What can be done about the cost of living?

[phattonez]

My thought is hat higher mortgage rates would increase the number of renters and drive up rents.

It would increase renters, but it would also decrease home prices because there is lower mortgage demand. I know that retirees may not like to hear this, but falling home prices would actually be a good thing.

I'm not in favor of taxing something like unearned incomes just to effect social goals.

Why can't unearned incomes at least be taxed at the same rate as wages?

Isn't rental income taxed at the owner's effective rate or am I wrong?

That does seem to be true, but you're neglecting the many deductions that landlords can take, and the depreciation that you get to claim. That's where the real benefit is.

https://www.zillow.com/blog/income-taxes-for-rental-properties-144134/

 

[Bullseye]

It would increase renters, but it would also decrease home prices because there is lower mortgage demand. I know that retirees may not like to hear this, but falling home prices would actually be a good thing.

But if it drives up rent have we achieved lowering cost of living?

Why can't unearned incomes at least be taxed at the same rate as wages?

Why should they be? Most unearned incomes are generated from assets purchased from after tax dollars.

That does seem to be true, but you're neglecting the many deductions that landlords can take, and the depreciation that you get to claim. That's where the real benefit is.

https://www.zillow.com/blog/income-taxes-for-rental-properties-144134/

And if you eliminate those deductions it's like rents will go up.

 

[phattonez]

But if it drives up rent have we achieved lowering cost of living?

These things would equal out. First and foremost mortgage demand would fall with higher rates. With that comes lower housing prices because of lower demand, but yes, there would also be more renters. However, with falling property values comes more property owners (at lower prices), and thus lower rents.

Why should they be? Most unearned incomes are generated from assets purchased from after tax dollars.

And this should be compounded ad infinitum simply because it was taxed once as a wage? Some dollar that was taxed that I pass on to my child, and he passes on, and he passes on eventually becomes millions? None of that extra wealth should be taxed just because that first dollar was originally taxed?

I'd be more willing to hear you out if there were no taxes on wages, but our current tax structure GREATLY advantages capitalists over laborers.

And if you eliminate those deductions it's like rents will go up.

Rather, you would decrease home prices because you're decreasing the incentives to invest in housing. Let me ask you this: would you rather than we have more landlords, or owner occupied housing? Which do you think our current tax structure incentivizes?

 

[Bullseye]

These things would equal out. First and foremost mortgage demand would fall with higher rates. With that comes lower housing prices because of lower demand, but yes, there would also be more renters. However, with falling property values comes more property owners (at lower prices), and thus lower rents.

I'm not sure it would be a wash. The chart above is based on 20-34 year olds. Many of that group aren't in a position to buy.

And this should be compounded ad infinitum simply because it was taxed once as a wage? Some dollar that was taxed that I pass on to my child, and he passes on, and he passes on eventually becomes millions? None of that extra wealth should be taxed just because that first dollar was originally taxed?

Nope, didn't say that. But there WOULD be a tax when the asset is sold, as there is now and it's based on all the gains between the first dollar spent and the eventual gain realized.

I'd be more willing to hear you out if there were no taxes on wages, but our current tax structure GREATLY advantages capitalists over laborers.

Nonsense, our system is highly progressive with a huge portion of the told income tax revenue being paid by those in the top 10% of earners. laborers pay little if any income tax.

Rather, you would decrease home prices because you're decreasing the incentives to invest in housing. Let me ask you this: would you rather than we have more landlords, or owner occupied housing? Which do you think our current tax structure incentivizes?

But with higher rates more of each payment would go towards the interest and less toward the equity meaning the overall cost of ownership would go up.

 

[Lursa]

Does that solve anything? Or is that just leaving the problem behind?

What problem does it leave behind? It's called supply and demand.

When people leave, then there are more jobs left for other people, less demand for goods, housing, etc and those prices go down.

It makes no sense for people only qualified for certain things to remain in a place where there are no opportunities for those things.

 

[Lursa]

Also "Just move" is disingenuous, because there are the matters of career and connection to place, to include family.

Moving is a lot of disruption.

Why yes, it is. I mentioned that.

If you want to starve and suffer, fine. If you want to make an informed decision and start over for the benefit of your kids, you move.

But then dont complain when you cant find a job that pays what you want.

 

[phattonez]

I'm not sure it would be a wash. The chart above is based on 20-34 year olds. Many of that group aren't in a position to buy.

Nope, didn't say that. But there WOULD be a tax when the asset is sold, as there is now and it's based on all the gains between the first dollar spent and the eventual gain realized.

Nonsense, our system is highly progressive with a huge portion of the told income tax revenue being paid by those in the top 10% of earners. laborers pay little if any income tax.


But with higher rates more of each payment would go towards the interest and less toward the equity meaning the overall cost of ownership would go up.

1. Not at current prices, but with lower home prices they might be.

2. But you understand my point. Just because it was taxed once doesn't mean profits from it can't be taxed.

3. But relative to their incomes the rich actually pay far less, and that's because of the way unearned income is advantaged in our tax system. Further, you could plausibly argue that labor should be taxed less than interest since the former does far more good for society.

Sent from my HTC phone. Instaurare omnia in Christo.

 

[Lursa]

You think that moving frequently is one of our GOOD qualities?

Nobody said frequently.

But yes, adaptability is one of our strongest qualities.

And humans have always done it to survive. It works.

Dont want to make a sacrifice for a better life? Dont.

 

[phattonez]

Nobody said frequently.

But yes, adaptability is one of our strongest qualities.

And humans have always done it to survive. It works.

Dont want to make a sacrifice for a better life? Dont.

Wouldn't stability make for better communities?

Sent from my HTC phone. Instaurare omnia in Christo.

 

[Lursa]

Wouldn't stability make for better communities?

Sent from my HTC phone. Instaurare omnia in Christo.

Why? What's unstable about it? It would be a gradual change.

From the sound of it, you are just discussing your personal comfort level.

Urban areas esp. have always been the focal point of change and new people.

 

[SDET]

Frankly... nothing can be done, because it is intentional.

Tell us more.

 

[SDET]

Why yes, it is. I mentioned that.

If you want to starve and suffer, fine. If you want to make an informed decision and start over for the benefit of your kids, you move.

But then dont complain when you cant find a job that pays what you want.

It can be done. Knowing how to crunch data helps. When I moved from Massachusetts to Texas, my pay rate didn't change. Having ubiquitous job skills helps. Every major city needs IT people. They also need plumbers, HVAC people and much more. The high school years is only time that you shouldn't be moving your kids around.

 

[SDET]

That contributes, sure, but then you would think you could find affordable housing for metro areas if you're willing to commute from pretty far. Given my anecdotal experience this is not true. Further, I don't think that this would cause a nationwide affordability crisis. We would expect this to be localized in just the areas with the stronger restrictions.



This does seem to create a large moral hazard in the market.

That's why you push to work remotely two or three days per week.

 

[Pedestrian]

Using escalating home prices to drive wealth creation....yet another bubble created to juice growth because without growth the both the entire economic and political systems collapse in upon themselves because they have been poorly constructed.

Capitalism IS debt. Then speculation in paper turned into money, resulting in just more debt upon which...to speculate.

I think US capitalism may be down to 'if half the people wanting their money'...it isn't there. Tell me millenials, what happens then ?

The top 5% will be handle it when everybody goes to the bank and sees 1/2 their money.


As for the cost of living ? It is going up...forever.

 

[phattonez]

That's why you push to work remotely two or three days per week.

This is a reaction to the problem, not a solution to the problem.

Sent from my HTC phone. Instaurare omnia in Christo.

 

[Nap]

These things would equal out. First and foremost mortgage demand would fall with higher rates. With that comes lower housing prices because of lower demand, but yes, there would also be more renters. However, with falling property values comes more property owners (at lower prices), and thus lower rents.



And this should be compounded ad infinitum simply because it was taxed once as a wage? Some dollar that was taxed that I pass on to my child, and he passes on, and he passes on eventually becomes millions? None of that extra wealth should be taxed just because that first dollar was originally taxed?

I'd be more willing to hear you out if there were no taxes on wages, but our current tax structure GREATLY advantages capitalists over laborers.



Rather, you would decrease home prices because you're decreasing the incentives to invest in housing. Let me ask you this: would you rather than we have more landlords, or owner occupied housing? Which do you think our current tax structure incentivizes?

Home ownership. It is cheaper to buy a home than rent, especially when you factor in deducting the interest. My 3 bedroom home was $200 less than the rent of my last 2 bedroom apartment (this was several years ago so now it is even cheaper as rents have continually risen while my mortgage hasn't changed)

 

[WillyPete]

But we've arguably had capitalism in this country for decades, right? So what changed more recently that caused this? I could argue that it's the increasing importance of finance versus manufacturing, that we're no longer an economy that makes things. What do you think?

It's become more efficient with technology, and shame has been removed from the equation.

 

[WillyPete]

The reason there is no affordable housing in those places is that of local housing regulations restricting the supply of apartments and properties both for sale and rent. The other reason is federally backed mortgages which encourage stupid buying decisions. Most of the problems are directly correlated to government policy and intervention.

The people driving those policies are generally the same people profiting by them. Capitalism gobbled up the government some time ago.

 

[phattonez]

Home ownership. It is cheaper to buy a home than rent, especially when you factor in deducting the interest. My 3 bedroom home was $200 less than the rent of my last 2 bedroom apartment (this was several years ago so now it is even cheaper as rents have continually risen while my mortgage hasn't changed)

The problem is saving enough for a down payment and qualifying for a mortgage. Home prices are too expensive for many to do this, so they're stuck renting.

Sent from my HTC phone. Instaurare omnia in Christo.

 

[PirateMk1]

The people driving those policies are generally the same people profiting by them. Capitalism gobbled up the government some time ago.

I suspect to a certain degree you are right.

 

[Nap]

The problem is saving enough for a down payment and qualifying for a mortgage. Home prices are too expensive for many to do this, so they're stuck renting.

Sent from my HTC phone. Instaurare omnia in Christo.

Problem solved, it's called an FHA loan.

People love to make excuses or complain about anything that doesn't grant them instant gratification when the fact is just about every issue is solved if a modicum of effort is put forth. For instance, people complain about the cost of college even though there are a multitude of ways of going to college at no cost to you, if you merely look for them.

 

[MrWonka]

Undoubtedly, the cost of housing has been rising relative to incomes, especially for young and poor workers. There was a slight reprieve when the housing bubble collapsed, yet the unaffordability continued to climb quickly thereafter.

Reduce income inequality, build smaller homes that can be owned instead of apartments that can be rented, and improve public transportation.

First, it's important to understand that the high cost of living isn't really a problem. It's a good thing. I mean your city, town, or neighborhood is a desirable place to live, and a lot of people want to move there. The real problem is that as you say you have a lot of young and poor workers who struggle with it. A major city does need unskilled labor to work in the restaurants and shops that the wealthy urbanites visit for lunch and happy hour. You either need to pay them well enough that they can afford to live downtown, subsidize their living, or provide cheap affordable transportation so that they can easily get downtown while living in a cheaper suburb that's farther away.

Second, one of the big problems particularly for younger single professionals is that so many of the homes that are built are designed for families. They're huge 3-5 bedroom units that a single young professional can't afford unless they rent out the other bedrooms to friends. Meanwhile, right assholes with too much money laying around buy up a ton of properties for rent not to mention build all kinds of big apartment complexes. As a young professional that wants to live alone, you get stuck renting a 1 bedroom apartment forever because you can't afford a down payment on the houses that are too big for you anyway. Even though your rent payment is almost the same as a mortgage for a decent sized house, you have to keep throwing your money away on rent because you can't save for the down payment, and without a down payment, the mortgage insurance you'd have to pay makes any home unaffordable.

Imagine instead of all these giant 3-5 bedroom houses that are going for over $400,000 or an apartment complex that only allows you to rent a 1 bedroom we saw smaller condos and townhouses that were 1-2 bedrooms max. They could sell, not rent, for $100,000-$200,000 and be well within the range for someone younger or poorer. They would need lower down payments, and could potentially pay the loans down faster and create equity. That way when they actually got ready to settle down and start a family they could sell their tiny homes and already have a good start on something bigger.

I'm a perfect example of what I'm talking about. When I first moved to Charleston, SC a few years ago I tried to buy a townhome. I didn't need a two bedroom, but those were the smallest that was available to buy. I could have easily afforded the mortgage on it, but I didn't have much for a down payment because between rent, student loans, and a car payment saving money was virtually impossible. As a result, I couldn't get the townhome without paying mortgage insurance which combined with the HOA fees put it well out of reach.

The result is that three years later I'm still renting. Even though my rent is damn close to what my mortgage would have been, and even if I get married it's unlikely I'll be able to buy anything for at least another two years despite making close to 6 figures.

 

[phattonez]

Reduce income inequality, build smaller homes that can be owned instead of apartments that can be rented, and improve public transportation.

First, it's important to understand that the high cost of living isn't really a problem. It's a good thing. I mean your city, town, or neighborhood is a desirable place to live, and a lot of people want to move there. The real problem is that as you say you have a lot of young and poor workers who struggle with it. A major city does need unskilled labor to work in the restaurants and shops that the wealthy urbanites visit for lunch and happy hour. You either need to pay them well enough that they can afford to live downtown, subsidize their living, or provide cheap affordable transportation so that they can easily get downtown while living in a cheaper suburb that's farther away.

Second, one of the big problems particularly for younger single professionals is that so many of the homes that are built are designed for families. They're huge 3-5 bedroom units that a single young professional can't afford unless they rent out the other bedrooms to friends. Meanwhile, right assholes with too much money laying around buy up a ton of properties for rent not to mention build all kinds of big apartment complexes. As a young professional that wants to live alone, you get stuck renting a 1 bedroom apartment forever because you can't afford a down payment on the houses that are too big for you anyway. Even though your rent payment is almost the same as a mortgage for a decent sized house, you have to keep throwing your money away on rent because you can't save for the down payment, and without a down payment, the mortgage insurance you'd have to pay makes any home unaffordable.

Reading this post, I come back to think of decades ago when families could buy a home with one income. Today we're in a situation where one income isn't even enough to rent a one bedroom apartment without creating financial stress. What's changed in those decades? I argue it's a massive increase in debt which, as you allude to, exacerbates inequality as the rich get richer and the poor get poorer. How do you see it?

 

[phattonez]

Problem solved, it's called an FHA loan.

People love to make excuses or complain about anything that doesn't grant them instant gratification when the fact is just about every issue is solved if a modicum of effort is put forth. For instance, people complain about the cost of college even though there are a multitude of ways of going to college at no cost to you, if you merely look for them.

So your solution to increased home prices is to increase leverage? This doesn't really seem to explain what's caused the problem in the first place: why have home prices risen faster than incomes over the past few decades?

 

[Lursa]

Reading this post, I come back to think of decades ago when families could buy a home with one income. Today we're in a situation where one income isn't even enough to rent a one bedroom apartment without creating financial stress. What's changed in those decades? I argue it's a massive increase in debt which, as you allude to, exacerbates inequality as the rich get richer and the poor get poorer. How do you see it?

There are places like that and lifestyle choices that can be made to do so. You have to go to those places and make those choices.

And not have kids until you can afford them.

People are not just entitled to affordable housing and high paying jobs. They have to invest their own time and effort in securing these things.