How You Calculate The True Value Of A 'house'

[Authoritarian]

or a lifetime of debt slavery?

can't argue that banks are extremely useful if you need credit - but when you need credit because it's available?

The bank ARE the landlords, and are providing a similarly insidious "service"

The services they provide are quite different. One is providing you with land and the other is providing you with credit.

In terms of parastic activity the land owner wins hands down, it would be much cheaper for all concerned if they simply went away and stopped performing their work because their work consists of collecting the rental value for a fixed location.

The same cannot be said for bankers, their services are vital for a modern capitalist economy.

Edited June 2, 2009 by chefdave

[lowrentyieldmakessense(honest!)]

The services they provide are quite different. One is providing you with land and the other is providing you with credit.

In terms of parastic activity the land owner wins hands down, it would be much cheaper for all concerned if they simply went away and stopped performing their work because their work consists of collecting the rental value for a fixed location.

The same cannot be said for bankers, their services are vital for a modern capitalist economy.

you are taking the piss arent you

sometimes the bank of england directors speak the truth

The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit.

Sir Josiah Stamp, director of the Bank of England

Edited June 2, 2009 by lowrentyieldmakessense(honest!)

[Sunderthine]

The services they provide are quite different. One is providing you with land and the other is providing you with credit.

In terms of parastic activity the land owner wins hands down, it would be much cheaper for all concerned if they simply went away and stopped performing their work. The same cannot be said for bankers, their services are vital for a modern capitalist economy.

Can't argue with anything there.

Both land owners and banks, however, restrict access to housing - by legally mandated theft in the case of landlords, or usury the banks. They make occupying a dwelling more expensive and more difficult.

[XswampyX]

Imagine two towns. Both are of a similar size have a similar number of inhabitants and their buildings are made identically using the same materials. The only difference between these two locations is that town number 1 has a bank.

Town number 1 has a thriving market economy a well maintained infrastructure and useful public services which among other things keeps the area clean and the population healthy. Everybody has a job and works 50hrs a week to pay rent/mortgage/tax. They have everything they want, but no time to enjoy any of it because they are trying to get the upper hand over everbody else. If you want to buy a house it will cost 150,000 cash, but over 25 years will cost you 300,000. The bankers and government are very happy.

Town number 2 on the other hand has no bank, poor infractructure in comparison coupled with a depressed economy. If you want to buy a house it will cost you £30,000 cash. The people who live here are very happy. They use the 270,000 saved to buy town number 1 when it goes broke.

Depsite the fact that the buildings are identical the price of housing in town 1 is considerably higher that in town 2, this reflects the respective prosperity of both locations. Town number 1 has the ability to produce more and so on average their occupants are richer in a real material sense than their counterparts, but they are ultimately loosers in life and envy everybody.

http://en.wikipedia.org/wiki/Seven_Deadly_Sins

Hmmm town 1 or 2 ?

[Stars]

Can't argue with anything there.

Both land owners and banks, however, restrict access to housing - by legally mandated theft in the case of landlords, or usury the banks. They make occupying a dwelling more expensive and more difficult.

People appear to need the credit to the degree they do because their natural rights have been stolen and they have to buy them back in a market in competition with others; because not borrowing means you cannot buy your rights back and borrowing means you may be able to buy up other people's rights and sell them back to them. It is important however to separate one thing from another; your natural rights are not owned by others BECAUSE of the availability of credit.

[Injin]

Not that's not what i said

In as far as they charge for the land, they charge for providing nothing to anyone.

No one charges anyone else for land.

[XswampyX]

Town number 2 has lower wages - in fact the house prices and rent will (more or less) track this; so the lower economic opportunity means that workers in town 2 are just as 'under the thumb' as town 1

You could be right, but town 1 works 10x as hard as town 2.

[Stars]

you are taking the piss arent you

sometimes the bank of england directors speak the truth

You trust this guy?

It's substantially BS with a little grain of truth, designed to distract you from the actual source of the elite's lifeblood.

You will run at the banking system and demand changes, these changes will not have the substantially liberating effect you envisage and you will roll up, and give in and look no further.

Like a bullfighter holding a red flag, the elites will have baffled you.

Edited June 2, 2009 by Stars

[lowrentyieldmakessense(honest!)]

You trust this guy?

It's substantially BS with a little grain of truth, designed to distract you from the actual source of the elite's lifeblood.

You will run at the banking system and demand changes, these changes will not have the substantially liberating effect you envisage and you will roll up, and give in and look no further.

Like a bullfighter holding a red flag, the elites will have baffled you.

yeah right

[Bloo Loo]

Good point but with undertones of Karl Marx and Pierre Proudhon.

So how do you see it Bloo?

let me stroke my beard a bit before I reply.

[Bloo Loo]

Not necessarily, there is just less economic opportunity and less production

and the people of town 1 borrow to buy up the bargains in town 2.

town 2 becomes desolate as people in town 2 move to town 1 looking for work, as the second home owners dont buy anything or help the economy for weeks at a time.

[Authoritarian]

so you want a land tax

I would prefer no tax, but then again I would also prefer Jennifer Aniston as my gf.

I'm a realist.

[Stars]

how do banks add value

By increasing economic flexibility

For instance, someone not need gather all the resources they need before building a bridge

target the landowners

Why do some people own the earth; did they provide it?

[lowrentyieldmakessense(honest!)]

By increasing economic flexibility

For instance, someone not need gather all the resources they need before building a bridge

Why do some people own the earth; did they provide it?

they paid for it with savings

you go down the route of not protecting property rights and you are on the road to ruin

unless you live on a commune

[lowrentyieldmakessense(honest!)]

By increasing economic flexibility

For instance, someone not need gather all the resources they need before building a bridge

true

to an extent

but they do it with money they create

[XswampyX]

how do banks add value

They get you, via the interest on the loan you took out, to make another loan to pay for a swimming pool & tennis courts, that you will never use because you are always working. This will push up your local housing costs. So you pay for it twice, and somebody else pays for it once. The bank has paid for nothing!

[Sunderthine]

how do banks add value

target the landowners

Banks make sophisticated exogenous trade more accessible to town 1 at a cost.

If the cost to involved parties is less than the wealth they can generate from the trade, the bank has added value.

edit: How grotesque - "wealth" "trade" "value" - the things this place does to you...

Edited June 2, 2009 by Sunderthine

[Authoritarian]

how do banks add value

In many ways, but I was strictly talking about the way a business such as a bank adds value to the land around it. Towns with banks are more efficient and this will have a knock on effect upon local house prices. Landowners in effect receive a small windfall as the location which they own a stake in becomes more attractive.

target the landowners

Land and capital are two completely different entities, I was careful to seperate them in the OP. Capital = tools, these should be privately owned.

Edited June 2, 2009 by chefdave

[lowrentyieldmakessense(honest!)]

In many ways, but I was strictly talking about the way a business such as a bank adds value to the land around it. Towns with banks are more efficient this will have a knock on effect upon local house prices. Landowners in effect receive a small windfall as the location which they own a stake in becomes more attractive.

Land and capital are two completely seperate entities, I was careful to seperate the then in the OP. Capital = tools, these should be privately owned.

so you want land owned by the state

the banks just add debt - it is the business owners who add the value

[Stars]

they paid for it with savings

They paid somebody who (again) didn't provide the land..

And so on..

The entire chain of owners provided nothing to anyone.

So what is the reason for their special status again?

you go down the route of not protecting property rights and you are on the road to ruin

I absolutely believe in protecting property rights

Land ownership is in direct logical contradiction to universal held property rights, just as slavery is.

Edited June 2, 2009 by Stars

[economiccycle]

I would imagine the economic value of a house is calculated in the same way as the market value of a company is calculated.

In the case of a company it is the present value of the dividend payments discounted at the interest rate depending on the riskiness of this company.

It is the same think as a government gilt the price of a gilt is based on the present value of the future interest payments .

Obviously using a lower discount rate

To calculate the “economic value†of a house I would want to use the same principle.

So as a formula I would write it as

Annual net Rent / (discount rate appropriate for property - expected annual growth in rental income)

If I assumed that rents normally grow by 4.5% per annum and that the net rental yield is 5%.

Then if the appropriate discount rate is 9.5% the economic value of a house would equal its market value.

Higher than this and the economic value of a house is below its market value , lower and the economic value is higher than its market value.

[Sunderthine]

They paid somebody who (again) didn't provide the land..

And so on..

The entire chain of owners provided nothing to anyone.

So what is the reason for their special status again?

I absolutely believe in protecting property rights

Land ownership is in direct logical contradiction to universal held property rights, just as slavery is.

+1 with nobs hanging from their chandeliers

[Injin]

They paid somebody who (again) didn't provide the land..

And so on..

The entire chain of owners provided nothing to anyone.

So what is the reason for their special status again?

I absolutely believe in protecting property rights

Land ownership is in direct logical contradiction to universal held property rights, just as slavery is.

You can have a system of property ownership without land ownership, we've done this before.

If you think that those who built a house provided nothing at all you need your bumps felt.

Massively overpriced due to lunatic statist constraints, yes. Nothing provided at all, no.

[Sunderthine]

You can have a system of property ownership without land ownership, we've done this before.

If you think that those who built a house provided nothing at all you need your bumps felt.

Massively overpriced due to lunatic statist constraints, yes. Nothing provided at all, no.

Of course the house / shed / water tower is valuable, and those who invested labour and capital in it should get something in return. I think (hope) that is a given on this thread - the land's the issue.

Unfortunately some have been brainwashed to believe the two are inextricably linked

[Stars]

so you want land owned by the state

Certainly not