Houses are for living, not for speculation(en.wikipedia.org) |
Houses are for living, not for speculation(en.wikipedia.org) |
If you want to live of your rents, buy a commercial or industrial building, speculate with that. But residential construction should be protected to ensure each household is able to buy one with the average country salary.
We should reward the person who lives in a normal house below their means, and buys an apartment as an investment (which is private capital into new construction that wouldn't have happened if they didn't do it), then rents it out, which increases stock on the rental market, and decreases rental yields.
If you want to tax ALL housing the same, including people's only house, then sure, go for it. Or better yet, tax all land ownership. Just don't distort people's behavior by making a special exception for their main house.
If you take speculation out of the housing market, storing net worth in your main house becomes a lot less attractive.
If someone lives in a modest house and have further assets, there are many many (speculative) stores for that net worth that isn't housing.
In the Uk, at least, stamp duty is an obvious and infuriating driver of either buying big early or never downsizing. I did the former, parents do the latter.
Easy to solve the incentive problem yet we never will
> But residential construction should be protected to ensure each household is able to buy one with the average country salary
is political suicide, because you’re giving every voter with existing property a haircut on money they believe they already have, that they’ve usually borrowed to buy, and that they’ve financially planned on appreciating. Per Jean-Claude Juncker, “ We all know what to do, we just don’t know how to get re-elected after we’ve done it”
You tell people: You have 20 years to sell your second/third residential properties, even at a good tax premium. But in 20 years you MUST have sold or you Will pay lots.of.taxes.
Edit: anyhow... I dont pretend to try to solve this complex issue in a couple of HN comments. It's just a general sentiment I have that the.only way to remove speculation from residential property is by government mandate.
I'm all for this. And I am "part of the problem " as I own 2 houses in 2 different states, and rent one at a freaking high rent price, because the market in that area is crazy.
Also, buying or building and operating an apartment complex isn't speculation in general, unless you consider basically any financial investment speculation.
I see no reason why someone providing capital to build a building and then renting it out to cover cost of that capital, maintenance and building cost is unreasonable or bad thing.
Issue really is when market is manipulated to keep prices going up beyond inflation or normal changes in demand. That really ruins everything. Real estate shouldn't really appreciate at all over time beyond inflation.
The problem is the scale of investment. For example, 3 companies own 19,000 houses, or 11% of the rental market, in the Atlanta, GA area[0]. The market is being "manipulated" in that investors with vast amounts of cash are outbidding folks trying to buy a primary residence, and by owning tens of thousands of homes, you exert a measure of control over the housing supply (i.e. "manipulation").
I don't believe that companies should have the ability to own so many houses, and the easiest way to curb this is to progressively tax investment property to the point that isn't financially feasible to own tens, let alone thousands, of homes.
0: https://news.gsu.edu/2024/02/26/researchers-find-three-compa...
Setting aside the "I know it when I see it" definition of speculation used by most people that changes as needed during a discussion and all the negative side effects that come with that, is telling people who produce a scarce asset that they will make less money when they sell it a good idea, or a bad idea?
Why do you assume that prices increasing faster than inflation is manipulation, and what is the definition of "normal changes in demand"?
Real estate historically hasn't appreciated faster than inflation over time. Supply constraints, historically low interest rates, and a couple other factors have changed that in a number of areas in the last couple decades, but not all. The Rust Belt is a prime example, yet for some reason that isn't relevant in these discussions.
So the 2nd, 3rd house taxes could be relatively low but for the 10th they would be ginormous.
If you wanted to incentivize home buying for young families, then the demographic that needs the most incentives are old people whose kids moved out decades ago. Every single person I know has two aging parents living in 4 or 5 bedroom homes by themselves, my own included. I know people are sentimental about the homes they grew up in, but this is the biggest lever you could move: hike property taxes on properties with unused occupancy.
If you want to keep the home in the family, then this encourages the parents to give the home to one of their kids who actually need it because they're starting a family of their own.
Some people need to rent and some will never be able to of want to buy property. This is taxing them even more.
If we do something like this it should come from financial system. Like already you need 30% deposit when you buy investment property in NZ. Perhaps we should only give rental loans to new builds only.
this proposition literally solves nothing
and for the record I own one real estate, which I bought without mortgage and live there with my family
I suggest you do those things while homeless. Let me know how it goes.
Same goes for commercial, but in that case, I'd even suggest forefeiture if you are not reducing requested rent within a year of vacancy. Let someone else take over if you overspent.
The other problem is this, if you banned short term rentals _entirely_, which NYC basically did, you have not changed the fundamental supply vs demand structure. You still have X people who want units and Y units. Rents did not go down _at all_. House prices did not go down _at all_. The primary change was that hotel prices went up because of lack of competition.
All data would indicate otherwise, and why shouldn't short term rental or vacation properties exist?
No, these homeowners know exactly what they are doing and they're intentionally creating a shortage to increase the value of their properties. The problem with the housing crisis is that it's entirely rational behavior. It's just that there should be some sort of human right that prevents this type of exploitation.
Housing debt has to expand or the economy tanks because the money supply shrinks. Since we are at the end of the current debt cycle, housing has gone vertical. It will collapse because eventually exponential curves can't fit reality. We may be seeing the start of that now.
The core problem is how we create money and who benefits from it. That's what needs to be fixed.
Also for land tax and similar: raise them by a lot and use that money to pay for a tax-exemption for one home
you can apply this for pretty much everything, who will decide what can be used for speculation? I want much rather free market than someone deciding what I can buy with my earned money
yeah, and gold should be for making space stuff, electronics or jewelerry, and water should be for drinking/cooking, not for having fun in swimming pool, etc.
edit: the problem in China is not expensive real estate, but no options to invest money, Chinese stock is shit, you would earn pretty much nothing over 10 year period, made that mistake once, even real estate prices are not really growing in China, my in laws bought apartment many years ago, now they would be lucky to sell it for zero profit, blame chinese economy with minimal real growth causing minimal inflation causing all these issues
on the other hand it's nice to come to China after 9 years and find out meals in restaurant cost pretty much same as 9 years ago, unnelievable in Europe, sadly so are their salaries and I have still seen job ads offering like 2500-3500RMB same as 10 years ago, though you can rent small apartment for 1200-1600 RMB (talking both about Beijing suburbs)
nice bonus in China is you can't even own the land with your house, just lease it for few decades
Instead, we give people an exemption for their real estate capital gains, so they can buy a bigger house without paying taxes at all. Then these same folks pull up the latter by voting in restrictive zoning to protect their property values.
There is one verifiably rigged game in finance, and it's residential real estate in affluent areas. It's the only industry where overt collusion and cartel-like behavior is completely legal. The result is generations of people who rationally load themselves up with way more debt than they probably should, because getting on the latter is the only way to stay above water within our lifetime.
Yes, obviously I think that having a 100% capital gains tax on housing would be pretty absurd, and would not lead to the types of outcomes we actually want. We often do want developers betting housing, which incentivizes improvements and reselling the places. But my point here is that -- for those who truly want housing to not be for speculation -- you need to completely eliminate economic gains from buying housing. They way you do that is to tax the capital gains that come from the sale of housing to the point where they no longer exist.
A land value tax is probably the best option for what we want to happen which isn't "eliminating speculation" but is instead to prevent land hoarding. We actually want people to speculate on properties, but in doing so, to develop them in to efficient uses if that future value.
https://en.wikipedia.org/wiki/Chinese_property_sector_crisis...
Never mind, I added a link to it, and the prior Chinese bubble (https://en.wikipedia.org/wiki/Chinese_property_bubble_(2005%...
I wonder when Xi will come up with a witty one liner for that one.
https://en.wikipedia.org/wiki/Chinese_property_sector_crisis...
But they also establish a minimum bar to _be_ housed. If you can’t afford a (by global standards) very nice home, you will be on the streets.
Maybe regulations put too much burden on homeownership but slums create huge issues as well. Basic plumbing shouldn't be taken for granted.
I think the 'plumbing' for sewage took me 2 days and $300 in pipe. The septic system was maybe $2000 in materials, you could easily replicate it with a shovel and a couple months of doing day labor on the weekends.
I take it for granted because it is extremely cheap, extremely easy, quite sanitary, and basically a footnote on building the shack. This ain't the 60s anymore, any tom/dick/harry can plumb a whole house using extremely forgiving pvc and pex with minimal cost or thought, though they're usually stopped by asinine licensing rules and the dumbass notion you need building plans (I had none).
The intentions of a government aren't enough. You need feedback systems. China doesn't have effective feedback systems, because the CCP actively destroys them. No one is "turning towards China" - they have negative net migration since 1968 (https://data.worldbank.org/indicator/SM.POP.NETM?locations=C...).
Whether you think that’s a good thing or not depends on whether you _actually_ believe in meritocracy or not. I’ve found most people don’t believe in it as much as they say they do.
"Trump Urges Congress To Pass Bill To Prevent Corporations from Scooping Up Single Family Homes"
I would 100% support measures that inhibit corporations from owning residential property.
Apartments are probably a special case, but I'm not entirely convinced the age of giant corporate complexes is a good one.
I also don't necessarily mind if a PERSON owns a house and rents it out (e.g., to spend a year somewhere else, or because it's a lake house or something), but I get suspicious of they own a bunch of them and make it a business. Denying corporate status would discourage that.
It seems to me that if you want some sort of money creation management role in the economy, you need to restrict people's ability to lend and borrow from each other. So if you wanted to lend me money, or you wanted to borrow from me, we would have to apply for permission.
Off the top of my head, I can't think of anyone who's tried to restrict people's right to borrow from a willing lender. It doesn't seem like a good idea intuitively, but I do think it's something you must do if you want to have a money creation manager.
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”
you can read up on social credit (the western version, not chinese) if you want an alternate perspective
EDIT: On reading it, this is actually a reasonable description of how it works. But the idea that it's not managed by anyone is silly: the banks manage it by scrounging as much debt as they can, productive or not, and charging as much interest as they can on it (and getting bailouts when that inevitably goes sideways, which transfers the issue to the public purse). That's the problem: the money needs to be created to match the productive economy and be placed in the hands of everyone, interest free.
Didn't the Christian phase in Europe effectively restrict meaningful lending from most of the economy for a really long time?
That's the fundamental problem. This was recognized for a long time in the west, we banned usury, but now if you use that word people either have no idea what you are talking about or get mad at you because they make good money off it.
Because of how tightly coupled local taxation is to the real estate market, the political risk associated with angering local homeowners, and the regulatory capture performed by local government employees and supporters of the status quo, it's highly, highly regulated already in nearly every populated area of the US.
I think forcing people to buy home is worse than some party owning lot of homes.
11% of the single family rental market. There are 200k rental apartments in Atlanta too.
Controlling 11% of the rental market is not enough to manipulate it, and that's one of the most concentrated markets in the US if I remember correctly. It's not an actual issue. If those 3 companies are in fact colluding, use the existing laws against that to prosecute them instead of inventing more counterproductive policies.
These people do not affect rents in any meaningful way.
> Small investors who owned between one and five properties held 87% of the single-family homes owned by investors; those owning six to 10 properties owned another 4%
https://www.prnewswire.com/news-releases/real-estate-investo...
Seems like for NYC, it worked as expected with the increasing hotel prices. And didn’t work as expected for rentals. The next step now would be to ask why it didn’t work as expected for rentals while it worked as expected for hotels, not just concluding that the ban wouldn’t work.
Maybe look at the actual facts before trying to tun this into some dumb socialism vs not socialism argument.
The thing to get your head around is: who gets the new money? My preferred system (social credit) says everyone gets a citizens dividend, rather than banks claiming surplus value via compounding (read: exponential) interest.
To my mind that's good, it allows each of us the right to estimate future value, and the money supply is effectively a sum of our estimates.
I think you write "the money needs" because you want that to be the case, Just another sentence where "x needs" (third person) means "I want" (first person). Unless you can describe the need?
Some companies buy and update homes then resell them. They don’t all do a cheap flip with a massive markup. Neither do all of them hold them long term to charge high rents. That seems like something that should probably be regulated rather than outright banned.
Beyond single-family homes, it’s very rare for someone to build an apartment building with all of the units already sold. In fact, most are not coops or condos and are rented long term. Those rents also keep going up. A big part of that is how hard it is to get a new complex, especially a mid-rise or high-rise building, permitted to build.
I think there’s a difference between a bank company “owning” a deed vs a PE company holding it for speculation and rent squeezing. You are right though that there has to be a system to hold inventory and we made Fannie Mae and Freddy Mac macro-economic instruments instead of those inventory stewards.
In reality what happened, was basically nothing. People that could afford decent sanitation continued to buy it, while the people shitting in the streets could now at least shit in a hole on a piece of land they could buy. We deregulated housing 20 years ago and eliminated inspections, and none of the apocalyptical worries by the nay-sayers came true.
The main results we saw was it's cheaper to build a house, and we ran bureaucratic bootlickers out of town because of their irrational fear of what turned out to be a nothing-burger (which might have been the more valuable of the two effects).
In no particular order:
- Financing company
- Realtor x 2 (both seller and buyer)
- loan servicing company (may or may not be the financing company)
- Insurance companies (multiple, depending on how financing is achieved, everything from property itself, to title, to PMI)
- Appraisers
- Home inspectors
- Closing attorneys
- County tax office
- City tax office
Basically... there's a reason that renting is the right call if you're not buying to hold for at least 5 years, ideally 10.
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There absolutely is speculation in housing markets, but at least in the markets I'm familiar with - it's not really the landlords who are renting houses that are doing the speculation. It's the folks who buy up 100+ houses in depressed/low-income neighborhoods during recessions and then sit on empty property for years.
Some speculators serve a necessary function but many do not. In my area it's not uncommon to see homes listed where the last sale was ~6 months ago and it's clear they just slapped some paint on it, replaced appliances in ways that are not generally to my taste, and then doubled the asking price.
So I'm not certain how to tie that back to the original discussion about not needing a special case to handle people accumulating multiple residential buildings.
--
Side note - I don't see this case pretty much anywhere (and I'm literally in the process of looking at homes). I do see cases where a home sold 6 months to a year ago and the new price is ~10% higher, and I do see cases where a home sold in 2021/2022 and now the price is 2x higher.
But what I don't see any of is doubled sales price in a 6 month window with just a new coat of paint.
So I'm not certain how this is relevant at all given it's non-existent in any of the markets I'm looking at.
This creates a distortion where people buy the biggest house they can afford, because everything else gets taxed.
Their houses aren’t even “investments” to them, they’re lifestyle properties that also may increase in value.
You invest 1 million USD in the stock market. It loses 90% of it's value. You basically have nothing but a tax write off on future gains.
I guess the housing equivalent would be an HOA, but honestly I would rather lose 90% of my money than sit through an HOA meeting…
All data indicates it's not the case, as well as common sense.
For homes, I don't know if there are. But I think taxes should be levied in line with incentives. If you place a wealth tax on property ownership, the only tangible thing that will happen is rents going up to offset. Since the tax applies to all landlords, it will be the closest thing to rent inflation.
What you really want to avoid is homes built but sitting empty. Whether that's a builder who can't sell at asking price, or a landlord not getting the rent they want doesn't matter. If the city sold a lot to you, they did so for improving home supply, not the developer's profits.
For commercial, my opinion was based on Louis Rossman's YouTube channel about New York. The hypothesis there is that loans are based on property value, which are tied to requested rent. Asking for a lower rent might mean they have to put up more collateral, which they can't. So they keep asking for high rates and leave it vacant.
Generally, there aren't any meaningful number of completely vacant homes in desirable areas in major cities. The caveats are there for cities like Miami where there are a significant number of second homes, cities like Detroit and Baltimore that have failed in some sense and experienced major population loss at some point, and rural areas that also have been experiencing population loss for some time.
I don't have a problem with vacation homes and most Americans don't seem to either, but if you do, okay.
The areas with declining population aren't really relevant to the discussion IMO, other than it's cheap housing that exists as a counterpoint to the people who claim no cheap housing exists.
> But I think taxes should be levied in line with incentives. If you place a wealth tax on property ownership, the only tangible thing that will happen is rents going up to offset. Since the tax applies to all landlords, it will be the closest thing to rent inflation.
I agree.
> What you really want to avoid is homes built but sitting empty. Whether that's a builder who can't sell at asking price, or a landlord not getting the rent they want doesn't matter.
Sure, but that's not a problem today. Builders aren't sitting on homes for extended periods of time, and landlords aren't leaving units empty for extended periods of time either. They are already disincentivized from doing so by existing carrying costs, so they don't.
> If the city sold a lot to you, they did so for improving home supply, not the developer's profits.
They presumably did it to generate revenue for the city, though there isn't much buildable city-owned land in most municipalities.
> For commercial, my opinion was based on Louis Rossman's YouTube channel about New York. The hypothesis there is that loans are based on property value, which are tied to requested rent. Asking for a lower rent might mean they have to put up more collateral, which they can't. So they keep asking for high rates and leave it vacant.
The commercial market is completely different than residential. Loan durations are shorter, terms are different, and there are many other factors that differ.
That analysis can't be applied to the residential market.
A house used to be viewed as a consumable good a hundred years ago, not an appreciating asset. (Before the New Deal commoditized mortgages)
Big land owners / PE / ... cornering all the available agricultural land / needed supply chain / economies of scale etc etc to extract more and more value of Scarce resource that has already been optimized is extractive.
The thing is that the word extractive makes it hard to have a good debate because pure extraction is rare (aka no need to add any extra labor to have the possesed "good" maintain or exceed its value vs inflation...
Personally in general I would prefer more usage of the word rent seeking (aka legally and finite resource captured market) and others.
As the current biggest problem in most countries in the world is housing and its cost for those who are renting and without any (realistic / statistical...) hope of ever entering the owners side that seems like something worth talking / voting for.
(I can get my beef from brazil / australia / ... But i can't get my land from there while living here.)
Your remaining arguments are endless handwaving and use of 'etc' so I won't be responding to those.
A farmer puts products that people buy into the marketplace. Many actors in the financial sector make their money by micro-timing trades in securities and commodities markets that are already liquid enough they don’t need the additional activity. Others buy up stock of housing just to control enough to raise the prices. They are literally just taking other people’s money out of the economy for their own gain, and the economy does not function any better due to their activity. In fact, when housing is overly tight the economy suffers.
Presumably you mean desirable land is scarce, which is true by definition, but land in the US is far from scarce.
Why do you think people are hoarding land today that could be used for housing developments and leaving it empty?
What is "too much" land that would subject it to your exponential taxation?
(there's a 1% chance that I'm wrong here - please accept my apologies if you're a vegetarian, sub 30m²/person living in an apartment not using cars / ubers and intentionally living near public transport - or the closest equivalent available to you / your families financial status as of this moment, you are also donating at least 6% of your money to buying up farmland to convert it to pristine wilderness --- i am definitely not but my order is me - friends family - other humans - a more beautiful planet for the most of those other humans)
But yeah, personally I'd gladly make beef that are feed lot fed a lot more expensive with every house hold getting a check in advance for what would be a fair share of beef for all... Make it so only american beef is allowed (american farmers are happy) and make it a slightly diminishing amount every couple of years as farmers age out... It would be slow but the value of beef would massively increase and i think a lot ot poorer people (and myself) would put my money where my mouth is) You'd also have to ban the export/import of feed for cattle fattening and presto - 10% or land available for none extractive uses...
In the same way that delmonte closing canned peaches results in a vast monoculture being cut down and that right now with the right externalities / support "human focused demand" you could be setting up / buying some of it up and paying rent every year to keep it pristine ~ or a bigger a one off payment...
Anyway, again - noone states their values and most people think their values are duh and only dumbasses would disagree - hence why only conversation especially in a thread of a story tends to be rather difficult as everyone tries to defend their pov without stating it or dio mio asking the other person why (which would have been a better option from my part as well but again medium/message etc.
Looking forward to your reply and have a great day wherever you are. I'm off to zzz
In short, you're just making things up. I'm glad you aren't in charge, though there are a concerning number of people with your mindset.
Spain is one of the last places on Earth I'd look to for economic policies. Enjoy your even higher unemployment and additional dying towns after attacking your only notable industry (tourism) I suppose.
There's plenty of housing available in places with no jobs, so mission accomplished in one sense!
Enjoy all the housing you could ever want when your town has even less economic activity than it did before!