5 ms·

It turns out the problem wasn't foreign investors, but investors full stop. The real solution is to institute a tax, much higher than 2%, on any second, third,

It turns out the problem wasn't foreign investors, but investors full stop. The real solution is to institute a tax, much higher than 2%, on any second, third, etc purchase and make the very notion of an "investment property" prohibitively expensive. The housing market would look very different if everybody had to live in their property instead of engaging in transparently parasitic activity like speculation/landlording. If there's still not enough space after these policies are implemented, maybe then we can entertain the YIMBYs' sqwaking.

dleslie 6y ago
Owners will just pass that expense on to market renters, since there isn't much in the way of alternative rental housing.
- jim-jim-jim 6y ago
  Combine it with caps on rent increases.
  - epistasis 6y ago
    You will still keep people out of the city that want to live there. Rent increases will be replaced with wait lists. I really wonder, why are you so opposed to giving people what they want, which just so happens to also meet BC's climate goals? Multi unit housing is much much better for the environment.
    - seanmcdirmid 6y ago
      > Rent increases will be replaced with wait lists. That is basically what happened when I lived in Switzerland. Places were let at reasonable prices, but there was so much competition for supply that your best bet was to find something overpriced.
      - Leherenn 6y ago
        If the prices are up due to competition, it might be expensive, but it's not overpriced.
  - nemothekid 6y ago
    These types of solutions just add more and more band-aids all the way down. You add caps on rent increases, then people can't find new homes because builders will only build for the top end of the housing market due to the rent caps and people won't move out of their current homes because they don't want to lose their capped rent. If you want housing investments to be less valuable, just build more if it.
    - pydry 6y ago
      Public housing used to be the solution to this problem. Then they stopped building it.
  - imtringued 6y ago
    There are two sides to a market. For a landlord to charge high rents, there must be someone willing to pay high rent on the renter side. Those people won't go away if you mess with the price signal, if anything, more of them will arrive.
epistasis 6y ago
For asset ownership, where ownership involves massive down payments, this seems like a backwards approach. Where are all these first time buyers going to get their down payment? Put yourself in the shoes of somebody who is not already wealthy enough to own a home and see that continual rise in property value, amplified by the 5x leverage of a loan. It's impossible. Taxing landlords may mean for fewer landlords buying, but unless all those young people can somehow buy, it does nothing to solve the problem. > YIMBYs' squawking The huge advantage of the "squawking" which you are unfairly biased against is that it eliminates the profits that these speculators are depending upon. The rise in prices is 100% dependent on a shortage of housing. If there wasn't a shortage, the market would correct. It may take a year or two of surplus housing to flush out those who are holding on for higher prices and teach them the new reality that they can't depend upon massive unearned gains every year, but it is the only way. The other advantage of building surplus housing is that it gives people what they want. It stops the hoarding of a few wealthy people and opens up a desirable place to more people. This is nearly as big a benefit as lower prices. Band aids on far downstream symptoms are not going to solve anything. And people are far too happy to only look at the symptoms rather than the underlying cause.
- pydry 6y ago
  >Where are all these first time buyers going to get their down payment? With a collapse in house prices, this problem is self solving.
  - epistasis 6y ago
    In places like Vancouver and the SF Bay Area, this is no longer true. The down payment amounts are often a multiple of annual household income, and even a drop by 30% will not solve much.
JamesBarney 6y ago
You are arguing we should ban renting? Won't this be extremely problematic for anyone who can't afford to buy a house?
- jim-jim-jim 6y ago
  In my ideal world property is decommodified and the rentier class is eliminated, yes. Attempting to reach that arrangement via polite means does introduce some complications, since landlords have the capital for down payments while others don't. By making landlording prohibitively expensive, you compel them to sell. They can't sell to other landlords, since the new buyer would incur the same penalty, so the most likely customers would be first time owners or the state itself. The government, free of the landlord's profit motive, could in turn offer these properties to the public at lower prices through long term mortgages with little to no down payment. The weekly repayments would be less than rent, and the occupants would eventually own the property instead of lining somebody else's pocket. I don't know what the precise term for this model is, but I don't think it's unprecedented. Like I said, this is the polite route. It introduces complexity to avoid stepping on too many toes, and therein lie its flaws. I can certainly think of more direct methods.
  - JamesBarney 6y ago
    I assume the impolite route is we use violence to end property rights and live in a utopian commune?
    - pydry 6y ago
      Introduction of a land value tax or other forms of land wealth redistribution need not necessarily lead to violence but it probably would. Redistribution of the spoils of unearned income is probably one of the leading causes of violence (e.g. civil war, bay of pigs) and the threat of violence is what helps keep those systems in place.
  - imtringued 6y ago
    You know, the easiest way for things to go bad is by giving gifts to people who don't appreciate their new gifts because they are under the mistaken belief that they are the rightful owner.
snidane 6y ago
It's funny and hard to believe for many that it wouldn't matter if such tax on land is 2% or 50% or 90% and still effective. - at 0% the price ceiling is infinite, so the price tends to climbs up to infinity, up to affordability, which due to close to zero interest rates is also almost unbounded - at 2% many vacant houses start returning back to the market since it no longer pay off to wait indefinitely for a greater fool to buy it from you. Price starts to equalize, because suddenly the market starts to clear again - at 50% of land tax, the only thing changes is that the land price is reduced, all else being equal. In such a market you pay 50% tax on the parcel to government and 50% to the land owner (current leassee). - At 100% of land tax the price of land is further reduced to almost optimal market clearing price. It is now equivalent to renting the land directly from the government. There is no longer any "private tax" paid to the land owner. The land is now rented only if the acticity performed on it outweights the benefit of the tax. The price is now determined purely based on market terms and actually affordable to many. It helps to understand that real estate prices today are mostly land value dominated. Construction material and labor is highly mobile so price of houses is virtually the same everywhere withing the same country. It's all land price in disguise. The house crumbles down eventually and eg. in Japan the price of a house is 0 or negative (destruction cost) after only 30years. It's the same in the west, but people choose to pretends it's not, because all their net worth is stored in that crumbling ruin of theirs.
- imtringued 6y ago
  He didn't advocate for a land tax. He advocated for an investment tax that would prevent developers from building more than 6 units at once. The developer would need some sketchy presale arrangement to obtain funding since he is no longer allowed to own the entire building until construction.
  - snidane 6y ago
    He advocated for a fix to a tax on vacant property owned by foreigners by imolementing it also on citizens, but only for second, third and so on properties. Which is just another compromise which will alleviate the problems a bit, but it will not go away fully for the same reasons the first tax didn't solve it fully. All of these attempts are imperfect but more politically accepted variations of land tax.
imtringued 6y ago
Where are all those investors coming from?!? Oh right... https://www.pionline.com/article/20180621/INTERACTIVE/180629958/u-s-retirement-assets-at-28-trillion-in-q1-little-changed-from-end-of-2017 https://www.pionline.com/article/20180621/INTERACTIVE/180629... Edit: >The housing market would look very different if everybody had to live in their property instead of engaging in transparently parasitic activity like speculation/landlording. Sarcasm on. Yes, I think we should ban renting out properties. Everyone should live in their own property. Sarcasm off.
- inetknght 6y ago
  > I think we should ban renting out properties. Everyone should live in their own property. Sarcasm off. No sarcasm: I think we should ban renting.
throw0101a 6y ago
Also: Airbnbs. Toronto rents were getting quite high pre-pandemic, but once tourism dried up, and Airbnb unit owners needed to pay their bills they seem to have released a lot of stock. The overall average rent dropped 16% YoY: * https://www.torontorentals.com/blog/toronto-gta-march-rent-report-2021 https://www.torontorentals.com/blog/toronto-gta-march-rent-r... Toronto has/had a lot of international students as well, and there's a lot fewer of those as well.

dleslie 6y ago

Owners will just pass that expense on to market renters, since there isn't much in the way of alternative rental housing.

jim-jim-jim 6y ago
Combine it with caps on rent increases.
- epistasis 6y ago
  You will still keep people out of the city that want to live there. Rent increases will be replaced with wait lists. I really wonder, why are you so opposed to giving people what they want, which just so happens to also meet BC's climate goals? Multi unit housing is much much better for the environment.
  - seanmcdirmid 6y ago
    > Rent increases will be replaced with wait lists. That is basically what happened when I lived in Switzerland. Places were let at reasonable prices, but there was so much competition for supply that your best bet was to find something overpriced.
    - Leherenn 6y ago
      If the prices are up due to competition, it might be expensive, but it's not overpriced.
- nemothekid 6y ago
  These types of solutions just add more and more band-aids all the way down. You add caps on rent increases, then people can't find new homes because builders will only build for the top end of the housing market due to the rent caps and people won't move out of their current homes because they don't want to lose their capped rent. If you want housing investments to be less valuable, just build more if it.
  - pydry 6y ago
    Public housing used to be the solution to this problem. Then they stopped building it.
- imtringued 6y ago
  There are two sides to a market. For a landlord to charge high rents, there must be someone willing to pay high rent on the renter side. Those people won't go away if you mess with the price signal, if anything, more of them will arrive.

epistasis 6y ago

For asset ownership, where ownership involves massive down payments, this seems like a backwards approach. Where are all these first time buyers going to get their down payment? Put yourself in the shoes of somebody who is not already wealthy enough to own a home and see that continual rise in property value, amplified by the 5x leverage of a loan. It's impossible. Taxing landlords may mean for fewer landlords buying, but unless all those young people can somehow buy, it does nothing to solve the problem. > YIMBYs' squawking The huge advantage of the "squawking" which you are unfairly biased against is that it eliminates the profits that these speculators are depending upon. The rise in prices is 100% dependent on a shortage of housing. If there wasn't a shortage, the market would correct. It may take a year or two of surplus housing to flush out those who are holding on for higher prices and teach them the new reality that they can't depend upon massive unearned gains every year, but it is the only way. The other advantage of building surplus housing is that it gives people what they want. It stops the hoarding of a few wealthy people and opens up a desirable place to more people. This is nearly as big a benefit as lower prices. Band aids on far downstream symptoms are not going to solve anything. And people are far too happy to only look at the symptoms rather than the underlying cause.

pydry 6y ago
>Where are all these first time buyers going to get their down payment? With a collapse in house prices, this problem is self solving.
- epistasis 6y ago
  In places like Vancouver and the SF Bay Area, this is no longer true. The down payment amounts are often a multiple of annual household income, and even a drop by 30% will not solve much.

JamesBarney 6y ago

You are arguing we should ban renting? Won't this be extremely problematic for anyone who can't afford to buy a house?

jim-jim-jim 6y ago
In my ideal world property is decommodified and the rentier class is eliminated, yes. Attempting to reach that arrangement via polite means does introduce some complications, since landlords have the capital for down payments while others don't. By making landlording prohibitively expensive, you compel them to sell. They can't sell to other landlords, since the new buyer would incur the same penalty, so the most likely customers would be first time owners or the state itself. The government, free of the landlord's profit motive, could in turn offer these properties to the public at lower prices through long term mortgages with little to no down payment. The weekly repayments would be less than rent, and the occupants would eventually own the property instead of lining somebody else's pocket. I don't know what the precise term for this model is, but I don't think it's unprecedented. Like I said, this is the polite route. It introduces complexity to avoid stepping on too many toes, and therein lie its flaws. I can certainly think of more direct methods.
- JamesBarney 6y ago
  I assume the impolite route is we use violence to end property rights and live in a utopian commune?
  - pydry 6y ago
    Introduction of a land value tax or other forms of land wealth redistribution need not necessarily lead to violence but it probably would. Redistribution of the spoils of unearned income is probably one of the leading causes of violence (e.g. civil war, bay of pigs) and the threat of violence is what helps keep those systems in place.
- imtringued 6y ago
  You know, the easiest way for things to go bad is by giving gifts to people who don't appreciate their new gifts because they are under the mistaken belief that they are the rightful owner.

snidane 6y ago

It's funny and hard to believe for many that it wouldn't matter if such tax on land is 2% or 50% or 90% and still effective. - at 0% the price ceiling is infinite, so the price tends to climbs up to infinity, up to affordability, which due to close to zero interest rates is also almost unbounded - at 2% many vacant houses start returning back to the market since it no longer pay off to wait indefinitely for a greater fool to buy it from you. Price starts to equalize, because suddenly the market starts to clear again - at 50% of land tax, the only thing changes is that the land price is reduced, all else being equal. In such a market you pay 50% tax on the parcel to government and 50% to the land owner (current leassee). - At 100% of land tax the price of land is further reduced to almost optimal market clearing price. It is now equivalent to renting the land directly from the government. There is no longer any "private tax" paid to the land owner. The land is now rented only if the acticity performed on it outweights the benefit of the tax. The price is now determined purely based on market terms and actually affordable to many. It helps to understand that real estate prices today are mostly land value dominated. Construction material and labor is highly mobile so price of houses is virtually the same everywhere withing the same country. It's all land price in disguise. The house crumbles down eventually and eg. in Japan the price of a house is 0 or negative (destruction cost) after only 30years. It's the same in the west, but people choose to pretends it's not, because all their net worth is stored in that crumbling ruin of theirs.

imtringued 6y ago
He didn't advocate for a land tax. He advocated for an investment tax that would prevent developers from building more than 6 units at once. The developer would need some sketchy presale arrangement to obtain funding since he is no longer allowed to own the entire building until construction.
- snidane 6y ago
  He advocated for a fix to a tax on vacant property owned by foreigners by imolementing it also on citizens, but only for second, third and so on properties. Which is just another compromise which will alleviate the problems a bit, but it will not go away fully for the same reasons the first tax didn't solve it fully. All of these attempts are imperfect but more politically accepted variations of land tax.

imtringued 6y ago

Where are all those investors coming from?!? Oh right... https://www.pionline.com/article/20180621/INTERACTIVE/180629958/u-s-retirement-assets-at-28-trillion-in-q1-little-changed-from-end-of-2017 https://www.pionline.com/article/20180621/INTERACTIVE/180629... Edit: >The housing market would look very different if everybody had to live in their property instead of engaging in transparently parasitic activity like speculation/landlording. Sarcasm on. Yes, I think we should ban renting out properties. Everyone should live in their own property. Sarcasm off.

inetknght 6y ago
> I think we should ban renting out properties. Everyone should live in their own property. Sarcasm off. No sarcasm: I think we should ban renting.

throw0101a 6y ago

Also: Airbnbs. Toronto rents were getting quite high pre-pandemic, but once tourism dried up, and Airbnb unit owners needed to pay their bills they seem to have released a lot of stock. The overall average rent dropped 16% YoY: * https://www.torontorentals.com/blog/toronto-gta-march-rent-report-2021 https://www.torontorentals.com/blog/toronto-gta-march-rent-r... Toronto has/had a lot of international students as well, and there's a lot fewer of those as well.