4 ms·

Ah yes, the classic (incorrect) xenophobia response; "It's those foreigners ruining our country". Lets all blame the symptoms for causing the disease! The real

Ah yes, the classic (incorrect) xenophobia response; "It's those foreigners ruining our country". Lets all blame the symptoms for causing the disease! The real (and only) reason is a mismatch of supply and demand. Mostly supply though. Localities pass very strict real estate policy which prevents construction, which lowers supply, and so naturally prices go up. Tokyo japan somehow is able to house 11 million people, at reasonable costs. What do they do differently? Allow construction and have intelligent zoning. If cities like SF/NY/etc were allowed to build, prices would come down, and those foreign investors would be revealed for the nice people that they are - ones paying property taxes to a country they don't live in.

jacobolus 8y ago
My wife is Chinese. My parents split their time between the USA and Mexico (where my father is a university professor). I have friends from all over the world and American friends who have moved all over the world, and I love traveling and interacting with foreign tourists. I’m as big a fan of international migration as you will find anywhere. The problem is not that foreigners are bad people (I’m sure most real-estate investors are “nice”), the problem is housing used as an investment vehicle. With the increasing ability for people to move money around the world, more housing than ever in world cities is becoming a magnet for remote investment. Foreign investors exacerbate problems which already existed. In particular, large-scale and absentee landlords (including those living in the same country) cause more problems than small-scale local landowners, because they don’t have the time or resources to form local relationships, tend to care less about the property or the local environment, and are not as accountable when they act badly. This is just as much true when it’s Americans buying large amounts of property in whatever other country, or buying property in other cities within the same country. I agree that a significant (but ideally gradual) drop in housing prices based on changing zoning laws and increasing housing supply (and ideally changing the tax structure, starting with e.g. repealing CA Prop. 13) would solve some of these problems. (Among other things, they would make housing an unattractive remote investment.)
- briandear 8y ago
  Absentee landlords don’t mean that properties are neglected. If they use a property manager, they can be just as well-run as anything else. Conversely there are plenty of “local” landlords that don’t do a good job. The location of the landlord is irrelevant, it’s the property management that matters.
  - jacobolus 8y ago
    In many places, houses that were previously owned and managed by someone who lived a few blocks away are now owned by someone far away and managed by a (remotely owned) for-profit company whose goal is to cut expenses as much as possible. I agree that many local landlords are terrible, especially in my experience those who own many properties. Personally I think professional property management companies should be very strictly regulated, and both owners and management companies should face severe financial liability for mismanagement, and landlords should be taxed as much as the market will bear, with the proceeds spent on local residents. But even in the best case, a property management company is never going to care as much as a good local landlord, and the best local landlord isn’t going to care as much as an owner-occupant.
    - sokoloff 8y ago
      > landlords should be taxed as much as the market will bear, with the proceeds spent on local residents. For rented properties, taxing the landlord is taxing tenants (indirectly, but tightly, linked). Those local residents that you want to spend the money are the tenants in most cases.
      - jacobolus 8y ago
        That is only true when housing supply is unlimited and competition between landlords drives prices down. (In that case, housing stays cheap and there is no problem to solve.) When housing is limited, excess demand (competition among tenants) already pushes prices above the landlord’s costs. As a result, the landlord pockets an unearned profit. In such a situation taxing landlords does not change prices paid by tenants because they are already paying as much as the demand side of the market will bear. It just redistributes the profit toward public uses. For more about this basic idea, see https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand or your favorite high school economics textbook. Also see https://en.wikipedia.org/wiki/Economic_rent https://en.wikipedia.org/wiki/Economic_rent

jacobolus 8y ago

My wife is Chinese. My parents split their time between the USA and Mexico (where my father is a university professor). I have friends from all over the world and American friends who have moved all over the world, and I love traveling and interacting with foreign tourists. I’m as big a fan of international migration as you will find anywhere. The problem is not that foreigners are bad people (I’m sure most real-estate investors are “nice”), the problem is housing used as an investment vehicle. With the increasing ability for people to move money around the world, more housing than ever in world cities is becoming a magnet for remote investment. Foreign investors exacerbate problems which already existed. In particular, large-scale and absentee landlords (including those living in the same country) cause more problems than small-scale local landowners, because they don’t have the time or resources to form local relationships, tend to care less about the property or the local environment, and are not as accountable when they act badly. This is just as much true when it’s Americans buying large amounts of property in whatever other country, or buying property in other cities within the same country. I agree that a significant (but ideally gradual) drop in housing prices based on changing zoning laws and increasing housing supply (and ideally changing the tax structure, starting with e.g. repealing CA Prop. 13) would solve some of these problems. (Among other things, they would make housing an unattractive remote investment.)

briandear 8y ago
Absentee landlords don’t mean that properties are neglected. If they use a property manager, they can be just as well-run as anything else. Conversely there are plenty of “local” landlords that don’t do a good job. The location of the landlord is irrelevant, it’s the property management that matters.
- jacobolus 8y ago
  In many places, houses that were previously owned and managed by someone who lived a few blocks away are now owned by someone far away and managed by a (remotely owned) for-profit company whose goal is to cut expenses as much as possible. I agree that many local landlords are terrible, especially in my experience those who own many properties. Personally I think professional property management companies should be very strictly regulated, and both owners and management companies should face severe financial liability for mismanagement, and landlords should be taxed as much as the market will bear, with the proceeds spent on local residents. But even in the best case, a property management company is never going to care as much as a good local landlord, and the best local landlord isn’t going to care as much as an owner-occupant.
  - sokoloff 8y ago
    > landlords should be taxed as much as the market will bear, with the proceeds spent on local residents. For rented properties, taxing the landlord is taxing tenants (indirectly, but tightly, linked). Those local residents that you want to spend the money are the tenants in most cases.
    - jacobolus 8y ago
      That is only true when housing supply is unlimited and competition between landlords drives prices down. (In that case, housing stays cheap and there is no problem to solve.) When housing is limited, excess demand (competition among tenants) already pushes prices above the landlord’s costs. As a result, the landlord pockets an unearned profit. In such a situation taxing landlords does not change prices paid by tenants because they are already paying as much as the demand side of the market will bear. It just redistributes the profit toward public uses. For more about this basic idea, see https://en.wikipedia.org/wiki/Supply_and_demand https://en.wikipedia.org/wiki/Supply_and_demand or your favorite high school economics textbook. Also see https://en.wikipedia.org/wiki/Economic_rent https://en.wikipedia.org/wiki/Economic_rent