Insanity Alert - spending 3 TIMES more on housing than the cost of the housing itself!

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kmarinas86
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Insanity Alert - spending 3 TIMES more on housing than the cost of the housing itself!

Ridiculous isn't it?

All those hours working and to think we pay 3 times more in housing than it takes to build it? That's money we should be saving not borrowing!

Let's put things in perspective - a mini-market example:

What if the value of new housing the first year is 2% of the current value of total housing?

How about in exchange for eliminating all mortgage obligations  2% property tax is applied to pay cost of new housing?

What if the value of new housing the second is 3% of the current value of total housing?

How about in exchange for eliminating all mortgage obligations that a 3% property tax is applied to pay cost of new housing?

What if the value of new housing this third year is 4% of the current value of total housing?

How about in exchange for eliminating all mortgage obligations that a 4% property tax is applied to pay cost of new housing?

2% a year is like 50-year mortgage with no interest!

3% a year is like 33-year mortgage with no interest!

4% a year is like 25-year mortgage with no interest!

Is that not affordable?

How would the property tax cover the housing?

Simple. A tax credit would be given to home builder for the value of the new home.

Imagine not paying three times more on housing than the value of housing itself

Yes we can!

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

I've read your post three times and I'm not quite sure what you are saying/meaning.  Can you clarify?  Sorry...

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
affert wrote:

I've read your post three times and I'm not quite sure what you are saying/meaning.  Can you clarify?  Sorry...

For affordable housing with no debt or interest all there needs to be is property tax that covers the cost of new housing only, and then everyone can stop paying mortgages. The cost of housing would fall by factor of 3, with no debt. The value of the average home times 2 would be average savings a family would make in their lifetime from this simple change.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
kmarinas86 wrote:
affert wrote:

I've read your post three times and I'm not quite sure what you are saying/meaning.  Can you clarify?  Sorry...

For affordable housing with no debt or interest all there needs to be is property tax that covers the cost of new housing only, and then everyone can stop paying mortgages. The cost of housing would fall by factor of 3, with no debt. The value of the average home times 2 would be average savings a family would make in their lifetime from this simple change.

You mean, instead of having private mortgage lenders, have the city, in the form of a property tax that is, what, a single cash payment if its a new house, and NO payment if its a used house, "sell" houses? The city would sell the houses in the form of a property tax, right? All houses start out belonging to the city, and the city sells the new ones and gives the used ones away?

What happens if a person wants to sell their house and move to another?

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
kmarinas86 wrote:
affert wrote:

I've read your post three times and I'm not quite sure what you are saying/meaning.  Can you clarify?  Sorry...

For affordable housing with no debt or interest all there needs to be is property tax that covers the cost of new housing only, and then everyone can stop paying mortgages. The cost of housing would fall by factor of 3, with no debt. The value of the average home times 2 would be average savings a family would make in their lifetime from this simple change.

So when someone wants to build a house, they apply for a gov't grant.  The gov't pays for the construction of the house, and the person then pays property tax on that house for the next X years? Is this what you are proposing?

You do make a good point about the high cost of borrowing money.  The interest paid doesn't buy you any more house.  Although saying 3x is not accurate: the interest rate needs to 10% for a 30 year loan for the multiplier to be that high: it's just over 2x at current interest rates. Paying interest is throwing money away.

However, I don't think a gov't run program fueled by property tax is a workable solution.  What you propose would GREATLY incentivize the building of new houses, which is the LAST thing we need right now.  There are already many built houses on the market and even more on the verge of foreclosure that will probably end up on the market in the next couple years.  

How would ownership work?  Would the people own the home?  Who would get the money after the home sold?   What would keep someone from moving into a
new house every 6 months?  Why should the gov't effectively provide a interest-free mortgage with no penalty for failing to repay to anyone?  Where would the money come from to start a program like this?  Moreover, why should the gov't become a bank, loaning out money at no interest?  

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
SkylightMT wrote:
kmarinas86 wrote:
affert wrote:

I've read your post three times and I'm not quite sure what you are saying/meaning.  Can you clarify?  Sorry...

For affordable housing with no debt or interest all there needs to be is property tax that covers the cost of new housing only, and then everyone can stop paying mortgages. The cost of housing would fall by factor of 3, with no debt. The value of the average home times 2 would be average savings a family would make in their lifetime from this simple change.

You mean, instead of having private mortgage lenders, have the city, in the form of a property tax that is, what, a single cash payment if its a new house, and NO payment if its a used house, "sell" houses? The city would sell the houses in the form of a property tax, right? All houses start out belonging to the city, and the city sells the new ones and gives the used ones away?

What happens if a person wants to sell their house and move to another?

There is no "giving away" in the sense of free lunch.

The first thing is that you wouldn't pay any more mortgage.

The second thing is that whatever house you live in right now, you would pay a property tax rate equal to the percent of new housing for the period relative to the total value of existing housing.

If new housing is down, the rate would be lower. If housing was growing rapidly, the rate would be higher.

In normal circumstances, the government would NOT own the home. They would only own the home if payments couldn't be made in time.

If you have lived in your house for several years now, you can be sure that the builder has already been compensated for, so that why the property taxes would pay out as [i]tax credits[/i] to the home builder for new homes only.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
affert wrote:
kmarinas86 wrote:
affert wrote:

I've read your post three times and I'm not quite sure what you are saying/meaning.  Can you clarify?  Sorry...

For affordable housing with no debt or interest all there needs to be is property tax that covers the cost of new housing only, and then everyone can stop paying mortgages. The cost of housing would fall by factor of 3, with no debt. The value of the average home times 2 would be average savings a family would make in their lifetime from this simple change.

So when someone wants to build a house, they apply for a gov't grant.  The gov't pays for the construction of the house, and the person then pays property tax on that house for the next X years? Is this what you are proposing?

Exactly. The grant money would come from the property tax.

affert wrote:

You do make a good point about the high cost of borrowing money.  The interest paid doesn't buy you any more house.  Although saying 3x is not accurate: the interest rate needs to 10% for a 30 year loan for the multiplier to be that high: it's just over 2x at current interest rates. Paying interest is throwing money away.[

However, I don't think a gov't run program fueled by property tax is a workable solution.  What you propose would GREATLY incentivize the building of new houses, which is the LAST thing we need right now.  There are already many built houses on the market and even more on the verge of foreclosure that will probably end up on the market in the next couple years.

The what one could do is multiply the rate by a factor of two. That would be money that the government can use to replace unjust taxes. Alternatively, the extra money can be used for exemptions. These include people who would have otherwise paid their mortgage already, and it may also include retired people living under social security. I only recommend this if it is true, as you say, that this would fuel housing too much.

affert wrote:

How would ownership work?  Would the people own the home?  Who would get the money after the home sold?   What would keep someone from moving into a new house every 6 months?  Why should the gov't effectively provide a interest-free mortgage with no penalty for failing to repay to anyone?  Where would the money come from to start a program like this?  Moreover, why should the gov't become a bank, loaning out money at no interest?

It's not a loan, they are grants. The money to start a program like this would come from the savings of NOT HAVING TO PAY ANY MORTAGES. There has to be a PENALTY FOR NOT PAYING TO LIVE AT HOUSE. It is a person's freedom to move into a new house every 6 months. The money would be given to the builder to pay out the value of the house in full, which is limited by how much the buyer is will to pay for that house in property taxes. People would live in the home, and that would be their address and only theirs, and if they live there long enough to pay in these property taxes what matches the value of the house then they would own it in the highest sense of the word.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

I just had another thought.

If it is true that this would make housing twice as affordable like Affert implied, then I could imagine a scenario where people would not buy new homes twice as fast. What can be done is that more people would buy houses of better quality than what they could afford before. This can include the incorporation of green technologies. This would reduce our residential energy costs while creating jobs, and those jobs can be afforded in the long term from the savings provided by no interest, no borrowing, homeownership.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

Property Taxes are used today to pay for Streets / Schools / Firemen / Police - this will still be part of the taxes but you are adding to the tax base to include this new piece (and worse - it would also be billed to people like 'me' who have already paid off the majority of their mortgage early and this extra tax is going to be billed year over year over year over year......get my point? Or do you believe only those first time buyers are going to pay this tax after such a system was implemented - and then only until their house is paid off?  That would be nice, but taxes are the wrong mechanism and it doesn't sound any different than a 4% mortgage rate.  Taxes, on the other hand, usually persist forever (if they don't go up) -  a 15  year mortgage 'ends' after 15 years, taxes go on forever)

Don't want to pay 'interest' to a bank? Fine, Its easy - you save up the entire amount of the money to pay for the house (and the lot on which it stands) up front. But wait, there is more!  After all, what IS the right value for the house?

Don't want to pay  the profit a builder receives to build the house for you? Easy - build it yourself.   Don't want to pay the markup added by the stores for 'their' profit and stocking costs (staff/floorspace/taxes) on the fixtures/carpet/lumber/wire/pipe/etc...? Easy - Buy them wholesale - or better yet, go directly to the manufacture.  Don't want to pay the manufacturer's profit on the fixtures/carpet/lumber...? Easy, mine the ore, cut the trees and mill the lumber, dig the foundation by hand, weave the rugs, etc...   Hmmm, still need to actually put all the pieces together, looks like a little more personal 'sweat equity' is in order!

 

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
drbarbour wrote:

Property Taxes are used today to pay for Streets / Schools / Firemen / Police - this will still be part of the taxes but you are adding to the tax base to include this new piece (and worse - it would also be billed to people like 'me' who have already paid off the majority of their mortgage early and this extra tax is going to be billed year over year over year over year......get my point?

This is a legitmate concern that also needs to be reconciled. I have not been very detailed with the exemptions for fear I would not be understood. But these problems associated with exemption can easily be mastered. You should not have to pay if you already paid so much already.

drbarbour wrote:

Or do you believe only those first time buyers are going to pay this tax after such a system was implemented - and then only until their house is paid off?

If their house mortgage is already paid off from the moment this system is started, then they shouldn't pay for it.

drbarbour wrote:

That would be nice, but taxes are the wrong mechanism and it doesn't sound any different than a 4% mortgage rate.  Taxes, on the other hand, usually persist forever (if they don't go up) -  a 15  year mortgage 'ends' after 15 years, taxes go on forever)

It strange that you call this "nice" when you also say it is the "wrong mechanism".

drbarbour wrote:

Don't want to pay 'interest' to a bank? Fine, Its easy - you save up the entire amount of the money to pay for the house (and the lot on which it stands) up front. But wait, there is more!  After all, what IS the right value for the house?

Really? To save enough money to buy a $100,000 home up front, you would have to save, for example, $10,000 a year for 10 years. So let's say you start saving that money starting at age 16. Then by age 26 you could own a home only worth $100,000??? And $100,000 is cheap. Try $200,000. If everybody does this, this can only mean that the amount of money in the banking system (particularly M1 money supply) must increase.

And the right value of the house = How much are you will to pay for it. It's as simple as that.

drbarbour wrote:

Don't want to pay  the profit a builder receives to build the house for you? Easy - build it yourself.   Don't want to pay the markup added by the stores for 'their' profit and stocking costs (staff/floorspace/taxes) on the fixtures/carpet/lumber/wire/pipe/etc...? Easy - Buy them wholesale - or better yet, go directly to the manufacture.

To make this happen for even 10% of america, you will need alot more money in the system than is already there. Why should we support this idea of yours if it requires the creation of a lot more money? Oh wait, if we implement my idea FIRST then this idea of yours would be A LOT more likely to work! But we have to do things in order. We have to stop borrowing money to finance the American dream, or to build houses for that matter. If we borrow money to save money, then your idea will not work. For someone to say that only a small select few dedicated people can do this (like people who actually take on your initiative of building their own home) defies my understanding of the human spirit.

drbarbour wrote:

Don't want to pay the manufacturer's profit on the fixtures/carpet/lumber...? Easy, mine the ore, cut the trees and mill the lumber, dig the foundation by hand, weave the rugs, etc...   Hmmm, still need to actually put all the pieces together, looks like a little more personal 'sweat equity' is in order!

That would be fun, but it is only possible if people can afford it. As a foundation, my proposal would have to be implemented first (people have to stop borrowing to "afford" homes!!!!). Your proposal would make building houses fun for people who are not lazy. Oh wait, are you saying that this won't be fun, and if so why propose it? ;)

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

kmarinas,

Where, exactly, is the government going to get the money to build the houses in the first place?  Who is going to lend it to them?  If you propose the government build houses, and collect payment for them through taxes, then someone has to lend the government the money first so they can pay the contractors, architects, buy materials, etc.  Where is THAT money going to come from?

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
kmarinas86 wrote:

... I have not been very detailed with the exemptions for fear I would not be understood...

Perhaps being more detailed in your explanation would lead to you being understood. 

 But before you do that, please answer the following question: Why is it better to get a mortgage from the gov't than from the bank?   Or, to put it differently, Why should the gov't get in the business of lending mortgages to people?  This in a nut-shell is what you are proposing.  If you disagree with my analysis here, please explain how they are fundementally different.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

I think the problem in here is the sense of entitlement and that everything should stay the same. (we all deserve a house and the government should give us one). We all have to change the way we think about our future. What about a smaller house? Houses are devaluating right now. So a $100,000 house will be a $200,000 a year ago and in Miami that still a very good house. I wish a 16 year old can have $10,000 a year to save or better yet I wish I can have $10,000 to save. If the government provides you the loan then all the houses will be the same with more government regulations.  If the Govt. is charging you for your loan it will be 4% of the value of your home but they are the ones who put the value in your house.  It is enough that your house is never yours because you will always have to pay property taxes for it. I think our problem was that everybody wanted their own house and with all the gadgets, and sad but true they think the government is always the answer. We still have a long way to go. The other day Aaron Moyer posted the ferfal blog in here http://ferfal.blogspot.com/   and that was an eye opening of how thing are. You can see one of his essays in this site http://www.frugalsquirrels.com/ubb/ultimatebb.php?ubb=get_topic;f=1;t=044387;p=1 . Government will always be government and rich people will be rich but middle class will be poor.  He makes sure to tell everybody that not to expect a clean break after the collapse because everything will be worst not better.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
kmarinas86 wrote:

drbarbour wrote:

That
would be nice, but taxes are the wrong mechanism and it doesn't sound
any different than a 4% mortgage rate.  Taxes, on the other hand,
usually persist forever (if they don't go up) -  a 15  year mortgage
'ends' after 15 years, taxes go on forever)

It strange that you call this "nice" when you also say it is the "wrong mechanism".

I used 'nice' sarcastically - sorry I didn't put a Wink around it for clarity.

kmarinas86 wrote:

drbarbour wrote:

Don't want to pay 'interest' to a bank? Fine, Its easy - you save up
the entire amount of the money to pay for the house (and the lot on
which it stands) up front. But wait, there is more!  After all, what IS
the right value for the house?

Really? To save enough money to buy a $100,000 home up front, you would
have to save, for example, $10,000 a year for 10 years. So let's say
you start saving that money starting at age 16. Then by age 26 you
could own a home only worth $100,000??? And $100,000 is cheap. Try
$200,000. If everybody does this, this can only mean that the amount of
money in the banking system (particularly M1 money supply) must
increase.

The M1 money supply isn't your real concern is it?  I think your concern is that you couldn't afford the house you want if you were constrained to saving.  None of us could.  Your example is actually a good opportunity to point out that today's system allows you to purchase more house than you would otherwise be able to purchase.  Saving for ten years to buy the house worth $100,000 years 'ago' will not buy the same house today since housing prices are not going to remain fixed.  Let me give a concrete example: I bought the house I currently live in for $132,000.  Ten years later I could have sold it for over $240,000, during that period I had paid less than $240,000 to the mortgage company so would have walked away with a substantial profit.  Even today, with the drop in housing prices, I would STILL be ahead.  If I had tried saving the money out of some sense that paying mortgage interest to a bank was somehow insane - I would still not be living in this house and it would be further out of range as you rightly point out (my commentary, however, was never intended to be considered as anything more than a tongue-in-cheek attempt at demonstrating that demonizing the banks for making a profit is just a ludicrous as demonizing the companies that build the house and supply the material).    [Those who gave insanely high loans to people who could not afford them should, however, be demonized]

I guess humor (albeit a little caustic since I was in an irritable mood when I wrote the original piece) doesn't always translate well.

 

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
Patrick Brown wrote:

kmarinas,

Where, exactly, is the government going to get the money to build the houses in the first place?

It doesn't. The government does not build the houses. The government gives grants to private builders to them based on how much the can sell the house for. IT'S NOT THE GOVERNMENTS MONEY. The value of that house time a percentage would be what the homeowner pay to the grant fund.

The government is simply the collecting agent here. It is doing something banks would be less suited to do because there are 1000's of banks but only one federal government. [b]The choice of using government as a medium is strictly a matter of transaction overhead minimization. It's the same rational princple that justifies sending retail goods to a wholesaler before taken to the point of sale. It's no more governmental than using stamps for pay for USPS shipment.[/b]

Patrick Brown wrote:

Who is going to lend it to them?

Come on sir. This is a property tax. There is NO LENDING in this. Why would I say NO a million times before you call it quits and say, "I don't understand why this is not a loan!" IT'S NOT A LOAN. I hope you are the last one to say this.

Patrick Brown wrote:

If you propose the government build houses,

This is a blind comment for not listening. I talk like this because I am afraid to have to say this ONE MORE TIME.

Patrick Brown wrote:

and collect payment for them through taxes,

There is NO "AND".

Patrick Brown wrote:

then someone has to lend the government the money first so they can pay the contractors, architects, buy materials, etc.  Where is THAT money going to come from?

NO INTEREST AND NO LENDING HELLO?

Let's put it this way.

AS IT IS WITH THE *CURRENT* SYSTEM, If you still live in a house and if you are young, you will pay for that house 2 times over or even 3 times over depending on the situation, that is, if you actually own the house. Is that my proposal? NO. Why should I say something like that when the idea obviously sucks. But that sucky proposal is our current reality.

WITH THIS SYSTEM YOUR HOUSE IS PAID UPFRONT BY TAX DOLLARS. Then you say "omgosh that so wrong using taxes!!!!! Communism." and this ignores the point entirely. It's called taxes because it will go to the government. But THAT'S NOT THE GOVERNMENT'S MONEY. The government will use it for tax credits for NEW HOMES and to EXEMPT those who have ALREADY PAID THEIR MORTGAGE!  To cover BOTH, the tax base is simply the value of the homes of people who are not exempt times the percentage of that value that will go to NEW HOUSING.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
affert wrote:
kmarinas86 wrote:

... I have not been very detailed with the exemptions for fear I would not be understood...

Perhaps being more detailed in your explanation would lead to you being understood. 

 But before you do that, please answer the following question: Why is it better to get a mortgage from the gov't than from the bank? Or, to put it differently, Why should the gov't get in the business of lending mortgages to people?  This in a nut-shell is what you are proposing.  If you disagree with my analysis here, please explain how they are fundementally different.

MY GOSH!

How many times do I have to say it is NOT A MORTGAGE! THIS IS NOT A LOAN! WHY THE GOVERNMENT? BECAUSE THE BANKS CANNOT COMPREND FUNDING HOUSES WITHOUT LOANS. They are TOO EDUCATED about the current means of paying houses, and they BORROW MONEY FROM THE FED (AND OTHER BANKS!) BECAUSE WHEN THEY LEND MONEY FOR HOUSING DO YOU REALLY THINK THEY THEY WILL WAIT 30 YEARS TO GET IT BACK? NO! -*>-*>-*>-*>-*>-*> IN FACT, MORTGAGES ARE A FUNDAMENTAL CAUSE OF INFLATION (THE BULK OF PUBLIC AND PRIVATE DEBT IT IS TIED TO THE CURRENT MEANS OF HOUSING FINANCE, AND THE DEBTS NEVER GET PAID!).

One would have to be a liar, or not smart, to propose anything similar (or related) to our current system. If I propose the current system: 1) I don't have to. 2) That would be STUPID, WRONG, and DANGEROUS.

Now that have said that you should see my previous post. Why? Because that's where you will see that how the banks could not possible fufill the role in my proposal.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
emdiaz wrote:

I think the problem in here is the sense of entitlement and that everything should stay the same. (we all deserve a house and the government should give us one). We all have to change the way we think about our future. What about a smaller house? Houses are devaluating right now. So a $100,000 house will be a $200,000 a year ago and in Miami that still a very good house. I wish a 16 year old can have $10,000 a year to save or better yet I wish I can have $10,000 to save. If the government provides you the loan then all the houses will be the same with more government regulations.  If the Govt. is charging you for your loan

NO. It's not the government's money. The government simply collects it and send it to those who build the new houses. Technically, they do charge you, but virtually everyone assume that means, additionally, that is "their money". In this proposal, that is CLEARLY NOT THE CASE. The government does not own the money, or the homes, or the builders, et cetera.


emdiaz wrote:

it will be 4% of the value of your home but they are the ones who put the value in your house.

NOT THEY. THE GOVERNMENT DOES NOT SET THE PRICES, BUILDERS SET THE PRICES, THEY GET THE PROFITS. The home buyer is limited obviously, to how much tax he/she can pay, so the builder bargains for a price with the buyer, on that basis, while considering the current rate. The government will have no say on the price nor any say on how many houses get built. They take the projected growth of new homes (a given), then they take the value of existing homes with unexempt households (a given) to find the rate already determined. Then they charge that rate on unexempt households.


emdiaz wrote:

It is enough that your house is never yours because you will always have to pay property taxes for it.

The normal city and state property taxes, yes. But not these! 



emdiaz wrote:

I think our problem was that everybody wanted their own house and with all the gadgets, and sad but true they think the government is always the answer. We still have a long way to go. The other day Aaron Moyer posted the ferfal blog in here http://ferfal.blogspot.com/   and that was an eye opening of how thing are. You can see one of his essays in this site http://www.frugalsquirrels.com/ubb/ultimatebb.php?ubb=get_topic;f=1;t=044387;p=1 . Government will always be government and rich people will be rich but middle class will be poor.  He makes sure to tell everybody that not to expect a clean break after the collapse because everything will be worst not better.

 

+1 for truth

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

kmarinas,

If you want this to be taken seriously, you are really going to have to sharpen your pencil and be more patient about explaining it.  So far, based on your explanation, I would rather run for the hills.  People who build houses have to be paid by somebody, ultimately, the home owner.  Same goes for the land the house is built on.  Whether the money comes from banks, or from the government, or from other tax payers through the government (not sure what te difference is there), interest must be paid or otherwise the loans will not get made.  There is no free lunch (unless you are a Central Bank that owns a printing press), so until you explain how your system is going to spend money that nobody pays interest on, and how that's different from borrowing money from a bank, I don't buy it.  

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
Patrick Brown wrote:

kmarinas,

If you want this to be taken seriously, you are really going to have to sharpen your pencil and be more patient about explaining it.

Time will not buy a better explanation. I just have to be more catious and more informed about people's unpredictable views. I cringe on the fact that I have to be so precise with words just to be understood LITERALLY. So far here in this thread, I have NEVER been! Yet, if I can make sense of why it's not being understood literally, that would help me a LOT! Sigh...

Patrick Brown wrote:

So far, based on your explanation, I would rather run for the hills.  People who build houses have to be paid by somebody, ultimately, the home owner.

YOU MISUNDERSTAND!

THE PAYMENTS OF THE HOMEOWNER ARE SPREAD OUT OVERTIME. THE ONLY WAY THIS CAN BE DONE WITHOUT ANYONE BORROWING IS FOR THE CHARGE OF ALL HOMES PER PERIOD TO MATCH THAT OF NEW HOUSING PER PERIOD, BUT THE HOMEOWNER WOULD STILL BE REQUIRED TO PAY THE FAIR SHARE, 100% OF THE VALUE OF THE HOME, JUST NOT IMMEDIATELY. THE HOME OWNER MUST PAY BUT CAN ONLY DO SO AT A SIMILAR RATE AS IT DONE NOW. IF THE BUYER WANTS TO MOVE, THEY CAN. THEY CAN CARRY THE EQUITY WITH THEM TO ANOTHER HOME, JUST LIKE NOW. BUT IT'S BETTER. SINCE THE RATE FOR THE PERIOD IS THE SAME FOR ALL, THIS WILL MEAN LESS FINE PRINT AND THUS LESS FRUSTRATION FOR THE HOME BUYER. THE LIMITS TO HOUSING GROWTH ARE ALSO DETERMINED BY HOW MUCH RATES ARE BEARABLE, BUT UNDER NORMAL CIRCUMSTANCES THIS SHOULD NOT POSE ANY SERIOUS PROBLEMS.

Patrick Brown wrote:

Same goes for the land the house is built on.  Whether the money comes from banks, or from the government, or from other tax payers through the government (not sure what te difference is there)

1) Who pays - homeowners whose equity is less than the value of homes they own
2) Who collects - the government
3) Who recieves - answer that question and I give you +1

Patrick Brown wrote:

interest must be paid or otherwise the loans will not get made.

THE LATTER IS PROPOSED (AS FAR AS MORTGAGES ARE CONCERNED! 

Patrick Brown wrote:

There is no free lunch (unless you are a Central Bank that owns a printing press),

Um. There is no free lunch. PERIOD. 

Patrick Brown wrote:

so until you explain how your system is going to spend money that nobody pays interest on, and how that's different from borrowing money from a bank, I don't buy it.

What I have already explain can be express in mathematical terms, BUT I AM SURE THAT WILL NOT CLARIFY THINGS.

The best you could to with this post here is to just read and understand the capitalized paragraph. I don't know how much more simple I can put it. The problem is that it is not being taken literally!

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

If I understand you correctly, you are proposing that exisiting home owners pay for the production of houses for new home owners.  If this is not what you are propising, please explain, in small words so I can understand, again. 

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

"If I understand you correctly, you are proposing that exisiting home owners pay for the production of houses for new home owners."

+10

The key here is that the homeowners will build EQUITY! While the equity equals or exceeds the value of the homes they currently own, they are exempt, which literally means, they don't pay for it. If the value momentarily rises, then the equity would have to climb back to that value before payments can stop once again.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

This would not work because there would be no market mechanism to prevent an oversupply of houses.  All increased values would be paid for by homeowners, whether they could afford it or not.  Just like an oversupply of money created the current crisis, an over-ability to tax, and therefore create a house-buying supply of money, would collapse this system.  Take the current crisis and multiply it by 1,000. 

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
Patrick Brown wrote:

This would not work because there would be no market mechanism to prevent an oversupply of houses.

The solution then is to provide a market mechnism to prevent oversupply. The problem is that such a mechanism never existed in the first place, the proof being in the existent oversupply. There are more houses than households simply because there are a lot of undesirable properties which people rather not live in, when they can afford better (no absestos, termites, etc).

Patrick Brown wrote:

All increased values would be paid for by homeowners, whether they could afford it or not.

So? Homeowners need to pay for what they have. There is NO FREE LUNCH.

Patrick Brown wrote:

Just like an oversupply of money created the current crisis, an over-ability to tax, and therefore create a house-buying supply of money, would collapse this system.  Take the current crisis and multiply it by 1,000. 

Um, I think that is what we are already headed towards. Just look at the political circus in Washington today. Its blindness is beyond belief. Epic!

1) Oversupply of money its makes next to worthless. That is the current flaglastingly stupid situation were are now about to face in reality, if and when the credit markets do open up like the government wants it to.#@%$#$

2) What would an oversupply of new houses do? Make it more affordable to own a home, unless (see 1).

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

agreed patrick. how does the builder know the optimum amount of housing to supply with municipalities guaranteeing payment (without that guarantee, what would be the advantage to the builder in the first place)? and with municipalities responsible for collecting and arbitrating housing issues, it sounds like a catastrophe for civil liberties.

 the builder has every incentive to overproduce, seek arbitration, and drive up the price they receive for every home built. 

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
bb_gun wrote:

agreed patrick. how does the builder know the optimum amount of housing to supply with municipalities guaranteeing payment (without that guarantee, what would be the advantage to the builder in the first place)?

By observing reality. The builder asks, "What is the market for new housing this year." If they overestimate, the government will have an excess in the rate, and there will be a lot of money saved for building new housing. If they underestimate, then those excess payment will simply be absorbed. If done right, there is no borrowing whatsoever need to pay for housing. It would entirely come from SAVINGS!

bb_gun wrote:

and with municipalities responsible for collecting and arbitrating housing issues, it sounds like a catastrophe for civil liberties.

Do paying stamps for USPS postage destroy civil liberties? Obviously not.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
kmarinas86 wrote:

2) What would an oversupply of new houses do? Make it more affordable to own a home, unless (see 1).

 

it drives up the price of everything else that could have used the materials and resources from building those extra homes. there is a limited number of resources available to us, misallocating them can causes a net loss in wealth. 

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Re: Insanity Alert - spending 3 TIMES more on housing than ...

so the amount i pay for my house is determined by the builders ability to project housing demand accurately? so their inaccuracy is essentially a tax. that would be unconstitutional. =)

 or to compensate the government could just cheap on build quality, make cut backs and sell me a defective house at a high rate. 

also, the responsibilities of usps are confined to mailing my bills not determining my fitness to pay for a house or occupy a residence of my choosing. my government is not here to determine the quality of my character.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
bb_gun wrote:
kmarinas86 wrote:

2) What would an oversupply of new houses do? Make it more affordable to own a home, unless (see 1).

 

it drives up the price of everything else that could have used the materials and resources from building those extra homes.

That's right. Materials become more expensive with greater demand. Green cost cutting measures such as thinner wood floors and low maintainece appliance. But we have NEVER seen a proposal that will allow all the extra supply old and new, to be used. As soon as there is no more oversupply, in short notice there will be a shortage, which is FAR worse. It is better to err in overestimating demand than understimating.

bb_gun wrote:

there is a limited number of resources available to us, misallocating them can causes a net loss in wealth.

Misallocation of wealth destroys it. But what is "misallocation"? That's in the eye of the beholder.

The greatest misallocation of wealth right now (I STRONGLY BELIEVE) is the DEBT created by mortgages and the resultant money outflows from that. Surely I know something that gives me a strong reason to completely reject the current system (and the very idea of mortgages itself).
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Re: Insanity Alert - spending 3 TIMES more on housing than ...

You want existing homeowners to pay the govt who will in turn pay the homebuilders and we will all fairly price our  housing accordingly?  Do we all get to live in the same project/complex's?  What about rural housing?  Lets totally discount market factors, costs, preferences.  What you are proposing is govt takeover of housing, er socialism?  No, I'd rather not, thank you.  And it wouldn't work. Govt is not the answer.

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Re: Insanity Alert - spending 3 TIMES more on housing than ...
bb_gun wrote:

so the amount i pay for my house is determined by the builders ability to project housing demand accurately? so their inaccuracy is essentially a tax. that would be unconstitutional. =)

Yes, all taxes are unconstitutional, but so are all mortgages. Heck every means of paying for housing aside from savings money to pay it upfront IS UNCONSITUTIONAL. But what can you do about that? It is arithmetically impossible for everyone to have those kind of savings without have many times more deposits in M1. People are infinitely times more likely to spend that money then save it. To imagine that people living on minimum wage could save even just $50,000 for a home is pure lunacy.

bb_gun wrote:

or to compensate the government could just cheap on build quality, make cut backs and sell me a defective house at a high rate.

THE GOVERNMENT DOESN'T %$#[email protected]$%$ BUILD THE HOUSE. Read this WHOLE thread.

bb_gun wrote:

also, the responsibilities of usps are confined to mailing my bills not determining my fitness to pay for a house or occupy a residence of my choosing. my government is not here to determine the quality of my character.

Ok then, so why can't those facts parallel my proposal? That's right, you didn't *read* the whole thread? Is that why they don't parallel?

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kmarinas86
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Re: Insanity Alert - spending 3 TIMES more on housing than ...
plantguy90 wrote:

You want existing homeowners to pay the govt

WRONG THE GOVERNMENT COLLECTS THE MONEY. THAT IS NOT AN ITEM OF DEBATE. NEITHER IS THE CLAIM THAT:

THE MONEY WOULD PAY PRIVATE BUILDERS NOT THE GOVERNMENT!

plantguy90 wrote:

who will in turn pay the homebuilders and we will all fairly price our  housing accordingly?

The people would pay for private house builders THROUGH the government.

Here is an analogy:

If you file income taxes through [TURBOTAX] are you paying TURBOTAX all of you income taxes? OBIVOUSLY NOT SIR!

plantguy90 wrote:

Do we all get to live in the same project/complex's?

HELLLLLL NO! 

Quote:

What about rural housing?

HELLLLLL NO! 

Quote:

Lets totally discount market factors, costs, preferences.

From what you ask? 

Quote:

What you are proposing is govt takeover of housing, er socialism?  No, I'd rather not, thank you.  And it wouldn't work. Govt is not the answer.

1) No.

2) Same here.

3) You don't even know what "it" is.

4) Yes, this country is going to hell in an hand basket simply because arithmetic of mortgages will doom this economy and the government doesn't have the ******* clue to solve that math problem, because it obviously sucks at math. Need I say more about that?

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