6 ms·

Ultimately the people who buy up housing in major cities as a place to park money are going to end up shooting themselves in the foot. Parking a few million do

by imgabe 7y ago

Ultimately the people who buy up housing in major cities as a place to park money are going to end up shooting themselves in the foot. Parking a few million dollars in a Manhattan apartment is desirable because it's unlikely to lose value and you can actually use it when you visit. But if all the apartments are owned by people who mostly don't live there and only visit a few times a year, the thing that made them valuable - being located in a desirable, dynamic city where lots of people live and work, is no longer going to be true and they're going to lose value. Cities should implement punitively high property taxes on any homes or apartments that are not used as a primary residence, either by the owner or a tenant.

gniv 7y ago
Ironically, strong rent control policies help the rich exactly because of this dynamic. The city is thriving while its most valuable real estate is empty.
- afpx 7y ago
  Please explain for those of us who fail to see the connection.
  - legitster 7y ago
    Occupancy with rent-control is virtually 100% and guarantees the desirability of non-rent controlled units in the same area. It's an interesting point, but I don't think would crack the top 10 list for reasons rent control is bad.
  - gniv 7y ago
    Note that I'm not saying rent control is bad. Anyway, imgabe argued that having more and more apts owned by rich folks that don't live in them changes the city for the worse, reducing the value of these apts as well. I'm arguing that having rent control means there is a base of people who live there and keep the city/neighbourhood thriving, thus (as a side effect) helping the expensive apts keep their value.
setr 7y ago
So... It's a self-correcting problem that will naturally find some equilibrium? The price goes up, it becomes worth using as a bank, but eventually bank usage leads to price reduction and thus not as valuable as a bank. I'm not clear how you conclude regulation is needed; self-regulating systems are exactly where gov intervention is not required.
- imgabe 7y ago
  You're missing the part where the correction involves the economic collapse of a major city.
  - yathern 7y ago
    I don't know if 'desirable neighborhood becomes less desirable because of over-gentrification' is necessarily 'economic collapse of a major city'.
    - imgabe 7y ago
      Even if it doesn't take out the whole city because no one can afford to live there, the people governing the city have a duty to represent the interests of the people who live there. Generally (well, tautologically), people are interested in living in desirable areas. What is the benefit to the citizens of the city of allowing homes in those areas to be used as investment vehicles for wealthy foreigners? Why should they care at all about the interests of people who aren't going to live there? Prioritize people who actually live there and if some billionaire who lives somewhere else absolutely must have a pied-a-terre, they can pay 20% or 50% or however much of the value of the home each year for the privilege.
- unethical_ban 7y ago
  The "self regulation" has the lag time where neighborhoods get ruined and housing goes to waste for the benefit of the ultra-rich to stick their money in a place where it is doing harm to society.
AdrianB1 7y ago
You can go directly for confiscation, it is just a 100% tax in the first year. You can also ask to pay it in advance. You cannot go more punitive than that. Well, this does not sound right. But I saw punitive taxes are a very popular opinion in some places.
dublinben 7y ago
A more directly effective counterbalance for vacant housing is squatting. An empty apartment is much less valuable when you can no longer ensure it will remain empty.
- imgabe 7y ago
  Probably pretty difficult to pull off in a fully staffed building with a doorman, security and all that.
srmatto 7y ago
There was an attempt to implement just such a tax in New York City but it failed. https://ny.curbed.com/2019/3/27/18283292/pied-a-terre-tax-real-estate-state-legislature https://ny.curbed.com/2019/3/27/18283292/pied-a-terre-tax-re...
- imgabe 7y ago
  That's too bad. I think I read about Vancouver, BC implementing a similar tax and it being helpful.
beerandt 7y ago
This scenario is happening in the French Quarter. Or really, has already happened.

by imgabe 7y ago

gniv 7y ago

Ironically, strong rent control policies help the rich exactly because of this dynamic. The city is thriving while its most valuable real estate is empty.

afpx 7y ago
Please explain for those of us who fail to see the connection.
- legitster 7y ago
  Occupancy with rent-control is virtually 100% and guarantees the desirability of non-rent controlled units in the same area. It's an interesting point, but I don't think would crack the top 10 list for reasons rent control is bad.
- gniv 7y ago
  Note that I'm not saying rent control is bad. Anyway, imgabe argued that having more and more apts owned by rich folks that don't live in them changes the city for the worse, reducing the value of these apts as well. I'm arguing that having rent control means there is a base of people who live there and keep the city/neighbourhood thriving, thus (as a side effect) helping the expensive apts keep their value.

setr 7y ago

So... It's a self-correcting problem that will naturally find some equilibrium? The price goes up, it becomes worth using as a bank, but eventually bank usage leads to price reduction and thus not as valuable as a bank. I'm not clear how you conclude regulation is needed; self-regulating systems are exactly where gov intervention is not required.

imgabe 7y ago
You're missing the part where the correction involves the economic collapse of a major city.
- yathern 7y ago
  I don't know if 'desirable neighborhood becomes less desirable because of over-gentrification' is necessarily 'economic collapse of a major city'.
  - imgabe 7y ago
    Even if it doesn't take out the whole city because no one can afford to live there, the people governing the city have a duty to represent the interests of the people who live there. Generally (well, tautologically), people are interested in living in desirable areas. What is the benefit to the citizens of the city of allowing homes in those areas to be used as investment vehicles for wealthy foreigners? Why should they care at all about the interests of people who aren't going to live there? Prioritize people who actually live there and if some billionaire who lives somewhere else absolutely must have a pied-a-terre, they can pay 20% or 50% or however much of the value of the home each year for the privilege.
unethical_ban 7y ago
The "self regulation" has the lag time where neighborhoods get ruined and housing goes to waste for the benefit of the ultra-rich to stick their money in a place where it is doing harm to society.

AdrianB1 7y ago

You can go directly for confiscation, it is just a 100% tax in the first year. You can also ask to pay it in advance. You cannot go more punitive than that. Well, this does not sound right. But I saw punitive taxes are a very popular opinion in some places.

dublinben 7y ago

A more directly effective counterbalance for vacant housing is squatting. An empty apartment is much less valuable when you can no longer ensure it will remain empty.

imgabe 7y ago
Probably pretty difficult to pull off in a fully staffed building with a doorman, security and all that.

srmatto 7y ago

There was an attempt to implement just such a tax in New York City but it failed. https://ny.curbed.com/2019/3/27/18283292/pied-a-terre-tax-real-estate-state-legislature https://ny.curbed.com/2019/3/27/18283292/pied-a-terre-tax-re...

imgabe 7y ago
That's too bad. I think I read about Vancouver, BC implementing a similar tax and it being helpful.

beerandt 7y ago

This scenario is happening in the French Quarter. Or really, has already happened.