tag:blogger.com,1999:blog-1110014885778996459.post2668262802427507536..comments2024-03-28T11:48:09.419-07:00Comments on Idiosyncratic Whisk: Housing: Part 234 - Liquidity is a Public GoodKevin Erdmannhttp://www.blogger.com/profile/07431566729667544886noreply@blogger.comBlogger18125tag:blogger.com,1999:blog-1110014885778996459.post-15031608287837113032024-01-10T06:19:02.517-07:002024-01-10T06:19:02.517-07:00Within the realm of residential real estate, homes...Within the realm of residential real estate, homes become more than physical structures; they become sanctuaries, encapsulating memories, experiences, and identity. Each house whispers stories of laughter, tears, and milestones, resonating with the lives lived within their walls. Meanwhile, the commercial domain of real estate paints a different picture—a canvas adorned with bustling offices, retail spaces, and industrial complexes. These spaces are the crucibles of innovation, commerce, and industry, where enterprises flourish, serving as the fertile ground for economic growth and prosperity.<a href="https://www.paulburrowes.com" rel="nofollow">how to sell your home fast</a><br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-84313799212556976212023-12-17T13:53:14.441-07:002023-12-17T13:53:14.441-07:00Real estate, an intricate tapestry of investments,...Real estate, an intricate tapestry of investments, transactions, and dreams woven into the fabric of urban landscapes and rural retreats, stands as a testament to human ambition and the desire for permanence. It's a realm where the physical and the financial converge, where bricks and mortar coalesce with monetary value and emotional attachment. Within this sprawling domain, properties emerge as silent storytellers, bearing witness to the ebb and flow of history, capturing the essence of cultures, and reflecting societal aspirations.<a href="https://www.buysellnewmexico.com/" rel="nofollow">homes for sale las campanas nm</a><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-81141914931540641832017-07-09T13:02:07.217-07:002017-07-09T13:02:07.217-07:00Capital earns higher returns in less liquid market...Capital earns higher returns in less liquid markets. We can see this on the margin in American stocks, where smaller firms seem to have persistently higher returns over long periods of time than larger more liquid firms do. And we can see this at the extreme in less developed economies where capital is tightly held by well connected elites. Those assets don't necessarily fetch a high price, but the owners have high incomes, especially compared to laborers.<br /><br />A switch to a less liquid regime would entail a capital loss when the regime shifted, but the mirror of that is that the new owners would have higher returns. Going forward, those higher returns would reflect a larger claim on new production by capital owners.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-80519754047680980652017-07-09T12:05:03.381-07:002017-07-09T12:05:03.381-07:00I don't understand why these two things logica...I don't understand why these two things logically follow from closing down the stock exchanges:<br /><br /><i>While equity owners would be earning higher profits for their investments, there would be an affordability problem for consumers - those using the services provided by those firms. Those higher profits would come from higher prices for their goods and services. There would be an "affordability" problem. Consumers would be worse off.</i><br /><br />If you shut down the market for Amazon stock today I would expect consumer prices to stay the same (financing can't be that important, right?) and I would think the return on the stock would go down just because it would be worth less.Noumenonhttps://www.blogger.com/profile/01597461989960782762noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-27703840560410171702017-06-24T00:03:36.082-07:002017-06-24T00:03:36.082-07:00Wouldn't you want more welfare spending in a c...Wouldn't you want more welfare spending in a cheat-less circumstance vs a cheat-filled? So yes, absolutely.<br /><br />Distinguishing between rent vs earn, especially at the individual level, is really quite difficult. If we have to tax something, let's tax what we think is 50% rent rather than <5% (payroll).<br /><br />"socializing the gains from upzoning" brought this to mind:<br /><br />http://www.chicagobusiness.com/article/20160413/BLOGS02/160419923/emanuel-submits-plan-to-link-downtown-neighborhood-growth<br /><br />I haven't followed the proposal's political fortunes, but I was quite surprised at the thought embedded in the basic formula:<br /><br />Tax = .8 * [bonus buildable-sqft] * [local $ of land per buildable-sqft]myb6noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-29185548742486261472017-06-22T14:26:07.949-07:002017-06-22T14:26:07.949-07:00Among properties that tend to be owner-occupied, t...Among properties that tend to be owner-occupied, that value tends to be capitalized into the price of the property and somewhat factored into rental value, so property taxes do tax that value, I think.<br /><br />On your last point, I think this is sort of a version of, "Since there is some cheating in Welfare, we should reduce the social safety net." Why would you use a tax that made no distinction between favored and disfavored forms of income, if what you are trying to mitigate is just the disfavored forms?<br /><br />On the other hand, in terms of property, I think your point does apply. Instead of making real estate exempt from capital gains, it is probably the one asset that should especially be taxed on capital gains. In that case, capital losses should be available for refunds, though. I think a libertarian case could be made for socializing some of the gains from upzoning, land development, etc. since these gains are so intertwined with local politics.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-20072965019925463182017-06-22T13:39:13.498-07:002017-06-22T13:39:13.498-07:00"the act of taking ownership represents a for..."the act of taking ownership represents a form of consumption that is separate from renting the property"<br /><br />Succinct version of my argument against "consumption"-only taxation. Sumner, for all his other merits, drives me a little cray on that one. Control, option-value, status, power, etc. Related to the thrust of your blog, I also see taxation on high incomes and capital gains as an imperfect but important defense against rents.myb6noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-1777741699645639402017-06-09T00:24:54.601-07:002017-06-09T00:24:54.601-07:00Thanks for the input, E.Thanks for the input, E.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-31989542453504635192017-06-08T10:32:36.965-07:002017-06-08T10:32:36.965-07:00I'm new to this blog and not an economist, and...I'm new to this blog and not an economist, and it is absolutely clear to me (or so it seems) what "Closed Access" means.E. Zorgninehttps://www.blogger.com/profile/10686345535253130749noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-71612508350041378972017-06-08T09:58:01.232-07:002017-06-08T09:58:01.232-07:00Thanks bill.Thanks bill.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-66214984117321079742017-06-08T09:23:17.883-07:002017-06-08T09:23:17.883-07:00I like your writing. To the extent that you'r...I like your writing. To the extent that you're concerned, you could add a glossary for beginners. <br /><br />This is my favorite line on TV: Gee, our old LaSalle ran great.<br />Thanks for using it!billnoreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-6418883432975073982017-06-08T04:55:11.935-07:002017-06-08T04:55:11.935-07:00Machiavellian?
Usually I stoop to vulgar Marxism...Machiavellian? <br /><br />Usually I stoop to vulgar Marxism, and accusations of abject cowardice. <br /><br />Picky note: It may be bureaucrats in a city planning department would actually like to pencil in a lot more density. But the zoning laws prohibit it. A developer comes in with a plan for high-rise condo, and they have to say "no." So developer goes for variance from the city council. <br /><br />So to blame "planning department" may be inaccurate. Blame the laws which prohibit anything above R1 (in CA, single-family detached), or blame the minimum acreage laws. <br /><br />I am polishing my bust of Lenin this afternoon. <br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-13604495898115379902017-06-07T20:53:42.908-07:002017-06-07T20:53:42.908-07:00Well, obviously, the "Closed Access" ter...Well, obviously, the "Closed Access" terminology is the main shorthand that I allow myself. Mostly, I was afraid that where I am trying to be descriptive that I am getting into the habit of using idiosyncratic terms or conceptual models that others wouldn't follow.<br /><br />I assume that good writing avoids attributing Machiavellian motives to its readers. At most, I try to limit myself to making sympathetic accusations of self deception.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-38963770902771698812017-06-07T20:10:18.272-07:002017-06-07T20:10:18.272-07:00Yes, always use the most simple language possible....Yes, always use the most simple language possible. After decades of financial reporting, I can tell you simple is best. <br /><br />For example, you do not use the words "property zoning" in the above post. Why not? Simple and easy to understand. <br /><br />Yes, to be sure there are other city codes that could limit supply, such as setback laws, or required parking, stupid affordability inclusion rules etc. <br /><br />But in general we are talking restrictive property zoning. So say that. "Some cities have a restricted supply of housing, in general due to tight anti-competitive property zoning." <br /><br />Many of us have a way of speaking when we want to explain "the real deal" to intelligent friends. That is often the best way to write too (with some editing). <br /><br />If you had some intelligent friends over for drinks, would you speak of "closed access cities and planning departments"?<br /><br />Or would you say, "Okay this is how it works. Most if not all neighborhoods in a NY, SF, LA. Boston are zoned to prevent new construction and supply. Guess what? In a good economy, house prices explode. Then, consider the tax benefits of owning. Many upper-income people are all but compelled to buy a house for the tax benefits. Duh, no wonder house prices explode." <br /><br />But maybe you are are shrewd.<br /><br />You can write in the comments section of "libertarian" blogs about getting rid of property zoning and the home mortgage interest tax deduction. Eventually, your comments will get censored. <br /><br />So, maybe some obfuscation is in order. <br /><br />Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-16917582362734640932017-06-07T15:51:30.048-07:002017-06-07T15:51:30.048-07:00Thanks Sean. Like Ken said, it's almost like ...Thanks Sean. Like Ken said, it's almost like coming up with the language to describe something is the end result of creating a new way to understand it. But I need to make sure the language I'm using isn't so novel that it becomes a foreign language to new readers. Thanks for the feedback.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-41749377937003907312017-06-07T13:21:04.201-07:002017-06-07T13:21:04.201-07:00It's a great article Kevin. Remember though th...It's a great article Kevin. Remember though that cronic is spelt with an h as in chronic. :)<br />Housing actually is a difficult economy to grasp - as you point out in this article. Part consumption, part investment. There's no question housing inequality is a big source of overall inequality. <br />In places with quite inelastic demand, building more may not have much effect for some time I think. (Or should that be elastic?)<br />Here in the UK, there are some confounders - it seems that building rates have matched or even exceeded household formation rates - but with rising prices - that seems to be impossible economically, until I suppose you factor in interest rates and mortgage affordability. <br />Part of the issue I think is captured by your point about living under bridges. We could build and occupy genuinely cheap affordable housing - but we just don't want to - have you seen your neighhbours!<br />Housing is tricky for sure!<br />Anyway, keep it up.Anonymoushttps://www.blogger.com/profile/06234426239124672535noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-82967929098125669072017-06-07T10:21:53.385-07:002017-06-07T10:21:53.385-07:00Thanks, Ken.
That's an interesting point.Thanks, Ken.<br /><br />That's an interesting point.Kevin Erdmannhttps://www.blogger.com/profile/07431566729667544886noreply@blogger.comtag:blogger.com,1999:blog-1110014885778996459.post-77682895141384174522017-06-06T15:33:59.820-07:002017-06-06T15:33:59.820-07:00> PS. This may be a good post for feedback. A...<br />> PS. This may be a good post for feedback. Am I starting to <br />> write in a sort of idiosyncratic language that is impossible to <br />> follow, or are the concepts above somewhat accessible?<br /><br />I've been reading your work for so long that I understand almost every word easily. But, I remember having to re-read several times when I was first getting started. I think it's just hard --- it's so easy to confuse housing with homes, to confuse an asset's price with the expense of operating it, to confuse real with nominal. Sometimes I think that at the point you have figured out the right words to use to discuss a problem, you've solved the problem (or the solution follows tautologically from posing the problem in the right terms.)<br /><br /><br />Kenneth Dudahttps://www.blogger.com/profile/10593455504357461005noreply@blogger.com