Genuine Question, why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property (which would likely be distributed back to the locality, specifics not important), apply the same rules we do for pass-through taxation to mitigate loopholes, and automatically charge this elevated rate for properties owned by non-natural persons? I think this would just price in the externalities of corporate versus natural person living in a property for a locality.
Or maybe it's a tiered system. W/e.
On a related note, does anyone have anecdotal stories about the efficacy of Georgist tax policies?
> Genuine Question, why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property (which would likely be distributed back to the locality, specifics not important)
I am that person.
I own two duplexes in addition to my primary residence, for a total of four residential rental units – all 2/1s made up of ~750 sq ft each. Those additional properties that I own provide housing to 6 humans who can't purchase, or just prefer not to.
What you're proposing would result in one of two moves from my end:
1. I sell both properties and let someone/some entity (who doesn't work and/or manage the properties themselves, have any relationship with the tenants, will push rents to market prices immediately, etc etc) deal with it.
2. I scrape the lots, stand up single family homes, take my gains and walk inside ~18 months. That puts the 6 humans mentioned above out into a (very tight, <= 1% vacancy rate) rental market that'll bump their monthly rent expense by ~25% minimum and, overall, very likely reduce the headcount of humans housed.
Either way, it's a high level hit to individuals, the market, whatever. It doesn't result in any gains or economic corrections to the RE market.
> (which would likely be distributed back to the locality, specifics not important)
That's already happening in my scenario. I own & operate a General Contractor LLC entity that issues invoices to me, the property owner. The local city, county, and state are paid B&O, sales, etc taxes on those GC LLC invoices out of my personal pocket. Separately, my personal rental income is taxed appropriately at the federal level.
> I think this would just price in the externalities of corporate versus natural person living in a property for a locality.
You know what else can be priced in? Or wildly swing a market into affordability, normality, etc? Letting people build things. My lots are massive, but they consist of sheds and lawns instead of multiplying my units and housing more people.
It's impossible in my local market, and that's why it's carrying the <= 1% residential vacancy rate it has for 15+ years, and why rents are increasing at wild rates that no industry/job market inside 80 miles can support. Economics 101 says supply vs demand etc etc. Easy layups for anyone with half a brain. We don't have to modify anything outside of city/county zoning & the ability to infill everywhere.
Fellow housing provider here. To your point about scraping the lots and building SFHs, I would counter the solution to that is to outlaw zoning for SFHs for tear downs. Raw land, go for it. But if a structure stood on a parcel, you can only increase density when rebuilding and upzone. This also potentially avoids situations like Naperville, Illinois, where you have a housing shortage at the same time obscenely wealthy folks tear down older modest homes to build McMansions to the lot lines.
That would be a bad idea because the problem isnt the need to increase density, that is obvious and wanted by nearly everybody building. The provlem is the zoning often limits lot coverage to one or two units and some percentage less than 50 % coverage. You dont jave to be a dick to the one guy in the hundred building that wants a small single family and lots of land, you need to let the other 99 act in their own self interest and build much higher density with a much jigher unit count.
My suggestion does not prevent a SFH and lots of land entirely, only if an existing structure was torn down to make way for it. You can still buy an existing SFH, or build one on vacant land. You simply can’t replace an existing SFH or multi family with another SFH. Density line only go up.
Yes, that's a good summary of the bad idea. Again, this is a bad idea because it discriminates against one tiny sliver of the resale market (those that want to buy old houses because they like the area the land is in and tear down the house to build a new one). It's not going to work. What you are going to cause is that tiny sliver of people to say "ok, how much do I have to keep to call this a reno and get it through the system?" and then keep that minimum. You are also going to cause an expansion of the government to deal with this new level of regulation, increasing everyone's costs and making us worse off for no discernible benefit because this deals with a part of the new house pipeline that isn't the problem.
The problem is that in most of these place no matter what one does one is still stuck with low lot coverage and low allowable unit numbers (i.e. in my city the overwhelming majority of residential tops out at 45% lot coverage, 15 meter heights, and one unit maximum (a small chunk of the overwhelming majority zoned this way allows 2 units in a restrictive manner as either garden/over garage or basement suite). So instead of wasting resources increasing regulation, the solution is to decrease regulation. rezone all this stupid stuff to allow much higher lot coverage, height and unit count and then approve everything that fits in the zoning in a short period of time rather than dragging it out for months and months through bureaucracy. You get smaller, cheaper government (big win), faster development of the available land (huge win) and you refocus the large contingent of businesses currently focused on buying old single family in places zoned for 2 units, subdividing and building two units onto building much bigger, higher density things like multi unit walkups in the same space raising the unit count from the current max 2 units to 4-10 units on the same piece of land. This will solve most of the problems while giving people the freedom to do what they want (but the incentive to do what is best for society) vs decreasing freedom for no benefit and moderate harm.
To be honest, I don’t really care about the one guy who can afford to buy a run down house in a nice downtown area just to level it and rebuild a $3-5M modern travesty.
Parent here, sorry for taking so long to get back and thanks for such a thorough answer.
I’ll start off by agreeing that supply is the primary issue. If I had to choose between increasing supply and fucking with tax incentives, I choose increasing supply 100/100 times.
However, you’re approaching this solely from the perspective of existing multi home owner.
(The following is directed both at you, but also the other dozen comments making similar points).
The entire point of this change would be to drive prices down. Because carrying this inventory is more expensive. Rent is dictated by what renters are willing to pay, not by your property taxes. What you're willing to pay is driven down by the increased cost of ownership. This leads to more owner occupied lots.
Your third option that you didn’t mention is that you sell the duplexes to one of the renters or someone looking to buy their first home and rent the other half (who now have an advantage over serial investors, and prices are lower) and you can utilize the cash from your sale to invest in other assets that don’t carry as many negative externalities to be invested in as speculative assets (I can’t buy a fucking house!!!!!!!). This is also Economics 101.
But to be clear, 3-4x property tax is too high, it would make more sense in the 20% up to 300% and scales the more you own. Also let’s just build.
The problem is not that rents are too low and sales prices are too high, which might make it appropriate to punish renting a unit and force landlords to sell. The problem is too few of both rental and ownership units.
I see this point oft repeated, usually as a shut-down for the above arguments. But i also see people claiming the complete opposite for their localities (that there are many many extra vacant homes being held than people that need them). It seems like the initial wave of arguments cited tons of statistics but over the months we've just stopped doing that for some reason as everyone's opinions have crystallized.
Stating such a strong assertion should still require at least a link
I think the best person who explains housing trends is Kevin Erdmann. This article provides an overview of his conceptual model for why prices fell nationwide in the Great Recession (people with bad credit were prohibited from getting a mortgage), why both prices and rents have been increasing since the Great Recession (when the Fed reduced prices too low, the construction industry collapsed), and why it is a mistake to attack build-to-rent landlords (they are a major source of new supply today). https://www.mercatus.org/research/policy-briefs/getting-corp...
There are plenty of ownership units in my state. They are just owned as second homes by people who don't live here. 80k of them sit vacant most of the year. There's only 6k homeless people in the state.
> Easy layups for anyone with half a brain. We don't have to modify anything outside of city/county zoning & the ability to infill everywhere.
Right, that's why we'd both want to allow infill everywhere, and ensure market effects can be realized by simultaneously discouraging property vampires who've got an inflated sense of service to their community—however generous they may think they are—from capturing any/all new homes built with the gains they got from already milking the constrained housing market or being the wealthiest generation; it takes a long time to cool down the ocean.
A set of policies that would enable much more to be built on what were previously lower density lots, that people who were previously priced out have a realistic opportunity to access, and as well constrain the ability for individuals to capitalize on raw surplus ownership. Building more doesn't work if people with modest salaries and families can't even dream of buying or renting the new units, but also things don't get built if there isn't some kind of incentive to do so, and there's a lot of potential for nuance in how policy makers should go about doing that. However it works out though, it shouldn't favor those who show up and threaten to make people homeless as soon as their personal fiefdom seems jeopardized.
On top of those hypothetical policies, protections against displacement of renters seem pretty crucial, in terms of redevelopment of land and letting people move back in, as well as against just arbitrarily selling one's property and tossing your tenants to the wind or leveling their home.
When the real solution is obvious and the proposals are nowhere near it, the game at play isn't to solve the problem:
Remarket collectivist expropriation with some gen-z friendly word salad and backfill details on how this solves ____.
The paradox, to me, is that the set of people pushing for redistribution is almost entirely disjoint from the set of people responsible for creation of the thigns to-be-redistributed. One would think the skill set needed for the latter would make them exceptionally suited for the former, yet here we are.
If we assume that there is no way around this, and the options you suggest are the only options available. Actually, for the sake of argument, let’s further assume that the only option is the worse option. Razing and putting SFH instead.
That still doesn’t mean anything. Nearly any action, private, public, regulatory, or otherwise, will always have impacts that are on their own negative. The real question is how common your scenario is and as a result how do the negatives weigh against the benefits of the action.
Just replace property tax with a land tax and most of your concerns will be handled. Any land upgrade (like buildings) should not affect the tax from owning a property.
Also I think that although rental cost may increase (but it's unlikely as individual rentals will be much more down to earth than those operated by a corporation that's driven only by quarterly earnings), the buying should be much more affordable.
Or the recreational properties. My 2 bedroom 80+ year old cabin that isn't fit for winter season gets used every weekend in the summer for 4 months but counts as vacant for my province, mevermind that it is W hours from any major non agricultural employment opportunitiesx
I would venture a guess you've never owned a property to conflate "empty second home" with that "free housing for homeless" insinuation, as if those two concepts are in any way related.
Pretty sure that housing isn't the only place where you see redistribution as the solution though, that pattern always holds strong.
Homeless people make up about .2% of the US, so multiplied by 10 and that's 2%. If your country only has 1.02 people's worth of food per person, that's more of a shortage than a distribution problem. The same goes for housing.
What's the reason that, with office occupancies down in so many places, there isn't a big push for conversion of commercial zoning to residential multi-family? Incentive programs to reward converting vacant spaces? Penalty taxes for holding vacant office space instead of selling it to someone who will figure out something to do with it?
Why is everyone (ok, fine, mostly economics & tech people) convinced this is such a wildly viable slam dunk of an idea?
Have y'all ever opened up a wall before and seen the electrical, plumbing, etc mechanical bits that make up a home? Any idea of what it'd cost to chop up that office space and feed every individual piece the necessary bits?
It's outrageous that we're even talking about this idea still. It'd require wildddddd tax advantages & federal spends in order to execute on it in any sense of the overarching idea.
But where do you need to live? 237 cities does not mean "very special places".
See (hours fresh article):
> A Thursday report from Zillow indicates that a typical starter home is now worth $1 million or more in 237 cities, up from 84 cities in 2019, underscoring America’s ongoing home affordability crisis
You don't "need" to live anywhere in particular. Many of those 237 cities are part of larger high-cost metro areas.
Move to the Columbus, OH area (or something like that). There are plenty of affordable homes for sale there. Or buy cheap vacant land and build whatever you want. The unemployment rate is low so it's not hard to find a job. Some people are just too picky about location and only want to complain or find excuses instead of doing something to improve their situation.
> What's the reason that, with office occupancies down in so many places, there isn't a big push for conversion of commercial zoning to residential multi-family?
Zoning simply doesn't allow for that in the overwhelming majority of places.
> Incentive programs to reward converting vacant spaces?
How about making it legal first?
> Penalty taxes for holding vacant office space instead of selling it to someone who will figure out something to do with it?
Or just have land value taxation.
All of those things simply miss the underlying structural issues. We know the structural issue. People need to stop thinking in these 'could we do this little micro adjustment, or this little micro adjustment' as if that solves anything.
We know how to solve this, its not really up for debate. Endlessly arguing about micro-optimization. Its like in IT when people argue about some minor optimization in the compiler when their are 100x more blocked by IO.
> why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property
Trivially worked around. Use an LLC. Have it bought in a relative’s name. Have it bought in a rando’s name with a bulletproof lease with a $1 rent-to-own option at its termination.
Essentially, the property registry system becomes a farce. (You see this, for example, in India.) Simpler: a straight wealth tax that funds first time homebuyer incentives.
We could require more disclosures and auditing and regulations of those workarounds. It's not some digital thing that could be hidden anywhere, it's trivially easy to monitor or seize real property.
> it's trivially easy to monitor or seize real property
Anyone who owns property should be horrified at the notion of making it “trivially easy” to seize real property. That turns this into electoral toast. Its only utility is in distracting from zoning reform.
Also, the homeownership rate is 65% [1]. Second homeowners aren’t the problem.
Trivially easy refers to the physical act: show up with force. Not that it should be any more "trivially easy" to crack down on than, say, tax evasion - that is, you'd still have courts, etc. But don't act horrified at that. Eminent domain has been used many times in the US, it's not a novel concept. Foreclosure is also state-sanctioned and common.
But there are SIGNIFICANT interests who want to horde real property anonymously. "Fixing zoning" is not a solution to the problems that causes. The large-landlord/acquire-and-leave-vacant-waiting-for-appreciation interests are the very same interests that would BENEFIT from less zoning restrictions and the Manhattanization of more places, and corresponding increase in real property values per sqft of land. But the reason we don't make ownership of property more clear, or crack down on hording, is because those interests don't want us to.
"Simpler: a straight wealth tax that funds first time homebuyer incentives." - so we've got more inflation of property prices through financial incentives but actually let's not bother because guess who ALSO doesn't want a "straight wealth tax!" (And, of course, taxes aren't wildly worked around in this country anyway.)
> (Also, homeownership is 65% [1]. Second homeowners aren’t the problem.)
Is there a breakdown on what portion of this 65% own multiple homes? Personally, I’m not a fan of anyone who has more than 2 homes. One primary and one vacation or rental. Why does anyone need more than that?
Some people are professional small landlords. It’s an incredibly valuable service for people who don’t want the headache of home maintenance, and there are very significant economies of scale - 1 unit is generally not worth doing unless you really enjoy diy.
This could be improved by changing the criterion: an actual human needs to be registered as living in that house and live there. LLCs, trusts, and other entities don’t count.
If people want to split their time, fine, let them have as many houses as they want, declare what fraction of their time is spent in each one, and get that fractional credit for each one.
Worried about a couple taking the credit for each person separately? Fine, make the credit only reduce a fixed amount of tax per person — that $200M fancy house doesn’t get all of the tax waived just because one human is in it.
> an actual human needs to be registered as living in that house and live there
Relatives. Again, these measures have been implemented across the world. Miraculously, nobody owns two homes.
In cities, where competition for land is fiercest, I would further fully expect the tax to be borne by tenants. Because nothing was fundamentally fixed about the supply-demand mismatch.
Did you read the second half of my comment? If each human only gets to reduce tax on, say $500k of residence, then relatives are of limited value for abusing the system. And some of those relatives may prefer to claim their exemption on their own homes…
This is a progressive property-tax system. It works because it avoids counting houses. (It's different because houses are discrete. Housing value is not. Dividing discrete assets is trivial. Dividing continuous ones is not.)
I personally think that progressive taxes and benefits can be quite reasonable, as long as they’re kept simple and non-discriminatory. As soon as the designs start to get clever and, say, phase benefits out with increasing wealth or income, they break down quickly.
Medicaid would be an example of getting it very, very wrong.
Things are only "trivially worked around" if we let them be.
There is a concept you don't seem to be familiar with called "beneficial ownership". What this means is that if an LLC buys a house, a lot of jurisdictions require the "beneficial owner" to be known and to be taxed accordingly. The beneficial owner may not be on public records (the LLC will be) but the tax authorities will know.
Some jurisdictions don't do this or don't enforce it, which is a big part of why the London property market is the money laundering capital of the world [1].
So what would I like to see?
1. Eliminate the Mortgage Interest TAx Deduction. It's giving money to the wealthy;
2. Increase property taxes for any property owned by an LLC;
3. Require a beneficial owner to be recorded and maintained with tax authorities;
4. Treat any benefical owner or owner of any property in the state to be a tax resident of that state, which means their worldwide income is subject to the income taxes of that state;
5. In any sufficiently dense population area, single family housing ("SFH") zoning should be illegal;
6. A return to multi-family units as this is a class of housing that used to be really common but is now exceptionally rare. I'm fine with landlords to the extent that the landlord lives in the same property and suffers the same externalities from their tenant as their neighbours do. This includes AirBnB too;
7. Higher property taxes for SFHs that don't have an auxillary dwelling unit ("ADU") in any area where the median rent is above some threshold of the median income;
8. Do what Texas does with property taxes for Seniors: you can defer them until your death if you don't want to move. Otherwise you should downsize. We want to do the opposite of what California did with Prop 13 and pass massive tax breaks to Disney and wealthy landowners under the guise of "not kicking seniors out of their homes". In case you didn't know, the tax rate for Disneyland has basically remained unchanged since the 1960s thanks for Prop 13.
> concept you don't seem to be familiar with called "beneficial ownership"
I own one house, my spouse the next, my mom the next and then we do kids.
Your other ideas are much better. Were I a NIMBY politician, I’d distract from them with this tax idea. (As a Wyoming homeowner I positively love No. 4. Presently, I pay taxes when owed in every state I work in.)
> 1. Eliminate the Mortgage Interest TAx Deduction. It's giving money to the wealthy;
That's literally the most popular deduction in USA; with home ownership rate of ~ 66%t by construction this covers more than half of the income distribution (ie not just "the wealthy" boogeyman)
And the MLS system is entirely voluntary and seemingly not updated timely, but it also doesn't include the secondary market, you know those pale skinny guys in the TV ads with dead eyes saying they'll buy any house no matter the condition. And there is a lot of secondary going on, probably more than the normal RE market.
> don’t see how those are trivially worked around in a country with a half decent government
Look at how people abuse rent controlled apartments. (All the way up to the current mayor.)
> People are not just going to give their relatives title to their property
This is literally what happens in places with such taxes. I wouldn’t bat an eye buying a house in my partner or a parent’s name if it saved 3x property taxes.
> I wouldn’t bat an eye buying a house in my partner or a parent’s name if it saved 3x property taxes.
That sounds like the policy had the desired effect. I.e home ownership is spread out across many people.
Those people cannot then own properties without being subject to those extra taxes. They'd be giving something up to help you, so would presumably benefiting somehow from your scheme.
I’m sick of rent control being vilified. If you’re not going to build more then you definitely need it. I’ve had my rent go up as much as 20%, forcing me to move on more than one occasion. If Prop 13 keeps the grandma in their home, then why can’t I have rent control that lets me stay put and provide stability?
Landlords will do the absolute minimum for repairs anyway, rent control or not.
Rent controls is universally considered a stupid idea, the only reason why it continues to exist for the benfits of the political class that leverage votes out of it.
Handing out subsidy checks for the same amount accomplishes the same thing without the deadweight loss of people getting locked in aparments that economically prohibitve to keep habitable , or the units stay vacant for the same reason (see NYC).
Even government run HUD aparments end up with the same problem, given the exact same economics.
> Rent controls is universally considered a stupid idea, the only reason why it continues to exist for the benfits of the political class that leverage votes out of it. Handing out subsidy checks for the same amount accomplishes the same thing
Fine, if subsidy checks then it’s subsidy checks. But subsidies or handouts will never work in the current political climate because it is “handouts for the poor”. So I don’t necessarily blame them for going this route.
All I am saying is that uncapped rent increases has put me at a major disadvantage, because every time I hope to save and buy for a house my rent jumps substantially and I find myself back to square one. I’m making progress toward that down payment sum, but the cost of moving + paying higher rent has made this a struggle.
Homeowners enjoy(ed) a lot of government perks - the GI bill spurred construction, property taxes are capped, interest can be a tax deduction. Renters get absolutely nothing, and 40% (vs 60% homeowners) is a non-trivial amount. Why can’t I have any protections or programs that help me save a bit more so I can actually be a homeowner?
Even the downvotes to my previous post seem to indicate that nobody really cares about renters - and I’m caught in this weird middle where I make too much to not qualify for subsidized housing and I make too little to save at a cadence where I can catch up with home appreciation and bidding wars. Now, I’ve to deal with bidding wars a renter too - it’s not the norm yet but I have certainly run into it. What the hell am I supposed to do?!?
> Saying that tracking who is the legal owner and beneficiary of a property is tough.
That doesn’t pass the sniff test - the legal owner has to pay property taxes so why can’t they track it that way? If it’s a trust then it’s the beneficiaries that are the owners.
In the absence of rent control i can see landlords just forwarding the cost of taxes, but that’s where I’m a huge proponent of it. Discourage investing in homes unless you really have the capital
> the legal owner has to pay property taxes so why can’t they track it that way
...the legal owner would pay the property tax. The beneficial owner/controller would reimburse them.
> In the absence of rent control i can see landlords just forwarding the cost of taxes, but that’s where I’m a huge proponent of it. Discourage investing in homes unless you really have the capital
This reminds me of the effect of squatters' rights on rents. It discourages property owners becoming landlords.
You're increasing the cost of owning rental property while lowering its yield. What do you think will happen? Why not offer a tax deduction for landlords voluntarily submitting their properties to rent control, similar to conservation easements?
> It discourages property owners becoming landlords.
But that’s a good thing, no? I’d much rather they sell, instead of hoarding property.
And as for the tax deductions, why should homeowners get even more help from the government? Property tax is capped, homes appreciate like crazy, and there are already tax deduction in place. From where I’m standing, homeowners are sitting pretty with their mortgage being at an all time low. It is awful being a renter and having no idea if my landlord intends to jack up rent and having me wonder if it’s worth it to move.
That being said, I do understand that there’s a fine balance - like if there are no landlords, someone who isn’t ready to find a house won’t have a place to live. Maybe we should put controls in place on who can buy a house - foreigners and corporations shouldn’t, for example. That should counter people doing all-cash offers for above asking.
It would be simpler to charge a property tax on every property and provide a tax credit to every individual based on the average property tax collected. I think it would be more robust against people trying to find loopholes.
That would also be more fair to renters. Much of the tax charged to commercial landlords would likely be passed on to their tenants. Providing renters with the same tax credit as home owners will offset that effect.
There’s nothing inherently wrong with people owning multiple properties. It’s not even a significant driver of the housing shortage. The main driver of the housing shortage is local zoning codes that forbid the construction of new homes, especially multi-family housing.
Not everyone wants to be a homeowner or will have the means to purchase one even with additional incentives, and the increased property taxes are going to be passed to renters. Also, if you intend on purchasing a place to live, you're unlikely to purchase a place that requires a lot of renovations. Disincentivizing investors means fewer of these homes will be our purchased and some will even degrade to an unrepairable state, which further reduces housing supply, which makes it more expensive in the long run.
People want to come up with all kinds of reasons to poo poo this… but it really is what needs to be done to start improving things. In CA, owner occupied homes get a minuscule reduction in their property tax. Same mechanism can be used
Because if we limit each individual to have only one home it could cause traffic issues in certain cities.
Something like 60% of the homes in my area don't have people living in them and the traffic can be as bad as 25 minutes for 1 mile of driving. This would have to be a state/city level decision.
Personally it seems like the decision of an officer for how many homes a single person can manage. IE if you are getting hired for a specific salary they already know how many homes you are going to own over your lifetime.
I wish the system actually tried to solve problems with well thought out solutions.
To answer your question: politicians don’t want to piss off the wealthy class. Americans at large are skeptical of taxes because they don’t see it being used for anything useful.
This is solvable. If a trust owns the property, default to the highest tax rate. The trustee is then responsible for providing proof of the beneficial owner(s) if they want the "discount" rate.
This is basically how income tax law works for trusts. The highest tax bracket is reached very quickly to quash the first order shenanigans that might result from more preferential treatment
Not sure how it's down there, but my understanding is even if we have housing crisis, legislations that would actually bring down the housing prices is also bad for us. RE market is about 10%+ of the entire GDP, so we want individuals to park their money and use it as an investment vehicle as a part of the consumption cycle. Combine it with "i'll just buy it for my child/spouse/mom/dad" and so on, it's not really that easy to implement either.
> legislations that would actually bring down the housing prices is also bad for us
Then perhaps we should make a 20 year rollout plan to help us adjust; but, individuals being able to live in a location for a consistent price and other improved social safety nets are a net positive for society and government is supposed to work *for* society as a whole, not just the elites
I’m a renter, and I would love that. That being said, majority of people in North America own their homes. Since looking at your property as an investment has been normalized, those voters wouldn’t really like that. Something similar is happening in China, where MoM the average housing is depreciating, and they’re trying hard to balance out the economy with incredible investments into manufacturing and tech. I’m not entirely sure how that would pan out in the west.
“Real estate and rental and leasing” for my province. Construction is separate. It is at 18%+ here, so I just rolled it down to 10 for the country-wide average. Probably much higher than that. This is Canadian numbers though, as I mentioned, I’m not sure how it is down there.
> RE market is about 10%+ of the entire GDP, so we want individuals to park their money and use it as an investment vehicle as a part of the consumption cycle.
Hard no, that’s how we got here. When it’s part of the investment cycle, developers won’t build or build only ones that maximize profits, NIMBYism thrives, and it makes it so that the only people able to buy are the ones who least need it.
If you have enough money to buy a __house__ for someone else, then you have enough money to pay much higher taxes. This isn’t like buying a car for someone.
Btw, the GDP contribution is about 18% [1] due to price being propped by extensive construction on the supply side. This is by design, and we shouldn’t be encouraging it.
The real, genuine answer is that the rich run the world and don't want that so they'll convince poor people it's actually bad for them. This works for any issue. It ensures that completely sound ideas get shot down. See "muh freedom", "it's bad for the economy", "communism", "taxing the rich hurts job growth", "this will just make rent go up" etc.
I disagree with your "natural" person qualification. "Non-natural persons" includes anyone with a work visa or green card. It's hard enough for most people to get these, much less become fully naturalized citizens. Plus, the waiting time isn't guaranteed in length: it's variable based on the political climate. It's hard enough for immigrants today. Making the viability of home ownership based on political whims only worsens it. Shouldn't we prefer these immigrants become homeowners, increasing their "investment" in their local communities?
"Natural" and "naturalized" do not refer to the same concept. "Natural person" includes those with work visas or green cards.
>A natural person is a living human being. Legal systems can attach rights and duties to natural persons without their express consent.
>The concept of a natural person appears in business law and bankruptcy law, where it provides a contrast with an artificial person or a legal person which is an entity that is treated as a person for legal purposes. While natural person describes an actual human being, artificial person describes a partnership, corporation, or some other entity that has been provided with legal personhood by statute.
This is a difficult conversation to have, and not unintentionally so. I hope I come across as respectful and unpatronizing as possible (and apologize since I probably don't.)
While we have intelligent people discussing pie-in-the-sky solutions, barely-related tangential issues, and even misdirected injection attacks, the causes of the housing crisis are not only well-known to (honest) economists [1], but can be verified by looking at the market pre- and post-1970.
It's hard enough to tune in to the correct analysis in the cacophony. When once in a blue moon it comes from the bully pulpit [2], it still gets shot down in a sea of misdirection.
Houston's market is still "normal." It was normal before 1970 and has been normal since. Price spikes are also normal and intended. Over time, S&D will respond and bring them back in line.
The solution is indeed build build build. The reason it didn't happen automatically in the first place is disingenuous land use laws like suppressive zoning.
Another MIT course that I absolutely love (went through it twice) is "Environmental Technologies in Buildings" [1]. It covers a very wide breadth of topics, like sun radiation, photo-voltaics, wind, insulation, human perception of heat and lighting, etc. Just all around fascinating. Professor Reinhart is a pleasure to learn from. There's also and Edx course with lecture recordings for it [2].
We need to stop treating real restate--especially residential real estate--as a mechanism for creating wealth.
there are enough homeowners that they vote for politicians and policies that will increase the value of their "investments". All this does is simply steal money from the next generation. Our entire economic system is designed to transfer wealth from the young and poor and the old and wealthy.
There is a distinction here to be made between "private property" (what we have now) and "personal property", which would be a far more ideal outcome.
Personal property simply means that you're allowed to own your own home. You're either not allowed to buy up huge tracts of homes to restrict supply and jack up prices or, if you do, you're taxed punitively for it.
Landlords. We need to get rid of landlords. 50+ years ago, the UK came close to this with a surprisingly simple solution [1].
This alone isn't sufficient but it's an important part. The other big part is to have a supply of social housing [2] so the private sector simply can't manipulate hte market.
Unfortunately, when Americans in particular hear a term like "social housing" they lose their minds and they immediately go to ghettoes or projects. Don't think that. Think Vienna [3][4].
No political remedy will work until there's a culture shift, and that's probably still a generation or two away. The baseline that people seek isn't just a reliable place to sleep, eat, and clean themselves.
They want the television-depicted life: a home which they only (at most) share with a partner and some pre-adult children, where everyone has their own bedroom, and there's probably at least one more bedroom to enjoy as an office or rec room, a kitchen suitable for entertaining, maybe a finished basement, parking for a few cars, no shared walls, and convenient access to whatever their work and whatever they like to attend in their free time. They'll tolerate a little less, but will refuse to take the social issue as resolved if they have to.
That's a far far cry from both the traditional history of multi-generational homes, boarding houses, and one room cottages and the modern political vision of "social housing". You can award contracts to all the builders you want, or open the market for them to chase whatever money you think is out there, but you're not going to be able to practically deliver the homes people want for everybody who wants them. Expectations need to be reconciled too, and we have almost no means to affect that.
Actually most families with a decent income can afford that "television-depicted" house in most of the country. It's only in a handful of high-cost metro areas where that has become unrealistic. Spend some time driving around the Midwest and you'll see that reality. We shouldn't impose a political "remedy" on the whole country just because San Francisco and Los Angeles are badly governed and haven't allowed much housing construction.
Wrong. People respond to incentives. If you have 50 years of intensives pointing to one system, then that's what you are gone get. And then you have commenters going all 'see this is what people want'.
The reality is, there is plenty of evidence that people still like other types of building and other types of neighborhoods. They were simply made illegal, economically terrible or destroyed with some other means.
You act like there wasn't a massive top-down government program to produce exactly the system the US has. There is a reason only the US looks like the US (expect for maybe Canada). Its because its was top down government policy.
The US systematically red-lines pretty much all inner-cities. Created a mortgage market that financed only single family homes in suberbia. These were often cheaper then rent you had to pay in social housing at the time.
This was then cast in concrete with some of the most strict zoning regulation anywhere. Making it basically impossible to do any other kind of development outside of the already existing city (that was redlined).
To support this a massive highway building program, with highways rammed right into the city center. Destroying large parts of existing cities (not paying people properly). Then in those cities laws were imposed to create massive amounts of parking, at direct expense of the poorer people that lived in these cities. And of course the tax system made it profitable to rip down houses and put in place surface parking-lots.
Private cars blocked public transport (often private back then) and made it non-competitive, destroying mostly car free neighborhoods that depended on that.
And of course it continues. The way the tax system works it systematically distributes tax dollars from city centers to the outside. Even poorer districts closer to city centers are more productive then suberiba. So you have those areas that get neglected, but even if they weren't neglected, they would still overpay on their taxes.
The same kind of unfair structure exists when it comes to utility as well. With existing urban cores overpaying and suberiba under-paying. Suberbia using massively more shared infrastructure to produce the same service but paying the same or less.
And of course lets not forget that all those new roads and new highways were a massive infrastructure investment, something that street-car, bus and trains didn't get.
This isn't even all. We could go on to talk about how fundamentally unfair tax assessment rules for different housing types and income groups.
But yeah, it was totally 'culture' that lead to situation. It wasn't at all a top down system. To be sure, there were lots of willing people in power on the local level that were more then happy to follow those things.
People respond to intensive. If all of a sudden subberbia would pay fair taxes and far utilities. And that goes even more for Walmart and friends, the predators of the current system. If the zoning laws didn't exist. If those highways were ripped away. If parking all of a sudden had to pay. If highway money was reinvested in high intensity bases and trains. If all those things happened I described above changed, this 'culture' wouldn't survived for even generation.
Unfortunately people are mostly blind to the systematic structure that produce 'culture'.
> And one room cottages and the modern political vision of "social housing".
Clearly you have no understanding how 'social housing' works in places like Vienna.
> but you're not going to be able to practically deliver the homes people want for everybody who wants them.
There is plenty of evidence that there is high demand for things other then single family homes. This is simply a fact. You can see this in the property prices alone. Anywhere that has a nice mixed used development, prices go threw the roof because demand is so high. The issue is supply, not demand.
Go look at the data analysis by urban3, their data shows this pretty clearly.
Instead of trying to invent new property classes and try untested social theories, let’s do what is known to work:
A. Stop the financialization of homes at the federal level by getting rid of the mortgage tax deduction and the sales tax exclusion on the sale of a personal home.
B. At the local level, reform zoning and remove the draconian restrictions on new home construction, especially of multi-family housing near transit. This will fix the supply issue, the primary driver of high home prices in high demand metros.
Once we remove these artificial government policy distortions that affect both demand and supply in the housing market, an actual free market will arise and drive down prices, especially of older, existing homes.
> We need to stop treating real restate--especially residential real estate--as a mechanism for creating wealth.
It's not about treating it this or that way though.
Owning a house is creating wealth, it's not something you can avoid. How could this ever not be the case?
We all agree a home is valuable. So if you buy one (and pay for it over many years), you're acquiring something valuable. As opposed to throwing money away in rent. That's it, you built some wealth. There's no way to make it not be valuable.
"Social Housing" sounds like a bad idea. Whenever something is "socially owned," it means it is controlled by a few who have wormed their way into the power position to control whom get to utilize that something. It comes down to who decides who can live in this social housing, and whether one could be kicked out by the whim of some bureaucrats or some committees. It's the HOA nightmare multiplies 100 times.
Basically it's what is your right and claim to this "social housing"? Pretty soon that right will become a personal ownership right, and private real estate ownership is back and so is commercial real estate.
Anyone who wants to see the current state of how the alt-mainstream thinking on this subject is shifting is welcome to indulge in the inventories over at [r/Canada, r/CanadaHousing, r/CanadaHousing2, r/TorontoRealEstate]. Anything that is not related to immigration or housing is essentially treated as a distraction. There is a simmering build up of disillusionment, anti-immigration and perhaps xenophobia that was usually not tolerated/allowed (hence the more spicy off-shoot CanadaHousing2), but the emotions have more or less found a stable equilibrium, and it’s not pretty.
I don’t have answers here, I can just observe the situation and blink.
Canada also has a dearth of startups, or new ways of making wealth. The only two ways are resource extraction and squatting on property. If Canadians can become more used to risk and put some of the pension fund into startups and new technology, things could be different.
It is shocking that the godfather of the modern AI boom taught at University of Toronto and yet Canada is not even in the picture when it comes to AI and it won't ever be.
This is the same tax trick that the obscenely wealthy use with their stock portfolios. It's a "fantastic" way of accessing accrued wealth without paying taxes on it.
I think I would prefer that we investigate this more thoroughly, as well, to reduce some of these tricks that further stratify the haves and the have-nots.
The thing being omissed here is that there's a cost-basic step-up when you die.
So, if the value of the home increased by say 2x the taxes on it are 0 because the cost-basis on it isn't the price your parents bought it for; it's the price when they died and you got it.
This works out a lot better for stocks because when you created the company and gave yourself a million stock units for a total of $1 (not each) and those stocks appreciated to be $300 each that's a ton of capital gains. Except when you die and it's stepped up its not. -- https://www.investopedia.com/terms/s/stepupinbasis.asp
What do you propose we "investigate" exactly? There are no tricks here. Everyone with a basic understanding of finance knows exactly how it works. People have always been allowed to borrow money and use their assets as collateral.
Yeah anytime the whole 'we already have enough houses' has been tested it has been found false. Demand in cities is constantly growing, and cities with green belts and all kinds of regulation simply can't expand. Total stock is irrelevant. The British solution if continued would also lead to rises as demand in cities grows.
> so the private sector simply can't manipulate hte market
They are not 'manipulating' the market, they simply have assets that are valuable because of high demand. You can only restrict supply if some other private developer can not simply buy land and build, and take that advantage away from you. If there was actually enough places to build, then the profit maximizing strategy is to build as many high value houses as fast as you can. And that's exactly how street car subburbs were built on mass. All these theories about how nothing is possible without defeating 'landlords' are just not true. Its the currently existing laws and regulation that set the board and people just play that game.
The reality is that we know the solution. We know that those places that build enough housing of the type demand by the market have lower rates, this has been proven over and over again.
In Britain Labor basically created a laws that made private house building much, much harder. They of course did this because they believed they would build lots of social housing. Of course because of money issues and their political downfall this didn't continue. But also off course, the laws restricting supply were not changed. So Labor and Tory both have a hand in the problem.
The problem are perfectly clear. Build more houses in places people want to live. It doesn't even matter if its social housing or private. I believe the market is perfectly capable of building the right kind of housing. But of course you can also do it with social housing. There are many ways to entourage more building. We need to stop making this about some political fight and simply look at the market basics.
In Houston Texas, the market did build many houses, and prices were comparatively low. But of course because of the type of regulation that still existed, this resulted mostly US style subburban sprawl. But I guess better then simply increasing prices. There is tons of other data that shows corroboration between house building and rents.
We don't have to totally re-imagine property rights law, we aren't gone abolish private property and renting isn't inherently bad. We simply need to create rules that make actual sense and provide the necessary infrastructure.
I'm not necessarily against some of the rules against landlords that you suggest, but we simply can't pretend that it is a solution by itself. The notion that all private ownership and renting is inherently hurtful is one of the biggest myths that's preventing any progress on this issue.
We know what to do, land-value tax, right-to-build, proper land-use planning, densification, take the space away from cars, transport oriented development. And this can be done entirely by the government if that your political bend.
> All this does is simply steal money from the next generation.
It actually enriches the next generation. We still have houses from the 16th century, still providing value for our community to this day.
I’m sorry to be negative because I agree with the general sentiment that society needs to stop treating “home value go up” as its primary retirement plan, and get rid of our allergy to social housing, but that first Guardian article about banning rental housing is just so bad on so many levels.
He says Britain doesn’t have a housing shortage because the ratio of homes to households hasn’t changed even as prices have gone up—but treating Britain as one big housing market is ridiculous, there have been massive shifts in economic geography over the last 5 decades. There is a housing shortage in the areas with well paying jobs and a housing surplus in the areas with no jobs. People should get to choose to move to a place where they can make a living!
He also says London’s population hasn’t changed in the last 50 years as prices have gone up without new housing being built—uhh no shit! If very little new housing was built in that period, how could the area’s population go up significantly? What happened instead is that, because demand rose and supply didn’t, the population stayed the same and the static supply went to the highest bidder. This is just mind-numbing economic illiteracy. Where does he think a population increase would go in London if London doesn’t increase housing supply?? The static supply is WHY the population didn’t grow! Literally exact same issue as NYC and the expensive parts of California.
He says developers would never build enough housing because it would drive down the price they can command—has this guy ever heard of the tragedy of the commons?? This is literally how markets work when there’s adequate competition. Econ 101. (And I’m not talking about fringy free-market-absolutist econ; Marx understood perfectly well that market competition drives down prices.) For a couple examples, Austin and Minneapolis have generated enough new supply to tank the price of rent. And imagine how ridiculous this argument sounds about anything but housing. “TV companies would never produce more TVs because that would bring down the price they can charge.” Oh wait…
It’s also totally left out (because there is no answer) how overall affordability would get better by getting rid of renting and only having owner-occupied housing. It’s the same amount of demand for the same amount of supply!
Finally, please just don’t take away my ability to rent! At my current place in life I don’t want to lock up a ton of money in real estate and be stuck in one place (much harder to move frequently due to transaction costs). Maybe later in life I’ll buy, but right now I want to rent (and invest my money in other things instead of a home). We need both kinds.
Ughhh. This author’s way of thinking is exactly why many of the most productive and ostensibly progressive cities (London, SF, NYC…) are prohibitively expensive, denying everyone but the rich the ability to live there. It’s easy to understand the right’s desire to send property values to the stratosphere (“fuck the poor, and fuck you too, I got mine”). But the left ties itself in these crazy knots to bring about the same result, hurting the working class we claim to care about, and it’s baffling.
Don’t overthink it, just build a fuckton of housing where there’s the most economic opportunity, both private sector (because central planning is notoriously not the best at creating enough supply) and social housing (because the market never works for literally everyone, and also because why not, more housing is good).
> homes to households hasn’t changed even as prices have gone up
Office for National Statistics (ONS) definition of a household: one person living alone, or a group of people (not necessarily related) living at the same address who share cooking facilities and share a living room, sitting room, or dining area.
By that definition (occupied homes)/households is always about 1, so homes/households is pretty much just homes/(occupied homes).
Yes and there are no third places where people can hangout locally. Out of all we know about humans up to 1950 is that we don't live full lives out in the burbs.
Maybe what we need is improvment to hyper-adobe which is being touted as a manual 3D Printer(humans being the processor). The wasp 3d printer looks promising. I wonder if we can simplify it to be manual by maybe stradling the first foot high layer. Alternatively, we could design modern modular wall sectkions akin to SIPs, ive seen some creative pvc sheets out of china lately.
Singapore cracked the housing problem for citizen but the rest of the world doesn’t like the policy, I can imagine most of the people commenting here won’t either.
Just read the comments, “housing provider” you can’t even admit your a landlord, it is amusing to read comment like these, very interesting to see how NIMBYs think.
Mh, I do not see the whole course but... The sustainable real estate is one who can evolve because the best energetic performances of today will be very bad performances tomorrow and the "ideal design" for today will be a very bad one tomorrow. So essentially only small buildings are sustainable because they can be made in an "industrial-like" manner (meaning the same design can fit pretty any needs with just minor changes) and changing them is sufficiently cheap.
Beware that in the past a condo was cheaper than a home per apartment because there was only one roof, a bit less in equipment and so on. BUT that's in the past where there was not much about anti-seismic design, fire safety, HVAC and so on. Today a modern "green" condo cost more in raw materials than equivalent single family homes PLUS the condo can't evolve. A tower? Even FAR worse. Just the mere structure need more steel than homes, just the elevators alone cost more. Similarly modern rails cost MORE than people moving with personal cars. The narrative of course it's the opposite because finance capitalism need big things and profit from rent and services in such setups, but the narrative and the reality are really different.
Today the sustainable real estate economy is those of spread single-family homes mixed with small commercial buildings (sheds, essentially) to reduce significantly the amount of commuting residents needs just to buy some groceries, modern small buildings built locally with mass produced components produced around the territory in most cases in not so big setups simply because there are standards like home appliances sizes or Chinese battery tools connectors (the same battery works essentially any tool from any vendor) or cars (yes, most component of Chinese cars are the same even if cars came from various brands). Essentially today sustainable real estate is a FLOSS/open hardware one spread/personal and built around the world without megafactories for most of the component (we still need some big scale for steel, for some electronics, mining etc, but not much more). This real estate of course is VERY opposed by any means by large actors who know well this model is for individual ownership, SMEs not for them.
It’s called Housing and Development Board (HDB) housing policy. First of all.. it’s not a freehold model but it’s sold to Singaporean citizens only.
They are highly subsidized and based on their income. Singapore also has CPF or central provident fund.. payments go from there but there has to be a 10-20% down payment.
These are highly subsidized. As are the maintaining costs and repairs etc. the state takes care of it. sometimes the owners do it. There is a central savings account too. They can choose how to pay for it.
But the key point is that it’s always a 99 year lease. They can only own it for 99 years. As everyone is going to be in some sort of workforce or is eligible for govt monies, no one needs to be without housing. It goes directly from their CPF or OA account.
The kind of housing is dependent on income level. And another condition is that it’s for families only.
Single people have a different scheme. And there are also ways to apply for Joint singles HBD flats.
They have to be at least 35 years old and anyone younger than 35 can buy under a public scheme but with their family. There are separate schemes for orphans and single unwed citizens, divorcées and the widowed.
Basically there is a scheme for everyone so no one is left behind. But they can’t own it after 99 years. Because it can be beyond a normal lifespan(they start at age 35.. so even after they are gone, the family will be housed until they themselves reach age 35 to qualify with CPF/OA for a HBD unit.
The flats can be resold but again only for the remaining period of the 99 years. Never for speculative purposes and only for residential.
Singapore is a high trust society and can be called as a benevolent dictatorship. They don’t look kindly at any kind of shenanigans.
There are very strict rules. It has to be a mixed ethnic development and it can’t be rented out etc..and if it is to be rented, there is a process for that too.
All HDB estates are meticulously planned. From schools to parks to shops and public transpirt, these are planned communities.
The idea is to give the people housing stability and housing security. The state takes care of its people but expects them to be responsible and accountable. The result is a highly ordered and high trust society that is stable.
Having said that, Singapore is not for everyone. It’s super ordered and appeals to many Asian mindsets and especially for those who would rather spend time raising their families instead of worrying about crime or housing or food security.
Honestly I wouldn't trust any comments about Sustainable Real Estate from a university on the east coast as a west coaster. So many empty houses there.
Genuine Question, why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property (which would likely be distributed back to the locality, specifics not important), apply the same rules we do for pass-through taxation to mitigate loopholes, and automatically charge this elevated rate for properties owned by non-natural persons? I think this would just price in the externalities of corporate versus natural person living in a property for a locality.
Or maybe it's a tiered system. W/e.
On a related note, does anyone have anecdotal stories about the efficacy of Georgist tax policies?
> Genuine Question, why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property (which would likely be distributed back to the locality, specifics not important)
I am that person.
I own two duplexes in addition to my primary residence, for a total of four residential rental units – all 2/1s made up of ~750 sq ft each. Those additional properties that I own provide housing to 6 humans who can't purchase, or just prefer not to.
What you're proposing would result in one of two moves from my end:
1. I sell both properties and let someone/some entity (who doesn't work and/or manage the properties themselves, have any relationship with the tenants, will push rents to market prices immediately, etc etc) deal with it.
2. I scrape the lots, stand up single family homes, take my gains and walk inside ~18 months. That puts the 6 humans mentioned above out into a (very tight, <= 1% vacancy rate) rental market that'll bump their monthly rent expense by ~25% minimum and, overall, very likely reduce the headcount of humans housed.
Either way, it's a high level hit to individuals, the market, whatever. It doesn't result in any gains or economic corrections to the RE market.
> (which would likely be distributed back to the locality, specifics not important)
That's already happening in my scenario. I own & operate a General Contractor LLC entity that issues invoices to me, the property owner. The local city, county, and state are paid B&O, sales, etc taxes on those GC LLC invoices out of my personal pocket. Separately, my personal rental income is taxed appropriately at the federal level.
> I think this would just price in the externalities of corporate versus natural person living in a property for a locality.
You know what else can be priced in? Or wildly swing a market into affordability, normality, etc? Letting people build things. My lots are massive, but they consist of sheds and lawns instead of multiplying my units and housing more people.
It's impossible in my local market, and that's why it's carrying the <= 1% residential vacancy rate it has for 15+ years, and why rents are increasing at wild rates that no industry/job market inside 80 miles can support. Economics 101 says supply vs demand etc etc. Easy layups for anyone with half a brain. We don't have to modify anything outside of city/county zoning & the ability to infill everywhere.
Fellow housing provider here. To your point about scraping the lots and building SFHs, I would counter the solution to that is to outlaw zoning for SFHs for tear downs. Raw land, go for it. But if a structure stood on a parcel, you can only increase density when rebuilding and upzone. This also potentially avoids situations like Naperville, Illinois, where you have a housing shortage at the same time obscenely wealthy folks tear down older modest homes to build McMansions to the lot lines.
https://legallysociable.com/2021/12/28/new-publication-more-...
That would be a bad idea because the problem isnt the need to increase density, that is obvious and wanted by nearly everybody building. The provlem is the zoning often limits lot coverage to one or two units and some percentage less than 50 % coverage. You dont jave to be a dick to the one guy in the hundred building that wants a small single family and lots of land, you need to let the other 99 act in their own self interest and build much higher density with a much jigher unit count.
My suggestion does not prevent a SFH and lots of land entirely, only if an existing structure was torn down to make way for it. You can still buy an existing SFH, or build one on vacant land. You simply can’t replace an existing SFH or multi family with another SFH. Density line only go up.
Yes, that's a good summary of the bad idea. Again, this is a bad idea because it discriminates against one tiny sliver of the resale market (those that want to buy old houses because they like the area the land is in and tear down the house to build a new one). It's not going to work. What you are going to cause is that tiny sliver of people to say "ok, how much do I have to keep to call this a reno and get it through the system?" and then keep that minimum. You are also going to cause an expansion of the government to deal with this new level of regulation, increasing everyone's costs and making us worse off for no discernible benefit because this deals with a part of the new house pipeline that isn't the problem.
The problem is that in most of these place no matter what one does one is still stuck with low lot coverage and low allowable unit numbers (i.e. in my city the overwhelming majority of residential tops out at 45% lot coverage, 15 meter heights, and one unit maximum (a small chunk of the overwhelming majority zoned this way allows 2 units in a restrictive manner as either garden/over garage or basement suite). So instead of wasting resources increasing regulation, the solution is to decrease regulation. rezone all this stupid stuff to allow much higher lot coverage, height and unit count and then approve everything that fits in the zoning in a short period of time rather than dragging it out for months and months through bureaucracy. You get smaller, cheaper government (big win), faster development of the available land (huge win) and you refocus the large contingent of businesses currently focused on buying old single family in places zoned for 2 units, subdividing and building two units onto building much bigger, higher density things like multi unit walkups in the same space raising the unit count from the current max 2 units to 4-10 units on the same piece of land. This will solve most of the problems while giving people the freedom to do what they want (but the incentive to do what is best for society) vs decreasing freedom for no benefit and moderate harm.
To be honest, I don’t really care about the one guy who can afford to buy a run down house in a nice downtown area just to level it and rebuild a $3-5M modern travesty.
Parent here, sorry for taking so long to get back and thanks for such a thorough answer.
I’ll start off by agreeing that supply is the primary issue. If I had to choose between increasing supply and fucking with tax incentives, I choose increasing supply 100/100 times.
However, you’re approaching this solely from the perspective of existing multi home owner.
(The following is directed both at you, but also the other dozen comments making similar points). The entire point of this change would be to drive prices down. Because carrying this inventory is more expensive. Rent is dictated by what renters are willing to pay, not by your property taxes. What you're willing to pay is driven down by the increased cost of ownership. This leads to more owner occupied lots.
Your third option that you didn’t mention is that you sell the duplexes to one of the renters or someone looking to buy their first home and rent the other half (who now have an advantage over serial investors, and prices are lower) and you can utilize the cash from your sale to invest in other assets that don’t carry as many negative externalities to be invested in as speculative assets (I can’t buy a fucking house!!!!!!!). This is also Economics 101.
But to be clear, 3-4x property tax is too high, it would make more sense in the 20% up to 300% and scales the more you own. Also let’s just build.
> Those additional properties that I own provide housing to 6 humans who can't purchase, or just prefer not to.
Of course you just ignore the fact that one of the reasons they can't purchase is because you're hoarding the damn houses.
You can't buy what isn't for sale.
The problem is not that rents are too low and sales prices are too high, which might make it appropriate to punish renting a unit and force landlords to sell. The problem is too few of both rental and ownership units.
I see this point oft repeated, usually as a shut-down for the above arguments. But i also see people claiming the complete opposite for their localities (that there are many many extra vacant homes being held than people that need them). It seems like the initial wave of arguments cited tons of statistics but over the months we've just stopped doing that for some reason as everyone's opinions have crystallized.
Stating such a strong assertion should still require at least a link
I think the best person who explains housing trends is Kevin Erdmann. This article provides an overview of his conceptual model for why prices fell nationwide in the Great Recession (people with bad credit were prohibited from getting a mortgage), why both prices and rents have been increasing since the Great Recession (when the Fed reduced prices too low, the construction industry collapsed), and why it is a mistake to attack build-to-rent landlords (they are a major source of new supply today). https://www.mercatus.org/research/policy-briefs/getting-corp...
There are plenty of ownership units in my state. They are just owned as second homes by people who don't live here. 80k of them sit vacant most of the year. There's only 6k homeless people in the state.
Rented housing isn't hoarded. The argument might have some merit if there was no market for used buildings and no market to build new housing.
But that's reality. Go on loopnet and you can see plenty of buildings for sale.
> Easy layups for anyone with half a brain. We don't have to modify anything outside of city/county zoning & the ability to infill everywhere.
Right, that's why we'd both want to allow infill everywhere, and ensure market effects can be realized by simultaneously discouraging property vampires who've got an inflated sense of service to their community—however generous they may think they are—from capturing any/all new homes built with the gains they got from already milking the constrained housing market or being the wealthiest generation; it takes a long time to cool down the ocean.
A set of policies that would enable much more to be built on what were previously lower density lots, that people who were previously priced out have a realistic opportunity to access, and as well constrain the ability for individuals to capitalize on raw surplus ownership. Building more doesn't work if people with modest salaries and families can't even dream of buying or renting the new units, but also things don't get built if there isn't some kind of incentive to do so, and there's a lot of potential for nuance in how policy makers should go about doing that. However it works out though, it shouldn't favor those who show up and threaten to make people homeless as soon as their personal fiefdom seems jeopardized.
On top of those hypothetical policies, protections against displacement of renters seem pretty crucial, in terms of redevelopment of land and letting people move back in, as well as against just arbitrarily selling one's property and tossing your tenants to the wind or leveling their home.
> Letting people build things
When the real solution is obvious and the proposals are nowhere near it, the game at play isn't to solve the problem: Remarket collectivist expropriation with some gen-z friendly word salad and backfill details on how this solves ____.
The paradox, to me, is that the set of people pushing for redistribution is almost entirely disjoint from the set of people responsible for creation of the thigns to-be-redistributed. One would think the skill set needed for the latter would make them exceptionally suited for the former, yet here we are.
If we assume that there is no way around this, and the options you suggest are the only options available. Actually, for the sake of argument, let’s further assume that the only option is the worse option. Razing and putting SFH instead.
That still doesn’t mean anything. Nearly any action, private, public, regulatory, or otherwise, will always have impacts that are on their own negative. The real question is how common your scenario is and as a result how do the negatives weigh against the benefits of the action.
Just replace property tax with a land tax and most of your concerns will be handled. Any land upgrade (like buildings) should not affect the tax from owning a property.
Also I think that although rental cost may increase (but it's unlikely as individual rentals will be much more down to earth than those operated by a corporation that's driven only by quarterly earnings), the buying should be much more affordable.
This isn't a distribution problem.
We don't have enough pie (houses).
We need more houses.
Not a campaign to distribute a massive shortage slightly more evenly.
There are more empty second homes than homeless people in my state. By a factor of 10.
It's a distribution problem.
Only if you have such a loose definition of vacant where it includes people who haven't yet moved into their newly acquired house.
Or the recreational properties. My 2 bedroom 80+ year old cabin that isn't fit for winter season gets used every weekend in the summer for 4 months but counts as vacant for my province, mevermind that it is W hours from any major non agricultural employment opportunitiesx
I would venture a guess you've never owned a property to conflate "empty second home" with that "free housing for homeless" insinuation, as if those two concepts are in any way related.
Pretty sure that housing isn't the only place where you see redistribution as the solution though, that pattern always holds strong.
Homeless people make up about .2% of the US, so multiplied by 10 and that's 2%. If your country only has 1.02 people's worth of food per person, that's more of a shortage than a distribution problem. The same goes for housing.
This is a cute fact completely devoid of meaning.
If your homeless population is 0.1% of the population, only 1% of the housing stock needs to be second homes for this to be true.
If you think only the top 1% should be able to afford a second home, then you must think we should be artificially poor.
The top 1% in this country are VERY wealthy. The top 10% can EASILY afford a modest vacation home if that's a priority.
The solution isn't to take their homes in Big Bear and give them to homeless people in San Jose.
It's to build more houses in San Jose so that starter condos don't cost $800k...
What's the reason that, with office occupancies down in so many places, there isn't a big push for conversion of commercial zoning to residential multi-family? Incentive programs to reward converting vacant spaces? Penalty taxes for holding vacant office space instead of selling it to someone who will figure out something to do with it?
Because most skyscrapers can't be converted to housing efficiently.
It would cost more to convert them then you could sell the units for.
The people who own those buildings are desperate to fill them. They'd convert if it made sense.
They aren't part of some evil cabal to have commercial buildings sit empty to push up residential property prices.
Why is everyone (ok, fine, mostly economics & tech people) convinced this is such a wildly viable slam dunk of an idea?
Have y'all ever opened up a wall before and seen the electrical, plumbing, etc mechanical bits that make up a home? Any idea of what it'd cost to chop up that office space and feed every individual piece the necessary bits?
It's outrageous that we're even talking about this idea still. It'd require wildddddd tax advantages & federal spends in order to execute on it in any sense of the overarching idea.
Houses are like a million dollars. Some plumbing is maybe 10k?
Are you joking? Regular houses are nowhere near a million dollars in most of the country.
But where do you need to live? 237 cities does not mean "very special places".
See (hours fresh article):
> A Thursday report from Zillow indicates that a typical starter home is now worth $1 million or more in 237 cities, up from 84 cities in 2019, underscoring America’s ongoing home affordability crisis
https://edition.cnn.com/2024/07/26/business/more-starter-hom...
You don't "need" to live anywhere in particular. Many of those 237 cities are part of larger high-cost metro areas.
Move to the Columbus, OH area (or something like that). There are plenty of affordable homes for sale there. Or buy cheap vacant land and build whatever you want. The unemployment rate is low so it's not hard to find a job. Some people are just too picky about location and only want to complain or find excuses instead of doing something to improve their situation.
I'm talking about the places with housing shortages where it might make sense to spend money converting an office block.
Have you talked with contractors recently? It costs a lot more than you seem to think it does.
> What's the reason that, with office occupancies down in so many places, there isn't a big push for conversion of commercial zoning to residential multi-family?
Zoning simply doesn't allow for that in the overwhelming majority of places.
> Incentive programs to reward converting vacant spaces?
How about making it legal first?
> Penalty taxes for holding vacant office space instead of selling it to someone who will figure out something to do with it?
Or just have land value taxation.
All of those things simply miss the underlying structural issues. We know the structural issue. People need to stop thinking in these 'could we do this little micro adjustment, or this little micro adjustment' as if that solves anything.
We know how to solve this, its not really up for debate. Endlessly arguing about micro-optimization. Its like in IT when people argue about some minor optimization in the compiler when their are 100x more blocked by IO.
> why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property
Trivially worked around. Use an LLC. Have it bought in a relative’s name. Have it bought in a rando’s name with a bulletproof lease with a $1 rent-to-own option at its termination.
Essentially, the property registry system becomes a farce. (You see this, for example, in India.) Simpler: a straight wealth tax that funds first time homebuyer incentives.
I.e. "we don't want to."
We could require more disclosures and auditing and regulations of those workarounds. It's not some digital thing that could be hidden anywhere, it's trivially easy to monitor or seize real property.
> it's trivially easy to monitor or seize real property
Anyone who owns property should be horrified at the notion of making it “trivially easy” to seize real property. That turns this into electoral toast. Its only utility is in distracting from zoning reform.
Also, the homeownership rate is 65% [1]. Second homeowners aren’t the problem.
[1] https://fred.stlouisfed.org/series/RHORUSQ156N
Trivially easy refers to the physical act: show up with force. Not that it should be any more "trivially easy" to crack down on than, say, tax evasion - that is, you'd still have courts, etc. But don't act horrified at that. Eminent domain has been used many times in the US, it's not a novel concept. Foreclosure is also state-sanctioned and common.
But there are SIGNIFICANT interests who want to horde real property anonymously. "Fixing zoning" is not a solution to the problems that causes. The large-landlord/acquire-and-leave-vacant-waiting-for-appreciation interests are the very same interests that would BENEFIT from less zoning restrictions and the Manhattanization of more places, and corresponding increase in real property values per sqft of land. But the reason we don't make ownership of property more clear, or crack down on hording, is because those interests don't want us to.
"Simpler: a straight wealth tax that funds first time homebuyer incentives." - so we've got more inflation of property prices through financial incentives but actually let's not bother because guess who ALSO doesn't want a "straight wealth tax!" (And, of course, taxes aren't wildly worked around in this country anyway.)
> (Also, homeownership is 65% [1]. Second homeowners aren’t the problem.)
Is there a breakdown on what portion of this 65% own multiple homes? Personally, I’m not a fan of anyone who has more than 2 homes. One primary and one vacation or rental. Why does anyone need more than that?
Some people are professional small landlords. It’s an incredibly valuable service for people who don’t want the headache of home maintenance, and there are very significant economies of scale - 1 unit is generally not worth doing unless you really enjoy diy.
> I’m not a fan of anyone who has more than 2 homes. One primary and one vacation or rental. Why does anyone need more than that?
Idk, why does anyone need anything beyond sustenance? Outside resort towns, I’m sceptical this is anything but a bogeyman.
The great thing about this country is that people can (mostly) do whatever they want without having to justify a "need".
This could be improved by changing the criterion: an actual human needs to be registered as living in that house and live there. LLCs, trusts, and other entities don’t count.
If people want to split their time, fine, let them have as many houses as they want, declare what fraction of their time is spent in each one, and get that fractional credit for each one.
Worried about a couple taking the credit for each person separately? Fine, make the credit only reduce a fixed amount of tax per person — that $200M fancy house doesn’t get all of the tax waived just because one human is in it.
> an actual human needs to be registered as living in that house and live there
Relatives. Again, these measures have been implemented across the world. Miraculously, nobody owns two homes.
In cities, where competition for land is fiercest, I would further fully expect the tax to be borne by tenants. Because nothing was fundamentally fixed about the supply-demand mismatch.
Did you read the second half of my comment? If each human only gets to reduce tax on, say $500k of residence, then relatives are of limited value for abusing the system. And some of those relatives may prefer to claim their exemption on their own homes…
This is a progressive property-tax system. It works because it avoids counting houses. (It's different because houses are discrete. Housing value is not. Dividing discrete assets is trivial. Dividing continuous ones is not.)
I personally think that progressive taxes and benefits can be quite reasonable, as long as they’re kept simple and non-discriminatory. As soon as the designs start to get clever and, say, phase benefits out with increasing wealth or income, they break down quickly.
Medicaid would be an example of getting it very, very wrong.
The more complicated laws are written to try and cover more edge conditions, the more loopholes they create.
Things are only "trivially worked around" if we let them be.
There is a concept you don't seem to be familiar with called "beneficial ownership". What this means is that if an LLC buys a house, a lot of jurisdictions require the "beneficial owner" to be known and to be taxed accordingly. The beneficial owner may not be on public records (the LLC will be) but the tax authorities will know.
Some jurisdictions don't do this or don't enforce it, which is a big part of why the London property market is the money laundering capital of the world [1].
So what would I like to see?
1. Eliminate the Mortgage Interest TAx Deduction. It's giving money to the wealthy;
2. Increase property taxes for any property owned by an LLC;
3. Require a beneficial owner to be recorded and maintained with tax authorities;
4. Treat any benefical owner or owner of any property in the state to be a tax resident of that state, which means their worldwide income is subject to the income taxes of that state;
5. In any sufficiently dense population area, single family housing ("SFH") zoning should be illegal;
6. A return to multi-family units as this is a class of housing that used to be really common but is now exceptionally rare. I'm fine with landlords to the extent that the landlord lives in the same property and suffers the same externalities from their tenant as their neighbours do. This includes AirBnB too;
7. Higher property taxes for SFHs that don't have an auxillary dwelling unit ("ADU") in any area where the median rent is above some threshold of the median income;
8. Do what Texas does with property taxes for Seniors: you can defer them until your death if you don't want to move. Otherwise you should downsize. We want to do the opposite of what California did with Prop 13 and pass massive tax breaks to Disney and wealthy landowners under the guise of "not kicking seniors out of their homes". In case you didn't know, the tax rate for Disneyland has basically remained unchanged since the 1960s thanks for Prop 13.
That's probably a good start but not egverything.
[1]: https://www.youtube.com/watch?v=gyk12Wf_TeQ
> concept you don't seem to be familiar with called "beneficial ownership"
I own one house, my spouse the next, my mom the next and then we do kids.
Your other ideas are much better. Were I a NIMBY politician, I’d distract from them with this tax idea. (As a Wyoming homeowner I positively love No. 4. Presently, I pay taxes when owed in every state I work in.)
> 1. Eliminate the Mortgage Interest TAx Deduction. It's giving money to the wealthy;
That's literally the most popular deduction in USA; with home ownership rate of ~ 66%t by construction this covers more than half of the income distribution (ie not just "the wealthy" boogeyman)
And the MLS system is entirely voluntary and seemingly not updated timely, but it also doesn't include the secondary market, you know those pale skinny guys in the TV ads with dead eyes saying they'll buy any house no matter the condition. And there is a lot of secondary going on, probably more than the normal RE market.
> there is a lot of secondary going on, probably more than the normal RE market
The primary real estate market is new builds. Everything else is secondary.
I don’t see how those are trivially worked around in a country with a half decent government.
People are not just going to give their relatives title to their property. LLC’s can be required to name the beneficial owner.
The rent-to-own lease farce can also be trivially uncovered by requiring rents to be public, like real estate sales are in most jurisdictions.
> don’t see how those are trivially worked around in a country with a half decent government
Look at how people abuse rent controlled apartments. (All the way up to the current mayor.)
> People are not just going to give their relatives title to their property
This is literally what happens in places with such taxes. I wouldn’t bat an eye buying a house in my partner or a parent’s name if it saved 3x property taxes.
> I wouldn’t bat an eye buying a house in my partner or a parent’s name if it saved 3x property taxes.
That sounds like the policy had the desired effect. I.e home ownership is spread out across many people.
Those people cannot then own properties without being subject to those extra taxes. They'd be giving something up to help you, so would presumably benefiting somehow from your scheme.
> those people cannot then own properties without being subject to those extra taxes
...neither can an individual today. The point is one person still controls multiple properties.
I’m sick of rent control being vilified. If you’re not going to build more then you definitely need it. I’ve had my rent go up as much as 20%, forcing me to move on more than one occasion. If Prop 13 keeps the grandma in their home, then why can’t I have rent control that lets me stay put and provide stability?
Landlords will do the absolute minimum for repairs anyway, rent control or not.
Rent controls is universally considered a stupid idea, the only reason why it continues to exist for the benfits of the political class that leverage votes out of it.
Handing out subsidy checks for the same amount accomplishes the same thing without the deadweight loss of people getting locked in aparments that economically prohibitve to keep habitable , or the units stay vacant for the same reason (see NYC).
Even government run HUD aparments end up with the same problem, given the exact same economics.
> Rent controls is universally considered a stupid idea, the only reason why it continues to exist for the benfits of the political class that leverage votes out of it. Handing out subsidy checks for the same amount accomplishes the same thing
Fine, if subsidy checks then it’s subsidy checks. But subsidies or handouts will never work in the current political climate because it is “handouts for the poor”. So I don’t necessarily blame them for going this route.
All I am saying is that uncapped rent increases has put me at a major disadvantage, because every time I hope to save and buy for a house my rent jumps substantially and I find myself back to square one. I’m making progress toward that down payment sum, but the cost of moving + paying higher rent has made this a struggle.
Homeowners enjoy(ed) a lot of government perks - the GI bill spurred construction, property taxes are capped, interest can be a tax deduction. Renters get absolutely nothing, and 40% (vs 60% homeowners) is a non-trivial amount. Why can’t I have any protections or programs that help me save a bit more so I can actually be a homeowner?
Even the downvotes to my previous post seem to indicate that nobody really cares about renters - and I’m caught in this weird middle where I make too much to not qualify for subsidized housing and I make too little to save at a cadence where I can catch up with home appreciation and bidding wars. Now, I’ve to deal with bidding wars a renter too - it’s not the norm yet but I have certainly run into it. What the hell am I supposed to do?!?
> sick of rent control being vilified
Not vilifying it. Saying that tracking who is the legal owner and beneficiary of a property is tough.
Given the present market state, I wouldn’t be surprised if such a tax measure increased rents.
> Saying that tracking who is the legal owner and beneficiary of a property is tough.
That doesn’t pass the sniff test - the legal owner has to pay property taxes so why can’t they track it that way? If it’s a trust then it’s the beneficiaries that are the owners.
In the absence of rent control i can see landlords just forwarding the cost of taxes, but that’s where I’m a huge proponent of it. Discourage investing in homes unless you really have the capital
> the legal owner has to pay property taxes so why can’t they track it that way
...the legal owner would pay the property tax. The beneficial owner/controller would reimburse them.
> In the absence of rent control i can see landlords just forwarding the cost of taxes, but that’s where I’m a huge proponent of it. Discourage investing in homes unless you really have the capital
This reminds me of the effect of squatters' rights on rents. It discourages property owners becoming landlords.
You're increasing the cost of owning rental property while lowering its yield. What do you think will happen? Why not offer a tax deduction for landlords voluntarily submitting their properties to rent control, similar to conservation easements?
> It discourages property owners becoming landlords.
But that’s a good thing, no? I’d much rather they sell, instead of hoarding property.
And as for the tax deductions, why should homeowners get even more help from the government? Property tax is capped, homes appreciate like crazy, and there are already tax deduction in place. From where I’m standing, homeowners are sitting pretty with their mortgage being at an all time low. It is awful being a renter and having no idea if my landlord intends to jack up rent and having me wonder if it’s worth it to move.
That being said, I do understand that there’s a fine balance - like if there are no landlords, someone who isn’t ready to find a house won’t have a place to live. Maybe we should put controls in place on who can buy a house - foreigners and corporations shouldn’t, for example. That should counter people doing all-cash offers for above asking.
> LLC’s can be required to name the beneficial owner.
Actually, they all are now required to register who the beneficial owners are for every LLC - https://home.treasury.gov/news/press-releases/jy2015
It would be simpler to charge a property tax on every property and provide a tax credit to every individual based on the average property tax collected. I think it would be more robust against people trying to find loopholes.
That would also be more fair to renters. Much of the tax charged to commercial landlords would likely be passed on to their tenants. Providing renters with the same tax credit as home owners will offset that effect.
Because it doesn't solve any actual problems. People owning more then 1 property simply aren't the primary issue.
People can politically fuck around with occupancy laws and all this other stuff, non of it solves the problem.
We know how to solve the problem, there is no mystery. Its simply a political problem to implement it.
You know who would pay those property taxes? The renters. Not the owners. The owners just pass those taxes onto the renters.
What would actually help is the reverse, i.e. abolish property taxes and reduce rents by that much.
If that was done I'd save money faster and be able to buy 1 house for myself sooner.
There’s nothing inherently wrong with people owning multiple properties. It’s not even a significant driver of the housing shortage. The main driver of the housing shortage is local zoning codes that forbid the construction of new homes, especially multi-family housing.
Federal government can't levy any property tax unless we amend the constitution.
Not everyone wants to be a homeowner or will have the means to purchase one even with additional incentives, and the increased property taxes are going to be passed to renters. Also, if you intend on purchasing a place to live, you're unlikely to purchase a place that requires a lot of renovations. Disincentivizing investors means fewer of these homes will be our purchased and some will even degrade to an unrepairable state, which further reduces housing supply, which makes it more expensive in the long run.
Because people making laws are not going to tax themselves and their friends.
You need a populist leader to achieve that, but, well, no one wants one I guess.
People want to come up with all kinds of reasons to poo poo this… but it really is what needs to be done to start improving things. In CA, owner occupied homes get a minuscule reduction in their property tax. Same mechanism can be used
Because if we limit each individual to have only one home it could cause traffic issues in certain cities.
Something like 60% of the homes in my area don't have people living in them and the traffic can be as bad as 25 minutes for 1 mile of driving. This would have to be a state/city level decision.
Personally it seems like the decision of an officer for how many homes a single person can manage. IE if you are getting hired for a specific salary they already know how many homes you are going to own over your lifetime.
“Why can’t we”
I wish the system actually tried to solve problems with well thought out solutions.
To answer your question: politicians don’t want to piss off the wealthy class. Americans at large are skeptical of taxes because they don’t see it being used for anything useful.
If you raise taxes on property, rents will rise. Is that the goal?
Trusts. It's relatively easy to hide who owns what.
This is solvable. If a trust owns the property, default to the highest tax rate. The trustee is then responsible for providing proof of the beneficial owner(s) if they want the "discount" rate.
This is basically how income tax law works for trusts. The highest tax bracket is reached very quickly to quash the first order shenanigans that might result from more preferential treatment
you skimmed over this part of his message:
> automatically charge this elevated rate for properties owned by non-natural persons
Not sure how it's down there, but my understanding is even if we have housing crisis, legislations that would actually bring down the housing prices is also bad for us. RE market is about 10%+ of the entire GDP, so we want individuals to park their money and use it as an investment vehicle as a part of the consumption cycle. Combine it with "i'll just buy it for my child/spouse/mom/dad" and so on, it's not really that easy to implement either.
> legislations that would actually bring down the housing prices is also bad for us
Then perhaps we should make a 20 year rollout plan to help us adjust; but, individuals being able to live in a location for a consistent price and other improved social safety nets are a net positive for society and government is supposed to work *for* society as a whole, not just the elites
I’m a renter, and I would love that. That being said, majority of people in North America own their homes. Since looking at your property as an investment has been normalized, those voters wouldn’t really like that. Something similar is happening in China, where MoM the average housing is depreciating, and they’re trying hard to balance out the economy with incredible investments into manufacturing and tech. I’m not entirely sure how that would pan out in the west.
> RE market is about 10%+ of the entire GDP
Source? Construction, commissions, renovations and lending maybe. But all that keeps happening in a constant real-price model.
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=361004...
“Real estate and rental and leasing” for my province. Construction is separate. It is at 18%+ here, so I just rolled it down to 10 for the country-wide average. Probably much higher than that. This is Canadian numbers though, as I mentioned, I’m not sure how it is down there.
If it can be destroyed by the truth, it deserves to be. This is all a farce and it needs to implode.
> RE market is about 10%+ of the entire GDP, so we want individuals to park their money and use it as an investment vehicle as a part of the consumption cycle.
Hard no, that’s how we got here. When it’s part of the investment cycle, developers won’t build or build only ones that maximize profits, NIMBYism thrives, and it makes it so that the only people able to buy are the ones who least need it.
If you have enough money to buy a __house__ for someone else, then you have enough money to pay much higher taxes. This isn’t like buying a car for someone.
Btw, the GDP contribution is about 18% [1] due to price being propped by extensive construction on the supply side. This is by design, and we shouldn’t be encouraging it.
[1] https://www.nahb.org/news-and-economics/housing-economics/ho...
And you suppose this will solve, what, exactly - besides destryong the rental market and new construction?
The real, genuine answer is that the rich run the world and don't want that so they'll convince poor people it's actually bad for them. This works for any issue. It ensures that completely sound ideas get shot down. See "muh freedom", "it's bad for the economy", "communism", "taxing the rich hurts job growth", "this will just make rent go up" etc.
I disagree with your "natural" person qualification. "Non-natural persons" includes anyone with a work visa or green card. It's hard enough for most people to get these, much less become fully naturalized citizens. Plus, the waiting time isn't guaranteed in length: it's variable based on the political climate. It's hard enough for immigrants today. Making the viability of home ownership based on political whims only worsens it. Shouldn't we prefer these immigrants become homeowners, increasing their "investment" in their local communities?
"Natural" and "naturalized" do not refer to the same concept. "Natural person" includes those with work visas or green cards.
>A natural person is a living human being. Legal systems can attach rights and duties to natural persons without their express consent.
>The concept of a natural person appears in business law and bankruptcy law, where it provides a contrast with an artificial person or a legal person which is an entity that is treated as a person for legal purposes. While natural person describes an actual human being, artificial person describes a partnership, corporation, or some other entity that has been provided with legal personhood by statute.
https://www.law.cornell.edu/wex/natural_person
Got it thanks
Parent were referring to https://en.wikipedia.org/wiki/Natural_person
It's legalese for a "human being".
This is a difficult conversation to have, and not unintentionally so. I hope I come across as respectful and unpatronizing as possible (and apologize since I probably don't.)
While we have intelligent people discussing pie-in-the-sky solutions, barely-related tangential issues, and even misdirected injection attacks, the causes of the housing crisis are not only well-known to (honest) economists [1], but can be verified by looking at the market pre- and post-1970.
It's hard enough to tune in to the correct analysis in the cacophony. When once in a blue moon it comes from the bully pulpit [2], it still gets shot down in a sea of misdirection.
[1] https://archive.nytimes.com/krugman.blogs.nytimes.com/2017/0...
[2] https://www.politico.com/story/2016/09/obama-takes-on-zoning...
It's a supply and demand issue. Zoning only makes things worse.
Check Houston house price hikes in the past 3 years. Once investment funds arrived prices soared by over 2x in some areas. Still no zoning.
The solution is one. BUILD BUILD BUILD.
Houston's market is still "normal." It was normal before 1970 and has been normal since. Price spikes are also normal and intended. Over time, S&D will respond and bring them back in line.
The solution is indeed build build build. The reason it didn't happen automatically in the first place is disingenuous land use laws like suppressive zoning.
Another MIT course that I absolutely love (went through it twice) is "Environmental Technologies in Buildings" [1]. It covers a very wide breadth of topics, like sun radiation, photo-voltaics, wind, insulation, human perception of heat and lighting, etc. Just all around fascinating. Professor Reinhart is a pleasure to learn from. There's also and Edx course with lecture recordings for it [2].
[1] https://ocw.mit.edu/courses/11-350-sustainable-real-estate-s...
[2] https://www.edx.org/learn/sustainable-development/massachuse...
The course videos have been uploaded to YT in the past hours:
https://www.youtube.com/playlist?list=PLUl4u3cNGP63Np7g0Xtk9...
We need to stop treating real restate--especially residential real estate--as a mechanism for creating wealth.
there are enough homeowners that they vote for politicians and policies that will increase the value of their "investments". All this does is simply steal money from the next generation. Our entire economic system is designed to transfer wealth from the young and poor and the old and wealthy.
There is a distinction here to be made between "private property" (what we have now) and "personal property", which would be a far more ideal outcome.
Personal property simply means that you're allowed to own your own home. You're either not allowed to buy up huge tracts of homes to restrict supply and jack up prices or, if you do, you're taxed punitively for it.
Landlords. We need to get rid of landlords. 50+ years ago, the UK came close to this with a surprisingly simple solution [1].
This alone isn't sufficient but it's an important part. The other big part is to have a supply of social housing [2] so the private sector simply can't manipulate hte market.
Unfortunately, when Americans in particular hear a term like "social housing" they lose their minds and they immediately go to ghettoes or projects. Don't think that. Think Vienna [3][4].
[1]: https://www.theguardian.com/lifeandstyle/2024/mar/19/end-of-...
[2]: https://www.allianceforhousingjustice.org/us-social-housing-...
[3]: https://www.politico.eu/article/vienna-social-housing-archit...
[4]: https://www.theguardian.com/lifeandstyle/2024/jan/10/the-soc...
No political remedy will work until there's a culture shift, and that's probably still a generation or two away. The baseline that people seek isn't just a reliable place to sleep, eat, and clean themselves.
They want the television-depicted life: a home which they only (at most) share with a partner and some pre-adult children, where everyone has their own bedroom, and there's probably at least one more bedroom to enjoy as an office or rec room, a kitchen suitable for entertaining, maybe a finished basement, parking for a few cars, no shared walls, and convenient access to whatever their work and whatever they like to attend in their free time. They'll tolerate a little less, but will refuse to take the social issue as resolved if they have to.
That's a far far cry from both the traditional history of multi-generational homes, boarding houses, and one room cottages and the modern political vision of "social housing". You can award contracts to all the builders you want, or open the market for them to chase whatever money you think is out there, but you're not going to be able to practically deliver the homes people want for everybody who wants them. Expectations need to be reconciled too, and we have almost no means to affect that.
Actually most families with a decent income can afford that "television-depicted" house in most of the country. It's only in a handful of high-cost metro areas where that has become unrealistic. Spend some time driving around the Midwest and you'll see that reality. We shouldn't impose a political "remedy" on the whole country just because San Francisco and Los Angeles are badly governed and haven't allowed much housing construction.
Wrong. People respond to incentives. If you have 50 years of intensives pointing to one system, then that's what you are gone get. And then you have commenters going all 'see this is what people want'.
The reality is, there is plenty of evidence that people still like other types of building and other types of neighborhoods. They were simply made illegal, economically terrible or destroyed with some other means.
You act like there wasn't a massive top-down government program to produce exactly the system the US has. There is a reason only the US looks like the US (expect for maybe Canada). Its because its was top down government policy.
The US systematically red-lines pretty much all inner-cities. Created a mortgage market that financed only single family homes in suberbia. These were often cheaper then rent you had to pay in social housing at the time.
This was then cast in concrete with some of the most strict zoning regulation anywhere. Making it basically impossible to do any other kind of development outside of the already existing city (that was redlined).
To support this a massive highway building program, with highways rammed right into the city center. Destroying large parts of existing cities (not paying people properly). Then in those cities laws were imposed to create massive amounts of parking, at direct expense of the poorer people that lived in these cities. And of course the tax system made it profitable to rip down houses and put in place surface parking-lots.
Private cars blocked public transport (often private back then) and made it non-competitive, destroying mostly car free neighborhoods that depended on that.
And of course it continues. The way the tax system works it systematically distributes tax dollars from city centers to the outside. Even poorer districts closer to city centers are more productive then suberiba. So you have those areas that get neglected, but even if they weren't neglected, they would still overpay on their taxes.
The same kind of unfair structure exists when it comes to utility as well. With existing urban cores overpaying and suberiba under-paying. Suberbia using massively more shared infrastructure to produce the same service but paying the same or less.
And of course lets not forget that all those new roads and new highways were a massive infrastructure investment, something that street-car, bus and trains didn't get.
This isn't even all. We could go on to talk about how fundamentally unfair tax assessment rules for different housing types and income groups.
But yeah, it was totally 'culture' that lead to situation. It wasn't at all a top down system. To be sure, there were lots of willing people in power on the local level that were more then happy to follow those things.
People respond to intensive. If all of a sudden subberbia would pay fair taxes and far utilities. And that goes even more for Walmart and friends, the predators of the current system. If the zoning laws didn't exist. If those highways were ripped away. If parking all of a sudden had to pay. If highway money was reinvested in high intensity bases and trains. If all those things happened I described above changed, this 'culture' wouldn't survived for even generation.
Unfortunately people are mostly blind to the systematic structure that produce 'culture'.
> And one room cottages and the modern political vision of "social housing".
Clearly you have no understanding how 'social housing' works in places like Vienna.
> but you're not going to be able to practically deliver the homes people want for everybody who wants them.
There is plenty of evidence that there is high demand for things other then single family homes. This is simply a fact. You can see this in the property prices alone. Anywhere that has a nice mixed used development, prices go threw the roof because demand is so high. The issue is supply, not demand.
Go look at the data analysis by urban3, their data shows this pretty clearly.
Nailed it.
Instead of trying to invent new property classes and try untested social theories, let’s do what is known to work:
A. Stop the financialization of homes at the federal level by getting rid of the mortgage tax deduction and the sales tax exclusion on the sale of a personal home.
B. At the local level, reform zoning and remove the draconian restrictions on new home construction, especially of multi-family housing near transit. This will fix the supply issue, the primary driver of high home prices in high demand metros.
Once we remove these artificial government policy distortions that affect both demand and supply in the housing market, an actual free market will arise and drive down prices, especially of older, existing homes.
> We need to stop treating real restate--especially residential real estate--as a mechanism for creating wealth.
It's not about treating it this or that way though.
Owning a house is creating wealth, it's not something you can avoid. How could this ever not be the case?
We all agree a home is valuable. So if you buy one (and pay for it over many years), you're acquiring something valuable. As opposed to throwing money away in rent. That's it, you built some wealth. There's no way to make it not be valuable.
> How could this ever not be the case?
If the value of the house goes down like what happened in 2008.
Those houses are now worth more, even inflation adjusted, it was just a temporary dip. So you've still built wealth even if you bought in 2007.
"Social Housing" sounds like a bad idea. Whenever something is "socially owned," it means it is controlled by a few who have wormed their way into the power position to control whom get to utilize that something. It comes down to who decides who can live in this social housing, and whether one could be kicked out by the whim of some bureaucrats or some committees. It's the HOA nightmare multiplies 100 times.
Basically it's what is your right and claim to this "social housing"? Pretty soon that right will become a personal ownership right, and private real estate ownership is back and so is commercial real estate.
Then just call it what it is, a dorm.
The prime minister of Canada literally said housing can't come down because it's the retirement plan of a lot of boomers.
Anyone who wants to see the current state of how the alt-mainstream thinking on this subject is shifting is welcome to indulge in the inventories over at [r/Canada, r/CanadaHousing, r/CanadaHousing2, r/TorontoRealEstate]. Anything that is not related to immigration or housing is essentially treated as a distraction. There is a simmering build up of disillusionment, anti-immigration and perhaps xenophobia that was usually not tolerated/allowed (hence the more spicy off-shoot CanadaHousing2), but the emotions have more or less found a stable equilibrium, and it’s not pretty.
I don’t have answers here, I can just observe the situation and blink.
Canada also has a dearth of startups, or new ways of making wealth. The only two ways are resource extraction and squatting on property. If Canadians can become more used to risk and put some of the pension fund into startups and new technology, things could be different.
It is shocking that the godfather of the modern AI boom taught at University of Toronto and yet Canada is not even in the picture when it comes to AI and it won't ever be.
Which is odd because I don't see a lot of downsizing from any boomer I know, the equity is locked away on the home until they sell.
> the equity is locked away on the home until they sell.
Some people get reverse mortgages so they can spend some of the equity of the home while they still live in it:
https://www.canada.ca/en/financial-consumer-agency/services/...
This is the same tax trick that the obscenely wealthy use with their stock portfolios. It's a "fantastic" way of accessing accrued wealth without paying taxes on it.
I think I would prefer that we investigate this more thoroughly, as well, to reduce some of these tricks that further stratify the haves and the have-nots.
The thing being omissed here is that there's a cost-basic step-up when you die.
So, if the value of the home increased by say 2x the taxes on it are 0 because the cost-basis on it isn't the price your parents bought it for; it's the price when they died and you got it.
This works out a lot better for stocks because when you created the company and gave yourself a million stock units for a total of $1 (not each) and those stocks appreciated to be $300 each that's a ton of capital gains. Except when you die and it's stepped up its not. -- https://www.investopedia.com/terms/s/stepupinbasis.asp
What do you propose we "investigate" exactly? There are no tricks here. Everyone with a basic understanding of finance knows exactly how it works. People have always been allowed to borrow money and use their assets as collateral.
Is it? There are several ways to draw against the equity of the house in the U.S. Are these absent in Canada?
Yeah anytime the whole 'we already have enough houses' has been tested it has been found false. Demand in cities is constantly growing, and cities with green belts and all kinds of regulation simply can't expand. Total stock is irrelevant. The British solution if continued would also lead to rises as demand in cities grows.
> so the private sector simply can't manipulate hte market
They are not 'manipulating' the market, they simply have assets that are valuable because of high demand. You can only restrict supply if some other private developer can not simply buy land and build, and take that advantage away from you. If there was actually enough places to build, then the profit maximizing strategy is to build as many high value houses as fast as you can. And that's exactly how street car subburbs were built on mass. All these theories about how nothing is possible without defeating 'landlords' are just not true. Its the currently existing laws and regulation that set the board and people just play that game.
The reality is that we know the solution. We know that those places that build enough housing of the type demand by the market have lower rates, this has been proven over and over again.
In Britain Labor basically created a laws that made private house building much, much harder. They of course did this because they believed they would build lots of social housing. Of course because of money issues and their political downfall this didn't continue. But also off course, the laws restricting supply were not changed. So Labor and Tory both have a hand in the problem.
The problem are perfectly clear. Build more houses in places people want to live. It doesn't even matter if its social housing or private. I believe the market is perfectly capable of building the right kind of housing. But of course you can also do it with social housing. There are many ways to entourage more building. We need to stop making this about some political fight and simply look at the market basics.
In Houston Texas, the market did build many houses, and prices were comparatively low. But of course because of the type of regulation that still existed, this resulted mostly US style subburban sprawl. But I guess better then simply increasing prices. There is tons of other data that shows corroboration between house building and rents.
We don't have to totally re-imagine property rights law, we aren't gone abolish private property and renting isn't inherently bad. We simply need to create rules that make actual sense and provide the necessary infrastructure.
I'm not necessarily against some of the rules against landlords that you suggest, but we simply can't pretend that it is a solution by itself. The notion that all private ownership and renting is inherently hurtful is one of the biggest myths that's preventing any progress on this issue.
We know what to do, land-value tax, right-to-build, proper land-use planning, densification, take the space away from cars, transport oriented development. And this can be done entirely by the government if that your political bend.
> All this does is simply steal money from the next generation.
It actually enriches the next generation. We still have houses from the 16th century, still providing value for our community to this day.
I’m sorry to be negative because I agree with the general sentiment that society needs to stop treating “home value go up” as its primary retirement plan, and get rid of our allergy to social housing, but that first Guardian article about banning rental housing is just so bad on so many levels.
He says Britain doesn’t have a housing shortage because the ratio of homes to households hasn’t changed even as prices have gone up—but treating Britain as one big housing market is ridiculous, there have been massive shifts in economic geography over the last 5 decades. There is a housing shortage in the areas with well paying jobs and a housing surplus in the areas with no jobs. People should get to choose to move to a place where they can make a living!
He also says London’s population hasn’t changed in the last 50 years as prices have gone up without new housing being built—uhh no shit! If very little new housing was built in that period, how could the area’s population go up significantly? What happened instead is that, because demand rose and supply didn’t, the population stayed the same and the static supply went to the highest bidder. This is just mind-numbing economic illiteracy. Where does he think a population increase would go in London if London doesn’t increase housing supply?? The static supply is WHY the population didn’t grow! Literally exact same issue as NYC and the expensive parts of California.
He says developers would never build enough housing because it would drive down the price they can command—has this guy ever heard of the tragedy of the commons?? This is literally how markets work when there’s adequate competition. Econ 101. (And I’m not talking about fringy free-market-absolutist econ; Marx understood perfectly well that market competition drives down prices.) For a couple examples, Austin and Minneapolis have generated enough new supply to tank the price of rent. And imagine how ridiculous this argument sounds about anything but housing. “TV companies would never produce more TVs because that would bring down the price they can charge.” Oh wait…
It’s also totally left out (because there is no answer) how overall affordability would get better by getting rid of renting and only having owner-occupied housing. It’s the same amount of demand for the same amount of supply!
Finally, please just don’t take away my ability to rent! At my current place in life I don’t want to lock up a ton of money in real estate and be stuck in one place (much harder to move frequently due to transaction costs). Maybe later in life I’ll buy, but right now I want to rent (and invest my money in other things instead of a home). We need both kinds.
Ughhh. This author’s way of thinking is exactly why many of the most productive and ostensibly progressive cities (London, SF, NYC…) are prohibitively expensive, denying everyone but the rich the ability to live there. It’s easy to understand the right’s desire to send property values to the stratosphere (“fuck the poor, and fuck you too, I got mine”). But the left ties itself in these crazy knots to bring about the same result, hurting the working class we claim to care about, and it’s baffling.
Don’t overthink it, just build a fuckton of housing where there’s the most economic opportunity, both private sector (because central planning is notoriously not the best at creating enough supply) and social housing (because the market never works for literally everyone, and also because why not, more housing is good).
> homes to households hasn’t changed even as prices have gone up
Office for National Statistics (ONS) definition of a household: one person living alone, or a group of people (not necessarily related) living at the same address who share cooking facilities and share a living room, sitting room, or dining area.
By that definition (occupied homes)/households is always about 1, so homes/households is pretty much just homes/(occupied homes).
This is one of the issues behind the North American housing crisis (there’s no “middle” housing):
https://missingmiddlehousing.com
Yes and there are no third places where people can hangout locally. Out of all we know about humans up to 1950 is that we don't live full lives out in the burbs.
Maybe what we need is improvment to hyper-adobe which is being touted as a manual 3D Printer(humans being the processor). The wasp 3d printer looks promising. I wonder if we can simplify it to be manual by maybe stradling the first foot high layer. Alternatively, we could design modern modular wall sectkions akin to SIPs, ive seen some creative pvc sheets out of china lately.
Singapore cracked the housing problem for citizen but the rest of the world doesn’t like the policy, I can imagine most of the people commenting here won’t either.
Just read the comments, “housing provider” you can’t even admit your a landlord, it is amusing to read comment like these, very interesting to see how NIMBYs think.
My radical solution (in addition to build build build).
Tax something like $1,000 per day that a unit is unoccupied (aka not in residential lease or commercial with x number of employees assigned there).
Buy and hold empty is not sustainable. Also Airbnb can go to hell.
If we penalize home buyers for investing in real estate, then we will have a housing problem.
Those who own real estate and rent it out should be motivated to create more housing. They should get tax breaks. Not penalized with more taxes.
Thats the only sustainable way.
Mh, I do not see the whole course but... The sustainable real estate is one who can evolve because the best energetic performances of today will be very bad performances tomorrow and the "ideal design" for today will be a very bad one tomorrow. So essentially only small buildings are sustainable because they can be made in an "industrial-like" manner (meaning the same design can fit pretty any needs with just minor changes) and changing them is sufficiently cheap.
Beware that in the past a condo was cheaper than a home per apartment because there was only one roof, a bit less in equipment and so on. BUT that's in the past where there was not much about anti-seismic design, fire safety, HVAC and so on. Today a modern "green" condo cost more in raw materials than equivalent single family homes PLUS the condo can't evolve. A tower? Even FAR worse. Just the mere structure need more steel than homes, just the elevators alone cost more. Similarly modern rails cost MORE than people moving with personal cars. The narrative of course it's the opposite because finance capitalism need big things and profit from rent and services in such setups, but the narrative and the reality are really different.
Today the sustainable real estate economy is those of spread single-family homes mixed with small commercial buildings (sheds, essentially) to reduce significantly the amount of commuting residents needs just to buy some groceries, modern small buildings built locally with mass produced components produced around the territory in most cases in not so big setups simply because there are standards like home appliances sizes or Chinese battery tools connectors (the same battery works essentially any tool from any vendor) or cars (yes, most component of Chinese cars are the same even if cars came from various brands). Essentially today sustainable real estate is a FLOSS/open hardware one spread/personal and built around the world without megafactories for most of the component (we still need some big scale for steel, for some electronics, mining etc, but not much more). This real estate of course is VERY opposed by any means by large actors who know well this model is for individual ownership, SMEs not for them.
Singapore has a very sustainable housing plan. Affordable homes are owned by the govt and let out on 99 year lease. Problem solved.
What happens when it gets to the last few years and the occupants stop doing any upkeep?
It’s called Housing and Development Board (HDB) housing policy. First of all.. it’s not a freehold model but it’s sold to Singaporean citizens only.
They are highly subsidized and based on their income. Singapore also has CPF or central provident fund.. payments go from there but there has to be a 10-20% down payment.
These are highly subsidized. As are the maintaining costs and repairs etc. the state takes care of it. sometimes the owners do it. There is a central savings account too. They can choose how to pay for it.
But the key point is that it’s always a 99 year lease. They can only own it for 99 years. As everyone is going to be in some sort of workforce or is eligible for govt monies, no one needs to be without housing. It goes directly from their CPF or OA account.
The kind of housing is dependent on income level. And another condition is that it’s for families only.
Single people have a different scheme. And there are also ways to apply for Joint singles HBD flats.
They have to be at least 35 years old and anyone younger than 35 can buy under a public scheme but with their family. There are separate schemes for orphans and single unwed citizens, divorcées and the widowed.
Basically there is a scheme for everyone so no one is left behind. But they can’t own it after 99 years. Because it can be beyond a normal lifespan(they start at age 35.. so even after they are gone, the family will be housed until they themselves reach age 35 to qualify with CPF/OA for a HBD unit.
The flats can be resold but again only for the remaining period of the 99 years. Never for speculative purposes and only for residential.
Singapore is a high trust society and can be called as a benevolent dictatorship. They don’t look kindly at any kind of shenanigans.
There are very strict rules. It has to be a mixed ethnic development and it can’t be rented out etc..and if it is to be rented, there is a process for that too.
All HDB estates are meticulously planned. From schools to parks to shops and public transpirt, these are planned communities.
The idea is to give the people housing stability and housing security. The state takes care of its people but expects them to be responsible and accountable. The result is a highly ordered and high trust society that is stable.
Having said that, Singapore is not for everyone. It’s super ordered and appeals to many Asian mindsets and especially for those who would rather spend time raising their families instead of worrying about crime or housing or food security.
Honestly I wouldn't trust any comments about Sustainable Real Estate from a university on the east coast as a west coaster. So many empty houses there.