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Joined 2 years ago
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Cake day: June 25th, 2023

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  • Let me give you an overly simplified example. You are in a property market where rental yield is 3% (happens in some cities)

    You could put a million dollar into buying a house and save $30k in rent every year

    or

    You could rent a million dollar house for $30k, and invest your million dollar in the market at 7%, returning $70k per year

    Obviously this gets more complicated with mortgages, taxes, maintenance, interest rates, etc. but the gist of it is that owning your home always comes with an opportunity cost, every dollar of house equity is a dollar that isn’t invested somewhere else. Depending on circumstances, renting might be the most economical choice.


  • What you forget is the cost of opportunity: the money that is stuck in a house is money that would yield income if it was invested somewhere else. Long term stock markets typically return 7%+, while rental return (or the rent you save by buying) can be anywhere from 3 to 7% depending on market, minus maintenance and other holding costs.

    So there’s no fast and hard guarantee that owning or renting is best - you need to run a proper simulation with the right parametres taking everything into account. In markets with low rental returns, renting is typically optimal.




  • The issue with housing is that the supply is limited. If you increase demand and not supply you just increase prices. Giving buyers $25k extra to spend means every home owner is now gonna jack up their selling price by $25k. This is, in the end, a subsidy for existing home-owners. Who already are doing pretty well, thank you very much.

    Denying the existence of supply and demand always lead to policy failure. The way to address housing cost is to lower the cost of housing, not make housing more expensive by helping people outbid each others.






  • “Taxing at 100% also brings no tax revenue” is already a stupid statement, and is Tautologically contradictory

    It’s not. If you work 40h per week and can do overtime but that overtime is taxed at 100% (because yes, that’s what marginal rate means, it’s the rate the extra income will be taxed), virtually nobody will bother doing that overtime. The handful who do will probably not clock-in because anyway, there’s no point since it will bring no income after taxation.