5 ms·

Real-Estate Frenzy Overwhelms Small-Town America: ‘I Came Home Crying’

24 points by throwkeep 5y ago

throwkeep 5y ago
Archive link: https://archive.is/IRICf https://archive.is/IRICf
mycologos 5y ago
> Local buyers bid against one another as well as against investors who now comprise about a fifth of annual home sales nationally. Have any places tried implementing residency laws requiring the owners of a home to actually spend some minimum out of time there? I imagine that the existing homeowners would oppose such a law, since it would reduce the pool of potential buyers, and thus the values of their own homes. And I imagine there's other collateral damage that would result from that kind of half-baked rule. But there is something gross to me, maybe illogically so, about wealthy investors crowding out young families who would actually ... use the house.
- ivankolev 5y ago
  They've tried something to that effect in Vancouver and Toronto. It is 15% tax for non-residents, in Toronto at least. Was instituted 2017, and it did not change a thing, both cities still among the hottest real estate markets in the world.
  - perl4ever 5y ago
    So? Is 15% the most imaginable?
  - philwelch 5y ago
    Is that meant as a disincentive or as a way for the local government to collect more revenue to capitalize on the phenomenon?
    - ivankolev 5y ago
      I'd say both, and it is failing at both counts :). The federal government is actually thinking of imposing it across Canada, even though most other places other than Vancouver and Toronto could actually use some foreign investment.
      - philwelch 5y ago
        Pigovian taxes are good economics but dubious politics for this exact reason. If you rely on them for revenue, you don’t want to actually disincentivize the behavior they’re intended to disincentivize so you keep the tax artificially low.
- axaxs 5y ago
  Agreed. Every time I get into a thought or conversation about it my blood just boils. Screw taxing...make it illegal for any person or entity to own more than say, 2 houses. Maybe 3? Downvote away, but real estate investors are real scum. Invest in literally anything else.
  - visualradio 5y ago
    > Screw taxing...make it illegal for any person or entity to own more than say, 2 houses. Maybe 3 Taxes are a simpler and more effective though. Ideal solution is a land tax on comparable sales price of the estate less some portion of replacement cost of non-obsolete fixed capital improvements. If there is a lot large enough for 10 houses worth millions in the middle of the city next to publicly maintained infrastructure, investors might be able to avoid the cap by rendering the units uninhabitable, removing toilets, etc. Land and property taxes do not have to be flat taxes. They are easy to make distributive by adding an X% deduction on the first $Y in tax payments per resident per billing period that they resided in the same jurisdiction that the parcel is located. State governments can reform property tax system by appointing state commissioners to chair a state board of equalization attended by local assessors to reappraise property values at the state level. When this was done in the Progressive Era, states found large areas of land held by railroad corporations and barons which were not being taxed at all and put them on the tax rolls. The federal government can also introduce a national property tax by amending and reintroducing the direct tax collected under James Madison. Any increase in direct land or property tax burden can be offset by distributive offsets for permanent residents or cuts to regressive taxes such as sales taxes and payroll taxes.
    - axaxs 5y ago
      Understood and good points, but think of the end game. I talked to a guy last week who works for an 'investment' firm. He said they're buying about 10 houses a week in my market, renting them all. It really blew my mind. Imagine if businesses eventually buy -all- housing. You can tax them 10000%, they'll just pass it on to renters. I feel like we're slipping back to feudal times.
mtnGoat 5y ago
I’m currently being effected by this. Housing is up at least 30% in the last year locally, and I am expecting a new member of my family soon, so more space is surely needed but dang if it’s not hard to look at current pricing.
ergot_vacation 5y ago
Naively, you would expect this to be fixed via basic economics: high demand and low supply lead to high prices, which should lead to MORE supply, which should lower prices. And yet this doesn't seem to be the case. Very little building seems to be happening relative to the explosion in demand, and when it does happen it's mostly houses for rich folks, not ordinary ones. The system isn't self-healing anymore. It's jammed up. Obviously this most recent spike is probably connected to exodus from the major cities due to covid, but the trend has been happening for years, maybe a full decade now. The best I can tell, this is yet another example of our economy becoming increasingly imaginary. Again, naively you would expect people to buy houses to LIVE IN, and other people to BUILD those homes so they could be sold to the first group of people. But in the recent past it seems the housing market has joined an ever-growing list of things like crypto, Game Stop stock, and who knows what else; a perverse wonderland where everything is detached from reality and rampant, delusional speculation rules the day. The difference is, no one needs crypto, or Game Stop shares, so if crazy people want to monopolize them, fine. People DO need places to live. Many can't afford one even under good conditions. And now yet another thing ordinary people need has been stolen from them by the rich, fenced and moated off, never to be seen again. Meanwhile food prices are going up and up and up, while portions get smaller and smaller. Inflation looks ready to explode. And soon, Covid will (hopefully) be over. Which means the "pause" that was put on everything will go away. No more government assistance to ease things. No more "coming together" to fight the common enemy. You may thing there's strife online and off now, but when we "go back to normal," in a few months, or a year, a whole ton of salt is going to be ground into the waiting wound, and this housing shortage will be at the top of a long, long list of grievances. 2020 was nothing compared to what's coming.
- andrewmcwatters 5y ago
  I fear that developed nations are in a fiat currency end-game where interest rates stay at near zero levels for the foreseeable future meaning that borrowing stays cheap for decades on end, which exacerbates asset prices, incentivizes builders to only produce real estate projects like “luxury” apartments, and makes government borrowing easy, too, so that bond yields produce negative returns for investors. We’re living in a world where politicians aren’t fighting the international housing crisis, and I think the only meaningful way you can do so is by nations coming together and forming a Breton Woods type era of agreement to establish the world over what housing rights look like and what restrictions companies, REITs, builders, and landlords have so as to prevent neofeudalism from continuing to proliferate.

24 points by throwkeep 5y ago

Archive link: https://archive.is/IRICf https://archive.is/IRICf

> Local buyers bid against one another as well as against investors who now comprise about a fifth of annual home sales nationally. Have any places tried implementing residency laws requiring the owners of a home to actually spend some minimum out of time there? I imagine that the existing homeowners would oppose such a law, since it would reduce the pool of potential buyers, and thus the values of their own homes. And I imagine there's other collateral damage that would result from that kind of half-baked rule. But there is something gross to me, maybe illogically so, about wealthy investors crowding out young families who would actually ... use the house.

ivankolev 5y ago
They've tried something to that effect in Vancouver and Toronto. It is 15% tax for non-residents, in Toronto at least. Was instituted 2017, and it did not change a thing, both cities still among the hottest real estate markets in the world.
- perl4ever 5y ago
  So? Is 15% the most imaginable?
- philwelch 5y ago
  Is that meant as a disincentive or as a way for the local government to collect more revenue to capitalize on the phenomenon?
  - ivankolev 5y ago
    I'd say both, and it is failing at both counts :). The federal government is actually thinking of imposing it across Canada, even though most other places other than Vancouver and Toronto could actually use some foreign investment.
    - philwelch 5y ago
      Pigovian taxes are good economics but dubious politics for this exact reason. If you rely on them for revenue, you don’t want to actually disincentivize the behavior they’re intended to disincentivize so you keep the tax artificially low.
axaxs 5y ago
Agreed. Every time I get into a thought or conversation about it my blood just boils. Screw taxing...make it illegal for any person or entity to own more than say, 2 houses. Maybe 3? Downvote away, but real estate investors are real scum. Invest in literally anything else.
- visualradio 5y ago
  > Screw taxing...make it illegal for any person or entity to own more than say, 2 houses. Maybe 3 Taxes are a simpler and more effective though. Ideal solution is a land tax on comparable sales price of the estate less some portion of replacement cost of non-obsolete fixed capital improvements. If there is a lot large enough for 10 houses worth millions in the middle of the city next to publicly maintained infrastructure, investors might be able to avoid the cap by rendering the units uninhabitable, removing toilets, etc. Land and property taxes do not have to be flat taxes. They are easy to make distributive by adding an X% deduction on the first $Y in tax payments per resident per billing period that they resided in the same jurisdiction that the parcel is located. State governments can reform property tax system by appointing state commissioners to chair a state board of equalization attended by local assessors to reappraise property values at the state level. When this was done in the Progressive Era, states found large areas of land held by railroad corporations and barons which were not being taxed at all and put them on the tax rolls. The federal government can also introduce a national property tax by amending and reintroducing the direct tax collected under James Madison. Any increase in direct land or property tax burden can be offset by distributive offsets for permanent residents or cuts to regressive taxes such as sales taxes and payroll taxes.
  - axaxs 5y ago
    Understood and good points, but think of the end game. I talked to a guy last week who works for an 'investment' firm. He said they're buying about 10 houses a week in my market, renting them all. It really blew my mind. Imagine if businesses eventually buy -all- housing. You can tax them 10000%, they'll just pass it on to renters. I feel like we're slipping back to feudal times.

mtnGoat 5y ago

I’m currently being effected by this. Housing is up at least 30% in the last year locally, and I am expecting a new member of my family soon, so more space is surely needed but dang if it’s not hard to look at current pricing.

ergot_vacation 5y ago

Naively, you would expect this to be fixed via basic economics: high demand and low supply lead to high prices, which should lead to MORE supply, which should lower prices. And yet this doesn't seem to be the case. Very little building seems to be happening relative to the explosion in demand, and when it does happen it's mostly houses for rich folks, not ordinary ones. The system isn't self-healing anymore. It's jammed up. Obviously this most recent spike is probably connected to exodus from the major cities due to covid, but the trend has been happening for years, maybe a full decade now. The best I can tell, this is yet another example of our economy becoming increasingly imaginary. Again, naively you would expect people to buy houses to LIVE IN, and other people to BUILD those homes so they could be sold to the first group of people. But in the recent past it seems the housing market has joined an ever-growing list of things like crypto, Game Stop stock, and who knows what else; a perverse wonderland where everything is detached from reality and rampant, delusional speculation rules the day. The difference is, no one needs crypto, or Game Stop shares, so if crazy people want to monopolize them, fine. People DO need places to live. Many can't afford one even under good conditions. And now yet another thing ordinary people need has been stolen from them by the rich, fenced and moated off, never to be seen again. Meanwhile food prices are going up and up and up, while portions get smaller and smaller. Inflation looks ready to explode. And soon, Covid will (hopefully) be over. Which means the "pause" that was put on everything will go away. No more government assistance to ease things. No more "coming together" to fight the common enemy. You may thing there's strife online and off now, but when we "go back to normal," in a few months, or a year, a whole ton of salt is going to be ground into the waiting wound, and this housing shortage will be at the top of a long, long list of grievances. 2020 was nothing compared to what's coming.

andrewmcwatters 5y ago
I fear that developed nations are in a fiat currency end-game where interest rates stay at near zero levels for the foreseeable future meaning that borrowing stays cheap for decades on end, which exacerbates asset prices, incentivizes builders to only produce real estate projects like “luxury” apartments, and makes government borrowing easy, too, so that bond yields produce negative returns for investors. We’re living in a world where politicians aren’t fighting the international housing crisis, and I think the only meaningful way you can do so is by nations coming together and forming a Breton Woods type era of agreement to establish the world over what housing rights look like and what restrictions companies, REITs, builders, and landlords have so as to prevent neofeudalism from continuing to proliferate.