It’s the same across the world.
The problem is that real estate has become an asset, a form of capital.
The only way out of this mess is to shift taxation away from labor and onto capital.
Higher property taxes (1-2%), that can be subtracted from income tax for working people are the answer.
Let’s say Joe the Plumber and Elon the Muskrat both have an income of $100K and pay an income tax of $25K.
Joe owns one property worth $1M that he lives in and pays 2% tax on it, $20K. Which gets subtracted from the $25K income tax, meaning he effectively pays $5K income tax + $20K property tax = $25K combined property and income tax. Pretty sweet deal.
Elon owns 20 properties valued $500M collectively, which means $10M in property taxes. He officially resides in the most expensive $100M property and gets a $50K credit for that. The $50K is larger than the $25K, so he pays zero income tax.
Total tax is $10M.
This (or something like it) is the system the whole world must move towards if we want to simultaneously (a) lower taxes on working people (b) increase taxes on property and © not let working people lose economic power relative to the capitalists over the longterm.
The middle class has to outsmart the owning class if we want our children to remain middle class.
I really hate all the replies attempting to poke holes with minimal effort. Thanks for this comment and your robust set of examples.
Housing shouldn’t be a vehicle for interest or making a living, I’d take it more extreme than what you have if I’m being honest. You can own the buildings you use 60% of the year for work or for housing but nothing else. We don’t sell stocks in bananas, we sell stocks in farms. Housing should be a consumable commodity not a line item in a corp’s assets sheet.
What would stop owners from shifting the burden to the renters?
As of right now this is already how property taxes are handled by most landlords: mortgage + tax + est. cost to fix incidentals + time managing paperwork = rent (in a fair situation - though most will tack on as much extra for “profit” as they can)
So if you have a house worth 600k (12k tax), the mortgage is $3500/mo, they would just charge $4500+ a month to cover their costs.
I think the only way is to add extremely progressive property tax to multiple ownerships, and a name always has to be attached as “owner”. So your first house and second might have limited property taxes, but your third would be double, fourth would be quadruple, fifth would be 8x etc.
My example is already an extremely progressive property tax on multiple ownership, but yeah, it can be tailored as needed.
I, personlly, would be in favor of doubling the tax if no one is living there.
As for rent: the price of rent cannot be arbitrarily raised. If renters can buy more cheaply than renting, then landlords will have empty units.
So in your example, renters would just buy and pay the $3500 mortgage instead of renting.
Of course real life is more complex. Renters need access to financing, etc.
I’m glad we currently don’t have this tax system in place otherwise rents would be absurd and growing right now!
This is a good idea which is why it will never implemented
There’s a dozen ways to fix the housing problem. Knowing how to fix it isn’t the problem. Getting politicians who are paid not to fix the problem to do it anyway, is the problem.
It will if poor people can work together against the common enemy.
Poor people can’t come together if you elevate one part of them to a privileged position over the other part which is placed at a right-less position. The privileged workers don’t want to lose their power over their degraded compatriots, so they will fight tooth and nail (on behalf of the owners) to prevent any attempt from their degraded compatriots to free themselves.
Scapegoats of the world unite.
Housing cannot be both affordable and an investment.
It theoretically can. Yes. It realistically won’t, no. Your home should be a security and not an investment. Speculation and hoarding with relation to housing should be largely outlawed. And usury being restricted to the point of being almost pointless.
If we, as a society prioritize desirable public housing for members of our society. Who the fuck cares if a house is an investment or not. That simple security is worth far more than any so-called investment could ever be. If people wanted to work extra hard and save up for something better, that’s always an option. But that shouldn’t be the premise for basic housing entirely.
Whats your plan for investment groups that back corporations buying 1000 houses each month to rent?
They will need to pay the property tax with no possibility of getting a tax discount, so they will have a competitive handicap against owner-occupiers, who will be able to outbid them in contrast to the current situation.
Government could consider providing a discount if the houses are rented out at affordable rates.
That just makes the asset more expensive and would likely get passed onto the renter. There’s got to be something done to curb their purchases. Making it more expensive on the backend won’t change them paying cash up front to outbid a regular family.
What if the property tax is higher than the income tax? They get money back?
What about those who have to sell at a loss and are now stuck with a debt instead of profit for their retirement? Heck, some of them might be forced to go bankrupt because you can’t have a mortgage for a house you don’t own anymore!
I literally covered these situations in the example, which leads me to believe you are just slinging mud and not seeking to understand.
If you own $500M in property and have a $10M tax bill but only have $100K in income, you can figure it out, even if it means downsizing and hoarding less real estate.
We have to stop feeling sorry for the top 0.1% of society and start taking care of the 99.9%.
I’m talking about my 90 years old grandma who bought her house in the 70s and now lives on whatever’s left of my late grandfather’s pension, my parents who will have a mortgage to pay and never had a pension fund at work, they’re not fucking millionaires! You guys always seem to forget about regular folks that will lose their house while the rich will find ways to dodge whatever tax you would love to see implemented because they have the means to do it
I, too, have retired parents.
You should have a look at their income tax. You apparently have no clue what it looks like.
Spoiler: they are still paying tax, well into retirement.
In a typical example they might have a $60K per year retirement income (social security plus pension), paying $20K income tax, owning a $500K house (if they downsized after the kids moved out). A 2% property tax on that would be $10K and leave them with $10K income tax + $10K property tax = $20K total tax, just as they have now.
You don’t get what I’m saying. Your tax reform happens, house are now flooding the market. Their house would lose so much value that what they had saved for their retirement (i.e. the money they put in their mortgage) will now have disappeared and if they ever needed to sell before paying off more of their mortgage they might have to go bankrupt instead because they wouldn’t be able to sell for what they owe on the house.
And you wouldn’t need to own a big expensive house for that to be the situation you would be put in.
Heck, you’re just recreating 2008 but now it’s the government/municipality that’s responsible instead! A house is worth less than what’s owed on it? Might as well stop paying and go bankrupt instead of paying off your mortgage!
Ok, you are just opposed to houses becoming more affordable too quickly.
That won’t happen. Some math geeks working for the government would have to work out the details, but these type of changes are always engineered to not disrupt markets.
So what would realistically happen is that property tax rates rise by a certain percentage per year until the target is met. Property prices will grow at less than inflation, but won’t stagnate.
What happened in 2008 was an uncontrolled subprime crisis that imploded, not the controlled introduction of a tax reform.
Yeah the "make it progressive"solution just means a reversal whenever the party in power changes.
Yes, he’s slinging mud. Can’t possibly be that there are holes in your perfect plan or that you explained it poorly
Assuming you can even win the bidding war to buy a house right now. Nothing worse than seeing a house you failed to buy have a For Lease sign on it the next week.
In my area there always seems to be a cash buyer so even if you have a strong offer and are prequalified the seller isn’t going to pick you. They need to heavily tax non-primary residences and housing owned by companies. These robobuyers have destroyed any chance people have of buying a first home.
Nothing worse than seeing a house you failed to buy have a For Lease sign on it the next week.
And it’s not only companies. Lots of homeowners with low-interest mortgages from 2020-21 rent out their home instead of selling when they move, which in turn depresses inventory and puts upward pressure on prices.
That’s crazy, I’m actually getting ready to sell my house right now and it’s going to be a struggle to not lose money… and I live in the fastest growing county in Utah.
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It really doesn’t make sense to talk about averages for something like this in a country as large and diverse as[US is. Median home price in Hawaii is $973k. In West Virginia it’s $158k. The average isn’t relevant to most people, just the tiny fraction who live in a place where it’s about in the middle. Also worth noting that average salaries vary pretty widely, too.
It does make sense because the average house price has gone up for everyone.
Its also very expensive to be homeless. There is no legal place to loiter or park your car. Even teh public spaces are strictly enforced with no loitering. Where I live anyways, public space is highly protected. If you dont have a private space you can do go, you are forced to constantly be nomadic going from one place to the next until you tire and cannot run away from the enforcement authorities and are jailed. When you exit jail, there is a halfway house or something you are allowed to go in, but thats only temporary and only if you have addiction problems.
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Idk, I’d imagine they’d get a cell phone for wifi reasons over loitering coverage, even though that could be an additional benefit
Housing is just a pump that transfers money from the bottom to the top. THE COST OF HOUSING USED TO BE 3 ANNUAL SALARIES. We could also turn air into a similar pump but air is more difficult to fence off…
When my wife and I started looking at buying a house, there were new houses in a brand new development going for absolutely screaming deals. Houses twice the size of similarly priced houses. They were bland, soulless husks, each one bordering on ugly. You could even just buy the land and build your own home, ordered from a catalog. No estimate on time, of course.
And nestled in to the fine print at every single one, an HOA. The worst being 400+ dollars a month.
New housing isn’t being built, at least not for most Americans. We’re above average earners in a low cost of living area. What we can afford is not typical, and these crappy catalog mcmansions were just at the top of our price range, before the HOA.
The only solution I see to the housing problem, is mandating that middle-low income housing be built. Right now there’s no incentive to. The money is in keeping it scarce, or milking a covenant.
Sorry, but for the non-americans, what is HOA?
Home owner’s association. Neighborhoods have common needs such as landscaping and other infrastructure that doesn’t fall in someone’s property. In theory these make sense, you have a group of people who set guidelines to keep the neighborhood nice. However, what often ends up happening is the group pushes their own agendas and it is no longer for the common good.
To elaborate for the curious, basically a community sets up a committee that will handle these things. You would normally pay HOA fees to cover things like paying for the streetlights in a private community, the pool or fitness center, or whatever a long those lines. Basically for a private community it’s a way to say “Hey, we need some things done to keep things nice, everyone pay in so the flowers look good this year”. Normally, not a bad idea. There are usually two things that go wrong though. One, the money is mismanaged and/or people are heavily overcharged and the extra money disappears. The other is that HOAs also have rules for the community to keep things orderly on their own property. No cars in your yard, no blaring music after 9pm, etc. But you hear about a lot of cases where this stuff gets out of hand and suddenly people are getting fined for having trash cans out too long or the wrong colored curtains.
Because of this, people have justifiably built up a lot of hate for HOAs. Imagine buying a house, your own property, then paying +$100 a month to keep the neighborhood nice, then some picky Karen comes by to tell you that you can’t hang up your sports team flag and if you don’t take it down they’ll fine you $50 a day.
It’s worse than the just Karens. If you don’t pay the fines they will put a lien on your property and eventually evict you. This has created a strong market pressure towards swindling people out of their places. Financial groups that manage HOAs wholesale are now the norm and they love encouraging Karens to generate nonsense rules and report offenders… They get a cut of either the fine or the home sale sand get to play the role faceless enforcer. There are no regulations on how high fines can go, nor how high LATE FEES on those fines can go, nor how soon “late” is.
We are way past the time when HOAs were harmless funny people hyperfocusing on lawns… It’s a predatory business now.
My wife was telling me a story about her friends friend, who lives in an HOA neighborhood and had a big tree that was rotting in their yard and was causing concern about it falling over. Apparently they went to the hoa for approval to cut it down and they said no for one reason or another, then started fining them for it. Then a while after they collected a good deal of money off the fines said they could cut it down but they had to use a specific company who happened to be owned by a relative of the head of the hoa and charged them a lot more than they should have.
This story was passed down the lane and I don’t even know the couple, but it doesn’t sound far fetched.
Additionally, they set rules about really nitpicky things like house paint color, mail box standardization, how often you mow and water your lawn, what kind of holiday decorations you can have and when they can be up, whether you store your trash cans in a way that is visible from the street when it’s not collection day, guests parking on the street too often, that kind of thing. They can fine or even kick you out of your house for violations.
What is a group of Karens called?
A homeowners association.
Home Owners Association
Your proposed solution is too narrow. All housing makes housing more affordable. Just let developers actually build the places people are demanding, whatever they are. No housing you build will ever be affordable unless there is enough of it.
I see your point, and I don’t disagree. But we’re currently allowing developers to pick and choose which housing to focus on, and so the only housing being built is the housing with the most to profit from, the higher end housing.
I say mandate middle and lower income housing because it’s not being built, leaving a growing population to scramble for a decreasing supply of units.
Mixed use buildings and neighborhoods are also disappearing, and mixed use buildings are going to be key in the future.
We got our house before all of this bullshit back in 2014 before all of this bullshit happened, so we have a decent mortgage, but we really want to move to another town and we’ll never be able to afford it until my rich mother dies and I inherit her money and sell her house. Which sucks, because one of the reasons to move is because she lives there.
Have you talked to her about this? She may want to give you your inheritance early if she knows it’s so that you can move closer to her.
She knows we want to move there, but we don’t really talk about money in my family. I have no idea how much she’s worth. But she lives in a huge house, so if she’s broke, we can sell the house and get a smaller one.
I can recall a time when people said home prices will never crash, right before they crashed.
I like all the people on lemmy that just expect everyone to buy a house instead of renting.
Edit. I love how everyone hates me because I can’t afford a house. Thumbs up lemmy
Buying a house is currently the backbone of middle class wealth.
If we want a society with a lot of renters and a strong middle class, then we will need to introduce strict rent controls.
Otherwise rent becomes a way for the owning class to exploit the working class.
Over the past 4 decades we have greatly loosened rent controls and promoted home ownership.
Either model can work, but most people seem to prefer owning their home rather than renting.
You can send me money for a down payment on a house at any time.
The current level of ownership is an historical anomaly and it seems to be going down now but is it really something we should be glad is happening? I personally don’t think so although I also understand that not everyone wants to own, everyone who wants to should be able to, even if it’s just a small condo.
How does the leather taste
I have no idea I can’t afford leather, or a down payment on a house.
No, you just have to save money for a down payment. It’s not easy but you put that down and then you’re paying about $1500 to $2500 a month.
…for a $400,000 home, to pay $2,000 a month with current interest rates, your downpayment would need to be 50%>
You would need $200,000 cash in hand.
No one puts 50% down, it isn’t 1952. $10K-$25K is normal these days.
Can you not do that? Maybe try budgeting and learning a marketable skill like programming or plumbing instead of having a degree in gender studie /s
I dare you to post on a programming community, asking how long it would take for the average software developer to save 200k USD. Maybe only if you are a senior developer working for a huge silicon valley company. Or maybe working in a niche role that no one else can do so you can negotiate a better salary.
But the average college graduate coming into that field is not making anywhere near enough to save 200K. Especially not in the US because of student loans. And likely not overseas either because the IT sector isn’t as big as it would be in the US.
For context, I live in Ireland, and while we do have a lot of big companies setting up shop here, literally just for tax reasons, and we have most university courses paid for by the government (aside from 3k that most students must pay themselves). But even despite all that, the cost of living is horrendous here. Nobody that doesn’t already come from wealth would be able to save 200K.
So respectfully, you need a reality check if you think that just by having a marketable skill, one can realistically achieve what’s necessary to own their own home in this day and age.
I tagged it sarcasm for a reason. My wife has a CS degree I know exactly how bad it is for programmers. Also I’m an engineer. Together we might have enough money that we could theoretically raise a small family and own a house if we’re frugal.
Average entry level home in my state is over 250k. 20% down payment is 50k. How many years will it take for someone actually making 115k to save that up? Stop boot licking
You call someone that can’t afford a house a bootlicker, and your also calling someone that can afford a house a bootlicker.
Pick your lane dude
Saving up $50K would take about 12 years, starting at age 18.
We should all just stop eating avocado toast, obviously.
You’ll probably have enough saved around age 28-30 in most cities. It seems large but it’s doable. Then you just have to get through the bidding war.
You’re liked an arrested development character.
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Your experiences aren’t universalisable. Part of growing up into an adult, is understanding that. The inability to understand that is quite literally “arrested development”.
“universlisable”
Yet I’m the comedian
Fixed it. Got anything else?
So, every single person can do exactly what you did and have every single opportunity that you had?
Of course there’ll be edge cases, but generally yes. Just save money, stop bitching, buy a house from outside the city centre. Some tips for yall, that you’re not gonna listen as you’re already knee-deep in memes and self-sorrow. Sad
You’re a moron. Lacking empathy isn’t a super power, it’s a mental disability.
🙄 You bootstrap types coulda been made in a factory for how uniformly dull you come off
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Broski where do you live? Try saving 200k or whatever it takes to make a sensible downpayment wherever you live. Remember, while saving that money, you still pay for rent and logically, rent didn’t go down either.
I bring this up and get downvoted to hell.
I can tell you’ve never bought a house if you think you need $200K to do it. It’s more like $20K down and you refinance after a year to get a lower interest rate.
I can tell your house is nothing like what I’d wanna live in. If you can get a house for maybe 70k, yeah a downpayment of 20k works.
In most places a house will likely be 500k or above. Let’s just say 500k for the sake of argument… it’s a simple number for your simple brain. You’ll have to pay at least 20% up front. That’s 100k in my example. However, that’s quite an unreasonable thing to do in recent years, so I better suggest your downpayment be more than 30%, or 150k in this example. Generally, 40% is s very good downpayment in terms of long term financial security… that’s already 200k. So yes. 200k is what the average person should expect. 20k wouldn’t even get you the land.
Oh, now a basic home isn’t good enough for you. Let me guess, it needs a swimming pool, three car garage, and a finished basement, too.
Yes, $20K down will get you a standard 3 bedroom home. You want to have a McMansion which is unaffordable for 99% of the American public.
20k will not get you a 3 bedroom home. Do you by chance live in West Virginia? Their median home values is under 200k, and even then, 20k won’t get you there. Trust me homeboy, 20k will not get you far, not even in the cheapest of regions.
The median US house value is 430k. The lowest legal downpayment is 3%, but that’s plain stupid. Financially, anything under 20% makes no sense. Your mortgage will be super high and you’ll have to pay for morgage insurance which you don’t have to do if you do a downpayment above 20%.
Also, if it’s so cheap and easy to buy a house, why isn’t everyone buying a house right now? The majority of millenials and forward are renting and you’re telling me half a year of rent is enough for them to get a house? Clearly they would have figured that one out by now.
Just so you understand my living standards. I do not own a car at all. I could financially afford one, but that wouldn’t be a sensible investment.
You can buy a 3BR home for $130K in Oklahoma City, so yes putting $20K down will absolutely secure you a home.
The median house proce in Oklahoma is super low. Try finding a home in the west.
There comes a point where a basic house is not enough. For example, someone who starts a family and career before buying late.
By the time I bought my first house I had 2 teenagers, a work from home job (need a dedicated office) and a sick mother-in-law who is dependent on us. Add to that, I am an expat, so I want my sister to be able to come and visit (a nice-to-have I admit). The “starter” home for my family has 5 bedrooms!
