• 0 Posts
  • 24 Comments
Joined 1 year ago
cake
Cake day: August 23rd, 2023

help-circle









  • Well, no, flat prices wound crash in that case & again be affordable. It’s not like project devs wouldn’t build stuff & sell flats, it’s just that the financing wouldn’t come from financial industry directly (but via retail mortgages). Also less inflationary pressure on building materials and labor.

    And … saying that ppl can’t afford to buy so they rent is bs if the rent is higher that the mortgage would have been.

    That’s why socialist countries have less homeless ppl (and more homeowners) and why in a free market you would want to have homeless people (otherwise you are not maximizing your yield/rent).


  • Taxes absolutely don’t effect market prices in such cases/markets. Because if your are saying that rent taxes would just fall on tenants (basically increasing rent) then landlords are stupid now because they could obviously charge more rent.

    It’s like saying McDonald’s paying employees more would result in pricier burgers - it simply wouldn’t bcs McD is already charging the absolute max it can in given circumstances. It would however lower their profit margin. And still, anything resulting in real profit is still worth doing (that’s why we have McD franchises in Europe too). Or like saying giving a tax exemption to McD would lower the price or burgers - it wouldn’t, price is market determined and not in direct correlation with costs or taxes.

    Where what your are saying is true is in markets with cost-based prices (ie minimal/competitive profit margins). In case of real estate that would mean the majority of rent wound go in repairs or upgrades. Which is not true for the last century, but RE yields are determined and tracked based on rent. So if I want to double my property’s value & have to double the rent. And since people need to live somewhere, they have to pay. If yields are not above market (like 10y local govies), money moves out of RE and into financial markets.


  • Ofc construction would continue just as it did for thousands of years - and because of the exact same reasons rents can get that high: people just need to live somewhere. Homes have intrinsic value and are necessary regardless of monetary value.

    It’s not like the housing market didn’t exist before the value increase in the western world (so in the last 70 years).

    There would however be less investments into homes, less financial incentive to build extra homes you don’t intend to use personally. So yes, fewer places to rent, more homeowners. And secondary market would function just as good, people move around all the time, needs change over ones life, etc - buying and selling would be easier. Prices would still vary a lot, but would reflect the majority (more democratic prices?).