NationStates Jolt Archive

What is your average monthly mortgage payment in US Dollars? This poll is anonymous, but will be interesting to see how much people pay considering this past (and still) mortgage crisis.

The average monthly mortgage payment in the United States hovers around $1700 from what I understand.

0 Euros.

Or are you looking for how much rent we pay?

$0, paid it off last April! (w00t!!!!) :)

zilch, nada, zero, nothing.

Then again I live on a family farm as a labour unit on a freeholded farm owned by a family trust. not in town in a 9 to 5 drudge to make enough to send the bank mortgage officer on a nice holiday to the French Riviera.

I rent (student). Costs me AU$137.50 a week. so you can do the maths from there.

That is for a room in a house...

Why is that poll in $?
US $, NZ $, Canadian $ or Aussie $?

Why is that poll in $?
US $, NZ $, Canadian $ or Aussie $?

US $ if your so inclined to convert it.

US $ if your so inclined to convert it.

Too confusing.

I rent and I pay 425 USD per month not including heating and electric. I won't own a home anytime in the foreseeable future as I don't even know which country I want to live in, much less what city.

percent of income works much better i think. For example in Australia most people are paying an equal percent of their income on petrol as 10 years ago despite the price about doubiling.

It also shows how much of their effort goes into the house. That being said i live as home with the parents as a months rent in canberra is about $500. My parents only charge my $200 per month and that covers food.

When I move into my new flat the rent will be 320 GBP a month not including electricity. So overall the rent for the whole house is 1280 GBP a month when I add up the rent for all of us who will be living there.

We rent our crappy apartment. $1176/m CAD or about $1155/m USD.

Our mortgage payments are $825 per month due to a hefty downpayment from selling my grandmother's house(which I inherited after she died). While I had fond memories of her house, it simply wasn't designed with a family(or energy efficiency) in mind.

What is your average monthly mortgage payment in US Dollars? This poll is anonymous, but will be interesting to see how much people pay considering this past (and still) mortgage crisis.

The average monthly mortgage payment in the United States hovers around $1700 from what I understand.

The price of a single family home with 3000 sq ft of living space on a 1/4 acre of land varies widely, depending on where you are in the United States, how old the home is, what its condition is, and what neighborhood it's in.

My home was valued (at the time I bought it) at 685,000 dollars, but I doubt that I could get this much house for twice that much money in San Jose, California (at the same date). And if I was in a small town in Kentucky, I could buy at least six houses on the same street for that price.

"Average" doesn't mean much if you don't specify where.

I pay a small HOA fee. Other than that, no mortgage because I paid cash for the house.

I own a house back in Ireland which I pay no mortgage on due to a complicated scheme of my dads to get myself and my siblings out of paying as much in inheritance tax should he die.

In Dundee I rent for £260 a month

My home was valued (at the time I bought it) at 685,000 dollars, but I doubt that I could get this much house for twice that much money in San Jose, California (at the same date). And if I was in a small town in Kentucky, I could buy at least six houses on the same street for that price..
I could pretty much buy all the houses on the same side of the street as the place I'm planning to buy for 685k.

The only places selling for that much are by the lakes and in the neighborhoods being put up by the local "buy all the land and see how many houses we can put on them before people realize they arn't getting crap for their money" property developers - one area they are developing is on some backroad in the outside city area and they are trying to sell the houses for 400k+. Anyone who buys that is a sucker.

I could pretty much buy all the houses on the same side of the street as the place I'm planning to buy for 685k.

The only places selling for that much are by the lakes and in the neighborhoods being put up by the local "buy all the land and see how many houses we can put on them before people realize they arn't getting crap for their money" property developers - one area they are developing is on some backroad in the outside city area and they are trying to sell the houses for 400k+. Anyone who buys that is a sucker.

Here it's "proximity" to the city without being in a certified combat zone. "Proximity" to the Metro rail line is also a big price factor, as are the quality of schools.

Fairfax County is pretty much developed out - most of the areas like the one you're talking about are in Loudoun County (further west, with no Metro access).

Fairfax is so developed now, there's no need for most residents to commute into the city. You're likely to be employed by a consulting firm that works for the government, with its own offices also in Fairfax County.

During my hiring, they asked if I was willing to occasionally work in DC - and I said, "yes, for more money". So they gave me 25% more than they were planning on offering me. Occasionally, I work in DC. Many of my peers consider working in the actual city "worse" than traveling outside of the area, and ask for compensation.

During my hiring, they asked if I was willing to occasionally work in DC - and I said, "yes, for more money". So they gave me 25% more than they were planning on offering me. Occasionally, I work in DC. Many of my peers consider working in the actual city "worse" than traveling outside of the area, and ask for compensation.

have you had any problems working in DC?

have you had any problems working in DC?

Yes. In the early 1990s, I was working at the Corporation for Public Broadcasting Building at 9th and E (near where the MCI Center is), and in broad daylight, bullets came through the window at the desk where I was working.

The police refused to come. They asked, "is the shooter still there?" And I said, "I can't see him." And they said, "well, if he isn't there anymore, there's no sense in us coming out there."

Which convinced me then that DC police are utterly useless.

I won't stay after dark in DC, and I won't go unarmed.

I could pretty much buy all the houses on the same side of the street as the place I'm planning to buy for 685k.

The only places selling for that much are by the lakes and in the neighborhoods being put up by the local "buy all the land and see how many houses we can put on them before people realize they arn't getting crap for their money" property developers - one area they are developing is on some backroad in the outside city area and they are trying to sell the houses for 400k+. Anyone who buys that is a sucker.

There are no houses available for 685K in my neighborhood. Because of falling prices, there are quite a few available in my city, but go back a year or so and you'd have a hell of a time finding anything for that price that you'd really like. And I live in the suburbs. No way in hell you'd find a place in SF for that price.

How much your mortgage payment is doesn't matter as much as what percentage of your income it is.

Case in point I have two clients each with a $1500 mortgage payment, one of them that is $30% of their income, the other it's 60% HUGE DIFFERENCE on how much risk they are taking as far as losing the house.

My mortgage payment is 15% of my household income, the condo association fees up it to about 21%. We pay more on the mortgage than that, but if we really just had to pay what they ask for, that's what it is.

How much your mortgage payment is doesn't matter as much as what percentage of your income it is.

Case in point I have two clients each with a $1500 mortgage payment, one of them that is $30% of their income, the other it's 60% HUGE DIFFERENCE on how much risk they are taking as far as losing the house.

My mortgage payment is 15% of my household income, the condo association fees up it to about 21%. We pay more on the mortgage than that, but if we really just had to pay what they ask for, that's what it is.

I can't imagine that the radical increase in gas prices and the resulting increases in the price of food and other goods has made it any easier for those who borrowed themselves right to the hilt.

i think its in the region of $1100 to $1500, at a bit of a guess

i sponge off my parents >.>
but hope to find a place (renting) next year

Live with my parents until I'm done with college.

They pay about 12,000 a month.

Does it matter what the payment consists off ?
In the Netherlands for instance most people only pay monthly interest, and only pay off the actual mortgage when they sell the house. This interest is tax deductable, so one even gets part of it back. Which amount do you want ?

Other people do not just pay interest, but also pay off the actual mortgage. They of course pay more a month - but when selling the house at the end of the mortgage period they get far more money all at once.

How much your mortgage payment is doesn't matter as much as what percentage of your income it is.

Case in point I have two clients each with a $1500 mortgage payment, one of them that is $30% of their income, the other it's 60% HUGE DIFFERENCE on how much risk they are taking as far as losing the house.

My mortgage payment is 15% of my household income, the condo association fees up it to about 21%. We pay more on the mortgage than that, but if we really just had to pay what they ask for, that's what it is.

60% of a family income ???? Wow. Such irresponsibility isn't even legal here...

60% of a family income ???? Wow. Such irresponsibility isn't even legal here...

I'm not entirely sure how they got the loan. It's what it is though. I'm trying as their financial advisor to get them to sell the house. They'll take a loss, but keeping it is ruining their whole life.

My payments were $550/month, about 30% of my income.

However, I paid it off and now hold the title free and clear.

How much your mortgage payment is doesn't matter as much as what percentage of your income it is.

Case in point I have two clients each with a $1500 mortgage payment, one of them that is $30% of their income, the other it's 60% HUGE DIFFERENCE on how much risk they are taking as far as losing the house.

My mortgage payment is 15% of my household income, the condo association fees up it to about 21%. We pay more on the mortgage than that, but if we really just had to pay what they ask for, that's what it is.

Ahh very good point.

Our mortgage on our primary residence is about 10% of our monthly gross income. We own outright our home in Morocco, just pay taxes on this one. The others are rentals that we derive income.

I'm not entirely sure how they got the loan. It's what it is though. I'm trying as their financial advisor to get them to sell the house. They'll take a loss, but keeping it is ruining their whole life.

Stated Income loan most likely.

No mortgage, but as mortgage prices rise so does the rent, unfortunately.

Also seems the odds of getting a mortgage in the near future are next to none.

Somewhat surprised by how many said they own their home

What is your average monthly mortgage payment in US Dollars? This poll is anonymous, but will be interesting to see how much people pay considering this past (and still) mortgage crisis.

The average monthly mortgage payment in the United States hovers around $1700 from what I understand.

What do you mean exactly? I have 4 mortgages on separate properties and two home equity loans. Do you want the total? The total on the residences? The highest one? What does your poll want from me?

Hell yeah still living with my parents.







Wait......





:(

No mortgage, but 260GBP (500USD) in rent per month, not including any bills (though those are shared between five of us so per person they're less than they could be).

$400 a month.

I've never even considered a mortgage. To buy land, I'd have to have about half up-front, with such strong earnings prospects I would plan to pay off in 2-3 years.

Even at single-digit rates, mortgage loans over decades are usury. Hell, rent is usury.

Feudalism is alive and well. The lords own the land, the serfs work just to pay rent ... or their mortgage.

Feudalism is alive and well. The lords own the land, the serfs work just to pay rent ... or their mortgage.


There is a reason they call us "Land Lords". Things really haven't improved to much since the middle ages. Just dressed up a bit different is all.

Somewhat surprised by how many said they own their home

This is the interenet. Maybe they "own" their home on World of Warcraft or some other online sim.

I've never even considered a mortgage. To buy land, I'd have to have about half up-front, with such strong earnings prospects I would plan to pay off in 2-3 years.

Even at single-digit rates, mortgage loans over decades are usury. Hell, rent is usury.

Feudalism is alive and well. The lords own the land, the serfs work just to pay rent ... or their mortgage.

How is a 6.75% mortgage really usury? I work to pay my mortgage but it is not the only thing I do with my money. I also save for retirement and maintain and improve my real estate. I do not feel like an oppressed serf although it will be a happy day whenever I pay of a mortgage.

From what I've heard, the real estate market is bad that nothing is being able to be sold. Therefore, things like mortgage and rent need to be really high.

From what I've heard, the real estate market is bad that nothing is being able to be sold. Therefore, things like mortgage and rent need to be really high.

If nothing is selling that means people are stuck where they are for the most part. One can always sell their property however they may not get a good price. As for raising mortgages that only really happens when the fed raises the underlying interest rate. As for higher rents. That depends on the areas demand and general economic wealth. All areas are different. My area I live in which would be Metro Seattle rents are rising. Places like Michigan or Ohio rents are probably dropping. I know housing prices have in those areas.

How is a 6.75% mortgage really usury?

I'm glad someone called me on that.

It deserves some thought. I'll get back to you tomorrow (however this thread fares, there seem to be a lot of threads started lately, threads this length drop off the front page in a day. )

The simple answer: Any rate of interest above the inflation rate is usurious IF the term of the repayments is long enough.

I work to pay my mortgage but it is not the only thing I do with my money. I also save for retirement and maintain and improve my real estate. I do not feel like an oppressed serf although it will be a happy day whenever I pay of a mortgage.

I wonder if serfs felt oppressed. Perhaps to them, being a serf wasn't so bad?

I do feel that paying off a mortgage is better than renting. If both are at the same rate per week, and the mortgagee has some equity in the house they have been living in while paying off the mortgage, they're better off than the renter who has none, at any time.

Here is the simple case outlined above, refined. IF a lender offers a loan with such long terms that the mortgager pays off none of it before defaulting (including interest-free period for the first few years) ... and the mortgager defaults ... the lender gets the asset (at the old price

Economic growth drives up the price of land! The loans would not be available to buy land if stocks bought in the market offered better rates of return (resale value) increased in value more than land did. The actual land doesn't change in its essential value (

I pay $1500 a month on my mortgage...rent is at least that right now, if not higher. It's insane. Houses have doubled in price here, and I luckily got in right before that happened...otherwise I'd be looking at just insane payments and a lifetime of making them.

What is with this stupid default font? Hate it.

almost $2000/mo

glad I'm on fixed rate

it's rough with prices rising everywhere and salary being stagnant

we got some dude to rent a room from us so that helps

otherwise we probably couldn't have afforded the $750 PT scan my wife just had or the $600 needed to fix my wife's car.

still it's worrying because we're going to the Philippines and Hong Kong in December and I don't think we'll ahve any spending money. :mp5::sniper::gundge:

I'm glad someone called me on that.

It deserves some thought. I'll get back to you tomorrow (however this thread fares, there seem to be a lot of threads started lately, threads this length drop off the front page in a day. )

The simple answer: Any rate of interest above the inflation rate is usurious IF the term of the repayments is long enough.



I wonder if serfs felt oppressed. Perhaps to them, being a serf wasn't so bad?

I do feel that paying off a mortgage is better than renting. If both are at the same rate per week, and the mortgagee has some equity in the house they have been living in while paying off the mortgage, they're better off than the renter who has none, at any time.

Here is the simple case outlined above, refined. IF a lender offers a loan with such long terms that the mortgager pays off none of it before defaulting (including interest-free period for the first few years) ... and the mortgager defaults ... the lender gets the asset (at the old price

Economic growth drives up the price of land! The loans would not be available to buy land if stocks bought in the market offered better rates of return (resale value) increased in value more than land did. The actual land doesn't change in its essential value (

I disagree with you on the usury, inflation, and that business about stocks and loans.

If a financial institution, such as a bank, offered mortgages at less than inflation, the bank would go broke and not be able to offer mortgages and this would make it very difficult for new home buyers and home owners that want to refinance.

Also, because of the tax breaks (in the USA at least) for mortgages and loans where the money was used for business or investment purposes the real cost of a lon is often a lot less than the stated price. Given this situation, I would hardly call this usury. Credit card default interest rates are usurious or at least borderline so but not mortgages. My highest interest mortgages are at a nominal rate of 7% a year. The real after tax rate is like 5.04%. How is this usurious? These are not very high rates. Now in 1981 or so there were 14% mortgages because inflation was nuts. Ok, that was pretty high, but the present mortgage rates are even lower than 7%. Having a rate slightly higher than inflation like 4% is not usurious at all espescially when you consider the tax deduction.

I believe that your point was that if we have a long term mortgage very little comes off the principal for the early part of the mortgage. This is why it is important to have a mortgage that does not penalize early prepayments on principal.

I am baffled by your assertion about stocks and their relationship to the availability of mortgage loans and the role of land appreciation. You are correct that areas with economic groth have increased land prices. Other than that I disagree. Stocks typically have greater appreciation than real estate. Mortgage loans are comparable to the bond market and have very little correlation with stocks at all and very little connection of any kind if any. The only relation that I can think of has to do with margin stock investors who are a minority. Those are the guys who borrow money to invest in the stock market. Sometimes they use their home equity to get these loans.

I also have no clue what you meant by essential value. Land has a fair market value and that is the only real value that is important except for sentimental value in the real estate market.

Somewhat surprised by how many said they own their home

I am as well. I wonder what the age and situations are for these people. Living in the NY metro area makes things quite expensive. Our mortgage including property taxes (far too high) 2143. I'm very young and I was given nothing of value from any member of my family. Everything I have has been the result of my own hard work. When I say nothing I mean nothing. I had to get a full academic scholarship to school and become a Marine to pay for the rest. I'm happy to have done it this way though. No one can ever say I didn't pave my own way.

This is the interenet. Maybe they "own" their home on World of Warcraft or some other online sim.

Or it could be that house ownership is cheaper in some places than it is in others.

I disagree with you on the usury, inflation, and that business about stocks and loans.

My point is that land must have some other value to investors than return on investment, or else investors would not speculate on land. Yet they do.

Land is a relatively safe investment, and so returns less either in appreciation of sale value, or in rent, than do stocks.

If a financial institution, such as a bank, offered mortgages at less than inflation, the bank would go broke and not be able to offer mortgages and this would make it very difficult for new home buyers and home owners that want to refinance.

Sure. I don't think I suggested that banks should have to offer mortgages at less than inflation. Inflation, plus fees to administer, but without profit is what I suggest.

It's important to note that I do not approach this question with a presupposition of capitalism being right or inevitable. I will not accept "the right to make a profit" and nor will I accept that all value can be defined in dollar terms. As such, we will probably not agree. Perhaps ever.

Also, because of the tax breaks (in the USA at least) for mortgages and loans where the money was used for business or investment purposes the real cost of a lon is often a lot less than the stated price. Given this situation, I would hardly call this usury. Credit card default interest rates are usurious or at least borderline so but not mortgages. My highest interest mortgages are at a nominal rate of 7% a year. The real after tax rate is like 5.04%. How is this usurious? These are not very high rates. Now in 1981 or so there were 14% mortgages because inflation was nuts. Ok, that was pretty high, but the present mortgage rates are even lower than 7%. Having a rate slightly higher than inflation like 4% is not usurious at all espescially when you consider the tax deduction.

I have made an embarassing mistake in not using the word "usury" in its proper, modern sense of "excessive profit from interest." I appear to have used it in an ancient, religious sense, of ANY profit from interest.

I agree, 7% is not usurious in the modern sense. It certainly does not exceed legal limits (though I think some lending, week-by-week lending for instance ('payday loans') should be further restricted by law.) But in either sense, "usury" refers to the loan provider's side of the deal, and they get their 7% no matter if the mortgagee pays all of that themselves.

I believe that your point was that if we have a long term mortgage very little comes off the principal for the early part of the mortgage. This is why it is important to have a mortgage that does not penalize early prepayments on principal.

My point was that the longer the mortgage repayment period

I am baffled by your assertion about stocks and their relationship to the availability of mortgage loans and the role of land appreciation. You are correct that areas with economic groth have increased land prices.

Land is an investment for some but a necessity for all. When one person has money to invest, and invests a proportion of that in a house they don't need, they are actually competing with someone who would take out a loan to buy that house. They're driving up the price of land, because they can afford to. And meanwhile, someone who can barely afford a house to live in must pay more.

This is no new thing. Investment in land is as old as capitalism. But the situation has certainly gotten worse in the last fifty years, with mortgage payments being the major component of the working-to-middle class income earner now.

Other than that I disagree. Stocks typically have greater appreciation than real estate. Mortgage loans are comparable to the bond market and have very little correlation with stocks at all and very little connection of any kind if any. The only relation that I can think of has to do with margin stock investors who are a minority. Those are the guys who borrow money to invest in the stock market. Sometimes they use their home equity to get these loans.

OK, compare land investment with buying bonds instead of stocks, if that makes more sense to you.

Huge amounts of money are held by "financial institutions." Here in Australia, superannuation funds are the fastest growing component of that. When they manage the super 'beneficiary's money 'for them,' land is a component of that long term investment.

The individual investor who uses their judgement to buy residential land which they believe will appreciate over the medium to long term, and earn rental in the meantime, isn't the growing problem. It is these big institutions, whose buying power allows them to make or break the market a whole suburb at a time. They are also big players in land development. They're the new Lords, to indulge in a bit of hyperbole.

I also have no clue what you meant by essential value. Land has a fair market value and that is the only real value that is important except for sentimental value in the real estate market.

This is where we will never agree. Land has a value as a place to live, it had this value before there was money to measure it, and it has that value now. The more hours a week a person must work, the more years they must work, to own a piece of land, the further this source of personal satisfaction is diluted by the consideration they must make of the money value . Undermining this "pride of place" by being collectively forced by the market to consider land a "commodity" I believe makes us all less secure and less happy.

But then, I am not a capitalist and actively wish not to be one.

My point is that land must have some other value to investors than return on investment, or else investors would not speculate on land. Yet they do.

Land is a relatively safe investment, and so returns less either in appreciation of sale value, or in rent, than do stocks.
Return on Land: -(Buying Price) + Sum[(Rent(k))/((1+r)^k)] + (Selling Price)/((1+r)^n)

Return on Shares: -(Buying Price) + Sum[(Dividend(k))/((1+r)^k)] + (Selling Price)/((1+r)^n)

It's not all that different. The problem is when people overestimate the selling price they will get to such an extent that it screws up the valuation. That's when bubbles happen, and they can happen in real estate just like in share markets. There is no fundamental difference between the two assets from a valuation perspective.

And it should be noted that "rent" doesn't have to mean actual rent. It can be replaced by any sort of benefit derived from owning the place in that period, including the happiness from living there. So the formula doesn't change when the person is an owner-occupier as opposed to an investor. And to the extent that the market works, rent and happiness derived from living somewhere should be similar, with only the psychological value from ownership being the difference...and any taxation laws and other peculiarities.

And by the way, the RBA reckons that real estate price growth in the last few years has come back to approximate such a valuation, after it seemed a tad bubbly in '01, when they raised interest rates and apparently deflated things a little. In other words, the increases reflect the scarce supply of properties and the large demand for them. One can, as you are, argue that the demand is all wrong, but from a realistic perspective, there is no problem. And I say that as my parents are signing a contract that will have us pay a huge chunk of income on mortgage repayments.

I agree, 7% is not usurious in the modern sense. It certainly does not exceed legal limits (though I think some lending, week-by-week lending for instance ('payday loans') should be further restricted by law.) But in either sense, "usury" refers to the loan provider's side of the deal, and they get their 7% no matter if the mortgagee pays all of that themselves.
You do realise that here in Australia we used to have interest rate caps, right? And that they were abandoned for a reason?

The individual investor who uses their judgement to buy residential land which they believe will appreciate over the medium to long term, and earn rental in the meantime, isn't the growing problem. It is these big institutions, whose buying power allows them to make or break the market a whole suburb at a time. They are also big players in land development. They're the new Lords, to indulge in a bit of hyperbole.
That's just plain false. The huge majority of investment in real estate in Australia is done by private individuals.

http://usj.sagepub.com/cgi/content/abstract/42/1/91

Funds tend to go into commercial real estate. It's easier to value.

But then, I am not a capitalist and actively wish not to be one.
You don't have to be a capitalist to realise that by using fuzzy definitions and arbitrary cut-offs you're not gonna produce good outcomes.

Return on Land: -(Buying Price) + Sum[(Rent(k))/((1+r)^k)] + (Selling Price)/((1+r)^n)

Return on Shares: -(Buying Price) + Sum[(Dividend(k))/((1+r)^k)] + (Selling Price)/((1+r)^n)

It's not all that different. The problem is when people overestimate the selling price they will get to such an extent that it screws up the valuation. That's when bubbles happen, and they can happen in real estate just like in share markets. There is no fundamental difference between the two assets from a valuation perspective.

Indeed. Reading my own post, it doesn't seem to say what I meant. Rather:

When seen as a pure investment (with no sentimental reasons for it) investment in land is just like investment in bonds: with a lower return than stocks, taking into account a possible depression, military invasion, democratically-elected socialist government etc, fully as sound an investment as a growing but still national enterprise. It's a medium-risk, medium-return investment. It has special characteristics (real estate is a more established legal value than a factory, and a factory more established than a corporation whose main assets are intellectual property.)

But I don't see anything as a "pure" investment. To paraphrase another poster in a thread I remember us both being in, the best return on capital is to buy half a tonne of cocaine and hire some gunmen. (Extreme risk, extreme return.)

It's an extreme case, but it isn't just the illegality of the extreme case which makes it different. On a Western stock-market, one can buy stocks in companies which employ slaves. One can invest in companies that make weapons, or develop sustainable technology. One does not "spend" their money on slaves or weapons or solar cells that way, but (even if motivated entirely by monetary return) one makes those industries more viable, and encourages new developement in that field, by buying low and selling high.

And it should be noted that "rent" doesn't have to mean actual rent. It can be replaced by any sort of benefit derived from owning the place in that period, including the happiness from living there.

Here is my best chance to make the point I have been trying to make all along.

You would put a market value on the happiness of living in a place. It would be the rent the house-hunter would be prepared to pay to live there. I'm guessing that Glorious Freedonia subscribes to the same "Value = money cost" model.

I would put a differently-defined value on the happiness of living in a place. It's the joy of being alive and having a safe place to make your own little world in. It varies from person to person, and I would not dare require everyone to acknowledge it. Yes, people should be prepared to pay for that ... but not whatever price the market demands. People deserve a basic place to live, within commuting distance of their work, and with a community in even easier reach.

I'm for community housing. Lots of it, vast quantities of basic housing to the point where anyone has choice of suburbs ... to the point where people on good wages who could easily afford to rent or buy choose community housing instead. The failure of community housing up 'til now is the way it has concentrated lots of people with problems (losers in the capitalist race) into one place.

Societies throw away huge amounts of potential, they disrespect the generous and the communal people by assuming self-interest and universal acknowledgement that money is the only measure of value. That's a patently inadequate model of social value, if only because it would pay a murderer and doctor in the same coin.

So the formula doesn't change when the person is an owner-occupier as opposed to an investor. And to the extent that the market works, rent and happiness derived from living somewhere should be similar, with only the psychological value from ownership being the difference...and any taxation laws and other peculiarities.

We still disagree. You hold out the hope that the market will someday "work," while I hold out the hope that the market will some day grow at least a second dimension beyond the single measure of value, money.

Can you even imagine a workable "market" which takes into account some measure of self-interest (itself a one-dimensional measure, so, some measure of interest) other than what money can buy? Or is that too complicated, given your allegiance to a model which is already struggling to "work"?

And by the way, the RBA reckons that real estate price growth in the last few years has come back to approximate such a valuation, after it seemed a tad bubbly in '01, when they raised interest rates and apparently deflated things a little. In other words, the increases reflect the scarce supply of properties and the large demand for them. One can, as you are, argue that the demand is all wrong, but from a realistic perspective, there is no problem. And I say that as my parents are signing a contract that will have us pay a huge chunk of income on mortgage repayments.

I would argue that land should increase in market value, adjusted for inflation, at the rate of increase of demand for land for housing and businesses. That is, at the rate of population increase, for housing!

Two points regarding that:


That businesses might increase their need for land at approximately the rate of stock market growth, and that this exceeds the rate of population growth, is offset by the increasing proportion of businesses which require no commercial land to operate. Also, council zoning restrains such demand from driving up housing prices except by a measure of real value of residential land: commercial rates to councils fund services, making the residential land more satisfactory to live on.

Demographic change in families (fewer and fewer extended families, delayed parenthood or none at all) and cultural expectations (large free-standing houses) surely account for a great deal of the growth in "demand" for residential housing in Australian cities. Can you demonstrate that these factors, along with population growth, account for all the "demand" or will you concede that speculators (private and corporate) add further to these "social demands" which drive up housing prices?


And, would you dispute that the manufacture of a house of a certain size has gotten cheaper, adjusted for inflation? The increasing cost of home ownership is due to: (a)increasing land prices, (b)increasing regulatory costs (eg zoning) and (c)social expectations of large, mostly empty houses.

If you would not dispute that, I suggest we continue in the same vein, discussing land prices as the main focus. In less developed economies, perhaps the house which stands on the land remains the more important asset. The salient issue (where I see the situation getting worse, while you see it as the market working) is LAND prices.


You do realise that here in Australia we used to have interest rate caps, right? And that they were abandoned for a reason?

I would guess that the reason was that a deregulated market would provide lower interest rates, averaged over the long term.

Don't say "government did it because it had to" or I will just laugh at you. I assume you endorse "the reason."

That's just plain false. The huge majority of investment in real estate in Australia is done by private individuals.

http://usj.sagepub.com/cgi/content/abstract/42/1/91

Funds tend to go into commercial real estate. It's easier to value.

I referred to growth in the market share of trust vs private investors. While I may in fact be wrong, your link does not show it so.

Large professional and institutional investors have avoided the private rental sector, leaving a myriad of small individual investor-landlords as primary suppliers

This is written from the investor's point of view, and in any case does not refer to trends.

Land is a part of any balanced portfolio. Surely, "economic growth" means that to keep the same share of a portfolio in land, eventually ALL land will be subject to speculation (buying for resale rather than use) -- and when all zoned commercial land is driven up in price, the speculators will move into private real-estate, with the biggest investors (access to cheapest capital) at an advantage.

If the trend is not so, feel free to demonstrate. ie, try again.

You don't have to be a capitalist to realise that by using fuzzy definitions and arbitrary cut-offs you're not gonna produce good outcomes.

I was taken to task for describing investment in residential real estate ("your mortgage", the thread subject) as usury.

I have admitted (in the post you replied to, in fact) that my definition of "usury" was wrong. No, nowadays usury is considered "excessive profit from lending" and the definition of "excessive" is determined by law. It's a ... you guessed it, arbitrary cut-off.

My payments were $550/month, about 30% of my income.

However, I paid it off and now hold the title free and clear.

You've paid yours off? Enviable.

My payment is almost $800/month including escrow, and I still have 28 years left on it.

Thank God it's a fixed-rate.

It's a medium-risk, medium-return investment. It has special characteristics (real estate is a more established legal value than a factory, and a factory more established than a corporation whose main assets are intellectual property.)
Yeah, but risk refers to the variability of return rather than the possibility that there is no return at all. If in 1997 I was investing in Thai real estate, it may have been a very high return investment (comfortably beating anything shares could do at the time, as is the case in Australia right now) but also quite risky. As I said, there is nothing inherent in real estate that makes it different from any other form of investment. Rather than the class, it depends on the particular item - and even moreso on the combination of items that end up in your portfolio, how risky something is. There are very safe shares and very risky pieces of real estate.

You would put a market value on the happiness of living in a place.
No, you misunderstand. The market value is the price you can buy it at. But it doesn't have to have anything to do with the value something has to you. If I love a little beach shack somewhere in WA and I'd be prepared to pay millions for it but get it for a few thousand, then I never have to express the value I put on the shack in money. In fact, people rarely have to know the precise value they put on things - most of the time it's a binary matter of "is it more or less than the market price".

It would be the rent the house-hunter would be prepared to pay to live there. I'm guessing that Glorious Freedonia subscribes to the same "Value = money cost" model.
Money is just a tool. Because your happiness doesn't automatically translate to someone else's happiness, there needs to be a trade of value. Money just makes it easier.

Yes, people should be prepared to pay for that ... but not whatever price the market demands. People deserve a basic place to live, within commuting distance of their work, and with a community in even easier reach.
You make quite a jump here. First you criticise the idea of expressing value in terms of money, then you acknowledge that they should be prepared to pay for value - and get to your real point, which is that people deserve something that they can't compensate someone else for.

But that's not a matter of market or no market. Regardless of whether it's a planned economy or some sort of libertarian utopia, by "owning" a piece of land and deriving happiness from it you're excluding someone else from doing the same thing. The building of our own little world on a given piece of land is a zero-sum game: we can't both do it in the same place at the same time. And if we both deserve it on some higher level, or we don't, there needs to be some mechanism to decide who gets to do it and who doesn't. A market happens to handle it by way of a compromise in which one compensates the other with some measure of value, ie money. But you still have to solve the same problem even if we don't want a market to "decide" this. Deserving doesn't have a whole lot to do with it.

I'm for community housing. Lots of it, vast quantities of basic housing to the point where anyone has choice of suburbs ... to the point where people on good wages who could easily afford to rent or buy choose community housing instead.
And who will pay for that? You don't suddenly produce an alternative where there are no losers, you just losses shift around. And that's before even thinking about implementation issues and the fact that private housing is still going to be more desirable and therefore more expensive and nicer.

Societies throw away huge amounts of potential, they disrespect the generous and the communal people by assuming self-interest and universal acknowledgement that money is the only measure of value.
Money isn't the only measure of value. Or rather, a measure of value that can be exchanged is the definition of money. Whatever measure of value you come up with, I can call it money and be correct, with the exception of the unexchangable, which also implies that it's immeasurable and not of any use when making these sorts of decisions.

That's a patently inadequate model of social value, if only because it would pay a murderer and doctor in the same coin.
What is social value? You need to define these terms when you throw them at me. And if someone pays a murderer, that seems to be the problem with the payer rather than the currency.

We still disagree. You hold out the hope that the market will someday "work," while I hold out the hope that the market will some day grow at least a second dimension beyond the single measure of value, money.
Actually, I didn't say that I didn't think the market worked in this case. I didn't want to assume too much, but if it didn't work and the happiness derived from renting and the rent were miles apart, then we'd either have no renters or everyone wanted to rent. But there seems to be some level of equilibrium where some number of people consider renting the best use of their resources.

But what is a second dimension beyond the single measure of value? What would that look like?

Can you even imagine a workable "market" which takes into account some measure of self-interest (itself a one-dimensional measure, so, some measure of interest) other than what money can buy? Or is that too complicated, given your allegiance to a model which is already struggling to "work"?
The model is pretty good in that it can account for a lot of stuff with relatively simple modifications. But before I can answer your question, I'd have to know just what it is you're talking about.

I would argue that land should increase in market value, adjusted for inflation, at the rate of increase of demand for land for housing and businesses. That is, at the rate of population increase, for housing!
But there is more than one reason for buying land. Indeed, the supply of land isn't actually constant either, since new developments, government restrictions and so on also change the total pool over time.

That businesses might increase their need for land at approximately the rate of stock market growth, and that this exceeds the rate of population growth, is offset by the increasing proportion of businesses which require no commercial land to operate. Also, council zoning restrains such demand from driving up housing prices except by a measure of real value of residential land: commercial rates to councils fund services, making the residential land more satisfactory to live on.
Hehe, and people accuse us poor free-market economists of making assumptions.

Can you demonstrate that these factors, along with population growth, account for all the "demand" or will you concede that speculators (private and corporate) add further to these "social demands" which drive up housing prices?
I never doubted that investors (funny how we're talking about the same thing but mine sounds so much less biased) were a big part of it. Isn't it obvious?

What I'm saying is that I don't see the problem.

The salient issue (where I see the situation getting worse, while you see it as the market working) is LAND prices.
Agreed.

I would guess that the reason was that a deregulated market would provide lower interest rates, averaged over the long term.
No, because interest rates are a very important signal in the market. They provide information on the time value of things as seen by people, on the return on productive capacity and on the amount of money available in the economy. Provided interest rate caps work and are enforced, people lose out on this information, not just regulators but also private consumers and investors.

I referred to growth in the market share of trust vs private investors. While I may in fact be wrong, your link does not show it so.
What I can find doesn't give the figures specifically, but it does show the massive rise in private residential investors. Fact of the matter is that government tax incentives apply to them rather than institutional investors.

http://www.shelternsw.org.au/docs/sem0606youren.ppt (that one's particularly good)
http://www.rba.gov.au/PublicationsAndResearch/Bulletin/bu_may04/bu_0504_2.pdf
http://www.asx.com.au/resources/newsletters/investor_update/20041012_PropertyAlternatives_IE3.htm
http://www.theage.com.au/news/money/back-the-burbs-with-an-efm/2005/11/04/1130823397222.html
http://www.wealthcreator.com.au/property-investment-spoilt-for-choice.htm
http://nationalhousingconference.org.au/downloads/2008/DayOne/Pritchard_NHC2008.pdf

The point is that residential property, since returns on it are more strongly driven by price rises rather than rent (most investment properties people have barely cover mortgage repayments) are just not a good option for institutional investors. They want steady streams of decent cashflows and the ability to offload quickly if necessary. Some the links there tell of the obvious answer: commercial properties pay much more rent.

So given that I can't find a link that says 100% exactly what I am saying, but that I've laid out my reasons and support for those, can you find something that contradicts this?

Land is a part of any balanced portfolio. Surely, "economic growth" means that to keep the same share of a portfolio in land, eventually ALL land will be subject to speculation (buying for resale rather than use)...
Not really. In portfolios you're looking for value rather than number. I want $1m worth of land, not 25 acres of it. As land values continue to increase over time, I don't have to buy a larger physical quantity of it to take the same place in the portfolio.

And as I said, residential property is not particularly attractive to institutional investors, but to private people who buy houses as an investment. And either they or the people who rent the homes from them are also using it, while the returns depend on how many people want to rent or buy. And of course, several of the articles talk about how people are actually looking to get institutional funds into residential property, because it will allow people cheap funds to buy homes they weren't previously able to, sort of as an alternative to the banks.

...and when all zoned commercial land is driven up in price, the speculators will move into private real-estate, with the biggest investors (access to cheapest capital) at an advantage.
There is little evidence of that happening. Commercial- and residential properties aren't interchangable as far as portfolio design is concerned.

Yeah, but risk refers to the variability of return rather than the possibility that there is no return at all.

What is "zero return" but an extreme case of low returns? If it's not factored into an investment decision, surely that investment decision is not fully informed.

If in 1997 I was investing in Thai real estate, it may have been a very high return investment (comfortably beating anything shares could do at the time, as is the case in Australia right now) but also quite risky. As I said, there is nothing inherent in real estate that makes it different from any other form of investment. Rather than the class, it depends on the particular item - and even moreso on the combination of items that end up in your portfolio, how risky something is. There are very safe shares and very risky pieces of real estate.

I'd agree with that last statement.

And I would agree that there is nothing different in real estate investment which makes it any different from any other investment, asides from it being regulated differently.

As to this regulation, I note that "investment in the home you live in" is favoured by regulators, and I agree with that. If it's sold, capital gains tax is held over for a period to allow you to buy another house to live in. Capital gains tax is one of the taxes I like: it does not penalize speculation unless the speculation is successful beyond an arbitrary limit, which is known to the speculator.

No, you misunderstand. The market value is the price you can buy it at.
Even that is a simplicification. But it doesn't have to have anything to do with the value something has to you. If I love a little beach shack somewhere in WA and I'd be prepared to pay millions for it but get it for a few thousand, then I never have to express the value I put on the shack in money. In fact, people rarely have to know the precise value they put on things - most of the time it's a binary matter of "is it more or less than the market price".

Really? This is just what I'm talking about, the market price over-riding the renter/buyer's sense of "is this where I want to live?"

The buying price obviously must be considered. I can't live on Point Piper just because I want to. But buying a house to live in, why the hell should I consider its resale value? Is that really what "a place to live" is reduced to now, an investment you live in while it appreciates in market value?

If so, land is most certainly overpriced. Such a "financial decision" should not rule people's lives.

Money is just a tool. Because your happiness doesn't automatically translate to someone else's happiness, there needs to be a trade of value. Money just makes it easier.

Easier perhaps but not better. Money is a tool, if it serves some purpose ... if it empowers the user to do some work, to create some value from their own efforts. Consider a chisel, or a hammer. These are tools, they magnify the effort of the user. Does money serve as a tool of any but the bean-counters? The experts with money?

You make quite a jump here. First you criticise the idea of expressing value in terms of money, then you acknowledge that they should be prepared to pay for value - and get to your real point, which is that people deserve something that they can't compensate someone else for.

I do not criticize the measurement of value in terms of the tradable, inexhaustible commodity money. I say that money cannot express all values. Therefore, a more accurate model of "markets", if that be the whole of social interaction, must take into account other values.

And to my "real" point: born on this earth powerless, people deserve a share of it. Saying that they must earn it merely magnifies the inequalities which exist at the time of their birth (I have said before, who your parents are and where you are born are intrinsic inequalities which a decent society would try to overcome, not encourage the magnification of -- at what point a person becomes responsible for their own fate is debatable, but it is certainly after the inequalities have already advantaged or disadvantaged them in economic terms).

Why must a young person strive to "get their share"? Their share of the economic pie, sure: this was a creation of all who lived before them. But their share of the earth on which they are born? Hell no -- viewed from the position of no power and no money (the only fair position to view it from) -- people become people with no property, no share of the earth's surface. They are presented with a choice: be selfish, take a share of this limited resource at the expense of others; or be homeless, insecure and cold at night for lack of a place to pitch a tent or build a house.

A place to live is a right. It's a born right, a human right. I see it in the beggar's spot on a street in Bombay, I see it in a squat on prime real estate in the eastern suburbs of Sydney. I see it in the Housing Commission flats and the cheap but sordid brick terraces. I see it in the new developments an hour's drive from work. These people need a place to call their own, and a rich nation can afford to just give it to them instead of making them compete for it.

So now I ask you a counter-question: is the powerless, moneyless human being entitled to anything? Food and clothing, but not shelter perhaps? Or nothing at all, starvation unless they get off their arse and work for it.

But that's not a matter of market or no market. Regardless of whether it's a planned economy or some sort of libertarian utopia, by "owning" a piece of land and deriving happiness from it you're excluding someone else from doing the same thing.

Better not to be born then. Really, you can't imagine people sharing a limited resource without seeing it as one pitted against the other?

The building of our own little world on a given piece of land is a zero-sum game: we can't both do it in the same place at the same time. And if we both deserve it on some higher level, or we don't, there needs to be some mechanism to decide who gets to do it and who doesn't.

If we all deserve it on some higher level, we make it so. Once housing is recognized as a right, those who would buy housing they do not need would be as rare and as ostracized by society as those who kill without necessity, ie murderers.

Viewed from a perspective of the sum happiness of all parties, it ISN'T a zero-sum game. Take one acre of land and divide it between four people: One person having 9/10 acre, and the other four sharing one tenth produces less sum happiness than each having a quarter acre. The satisfaction of each party in "owning their own place" doesn't even increase linearly with how much they own -- in some cases (eg having to pay rates and maintenance on a large block they don't really use) more land can actually decrease happiness.

A market happens to handle it by way of a compromise in which one compensates the other with some measure of value, ie money. But you still have to solve the same problem even if we don't want a market to "decide" this. Deserving doesn't have a whole lot to do with it.

I'm happy to hear you say that a market compromises between the values as perceived by the parties to it.

This isn't so far from what I'm saying. I would abandon the quest to understand and control economies, and focus instead on the other forces between people which make this model of "single value" only an approximation. In terms of government policy, this would translate to a steady and predictable burden on the economy (high taxes) but with spending directed towards social aims (most notably, reducing perceived inequality by "entitlements" which don't have a direct monetary value.) While I'm sure you would disagree with my methods, I hope you would agree that government should not attempt to manipulate the economy.

And who will pay for that? You don't suddenly produce an alternative where there are no losers, you just losses shift around. And that's before even thinking about implementation issues and the fact that private housing is still going to be more desirable and therefore more expensive and nicer.


As it is, public housing is pretty damn desirable. Don't judge it by the crumbling tower blocks built in the sixties -- you probably drive right by public housing and don't know it isn't a privately-owned or rented property. And the rent is hugely attractive, a quarter or a third of the adjoining property.

The issue for me is that this public housing is restricted by "need" as defined by the social services departments of government. I never even put myself on the list! I knew that I'd only ever go backwards, as single parents, junkies and ex-cons were inserted above me on the basis of "greatest need."

As to who pays for it: the taxpayer of course. Prosperity in Western nations has, to my eye, reached the point of diminishing returns. More prosperity, but with more inequality between rich and poor, won't make us collectively happier. There is no way (in my view which does not rely on measures like "GDP" or "average income") to measure the average nor the individual levels of happiness-from-prosperity, so I'll just state it as a principle: the focus should shift towards equality of prosperity, not median prosperity (and note, GDP does not even measure that). By reducing competition between individuals, GDP would likely fall (and of course, increased government intervention would scare away businesses, with the same effect) so we should still keep those measurements in mind, and aim for a plateau of economic growth, rather than an increasing rate endlessly.

Money isn't the only measure of value. Or rather, a measure of value that can be exchanged is the definition of money. Whatever measure of value you come up with, I can call it money and be correct, with the exception of the unexchangable, which also implies that it's immeasurable and not of any use when making these sorts of decisions.

Heh. You recognize that there exist values which cannot be exchanged. That's a step.

What is social value? You need to define these terms when you throw them at me. And if someone pays a murderer, that seems to be the problem with the payer rather than the currency.

The "arbitrary cut-off" of law. Or would you argue that law is somehow determined by the free market? Or that a truly free market would not need arbitrary laws imposed by government? In any case, the murderer's money is as good as any other worker's money, if they take some elementary precautions to launder it. It gives them the same advantages, the same pleasures, as honestly earned money.

"Social value" is described below. I don't consider myself to have a "definition" for the term yet.

I am saying that certain occupations (and more particularly, certain actions which can gain a person money) have more social utility -- they bring more happiness to other people -- than occupations or actions which may well gain more money. You would say that the market does not work as it should, I would say that the market cannot measure the value of work to society as a whole. It measures, on any day or in any year, what someone is prepared to pay for the work.


Actually, I didn't say that I didn't think the market worked in this case. I didn't want to assume too much, but if it didn't work and the happiness derived from renting and the rent were miles apart, then we'd either have no renters or everyone wanted to rent. But there seems to be some level of equilibrium where some number of people consider renting the best use of their resources.

Their choice is a cardboard box and daily contact with the police. Honestly!

But what is a second dimension beyond the single measure of value? What would that look like?

I will define for you "social value" which I consider one of the alternative ways of measuring value. Before you rush to reduce it to the one dimension of "money exchange value" I must stress: many components of it are already subsumed in the economic model, and other components could as easily be claimed by yet a third measure, of religious or ethical satisfaction.

"Social value" for me is what a "good citizen" earns by the investment of their effort in their community. "Their community" includes their friends and family, it includes people they have casual or formal interactions with through clubs or charities, it includes those they work with, it may include local politics or public speech not-for-profit. If they are a parent, it would likely extend to involvement with their kid's school, either supportive or critical. Depending on the individual and their self-perceived scope of influence, it might include writing books, joining a political party, or making financially disadvantageous decisions to change jobs to change the effects their work is having on other people.

Yes, these are seemingly marginal decisions in a person's happiness. It seems unlikely that any of them would sustain a person if they lost their mortgage, couldn't afford rent, and had to beg for food. Yet I maintain: without the relentless growth of market value, the high regard of those you meet every day would be far more significant. Valuation of a life by its money-market interaction (by wealth) has hugely overextended, undervaluing other qualities and other motivations in everybody who participates.

"People give money to charity because it feels good, it's a selfish decision" and "people participate in their community because it enhances their job prospects" simply don't hold up. It's a kind of monotheism of Mamon ... "thou shalt have no other Gods before me."

Well, why the hell not? Isn't it the simplest explanation of the behaviour of decent people, people who other people respect and love, that they may have other motivations, just as legitimate and perhaps even just as self-serving, as "making money"? And if having money would allow them to achieve their aims more easily than directly doing what they think is good, why wouldn't they work the overtime instead of going to their club, instead of talking with the other parents from their school, instead of writing letters to the paper ... and then simply exchange the money for what they want done?

I have no respect for your philosophy of "only what is exchangeable is valuable." It seems to me tailored to defining all value as money, it's a definition which limits the field of human value, not according to experience or observation of the lives of others, but to make a limited model of value "work."

The model is pretty good in that it can account for a lot of stuff with relatively simple modifications. But before I can answer your question, I'd have to know just what it is you're talking about.

I'll summarize: by demanding more than one ordinate of value, I am not setting up ONE alternative measure which could supplant monetary value. You asked about "social value" (a term I made up, AFAIK) and I put that as one supplemental value among others.

I myself am blinded by living my life under the yoke of monetary value: I might get a carton of milk by just asking at the local shop, as a nice guy who shares a joke from time to time. No-one is going to give me a half-acre of residential land near a station for that. It is hard, but not impossible, to imagine a society built on a right to a share of land (a fair share, a quarter acre in the suburbs or a thousand in the desert) but most certainly it would be different from what history has so far offered. I'm a kind of communist, I guess: the earth is our commune.

But there is more than one reason for buying land. Indeed, the supply of land isn't actually constant either, since new developments, government restrictions and so on also change the total pool over time.

Overwhelmingly by increasing the available land. This ought to reduce prices, surely?

Hehe, and people accuse us poor free-market economists of making assumptions.

You crying poor? That's a laugh.
No, really. I make assumptions, and like you my assumptions are aimed at "cutting the crap and getting a workable model." Yours may well be stronger, but I don't care because mine is far less focussed on goals and can afford to wander around tripping over its own feet. If you like, my goals are far beyond my own lifetime, and I don't want to firm them up just yet.

I never doubted that investors (funny how we're talking about the same thing but mine sounds so much less biased) were a big part of it. Isn't it obvious?

Yours sounds biased to me. In fact, you often speak of market situations from an assumption that the "unit" (individual or corporation) which defines it by buying or selling decisions does so with discretionary spending -- never is it a choice between buying a stock or buying shoes for the kids.

We're both biased. I speak from the point of view of the poorest, the earnest but limited worker with too big a family, whose lifes wages do not suffice to buy the house he unwisely set his sights on. Whereas you speak from the point of view of the rich, if not richest: the capitalist deciding where to spend his money to make as much more money as possible, well informed and well aware of his own interests.

No doubt you will yourself get rich, while I will stay poor (relatively, given that I live in a rich country. I'll still have Medicare and good food out of the bins at the back of the restaurant, if it comes to that).

No, because interest rates are a very important signal in the market. They provide information on the time value of things as seen by people, on the return on productive capacity and on the amount of money available in the economy. Provided interest rate caps work and are enforced, people lose out on this information, not just regulators but also private consumers and investors.

Fair enough. While I value information (providing it's available to all affected by it) I was expecting some more compelling reason.

What I can find doesn't give the figures specifically, but it does show the massive rise in private residential investors. Fact of the matter is that government tax incentives apply to them rather than institutional investors.

Perhaps "for good reason" there too. In the event of a collapse of world economies, land would be owned by residents not funds.

The point is that residential property, since returns on it are more strongly driven by price rises rather than rent (most investment properties people have barely cover mortgage repayments) are just not a good option for institutional investors. They want steady streams of decent cashflows and the ability to offload quickly if necessary. Some the links there tell of the obvious answer: commercial properties pay much more rent.

So given that I can't find a link that says 100% exactly what I am saying, but that I've laid out my reasons and support for those, can you find something that contradicts this?

Not really, no. I'll read that stuff if I get the time, but my point (made to GF, not you) I will not abandon despite your bluster. I put a point, you said I was "totally wrong" and now you abandon the proof of that.

I seem to remember hearing that Macquarie Bank invests in broadscale housing development (symbiotic with their investment in infrastructure I guess.) I would consider them a leader in big financial institutions, and reliant on the easy money available through super funds.


Not really. In portfolios you're looking for value rather than number. I want $1m worth of land, not 25 acres of it. As land values continue to increase over time, I don't have to buy a larger physical quantity of it to take the same place in the portfolio.

If economies are truly "growing" -- ie, reflecting increasing value of the companies on the stock market ... and of each portfolio, land remains a constant factor by value ... does this not show what I was saying when you first intervened? That the stock market drives up the cost of land, regardless of the demand for it?

No, of course it isn't essential that they buy ALL the land in and around cities to affect the price. And no, I did not sheet all the blame for increasing land prices (beyond increasing demand, which I grant has been strong the last two decades) to trust funds. Rather, I decried their having any role at all!

In fact, government incentives to small investors to invest in residential land seems like a bad thing to me. One house per resident, yes, but it's hard to see a good reason for those with investment money beyond their living expenses to drive up the market in housing. There is self-interest (increasing the resale value of their own house) but if it widens inequality in society (between those who can afford a house and those who cannot) I can't imagine why government would encourage it ... other than perhaps to keep the investment in assets (land) instead of across national borders, and to keep the land out of the hands of trust funds.

And as I said, residential property is not particularly attractive to institutional investors, but to private people who buy houses as an investment. And either they or the people who rent the homes from them are also using it, while the returns depend on how many people want to rent or buy. And of course, several of the articles talk about how people are actually looking to get institutional funds into residential property, because it will allow people cheap funds to buy homes they weren't previously able to, sort of as an alternative to the banks.

Sort of "more money is cheaper money" perhaps?

I'm not all that clear on how a bank and a fund are constituted differently. I would expect both to behave in pretty much the same way, unless the funds, or the banks, have different requirements to secure loans, or if perhaps funds are answerable to some board not elected by their shareholders (to government? To the superannuees??

There is little evidence of that happening. Commercial- and residential properties aren't interchangable as far as portfolio design is concerned.

If so, good. If it goes that way ... I told you so. ; p

Feel free to cull some sections from the dialogue. I'll be doing that next reply anyway, we shoud try to stay on-topic and keep away from a essay war-of-attrition.

mort what? if it weren't for poverty and building codes, i'd build an indiginous shelter out in the woods some where and live in that. well if it wasn't for private ownership of land, poverty wouldn't be a factor either.

instead, under the tyranny of economic fanatacism that pretends to be freedom, i've had to rent/live with renters, all my life. even my parents did for MOST of theirs. we did have a small cabin on a half an acre once upon a time in a rural village where my dad worked for the railroad, but he sold his equity in it to get his first car, when conditions and situations forced him to absolutely have to.

we did get quite a bit of fun out of that little datsun pickup, every free weekend, every free hour practically making up for lost time boonie stomping all the intreguiging places we'd never been able to get to before, but it was the end of the only time anyone in my imediate family 'owned' (was mortgauged to) a piece of property.

=^^=
.../\...

my rent is $415 US dollars. But that includes all bills except internet.