this post was submitted on 19 Mar 2024
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What is intrinsic value?
Depends on the case, but for an average house the cost of building one. How the location affects pricing wouldn't change (land/space is still limited & some places offer things that others dont).
Its just that without rent invectives more houses would again be privately owned simply because less investment capital would bother with it & push the sectors profitability up.
Edit: if I misunderstood your question --> wiki/Intrinsic_value_(finance), wiki/Intrinsic_theory_of_value, wiki/Intrinsic_value_(ethics)
Ah I see, yeah I would disagree there is such a thing as intrinsic value.
I don't know if I agree with that, because of current governments goals of keeping house prices ever rising, land, even empty, would be useful for risk management. It also may lead to that land being used for very short term housing, aka AirBnB. It could also lead to psuedorent type arrangements where banks offer loans with much lower downpayments, but with extremely long terms.
What government has an interest in rising housing prices? Isn't their job the opposite of that usually? Im not familiar with that.
And regulators/government should prohibit such predatory practises as long loans (no central bank would even allow that atm anyway, not under Basel). Basically my point is that housing, healthcare, public infrastructure, etc should be non-profit imo (so, no dividends/profit payouts, only for r&d or lowering price points and profit sharing to clients).
A government who for decades has encouraged home ownership as the safest way of building wealth. A government who a massive number od their constituents are home owners.
Are they predatory? How else can someone live if they can't afford a down payment and can't rent?
I understand
Oh, yeah, politicians working for themselves, that's the exact same reason why taxes on rent are usually kinda low/treated specially.
Yes, really long loans are predatory or if you want to look at it from a different perspective, a result of a non-functioning system. Financial obligations tax mental health, trap people, make enormous cumulated profits on capital without any work & negligible risk.
Central banks restrict max durations on mortgages/loans as is (also like what clients minimal disposable income after loan payments must be each month, age, max ratio of loan to property value, etc). And yes, if nothing else changes, that is bad for young people trying to buy a house, start a family, central banks acknowledge that, but their job is monetary policy/stability, not social policies - the government is the one not doing their job.