[cloverich]

Demand would still outstrip supply, so by what mechanism would selling be difficult or risky? It would modestly reduce prices, making it less expensive for all regular home owners. That's a win for everyone but (sfh) investors.

[kasey_junk]

Home builders are “investors” in sfh. So out of the gate you’ve got a problem with making the regulations more complicated to navigate. For the people creating supply.

Some of those homebuilders build because they can rent homes if they can’t be sold. Others build because they have large investors to sell to if necessary. All of them build with their financial models account for carry time, as carry costs are extremely important to their bottom line.

If the average carry time goes up even a little bit (and it will because investors close faster) that can make whole developments untenable.

[cloverich]

> So out of the gate you’ve got a problem with making the regulations more complicated to navigate.

Assuming the policy to reduce non-primary home ownership is tax based, carve out tax exceptions for home builders. Personally I would carve out exceptions for home flippers too, but could see that being more contentious. Either way though, this part of the problem would be, IMHO, trivial to solve.

> If the average carry time goes up even a little bit (and it will because investors close faster) that can make whole developments untenable. Others build because they have large investors to sell to if necessary.

I think that's fair. But conversely carry time is also high because prices are high, and investors drive up prices; builders also do this to an extent, by e.g. buying down points to avoid lowering prices, to keep the perceived price elevated. I have no illusions this is a simple problem to solve. The right question here is probably figuring out whether the overall supply going up by X increased rate because of investors will be worth the cost of the total homeownership rate being controlled by a shrinking proportion of the population (I would guess no).

My personal proposed solution here would be to kick out investors (tax policy), and also directly incentivize home builders selling to first time owners (via tax credits, comparable to e.g. EV tax credits). The latter would be quite expensive, but if the overall homeownership rate increases and home prices drop, it would likely be popular.

[kasey_junk]

Homeownership rates are not particularly out of band right now. They’ve kept within a couple of % points for the entire post ww2 era. They’ve kept within track almost exactly mortgage rates. They are higher they were 10 years ago for instance.

https://fred.stlouisfed.org/series/RHORUSQ156N

But note that’s not the same thing as housing affordability. You probably can goose the homeownership rate by appropriating a bunch of homes and redistributing them to the marginal buyers who are currently not owners.

But it will not drop the price of housing, it will increase it because supply will still be constrained (think of the normal case of someone moving temporarily for work. If you disincentivize them being allowed to rent the unit out you now have 2 units off the market).

Carry cost is mostly about financing costs and regulations not the price of homes.

[tptacek]

Tax incentives for first-time home buyers are enormously regressive. You're operating from a presumption that everybody intends to buy a house (see upthread), but that's not true, and it gets less true as you go down the income ladder. Owning a home comes with huge downside risk, added expense, and loss of flexibility.