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I've asked this question to a person I know who is an academic in economics (not a world-renowned economist, just someone who does economics at university), for
by techsupporter 8y ago
I've asked this question to a person I know who is an academic in economics (not a world-renowned economist, just someone who does economics at university), for what it's worth, and what she told me is--in my paraphrased understanding--that if a market goes up "naturally," or by the usual forces people regularly expect (usually around jobs), then wages tend to also go up so housing and other goods remain mostly affordable relative to local wages being paid.
The issue in cities and areas like Vancouver and Seattle and San Francisco--ones that aren't just hubs for high-paying technology jobs but also ones where overseas capital has made inrushes--is that wages haven't been able to keep up with the outside capital. So property of all types (it's just that most people only directly care about residential property, but commercial property also goes up and that increases the cost of other things in the local economy) rises in price while wages don't, so a major disconnect starts to happen.
This is a two-paragraph summary of a nearly three-hour conversation we had, so there's a lot of nuance I've left out. Zoning, development, density, and all of the rest around property use also affect prices and, according to her, probably more than inbound foreign money, but the added money has an influence.
- rtkwe 8y agoTo add on to that when there's a big inrush of capital into real estate usually there's people coming into the area along with that money which brings money into other areas of the economy. If the properties are just being bought as offshore cash dumps and investments there isn't the same influx of money into other areas of the economy.
- api 8y agoNon-local residential property should be taxed at a significantly higher rate than owner occupied or locally owned properties. That would both solve the problem and provide much needed revenue.
- AzzieElbab 8y agoHow would you enforce that when people have "trusted" relatives all the world?
- pm24601 8y ago1. All real estate held by non-human persons ( i.e. corporations, LLC) gets taxed at a higher rate. 2. All real estate used for income production - i.e. AirBnB for significant percentage of the year 3. An owner can declare a single piece of property their primary residence, all others are taxed as commercial property. 4. etc.... Vancouver needs to define "residents" and tax property that is not being held by non-residents.
- stevenwoo 8y agoThere a number floated at 57 million for 2018? value of Vancouver property purchased by local students with zero income - so this only tallied the ones not clever enough to use shell companies or lawyers as described as the other money laundering techniques to purchase homes, though the casino cash to chips to cash might be most brazen. I think just like the UK hsd recently done - stricter anti money laundering rules, income transparency are needed.
- TheCoelacanth 8y agoSo at Vancouver prices, something like 20 houses? That seems like a number that could easily hit just with students from super wealthy families who legitimately live there. I don't see any reason to believe that involves money laundering.