Rising home prices: who on earth thinks that's good news?
Center for the Study of Economics - Company Message
RSS Follow Become a Fan

Delivered by FeedBurner

Recent Posts

LVT in Los Angeles? Op-Ed says go for it.
Welcome to the Zany World of NYC's Property Tax
Land Value Taxation in Jamaica: Now More Than Ever
Part 1, Land Value Taxation: Politics, Persuasion, and Practicality - A How-To
2016: Another Year of Advances and Retrenchment

Most Popular Posts

Noted UK Think Tank: Tax Land Values
Eliminating the property tax? It must not happen, but we’ll see what happens.
Altoona, PA: City tax wholly on land values = normality
Land Value Tax in Britain: Progress While the Rear Guard Digs In
Dr. Herbert Barry's Proposal to Really Reassess Allegheny County


Act 47
Affordable Housing
Agricultural Policy
Allegheny County
Australian Capital Territory
Connecticut General Assembly
Current News Item
de Blasio
Economic Development
Economic Policy
Economic Rent
Ed Vargas
Federal Tax Policy
Fiscal Policy and Taxes
Free Markets
George Osborne
Global Taxation
Healthy Communities
Housing Policy
Hurricane Sandy
Jeffrey Berger
Jimmy Tayoun
Justin Skariah
Kenyatta Johnson
Land Policy
Land Value Tax
Larry Deutsch
Law and the Constitution
Len Fasano
Liberal Democrats
Local Government
Los Angeles
Maria Quinones-Sanchez
Martin Looney
Matt Ritter
Matthew Ritter
Mayor Rick Gray
Michael Kinsley
Model Legislation
Monroe County
National Tax Policy
New Jersey
New London
New York City
Parking and Transportation
Patricia Dillon
Property Assessment
Property Tax Reform
Public Health
Public Opinion
Public Resources
Public Works
Regional Tax Base Sharing
Rhode Island
Roland Lemar
Sales Taxes
Senator Jan Malik
Sin Taxes
Smart Growth
Soda Tax
Tax Exemption and Abatment
Thomas Piketty
Tom Kramer
Transportation Funding
Transportation Policy
United Kingdom
Urban Blight
Urban Rejuvenation
Urban Tax Policy
Vince Cable
Wage and Income Taxes
Wilson Goode Jr.
powered by

Incentive Taxation

Rising home prices: who on earth thinks that's good news?

Pop it now!

Moseying through the tinny yet strident “news” from the real estate markets that housing is on the rebound.  To the real estate industry and their flacks in the press, we're meant to believe any increasing equity will redound to the benefit of homeowners.  Not quite.  

Remember where it all started: the unholy triangle between activist government (everybody gets a house with NO money down) crooked to lazy lenders, and banks who wanted a piece of the action (even though they had no clue what was in those pieces).  

Even the chief economist of the National Realtors Association Lawrence Yun - the usually reliable cheerleader for rip roaring real estate markets, agrees that the future belongs to cash buyers, flippers,high-end purchasers, and people who live in areas enriched and subsidized by everybody else (Washington DC, the DC suburbs of Maryland and Northern Virginia). 

Trying to gin up a new bubble is absolutely in error.  What this country needs for a stable future is a market economy that invests in production and people, and gets a fair return on that investment.  The only thing a new bubble will do is suck away capital (and by extension labor) at a time when we need real things, not dreams of McMansions sitting in former cornfields (the number of which appears to be a state secret, or at least the secret of the banks). 

Between the idea And the reality, Between the motion And the act, Falls the Shadow (Inventory)

Bottom line: keep land and real estate prices down so the people can have decent housing and shelter.  Keep land out of collateral for loans, and tax it to make the acquisition and sale quicker and cheaper.  Let the investment go into the structure instead.  Collecting economic rents from land will go a long way to permanently extinguish booms and busts.

21 Comments to Rising home prices: who on earth thinks that's good news?:

Comments RSS
Mark Koerner on Wednesday, October 31, 2012 10:18 PM
Josh-- I couldn't agree with you more. Another real-estate-fueled boom will lead to another disastrous crash in the not-so-distant future. This raises a theoretical question about what "consumption" and "investment" are. In standard macroeconomic accounting, I believe "housing" is classified as a part of the "Investment" variable and not part of the "Consumption" variable. In other words, a single-family house is said to be a lot like a mainframe computer or a Coca-Cola bottling plant--and to have very little in common with a family car, a refrigerator, or a Three Musketeers bar--all of which are "Consumption" goods. This classification scheme has always seemed just plain wrong. In reality, houses are generally long-lived consumption goods. (An exception: houses used as rental properties.) If I'm right about this, then that last disastrous boom--the one that ended with the collapse of Lehman Brothers--was built on a false premise, the premise that we were "investing" in houses when we were really just cranking out a certain type of consumption good that we wanted to _call_ an investment. Houses may have a longer shelf life than Three Musketeers bars, but they are consumption goods just the same. Does this make any sense?
Reply to comment
essay have review on Wednesday, July 25, 2018 4:38 AM
The rise in rates doesn't always correlate with houses coming down in price. You're assuming that because people are priced out of buying, that housing prices will decrease. What will likely happen is that the few cash buyers left will continue fighting over the scraps. They see people being priced out as an opportunity for better rental prices. People have realized the incredible potential in real estate as an investment. In cities, I think the prices will continue to increase even as rates continue to rise. Cash buyers will just run the markets.

Bianca on Friday, November 02, 2012 11:37 AM
Rising costs in housing - and everything else - is never good news. Thanks for your post and let's hope that prices stabilize for everyone.
Reply to comment
Danny Handelman on Saturday, February 23, 2013 9:39 AM
High home prices is an effective market mechanism to use the land more efficiently.

Wendy Peterson on Tuesday, November 13, 2012 1:34 AM
None, I guess! For the sudden economic fall most of the people are suffering a lot so they are looking for frugal options in everywhere so at this moment hiking the price of house is not supported anyhow. I hope the situation will be changed very soon. Thanks for noticing the important issue.
Reply to comment

California USDA Broker on Monday, March 11, 2013 6:09 AM
Hello there! I must tell you the blog post is really good. It is very informative. I want to mention one thing that I like the way you write the post to the point. I really appreciate and keep writing! Very INFORMATIVE and just FANTASTIC! I was looking for the related information. Thanks a lot it is very useful for me. Would love to read some pieces on the topic.After reading your blog post I am inspired with the writing and looking forward to write a blog on the same including my view points. I will share my writing content soon! About this blog post, very informative and inspiring as well. Good Job!
Reply to comment

Click here on Monday, April 23, 2018 6:51 AM
Nice post
Reply to comment

John Peter on Friday, April 27, 2018 8:44 AM
nice workings.
Reply to comment

stellar phoenix photo recovery on Monday, May 14, 2018 2:14 AM
As a highly rewarded, easy to run, and absolutely free affiliate program, MiniTool Affiliate Program allows every affiliate to earn attractive commission from orders he made, and the commission rate reaches to 70%. Moreover, there are lots of flagship products for every affiliate to choose, and we will track every affiliated order for up to 120 days. Most importantly, the commission will be assigned to your account exactly and punctually.
Reply to comment

karamba on Wednesday, May 16, 2018 8:24 AM
The article you have shared here very awesome. I really like and appreciated your work. I read deeply your article, the points you have mentioned in this article are useful
Reply to comment

iq option on Sunday, May 20, 2018 9:37 AM
In the event that both have a positive result, for what reason not get some extra help either on the tasks or on other work to free up time for the activities.
Reply to comment

Charlie on Friday, June 01, 2018 6:40 AM
Reply to comment

Shuaib on Friday, June 22, 2018 10:25 AM
Reply to comment

Shuaib on Friday, June 22, 2018 11:17 AM
Reply to comment

https://www.aussiewrit on Monday, June 25, 2018 7:14 AM
Honestly I've learned alot from this blog and I would like to spread this more people.I would contact the writing services for performing this task.Good Job.
Reply to comment

loemrntdherid1 on Wednesday, June 27, 2018 3:27 AM
Interesting topic what you have shared with us. Your writing skill is really very appreciative. I love when you share your views through the best articles.Keep sharing and posting articles like these.This article has helped me a lot.Keep posting this stuff.
Reply to comment

1xbet on Monday, July 02, 2018 12:00 PM
To securely extricate reward you have to utilize wagering trades.
Reply to comment

Shuaib on Tuesday, July 03, 2018 8:38 AM
Reply to comment

nightrush on Thursday, July 12, 2018 2:03 AM
The player ought to once in a while wage for such diversions like dynamic which has a result that is high.
Reply to comment

data recovery software for pc free download full version on Tuesday, September 25, 2018 10:41 PM
Ea elit earum occaecat dolorem mollitia fugit rem consequatur voluptatem quis voluptates dolorem tempore doloremque eos laborum Ut
Reply to comment

environmental site assessment phase 1 on Saturday, December 08, 2018 7:57 AM
Thanks for the post. It is really a matter of concern. Although we do not deal about it, here must be added that an environmental site assessment must be done before building a home to make it safe. We can do this cheaply.
Reply to comment

Add a Comment

Your Name:
Email Address: (Required)
Make your text bigger, bold, italic and more with HTML tags. We'll show you how.
Post Comment