I respect your work and your arguments but I propose they are missing a few very key points, both quantitatively and intrinsically. First, from purely an investment standpoint, adjusted for volatility, real estate has been the top performing asset over the long run, even better than equities. Mobility is only one piece of the puzzle and there are intrinsic benefits around familial stability, and family formation, etc. Thirdly, It's a hard asset with (implied) cashflows that move with the price of rents. Fourthly, It's more likely, for those in western economies, that the market prices you out with rent increases than your government steals your home outright or through Fiat, taxation, etc.
Lastly, If you aren't going to own the home you live in (and ignore the tax benefits), you should at least own real estate you can rent out to others. After all, why doesn't the honorable Mr. Mazzone, who I respect greatly, simply rent the land/property from someone else instead of buying the property to build and rent out? The control of the asset is the most valuable piece.
Overall, these benefits outweigh the mobility arguments for most individuals and allow us to directly "hedge" against housing inflation (one of life's biggest risks) at the same time.
Thanks for your thoughtful comment. You make some good points. I certainly agree with the value of familial stability and family formation. There is a psychological benefit in believing that you and your descendants will be able to live in the same place for generations. However, I think that sense of stability can be realized with long term leases, which also mitigate against the risks of rising market rents.
Aside from mobility, renting offers flexibility that may be even more important in the coming years. Renters can easily upgrade or downgrade their living experience without being saddled with a mortgage or the regulatory difficulties of home modifications.
I also believe in the value of real estate as a long-term income-producing investment. I believe that Free Cities will offer their residents the opportunity to realize those gains by investing in the city itself as an income-producing asset, rather than investing in one specific piece of land for a house.
You mention the tax benefits of home ownership, but the tax benefits of living in a Free City will far outweigh the minor tax advantages that homeowners have over renters under our current governments.
Housing inflation is certainly one of our biggest risks now, but it is caused entirely by government monetary policy and housing regulation. In a Free City, people will pay for services in hard money of their choice, not necessarily fiat currency, and will not be burdened by the over-regulation that is inevitable with political governance.
So, while I agree with your analysis of the current situation, I think we need to rethink what we want from our living spaces in light of what the future is likely to bring.
Well ordered and thoughtful response. I agree that there should be opportunities to invest in the equity of the private organization that governs where you live, as the first way people "invest" is with their feet by the place they choose to live, but often, they don't move outside their home country. Jurisdictions should be competing for residents and that's the beauty behind the free private cities models. I am invested. And more options should and will become available over time. Most of what you have presented is unfortunately theoretical for most of the 8+bill people on the planet. There are so many barriers to exit/entry not least of which might be convincing your loved ones to move along with you.
I love the idea, and it will all become a reality, but over time and in certain places before others.
The same thing that happens if the government decides to take your home for whatever reason, or if something unexpected happens that makes you want to move. However, if you are leasing or renting, you know it could happen, and you have some room to negotiate. You haven't sunk your life into thinking that you control something you actually don't. Suddenly having to find another place to live is a lot easier if you are looking for a place to rent rather than buy.
I understand the appeal of home ownership because it used to make a lot of sense, and there is an emotional attachment to the idea, but the world is changing faster and faster. The question is whether it still makes sense for a particular individual. I think it's a question worth asking ourselves.
Hi, I'd also like to add that the "sunk cost fallacy" is a highly determinate factor in this debate, that and when the property was purchased together with the debt denominated culture that we all live under. Boomers, by and large, have come out on top since the endless spike of house pricing only really "ramped" up in the 2000's onwards (with a dip for many Western jurisdictions early post GFC - before it all got propped up again). In Australia, where I live, retail housing hardly missed a beat due to Governmental crutches. Loans have become increasingly huge and families tottering under the sheer weight of their financial commitments, egged on by a combination of Keynesian Economic skullduggery and peer group pressure, have been "flipping homes" for at the least the last decade. Western Governments have been setting the bar increasingly lower for their citizens indebtedness. My father was from small business stock and was gifted a family home by my Grandmother, a wonderful competent woman who owned and operated a Post Office when he married my mother. Show me an instance where that would be possible today? We boomers can bang on as much as we like about the fecklessness of upcoming generations - but the tone of irresponsibility and the deleterious framework for failure was set long ago. Joyce is absolutely correct, "the Australian (replace with any Western Country here) Dream" of home ownership is well and true buried and now is the time to explore new paradigms of living (as far away as possible from Governmental interference). I'll leave you to ponder this notion, if Property Rights are central to a free society then What is Property?
I respect your work and your arguments but I propose they are missing a few very key points, both quantitatively and intrinsically. First, from purely an investment standpoint, adjusted for volatility, real estate has been the top performing asset over the long run, even better than equities. Mobility is only one piece of the puzzle and there are intrinsic benefits around familial stability, and family formation, etc. Thirdly, It's a hard asset with (implied) cashflows that move with the price of rents. Fourthly, It's more likely, for those in western economies, that the market prices you out with rent increases than your government steals your home outright or through Fiat, taxation, etc.
Lastly, If you aren't going to own the home you live in (and ignore the tax benefits), you should at least own real estate you can rent out to others. After all, why doesn't the honorable Mr. Mazzone, who I respect greatly, simply rent the land/property from someone else instead of buying the property to build and rent out? The control of the asset is the most valuable piece.
Overall, these benefits outweigh the mobility arguments for most individuals and allow us to directly "hedge" against housing inflation (one of life's biggest risks) at the same time.
Thanks for your thoughtful comment. You make some good points. I certainly agree with the value of familial stability and family formation. There is a psychological benefit in believing that you and your descendants will be able to live in the same place for generations. However, I think that sense of stability can be realized with long term leases, which also mitigate against the risks of rising market rents.
Aside from mobility, renting offers flexibility that may be even more important in the coming years. Renters can easily upgrade or downgrade their living experience without being saddled with a mortgage or the regulatory difficulties of home modifications.
I also believe in the value of real estate as a long-term income-producing investment. I believe that Free Cities will offer their residents the opportunity to realize those gains by investing in the city itself as an income-producing asset, rather than investing in one specific piece of land for a house.
You mention the tax benefits of home ownership, but the tax benefits of living in a Free City will far outweigh the minor tax advantages that homeowners have over renters under our current governments.
Housing inflation is certainly one of our biggest risks now, but it is caused entirely by government monetary policy and housing regulation. In a Free City, people will pay for services in hard money of their choice, not necessarily fiat currency, and will not be burdened by the over-regulation that is inevitable with political governance.
So, while I agree with your analysis of the current situation, I think we need to rethink what we want from our living spaces in light of what the future is likely to bring.
Well ordered and thoughtful response. I agree that there should be opportunities to invest in the equity of the private organization that governs where you live, as the first way people "invest" is with their feet by the place they choose to live, but often, they don't move outside their home country. Jurisdictions should be competing for residents and that's the beauty behind the free private cities models. I am invested. And more options should and will become available over time. Most of what you have presented is unfortunately theoretical for most of the 8+bill people on the planet. There are so many barriers to exit/entry not least of which might be convincing your loved ones to move along with you.
I love the idea, and it will all become a reality, but over time and in certain places before others.
If you don't own the home, someone else does.
What happens if that someone doesn't like you any more for whatever reason?
The same thing that happens if the government decides to take your home for whatever reason, or if something unexpected happens that makes you want to move. However, if you are leasing or renting, you know it could happen, and you have some room to negotiate. You haven't sunk your life into thinking that you control something you actually don't. Suddenly having to find another place to live is a lot easier if you are looking for a place to rent rather than buy.
I understand the appeal of home ownership because it used to make a lot of sense, and there is an emotional attachment to the idea, but the world is changing faster and faster. The question is whether it still makes sense for a particular individual. I think it's a question worth asking ourselves.
Hi, I'd also like to add that the "sunk cost fallacy" is a highly determinate factor in this debate, that and when the property was purchased together with the debt denominated culture that we all live under. Boomers, by and large, have come out on top since the endless spike of house pricing only really "ramped" up in the 2000's onwards (with a dip for many Western jurisdictions early post GFC - before it all got propped up again). In Australia, where I live, retail housing hardly missed a beat due to Governmental crutches. Loans have become increasingly huge and families tottering under the sheer weight of their financial commitments, egged on by a combination of Keynesian Economic skullduggery and peer group pressure, have been "flipping homes" for at the least the last decade. Western Governments have been setting the bar increasingly lower for their citizens indebtedness. My father was from small business stock and was gifted a family home by my Grandmother, a wonderful competent woman who owned and operated a Post Office when he married my mother. Show me an instance where that would be possible today? We boomers can bang on as much as we like about the fecklessness of upcoming generations - but the tone of irresponsibility and the deleterious framework for failure was set long ago. Joyce is absolutely correct, "the Australian (replace with any Western Country here) Dream" of home ownership is well and true buried and now is the time to explore new paradigms of living (as far away as possible from Governmental interference). I'll leave you to ponder this notion, if Property Rights are central to a free society then What is Property?