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> This is the the real cost of allowing (particularly foreign) capital to be parked in real estate in the developed world. It's amazing to me that people don't

> This is the the real cost of allowing (particularly foreign) capital to be parked in real estate in the developed world. It's amazing to me that people don't recognize this as xenophobia when other forms ("Mexicans are taking our jobs!", "Migrants don't have the same values!") are so readily called out. High housing prices are a self inflicted problem. When you mix supply restrictions with tax breaks explicitly designed to keep people from moving, you end up pricing people out. Not surprising.

antif 9y ago
California Proposition 13, to me, has been a ticking time-bomb of a 'youth tax' over the past forty years. As much as I respect that it serves to protect the vulnerable and elderly from heightening costs, it has unduly shifted that burden onto everyone else. I believe todays homelessness is surely in part being caused by this untouchable stick-in-the-mud legislation. Property tax appraisals for neighboring houses are wildly variant, some times by a factor of 20x (eg, home market value of two million or more, but taxed on a state appraised value of 100-200k). So a young person buying their first home seemingly must always pay a significantly higher annual property tax when compared with the family next-door who've kept the property family owned for a generation.
- joejerryronnie 9y ago
  If you want to see the most bi-partisan, passionate, and active opposition in the history of California, try taking on Prop 13. This will never get repealed because it's the one thing every politician knows will rally the vast majority of voters, regardless of ideology, and result in an immediate political death sentence.
- orangecat 9y ago
  As much as I respect that it serves to protect the vulnerable and elderly from heightening costs And I would even question that. If your house has appreciated so much that you can't afford the property taxes, so you're "forced" to sell it for a huge profit...maybe in an ideal world that wouldn't happen, but it's nowhere near the top of my list of injustices that need to be fixed.
TuringNYC 9y ago
I think the reason people dislike foreign capital specifically is when the houses come just a piggybank and remain empty. It is bad enough when capital (local or foreign) drives up home prices, but it feels worse when the homes sit empty. Note, this affects everyone because people get knocked down the ladder incrementally.
- grandmczeb 9y ago
  When I lived in NYC, a famous celebrity had a condo in the same building as me. As far as I could tell, it never got used. Weirdly enough no one minded until it sold to someone from Saudi Arabia.
  - cletus 9y ago
    Bono lives in one of the towers of the San Remo building on CPW. He bought it from Steve Jobs who had owned it for ~20 years famously never having set foot in it. The other tower was owned by Bruce Willis and Demi Moore bought in 1990.im not sure they ever lived there either. Eventually Demi Moore got it 8n the divorce and sold it recently. And this is in a coop, which tend to be far more owner-occupied. Luckily for Manhattan the vast majority of hous8ng stock is coops. If it were nothing but the luxury piggy banks being built on 57th street the city would be a ghost town.
- dnautics 9y ago
  > the houses come just a piggybank and remain empty seems like a poor investment to me. You're just pissing it away on property taxes. So why not let the rich do this and basically redistribute their wealth?
  - QAPereo 9y ago
    It makes sense if you want to exfiltrate your money from the Russian mob, or Chinese communist party.
  - pjc50 9y ago
    You get the property appreciation, potentially leveraged; and you get what might be called the "option value" of being able to move into and sell it at a moment's notice. Weirdly, many of the foreign moneyed people know that they and/or their family may have to drop everything and leave their country of origin at any point to flee a purge, and the property is a bolthole for that possibility and a financial reserve that is hard for China to seize.
teej 9y ago
Foreign investment is certainly a factor as much as the NIMBY-ism of the Bay Area. But people would still be griping about outside money if it were New York investors buying homes and leaving them empty. But it’s not. Just because the outside investment is Chinese doesn’t make someone xenophobic.
- nerfhammer 9y ago
  It's entirely the NIMBYism because without that the supposed foreign real estate speculation would be almost completely pointless. It is xenophobia and that's bad because it trains the reflex to waste time on stupid, lazy, self-satisfying thought blaming greedy, scheming outsiders instead of trying to think of any sane practicable solution.
perl4ever 9y ago
When reading an article about New Zealand restricting foreign real estate investment, I found their reasoning compelling. Housing can be used to house people, or for speculation, like Bitcoin or gold. If you believe that providing shelter takes strict priority for the limited housing stock then it is moral and necessary to restrict the demand from investors. Quantifying the scale of the problem is another issue, but I certainly think that if people are buying houses for purposes other than living in, allowing that is the, or a, "self-inflicted problem". If someone wants to invest and grow the supply of something, they should be welcome, but bidding up a resource that cannot be increased is not something people have to accept merely because of some misguided slogans or epithets.
- tankenmate 9y ago
  In Australia non resident foreigners are, for the most part, only allowed to buy new builds. In Sydney some have called for an empty residential property tax, but it hasn't come about yet.
- Feniks 9y ago
  New Zealand also gave out passports for people who "invested" in the country. California does something alike, giving US citizenship to anyone born in the country.
  - azemetre 9y ago
    US Citizenship by birth is a right granted by the US Constitution and has very little to do with the State of California.
- mythrwy 9y ago
  Exactly. Speculation and storing wealth are worthwhile activities but IMOP not when it comes to basic human needs. One of which is having a place to eat and sleep.
pjc50 9y ago
People downvoting this are missing the point, because you're absolutely right: the problem word is not foreign capital, but foreign capital and the extreme global inequality thereof.

antif 9y ago

California Proposition 13, to me, has been a ticking time-bomb of a 'youth tax' over the past forty years. As much as I respect that it serves to protect the vulnerable and elderly from heightening costs, it has unduly shifted that burden onto everyone else. I believe todays homelessness is surely in part being caused by this untouchable stick-in-the-mud legislation. Property tax appraisals for neighboring houses are wildly variant, some times by a factor of 20x (eg, home market value of two million or more, but taxed on a state appraised value of 100-200k). So a young person buying their first home seemingly must always pay a significantly higher annual property tax when compared with the family next-door who've kept the property family owned for a generation.

joejerryronnie 9y ago
If you want to see the most bi-partisan, passionate, and active opposition in the history of California, try taking on Prop 13. This will never get repealed because it's the one thing every politician knows will rally the vast majority of voters, regardless of ideology, and result in an immediate political death sentence.
orangecat 9y ago
As much as I respect that it serves to protect the vulnerable and elderly from heightening costs And I would even question that. If your house has appreciated so much that you can't afford the property taxes, so you're "forced" to sell it for a huge profit...maybe in an ideal world that wouldn't happen, but it's nowhere near the top of my list of injustices that need to be fixed.

TuringNYC 9y ago

I think the reason people dislike foreign capital specifically is when the houses come just a piggybank and remain empty. It is bad enough when capital (local or foreign) drives up home prices, but it feels worse when the homes sit empty. Note, this affects everyone because people get knocked down the ladder incrementally.

grandmczeb 9y ago
When I lived in NYC, a famous celebrity had a condo in the same building as me. As far as I could tell, it never got used. Weirdly enough no one minded until it sold to someone from Saudi Arabia.
- cletus 9y ago
  Bono lives in one of the towers of the San Remo building on CPW. He bought it from Steve Jobs who had owned it for ~20 years famously never having set foot in it. The other tower was owned by Bruce Willis and Demi Moore bought in 1990.im not sure they ever lived there either. Eventually Demi Moore got it 8n the divorce and sold it recently. And this is in a coop, which tend to be far more owner-occupied. Luckily for Manhattan the vast majority of hous8ng stock is coops. If it were nothing but the luxury piggy banks being built on 57th street the city would be a ghost town.
dnautics 9y ago
> the houses come just a piggybank and remain empty seems like a poor investment to me. You're just pissing it away on property taxes. So why not let the rich do this and basically redistribute their wealth?
- QAPereo 9y ago
  It makes sense if you want to exfiltrate your money from the Russian mob, or Chinese communist party.
- pjc50 9y ago
  You get the property appreciation, potentially leveraged; and you get what might be called the "option value" of being able to move into and sell it at a moment's notice. Weirdly, many of the foreign moneyed people know that they and/or their family may have to drop everything and leave their country of origin at any point to flee a purge, and the property is a bolthole for that possibility and a financial reserve that is hard for China to seize.

teej 9y ago

Foreign investment is certainly a factor as much as the NIMBY-ism of the Bay Area. But people would still be griping about outside money if it were New York investors buying homes and leaving them empty. But it’s not. Just because the outside investment is Chinese doesn’t make someone xenophobic.

nerfhammer 9y ago
It's entirely the NIMBYism because without that the supposed foreign real estate speculation would be almost completely pointless. It is xenophobia and that's bad because it trains the reflex to waste time on stupid, lazy, self-satisfying thought blaming greedy, scheming outsiders instead of trying to think of any sane practicable solution.

perl4ever 9y ago

When reading an article about New Zealand restricting foreign real estate investment, I found their reasoning compelling. Housing can be used to house people, or for speculation, like Bitcoin or gold. If you believe that providing shelter takes strict priority for the limited housing stock then it is moral and necessary to restrict the demand from investors. Quantifying the scale of the problem is another issue, but I certainly think that if people are buying houses for purposes other than living in, allowing that is the, or a, "self-inflicted problem". If someone wants to invest and grow the supply of something, they should be welcome, but bidding up a resource that cannot be increased is not something people have to accept merely because of some misguided slogans or epithets.

tankenmate 9y ago
In Australia non resident foreigners are, for the most part, only allowed to buy new builds. In Sydney some have called for an empty residential property tax, but it hasn't come about yet.
Feniks 9y ago
New Zealand also gave out passports for people who "invested" in the country. California does something alike, giving US citizenship to anyone born in the country.
- azemetre 9y ago
  US Citizenship by birth is a right granted by the US Constitution and has very little to do with the State of California.
mythrwy 9y ago
Exactly. Speculation and storing wealth are worthwhile activities but IMOP not when it comes to basic human needs. One of which is having a place to eat and sleep.

pjc50 9y ago

People downvoting this are missing the point, because you're absolutely right: the problem word is not foreign capital, but foreign capital and the extreme global inequality thereof.