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It's hard not to see the overall solution to the housing crisis in some North American cities as simply building more housing. A speculation and/or vacancy tax

It's hard not to see the overall solution to the housing crisis in some North American cities as simply building more housing. A speculation and/or vacancy tax makes sense in cities with a high number of foreign buyers like Vancouver and New York but in other cities it seems like the biggest road block is simply zoning restrictions that prevent supply to meet demand. There are second order effects that need to go w/ more building, such as adequate transportation, parking and services. But if your goal is simply to get the average down can you do better than simply building more? Rent control seems more like a band-aid for a small number of folks rather than a real solution.

quickben 8y ago
Building more doesn't work. Some areas in Toronto have 30% empty dwellings. There are much more money available to speculate than available surface area. Leverage was cheap (through housing) so everyone played that asset class on margin here. Now that the interest rates are going up, it will sort itself out.
- tptacek 8y ago
  The average rent in Toronto is even lower than that of Chicago. It doesn't sound like there is a housing problem there.
  - jacquesc 8y ago
    You have to compare it to avg incomes. They make less in Vancouver than Chicago, so it takes up a much higher percentage of their income.
    - xyzzyz 8y ago
      I just did that, and it’s not true. Average rent is higher percentage of average wage in Chicago.
      - tptacek 8y ago
        Also, I said Toronto.
      - deleted 8y ago
        [deleted]
    - tfehring 8y ago
      I assume you mean Toronto, not Vancouver, based on the parent comment. Median household income in Toronto is $65,829 CAD as of 2015 [0], which is about $52,500 USD adjusted for purchasing power parity [1]. Chicago's median income from 2012 to 2016 was $50,434 [2]. I didn't take the time to find numbers that are perfectly apples-to-apples, but it definitely doesn't seem like Toronto's median income is materially lower than Chicago's. [0] https://www.toronto.ca/wp-content/uploads/2017/10/8f41-2016-Census-Backgrounder-Income.pdf https://www.toronto.ca/wp-content/uploads/2017/10/8f41-2016-... [1] https://data.oecd.org/conversion/purchasing-power-parities-ppp.htm https://data.oecd.org/conversion/purchasing-power-parities-p... [2] https://www.census.gov/quickfacts/fact/table/chicagocityillinois/LND110210 https://www.census.gov/quickfacts/fact/table/chicagocityilli...
- jowiar 8y ago
  Cities need to fund themselves through real estate rather than income taxes. Tax “the person who could live in a place” rather than “the person who does live in a place”. For actual residents, it’s a wash, but it severely penalizes the investment crowd.
  - underwater 8y ago
    It also severlely penalizes the elderly and retired, who don’t earn but certainly still vote. In my city in Australia it’s common to see a single elderly retiree living in a rundown home on a large block, where the land alone could be worth close to a million dollars. When the property is sold it can often be split into two, and house two families in detached homes. It feels cold hearted to say elderly should be pushed out of homes they have lived in for 50 years. But it does make it harder for cities to grow - the carrot of higher prices doesn’t seem to work for people who just want to live out their days in the community and home they know.
    - underwater 8y ago
      Here is a random example (https://www.domain.com.au/64-days-avenue-yeronga-qld-4104-2014561367 https://www.domain.com.au/64-days-avenue-yeronga-qld-4104-20...) I just came across. A home that was purchased 30 years ago for the equivalent of 350k, selling for 1.4 million. The same sized property next door has a full sized home and three townhomes. So potentially one person living in the same space that is housing a dozen next door.
    - bradleyjg 8y ago
      > It feels cold hearted to say elderly should be pushed out of homes they have lived in for 50 years. More or less cold hearted than forcing three new dads to spend 15% of their waking hours getting back and forth to work, which means they only sees their kids when they are sleeping?
    - jowiar 8y ago
      If you have a million bucks in assets, I don't care if you're 75. Our country has been ruined by boomers running the country into debt by way of cutting their taxes -- taxes that millennials will eventually have to pay. I have no qualms with taxing the "winners" of that generation. They owe it to us anyway.
- RidingPegasus 8y ago
  > much more money available to speculate than available surface area Doubtful, some of the biggest cities on earth have tiny geographic areas. Build more and let them keep buying, a clear government policy that targets rezoning to keep price rises in-step with inflation would certainly make empty home investors think twice. Real estate speculation is a gamble that governments won't accommodate growing populations and politically benefit from rising house prices. In many places on Earth they are likely right.
noobermin 8y ago
It is worth noting the story wasn't about building more housing, it attributed it to more taxes on speculation, rules, and one market effect, a slow down of home resales. "Resale" meaning not new housing units.
fatbird 8y ago
For the last 20 years Vancouver has been adding housing stock, mostly in the form of multi-family dwellings, at one of the highest rates in North America. We're adding as much as we can as fast as we can. The situation now is worse than ever, so "build more housing" is clearly not a solution, and in fact may be making things worse by adding a lot of investment vehicles that attract foreign capital.
- xt00 8y ago
  Build more housing only works if you actually build enough to satisfy the demand — so it would be cool if we knew a number of houses built vs people trying to buy houses type of thing. Maybe you are right just I don’t know the data on the subject for Vancouver. I heard similar arguments while living in Bay Area that “we’ve tried to build our way out of this problem and it hasn’t worked for 20 years” but actually they were building one house for every 10 people moving there so, in that case it was a case that they under built for a long time because after people would move to their little corner of SF they would say ok no more people.. it’s good as is.. ultimately if you look at places like Dayton (good frontline episode on this recently), you see what happens when you build a ton of housing during a boom then factories leave and the houses then sell for basically $0.. often people are buying houses there for $5k, and buying 5 at a time then remodeling them. So overbuilding is bad as well as underbuilding.. my take is that the most sustainable building approach is to build in places that people still want to live in even when the economy is down. Like surprise surprise living 40 miles outside of Las Vegas next to a strip mall likely will drop in value when you can afford to buy a place that is more desirable closer to services and jobs and friends.
  - 40acres 8y ago
    We need to be smart about where we want to invest housing in. People are living in cities now and Columbus has been bigger than Dayton for quite some time. Columbus will hit 1M people soon. Columbus has a diverse set of industry and is more of a service industry city, Dayton was always a one industry town.
- jseliger 8y ago
  We're adding as much as we can as fast as we can This is not even remotely true. Much of the city is still zoned exclusively for single-family housing, although that may be (very slowly—too slowly) changing: https://www.sightline.org/2018/08/14/vancouver-housing-of-all-shapes-and-sizes https://www.sightline.org/2018/08/14/vancouver-housing-of-al.... About two-thirds of Seattle is also single-family only: https://www.seattletimes.com/business/real-estate/amid-seattles-rapid-growth-most-new-housing-restricted-to-a-few-areas https://www.seattletimes.com/business/real-estate/amid-seatt.... Those factors alone likely explain much of the housing shortage. Make it legal to build the housing that people want to live in, and the housing will be built.
michaelchisari 8y ago
>> A speculation and/or vacancy tax makes sense in cities with a high number of foreign buyers A proper speculation/vacancy tax that disincentivized empty properties in SF, Vancouver, NY and other major cities that have that issue would probably result in a noticeable rippling effect to reducing values in smaller cities. Regardless, an economy where many people are working just to pay exorbitant rent is not a healthy economy.

quickben 8y ago

Building more doesn't work. Some areas in Toronto have 30% empty dwellings. There are much more money available to speculate than available surface area. Leverage was cheap (through housing) so everyone played that asset class on margin here. Now that the interest rates are going up, it will sort itself out.

tptacek 8y ago
The average rent in Toronto is even lower than that of Chicago. It doesn't sound like there is a housing problem there.
- jacquesc 8y ago
  You have to compare it to avg incomes. They make less in Vancouver than Chicago, so it takes up a much higher percentage of their income.
  - xyzzyz 8y ago
    I just did that, and it’s not true. Average rent is higher percentage of average wage in Chicago.
    - tptacek 8y ago
      Also, I said Toronto.
    - deleted 8y ago
      [deleted]
  - tfehring 8y ago
    I assume you mean Toronto, not Vancouver, based on the parent comment. Median household income in Toronto is $65,829 CAD as of 2015 [0], which is about $52,500 USD adjusted for purchasing power parity [1]. Chicago's median income from 2012 to 2016 was $50,434 [2]. I didn't take the time to find numbers that are perfectly apples-to-apples, but it definitely doesn't seem like Toronto's median income is materially lower than Chicago's. [0] https://www.toronto.ca/wp-content/uploads/2017/10/8f41-2016-Census-Backgrounder-Income.pdf https://www.toronto.ca/wp-content/uploads/2017/10/8f41-2016-... [1] https://data.oecd.org/conversion/purchasing-power-parities-ppp.htm https://data.oecd.org/conversion/purchasing-power-parities-p... [2] https://www.census.gov/quickfacts/fact/table/chicagocityillinois/LND110210 https://www.census.gov/quickfacts/fact/table/chicagocityilli...
jowiar 8y ago
Cities need to fund themselves through real estate rather than income taxes. Tax “the person who could live in a place” rather than “the person who does live in a place”. For actual residents, it’s a wash, but it severely penalizes the investment crowd.
- underwater 8y ago
  It also severlely penalizes the elderly and retired, who don’t earn but certainly still vote. In my city in Australia it’s common to see a single elderly retiree living in a rundown home on a large block, where the land alone could be worth close to a million dollars. When the property is sold it can often be split into two, and house two families in detached homes. It feels cold hearted to say elderly should be pushed out of homes they have lived in for 50 years. But it does make it harder for cities to grow - the carrot of higher prices doesn’t seem to work for people who just want to live out their days in the community and home they know.
  - underwater 8y ago
    Here is a random example (https://www.domain.com.au/64-days-avenue-yeronga-qld-4104-2014561367 https://www.domain.com.au/64-days-avenue-yeronga-qld-4104-20...) I just came across. A home that was purchased 30 years ago for the equivalent of 350k, selling for 1.4 million. The same sized property next door has a full sized home and three townhomes. So potentially one person living in the same space that is housing a dozen next door.
  - bradleyjg 8y ago
    > It feels cold hearted to say elderly should be pushed out of homes they have lived in for 50 years. More or less cold hearted than forcing three new dads to spend 15% of their waking hours getting back and forth to work, which means they only sees their kids when they are sleeping?
  - jowiar 8y ago
    If you have a million bucks in assets, I don't care if you're 75. Our country has been ruined by boomers running the country into debt by way of cutting their taxes -- taxes that millennials will eventually have to pay. I have no qualms with taxing the "winners" of that generation. They owe it to us anyway.
RidingPegasus 8y ago
> much more money available to speculate than available surface area Doubtful, some of the biggest cities on earth have tiny geographic areas. Build more and let them keep buying, a clear government policy that targets rezoning to keep price rises in-step with inflation would certainly make empty home investors think twice. Real estate speculation is a gamble that governments won't accommodate growing populations and politically benefit from rising house prices. In many places on Earth they are likely right.

noobermin 8y ago

It is worth noting the story wasn't about building more housing, it attributed it to more taxes on speculation, rules, and one market effect, a slow down of home resales. "Resale" meaning not new housing units.

fatbird 8y ago

For the last 20 years Vancouver has been adding housing stock, mostly in the form of multi-family dwellings, at one of the highest rates in North America. We're adding as much as we can as fast as we can. The situation now is worse than ever, so "build more housing" is clearly not a solution, and in fact may be making things worse by adding a lot of investment vehicles that attract foreign capital.

xt00 8y ago
Build more housing only works if you actually build enough to satisfy the demand — so it would be cool if we knew a number of houses built vs people trying to buy houses type of thing. Maybe you are right just I don’t know the data on the subject for Vancouver. I heard similar arguments while living in Bay Area that “we’ve tried to build our way out of this problem and it hasn’t worked for 20 years” but actually they were building one house for every 10 people moving there so, in that case it was a case that they under built for a long time because after people would move to their little corner of SF they would say ok no more people.. it’s good as is.. ultimately if you look at places like Dayton (good frontline episode on this recently), you see what happens when you build a ton of housing during a boom then factories leave and the houses then sell for basically $0.. often people are buying houses there for $5k, and buying 5 at a time then remodeling them. So overbuilding is bad as well as underbuilding.. my take is that the most sustainable building approach is to build in places that people still want to live in even when the economy is down. Like surprise surprise living 40 miles outside of Las Vegas next to a strip mall likely will drop in value when you can afford to buy a place that is more desirable closer to services and jobs and friends.
- 40acres 8y ago
  We need to be smart about where we want to invest housing in. People are living in cities now and Columbus has been bigger than Dayton for quite some time. Columbus will hit 1M people soon. Columbus has a diverse set of industry and is more of a service industry city, Dayton was always a one industry town.
jseliger 8y ago
We're adding as much as we can as fast as we can This is not even remotely true. Much of the city is still zoned exclusively for single-family housing, although that may be (very slowly—too slowly) changing: https://www.sightline.org/2018/08/14/vancouver-housing-of-all-shapes-and-sizes https://www.sightline.org/2018/08/14/vancouver-housing-of-al.... About two-thirds of Seattle is also single-family only: https://www.seattletimes.com/business/real-estate/amid-seattles-rapid-growth-most-new-housing-restricted-to-a-few-areas https://www.seattletimes.com/business/real-estate/amid-seatt.... Those factors alone likely explain much of the housing shortage. Make it legal to build the housing that people want to live in, and the housing will be built.

michaelchisari 8y ago

>> A speculation and/or vacancy tax makes sense in cities with a high number of foreign buyers A proper speculation/vacancy tax that disincentivized empty properties in SF, Vancouver, NY and other major cities that have that issue would probably result in a noticeable rippling effect to reducing values in smaller cities. Regardless, an economy where many people are working just to pay exorbitant rent is not a healthy economy.