Legalize apartments.
It isn’t that real estate can’t be an investment, but we should reward those who invest their human capital as well.
Landlords and market investors might balk, but they are going to hell anyway.
Forcibly taking something from somebody just because somebody else wants it is rather totalitarian.
> Alice has to pay Bob one third of her income, or else he'll call on on armed men to throw her out of her home.
"Not totalitarian"
> Bob isn't allowed to do that anymore.
"Totalitarian"
More apartments only makes lack of home ownership worse. You're always paying someone else for something you will never own.
Rent payments go down a black hole. Mortgage payments at least result in an actual asset, and eventually end.
These zoning restrictions would need to be rewritten first, and incentives given to developers to create high-volume, inexpensive housing. With restrictions preventing them from selling to built-to-rent companies.
But zoning restrictions are incredibly difficult to rewrite. A woman from a county in GA is having to sue the county to try to adjust their zoning restrictions and the counties constitution states that zoning can only be used to protect the health of the citizens. And their restrictions banning off-site built homes or small homes does nothing to protect health since they're built to the same standards as larger site-built homes.
I really want to know how they got written in the first place. It seems clear that somehow, zoning regulations is one of the biggest issues we've got. But everyone has these onerous zoning regulations that make life worse... where did they come from?!
As redlining and segregation had a lot of old white people shaking in their boots complaining about property values, old white people who worked for local government (who were also largely landowners) began implementing zoning regulations that effectively banned any sort of housing being built that was affordable to many citizens. Such as apartment complexes, townhomes, quadplexes, smaller homes, etc.
In today's world, we're now dealing with the continued effects. Wealthier areas of town that do not allow ANY multifamily house. Less wealthier areas of town that do not allow homes to be built off-site, or to have under a certain square footage, effectively ensuring homes there are more expensive than they should be. And then the poorer areas of town only allowing multifamily housing right next to industrial/commercial zoning areas. Effectively preventing anyone (outside of property investors) from affording to own a multifamily property, let alone even be able to legally build a single-family home.
As the separations between middle class and lower class begin to blur, it makes the situation worse for everyone, outside of the financially well-off who either made it big with a business, or have owned property for decades at that point.
Zoning was redefined from a health and safety perspective, to a legal, local government tool to artificially inflate property values by unfairly limiting the types of homes that could be built, and putting the poorer workers and "undesirables" in unsafe communities full of industrial factories, low-wage jobs, and no vertical movement for the community to grow.
The process in the Soviet Union might not have involved financial capital, but it involved human capital (i.e. if your profession was not "respectable", or if you were ever convicted of a criminal act, you might not receive permission to get an apartment (or even a room) in a top tier city like St. Petersburg or Moscow)
Industrialization led to many dirty cities especially before sanitation technology was deployed. Restrictions on more than e.g. 8 unrelated people per house, minimum window requirements, separating the meat packing district from a pure residential neighborhood were in response to tenements which were deathtraps in fires.
> Rent payments go down a black hole. Mortgage payments at least result in an actual asset, and eventually end.
Generally making rent payments and investing the money you would have spent on the house in the stock market will get you further ahead in terms of ownership stake than just making payments on a mortgage. The only reason this is not true is due to massive, massive government subsidies of owners at the expense of renters (ie. Fannie Mae/Freddie Mac acting as lenders of last resort for nonsense mortgages that no private bank would have ever granted without this support).
This cannot be accurate.
1: rentals are often as much or more expensive than a mortgage (the problem is the down payment)
2: rental prices *constantly* go up, despite nothing changing in the house or apartment you're living in. Mortgages stay flat (in the US), so raises, etc, aren't eaten up by a cost of housing that exceeds the local inflation rate.
Not now, no.
You have to compare the money you would spent on the down payment (and excess from mortgage) to the returns you would get from investing that money directly.
And as I said, the only reason mortgages are so cheap is due to the massive, massive amount of government subsidy in favor of owners - if owners were remotely exposed to the true cost of borrowing, it would not even be particularly close.
Not that there isn't a stigma against renting, but, does one really want to be renting during retirement when most people's income is fixed? And yes, there are ongoing costs to ownership, but you can possibly plan for those better. You can't really plan for your land lord to raise rent by 50% because the media tells him the market is hot and he can do that.
So if you feel a need to buy a home, you should be able to do it. But the government should not be propping up unsustainable markets at considerable risk to the rest of us to let you do so - if you can afford a home and get a bank to lend you the money and assume the risk, you should be able to. But I am not sacrificing my ability to afford quality housing to give you government-guaranteed mortgages, it's a massive moral hazard.
If you need the fixed-income security, pay for it.
Not sure if that is true with current rates - and also is due to government policy propping up cheap money to homebuyers.
As I've said, no bank in their right mind would give out the mortgages they are right now if they didn't know they could turn around and sell it straight to Fannie & Freddie
A mortgage is an extremely leveraged investment at preferable rates. Your statement is extremely sensitive to the change in home prices (generally rising), the change in stock prices, and interest rates.
My home has been making an unrealized 11% per year (disgusting) on a much larger pool of money than I actually had to invest. The economics of renting and investing the leftovers are deeply unfavorable.
Some European countries have things like the imputed rent tax (basically taxing homeowners as if they were renting their own home). This goes a long way towards balancing the scales between homeowners & renters.
That said, I mentioned stigma, I didn't say anything about culture - and I'm not sure why it is at all relevant to my point.
What money? Renting isn’t cheaper than owning. You will almost definitely make more money on remodeling a home than buying stocks.
The flexibility of renting is a real and important phenomenon: people's lives change unexpectedly sometimes.
Since then, interest rates have only increased, and in my location, real estate is at a record high. It's been increasing pretty much since the 90s without a break. I don't believe a bubble will break any time soon. Also, materials/energy is getting more expensive, there's a lack of labour, so even building/renovating places isn't an option.