This is a new topic for me and it is a single issue post. I
am struggling with how to address this problem because it involves two dynamic
forces colliding. And maybe not the best description, but I hold fast to this
is a dynamic collision in how do you address the best policy.
And this is the housing situation in America. More and more
you read that corporate America is buying up homes. The obvious problem is
where does this leave individuals and families when it comes to owning a home. Do
we let the market dictate everything? And allow those with the assets to have
free reign on the market? Or is the opportunity to own your own home at a
reasonable price something that allows for government interference in the
housing market?
This is a dynamic collision in America. Does one side have
an inherent priority over the other? And if we say the government should get
involved what exactly does that look like?
And it can become a major political fight if anyone wakes up
and realizes how fast corporate ownership of houses is growing. For now,
investors have been buying houses for years and some people feel that is one of
the problems that caused the 2008-2009 recession. There were too many house
flippers buying houses borrowing too much money to do such. Well things are a
bit different now. We are looking at full corporations buying into the housing
market. They bring a much stronger financial balance sheet than the house
flippers so their ability to gain larger market share is real and depending on
your outlook potentially dangerous.
Historically owning a home is one of the ways young couples
in the working and middle class could start to build wealth or have something
to pass on to their children. If the housing market consolidates too much then
the wealth gap only increases. And if you are a regular reader you know that I
feel the wealth gap is a danger to this country and democracy/our republic in
general. I am of the camp that believes a strong middle class is the backbone
of a strong democracy. Yet as a conservative I do not want too much government
overreach into our lives and this includes the economy. So where does this land
us with trying to balance these two competing dynamics?
A strong purpose of an elected government is to defend or
protect the public in general, whether it be from external forces or internal
issues. You can make the case that at times the government should get involved
when the general welfare of its people is negatively affected by an issue. I
think this is one of those cases. And since our government is founded on
certain ideals such as life liberty and the pursuit of happiness, the
government can at times look to balance competing interests to help the general
welfare of the populace. And owning an affordable home is beneficial to the
general populace. Now you also have to realize that owning a home is not a “right”
nor is it a privilege, but being able to
afford where you live should be considered a necessity in modern times. And
having the opportunity to thrive is an opportunity that should be open to all.
So how do we keep the door open for home ownership to many
while not interfering with businesses well, doing business?
This is a interesting question and I do not think it has
been addressed enough with ideas. It is talked about in the press somewhat, but
there is not a plethora of competing arguments, policy, or platforms that addresses
the pros on either side, much less discussions in general that weigh the two
competing sides. I will make the joke/statement this is ripe for some dissertational
work. I say this knowing we need some immediate action or policy to this before
housing does get out of reach for most Americans.
And since I have not seen too much in regards to public
policy initiatives and maybe I have missed them and I feel the Democrats and
Republicans are just too weak to step up and address this problem I will step
into whatever mess is lying on the floor and put forth some thoughts.
And if you read through many of the immediate platform posts
you may start to notice a theme so I will state it now. And some will not like
it. Since I fear the wealth gap growing some policy proposals will have
considerations to tax activities that drive the wealth gap larger. And since I
have already stated I feel this is happening with corporations buying home large
swaths of the housing market or will have in the near future one approach is to
tax at very high rates profits on transactions that remove properties from the
open markets or corporations owning too much of the housing market. Does this
interfere with business opportunities? Yes, yet something needs to be done to allow
anyone and especially young people a fighting chance to create a worthwhile dynamic
for themselves for those that choose to want a home. Some people do not want a
home and so we are not going to force everyone into that mindset, but for those
that do, they should not be priced out of the market.
So what does taxing at a higher proportional rate for
business activities in the housing market look like? And that is difficult because
corporations owning the housing market is a change from what was considered the
norm for the last fifty plus years. I have seen articles that state corporations
may own forty percent of the market by 2030. Honestly is that too much and if
you support the business models of life you may think not. Yet if you support
the wealth gap problem, you would feel way too much.
And if corporations can change the mentality and find a way
to make their ownership just a way to make money as a conduit to more people
owning a home, you wouldn’t need to tax at a proposed higher rate. For example
since the real estate market is changing with the amount of commission real
estate agents may be charging in the future, what if the corporations buy the
house then sell it at a six percent mark up which was the previous real estate
commission rate. That would not be affecting the market in a negative way. Yet
if the corporations buy up houses and then start creating their own market for
rental pricing then they are taking away wealth from the general populace. One
way to determine if rental prices are too high would be relative to past
inflation, current inflation and if rental prices are adding to inflation and
not being affected by inflation. Quite a few parameters in that scenario, but
that could be a start to determine if rent prices should be taxed at higher
rates than regular income tax or corporate tax rates. So instead of starting
with the formula to determine if it is excessive you force the business prove their income is not excessive. So the
rates start higher and I mean higher so hopefully to discourage corporations
trying to raise rates just for profit motives. To lower their tax rate they would have to
prove their income is not driving housing costs up either through buying and
selling or rental income. You may say this is quite a bit to prove. And yes
that is the point. We are trying to discourage corporations for over owning
housing in America so you have to make it difficult for corporations to take
advantage of a monopoly in the housing market. Would it be better for them to
keep housing prices in line or would the cost of managing many homes for little
profit keep them out of this business? If they are doing so only for their
bottom line, then they are negatively affecting the market and the higher tax rates
are implemental. If they are trying to generate a new way for Americans to obtain
housing at affordable housing and this is a new business model, then their
profits should be reasonable and taxed at current corporate rates.
Yes we are walking some thin lines here, but we have to
start talking about this issue with more emphasis on maintaining affordable
housing and this can be either ownership or rents. The housing market is changing
fast and my idea may not be the most ideal. So my goal is to force the issue
and bring it to the forefront of political discussion requiring politicians to
make decisions on policy to protect the American public from runaway housing
costs. Better ideas are always welcome. Until then I am sticking with my
general theme that the government can take action to protect the general welfare
of its populace as best as it can without completely stifling free market
competition. Again a very thin line to walk, but one that is needed always and
specifically with housing. Otherwise our illustrious two major parties will sit
on this until it is too late since neither has any backbone to really help the American
people.
Cheers