The National Association of Realtors, in perfecting the idea of Rotarian Socialism, not only sanctified the criminal violation of the property rights of innocent people, it also robbed us of the highest and best uses we might have achieved with our real property…

by Greg Swann

Suburban Phoenix Real Estate Broker

Author website

Kicking this back up to the top because it fits so well with the recent posts from Al Lorenz and Doug Quance. –GSS

 
I’ve understood since I was 18 or so how real estate develops organically, in a truly free market, so I have known all my adult life how horribly the real estate market has been disrupted by the idiotic intrusions of Rotarian Socialism. It’s all about who can steal a few bucks by strong-arming his neighbors, and no one ever stops to wonder what gets mucked up in the process.

So: I said:

tell me in twenty-five words or fewer why relatively fungible non-commercial real estate should ever be thought of as an investment.

And Brian Brady said, in a comment to that post:

When it’s a 1-4 unit property, held for investment purposes.

Ten words. What am I missing?

What he’s missing is the definition of commercial real estate. If Brian owned 1-4 rental tuxedoes, should he call that his personal wardrobe? Just because the tax laws engender dumb distinctions, we don’t have to ignore reality, do we? Rental property — including a solitary rental house — is commercial real estate. It is owned in pursuit of profit, not as the residence of the owner.

So again:

tell me in twenty-five words or fewer why relatively fungible non-commercial real estate should ever be thought of as an investment.

The answer is that it should not. Hundreds of thousands of elderly people are going to suffer because — at the bidding of the National Association of Realtors — they took their eye off the ball. There is nothing rare about a tract home. If it gains in value ahead of other consumer goods, there has to be a cause — usually one that originates in the criminal use of force against people innocent of all wrong-doing.

As we have discussed, the precipitating cause of the real estate boom in the southwest was criminal land-use restrictions in the costal metroplex of Southern California. The land there is not inherently scarce, but governments made its development difficult or impossible, driving prices up faster than they would have gone otherwise. Investors falsely believed that their gains were demand-driven, so they took the boom to cities with abundant land and no significant land-use restrictions — Riverside County, Sacramento, Las Vegas, Phoenix, etc. — causing massive overbuilding in those markets.

If we had a truly free market in real estate — if government kept its nose out of private property issues, including transportation, and if taxes were zero or something very close to zero — ordinary housing would not gain or lose value any faster or slower than clothing or shoes or any other semi-durable utilitarian goods.

Away from significant historic and architect-built homes, and away from extremely non-fungible land like Malibu Beach or Camelback Mountain, housing should tend to lose value as it ages, with the move-up process into newer homes being a status symbol of the wealthy. This is the way things worked in all the cities of Europe and America prior to the twentieth century — when the NAR perfected Rotarian Socialism.

The interruption of this organic process of hand-me-down housing is the essential cause of homelessness, just as an illustration of how far-reaching are the consequences of the criminal use of force against innocent people. And, of course, almost all of us live in structures that are shoddy and widely-separated, with almost nothing of the kind of metropolitan urbanity we associate with cities that developed before governments criminalized commerce.

The fact that the once freedom-loving American people fell deeply in love with the use of force against innocent people is not solely the fault of the NAR, but you can bet those Babbits had their hands in the till every step of the way. Zoning makes our cities bland and stupid, but “free” roads make them ugly and unmanageable. We have strayed so far from the idea of capitalism — no matter how much we denounce the consequences of Rotarian Socialism under capitalism’s name — that we actually forget the first principle of capitalist enterprises: They must show a profit.

Since Rome, at least, roads have not been privately owned, but a profit-seeking road would not be built on a whim, as a politically-favorable connection between two equally-unprofitable farms, for instance. A profit-seeking road would surely serve many disparate profit-seeking purposes, perhaps so many that you might not identify it primarily as being a road. A real road is real estate, and access to goods and services and delivery of goods and services are all intermingled on what is, in fact, a full-blown linear bourse.

I am famously opposed to taxpayer-extorted mass-transit boondoggles, but these idiotic swindles only exist because the NAR and other Rotarian Socialists have so successfully made war on the ideas of freedom and private property. Do you see? If all real estate development has to show a profit, structures will be a lot more vertical and our footprint on the land will be a lot smaller. In that circumstance, virtually all personal transportation would be undertaken by the best mass transit system ever devised — cheap in capital costs, non-polluting and with salutary health benefits for every patron. What is it? It’s called walking — something that can now only be done in cities that were developed before governments started pushing innocent people around at gunpoint.

One of the things we love about the internet is that it connects people with incredibly arcane interests, but this is also a function that was once common in cities, before they were redrawn as vast collections of strip malls and wedding-cake houses by the NAR.

I could go on forever, but there’s no real point to it. We paved paradise to put up a parking lot, and we not only didn’t learn our lesson, we’re hell bent on sliding ever closer to full-blown totalitarianism. There is no one who has ever been to the Department of Motor Vehicles who can claim not to know what to expect when medical practitioners are enslaved. And yet off we go, like lemmings in lockstep, swearing to anyone who will listen that the smartest people we will ever know are going to take orders from morons with guns.

We live in horror of freedom, and we will stop at nothing to eradicate it from the earth. We will finally manage to build vertically when, like the Nazis and the Communists before us, the murdered bodies of our neighbors and friends, brothers and sisters, parents and children start to pile up. And in that light, it seems kind of silly of me to maunder about what might have been in real estate development.

But still… When you’re wandering through The City in London or through the Battery in New York or The Loop in Chicago, when you find yourself wondering why those old towns are so vibrant and vital and fun and why modern cities are so boring, so draining, so forgettable — the answer is the difference between freedom and force.

It took a hundred years for the NAR and its fellow Rotarian Socialists to screw up America, and, unfortunately, that’s a process that rages on apace. But if you could imagine our reversing course, it would probably take two or three centuries to undo all the damage. Everything could be so much better than it is — and we haven’t even talked about the compound-interest value of all the opportunity costs associated with systemic, epidemic criminality in government. But, for a start, everything could be so much better in real estate…