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UN report lays bare the waste of treating homes as commodities

69 points by miraj 9y ago

mschuster91 9y ago
There is a dead simple solution: cities must be allowed to use eminent domain for unoccupied (more than half a year is usually used as standard) housing if the city declares a housing emergency. Radical, yes, but I don't believe that there is any other viable solution left, including "unoccupied taxes" - because when the tax over a year is lower than expected value gain, investors just pay the fine instead of complying.
- valuearb 9y ago
  If investors can't find renters, or or the cost of repairs to make a place rentable isn't worth the rents it would generate, what makes you think the government can magically fix these problems? No one is sitting around waiting for property to appreciate when they could sit around and collect rents waiting for property to appreciate.
  - mschuster91 9y ago
    > If investors can't find renters There's a solution for this, too: lower the rent to market prices. > or the cost of repairs to make a place rentable isn't worth the rents it would generate Well... as a landlord you're supposed to provide for continuous maintenance, and if you have cut corners on this out of greed (like it's common in Germany, just google for "Vonovia Skandal"), it's your fault. And there's always the possibility to tear down and rebuild. > No one is sitting around waiting for property to appreciate when they could sit around and collect rents waiting for property to appreciate. You haven't heard of London, I assume? Quote from https://www.theguardian.com/commentisfree/2016/may/04/london-mayor-scandal-empty-homes https://www.theguardian.com/commentisfree/2016/may/04/london... : > Key to this is tackling buy-to-leave investing, a growing and unwelcome practice. The model is simple, buy a property, leave it empty – in the knowledge that investors do not then need to comply with regulations covering the rented housing market – and sell it on for a profit.
    - valuearb 9y ago
      Again, investors can and will find renters at market prices. That's the main reason for owning an investment property. Rents usually provide most of the returns for investment properties, voluntarily forgoing them would be like not deigning to pickup $100 bills laying in the street. And rents are enough to pay for maintenance, which you have to pay for whether you rent or not. Just try re-selling an uninhabitable investment home. And you need to be a more critical reader. The guardian article is full of red flags. It "claims" 57k vacant homes in London, where there are 8.5M households. So less than 7%. How many do you think should be vacant, considering that homes are vacant when for sale, when waiting to find a renter, and when waiting for the owners to move back if they worked out of country for a few years? Secondly the paragraph on "buy-to-leave" investing indicates that rental regulations are so absurdly onerous that it is keeping properties off the market. Reforming them is the real solution.
      - throwaway2048 9y ago
        The main reason for owning an investment property these days is to flip it in a few years for 50%+ more than you paid for it. Dealing with renters in that equation dosent make any sense, because the returns will be tiny, even with sky high rents like $3000 a month on say an $800k property appreciating 20% every year (a real situation in many cities). The presence of renters will ensure you cant sell it when you want to, and instead have to deal with them, an insane hassle for a foreign investor. Compounding this is the fact that much of this property investment is being driven by wealthy (and to a huge degree corrupt) chinese looking to funnel money out of china, before the CCP can take it from them. Real estate is one of the few foreign investments allowed by the CCP. Tie this in further to the investor class visas many countries have, where you get the equivilent of a green card if you invest X millions of dollars. In these circumstances people dont care much about returns, or even taking somewhat of a haircut on their investments, because its better to have some + a get out of jail free card as a resident of another nation, than be stuck in china in jail, with no assets at all. Your continued incredulity that these properties arnt being rented out dosent change the reality of the situation, a massive percentage of them are not, and are built specificly to NEVER be rented.
- ptaipale 9y ago
  >if the city declares housing emergency Such declarations should not justify extraordinary action if you don't have a clear plan for how you are going to get away from the emergency. They are a tool of political trickery to avoid regular checks and balances of democratic policies. For comparison, France declared a "national emergency" in November 2015, and has then extended it repeatedly, and now France lives in a perpetual "state of emergency". If you need to keep extending the state of emergency, you should admit that the "emergency" is actually your normal state of affairs. If you have a problem in housing, with a really substantial part of your housing stock empty, your rental market isn't working. Don't blame evil capitalists for it; blame the rules of the market you created with legislation. For instance, unreasonable tenant protections at the expense of the owner. Most often this is, however, just a diversion. Empty housing is not the real problem; the problem is lack of building permits and zoning in areas of population growth, and generally meddling with the market. Beware of "dead simple solutions"; silver bullets offered as solutions to complex problems are usually bogus.
  - mschuster91 9y ago
    > If you need to keep extending the state of emergency, you should admit that the "emergency" is actually your normal state of affairs. I agree with this, therefore the trigger for a "housing emergency" should be something that can be measured in qualified facts (e.g. ratio of migration influx vs build of housing stock, queue length for welfare housing). > If you have a problem in housing, with a really substantial part of your housing stock empty, your rental market isn't working. Don't blame evil capitalists for it; blame the rules of the market you created with legislation. For instance, unreasonable tenant protections at the expense of the owner. Housing is a human right. Tenant protections are not unreasonable, they're often enough the only thing preventing capitalism from its worst excesses. The countless stories I have read alone on HN how in America people are kicked out of their homes just because the landlord wants to have more money should be proof of why tenant protections are needed. > Empty housing is not the real problem It is. Empty housing causes entire zones going dead - look at London. Wherever a large number of "investment housing" appears, the small shops etc. have to close because there are no customers. > the problem is lack of building permits and zoning in areas of population growth, and generally meddling with the market. I highly doubt the problems in Berlin, London or Munich are related to a lack of building permits or population growth. It's just that it fetches more money for real estate developers to build luxury apartments instead of affordable housing, therefore the solution is more zoning, not less.
awinter-py 9y ago
I think the article means 'assets', not commodities. They're saying investment in real estate is leading to (a) long commutes for poor people and (b) empty houses causing commercial blight. Thought it was going to be about how cookie-cutter apartment buildings tend to have nice fixtures but thin walls & inefficient heating/cooling.
- RodericDay 9y ago
  the idea that everyone with a nest-egg should run out and buy property, any property, and expect it to go up in price, seems "commodity-like" to me
  - awinter-py 9y ago
    there was a commodity bubble in the 00s, but not every asset bubble is in commodities.
zzalpha 9y ago
Are houses the new tulips? If value isn't linked to utility and only to speculative investor demand, it's hard to conclude otherwise...
- 21 9y ago
  Only if said tulip is in a desired place. "Location, location, location" as someone would say. So the investment is actually in the location, not in the house itself. Which is a good idea. For a bunch of reasons cities will continue to grow, and bigger cities will grow faster. So if you have a multi-decade view, buying location in any major cities is a sound idea.
  - paganel 9y ago
    > For a bunch of reasons cities will continue to grow, and bigger cities will grow faster. In the Eastern-European country from where I'm from the cities' population has actually decreased after 1990, the demographic crisis is a real thing (the country's population as a whole has decreased by 17-20% after 1990). I see this phenomenon extending to the rest of Europe in the next 20-30 years.
    - 21 9y ago
      What about the population of Bucharest? Did the population decreased because of lot of your people migrated to Western Europe, and in particular to Western capitals? This chart shows clear increases in most major cities of Europe: https://media.boingboing.net/wp-content/uploads/2015/06/europepopulation.jpg https://media.boingboing.net/wp-content/uploads/2015/06/euro...
      - paganel 9y ago
        > Did the population decreased because of lot of your people migrated to Western Europe, and in particular to Western capitals? Interesting question! Intuitively, I'd say that the answer is "yes". The birth vs mortality rate is also a huge factor, of course, as in Bucharest people tend to die more compared to kids being born here. Until we joined the EU that was counter-balanced by the countryside people coming to Bucharest (so much so that in the early 1980s the communist regime instituted some draconian rules against that, pretty similar to the Hukou system now in effect in China), but after our EU accession those countryside people saw that the salaries in Spain or Italy were higher compared to those from Bucharest, plus cost-of-living was pretty much the same if not lower, so they took the logical decision and migrated to those countries instead. Right now Bucharest is feeding off smaller cities from Southern and Eastern Romania. I've made a heatmap showing that phenomenon in here: http://4.bp.blogspot.com/-tbQVpiC4CuI/UX7rUriCEBI/AAAAAAAAAko/3mOPiZMcnVc/s1600/Picture+5.png http://4.bp.blogspot.com/-tbQVpiC4CuI/UX7rUriCEBI/AAAAAAAAAk... ("hotter" points represent places where people lived before coming to Bucharest), based on FB-profile data I parsed a couple of years ago; of course, there's nothing scientific-like in that map, I just found it interesting. This strategy is not sustainable on the long-term.
RichardHeart 9y ago
Their link to the report is broken. http://www.ohchr.org/EN/Issues/Housing/Pages/HousingIndex.aspx http://www.ohchr.org/EN/Issues/Housing/Pages/HousingIndex.as... is more recent and inclusive of the 2014 report. The title of the original article is malformed. The problem of the empty homes is that they aren't treated as commodities. Commodities are synonymous with low margin and exchangeability with like kind. If homes were seen like normal depreciating commodities, and less like the special snowflake, all legislation must cause them to rise in price gifts to the capital class, they'd be less of a problem. Thus, homes if actually treated like commodities should exhibit less of the problems the empty homes in this article describes. Artificially cheap/government subsidized credit for home purchase has distorted the housing market, as it has now also done to education. I hope the next bubble they blow up is in healthcare.
- rlongstaff 9y ago
  This is the correct link to the report: http://daccess-ods.un.org/access.nsf/Get?Open&DS=A/HRC/34/51&Lang=E http://daccess-ods.un.org/access.nsf/Get?Open&DS=A/HRC/34/51... The UN has a bizarre and archaic document management system that it is difficult to link to (and to search, for that matter).
tankenmate 9y ago
And in the extreme you have cases like Vancouver which introduced their Empty Homes Tax, unoccupied residential properties that are unoccupied attract a 1% of value tax. I would suggest at least a 2% tax as that matches the IMF's usual inflation target. I would also suggest that the money raised is spent on subsidising affordable housing. But home owners vote far more often than the poor or homeless so they don't want to see the last 30 years of value gains go down the toilet (let alone a margin call if they go underwater).
- 21 9y ago
  It won't be long till a new job appears "dweller of investment house", with job descriptions like "minimal impact on property". Defining what "unoccupied" means will become very important.
  - tankenmate 9y ago
    In the case of Vancouver it is already defined. http://vancouver.ca/home-property-development/empty-homes-tax.aspx http://vancouver.ca/home-property-development/empty-homes-ta...
  - knappe 9y ago
    This is already a thing and has been for quite a while. One of my former coworkers used to live in really, really nice homes. He was able to do that because he was acting as caretaker for what would have otherwise been unoccupied properties.
  - pdelbarba 9y ago
    This is already a thing. You just post an ad on craigslist but the monthly amount you post is actually paid to you. Problem is, you have to make that amount reasonable relative to the other people doing the same thing in your area, otherwise nobody will email you.
- rb808 9y ago
  Agreed, Empty home tax is good. Also a additional tax for foreign resident owners & second home tax. I think expensive housing is the biggest problem of our generation globally.
tunap 9y ago
Just reinstate the GS Act, already! Must we wait until the banks, funds & their ilk completely ruin more markets and put mllions og REAL PEOPLE in more desperate, stagflating situations on more fronts? Let the wealth managers apply their smarts to actually creating tangible value to society instead of nicking more margins for "the investors". Parasitoid behavior kills the host every time. https://en.wikipedia.org/wiki/Decline_of_the_Glass%E2%80%93Steagall_Act https://en.wikipedia.org/wiki/Decline_of_the_Glass%E2%80%93S...
- linkregister 9y ago
  How would the reinstatement of that act solve the problem in the article?
  - Terr_ 9y ago
    My guess for what they mean (not making judgments or asserting these as fact) would be something like: 1. The risky return-focused investment money is still going into housing, despite the 2008 great recession. ("It can't happen twice, right?") 2. A significant portion of that wealth is actually from "non-gambler" savings, and "should" be more conservatively held. 3. Glass-Steagall would help do that, with the side-effect of making housing more broadly affordable for people who need the direct utility of the house.
- valuearb 9y ago
  Glass-Steagal was just a competitive barrier that made markets less efficient, why would restoring it make anything better?
  - icebraining 9y ago
    I have to say, this post is a bad example of writing to your audience. Outside of a few communities, even the idea that market efficiency is a goal to be achieved is not generally accepted. You should be more specific in describing the way Glass-Steagal was actually making things worse.
  - tunap 9y ago
xforteversilov 9y ago
Land Value Taxation. Stop taxing property, and tax land value and land ownership instead and most of these problems go away. This might be more of a hard-sell than basic income though. https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism
- valuearb 9y ago
  Terrible solution to an fake problem.
  - mjevans 9y ago
    As an alternative reason or explanation for why taxing "land" instead of property built on the land: The idea is to tax based on the //potential// value of the area to society, so that realizing that value to society is incentivezed. I suspect a real application of this would examine the difference in value to society and apply more 'incentive' (tax proportionally more of the missing value) the further from actual value to society a piece of land is.
    - jdmichal 9y ago
      How does this not end with all existent small owners being strong-armed into selling out to capital-heavy investors who can afford to build 20-story towers? Or is the point that it explicitly does not protect them, because they are "under-utilizing" the property? I'd expect that such a policy would result in a lot of cultural churn, and homogenizing of communities to the point of losing any sort of interesting historical character. How can you have history, when everything is being bought up and redeveloped every (x) years because the previous owners can no longer afford the taxes on the "improved value". Everyone becomes the victims of everyone's success.
      - throwaway2048 9y ago
        When "historical charachter" and entrenched interests are making cities en masse completely unlivable for anybody but the top margin of society, we have a serious problem that needs solutions. "historical charachter" is a pretty shitty reason that people should go homeless
orasis 9y ago
"In prime locations for wealthy foreign investors, such as the affluent boroughs of Chelsea and Kensington in the city of London, the number of vacant units increased by 40% between 2013 and 2014." How much of this is vacant vs AirBnB units? In heavily regulated markets a lot of owners will under-report that they're being used for AirBnB.
- Element_ 9y ago
  I believe the average price of a semi in Chelsea and Kensington is something like 6 million Euros or 40x local median income. These properties aren't for Airbnb they are for rich foreigners who need to park their money outside their governments reach.
valuearb 9y ago
This is crazy. "In such markets, the value of housing is no longer based on its social use. Properties are equally valuable regardless of whether they are vacant or occupied, so there is no pressure to ensure properties are lived in. They are built with the intention of lying empty and accumulating value, while at the same time, homelessness remains a persistent problem." A home lying empty has a negative return (due to maintenance and operating costs, still have to water lawns, repair weather damage, etc). A home being rented has a higher return. There is simply no reason from an investors perspective to leave a home empty unless you can't find a renter who will cover their costs, or you are trying to sell it. It's people like the author of this study that created the housing bubble in the US. They pushed to lower lending requirements, and pushed to have the US Government assume more risk so more easy money was available for housing purchases. With Fannie Mae and Freddie Mac, the US hasn't had a free market in housing for 70 years. And worse, Fannie Mae and Freddie Mac are integrally connected to both political parties, offering huge payouts to retiring politicians or their friends in return for their support. Google the ex-DNC chairman who made $100M+ as chairman of Fannie Mae's board.
- objclxt 9y ago
  > There is simply no reason from an investors perspective to leave a home empty unless you can't find a renter who will cover their costs Right now the four bed house next door to me in San Francisco is empty, and has been empty for the past three years - it's worth $4 million, and is owned by a family based in mainland China. On one occasion a representative of theirs stopped me in the street and asked if my home was for sale (fortunately for me my landlord decided it wasn't). And when I lived in London I saw equally empty properties - new build flats worth millions of pounds completely deserted. > A home lying empty has a negative return (due to maintenance and operating costs, still have to water lawns, repair weather damage, etc). Not if the value of the home increases greater than the negative pressures...which it very much has been in many cities. > A home being rented has a higher return. There is simply no reason from an investors perspective to leave a home empty unless you can't find a renter who will cover their costs Tenants have their own problems. They have rights, homes are harder to liquidate with a tenant in, and you may decide it's just not worth the hassle. If you're expecting the property value to increase 50% over the next few years the income a tenant would be providing you is a relative pittance.
Shivetya 9y ago
Should they go after anyone who owns more than one home? When does a vacation home become a "Bad social construct" or whatever phrase they want to use? All depending on where it is located? Yes I understand there is an issue that many homes go unoccupied in some areas but I cannot tell from the article how long between owner uses does it qualify for this designation? Now I can agree if the unit is never occupied, however if they visit a few weeks out of the year then I don't see an issue. It is no different than owning a second or third home anywhere else.
bryanlarsen 9y ago
The building of homes for investment purposes should be making housing more affordable, not less. Simple supply & demand: more supply should mean lower prices. Which implies that these homes aren't actually being added to supply. Why are investors choosing to forgo rental income? There are lots of potential answers to the question, and answering them might magically fix the problem.
- robk 9y ago
  Wear and tear. The ones I know say that they don't want renters wearing the interior
phoenixProgram 9y ago
If we kill a bunch of rich people, a lot more product will come on the market. I don't care about those people, so if we want a lot of homes to come on the market quickly, I have no problem with a genocide of the power elite.
Houshalter 9y ago
Taxing empty properties might help a bit. But it doesn't address the root of the problem. That housing has become such a scarce resource it can be treated as a commodity. We have the technology to build denser and higher. There's no economic reason that housing should cost much more than the cost of construction. Which should only get cheaper with time, as technology improves. Certainly not more expensive. But this doesn't happen. Why? Because the people commoditizing homes want to protect their investment. The scarcer housing is, the more money they make. It's an incredibly perverse system. It hurts the poor especially. Even the middle class ends up losing most of their income to it. It leads cities to stagnate instead of grow.
- valuearb 9y ago
  You are missing the bigger pictures. Housing costs are directly related to the cost of land, which is much higher in dense urban areas. The other driver isn't "commoditizing" homes, no individual owner can affect the market price of similar homes by not renting it. It's land use regulation, and rental regulations. The NIMBYs in every city want tight land use controls to restrict the construction of new housing that would impact the value of their homes. The renters want tons of regulations demanding things from landlords the renters can't get by contract. In NY or SF renting a home means giving a renter a massive amount of control over it. Evicting them when their lease expires and you want to sell or move back can be a nightmare. So the rental regulations are keeping homes off the market.
  - toomuchtodo 9y ago
    I propose the following solutions: 1. A building's minimum height is dictated by the demand in the area; your existing building can stay, but if you want to bulldoze and rebuild as a developer, you must build up if the local real estate demand dictates so (I don't have enough experience to determine how you'd calculate demand, perhaps trailing rents for the last 24 months?). 2. Renters rights remain in place, with the government providing subsidies and relocation assistance when necessary (funded by a special property tax on non-owner occupied units). An equilibrium can be reached, but the idea of "property rights" will need to change a bit, with the understanding that a healthy neighborhood is more important to society than you having full control of your property (which is already the case, considering zoning laws and what not).
easilyBored 9y ago
They are built with the intention of lying empty and accumulating value, while at the same time, homelessness remains a persistent problem Yeah and Apple has $250,000,000,000 in the bank and at the same time.... Welcome to inequality in home ownership, stock ownership, money in the bank, education, crime rates etc etc.
orschiro 9y ago
Homes are such a critical resource. While other resources are passed down the stream from the rich to the poor — see for example food leftovers (waste) — this is not the case for homes. They remain where they are and don't easily change ownership.
kazinator 9y ago
If something costs a lot of money, retains its value with a potential to appreciate, people will treat it as a financial commodity. Oh well, "shikata ga nai", as they say in Japan. Can't be helped. Funny how the talk always turns to human rights when Peter sets his sights on something he is lacking, which Paul happens to have. If housing is a right, then even if you're not a real estate speculator but an earnest home owner, some assholes out there believe that they have a right to what is yours. Want to relocate somewhere temporarily to work? Hey, "your" home is empty: rent it to some trash that will destroy it, or pay up!
jodrellblank 9y ago
Funny how the talk always turns to human rights when Peter sets his sights on something he is lacking, which Paul happens to have. Paul just 'happens' to have both houses and all the available land to put them on? Convenient for him. Must be God's favourite; Peter should lump it and go die in the gutter. Better luck next life Peter, you asshole, try being born with one of the houses next time, although you'll only damage it. I mean, you're poor therefore you're trash, right?
- kazinator 9y ago
  Yes, Paul has stuff, so he must have done shady things. As a rule, honest, hard working people have nothing. Paul didn't work two jobs for fifteen years to scrape together a down payment. Doesn't happen, except in stories. Paul's family didn't immigrate with just the clothes on their backs and in their suitcases and a couple of dollars. Hollywood hogwash.
  - jodrellblank 9y ago
    As a rule, honest hard working people never fall on hard times, never have medical problems, never have circumstances turn against them, never get hit with spurious lawsuits, are never victims of crime or mis-selling. Everyone who works hard is successful and rich, therefore everyone else must be lazy and undeserving scroungers trying to unfairly obtain what they don't deserve. https://en.wikipedia.org/wiki/Just-world_hypothesis https://en.wikipedia.org/wiki/Just-world_hypothesis hogwash.
    - kazinator 9y ago
      > are never victims of crime Good point; for instance, they get robbed by the government. If I have serious medical problems requiring lots of money, can I get back all the income tax I paid over the last 20 years? Why not? Don't you care about my unlucky circumstances?
      - jodrellblank 9y ago
        Are you suddenly turning away from the cash-before-people, 'fuck-you, got mine' culture that, moments ago, you were so much in favour of? Remember when you had the two houses and everyone else could go fish, but now the government has the two houses and it's "theft" and "don't you care"? Weird. Many countries would give you much more value in medical treatment than you paid in income tax, without any problem, based on such awful, repellent ideas as 'people suffering is bad', or even the pragmatic 'healthy people are a worthwhile investment because they'll contribute more to the economy in future than disabled or bankrupt people will'.

69 points by miraj 9y ago

There is a dead simple solution: cities must be allowed to use eminent domain for unoccupied (more than half a year is usually used as standard) housing if the city declares a housing emergency. Radical, yes, but I don't believe that there is any other viable solution left, including "unoccupied taxes" - because when the tax over a year is lower than expected value gain, investors just pay the fine instead of complying.

valuearb 9y ago
If investors can't find renters, or or the cost of repairs to make a place rentable isn't worth the rents it would generate, what makes you think the government can magically fix these problems? No one is sitting around waiting for property to appreciate when they could sit around and collect rents waiting for property to appreciate.
- mschuster91 9y ago
  > If investors can't find renters There's a solution for this, too: lower the rent to market prices. > or the cost of repairs to make a place rentable isn't worth the rents it would generate Well... as a landlord you're supposed to provide for continuous maintenance, and if you have cut corners on this out of greed (like it's common in Germany, just google for "Vonovia Skandal"), it's your fault. And there's always the possibility to tear down and rebuild. > No one is sitting around waiting for property to appreciate when they could sit around and collect rents waiting for property to appreciate. You haven't heard of London, I assume? Quote from https://www.theguardian.com/commentisfree/2016/may/04/london-mayor-scandal-empty-homes https://www.theguardian.com/commentisfree/2016/may/04/london... : > Key to this is tackling buy-to-leave investing, a growing and unwelcome practice. The model is simple, buy a property, leave it empty – in the knowledge that investors do not then need to comply with regulations covering the rented housing market – and sell it on for a profit.
  - valuearb 9y ago
    Again, investors can and will find renters at market prices. That's the main reason for owning an investment property. Rents usually provide most of the returns for investment properties, voluntarily forgoing them would be like not deigning to pickup $100 bills laying in the street. And rents are enough to pay for maintenance, which you have to pay for whether you rent or not. Just try re-selling an uninhabitable investment home. And you need to be a more critical reader. The guardian article is full of red flags. It "claims" 57k vacant homes in London, where there are 8.5M households. So less than 7%. How many do you think should be vacant, considering that homes are vacant when for sale, when waiting to find a renter, and when waiting for the owners to move back if they worked out of country for a few years? Secondly the paragraph on "buy-to-leave" investing indicates that rental regulations are so absurdly onerous that it is keeping properties off the market. Reforming them is the real solution.
    - throwaway2048 9y ago
      The main reason for owning an investment property these days is to flip it in a few years for 50%+ more than you paid for it. Dealing with renters in that equation dosent make any sense, because the returns will be tiny, even with sky high rents like $3000 a month on say an $800k property appreciating 20% every year (a real situation in many cities). The presence of renters will ensure you cant sell it when you want to, and instead have to deal with them, an insane hassle for a foreign investor. Compounding this is the fact that much of this property investment is being driven by wealthy (and to a huge degree corrupt) chinese looking to funnel money out of china, before the CCP can take it from them. Real estate is one of the few foreign investments allowed by the CCP. Tie this in further to the investor class visas many countries have, where you get the equivilent of a green card if you invest X millions of dollars. In these circumstances people dont care much about returns, or even taking somewhat of a haircut on their investments, because its better to have some + a get out of jail free card as a resident of another nation, than be stuck in china in jail, with no assets at all. Your continued incredulity that these properties arnt being rented out dosent change the reality of the situation, a massive percentage of them are not, and are built specificly to NEVER be rented.
ptaipale 9y ago
>if the city declares housing emergency Such declarations should not justify extraordinary action if you don't have a clear plan for how you are going to get away from the emergency. They are a tool of political trickery to avoid regular checks and balances of democratic policies. For comparison, France declared a "national emergency" in November 2015, and has then extended it repeatedly, and now France lives in a perpetual "state of emergency". If you need to keep extending the state of emergency, you should admit that the "emergency" is actually your normal state of affairs. If you have a problem in housing, with a really substantial part of your housing stock empty, your rental market isn't working. Don't blame evil capitalists for it; blame the rules of the market you created with legislation. For instance, unreasonable tenant protections at the expense of the owner. Most often this is, however, just a diversion. Empty housing is not the real problem; the problem is lack of building permits and zoning in areas of population growth, and generally meddling with the market. Beware of "dead simple solutions"; silver bullets offered as solutions to complex problems are usually bogus.
- mschuster91 9y ago
  > If you need to keep extending the state of emergency, you should admit that the "emergency" is actually your normal state of affairs. I agree with this, therefore the trigger for a "housing emergency" should be something that can be measured in qualified facts (e.g. ratio of migration influx vs build of housing stock, queue length for welfare housing). > If you have a problem in housing, with a really substantial part of your housing stock empty, your rental market isn't working. Don't blame evil capitalists for it; blame the rules of the market you created with legislation. For instance, unreasonable tenant protections at the expense of the owner. Housing is a human right. Tenant protections are not unreasonable, they're often enough the only thing preventing capitalism from its worst excesses. The countless stories I have read alone on HN how in America people are kicked out of their homes just because the landlord wants to have more money should be proof of why tenant protections are needed. > Empty housing is not the real problem It is. Empty housing causes entire zones going dead - look at London. Wherever a large number of "investment housing" appears, the small shops etc. have to close because there are no customers. > the problem is lack of building permits and zoning in areas of population growth, and generally meddling with the market. I highly doubt the problems in Berlin, London or Munich are related to a lack of building permits or population growth. It's just that it fetches more money for real estate developers to build luxury apartments instead of affordable housing, therefore the solution is more zoning, not less.

awinter-py 9y ago

I think the article means 'assets', not commodities. They're saying investment in real estate is leading to (a) long commutes for poor people and (b) empty houses causing commercial blight. Thought it was going to be about how cookie-cutter apartment buildings tend to have nice fixtures but thin walls & inefficient heating/cooling.

RodericDay 9y ago
the idea that everyone with a nest-egg should run out and buy property, any property, and expect it to go up in price, seems "commodity-like" to me
- awinter-py 9y ago
  there was a commodity bubble in the 00s, but not every asset bubble is in commodities.

zzalpha 9y ago

Are houses the new tulips? If value isn't linked to utility and only to speculative investor demand, it's hard to conclude otherwise...

21 9y ago
Only if said tulip is in a desired place. "Location, location, location" as someone would say. So the investment is actually in the location, not in the house itself. Which is a good idea. For a bunch of reasons cities will continue to grow, and bigger cities will grow faster. So if you have a multi-decade view, buying location in any major cities is a sound idea.
- paganel 9y ago
  > For a bunch of reasons cities will continue to grow, and bigger cities will grow faster. In the Eastern-European country from where I'm from the cities' population has actually decreased after 1990, the demographic crisis is a real thing (the country's population as a whole has decreased by 17-20% after 1990). I see this phenomenon extending to the rest of Europe in the next 20-30 years.
  - 21 9y ago
    What about the population of Bucharest? Did the population decreased because of lot of your people migrated to Western Europe, and in particular to Western capitals? This chart shows clear increases in most major cities of Europe: https://media.boingboing.net/wp-content/uploads/2015/06/europepopulation.jpg https://media.boingboing.net/wp-content/uploads/2015/06/euro...
    - paganel 9y ago
      > Did the population decreased because of lot of your people migrated to Western Europe, and in particular to Western capitals? Interesting question! Intuitively, I'd say that the answer is "yes". The birth vs mortality rate is also a huge factor, of course, as in Bucharest people tend to die more compared to kids being born here. Until we joined the EU that was counter-balanced by the countryside people coming to Bucharest (so much so that in the early 1980s the communist regime instituted some draconian rules against that, pretty similar to the Hukou system now in effect in China), but after our EU accession those countryside people saw that the salaries in Spain or Italy were higher compared to those from Bucharest, plus cost-of-living was pretty much the same if not lower, so they took the logical decision and migrated to those countries instead. Right now Bucharest is feeding off smaller cities from Southern and Eastern Romania. I've made a heatmap showing that phenomenon in here: http://4.bp.blogspot.com/-tbQVpiC4CuI/UX7rUriCEBI/AAAAAAAAAko/3mOPiZMcnVc/s1600/Picture+5.png http://4.bp.blogspot.com/-tbQVpiC4CuI/UX7rUriCEBI/AAAAAAAAAk... ("hotter" points represent places where people lived before coming to Bucharest), based on FB-profile data I parsed a couple of years ago; of course, there's nothing scientific-like in that map, I just found it interesting. This strategy is not sustainable on the long-term.

RichardHeart 9y ago

Their link to the report is broken. http://www.ohchr.org/EN/Issues/Housing/Pages/HousingIndex.aspx http://www.ohchr.org/EN/Issues/Housing/Pages/HousingIndex.as... is more recent and inclusive of the 2014 report. The title of the original article is malformed. The problem of the empty homes is that they aren't treated as commodities. Commodities are synonymous with low margin and exchangeability with like kind. If homes were seen like normal depreciating commodities, and less like the special snowflake, all legislation must cause them to rise in price gifts to the capital class, they'd be less of a problem. Thus, homes if actually treated like commodities should exhibit less of the problems the empty homes in this article describes. Artificially cheap/government subsidized credit for home purchase has distorted the housing market, as it has now also done to education. I hope the next bubble they blow up is in healthcare.

rlongstaff 9y ago
This is the correct link to the report: http://daccess-ods.un.org/access.nsf/Get?Open&DS=A/HRC/34/51&Lang=E http://daccess-ods.un.org/access.nsf/Get?Open&DS=A/HRC/34/51... The UN has a bizarre and archaic document management system that it is difficult to link to (and to search, for that matter).

tankenmate 9y ago

And in the extreme you have cases like Vancouver which introduced their Empty Homes Tax, unoccupied residential properties that are unoccupied attract a 1% of value tax. I would suggest at least a 2% tax as that matches the IMF's usual inflation target. I would also suggest that the money raised is spent on subsidising affordable housing. But home owners vote far more often than the poor or homeless so they don't want to see the last 30 years of value gains go down the toilet (let alone a margin call if they go underwater).

21 9y ago
It won't be long till a new job appears "dweller of investment house", with job descriptions like "minimal impact on property". Defining what "unoccupied" means will become very important.
- tankenmate 9y ago
  In the case of Vancouver it is already defined. http://vancouver.ca/home-property-development/empty-homes-tax.aspx http://vancouver.ca/home-property-development/empty-homes-ta...
- knappe 9y ago
  This is already a thing and has been for quite a while. One of my former coworkers used to live in really, really nice homes. He was able to do that because he was acting as caretaker for what would have otherwise been unoccupied properties.
- pdelbarba 9y ago
  This is already a thing. You just post an ad on craigslist but the monthly amount you post is actually paid to you. Problem is, you have to make that amount reasonable relative to the other people doing the same thing in your area, otherwise nobody will email you.
rb808 9y ago
Agreed, Empty home tax is good. Also a additional tax for foreign resident owners & second home tax. I think expensive housing is the biggest problem of our generation globally.

tunap 9y ago

Just reinstate the GS Act, already! Must we wait until the banks, funds & their ilk completely ruin more markets and put mllions og REAL PEOPLE in more desperate, stagflating situations on more fronts? Let the wealth managers apply their smarts to actually creating tangible value to society instead of nicking more margins for "the investors". Parasitoid behavior kills the host every time. https://en.wikipedia.org/wiki/Decline_of_the_Glass%E2%80%93Steagall_Act https://en.wikipedia.org/wiki/Decline_of_the_Glass%E2%80%93S...

linkregister 9y ago
How would the reinstatement of that act solve the problem in the article?
- Terr_ 9y ago
  My guess for what they mean (not making judgments or asserting these as fact) would be something like: 1. The risky return-focused investment money is still going into housing, despite the 2008 great recession. ("It can't happen twice, right?") 2. A significant portion of that wealth is actually from "non-gambler" savings, and "should" be more conservatively held. 3. Glass-Steagall would help do that, with the side-effect of making housing more broadly affordable for people who need the direct utility of the house.
valuearb 9y ago
Glass-Steagal was just a competitive barrier that made markets less efficient, why would restoring it make anything better?
- icebraining 9y ago
  I have to say, this post is a bad example of writing to your audience. Outside of a few communities, even the idea that market efficiency is a goal to be achieved is not generally accepted. You should be more specific in describing the way Glass-Steagal was actually making things worse.
- tunap 9y ago

xforteversilov 9y ago

Land Value Taxation. Stop taxing property, and tax land value and land ownership instead and most of these problems go away. This might be more of a hard-sell than basic income though. https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism

valuearb 9y ago
Terrible solution to an fake problem.
- mjevans 9y ago
  As an alternative reason or explanation for why taxing "land" instead of property built on the land: The idea is to tax based on the //potential// value of the area to society, so that realizing that value to society is incentivezed. I suspect a real application of this would examine the difference in value to society and apply more 'incentive' (tax proportionally more of the missing value) the further from actual value to society a piece of land is.
  - jdmichal 9y ago
    How does this not end with all existent small owners being strong-armed into selling out to capital-heavy investors who can afford to build 20-story towers? Or is the point that it explicitly does not protect them, because they are "under-utilizing" the property? I'd expect that such a policy would result in a lot of cultural churn, and homogenizing of communities to the point of losing any sort of interesting historical character. How can you have history, when everything is being bought up and redeveloped every (x) years because the previous owners can no longer afford the taxes on the "improved value". Everyone becomes the victims of everyone's success.
    - throwaway2048 9y ago
      When "historical charachter" and entrenched interests are making cities en masse completely unlivable for anybody but the top margin of society, we have a serious problem that needs solutions. "historical charachter" is a pretty shitty reason that people should go homeless

orasis 9y ago

"In prime locations for wealthy foreign investors, such as the affluent boroughs of Chelsea and Kensington in the city of London, the number of vacant units increased by 40% between 2013 and 2014." How much of this is vacant vs AirBnB units? In heavily regulated markets a lot of owners will under-report that they're being used for AirBnB.

Element_ 9y ago
I believe the average price of a semi in Chelsea and Kensington is something like 6 million Euros or 40x local median income. These properties aren't for Airbnb they are for rich foreigners who need to park their money outside their governments reach.

valuearb 9y ago

This is crazy. "In such markets, the value of housing is no longer based on its social use. Properties are equally valuable regardless of whether they are vacant or occupied, so there is no pressure to ensure properties are lived in. They are built with the intention of lying empty and accumulating value, while at the same time, homelessness remains a persistent problem." A home lying empty has a negative return (due to maintenance and operating costs, still have to water lawns, repair weather damage, etc). A home being rented has a higher return. There is simply no reason from an investors perspective to leave a home empty unless you can't find a renter who will cover their costs, or you are trying to sell it. It's people like the author of this study that created the housing bubble in the US. They pushed to lower lending requirements, and pushed to have the US Government assume more risk so more easy money was available for housing purchases. With Fannie Mae and Freddie Mac, the US hasn't had a free market in housing for 70 years. And worse, Fannie Mae and Freddie Mac are integrally connected to both political parties, offering huge payouts to retiring politicians or their friends in return for their support. Google the ex-DNC chairman who made $100M+ as chairman of Fannie Mae's board.

objclxt 9y ago
> There is simply no reason from an investors perspective to leave a home empty unless you can't find a renter who will cover their costs Right now the four bed house next door to me in San Francisco is empty, and has been empty for the past three years - it's worth $4 million, and is owned by a family based in mainland China. On one occasion a representative of theirs stopped me in the street and asked if my home was for sale (fortunately for me my landlord decided it wasn't). And when I lived in London I saw equally empty properties - new build flats worth millions of pounds completely deserted. > A home lying empty has a negative return (due to maintenance and operating costs, still have to water lawns, repair weather damage, etc). Not if the value of the home increases greater than the negative pressures...which it very much has been in many cities. > A home being rented has a higher return. There is simply no reason from an investors perspective to leave a home empty unless you can't find a renter who will cover their costs Tenants have their own problems. They have rights, homes are harder to liquidate with a tenant in, and you may decide it's just not worth the hassle. If you're expecting the property value to increase 50% over the next few years the income a tenant would be providing you is a relative pittance.

Shivetya 9y ago

Should they go after anyone who owns more than one home? When does a vacation home become a "Bad social construct" or whatever phrase they want to use? All depending on where it is located? Yes I understand there is an issue that many homes go unoccupied in some areas but I cannot tell from the article how long between owner uses does it qualify for this designation? Now I can agree if the unit is never occupied, however if they visit a few weeks out of the year then I don't see an issue. It is no different than owning a second or third home anywhere else.

bryanlarsen 9y ago

The building of homes for investment purposes should be making housing more affordable, not less. Simple supply & demand: more supply should mean lower prices. Which implies that these homes aren't actually being added to supply. Why are investors choosing to forgo rental income? There are lots of potential answers to the question, and answering them might magically fix the problem.

robk 9y ago
Wear and tear. The ones I know say that they don't want renters wearing the interior

phoenixProgram 9y ago

If we kill a bunch of rich people, a lot more product will come on the market. I don't care about those people, so if we want a lot of homes to come on the market quickly, I have no problem with a genocide of the power elite.

Houshalter 9y ago

Taxing empty properties might help a bit. But it doesn't address the root of the problem. That housing has become such a scarce resource it can be treated as a commodity. We have the technology to build denser and higher. There's no economic reason that housing should cost much more than the cost of construction. Which should only get cheaper with time, as technology improves. Certainly not more expensive. But this doesn't happen. Why? Because the people commoditizing homes want to protect their investment. The scarcer housing is, the more money they make. It's an incredibly perverse system. It hurts the poor especially. Even the middle class ends up losing most of their income to it. It leads cities to stagnate instead of grow.

valuearb 9y ago
You are missing the bigger pictures. Housing costs are directly related to the cost of land, which is much higher in dense urban areas. The other driver isn't "commoditizing" homes, no individual owner can affect the market price of similar homes by not renting it. It's land use regulation, and rental regulations. The NIMBYs in every city want tight land use controls to restrict the construction of new housing that would impact the value of their homes. The renters want tons of regulations demanding things from landlords the renters can't get by contract. In NY or SF renting a home means giving a renter a massive amount of control over it. Evicting them when their lease expires and you want to sell or move back can be a nightmare. So the rental regulations are keeping homes off the market.
- toomuchtodo 9y ago
  I propose the following solutions: 1. A building's minimum height is dictated by the demand in the area; your existing building can stay, but if you want to bulldoze and rebuild as a developer, you must build up if the local real estate demand dictates so (I don't have enough experience to determine how you'd calculate demand, perhaps trailing rents for the last 24 months?). 2. Renters rights remain in place, with the government providing subsidies and relocation assistance when necessary (funded by a special property tax on non-owner occupied units). An equilibrium can be reached, but the idea of "property rights" will need to change a bit, with the understanding that a healthy neighborhood is more important to society than you having full control of your property (which is already the case, considering zoning laws and what not).

easilyBored 9y ago

They are built with the intention of lying empty and accumulating value, while at the same time, homelessness remains a persistent problem Yeah and Apple has $250,000,000,000 in the bank and at the same time.... Welcome to inequality in home ownership, stock ownership, money in the bank, education, crime rates etc etc.

orschiro 9y ago

Homes are such a critical resource. While other resources are passed down the stream from the rich to the poor — see for example food leftovers (waste) — this is not the case for homes. They remain where they are and don't easily change ownership.

kazinator 9y ago

If something costs a lot of money, retains its value with a potential to appreciate, people will treat it as a financial commodity. Oh well, "shikata ga nai", as they say in Japan. Can't be helped. Funny how the talk always turns to human rights when Peter sets his sights on something he is lacking, which Paul happens to have. If housing is a right, then even if you're not a real estate speculator but an earnest home owner, some assholes out there believe that they have a right to what is yours. Want to relocate somewhere temporarily to work? Hey, "your" home is empty: rent it to some trash that will destroy it, or pay up!

jodrellblank 9y ago

Funny how the talk always turns to human rights when Peter sets his sights on something he is lacking, which Paul happens to have. Paul just 'happens' to have both houses and all the available land to put them on? Convenient for him. Must be God's favourite; Peter should lump it and go die in the gutter. Better luck next life Peter, you asshole, try being born with one of the houses next time, although you'll only damage it. I mean, you're poor therefore you're trash, right?

kazinator 9y ago
Yes, Paul has stuff, so he must have done shady things. As a rule, honest, hard working people have nothing. Paul didn't work two jobs for fifteen years to scrape together a down payment. Doesn't happen, except in stories. Paul's family didn't immigrate with just the clothes on their backs and in their suitcases and a couple of dollars. Hollywood hogwash.
- jodrellblank 9y ago
  As a rule, honest hard working people never fall on hard times, never have medical problems, never have circumstances turn against them, never get hit with spurious lawsuits, are never victims of crime or mis-selling. Everyone who works hard is successful and rich, therefore everyone else must be lazy and undeserving scroungers trying to unfairly obtain what they don't deserve. https://en.wikipedia.org/wiki/Just-world_hypothesis https://en.wikipedia.org/wiki/Just-world_hypothesis hogwash.
  - kazinator 9y ago
    > are never victims of crime Good point; for instance, they get robbed by the government. If I have serious medical problems requiring lots of money, can I get back all the income tax I paid over the last 20 years? Why not? Don't you care about my unlucky circumstances?
    - jodrellblank 9y ago
      Are you suddenly turning away from the cash-before-people, 'fuck-you, got mine' culture that, moments ago, you were so much in favour of? Remember when you had the two houses and everyone else could go fish, but now the government has the two houses and it's "theft" and "don't you care"? Weird. Many countries would give you much more value in medical treatment than you paid in income tax, without any problem, based on such awful, repellent ideas as 'people suffering is bad', or even the pragmatic 'healthy people are a worthwhile investment because they'll contribute more to the economy in future than disabled or bankrupt people will'.