Comment by neilwilson | Hacker News Reader

Comment by neilwilson | Hacker News Reader

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That housing is an appreciating asset is the problem.

That's a big red flag that something is wrong, and that's because houses wear out. Therefore they should depreciate like a car.

The problem is not solved by messing about trying to control "Domestic Credit Expansion". Limiting the supply of money causes the problem by limiting the funding of housing production.

The problem is the power of exclusion. Housing should be used for housing services, not hoarding. If the price of it is going up, all that is telling you is that there are insufficient housing services available, and there is some market failure that is stopping it being produced.

The solution is anti-trust action and, if necessary, government intervention to limit the power of exclusion and directly produce more housing services until houses start to depreciate.

Address the root cause, not the symptoms. The solution to asset prices going up is produce more of the required assets and stop people trying to corner the market in them.

Nobody is suggesting that the price of used cars suddenly going up should be solved by reducing the loans available to buy them. It should be solved by sorting out the production issues for cars to put the market back where it normally is.

Why not the same for housing services?

Houses go down in value, land goes up in value on average, partly due to scarcity. Best example is Manhattan. Additional land is non existent, and any existing land becomes more valuable as more people and businesses move there.

its not the land that has value, it is the community on that land (police, public services, schools, parks, beautiful nature, access to jobs, etc) that has enormous value.

Take Detroit for example, nothing has changed to the land itself, but the community has changed and caused land (and housing) prices to change.

the way to solve it, I think is to build better communities, help with more construction of houses, parks, and building better public services (police, fire, public education, parks&recreation, etc).

What should be the source of such funding? I dont know, but the American approach seems to be to use local funding from property taxes, but this approach only sustains status-quo, and does not help to improve struggling communities

Just charge a land value tax and scrap all other taxes.

I would take it a step further and say that it isn’t the community services that has value at all. It is the production of the community that has value. Detroit stopped producing things so it could not trade/earn money for all those public benefits. You could raise property taxes as much as you want but if people can’t pay then because they haven’t earned money the city will just go bankrupt, like the Detroit did. A community doesn’t have to produce physical goods, it can produce services for those that do produce physical goods, or digital services. But when the community can’t produce even enough to cover your food costs, community services don’t matter. To increase value in an area there must be a surplus somewhere. San Francisco area is a perfect example of the opposite. The myriad of tech companies are able to scale on a massive level because software scaling has practically zero cost and end up with a surplus.

The real problem is that houses carry a monetary premium, but you also need to live in them. Fix the money.

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