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> While it’s possible that some homes in this category are indeed being kept off-market by an owner holding out for a larger payout down the line, given the bre

> While it’s possible that some homes in this category are indeed being kept off-market by an owner holding out for a larger payout down the line, given the breadth of this category it’s implausible that this category represents any meaningful part of that total number. The article doesn't show that it's a myth, it just says roughly half of the vacancies are market vacancies (lease ended and looking for new tenant), the other half are non-market, and then waves its hands and speculates that the non-market half probably isn't livable anyways. Maybe that's true but the article makes no effort to figure out if that's the case.

ed25519FUUU 6y ago
The conclusion I came to was that there’s no magic wand, and the only “real” solution is more housing. LA is a very desirable place to live, and the city has failed to deliver on the necessary new housing to economically support the demand.
- harryh 6y ago
  To be more precise: The city has outlawed the construction of new housing to economically support the demand.
- acdha 6y ago
  > the city has failed to deliver on the necessary new housing to economically support the demand. Less passively, current property owners have successfully lobbied the local government to increase the value of their properties. This is especially potent in California where Prop 13 heavily favors long-time owners. If you stand to make a fortune when you retire and are going to pay very little until then, you’re probably going to be in frequent contact with your elected officials.
- snidane 6y ago
  Did you try hard enough? Inplement a small annual fee on the parcel based on market rate and watch the vacant housing appear back on the market in the blink of an eye. You can't clear the housing market without this. Instead of supply/demand dynamic you get a Greater Fool dynamic on the market.
  - epistasis 6y ago
    Charging taxes based on market value has been banned in the California constitution, with the passage of the disastrous Prop 13 in the late 1970s. It is the source of many problems in California. Taxes based on percentage of value are limited to 1% of purchase price, with a maximum increase of tax paid of 2% per year, which is sub inflationary. Presumably if we had a loooong run of time with property values increasing less than 2% per year, newly purchased homes would still be taxed at market value, but that's pretty far outside the normal realm of market behavior.
- etripe 6y ago
  The question is whether politically there is a greater demand for available housing, or for ROI on already owned properties. Depending on which hypothesis you prefer, there either is a problem today or there isn't. When one factors in that this situation is decades in the making and present across most of the Western world, I would argue the political interest is in looking out for home owners, not starters, both in sheer voter numbers and the politicians' own group membership.
joe_the_user 6y ago
As far as I can just looking around my neighborhood and looking at a few known-vacant buildings, there are plenty of houses that are vacant for investment reasons. And the dynamics of the market sort of reinforce this. Real estate is a great investment but land lording is hard. Renting below market lowers the value your investment and so does leaving your investment open as a rental indefinitely. Sure, just about anything that opens up will get many applications. But most of those will be from people who technically can't afford the location - because house is unaffordable, people making 3x the rent you are charging are scarce and the most desperate people put in the most applications, so any landlord will find most people applying look like bad renters and not want to deal with the situation. And for the same reason, some portion of the "between renters" category may be actually off-market too. If the landlord is for the perfect renter, they may look forever.
kuang_eleven 6y ago
Weirdly, there is great evidence for the author's point, he just didn't mention it! In short, the vacancy rate is incredibly low, ~3.5% [1]. Taking the other data the author mentioned, that means that ~1.5% is non-market vacancies, of which only a subset is the much-ballyhooed investment vacancies. [1] https://www.census.gov/acs/www/data/data-tables-and-tools/data-profiles/ https://www.census.gov/acs/www/data/data-tables-and-tools/da...
- alisonatwork 6y ago
  Although 3.5% might be small compared to the US or California average on that linked site, it still sounds like a lot to me. In a town with 10000 properties, that's 35 empty units. Even if only 15 weren't actively on the market, that could still get over a dozen homeless people off the streets, or provide a refuge for at risk members of the community who currently live with abusive parents or spouses due to not having the means to live alone. Obviously building more affordable properties is a longer term solution, but that doesn't mean that people who keep empty houses around aren't also part of the problem. Personally, I think there should be a "use it or lose it" tax on vacant properties. Edit: I realized after posting I'm off by an order of magnitude. It's 150-350 empty units! That would make a huge difference to homeless numbers almost anywhere.
  - erik_seaberg 6y ago
    That doesn’t mean 350 units have been sitting empty since last spring. It means at some point each unit waited two weeks for cleaning, viewing, lease approval, and a new tenant moving in.
    - alisonatwork 6y ago
      This doesn't come across as convincing to me. This would require that in any given community of 10000 dwellings, literally every single unit is a rental property, and that every single unit is vacated and has a new tenant move in every year. That might be true in certain specific communities like university residences, but I very much doubt it's the case in any ordinary urban community. In the US home ownership numbers are around 65%[1] (not 0%), and people on average only move about 11 times in their life[2] (not once per year). It seems to me entirely reasonable to assume that in a community that touts its low vacancy rate of 3.5%, there must still be a not insignificant absolute number of properties that remain unoccupied for a month or more every year. If that number truly were near-zero, then nobody should have a problem with a vacancy tax, or a squatter's rule designed to grant rights to actual members of the community who want to use a property left vacant for longer than a couple of months. [1] https://en.wikipedia.org/wiki/Home-ownership_in_the_United_States https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S... [2] https://fivethirtyeight.com/features/how-many-times-the-average-person-moves/ https://fivethirtyeight.com/features/how-many-times-the-aver...
asdff 6y ago
Take Los Angeles where the median home is 900k now, homes sell like lightning, and you move into your apartment the week after you tour it because it's that competitive. There is demand to live here and has been forever, basically, probably always will given that's how it goes for large American cities. It is baffling how backwards the land use is. It shouldn't be possible for a lot zoned for mixed use commercial and residential could sit as a derelict burned out building for years(1). It was burned out recently, but street view from 2007 shows it's been abandoned for at least 14 years now. This metro station takes you either to hollywood or downtown LA in 10 minutes, massive job centers as well as nightlife areas. Anything built here would get signed leases that week, just like everything else in Koreatown. Other notable pieces of land use for this corner precious steps from the metro station are a gas station, an abandoned hyundai dealership, and a drive thru offering unhealthy food to the community. If someone quantified all the externalities, I'm sure poor land use alone causes trillions in economic and ecological damage to our cities in this country. This is our hardest problem. 1. https://www.google.com/maps/@34.0769362,-118.2918114,3a,75y,234.45h,111.68t/data=!3m6!1e1!3m4!1sX2X0y8PzBV_rUUXJTKndQw!2e0!7i16384!8i8192 https://www.google.com/maps/@34.0769362,-118.2918114,3a,75y,...
- epistasis 6y ago
  The losses to workers from exclusionary land use are absolutely massive. A paper by Hsieh and Morettis has been the go-to analysis, with GDP growth changing by single digit percentages. However there was recently a simple math error found, and the effect is much higher, to multiple digit GDP changes. GDP has its flaws, but since these changes are due to wages, this is the worst sort of GDP loss since it would even out inequality. https://www.econlib.org/a-correction-on-housing-regulation/ https://www.econlib.org/a-correction-on-housing-regulation/

ed25519FUUU 6y ago

The conclusion I came to was that there’s no magic wand, and the only “real” solution is more housing. LA is a very desirable place to live, and the city has failed to deliver on the necessary new housing to economically support the demand.

harryh 6y ago
To be more precise: The city has outlawed the construction of new housing to economically support the demand.
acdha 6y ago
> the city has failed to deliver on the necessary new housing to economically support the demand. Less passively, current property owners have successfully lobbied the local government to increase the value of their properties. This is especially potent in California where Prop 13 heavily favors long-time owners. If you stand to make a fortune when you retire and are going to pay very little until then, you’re probably going to be in frequent contact with your elected officials.
snidane 6y ago
Did you try hard enough? Inplement a small annual fee on the parcel based on market rate and watch the vacant housing appear back on the market in the blink of an eye. You can't clear the housing market without this. Instead of supply/demand dynamic you get a Greater Fool dynamic on the market.
- epistasis 6y ago
  Charging taxes based on market value has been banned in the California constitution, with the passage of the disastrous Prop 13 in the late 1970s. It is the source of many problems in California. Taxes based on percentage of value are limited to 1% of purchase price, with a maximum increase of tax paid of 2% per year, which is sub inflationary. Presumably if we had a loooong run of time with property values increasing less than 2% per year, newly purchased homes would still be taxed at market value, but that's pretty far outside the normal realm of market behavior.
etripe 6y ago
The question is whether politically there is a greater demand for available housing, or for ROI on already owned properties. Depending on which hypothesis you prefer, there either is a problem today or there isn't. When one factors in that this situation is decades in the making and present across most of the Western world, I would argue the political interest is in looking out for home owners, not starters, both in sheer voter numbers and the politicians' own group membership.

joe_the_user 6y ago

As far as I can just looking around my neighborhood and looking at a few known-vacant buildings, there are plenty of houses that are vacant for investment reasons. And the dynamics of the market sort of reinforce this. Real estate is a great investment but land lording is hard. Renting below market lowers the value your investment and so does leaving your investment open as a rental indefinitely. Sure, just about anything that opens up will get many applications. But most of those will be from people who technically can't afford the location - because house is unaffordable, people making 3x the rent you are charging are scarce and the most desperate people put in the most applications, so any landlord will find most people applying look like bad renters and not want to deal with the situation. And for the same reason, some portion of the "between renters" category may be actually off-market too. If the landlord is for the perfect renter, they may look forever.

kuang_eleven 6y ago

Weirdly, there is great evidence for the author's point, he just didn't mention it! In short, the vacancy rate is incredibly low, ~3.5% [1]. Taking the other data the author mentioned, that means that ~1.5% is non-market vacancies, of which only a subset is the much-ballyhooed investment vacancies. [1] https://www.census.gov/acs/www/data/data-tables-and-tools/data-profiles/ https://www.census.gov/acs/www/data/data-tables-and-tools/da...

alisonatwork 6y ago
Although 3.5% might be small compared to the US or California average on that linked site, it still sounds like a lot to me. In a town with 10000 properties, that's 35 empty units. Even if only 15 weren't actively on the market, that could still get over a dozen homeless people off the streets, or provide a refuge for at risk members of the community who currently live with abusive parents or spouses due to not having the means to live alone. Obviously building more affordable properties is a longer term solution, but that doesn't mean that people who keep empty houses around aren't also part of the problem. Personally, I think there should be a "use it or lose it" tax on vacant properties. Edit: I realized after posting I'm off by an order of magnitude. It's 150-350 empty units! That would make a huge difference to homeless numbers almost anywhere.
- erik_seaberg 6y ago
  That doesn’t mean 350 units have been sitting empty since last spring. It means at some point each unit waited two weeks for cleaning, viewing, lease approval, and a new tenant moving in.
  - alisonatwork 6y ago
    This doesn't come across as convincing to me. This would require that in any given community of 10000 dwellings, literally every single unit is a rental property, and that every single unit is vacated and has a new tenant move in every year. That might be true in certain specific communities like university residences, but I very much doubt it's the case in any ordinary urban community. In the US home ownership numbers are around 65%[1] (not 0%), and people on average only move about 11 times in their life[2] (not once per year). It seems to me entirely reasonable to assume that in a community that touts its low vacancy rate of 3.5%, there must still be a not insignificant absolute number of properties that remain unoccupied for a month or more every year. If that number truly were near-zero, then nobody should have a problem with a vacancy tax, or a squatter's rule designed to grant rights to actual members of the community who want to use a property left vacant for longer than a couple of months. [1] https://en.wikipedia.org/wiki/Home-ownership_in_the_United_States https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S... [2] https://fivethirtyeight.com/features/how-many-times-the-average-person-moves/ https://fivethirtyeight.com/features/how-many-times-the-aver...

asdff 6y ago

Take Los Angeles where the median home is 900k now, homes sell like lightning, and you move into your apartment the week after you tour it because it's that competitive. There is demand to live here and has been forever, basically, probably always will given that's how it goes for large American cities. It is baffling how backwards the land use is. It shouldn't be possible for a lot zoned for mixed use commercial and residential could sit as a derelict burned out building for years(1). It was burned out recently, but street view from 2007 shows it's been abandoned for at least 14 years now. This metro station takes you either to hollywood or downtown LA in 10 minutes, massive job centers as well as nightlife areas. Anything built here would get signed leases that week, just like everything else in Koreatown. Other notable pieces of land use for this corner precious steps from the metro station are a gas station, an abandoned hyundai dealership, and a drive thru offering unhealthy food to the community. If someone quantified all the externalities, I'm sure poor land use alone causes trillions in economic and ecological damage to our cities in this country. This is our hardest problem. 1. https://www.google.com/maps/@34.0769362,-118.2918114,3a,75y,234.45h,111.68t/data=!3m6!1e1!3m4!1sX2X0y8PzBV_rUUXJTKndQw!2e0!7i16384!8i8192 https://www.google.com/maps/@34.0769362,-118.2918114,3a,75y,...

epistasis 6y ago
The losses to workers from exclusionary land use are absolutely massive. A paper by Hsieh and Morettis has been the go-to analysis, with GDP growth changing by single digit percentages. However there was recently a simple math error found, and the effect is much higher, to multiple digit GDP changes. GDP has its flaws, but since these changes are due to wages, this is the worst sort of GDP loss since it would even out inequality. https://www.econlib.org/a-correction-on-housing-regulation/ https://www.econlib.org/a-correction-on-housing-regulation/