The article compares this to Georgism, but the comparison seems misplaced.
The point of a land value tax is not to make housing more affordable, but to ensure land goes towards the most productive use. If LVT was implemented along with zoning reform, housing would indeed become far more affordable because lots of more housing would be built. But a government subsidy for lower income families to pay below market land rent is a very different policy and has none of the benefits of LVT.
All of these programs are band-aids at best. Most, like this, will force middle class rents even higher, putting more strain on the system.
The causes of ever-increasing rent are clear, but unpopular to address. We need more transit and living opportunities in healthy, job-rich areas so that 100 people aren't competing for a tiny apartment. Sadly, any movement to do so is attacked as "gentrification" or nonsense about "luxury" apartments. So, nothing gets done and people continue to get priced out. :/
The prime opponents to new housing construction aren't people who complain about gentrification or luxury housing. Those groups don't have that much political power. The proof for this lies in the fact that most new housing construction in American cities takes place in lower to middle income neighborhoods.
The opponents to transit and living construction tend to be people who complain about "other people" moving in, "my property values", and "neighborhood character".
We are on the same side of this issue, I simply urge you to direct your anger at more appropriate targets :)
> The opponents to transit and living construction tend to be people who complain about "other people" moving in, "my property values", and "neighborhood character".
I have a feeling that "house as a place to live" is fundamentally incompatible with "house as an investment".
It's about class, and to a lesser degree race. If there was good public transit, then 'inner city' people who can't afford owning a car could come and go freely. The suburban middle class don't want anything to do with 'those people'.
Exactly! This is why I chose to put "property values" in quotes. While it is something that they think about, it's mostly about excluding people they have prejudices against.
This sounds like a really nice idea that is 20 years away from being a horrific disenfranchising one. Owning the land is an important piece of wealth transfer from generation to generation. This reminds me of the situation in NC and other parts of the south where minority communities are starting to lose control of the land there families due to a bunch of loop holes. There the problem is that due to lack of paper trails ownership is murky and often reverts back to the city who then sells it away to the highest bidder (often developers who displace the people who have been there). What happens 20 - 30 years from now when this non profit has shuttered and the land is now owned by some random bank? It's great that the land lease is transferable to heirs but this just has all the makings of a looming disasters
"Owning the land is an important piece of wealth transfer from generation to generation"
It's worth questioning whether this is a desirable goal. I'm not saying it is or isn't, but I don't think it would be universally accepted. At the risk of being grim, I stand to inherit a gorgeous home near Monterey purchased by my grandparents in the 1950's that I could never, ever afford now - and with prop 13 I could continue to afford it.
But is that good? I wouldn't even live there full time. Maybe someone else could make better use of that land, but the current tax system enables me to keep it as a luxury when someone else might want it as a necessity (a home).
Eventually, of course, it will go to someone else, as a logical consequence of not being a chain of only children, so there is that.
It's also worth considering that "owning" land is a little bit strange in the sense that if it's in a location that can support life reasonably comfortably (fresh water, decent soil) and isn't inhabited by aboriginal people, the paper trail goes back to "someone just took it from the inhabitants" which puts modern claims on shaky grounds.
Though all of this is kind of secondary to the fact that we made it damn near illegal to build new homes near good jobs.
Do those aboriginal people have an army that can reconquer the land? If not, then the shaky grounds aren't that shaky. We still live in an environment where the rule "might makes right" still applies. Don't forget that.
> We still live in an environment where the rule "might makes right" still applies
Which is correct. You have to draw the line somewhere when one civilization replaces another.
What is not ok when this rule applies within a civilization - you get a class struggle when one faction uses their (political) might to acquire land with an advantage.
As the parent says - land ownership as a concept is shaky and its infinite transfer over generations even more so because you tend to accumulate errors of unethically acquired land with time.
What actually is fair is a continual payment for land use to the community through government for the fact that they guarantee you, but nobody else, to use the land.
On Netflix you pay monthly fee for the service. Our land system is akin to purchasing an expensive perpetual Netflix license with infinite amount of transfers to your descendants through inheritance. What if you knew somebody inside Netflix and they give you this cool package somehow for very cheap?
This is the situation with our land systems - they are separating social classes by design - with long time convergence to aristocratic and serf classes.
99 year leases are common in many countries. You still get equity and you can still sell the house. If you don't sell before the lease is up and they don't renew the lease, they still need to compensate for the value of the house before kicking you out.
There is a cap on what you can resell the house for, so this is not a way to get rich in real estate.
It's interesting how many commenters seem to think that renders this model ineffective.
"If nobody can get rich in this game, nobody should play" is an odd way to look at this program, which is about helping renters graduate to home ownership while protecting their community from speculative capital.
It's preventing these people from benefiting from the very mechanism they claim put them at a disadvantage in the first place.
Why not teach them the ropes of how to benefit like everyone else is?
Telling them not to play the game at all while everyone else continues to doesn't help anyone long term.
Even worse, they're paying essentially the same mortgage (a slightly discounted one) but will see a fraction of the proportional benefit as their neighbors do, when it comes time to sell.
Then it will be just another way that the system is set against them to get ahead.
You can't sell the house. You can sell the lease. In the end, this house reverts back to whichever wealthy family already owned it, so that this family gets wealthier and wealthier over time. Leasehold is a terrible concept leftover from feudalism.
In my country, 93% of the land is communally owned by the people indigenous to this place. The only way for an individual to access this land is via leases of 30, 50, or 99 years.
>What happens 20 - 30 years from now when this non profit has shuttered and the land is now owned by some random bank?
In my country some cities offered 49 years or 99 years of lease on land to people willing to build homes. Since the land is owned by the city there's no much concern it will got in hands of banks.
That sounds amazing. In my current country and that of my birth you have to fight tooth and nail to be allowed to build anything, at least at the scale an individual can manage to build.
There could be a rule that states that if the land trust becomes bankrupt, then the land in question becomes the property of the title holders owning the home on top of it. This idea could have issues in itself with respect to incentives, but hopefully it could prevent people having the rug pulled from underneath them.
Interesting concept, I'm not entirely sure what I think of it. Land ownership interests me a lot more than homeownership, and undeveloped land has its own value in a community. That's partly why we bought our house on two acres in a small community. A house surrounded by forests or a lake or even just farmland is more desirable to me than more dense housing, so I don't entirely understand Henry George's point. I would much rather live on land that I could do things with, such as farm, or hunt, or build things, and be "out in the country".
What happens after the 99-year ground lease is up? Are the house and land then sold together on the open market?
While it's nice to be around idyllic nature, it comes at the cost of being further away from other humans. There's a reason economic productivity rises by roughly 10% every time a city doubles in size.
More people, means more innovations. Higher density leads to a more rapid spread of new ideas and best practices. Workers, entrepreneurs and investors can rapidly reconfigure to seize opportunities. Less density means you're more likely to fall into stagnation, as the one local employer in commute distance slowly circles the drains.
City life comes with significantly better living standards. What you lose in yard space you make up with much higher salaries, better healthcare and education, and more varied cultural options. To a large extent country living is only idyllic because of the technological exports made by high productivity city-dwellers.
I agree that there's a deep human need to connect with nature. But the solution isn't to try to give every man is his own personal Nottingham forest on his property. It's to build high-quality parks and nature reserves, and good transit so people can easily access these amenities.
Not to mention community. If you're lived in a city all your life and have roots, it's hard to just pick up and move. Not that it can't be done, but this often gets left out of the "why don't people just move if they can't afford to live there?" conversation.
I can see your point and agree this is probably true for the large majority of people. And most people don't want to live close to nature; it seems the large majority like being near cities and people, I'm just not one of them. :-D
I'm not entirely sure that the dichotomy of high productivity city-dwellers/lower productivity country dwellers is true any longer though. I'm a dev manager/programmer working remotely, many of my neighbors are also in IT or construction and either work remotely or commute, and many programmers in our company also live in "fly-over" states in rural areas. Most also own chickens, have small farms, or raise competition animals.
But I still understand and see your point, and I see the value in this for suburban areas. I suppose my mind went to areas more rural than the article is talking about.
Overcrowding, traffic jams, very high housing prices, high prices for food and everything else. Yes, you earn more, but you pay more for living in smaller apartments, so the standard of live isn't guaranteed to be improved.
I think that moderation is best, and there probably are ranges of population density which are the best. Urban sprawl is bad, as is overcrowding in the city center.
In some parts of the world, you can live in a rural area and travel to work by fast trains, so you can have your cake and eat it, too.
I mostly agree with what you're saying. But high housing costs are largely a result of policies designed to intentionally restrict supply. Not necessarily density itself.
As a counterfactual to the NIMBY West, Tokyo has very high density but surprisingly affordable housing because it places few restrictions on building and land use.
>A house surrounded by forests or a lake or even just farmland is more desirable to me than more dense housing, so I don't entirely understand Henry George's point.
The point is that whoever values the land most should get it. If you're willing to pay more taxes on the land than someone who wants to build housing, then you can keep it. If not, the land should go to whoever can make the most productive use of it.
Not sure you are advocating or just explaining the idea, but I have to say something.
This is how we lose natural land to sprawl. A large chunk is bought by a developer, clear cut, split into many small chunks, and sold to private individuals.
This splitting of the land into many new owners makes conservation of an area in the future to be much harder.
LVT makes sense for urban areas, but should stop where the city line is.
From there out I could see LVT leeding to increasing deforestation, sprawl, and destruction of the natural environment.
In certain areas I would even argue doing the opposite of LVT and be giving people tax incentives to leave land undeveloped and natural, better yet join parcels of adjoining land together in conservation projects while still allowing people to live on it, just where they cannot develop most of it, maybe even allow public access in the form of hiking trails using the "Freedom to Roam" principle.
> This is how we lose natural land to sprawl. A large chunk is bought by a developer, clear cut, split into many small chunks, and sold to private individuals.
This is Land front-running - somebody has information you want or will want something and buys it for himself and later reselling to you more expensively (eg. concert ticket scalpers, high frequency trading or simply knowong that there will be generations of youngsters moving to cities so why not to buy real estate there and sell it to them later).
While this market-making can be a useful service for smoothing out price of goods with price fluctuating up and down, it however becomes immoral for badly auctioned goods - such as desirable concert tickets which are often sold to scalpers in large quantities who front-run every other buyer. Also in real estate and land markets - where all the QE printed money creates asset price inflation, so by buying in those markets you can front run people who don't yet have money for it or are not even born yet.
This ceases to be a problem under LVT because you auction land usage fairly to a large degree.
No front-running -> no sitting idle on land by developers and deforestation -> optimal allocation to users.
A trust enables a public good (in this case, the land) to be protected from adverse forces (anyone whose interest is something other than those living on the land continuing to live on it). You could extend the ground lease forever, 99 years is simply a "good enough" number for now.
Why is it good for the government to buy up property and rent it at below market prices? That's just a handout and is inefficient, discouraging denser housing.
Edit: they're specifically requiring someone to build a house there. It seems like if someone wanted to build multifamily housing, even if that would be a better use of the land, they would be turned down. That's a perverse incentive.
A far better "hack" would be LVT+get rid of zoning and other restrictions on building.
That would actually reduce market prices instead of requiring a subsidy.
>Compassionate government
Nope, a government driving up market prices by restricting new construction is not compassionate just because they tried to help a handful of families buy below market.
This is in Houston. They already have some of the most lax zoning in the country.
You're free to your opinion this is "inefficient" and causes "perverse incentives". In the meantime, people get homes they otherwise wouldn't. Some of us consider that a win.
The parent was talking about the government getting out of the way and letting people build denser neighborhoods. Japan has a good zoning model, based on population density and flexible land use.
In the U.S. zoning is used to restrict the supply of housing. Building codes exist for safety. What is the reason for zoning? To protect to investment of current homeowners and screw everyone else?
Zoning is so that a meat packing plant isn’t built next to a residential neighborhood. I won’t disagree that there are challenges with zoning, where upzoning is an uphill battle (I myself face these challenges as a real estate investor who prefers to build multi family properties in an effort to create affordable housing), but I understand why it exists and have an appreciation for the intent behind it.
But what if I want to build a home next to a meatpacking plant? The Japanese zoning system designates nuisance levels to land. The lowest level only allows residential and the highest allows industrial. The general principal is that you are allowed build a low nuisance building in a high nuisance zone, but not vice versa.
The article is about land trusts in general, not just the one in the headline. Regardless, the correct solution is to implement LVT. Without that, almost by definition market prices will be higher than they should be.
The market failure is the government permitting people to buy and sell land. A small trust buying up some land and taking it off the market doesn't fix the underlying failure.
And like a carbon tax, a land value tax will never be implemented in the US due to entrenched interests.
> The market failure is the government permitting people to buy and sell land. A small trust buying up some land and taking it off the market doesn't fix the underlying failure.
Fine, you want a policy that's better than the one described in OP but feasible on a small scale? Have the city buy up land and rent it out at market price. Allow any kind of housing to be built on top of it, have no requirements for income etc.
Then use the profit this produces over the current system to directly subsidise low income households.
This is more efficient and has the same subsidy effect.
That is caused by putting disenfranchised, poor and troubled people there, and no longer giving a damn about them once they have a simple roof over their heads.
Renters can have exactly as much community spirit and take as much pride in their dwellings as anyone, but it requires that they're treated with a modicum of respect, which unfortunately is exceedingly rare in lardlordism.
> Renters can have exactly as much community spirit and take as much pride in their dwellings as anyone
No, they don't. Talk to hotel staff sometime about how their guests treat the rooms, for just one example. Or how people rent cars and go race them. Or how sensible people avoid buying former car rentals.
Anybody in any form of rental business knows it isn't true.
You're conflating short-term renting with long-term renting.
There is a vast difference between a hotel guest or AirBnB renter, who will only be staying a few days or a couple of weeks at most, and someone who rents an apartment/house for years and is part of the local community.
There are also cultural and personal differences, because neither I nor any of my friends would ever trash a short-term rental, whether it was an apartment, hotel room or a car.
However I also know people who don't even give a damn about their own things, they trash everything they touch, it is absolutely not some universal trait in renters.
Overall, the less egotistical a culture is, the better short-term renting, tool sharing and similar programs work.
> neither I nor any of my friends would ever trash a short-term rental, whether it was an apartment, hotel room or a car.
It's not just "trashing". It's in general being harder on things.
I'll give another example, this from the military, as told to me by my father, career Air Force. The military issued combat boots to soldiers, and when they'd wear out, the soldier would present the worn out boot at the supply office, and get a new pair.
They had a rate of boot exchanges that seemed high. As an experiment, the military instead provided the soldiers with a uniform allowance. What they didn't spend they could keep. The boot consumption dropped by a factor of three.
This was not soldiers "trashing" the boots. It was simply not caring about them.
> It's not just "trashing". It's in general being harder on things.
I will treat a rented or borrowed item better than one I own myself, as would my friends, simply because it is the right thing to do and because we would all hate to be handed a mistreated item the next time we rent something.
What you're describing is a cultural issue of people lacking respect for other people, and it is by no means a universal trait in humanity. However a lack of respect usually correlates with immaturity, which is shown in your example from the military. Young men tend to lack the requisite level of maturity.
When people mature, they usually start respecting other people and start caring about making things last for as long as possible. If the lack of respect persists well into adulthood, you're dealing with a major societal problem.
>"
That is caused by putting disenfranchised, poor and troubled people there, and no longer giving a damn about them once they have a simple roof over their heads."
It is not an inherent nor universal trait of humanity.
It happens because people often feel uninvolved, disconnected, and self-concerned to a fault; they do not trust their neighbors, because they have been given no reason to do so. They have been propagandized for decades with the message that they must be self-sufficient, responsible adults, and the way you measure that is in wealth, and that in that regard they are, at best, in competition with their neighbor.
One consequence of this is not giving a damn about anything you do not own yourself, which is a sick mindset, a symptom of a sick societal order.
Most of the western world has adopted this neoliberal mindset, and it is making us increasingly more callous, the longer it goes on.
You're pointing out how some people are, based on your own cultural and societal perspective, obviously one affected by negative experiences.
I am merely pointing out that this is in no way universal, and that the behavior you've observed is not caused by human nature, but rather by societal pressures and the forced state of constant ego-centered competition that people find themselves in.
Neoliberalism has made us callous and indifferent at best to the plight of our fellow human beings and the natural world.
The ideal I talk about is really just respecting other people and respecting things even if they are not yours personally. Not very complicated nor high-theory stuff.
If you want to talk about socialism specifically, the biggest drawback of
socialism is that if you do it too well, you attract the attention of the US military industrial complex.
The entire modern history of Latin America exemplifies this issue.
Neoliberalism and capitalism do not tolerate alternatives to exist, because they undermine the condtructed narrative that no valid alternatives exist.
Georgism is specifically about land, not housing. The theory is that land value isn't much affected by investment of the landowner. Housing is, and that can be owned by individuals who then have a strong incentivize to take care of it.
Preventing buying and selling of housing is actively harmful.
Land shouldn't be sold, it should all be owned by the state and leased out at market value; equivalently, implement LVT at close to 100% of land value.
The state setting a maximum sale price and subsidizing demand is not that.
Is there an alternative to zoning that still protects people from externalities such as someone building a loud nightclub or a dangerous chemical plant next to someone's home?
Blanket noises ordancenes. If I'm not a nightclub but I blast loud music am I okay? If I want to build a nightclub with good sound insulation so you can't hear why should you care?
Nightclubs attract crowds, some of which will be rowdy, drunk and belligerent. They will urinate and defecate in doorways, cause property damage and may be violent, depending on the type of crowd the club attracts.
What are those adverse forces? Someone who's unwilling to develop their land for housing? At least monetarily, space around a house tends to increase the value of the house.
Developers, real estate investors, anyone with a profit motive who may seek to take advantage of the power asymmetry between themselves and someone who might not have the opportunity to live on a piece of land without a land trust.
>Interesting concept, I'm not entirely sure what I think of it. Land ownership interests me a lot more than homeownership
Before accumulating wealth, most people are interested in having a shelter.
Let's say someone has 50 years to live, from a point on. To have a shelter, it will cost him a = 50 * 12 * rent if he rents, b = x * 12 * rate if he buys a house and pays the mortgage, c = y * 12 * rate + 50 * 12 * land_rent if he buys just the house and lend the land.
So picking the smallest from a, b and c might be better for that particular individual.
> Many people still balk at the investment required by a CLT — in Houston, the city puts in roughly $105,000 per home.
I wonder why $105,000. Looking at Zillow a quarter acre of land in the Acres Home area sells for ~$50-$75,000, and substantially less if you buy a bigger lot. And per the article, banks are providing home mortgages, thus substantially financing construction. Unless they're selling the houses for significantly less than the cost of construction, it doesn't make sense. Even if you had to heavily subsidize risk premium on the mortgage, a $105,000 expense per home seems exorbitant and not sustainable.[1]
I bet costs could come way down if there was some serious money put behind a project like this to scale it up. Singapore, Hong Kong, and other places around the world (often former British colonies, because of smart U.K. housing policies immediately before decolonization) build affordable housing using similar schemes (99-year property lease, transfer covenants, etc), but on a much larger scale. San Francisco could (and should) do this, rather than spend years negotiating over developer exactions for every tiny project.
[1] It would make more sense if most of that $105,000 was recovered on the first sale. But the article calls it a "subsidy", and other context suggests the $105,000 isn't directly recovered.
I agree that $105,000 is too high for the area from a cost point of view, but when compared to California’s affordable housing up front capital cost, it looks much more promising ($1 million per unit in this, extreme but unfortunately not too extreme for this state, case): https://www.bisnow.com/los-angeles/news/affordable-housing/a...
At that rate, Houston metro could get 100 homes for the same price it takes to produce 10 affordable homes in the San Diego metro area!
no expert in the topic, but this comparison is only meaningful if compared to the local cost per unit of raw land - land prices in SD metro are probably way higher, esp. compared to this particular part of houston
what is clear is that this area is mostly empty fields or pretty poor, with vastly more expensive gentrifying houses popping up in the greenspace.
a large area land trust can buy large chunks, preventing speculation on the greenspace from completely removing the existing community
subsequently, since community members are part of the trust, they would defacto own all of the local land, guarding against future speculation and ensuring a like-minded voting block w/r/t local property tax policy (which is huge in TX and in practice what serves as the state income tax)
so to me the topic is basically like rent control for real estate.
whether or not this is the state's business is another topic - interesting that our free market, 'classless' republic is in effect building up a hereditary landowning class though.
So it sounds like these trusts get favorable tax treatment too from a property tax perspective? Seems like that will be a sticking point if these gain popularity as it could suppress property tax revenue
Big disagree with this concept. If the article is accurate, it prevents Regina Daniels or any other beneficiaries from accumulating significant wealth in the the property, because resale (or presumably home equity loan) values are capped. So what does she get out of it? More stability for her family and a capped mortgage payment every month, yes, but no real chance to actually accumulate wealth. It's basically blocking the way in which the poor can join the middle class (yes I think index funds are a better investment than real estate, but I think owning your own home is perfectly fine for a lower income family).
A better idea would be to deregulate housing and let developers build condos there, and she could buy one (or I'd be totally fine with government assistance in her buying one!) Way more efficient use of the land, and she could accumulate real wealth that way
That may be the point of the program, I'm saying I don't think it's a very good point. Owning is basically always more expensive than renting, there's taxes, insurance, endless maintenance etc.
As I said in my original comment, I'm sure it gives her family more stability, but wealth accumulation via government-sponsored real estate ownership is literally a huge part of why white families have more than African America ones in this country. I think this program is missing the forest for the trees
> wealth accumulation via government-sponsored real estate ownership is literally a huge part of why white families have more than African America ones in this country
There surely must be a point in which we realize a course of action is wrong and abandon it, instead of perpetuating it to be "fair" to those who joined later?
Many people think that Americans are over-invested in their houses. Germans, for example, don't use housing as an investment yet they are still able to save and invest in other ways. Specifically, Regina Daniels could put the difference between her super-low mortgage payment and what she would normally pay into some index funds and she would probably be net ahead.
You're measuring wealth in only the dimension of financial capital. What if participation in a community land trust enables an increase of social capital?
Unfortunately if your measuring wealth in something intangible that is usually a sign your getting screwed over. If I give away all my money to random people on the street I might have gained social capital but my tangible wealth is gone.
Just because they don’t call it zoning doesn’t mean they don’t have zoning.
> Festa also rattles off a list of other policies that bolster his case that Houston effectively has zoning.
> Deed restrictions: In Houston, developers create rules to prevent things like corner stores within residential neighborhoods. Those rules are called deed restrictions. Houston is unique in that it will represent residents when they try to enforce those covenants.
> Density: Historically, the area within the confines of the 610 Loop have been permitted to have higher levels of density than the rest of the city. But recent changes to city policies extend the higher density levels all the way to Beltway 8. “Those are rules that tell you what you can and can’t do, based on where you are on a map,” Festa said.
> Tax Increment Reinvestment Zones: The controversial tool allows certain areas within distinct boundaries to retain property tax revenue for uses within their borders. The word “zone” is right in the name.
> Airports: The Houston area has three major airports, and under federal rules, the communities around them are subject to zoning requirements. “It’s a good chunk of metropolitan Houston, and it’s flat out zoning,” Festa said.
> Buffering ordinance: New rules restrict tall buildings to “major activity centers” by limiting their height, set back requirements and construction styles.
> Historic preservation: Residents can ensure many types of building restrictions within their communities if they get enough votes to create a historic district.
> Lot sizes: City rules restrict lot sizes, but neighborhoods can petition for even tighter restrictions if they get the votes.
Another alternative that used to be popular in many American cities are coops. Instead of buying property you buy shares in a corporation which give you the right to occupy a unit. The large, low-rise apartment complex on Geary Blvd across the street from Japantown is a coop.
Regarding the effect of 99-year property leases on home prices, there's a condominium tower at 946 Stockton St/950 Washington St in Chinatown that has a 99-year ground lease (expiring in 2069, I believe).
Units in both developments regularly sell for a fraction (~ 1/3 to 1/2, IIRC) of comparable units in the area. You'd have to know the details of the shareholder rights (coop) or accession rights[1] (ground lease) to know how the prices compare to freeholds or rentals, but it shows how alternatives aren't new, just merely coming back into fashion.
[1] That is, whether ownership of the tower transfers to the landlord without any renumeration for the improvement; whether the condominium owners have a renewal option, etc.
The point of a land value tax is not to make housing more affordable, but to ensure land goes towards the most productive use. If LVT was implemented along with zoning reform, housing would indeed become far more affordable because lots of more housing would be built. But a government subsidy for lower income families to pay below market land rent is a very different policy and has none of the benefits of LVT.