We don't necessarily need to build more housing. We already have more vacant homes than there are homeless people. We need to stop treating real estate like a speculative commodity. That's the real issue. Speculative commodities require returns, which means the value must keep going up, hence the prices must keep going up. So while build…
We don't necessarily need to build more housing. We already have more vacant homes than there are homeless people.
We need to stop treating real estate like a speculative commodity. That's the real issue. Speculative commodities require returns, which means the value must keep going up, hence the prices must keep going up.
So while building more homes will help, it won't solve the issue or real estate being a speculative vessel for the wealthy and the way that distorts markets.
You know who's encouraged to treat real-estate as speculation even more than the wealthy are? Ordinary homeowners.
"Real estate is the largest portfolio component for the bottom 50% and comprises more than half of their wealth. Meanwhile, the share of real estate decreases in portfolios for higher percentiles of the wealth distribution. The top 1% hold only about 12% of their assets in real estate." The top 10% hold only about 20% in real estate; those in the 50-10% hold about 35%.
The wealthy can – and do – diversify their portfolio away from real-estate. Ordinary homeowners, on the other hand, have been taught by policy that it's "natural" (it's not, it's *policy*) for home appreciation to drive middle-class growth. Encouraged by government policy to overinvest in housing (to not just own *a* home, but own more home than they would have if policy were different), homeowners become "homevoters": voters who vote to forestall neighborhood change which seems likely (or even unlikely – loss-aversion runs deep) to threaten their home values. Trumpian appeals to "the suburban lifestyle dream" (of homes that only appreciate in value) aren't aimed at the wealthy, but the petit bourgeois – less because of whatever small-mindedness is supposedly natural to that class than because of "homevotership".
Encouraging homevoters to overinvest in their homes, so that their loss-aversion reaches paranoid levels, has been bad for US politics. Once racially-segregated zoning became officially illegal, homeowners soon found other rationales to "keep the riff raff out" to protect home values. The economist William Fischel argues that rising home values contributed to rising homevoter paranoia against neighborhood change, even after civil-rights recognition:
"As an asset, an owner-occupied home is almost impossible to diversify and is subject to risk from changes in the neighborhood and the community in which it is located. Unlike fire and theft, adverse community and neighborhood effects cannot be insured by homeowners. Homeowners had since the 1910s [when the rise of both automotive transport and zoning law made segregated neighborhoods feasible in a way they'd never been before] cared about keeping" well, the "riff-raff" out, "but they lacked the organizational ability to forestall community and regional growth that would threaten the upward growth of their home values in the 1970s" when economic conditions, including, perhaps, the sheer mass of Boomers becoming homeowners, led to an "unprecedented rise in housing prices [that] gave homeowners additional reasons to care about public land-use decisions".
"In the 1970s, unprecedented peacetime inflation, touched off by the oil cartel OPEC, combined with longstanding federal tax privileges to transform owner-occupied homes into growth stocks. The inability to insure their homes’ newfound value converted homeowners into 'homevoters,' whose local political behavior focused on preventing development that might devalue their homes. Homevoters seized on the nascent national environmental movement, epitomized by Earth Day, and modified its agenda to serve local demands... Residents of suburbs in the larger urban areas of the Northeast and West Coast used existing zoning and new environmental leverage to protect the growth rate of their home values. The regional spread of these regulations has slowed the growth of the economy and perpetuated regional income inequalities. I argue that the most promising way to modify this trend is to reduce federal tax subsidies to homeownership."
We don't necessarily need to build more housing. We already have more vacant homes than there are homeless people.
We need to stop treating real estate like a speculative commodity. That's the real issue. Speculative commodities require returns, which means the value must keep going up, hence the prices must keep going up.
So while building more homes will help, it won't solve the issue or real estate being a speculative vessel for the wealthy and the way that distorts markets.
You know who's encouraged to treat real-estate as speculation even more than the wealthy are? Ordinary homeowners.
"Real estate is the largest portfolio component for the bottom 50% and comprises more than half of their wealth. Meanwhile, the share of real estate decreases in portfolios for higher percentiles of the wealth distribution. The top 1% hold only about 12% of their assets in real estate." The top 10% hold only about 20% in real estate; those in the 50-10% hold about 35%.
https://www.frbsf.org/economic-research/publications/economic-letter/2021/august/effects-of-asset-valuations-on-us-wealth-distribution/
The wealthy can – and do – diversify their portfolio away from real-estate. Ordinary homeowners, on the other hand, have been taught by policy that it's "natural" (it's not, it's *policy*) for home appreciation to drive middle-class growth. Encouraged by government policy to overinvest in housing (to not just own *a* home, but own more home than they would have if policy were different), homeowners become "homevoters": voters who vote to forestall neighborhood change which seems likely (or even unlikely – loss-aversion runs deep) to threaten their home values. Trumpian appeals to "the suburban lifestyle dream" (of homes that only appreciate in value) aren't aimed at the wealthy, but the petit bourgeois – less because of whatever small-mindedness is supposedly natural to that class than because of "homevotership".
Encouraging homevoters to overinvest in their homes, so that their loss-aversion reaches paranoid levels, has been bad for US politics. Once racially-segregated zoning became officially illegal, homeowners soon found other rationales to "keep the riff raff out" to protect home values. The economist William Fischel argues that rising home values contributed to rising homevoter paranoia against neighborhood change, even after civil-rights recognition:
"As an asset, an owner-occupied home is almost impossible to diversify and is subject to risk from changes in the neighborhood and the community in which it is located. Unlike fire and theft, adverse community and neighborhood effects cannot be insured by homeowners. Homeowners had since the 1910s [when the rise of both automotive transport and zoning law made segregated neighborhoods feasible in a way they'd never been before] cared about keeping" well, the "riff-raff" out, "but they lacked the organizational ability to forestall community and regional growth that would threaten the upward growth of their home values in the 1970s" when economic conditions, including, perhaps, the sheer mass of Boomers becoming homeowners, led to an "unprecedented rise in housing prices [that] gave homeowners additional reasons to care about public land-use decisions".
"In the 1970s, unprecedented peacetime inflation, touched off by the oil cartel OPEC, combined with longstanding federal tax privileges to transform owner-occupied homes into growth stocks. The inability to insure their homes’ newfound value converted homeowners into 'homevoters,' whose local political behavior focused on preventing development that might devalue their homes. Homevoters seized on the nascent national environmental movement, epitomized by Earth Day, and modified its agenda to serve local demands... Residents of suburbs in the larger urban areas of the Northeast and West Coast used existing zoning and new environmental leverage to protect the growth rate of their home values. The regional spread of these regulations has slowed the growth of the economy and perpetuated regional income inequalities. I argue that the most promising way to modify this trend is to reduce federal tax subsidies to homeownership."
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