7 ms·

There's a lot of empty houses in Palo Alto owned by overseas investors. That is a huge problem, really limiting our housing supply.

lazaroclapp 10y ago
Is this really the case? Or are there a lot of occupied (as in, rentals) houses owned by overseas investors? Why would it make any sense to leave a property in the bay area empty if you can add rent to the benefits of your investment?
- pfarnsworth 10y ago
  Because they are so rich that renting is a hassle. They don't need the extra money. The exact same thing happens in Vancouver, BC and their is a new law that fines people that leave their house empty.
- lupin_sansei 10y ago
  Often investors in Australia leave houses empty as there are different laws around capital gains taxes for investment properties (rentals) vs primary residence (which you don't have to actually live in all the time). It's often cheaper to not rent a property out and to get the lower CGT rate than to receive rent but have a 30% CGT when it's sold.
  - deleted 10y ago
    [deleted]
- Hydraulix989 10y ago
  Have you ever been a landlord? It's a huge hassle (it's impossible to do property management remotely, let alone in a foreign country), and if you have the wrong tenants (an easy mistake to make if you aren't experienced enough), things can end up going pretty badly!
  - ams6110 10y ago
    Of course, there are property management companies that will market the property, screen tenants, handle rent collection, and perform maintenance for you.
    - sokoloff 10y ago
      PMs often take 8% (+/- 2%) of the gross rent receipts for their services. In many places, that is about the same amount as the profitability of renting the place out, meaning that if I am financially able to hold the place empty, taking on the risk, time, and aggravation of finding a PM and having them rent it out doesn't leave me meaningfully better off. So, I'd rather leave it empty.
- EliRivers 10y ago
  "Why would it make any sense to leave a property in the bay area empty if you can add rent to the benefits of your investment?" A lot of these people are really rich. They don't think like us poor people. For many of them, the houses they buy and leave empty aren't investments. They already did their investing and made money. This is a key difference in the thinking; for many poor people, houses are considered an investment. These rich people aren't investing; they're spending or parking some of the money they made elsewhere. Buying a single apartment to rent out as an investment? How quaint. How small. For some, this is something they buy to park their money in such a way that it can't be simply taken away (bank accounts can be frozen, gold or other such small items can be confiscated, but it's awfully difficult to simply take someone's house when that house is in a foreign country with strong property laws) and is unlikely to vanish overnight. Secondly, it's my house, for me to live in if I feel like being in the area for a while. It's just nice to have my own place with my own personal belongings that I can leave there, and drop in or let family and friends use whenever I want. Sometimes, hotels just feel impersonal, and they're more public than I'd like, and I'd have to bring with me everything I needed. What they are not doing is getting into the landlord business. As a very wealthy person with houses all over the world, I wouldn't want strangers living in my house. I wouldn't be able to keep my things there. I wouldn't be able to just use it or offer it to friends whenever I wanted. I could make a tiny bit of extra income by being a landlord? That extra income is worth less to me than having the house empty, available for me to use or dispose of however and whenever I feel like it.
  - state_less 10y ago
    Sure leaving a SV house on Marina Dr. empty is nice just in case I want to use it, but we ought not condone or enable this self-serving behavior. It's disrespectful. Why do so many in this country still admire these types of wealthy people?
    - HarryHirsch 10y ago
      People have been conditioned to do so. There's no intrinsic reason why property rights should be protected to a greater degree than workers' rights, but libertarianism promotes awareness of one and not the other. It's kind of a circular reasoning, but useful as an observation.
TuringNYC 10y ago
I dont know about Palo Alto, but this is a big problem where I live in Brooklyn, and in NYC in general. When there is gray money coming into the market, prices go up. Honest earners get pushed down, and the push-down happens all the way down the chain. See the article below for more details. Of course in the Bay Area, there is an additional dynamic of restrained building which might be the bigger problem. https://www.nytimes.com/news-event/shell-company-towers-of-secrecy-real-estate https://www.nytimes.com/news-event/shell-company-towers-of-s... "From Manhattan condominiums to California mansions to gentrifying neighborhoods in Brooklyn, shell companies are increasingly pervasive in the world of real estate. These articles explore the people behind the opaque deals."
- Zach_the_Lizard 10y ago
  NYC has quite restrained building also, almost comparable to SF. The tall stuff was mostly built long ago, and the newer stuff (E.g. Long Island City) is opposed by local politicians (Van Bramer for instance). Otherwise why on Vernon Blvd in LIC next to high rises are there 2 story rowhouses? LES, West Village, parts of Park Slope, LIC have historic districts (I'm forgetting many of them)
  - bradleyjg 10y ago
    Opposed by local politicians or not, new buildings have and are going up on both sides of the east river. NYC could do a lot better, but credit where credit is do. It is doing significantly better on this front than SF.
lets-tryagain 10y ago
Please show me some addresses of purposefully vacant properties...I'm starting to think this is mostly an urban legend. Palo Alto is not Vancouver.
zebraflask 10y ago
Same thing in LA.
biocomputation 10y ago
Yes, it's a huge injustice. Foreign nationals should not be allowed to own property in the US, period. They're turning our housing markets into private casinos, to the detriment of American citizens.
- aianus 10y ago
  No, we should just keep building more housing to sell to them so there's enough to go around. Not my metaphor but I like it: imagine if there were laws restricting GM from making more than a million cars a year and we sat around complaining the Chinese were buying all the cars and there were none left for Americans. Would you get rid of the stupid law or ban the Chinese from buying our cars?
  - Hydraulix989 10y ago
    Whichever is the path of least resistance -- in the case of housing (unlike cars), it's actually the latter, given that you have more people with domestic political power opposed to the former. The analogy also breaks down in that housing is a bit of an exceptional issue here, unlike cars. You literally need shelter to survive, but you can always take public transit or use Uber. Remember, the article we're commenting about shows service workers without homes because they can't afford to pay rent. Also, it's worth noting that, unlike some other users, I've never said anything about specific nationalities.

lazaroclapp 10y ago

Is this really the case? Or are there a lot of occupied (as in, rentals) houses owned by overseas investors? Why would it make any sense to leave a property in the bay area empty if you can add rent to the benefits of your investment?

pfarnsworth 10y ago
Because they are so rich that renting is a hassle. They don't need the extra money. The exact same thing happens in Vancouver, BC and their is a new law that fines people that leave their house empty.
lupin_sansei 10y ago
Often investors in Australia leave houses empty as there are different laws around capital gains taxes for investment properties (rentals) vs primary residence (which you don't have to actually live in all the time). It's often cheaper to not rent a property out and to get the lower CGT rate than to receive rent but have a 30% CGT when it's sold.
- deleted 10y ago
  [deleted]
Hydraulix989 10y ago
Have you ever been a landlord? It's a huge hassle (it's impossible to do property management remotely, let alone in a foreign country), and if you have the wrong tenants (an easy mistake to make if you aren't experienced enough), things can end up going pretty badly!
- ams6110 10y ago
  Of course, there are property management companies that will market the property, screen tenants, handle rent collection, and perform maintenance for you.
  - sokoloff 10y ago
    PMs often take 8% (+/- 2%) of the gross rent receipts for their services. In many places, that is about the same amount as the profitability of renting the place out, meaning that if I am financially able to hold the place empty, taking on the risk, time, and aggravation of finding a PM and having them rent it out doesn't leave me meaningfully better off. So, I'd rather leave it empty.
EliRivers 10y ago
"Why would it make any sense to leave a property in the bay area empty if you can add rent to the benefits of your investment?" A lot of these people are really rich. They don't think like us poor people. For many of them, the houses they buy and leave empty aren't investments. They already did their investing and made money. This is a key difference in the thinking; for many poor people, houses are considered an investment. These rich people aren't investing; they're spending or parking some of the money they made elsewhere. Buying a single apartment to rent out as an investment? How quaint. How small. For some, this is something they buy to park their money in such a way that it can't be simply taken away (bank accounts can be frozen, gold or other such small items can be confiscated, but it's awfully difficult to simply take someone's house when that house is in a foreign country with strong property laws) and is unlikely to vanish overnight. Secondly, it's my house, for me to live in if I feel like being in the area for a while. It's just nice to have my own place with my own personal belongings that I can leave there, and drop in or let family and friends use whenever I want. Sometimes, hotels just feel impersonal, and they're more public than I'd like, and I'd have to bring with me everything I needed. What they are not doing is getting into the landlord business. As a very wealthy person with houses all over the world, I wouldn't want strangers living in my house. I wouldn't be able to keep my things there. I wouldn't be able to just use it or offer it to friends whenever I wanted. I could make a tiny bit of extra income by being a landlord? That extra income is worth less to me than having the house empty, available for me to use or dispose of however and whenever I feel like it.
- state_less 10y ago
  Sure leaving a SV house on Marina Dr. empty is nice just in case I want to use it, but we ought not condone or enable this self-serving behavior. It's disrespectful. Why do so many in this country still admire these types of wealthy people?
  - HarryHirsch 10y ago
    People have been conditioned to do so. There's no intrinsic reason why property rights should be protected to a greater degree than workers' rights, but libertarianism promotes awareness of one and not the other. It's kind of a circular reasoning, but useful as an observation.

TuringNYC 10y ago

I dont know about Palo Alto, but this is a big problem where I live in Brooklyn, and in NYC in general. When there is gray money coming into the market, prices go up. Honest earners get pushed down, and the push-down happens all the way down the chain. See the article below for more details. Of course in the Bay Area, there is an additional dynamic of restrained building which might be the bigger problem. https://www.nytimes.com/news-event/shell-company-towers-of-secrecy-real-estate https://www.nytimes.com/news-event/shell-company-towers-of-s... "From Manhattan condominiums to California mansions to gentrifying neighborhoods in Brooklyn, shell companies are increasingly pervasive in the world of real estate. These articles explore the people behind the opaque deals."

Zach_the_Lizard 10y ago
NYC has quite restrained building also, almost comparable to SF. The tall stuff was mostly built long ago, and the newer stuff (E.g. Long Island City) is opposed by local politicians (Van Bramer for instance). Otherwise why on Vernon Blvd in LIC next to high rises are there 2 story rowhouses? LES, West Village, parts of Park Slope, LIC have historic districts (I'm forgetting many of them)
- bradleyjg 10y ago
  Opposed by local politicians or not, new buildings have and are going up on both sides of the east river. NYC could do a lot better, but credit where credit is do. It is doing significantly better on this front than SF.

lets-tryagain 10y ago

Please show me some addresses of purposefully vacant properties...I'm starting to think this is mostly an urban legend. Palo Alto is not Vancouver.

zebraflask 10y ago

Same thing in LA.

biocomputation 10y ago

Yes, it's a huge injustice. Foreign nationals should not be allowed to own property in the US, period. They're turning our housing markets into private casinos, to the detriment of American citizens.

aianus 10y ago
No, we should just keep building more housing to sell to them so there's enough to go around. Not my metaphor but I like it: imagine if there were laws restricting GM from making more than a million cars a year and we sat around complaining the Chinese were buying all the cars and there were none left for Americans. Would you get rid of the stupid law or ban the Chinese from buying our cars?
- Hydraulix989 10y ago
  Whichever is the path of least resistance -- in the case of housing (unlike cars), it's actually the latter, given that you have more people with domestic political power opposed to the former. The analogy also breaks down in that housing is a bit of an exceptional issue here, unlike cars. You literally need shelter to survive, but you can always take public transit or use Uber. Remember, the article we're commenting about shows service workers without homes because they can't afford to pay rent. Also, it's worth noting that, unlike some other users, I've never said anything about specific nationalities.