twotime t1_itd1vhk wrote on October 22, 2022 at 6:37 PM

Reply to comment by auntiepink in Many countries have a "hidden welfare state" for incumbent homeowners, as governments subsidize homeowners through the tax system. The homeownership welfare state is strongest in the US and other Anglophone countries, but weakest in the Scandinavian countries. by smurfyjenkins

Yes, it looks like a net positive. But the actual long-term impact on society (and, likely, you personally) is almost certainly a net negative..

Consider the world where there are no FHA loans, no pseudo banks like Freddy and Fanny, mortgage interest is not tax deductible, laws like prop 13 in california (which limits real estate taxes) do not exist..

What would that do to home prices? Almost certainly they would be significantly lower (especially in areas which are very expensive: where homeowners would be under higher pressure to sell and move into a less expensive area). Basically the current system floods the housing market with money and drives prices up while simultaneously encouraging people to hold-on to their current houses.

What would it do to rent prices? Here the impact would be more complicated but the prices would likely end up lower too: current homeownership laws "lock" a lot of land into very-low-density single family housing, if that land is "unlocked" then single-family will get replaced by multi-family housing which far more efficient (cheaper!)

Another way to look it: the governments are trying to subsidize almost every buyer on the market, that does not work and cannot work, it just drives prices ups. I suspect that the primary beneficiaries of the current laws are real estate agents and development companies (and to a lesser degree long-term home owners).