The rent is too damned high... and wages are too damned low.

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Quote Phaedrus76:

The better change would be to change property tax law to only tax the value of the land, and not the improvements.

This conceivably could produce more housing: Same property tax payment, why build a three-bedroom house when you can bulid a six-bedroom house (or maybe 4 small apartments with 8 bedrooms.)

On the other hand, property taxes are necessarily the lifeblood of local governments: you can find and lien real property, it's there on the map that shows your city's boundaries. And property taxes are for police, teachers, firemen, etc. The more inhabitants, the more of these services are required. Who should pay that tax? Shouldn't the guy who's got 16 people in the apartment he built on his parcel pay more than the family of three on the same-sized parcel adjacent?

chilidog
Joined:
Jul. 31, 2007 3:01 pm

It's pretty simple to place a value on a structure....the cost of duplicating it.

The "value" of a city lot is usually through perception alone.

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 3:01 pm
Quote polycarp2:

It's pretty simple to place a value on a structure....the cost of duplicating it.

The "value" of a city lot is usually through perception alone.

Retired Monk - "Ideology is a disease"

To duplicate a structure with new construction and code compliance can easily cost many times what the existing structure does. The true value of a structure is determined at the real estate closing, after all the paperwork is signed, and the checks have cleared.

Dexterous's picture
Dexterous
Joined:
Apr. 9, 2013 8:35 am

I found this graph of Mortgage Product by Country interesting: http://oliverreports.com/category/mortgaqge-finance/

I grew up near Los Angeles and always assumed the 30yr mortgage was "the norm", and variable rates led to personal bankruptcy DOOM. I'm mid-40's years old so this assumption harkens to my grade school years when my single-mother juggled her secretary's income and women weren't allowed credit without a man's co-signature. We knew we weren't "middle class" then, so we budgeted with dimes and quarters and envelopes. The mortgage was 25% of income at 6+1/2% (just before savings accounts rocketed over 12%). We could afford to eat meat every day, keep the lawn green, defend and repair against robbers, and have a couple electronic advanced devices.

This graph clearly shows "long term fixed" mortgages are NOT the norm now. France is the only other country that has a majortiy of mortgages categorized as "long term fixed".

Would today's U.S. middle class be better off if the mortgage mix had zero or few "long term fixed" mortgages? As is the case in the U.K., Switzerland, Spain, Korea (obviously South!), Ireland, Canada, Australia.

There's a lot of moving parts, but I say DEFINITELY. Our current system allows the selling of mortgages. That's bad because buyers of mortgages are not as knowledgeable of the product defects as the manufacturers. I think mortgage originators should be exposed to loss if they make bad loans.

It would suck if my wishes casued my home to fall in value and I couldn't sell or re-finance it to pay for a fabulous retirement. But I wouldn't have bought in at a high price if the systems was more "honest" or "accountable" as it should be.

Steve in California's picture
Steve in California
Joined:
Jan. 27, 2014 5:41 am

Your home value could fall in the short run, but in the long run you'd be better off because there would be less price volatility!

Dweinstein003's picture
Dweinstein003
Joined:
Nov. 4, 2013 12:50 pm
Quote Dexterous:
Quote polycarp2:

It's pretty simple to place a value on a structure....the cost of duplicating it.

The "value" of a city lot is usually through perception alone.

Retired Monk - "Ideology is a disease"

The true value of a structure is determined at the real estate closing, after all the paperwork is signed, and the checks have cleared.

Not in California. Even if that is attempted, I don't see how it is accurately possible, anywhere: the buyer is buying the whole package. You can't separate the structure from the parcel.

chilidog
Joined:
Jul. 31, 2007 3:01 pm

Maybe we are splitting hairs over the term "value". I am not speaking to sentential value. That is a totally different topic.

In my world, things of value have a market with a buy, sell, or trade option.

Thus the value of something is determined at the final sale when the transaction is completed. It is possible to own a jeweler certified diamond that is "valued" at $25 million but the highest bidder will only pay you $10 million.

If the buyer got a "good deal" or not, will again be determined when it is resold.

Dexterous's picture
Dexterous
Joined:
Apr. 9, 2013 8:35 am

The inherent value of anything is the total cost put into producing it. Perceived values are by agreement alone. They are two different things.

When I was investing in real estate, I never, ever paid more than the inherent value for any property. Made a bundle. Never took a loss.

If people kept that in mind, a real estate bubble and massive losses never would have developed. Perceived values can collapse quicker than they develop. They aren't "real". I only went for sure things.

As a young man, I had an exceptional mentor.

Retired Monk - "Ideology is a disease"

polycarp2
Joined:
Jul. 31, 2007 3:01 pm

"The Saddest Thing Is This Won't Be Breaking News"

Thom plus logo As the world burns, and more and more fossil fuels are being used every day planet-wide, atmospheric carbon dioxide levels passed 416 ppm this week at the Mauna Loa Observatory in Hawaii. In the 300,000 years since the emergence of modern humans, carbon dioxide levels have never been this high.
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