Fixed-Rate Mortgages Are Rent Control for Homeoweners

Jiro

High willingness to pay is not "best use" because money is worth more to some people than to other people.

ungreased0675

Surprisingly balanced take on such a contentious issue. Thanks for sharing.

barchar

I mean homeownership (with the intent to occupy the home yourself) causes this misallocation by itself. The proper policy remedy would be to prohibit people from owning their own home until it was a very small portion of their net worth. I think this policy has been crafted in a lab to have both very few financial losers and yet make literally everyone mad.

ebiederm

California has another distortion. The property value for tax purposes does not change unless you sell. In many other states there is the lesser distortion of property valuearions for tax purposes not being allowed to go up faster than a roughly fized rate. Something like 3% a year. At a practical level I wonder if limiting how much rents can increase from year to year would be a better policy, than not letting rent levels change at all. Then there is the question of how to encourage home construction so there is sufficient supply where there is demand for people to live.