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When I lived in San Francisco, the newly built condo building across from me was fully empty (but fully sold) for all the years I lived there. This is a tower i

• aaronbwebber 7y ago
  I call bullshit. Say what tower it was, and when it was built, and what time frame you are actually talking about so we can verify for ourselves whether it was actually empty or not, or even if it was empty whether it was empty for a good reason (e.g. not having it's habitability permit). Otherwise this is the worst kind of anecdata - not even enough detail to verify that the anecdote is true, nevermind whether it is actually a representative sample of a larger issue or just an odd case.
  • cmclaughlin 7y ago
    I'm all for backing up claims, but drive through Pac Heights and Cow Hollow at night - you won't see many lights on in those mansions. Drive by during the day and all you see is construction workers and gardeners tending to the properties there. It's pretty obvious people don't live there more than a couple months a year. These are the ultra rich with property in the most expensive cities all over the world.
    • robbyking 7y ago
      > I'm all for backing up claims, but [...] you won't see many lights on in those mansions. I'm with you 100%. I lived in SF from 1998-2006, then again for a few years in the 2010's, and when rental prices are high landlords seem to prefer holding out rather than lowering their rates. I assume this is to avoid locking a potentially valuable rental unit into a low, rent-controlled lease. (On a side note, this is why many economists believe rent control is bad overall for rental markets: http://freakonomics.com/podcast/rent-control/ http://freakonomics.com/podcast/rent-control/)
    • pcwalton 7y ago
      Mansions in Pacific Heights and condos in SOMA are very different. If mansions in Pacific Heights are indeed vacant (which, to be clear, I doubt they are) that would suggest that a better use of the space would be to split them up into new, more affordable, units.
    • LorenPechtel 7y ago
      If they live there a couple of months a year it's a vacation home, not a vacant home.
  • filoleg 7y ago
    Cannot speak for SF, but that was definitely the case with highrises in downtown Vancouver. Saw quite a few of those next to the waterfront that had 90% of the apartments (visible from the ground) completely empty or even have the plastic cover on the windows on the inside, with very few (i could count less than 5 of those out of about 30 being visible enough to judge) having anything on the inside.
• trickstra 7y ago
  The next financial crisis will take them all like a tsunami. I really wouldn't want to be in their shoes.
  • asdff 7y ago
    If they wait it out 5 years they'd probably be back in the black.
• damnyou 7y ago
  Why should different rules apply to foreigners in this context? An American billionaire buying a few condos and keeping them empty has the exact same effect as a Chinese billionaire doing so. Rules around vacant homes are good, though, and I strongly support them.
  • rb808 7y ago
    At least an American billionaire pays some American taxes. If a foreign speculator makes a lot of money they aren't even paying any income or capital gains taxes here.
    • klipt 7y ago
      > if a foreign speculator makes a lot of money they aren't even paying any income or capital gains taxes here. False, even if you're not US resident, you still have to file non-resident tax returns and pay taxes on all US sourced income. https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens-source-of-income https://www.irs.gov/individuals/international-taxpayers/nonr... > A nonresident alien (NRA) usually is subject to U.S. income tax only on U.S. source income.
    • tareqak 7y ago
      An vacancy tax deals with both domestic and foreign buyers keeping homes unoccupied. Here is the link to the city of Vancouver’s Empty Home Tax: https://vancouver.ca/home-property-development/empty-homes-tax.aspx https://vancouver.ca/home-property-development/empty-homes-t... .
    • amenod 7y ago
      The cynic in me would correct you that neither pays much taxes.
    • asdfadsfgfdda 7y ago
      They are still paying plenty in property tax. From the city's perspective, you couldn't ask for a better resident. Somebody who pays full property tax and consumes almost no services (schools, police, etc).
• toasterlovin 7y ago
  I used to be instinctively against stuff like this, but I actually think it’s pretty reasonable now. People outside of a given city/country/etc. have no inherent right to participate in that place. Local residents should only allow outsiders to participate if they derive some benefit from it. Now, that said, there may be unintended consequences to eliminating foreign purchases of real estate.
  • kdazzle 7y ago
    Vancouver, BC passed something like this a few years ago - it’s a 20% tax on all non-resident home purchases. It has actually stopped house prices from rising so fast, but there are still a bunch of empty homes.
    • asdff 7y ago
      Sounds like the tax is too low then. If the vacancy tax is high enough, landlords will have no problems finding a tenant. This is vancouver and sf we are talking about, snap your fingers and you will find a tenant if the price is right. Too many greedy people.
  • klipt 7y ago
    Just tax the vacant homes at high rates and use that money to build even more housing. Win/win for the city.
    • asdff 7y ago
      tough to do when the councilman has two or three piece of property too
• jayd16 7y ago
  We should really just repeal prop 13 for commercial and non-primary home real-estate. edit: forgot to add non-primary home.
  • vonmoltke 7y ago
    Repeal it for everything except owner-occupied residences. That's the way homestead works in Florida.
    • refurb 7y ago
      Repeal it for everything. Just do what Texas does and allow deferred property tax payments for when the owner dies or sells. Why should we be giving tax breaks to people who have seen incredible appreciation of their homes. Those are the last people who should be getting tax breaks.
      • cameldrv 7y ago
        This. The original stated intent of Prop 13 was people not being able to afford to stay in their homes due to rising property taxes. OK fine, but when you sell your house for $2 million, you most definitely can afford it, and you should pay up, with interest.
      • LorenPechtel 7y ago
        This is what I've been saying for years. I didn't know anyone had implemented it.....looks like they have an 8% interest rate, that's crazy high for the situation.
        • cameldrv 7y ago
          There's a product called a reverse mortgage that accomplishes the same thing. Having the government offer this instead of foreclosure nullifies the "I lost my house because of high property taxes" argument, but there's no need for the interest rate to be especially competitive. If you can get a better deal on the private market, go get it.
• Reedx 7y ago
  There are houses throughout the Bay Area sitting empty, just being used as a relatively safe store of value. That goal is already achieved without having to deal with the overhead of managing the property and tenants. So the homes just sit... empty.
  • lkbm 7y ago
    Seems strange. Surely a management company would happily handle all that hassle and provide a secondary income stream. Sign a couple forms and boost investment income by a few percent? Surely that's not significantly more burdensome than the bureaucratic hassle of purchasing the property in the first place. I guess there's some significant tax/regulatory difference between capital gains from holding property vs. an income stream from renting said property.
    • Qworg 7y ago
      AFAIK, if you CAN rent a property for $X and it remains empty, you can take it as a loss. $X tracks inflation/value, which was a huge problem when I lived in Pittsburgh. Places that were empty for 40 years had ludicrously high rents (4X+ new places), so they just remained empty as tax write offs.
    • deleted 7y ago
      [deleted]
    • klipt 7y ago
      There's large downside risk to renting out property. One bad tenant trashing the place can cancel out years of rent. And in the Bay Area people invest more for appreciation than rent. The rent/price ratio is much higher elsewhere.
      • asdff 7y ago
        Landlords have insurance too. Plenty of people still rent. If a landlord is struggling to fill their apartment in sf, maybe they should try not asking 3000 a month. The demand is very much there.
• macinjosh 7y ago
  > The rise of foreign money parking money in real estate has screwed things up on a global level. If the property tax is paid and the maintenance is kept up what is the problem created solely by the fact some homes are empty? The only reason these properties have such high values is because there is a demand that is not being supplied. Supplying more housing makes this a non-issue. > San Francisco has felt the brunt of this due to their insanely restrictive development laws. This is the real issue. Governments restrict housing supply for whatever misguided reasons and prices go up, those prices make it a good place to park cash. Government should stop picking winners and losers.
  • nicksellen 7y ago
    > This is the real issue. Governments restrict housing supply for whatever misguided reasons and prices go up, those prices make it a good place to park cash. Government should stop picking winners and losers. Restriction of housing is not limited to Government, housing developers also do it: "[Kate] Barker reached a similar conclusion in her interim report, where she noted that in order to maximize their profits, developers control the rate of production and ‘trickle out’ no more than 100–200 houses a year from a large development. ‘This may not be desirable from society’s point of view,’ she wrote." (from https://www.annaminton.com/bigcapital https://www.annaminton.com/bigcapital) Personally, I trust the reasons that a Government would limit housing more than I would a for-profit company who are probably operating in the interests of investors who don't live in the affected areas. Even more than Big Government control though, I would prefer the people that live in an area to have the biggest say into how things are run.
    • macinjosh 7y ago
      Corporations who collude with or otherwise use government/laws to manipulate markets in their favor are even worse in IMO. The fact still remains though that the housing developers wouldn't be able to trickle out homes at their whim if the government enforced limits on housing weren't preventing other developers from competing.
  • wetpaws 7y ago
    You can't satisfy demand for speculative assets. China tried to do it by building entire cities, and still failed.
• api 7y ago
  A few starter ideas: (1) Repealing prop-13 is probably a non-starter but we could probably get away with repealing it for non-owner-occupied homes. Prop-13 was meant to prevent people from being driven from their homes by property tax increases, not to protect speculators from being taxed. (2) Levy a substantial additional property tax on residential properties that are not currently occupied by either the owner or a renter (for more than e.g. 6 months). These should at the very least be on the rental market. (3) Subject all real estate purchases and investments to KYC/AML and other rules. AFAIK one of the things driving this loony real estate speculation is that RE has become a preferred vehicle for money laundering after KYC/AML made other financial investments less attractive for that. (4) Tax foreign (non-US-citizen) purchases of residential real estate. Yes they'd set up shells and recruit locals to be proxy buyers, but at least this would give them more hoops to jump through and would probably reduce the extent of the problem.
  • vonmoltke 7y ago
    > (1) Repealing prop-13 is probably a non-starter but we could probably get away with repealing it for non-residents. Prop-13 was meant to prevent people from being driven from their homes by property tax increases, not to protect speculators from being taxed. I have never lived in California, and Prop 13 passed before I was born anyway, so I don't know much about the political backstory. That said, if this was the purpose that got it passed, why is the exemption so broad? How does capping Safeway's property taxes keep people from being driven out of their homes?
    • compiler-guy 7y ago
      The corporate protections are unintended consequences of the original proposition. They really weren't on people's radar. (This is why California residents should almost always vote against propositions, even if the idea and goals are good: Fixing the unintended consequences is extremely difficult. It would be better to find other ways to implement the idea. But getting anyone to fix proposition 13--even in this very limited instance of not protecting corporations anymore--brings out all the apocalyptic messaging (from basically everyone, but especially the corporations) that the old folks who bought in 1970 and have lived their whole lives there will be out on the street when their property taxes go up 10x. There is no nuance in these messaging battles. And quite frankly, what property owner wants to take any kind of risk with this?
• mschuster91 7y ago
  There is an easy solution preventing empty homes in markets with a high rate of vacant homes combined with a high rate of involuntary homeless: a tax of 40% of the value as recorded at deed transfer per year of emptiness. Exceptions only given in case of reasonable vacancy (e.g. due to construction works or damages). If the property ends up vacant for 2 years, government appoints random renters - for a maximum rent no higher than the rate the lowest 10% city-wide is. No possibility of eviction for ten years, except for willful/grossly negligent damage to property or unfit conduct (e.g. disturbing the peace, running drug dens or harassment of other renters). If an owner intentionally does not repair damages to claim the tax exception, government is authorized to do the repairs themselves and recoup costs from the owner. That should be proper incentive for developers to build housing that is actually wanted and for speculation owners to rent out homes and to keep them intact/rentable. Edit: for the downvoters, please explain why. This is a system that is the law in Berlin, only with a drastically higher tax rate and lower minimum rent.
  • war1025 7y ago
    You would have fared much better if you led with the fact that a similar system is already in place in Berlin. The comment reads as an extreme solution that no one would ever implement. The fact that it is already implemented somewhere gives it a lot more credibility.
  • narag 7y ago
    Some questions: Was this system intended for the homeless? Were there many vacants before? How has the offer responded to such measures? How difficult is to evict a grossly negligent or misbehaved tenant?
  • sidlls 7y ago
    I think this is the kernel of a great idea. Empty homes in urban areas especially ought to be relatively rare and we need to have ways to incentivize utilization--with both carrot and stick.
    • mateo411 7y ago
      I think the main idea is what's known as a vacancy tax. If people want to park their money in SF property but not use it, that's fine, they'll just have to pay more.
• mc32 7y ago
  Some countries in Asia have restrictions regarding ownership by non-citizens. If you’re not a citizen it basically has to belong to a local —could be a spouse. On the other hand that can be detrimental to the economy depending on how something like that is implemented.
• pcwalton 7y ago
  Counterpoint: I live in a newly-built condo building near Mission Bay and I don't know of any vacant units in the building. My neighbors very much exist. These debates always turn into anecdotes that cover up the real reasons why people oppose or support housing—a preference for the suburban or urban lifestyle respectively. People who argue that newly-built condo buildings are mostly vacant always happen to prefer the suburban lifestyle; people who argue that newly-built condo buildings provide much-needed housing always happen to prefer the urban lifestyle (including me). It's all a facade. The actual vacancy rate in San Francisco, as we expect, is relatively low for US cities.