[bufordsharkley]

Even if prices are stable, what makes it the case that the system works so well for those who own land and creates such problems for those who are landless?

We take it for granted that renting is just a form of having your money stolen by landowners, without realizing that this is a choice we make: we could just as easily administer the market so that absentee ownership ceases to be a smart bet.

[anon192831]

Korea has a different system where they don't pay rent, but they pay what's called jeonse (jun-sae). You pay about 33-50-60% the value of the property and live rent free for 2 years. At the end of the 2 years, you get your lump sum back.

The idea is that the landlord makes their money by investing the lump sum, though there seems to be risks where the landlord is unable the cough up the money at the end of the term and needs to find someone else to cough up jeonse money to pay back the original tenants.

Of course many tenants can't come up with 33% of a property, so they are also taking out a loan to come up with the money and making payments on that money to which essentially comes out to rent, but significantly cheaper.

It does seem that rent is becoming far more common in Korea now, so jeonse may be on its way out, but it is a different system, can't say that it's better or worse.

[Spooky23]

We did that with the American dream of suburban home ownership, which broke the bad old landlords and tenements.

Prices are wacky because the market is wacky. We subsidize loans, subsidize unprofitable commercial property via taxes, restrict supply of higher density housing and set a price floor for housing with subsidy programs like section 8.

[briandear]

> administer the market

That’s a scary idea. There are massive unintended consequences to such a strategy of reducing the benefits of “absentee” ownership. Almost every private rental property in existence is the result of absentee ownership. A move to disrupt that would result in a dramatically reduced supply of rental properties. Not everyone has the resources, credit or responsibility to own their own home. The financial crisis of 2008 was trigger by a whole bunch of people buying when they shouldn’t have. The places where people try to “administer” the market either through aggressive regulation or capping rents through rent control have the most inefficient and expensive markets.

[bufordsharkley]

It's interesting that you jump to "aggressive regulation" or "rent control" instead of the solution that has close to full consensus from the economic profession: https://en.wikipedia.org/wiki/Land_value_tax

[scythe]

LVT is a good policy but it doesn't make land ownership a bad investment. It just tends to decrease the price of land, which is not usually a problem because land is not produced by people, unlike other securities.

[bufordsharkley]

The reason that land is a good investment is precisely because of future land rents that a land buyer expects to receive.

If these land rents are instead paid towards a tax, how wouldn't this make land less of a good investment?