Housing prices

[Kriegsspiel]

I don't think you should be able to deduct mortgage interest either. It's in my same mental category as SALT deductions.

[yankees60]

Very interesting article, thanks Vinny.

Thanks for being my prompt to find it!

Vinny

[yankees60]

I don't think you should be able to deduct mortgage interest either. It's in my same mental category as SALT deductions.

I can think of no logical arguments against your position.

So many tax deductions are because there is a major focus on reducing tax rates with a lot of subsequent protests. But while tax deductions accomplish the same thing they do not get anywhere near the attention that reducing tax rates do. Plus those with the money seem to be able to get Congress to get certain tax deductions passed for their benefit.

Vinny

[doodle]

Real estate is a market of supply and demand.

Demand is based on not only desire but also ability to pay for the thing you want.

If we offer tax breaks for houses, then demand goes up, all else equal, due to higher ability to pay for it.

All else equal, the housing market prices will rise concomitant with the tax break, as buyers bid up the price to their new higher ability to pay for it, with the tax break.

Thus, the tax break will provide no assistance in buying the house, since the house price will go up equivalent to the eat presemt value of the tax break.

Since this is a finance forum, here’s a more familiar example. A few years ago when interest rates weren’t zero, you could get maybe 2% for a treasury bill. It’s taxable so after taxes you might only keep 1.2% if you’re in a high tax bracket.

The fed gov wants to subsidize states and cities, so allows they to issue tax-free bonds. A similar duration tax-free bond, when the taxable treasury bond yielded 2% was only yielding about 1.2%

Why? Because the people in high tax brackets bid up the prices of the bonds so their overall return, after-tax, would be the same as compared to a taxable bond of similar risk.

And what social good comes from creating policies that drive up the price of life's necessities and turn them into speculative investments? I don't see how higher home prices are any more beneficial to society than higher education prices or higher food prices. Seems to me like we should be doing just the opposite...creating policies that attempt to drive down the prices of these goods.... If in 1970 it took 4000 hours of work to house your family and today it takes 8000 hours of work I don't see that as intelligent societal progress.

[doodle]

Doodle,

I’m with you, and think we should end the tax credits here. Anytime the government interferes with a market, the price of that good goes up exponentially.

Housing
College education
Healthcare

I'm not sure about healthcare and government interference . What would the downside be to having a national insurance pool...insurance functions best when risk is spread as wide as possible. As far as I can tell insurance risk and rate assessment is largely an automated process so I don't see the value added from individual private businesses for such a basic commodity. From my perspective most hospitals spend an enormous amount of time and money dealing with thousands of different plans and companies. Doesn't make sense. Three tier national insurance plan would be so simple and save so much complication.

[Kriegsspiel]

I think health insurance is a bit of a misnomer in a lot of cases. Like if your health "insurance" covers things that you know you're going to need anyways that you should just pay for, like insulin or birth control, then you just want other people to pay for your stuff.

To bring it back to housing, I think a corollary for those people's concept of health insurance would be like saying you want home insurance that covers replacing your light bulbs and a can of paint every year for touching up your trim (heh).

[doodle]

Doodle,

I’m with you, and think we should end the tax credits here. Anytime the government interferes with a market, the price of that good goes up exponentially.

Housing
College education
Healthcare

I'm not sure about healthcare and government interference . What would the downside be to having a national insurance pool...insurance functions best when risk is spread as wide as possible. As far as I can tell insurance risk and rate assessment is largely an automated process so I don't see the value added from individual private businesses for such a basic commodity. From my perspective most hospitals spend an enormous amount of time and money dealing with thousands of different plans and companies. Doesn't make sense. Three tier national insurance plan would be so simple and save so much complication.

Who does insurance work best for, when spread as wide as possible? Does a 25 year who has great genetics, eats super healthy, doesn’t drink or smoke, and work out regularly. Does this person benefit from being lumped in with a 50 year old life-time smoker with type 2 diabetes who is 200 pounds overweight and eats McDonald’s 4 times a day?

Isn't that calculated into the rates when risk assessment is run? Every insurance plan I've seen charges smokers extra...obese individuals should pay more as well. Pretty similar to auto insurance and how many tickets you have, your age, etc. All influence rates...it's a computer calculation.


You mention your perspective of hospitals spending a lot of time and money dealing with different plans. I’m curious as to what professional experience you base this on.

Friend who have worked in hospital as well as independent practitioners who spend a lot of time and effort billing and navigating ridiculously complicated insurance plans. It's insanely more complicated than it needs to be for a basic commodity product.

I work professionally in healthcare and most of my time is spent dealing with government regulations on CMS patients. Regulations that make no sense, and were written by bureaucrats who clearly don’t understand or care what they are asking to be done. Personally, I make a fantastic living as a consultant trying to aid my hospital clients figure this stuff out. So it’s great for me, not so great for the hospitals.

I'm sure there is room for fixing this as well. Are you telling me that a panel of experts couldn't sit down and devise a better system than the one that currently exists? It's not the fault of government that stupid people coupled with special interests come up with stupid plans. The government is merely facilitating a system...allowing coordination....kind of like interstate highway system or regional power grids.

[Kriegsspiel]

Doodle, Obama eliminated pre-existing conditions with ACA, so by definition, people with diabetes can't be charged more.

Also, if you think you can make the government regulate less, you know nothing about government.

Didn't Trump just say something about doing the same thing? The pre-existing conditions thing is maybe a good example of what I'm talking about. It's not insurance if you already know you have the medical condition. You're not insuring against it, you already have it, but you want the other people in the insurance pool to pay for it. That's different from joining a pool of people who might or might not have some kind of accident that necessitates a trip to the ER.

[doodle]

Doodle, Obama eliminated pre-existing conditions with ACA, so by definition, people with diabetes can't be charged more.

Also, if you think you can make the government regulate less, you know nothing about government.

Didn't Trump just say something about doing the same thing? The pre-existing conditions thing is maybe a good example of what I'm talking about. It's not insurance if you already know you have the medical condition. You're not insuring against it, you already have it, but you want the other people in the insurance pool to pay for it. That's different from joining a pool of people who might or might not have some kind of accident that necessitates a trip to the ER.

Somehow a system must be devised that incentivizes people to make healthy decisions and take care of their health but doesn't penalize individuals who are born with medical conditions that are genetic bad luck. You know, part of this is just being a decent human being. If some 6 year old kid is born with cancer I don't really have an issue paying extra for my health insurance to include him in the pool of insured so he doesn't have to die or have his family go bankrupt to pay for treatment. I feel a lot better about paying extra for that than bailing out banks or making holes with explosives in the desert.

If a company makes massive profits by marketing and selling products to children that have been specifically engineered in food labs to exploit natural evolutionary human pleasure centers in the same fashion that illegal drugs do, and these foods also have destructive health effects, do you think that those industries have any responsibility when our population has negative health effects that overwhelm our medical capacity to deal with them? I'd say the majority of health issues today are due to dietary issues.

[doodle]

If an individual develops type 2 diabetes because he became addicted to these foods as a child is it his fault? If food companies laced kids breakfast cereals with nicotine would you have an issue with that? If yes, what if some combination of sugar and fat and weird artificial flavors was shown to have the same addictive properties?. Would you have an issue with them exploiting this knowledge if we also knew that eating this food led to obesity and diabetes?

[doodle]

Tom, either your job is too damn easy or you really don't have a job! Lol

[doodle]

So if a breakfast cereal manufacturers laced their product with a substance which created a chemical dependency you would blame the parents? Your worldview sucks if that's the case.

[doodle]

Lots of liberal ideology would work if only...

My hobbyist rocket ship I’m making in my garage would work, if only gravity didn’t exist.

Ahh...maybe that's the problem. You are equating our economic system of production with the fundamental laws of the universe.

[doodle]

I have work to do so can't give full attention to this discussion right now but where did I mention central planners? I talked about labor negotiation. Right now labor is at the negotiation table with imperfect information. The business knows how much value these workers are adding, the workers have no idea. If both actors had the same information and labor had the ability to organize in negotiations my argument is that the value created by an enterprise would be more evenly distributed.

In case you haven't noticed we have a wealth disparity issue starting to arise. At some point things get so off balance that through history it has led to revolutions. I am trying to save the good aspects of our system I'm the same way that roosevelt rescued capitalism. If not for him this country probably would have had a communist revolution.

[Kriegsspiel]

Somehow a system must be devised that incentivizes people to make healthy decisions and take care of their health

LOL, what? People are already incentivized to take care of their health if they want to be healthy. If they don't care, for whatever reason, then they don't have to; maybe there is another incentive that holds a stronger allure for them, like neglecting their health so that they can make more money or go to night school or literally anything.

but doesn't penalize individuals who are born with medical conditions that are genetic bad luck.

They're not being penalized. They're fucking unlucky, sure, but it's not a penalty that mean people are imposing on them. This is close to, but not the same as, the bigotry that open borders people employ to say that people that are unlucky enough to not be born in the USA should be able to come here.

You know, part of this is just being a decent human being. If some 6 year old kid is born with cancer I don't really have an issue paying extra for my health insurance to include him in the pool of insured so he doesn't have to die or have his family go bankrupt to pay for treatment. I feel a lot better about paying extra for that than bailing out banks or making holes with explosives in the desert.

You are free to do so. Do you already do that?

If a company makes massive profits by marketing and selling products to children that have been specifically engineered in food labs to exploit natural evolutionary human pleasure centers in the same fashion that illegal drugs do, and these foods also have destructive health effects, do you think that those industries have any responsibility when our population has negative health effects that overwhelm our medical capacity to deal with them? I'd say the majority of health issues today are due to dietary issues.

No.

I also think drugs should be legal.

[doodle]

Somehow a system must be devised that incentivizes people to make healthy decisions and take care of their health

LOL, what? People are already incentivized to take care of their health if they want to be healthy. If they don't care, for whatever reason, then they don't have to; maybe there is another incentive that holds a stronger allure for them, like neglecting their health so that they can make more money or go to night school or literally anything.

Disagree. The environment that we live in is designed so that one has to struggle to make healthy choices. Everything about the way our system is set up encourages people to make unhealthy decisions...hence the extremely shitty health of our population. Sparta as an extreme example was designed to create a race of warriors, ours is designed to create diabetic creampuffs. There is certainly a cultural aspect to this.

but doesn't penalize individuals who are born with medical conditions that are genetic bad luck.

They're not being penalized. They're fucking unlucky, sure, but it's not a penalty that mean people are imposing on them. This is close to, but not the same as, the bigotry that open borders people employ to say that people that are unlucky enough to not be born in the USA should be able to come here.

They are penalized if their condition doesn't allow them to afford insurance or only at nosebleed prices and thus handicaps them from making headway. Not every country does this. It is a choice.

You know, part of this is just being a decent human being. If some 6 year old kid is born with cancer I don't really have an issue paying extra for my health insurance to include him in the pool of insured so he doesn't have to die or have his family go bankrupt to pay for treatment. I feel a lot better about paying extra for that than bailing out banks or making holes with explosives in the desert.

You are free to do so. Do you already do that?

I'd be happy to include him in the national insurance pool.

If a company makes massive profits by marketing and selling products to children that have been specifically engineered in food labs to exploit natural evolutionary human pleasure centers in the same fashion that illegal drugs do, and these foods also have destructive health effects, do you think that those industries have any responsibility when our population has negative health effects that overwhelm our medical capacity to deal with them? I'd say the majority of health issues today are due to dietary issues.

No.

I also think drugs should be legal.

So we should be able to sell meth in vending machines at high schools? I assume there would be no reason to place any restrictions on that.

Maybe you guys are right. As I said, It would be very interesting to be able to run a simulation in this 'libertarian' wonderland. Hopefully one day soon we'll have the computing power to accurately do that.

[doodle]

I'd be for a straight up libertarian anarchy land though. I think it would be pretty rough place to live...basically a world of might makes right. But at least it wouldn't suffer from the arbitrary application of government force that you libertarians are arguing for. If we gonna eliminate all forms of government sanctioned coercion and go full on mad max it would certainly be an exciting if not brief experience.

[Kriegsspiel]

Disagree. The environment that we live in is designed so that one has to struggle to make healthy choices. Everything about the way our system is set up encourages people to make unhealthy decisions...hence the extremely shitty health of our population. Sparta as an extreme example was designed to create a race of warriors, ours is designed to create diabetic creampuffs. There is certainly a cultural aspect to this.

We can agree to disagree on the first point if we both agree Sparta was the shit.

They are penalized if their condition doesn't allow them to afford insurance or only at nosebleed prices and thus handicaps them from making headway. Not every country does this. It is a choice.

That's not a penalty. The default state is no healthcare. Just like the default state for all of us is hunter-gatherer levels of wealth. Like Steven Pinker says (in Enlightenment Now), the fact that any humans are wealthy at all is miraculous. And come to think of it, he had another quote that you might find interesting:

In addition to obliterating wealth (and in communist revolutions, the people who owned it), the four horsemen reduce inqeuality by killing large numbers of workers, driving up the wages of those who survive. Scheidel concludes, "All of us who prize greater economic equality would do well to remember that with the rarest of exceptions it was only ever brought forth in sorrow. Be careful what you wish for."

I'd be happy to include him in the national insurance pool.

But you don't already pay their medical bills, even though you said you don't have an issue with doing it? Are you a monster?

So we should be able to sell meth in vending machines at high schools? I assume there would be no reason to place any restrictions on that.

If I were king of the world, I think I'd just make 18 the legal age for drugs and call it a day. My mentality is that is should be allowed, but we shouldn't want to do it or encourage it.

[Kriegsspiel]

I'd be for a straight up libertarian anarchy land though. I think it would be pretty rough place to live...basically a world of might makes right. But at least it wouldn't suffer from the arbitrary application of government force that you libertarians are arguing for. If we gonna eliminate all forms of government sanctioned coercion and go full on mad max it would certainly be an exciting if not brief experience.

I used to be huge into that kind of thing, but I have moved on to preferring a government, but a small one. Probably like what America started out like.

[doodle]

In addition to obliterating wealth (and in communist revolutions, the people who owned it), the four horsemen reduce inqeuality by killing large numbers of workers, driving up the wages of those who survive. Scheidel concludes, "All of us who prize greater economic equality would do well to remember that with the rarest of exceptions it was only ever brought forth in sorrow. Be careful what you wish for."

Inequality is natural. Hierarchies exist throughout nature between and within all groups of animals. I'm not arguing for equality....that would be naive. I also realize that coercive action to impose equality (beyond trying to ensure a level playing field, recognizing that humans are deterministic apes whose outcomes are a function of experiential inputs + base system (software + hardware) and incorporating some human decency into our cultural traditions) is probably doomed for failure. Nevertheless if we know that a certain habitat at a zoo produces negative outcomes for the health and well being of the animals we can certainly apply some of these principles (albeit with caution as humans are more complicated) to our our system. There is nothing in the rules that says that the outcome of all the arbitrary laws and natural outgrowth of that system has created the pinacle of what leads to human flourishing. I would argue that we should tweak things (after all, the entire system we have created is based on arbitrary rules centered around one particular philosophical outlook). Why not play around and see if we can't improve things? Perhaps implementing a national healthcare system would unleash a flourish of creativity and ham freedom that has been locked up by people afraid to leave their corporate jobs for fear of not being able to afford the exorbitant premiums for their families healthcare. Maybe it would save money and resources in the long run if people had access to preventative care instead of running to emergency room at the last minute. We have the freedom to experiment.

[doodle]

Declining population and deflationary asset prices seem so nice.

https://www.cnn.com/travel/article/jap ... dex.html

In a country known for sky-high real estate prices, buying a large country home (or "kominka") in Japan is still affordable.

"You can buy a home with a modest lot for as little as $20,000 USD, depending on location. Some towns even maintain lists of free or nearly free houses, in hopes of bringing in new families, " Paul explains.
There are no restrictions on foreigners buying land or property in the country, and no citizenship or resident visa is required. That said, without a work visa or permanent resident status, obtaining a loan can be difficult. Foreign buyers typically opt to pay cash for this reason.

https://www.cnn.com/travel/article/ita ... dex.html

Italy's €1 houses are back in time for the holidays

Auctions2Italy is selling houses in Vetto, Italy.
(CNN) — Looking for a holiday gift but still not found the perfect one? Here's a last-minute idea: a home in Italy, yours for less than the price of a cup of coffee.
Yes, another month, another set of idyllic Italian village cottages up for sale -- and yes, it's all part of the bid to breathe new life into remote rural locations that have been quietly dying off.

However, if you're used to the usual model -- town authorities wanting to attract new residents and offering cut-price houses or subsidized living to entice them -- this is a little different.

[Kriegsspiel]

House prices rose by 11.2% from a year ago, the biggest increase since the peak of Housing Bubble 1 in 2006, according to today’s National Case-Shiller Home Price Index for January. link

Like he says though, it's a few out-performers who really are getting wild.

[doodle]

This is definitely a localized trend. Plenty of markets still have very reasonable and affordable home prices. Canada is even worse overall.

That said, I think people have lost their damn minds paying what they are for housing. This is 2021...no basic durable good should cost more and more every year.

Having worked in rehab and construction I believe that housing and the construction industry overall is well overdue for a reimagined concept. Somehow the factory model of production completely missed this entire industry. Basic, simple, affordable shelters should be rolling off assembly lines.

[flyingpylon]

Housing inventory is at record lows. You can find stories from all different parts of the country about sellers receiving multiple offers well above asking from buyers that haven't even seen the house.

[Kriegsspiel]

This is definitely a localized trend. Plenty of markets still have very reasonable and affordable home prices. Canada is even worse overall.

That said, I think people have lost their damn minds paying what they are for housing. This is 2021...no basic durable good should cost more and more every year.

Having worked in rehab and construction I believe that housing and the construction industry overall is well overdue for a reimagined concept. Somehow the factory model of production completely missed this entire industry. Basic, simple, affordable shelters should be rolling off assembly lines.

Have you seen the 3d printed houses? Pointedstick The Apostate probably knows a lot about them. They look neat. The brick-laying machine that can build a wall in 10% the time of human laborers is my favorite, because I like the look of brick houses over the stucco of the 3d printed ones.

I remember a few years ago talking with one of my friends brothers, who is a housing contractor, about 3d printed houses. After I described them from some articles and videos I'd seen, he said something like, "Well, they can't do what I do, putting in trim, running wire, figuring out where to put pipes" etc. My response was something like, they'll design the houses and construction process to not need you.

Modular construction is what you're talking about, though. Really tight homes made out of good quality materials that can be built far quicker than stick built. There seem to be more and more companies out there (or maybe I'm just discovering companies that have been around for a while) that are doing this.

It's really the location people are paying for over the house itself. So even if you could 3d print a home, if you want it in a desirable location then you're going to be paying a lot to outbid other people.