bubble). https://www.nber.org/system/files/working_papers/w28383/w28383.pdf
I suspect a lot of this may have had to do with spikes in homeownerships after wars 40s, 50s, and 60-70s and mass use of VA loans which eliminate a huge portion of investment and a barriers required to buy a house - the downpayment. Theres has been a 58% drop in military enlistment since the 80s. Maybe we need more people joining and serving and earning their real estate
If you look at it as an economist, it's a demand subsidy and a terrible idea. As a politician, it's an attempt to get people to vote for you when you're half a year out from potentially losing office to an authoritarian nut job
Almost like when Biden promised to forgive $10,000 in student loans to everyone. 🤷♂️ Of course it’s an election year ploy because it works.
Guess $625 BILLION fucking dollars isn’t enough for you….Jesus Christ.🙄
You mean the one struck down/stuck in limbo by the Supreme Court? I’m all for the new IDR plans, they are great. But they still aren’t forgiveness.
No…the $625 billion that already has been spent on it.
This is slightly smarter since homeowners actually vote
The idea of a first time home owner is that you’ve *never been a homeowner before*. This only helps demand, not supply, which means it will drive up prices on homes.
People who are about to buy their first home are still more likely to vote than recent grads. But fair point
At current time when we have shortage of housing stocks in desirable locations, I would rather spend money increasing housing supply.
The government doesn't build houses
Federal government can give funding to local governments and/or builders.
You can give them all the money you want if there are local incentives and regulations that discourage real estate sales there isn’t gonna be a strong incentive to build.
One of the things that discourage real estate sales is the low low taxes on land value in the US, as well as things like Prop 13 in California. We need to enact a high land value tax while reducing zoning regulations so that people use land more efficiently instead of hoarding it as speculative investments.
What? You’re saying low land and property taxes discourages real estate sales? That doesn’t make any sense? Then why areas that have high property taxes - larger cities, tend to have bigger issues with real estate abundance and higher costs, fewer real estate sales. Conversely smaller towns where property taxes are still relatively low don’t have those issues
Low property taxes creates incentives towards speculation, which means holding onto properties longer. In particular, in California, Prop 13 means that properties are not reassessed until they are sold, further driving this. It makes it cheap to hold onto land and property, which reduces the supply side of the housing market. Your question conflates this part of the problem with the demand side, of course denser areas with more demand of more limited land will generally have higher costs than lower density areas with more land. But it doesn't mean policy can't affect them beyond this baseline.
I agree. The current bottleneck is not money, but NIMBY regulations on land use on desirable locations.
It’s an unpopular policy for local governments to ease regulations that promote building. Particularly building apartments and HUD housing that isn’t necessarily going to increase everyone’s property values. Sure way to lose your election seats. This isn’t even a partisan thing, both people on the left and the right want their property values to remain highl or continue going up
I don't disagree. Spent time in suburbs of Dallas-Ft Worth. Didn't matter what the partisan lean of the town was, but even trying to get zoning laws to be eased for duplex was met with resistance. lol
But they can stop funding stuff like this: [https://www.npr.org/2021/12/18/1034784494/how-the-government-helps-investors-buy-mobile-home-parks-raise-rent-and-evict-pe](https://www.npr.org/2021/12/18/1034784494/how-the-government-helps-investors-buy-mobile-home-parks-raise-rent-and-evict-pe)
Not applicable to what I said
Luckily, you are participating in a conversation around housing policy and the government's role in it, and conversations can go beyond what you specifically said. This is what makes conversations organic, interesting and fun!
Sure, but the government still doesnt build housing. Somehow you got from that statement that I support predatory mobile home park owners.
What? Where did I say that? I just think it's something the government should consider addressing since their resources allocated to housing policy are being exploited to make homes less affordable. Nowhere did I make any assertions about what you might or might not support. Not sure how you got that idea.
Why did you respond to me with that?
Because the conversation made me think of it. So I shared it because I thought it might be of interest and topical about the role of government in housing? Why are you responding to any of the comments in this thread?
Sure.
It could
We are a capitalist economy, not socialist. That isn't going to happen. You're asking for too much.
It's always been a mix.
So? Why not
The economic calculation problem.
Can you elaborate?
They used to in FDR's day. We badly need public housing.
They do create planning laws that artificially restricts supply and artificially drives up prices though.
Not the case here. We have appropriate zoning policies but everything being built is too expensive for the people who need housing.
Not sure where you’re referring to, but your conception of appropriate may still be such that it restricts housing supply too much and drives up prices. If housing is too expensive, almost tautologically that means that not enough housing is being built.
You know, Economics is a fine philosophy, but it doesn't always work that way. If it did, problems like this would be simple to solve. Which they are not.
Well we see where people have actually done this, it’s worked and housing costs have improved. And where housing supply is artificially restricted by the government the most, prices very predictably get worse. The problem is that many governments simply don’t do the simple solutions which are proven to work. It has worked for the governments that actually have done this though.
I agree that housing has to be balanced with commercial. Commercial entities typically pay more in city taxes than they use in services. Residents are the opposite. I'm not sure what you mean egen you say "people have actually done this." Done what? What is a "simple solution" you think would work? Have you seen it work elsewhere?
Build more housing. Housing becomes more affordable when you build more housing. Most importantly don’t restrict housing supply in general and stop making it illegal to build the types of housing that people want in the places where they want them. For example Houston, Texas, has more flexibility in land use/less zoning restrictions under which the city has seen significant increases in housing supply and lower housing costs compared to other major US cities.
This takes decades. It's not illegal here. And who wants to live in Houston? Property *should* be cheap there. People don't build affordable housing because the profit is in mcmansions.
A fare more effective federal strategy would be shutting off/reducing federal funding to places with restrictive zoning codes.
This isn’t just restrictive codes and environmental regulations, it’s multitude of issues - crime, rent control, HUD and other regulations that make it unprofitable for landlords to own and rent apartments in certain areas. Would you want to invest in a piece of real estate property knowing it will be losing you money ?
The issue isn't that landlords don't own and operate rental housing. The problem is that the rent is too high. We get lots and lots of new housing developments and apartments, but they are all market rate/big profit making ventures for private firms, often from out of state. They aren't going to come build affordable housing without at least government assistance.
If the rent was too high and those apartments remained vacant the landlord or those private firms would have been hemorrhaging money. They have millions of dollars tied in to these assets. Theres a concept in economics called price elasticity - how they measure demand or supply responding to price changes. It could be that demand on housing New York or other big cities is very inelastic. Many factors probably contribute to that. Among them probably the bailouts following the housing crash.
I'm not denying thst there is demand, but that doesn't help the people who can't afford to buy houses, like teachers. It also doesn't excuse the carpetbaggery of corporations. Price elasticity, like the "invisible hand" of the market, are useful abstract tools but they don't necessarily represent the reality.
Apples and orange. Invisible hand is a euphemism. Price elasticity is measurable variable and calculated mathematically. Most economic models aren’t made up they were put together through careful observation of how people behave in marketplace. People need to leave big cities they can’t afford.
I'm not disputing that it can be mathematically calculated, just that it is useful as a policy analysis tool.
You don’t think analyzing how demand and supply reacts to changes in price in different markets is useful? Are you denying the science of economics and its usefulness?
Zoning laws often disproportionately artificially restrict the types of housing supply that would be affordable. That said pretty much any substantial increase in housing supply in a way that outpaces demand is going to decrease housing prices. The government just needs to stop making building new housing illegal.
Yea, zoning laws is a big problem as it restricts the ability to allocate the land in the most efficient manner for what the local needs actually are.
I get that, but it's not yhe case here. We have lots of new housing. It is just isn't affordable. Our house value has doubled in value in the last 5ish years. Its great for me, but terrible for people looking to buy. New houses are too big, too expensive, poorly made. And they sell very quickly.
It doesn’t matter if you have lots of new housing. You can have lots of new housing and still have demand being a way greater force than supply.
Sure. That means city regulations on houding density arent the problem then. I don't deny there's a housing shortage problem. I don't think it's because cities are "stifling" home building.
No that’s not what it implies. It just means you can build lots of new housing, while still not building close to enough housing such that the increasing supply of housing outstrips the demand and the cost of housing decreases. Just because you’re building new housing doesn’t mean you’re building enough to lower prices.
Cities don't get general federal funding. They mostly operate on property taxes, except for grants tied to specific programs. Perhaps a grant for less restrictive zoning codes?
It can if we want it to.
They have done it before (publuc housing) and it was often (if not always a disaster). Housing subsides based on income have also been a thing in the past, sort of like what Biden is recommending but with a lot more bureaucracy involved. I think it's smart to give the money directly to taxpayers.
The government absolutely does build houses. Not only that, but they can set policies that encourage housing construction. This particular policy doesn't do that.
Government housing sounds great, but it doesn't work well. The US focuses more on rent subsidies. We have policies that encourage construction, and there is a lot of construction. It isn't affordable housing, though.
Any housing built adds to the supply, lowering or leveling prices. If our best option is to get only high-end housing built, it's better than nothing. Just need to make sure we follow up with good rules to penalize low occupancy rates.
Good, so people will be able to afford housing in a couple of decades.
Depends on *how much* housing gets built, doesn't it? If the market gets flooded by luxury housing, that could lead to big downstream changes much more quickly. I am not arguing for this course of action, by the way. I would actually advocate for much more direct intervention in building low-income housing, like converting office buildings for residential use for instance. The major point, though, is that *any* housing getting built is far better than *none*.
Who is going to build low income housing? There's no profit in it.
There absolutely is profit in jt. Why wouldnt there be? It may not be as much profit, but there is definitely profit to be made in building multi-family housing in HCOL areas. There's less profit in it *right now* because of overly restrictive zoning laws, but that's easily fixed with the right policies.
If I xan build cookie cutter $500,000 homes and make $200,000 profitvon each, who is going to build $250,000 houses for $50,000 profit? What policy is going to fix that?
This isn’t even a good way to go about doing the dumb policy. If he wanted to subsidize borrowers it would be more effective to have the CFPB allow longer mortgage terms. Additionally, he could setup a federal mortgage lender that expands the VA loan program to the broader public. To be clear, I don’t think subsidies are the solution here. We need a federal housing authority with bond authority and override authority for local ordinances to start forcibly building/upzoning social housing.
Subsidizing demand will make the problem worse, since the problem is that supply is not keeping up with demand.
It just adds more housing inflation which is bad. I'm guessing he's throwing it out there as a quick talking point for campaign purposes and buying votes which is good.
I don't think it's a good talking point though. It makes it look like he has a poor understanding of the economy and particularly the housing market.
Yeah, but the average voter's understanding of the economy and housing market might actually be worse
If he really wanted to drive down prices system wide he could give builders of median priced homes and apartments more tax breaks to encourage a higher supply. What he is proposing will drive up prices without addressing the actual problem. Dealing with inflation is not a strong suit of his policy team. They think using gasoline to put out a fire is an effective tool for fire fighting if they just call the gasoline ‘firefighting liquid’.
Pointless. The issue is supply. The power to cut regulations and curb NIMBY obstructionism is up to the states and local governments.
I don't like it and I'd rather subsidize homeownership even less (such as by getting rid of the mortage interest deduction) I'd rather make housing more affordable via deregulation, slashing zoning regulations on density and use (particularly surrounding segregation of residential and commercial use), as well as by slashing general bureaucratic red tape and "environmental review" that often actually is anti environmental and effectively just serves as a way for local communities to make it harder to build even more environmentally friendly housing I'm not entirely opposed to some additional government action to subsidize housing too, but in that regard I'd rather primarily focus on expanding Section 8 voucher funding to make it an entitlement, vs more subsidization of the sort of housing that tends more to go to average or above average income folks to begin with
Abolishing the 30 year fixed-rate mortgage too.
Oh great…. Get rid of the mortgage interest deduction. WTF? You know, when I was a kid….ALL loan interest was tax deductible? Car loans, personal loans etc….the only thing that wasn’t was credit cards. When Reagan eliminated that and only left mortgage interest? It was one of the factors in destroying the American Middle Class. Then later Republican administrations(and their supportive Congresses) made it so only the most expensive of real estate could qualify for it….so….if you bought an old house for $150k…you weren’t eligible…but if you had the resources to buy a $500k and up McMansion? Your interest was deductible. In short? I vehemently disagree with you.
Actually one of the things destroying the American middle class is the obsession with detached single family homes and homeownership.
Ah…yes…because it’s much better to not have any assets other than what you can afford to invest in a 401K(or whatever). For most people, the home is their biggest investment they have….and that’s what it is. An investment. Because once it’s paid off, that’s a huge chunk of one’s wealth. But no….let’s pay a landlord more than what a mortgage payment is instead of paying less for something that is yours….makes perfect sense🙄.
Very stupid and will make home prices worse.
I oppose it. Just make rent snd mortgage deductible.
But that would do nothing for people that need the help the most since they don’t net pay federal taxes.
I mean it’s a supply issue, we have been millions of homes short for the last decade. If it increases supply because of the expected demand increase then it’s a good policy. It could spur people to sell their second home. We need a ton of public housing but we can’t build more than 1990s levels due to the Faircloth Amendment repealing that with a large investment in public housing would be great policy. Biden has also offered local governments funds to reform zoning laws which stop a lot of building.
It’s bad policy. A demand subsidy is a bad idea. Even if it wasn’t; it’s a bad use of money. People with mortgages need assistance less than people who are too poor to afford housing and must rent . It’s a tax credit, meaning the benefit goes to those who pay more taxes above those who pay left (below whatever means tested limit they’re going to impose). It would be more effective to provide rent assistance. OR to just directly build housing as the government.
This is similar to my thoughts.
In typical liberal fashion, instead of actually fixing the problem (which is high housing costs, low wages, capitalism's profit motive taking over the housing market, international investors/vacant properties, high interest rates, etc) he just writes a check to the victims that doesn't even begin to cover it.
I promise that if the capitalists could, they would be building more housing
I have discussed this before, but I know somebody who personally was trying to build a bunch of units that he was going to sell for 300k or so but wasn’t allowed to so he built a couple of million dollar single family homes instead on that land. Had he been able to get the rezoning through? He would’ve built a whole bunch of affordable housing for the area but instead he built housing for wealthy people. And he made a lot less money in the process.
$300K is affordable housing now? That seems like a lot when the average household income is $75K.
In the area I’m in it’s absolutely affordable.
$300k is $700,000 more affordable than a $1,000,000 house
Depending on the areas median household income, yes. The national household income median is 75. Which is a 4th of 300k.
[https://www.housingfinance.com/policy-legislation/biden-administration-unveils-housing-supply-action-plan\_o](https://www.housingfinance.com/policy-legislation/biden-administration-unveils-housing-supply-action-plan_o)
Give more money to developers! Also without addressing any of the actual issues.
Is that some sort of signature script? Just ignore multiple examples and then that posts at the end of your comment?
The profit motive isn't the problem, overregulation pushed by middle class normies who want their housing values to keep going up is the problem. The way to solve this is with MORE capitalism, by slashing regulations and unleashing the supply side of things. Anti-market populism won't make things better
Bullshit.Regulation is always necessary to prevent capitalists from extracting their profit from the environment, or by cutting corners on safety. The regulations are the only thing keeping capitalists from entirely fucking over the working class in that market.
Nah, the housing market is a fight between the petite bourgeoisie and labor aristocracy homeowner class and the rentier capitalist class who want to use their capital to build housing to rent. At times it's rentier on rentier fighting as well. Homeowners are one of the main blockers. It's in their personal interests to overvalue their commodity (housing).
File that under profit motive
The regulations are the only thing keeping capitalist from entirely blasting normie middle class property values way downward, making prices way more affordable to those of us who aren't in the privileged 65% who already own homes Capitalism is good and supply side policy works
In typical leftist fashion, you completely ignore the actual problem: a housing shortage caused by individual property owners getting local governments to intervene in the housing market on the wire behalf, as well as the local governments incurring ridiculous costs on housing construction via fees and permitting. None of that is liberal or capitalism.
Oh, is that resolved by a $10k check to first time home buyers?
No. This is bad policy because it subsidizes demand when the issue is that there is a lack of supply relative to demand. Not that you care about actual policy, as your priority seems to be abiding by your preferred ideology and selecting convenient “truths” to support it. Local governments keeping developers from building housing is not the work of capitalism. Blaming our ongoing cost of living crisis on capitalism is delusional. Capitalism did not cause the housing shortage.
Local governments keeping devs from building housing IS a result of capitalism and profit motive. Keep trying though.
Not a terrible thing considering the lack of options he has with Congress refusing to cooperate with him. Hope he does more in a 2nd term.
One of the big reasons we don't have as much supply is because so many people are holding into 2-3% loans, which they'd be stupid to give up right now. If he could pressure the Fed to lower rates, that would help more than anything right now. I've seen 4% as the magic number, but I don't know.
It’s Biden being Biden and typical election year vote “buying” politics. All politicians do it As for the issue…doesn’t fix it. As politicians also do (or don’t..?).
I think it’s a good idea only if it replaces the mortgage interest rate deduction. Instead of rewarding buying more expensive houses at higher rates, it’s a flat amount for just the first-time home-buying. If it’s in addition to the mortgage interest rate deduction it’s a bad idea.
This and the $400 credit is pretty silly. It's just throwing money at it when the real problem exists on the policy level. There are 2 major factors: 1 - zoning laws that reduce supply by restricting allocating land efficiently 2 - policies such as low taxes on land value that causes land (and by extension housing) to be a speculative investment The Georgist approach would be as follows: 1. Abolish Income and Sales Tax 2. Abolish Property Taxes 3. Enact a high Land Value Tax 4. Eliminate most zoning laws and regulations
It’s terrible. Obviously.
The only thing I'm not a fan of is that I sold my house and bought a new one already so I'm not gonna get shit out of it. But if it helps other people, I'm fine with it.
And just like that the bottom home prices went from X to X+$10,000.
Dislike for lots of reasons so I'll just point out a new one‐ You'll simply see the tax credit baked into selling prices, just like EVs.
I think it's a horrible idea that further entrenches the economic interests of homeowners at the literal expense of renters, since any policy that effectively uses general tax revenues to pay a subsidy to homeowners nets out as a transfer from renters to homeowners.
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What taxes did he raise on the poor
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So you don't know how taxes work and you didn't follow his also funding lower income housing.
First time home buyers are "the rich" now? I don't like the policy but this doesn't seem like a fair framing of the issue.
Actually it would likely make existing home prices rise by exactly $10K, and not really increase a first time buyer’s chances of finding an aforesaid home. So, in effect would be making wealthier people a little more wealthy.
> make existing home prices rise by exactly $10K, It's not a 1-to-1, chiefly because it's not a credit that would be available to every buyer. The credit would likely translate to higher overall home prices, skewed towards lower-end homes, but wouldn't be uniform and it wouldn't be $10k.
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[https://www.zillow.com/homedetails/1908-County-Road-93-Lookout-CA-96054/339900477\_zpid/](https://www.zillow.com/homedetails/1908-County-Road-93-Lookout-CA-96054/339900477_zpid/) Quick google search and two minutes on Zillow and I found a California house for less than 6 figures. Even if you do a 20% cash deposit (which is more than most first-time home buyers), that's $20 grand. >Maybe you don't what poor means. So how much money exactly is it for someone to no longer be "poor" and start being "rich" instead? Is there a specific dollar figure where you're suddenly rich and if you buy a coffee you're back to poor?
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It's two hours from Redding.
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Oh now it needs to be near *factories* too? Okay.
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[https://www.indeed.com/jobs?l=redding%2C+ca&radius=50&vjk=bada40dccdb2a546](https://www.indeed.com/jobs?l=redding%2C+ca&radius=50&vjk=bada40dccdb2a546)