5 ms·

How much of this is a result of our "don't tax the rich" policies that created a staggering amount of wealth at the top that has nowhere else to go? So many ul

• fake-news 5y ago
  How can we eat the rich when we have no kitchens? Can't blame the capitalists for self-preservation.
• fatnoah 5y ago
  I fully expect that as we tax investment income more and more, we'll see this trend in real estate worsening as it becomes an even more attractive investment vehicle.
• flyinglizard 5y ago
  This is happening outside of the USA, in countries with more progressive taxation too. Canada, UK, Israel - all with much worse house price to income ratio compared to the USA. These homes are not owned by billionaires either. It’s an asset class that’s very broadly distributed by its definition; most people own their homes. I think it’s mostly driven by macroeconomics. Near zero interest, population growth (organic or through immigration) and historical real estate appreciation all fuel this trend.
  • jandrese 5y ago
    It doesn't matter so much if a country is taxing their own rich if they allow rich people from other countries to buy real estate.
    • flyinglizard 5y ago
      I’ve never seen any data showing that housing bubbles are attributed to “the rich”. The housing market is made of tens of millions of individual home owners, not some moguls cornering the market.
      • jandrese 5y ago
        The term you want to look for is "investment properties", or in some cases "foreign investment".
        • flyinglizard 5y ago
          “Rich people” investment properties are a negligible share of the total housing market so this theory most often used as a scapegoat by the “eat the rich” crowd. If anything, more real estate investment would create more housing stock. Someone’s not building enough.
          • munk-a 5y ago
            I don't actually think new housing developments are a really high RoR and building your own house has a high barrier of being able to support and house yourself while floating the full value of the house you're trying to build - for that reason new home owners almost never buy their own house. Additionally arguably the most valuable part of owning a home is the appreciating value of land - and land most steadily appreciates in stable communities (where a plant closure won't suddenly tank the market) and the best of these are urban centers where the market is extremely stable. All that is a long way to say that investors specifically want to buy that condo that's right next to your office and they're much less interested in investing in some development out in the boonies that will only gradually accrue value (and be impossible to exit for the year or so that the units are actually under construction). Lastly, we've got NIMBY - this is the source of nearly all our housing woes because if you could buy up all those single homes in SF and convert them to condo towers we'd solve the housing crisis overnight - but that would "ruin the neighborhood" and, more importantly, depreciate the value of all those inflated house prices - and that's why all the neighborhood councils will continuously vote to perpetuate the shortage of housing. People do want to build more housing - but people who own the land are stubborn assholes. When it happens that an investor manages to secure a full block of single family homes in a downtown core they'll almost always try and convert it to condos - but then they've got to fight against the NIMBYism and they'll usually lose because as every 80's movie ever taught us: "The evil developer is trying to tear down the community center - we've got to stick up for the neighborhood and win that tournament!"
    • exporectomy 5y ago
      It happens in countries which don't allow that too.
• taurath 5y ago
  The amount of private equity in housing is really underreported I think - still the vast majority of people owning second homes or additional property are doing it for investments, but there is nothing stopping an “uber for housing” where they use VC money to buy up massive amounts of properties and influence pricing. I believe this is one of Zillow’s primary models. My take is that we need to treat housing as an actual human need, and there should be penalties for buying houses to rent or for investment purposes outside of ones primary residence. That sort of exists in the mortgage interest tax deduction but with rates near 0 that’s become far far less effective.
  • epistasis 5y ago
    I think the problem is as much in the ownership as it is in anything else. In China, where housing costs are skyrocketing as well, there are protests when enough housing is built to start to make it affordable again. Putting the majority of a person's life savings into their house is, in the end, a pretty bad idea.
  • jurassic 5y ago
    > there should be penalties for buying houses to rent or for investment purposes outside of ones primary residence. There are lots of people who don't want to own a home (e.g. who value the mobility/flexibility of renting), and people who are unable to afford the fully loaded homeownership costs. In these rent-vs-mortgage discussions people often overlook the non-mortgage homeownership costs which can be very significant and hard to predict. I say this as a person who found myself needing an unexpected $25k+ roof replacement in my first year of homeownership. I suspect living standards for the bottom quintile would actually fall if they had to maintain their own homes. E.g. how are the people who can't put together $400 in an emergency, the minimum wage employees living hand to mouth, etc going to be able to afford to replace an unexpected leaking roof (a $10k+ problem) or a broken water heater (a $5k problem) or refrigerator (a $500+ problem)? A lot of basic amenities are legally mandated for landlords to provide that I think low-income tenants would not be able to maintain on their own. A landlord with a larger net worth is better able to absorb these cashflow problems and keep the property in a healthy state.
  • xibalba 5y ago
• exporectomy 5y ago
  It's fun to blame the super rich but I'd say it's fundamentally due to a combination of population shift from rural to urban areas https://ourworldindata.org/grapher/urban-and-rural-population?country=~USA https://ourworldindata.org/grapher/urban-and-rural-populatio... and normal homeowners stopping densification out of fear of reducing the value of their own home or just not wanting the riff-raff living near them. These people are really the ones doing a directly harmful thing for pure selfish greed. They're not super-rich, they're just people's parents. But they're trying to make money by excluding others instead of doing anything useful.
  • somethoughts 5y ago
    Agree! It's also the densification of urban areas. Where once each occupant had a private office, now 5-6 SW engineers occupy the same office space footprint. That has implications for already dense urban office and associated housing needs.
    • jackcosgrove 5y ago
      The long-term trend in urban housing is diffusion, not densification. One hundred years ago a family of five lived in an apartment now occupied by a couple.
      • exporectomy 5y ago
        I was surprised to learn that the population (and density) of Manhattan was higher 100 years ago than it is today. It's been falling pretty steadily throughout the entire 1900s.
• nostromo 5y ago
  What "don't tax the rich" policies? 61% of Americans pay zero income tax. Why are the rich getting tremendously rich? Because the Federal Reserve has printed money at an astonishing rate, which inflates asset prices. Who owns the most assets? The rich do. People are so focused on taxation (because it's something the average poor or middle class understands) when the real issue is the Fed (something most Americans aren't even aware of).
  • drunkpotato 5y ago
    That income tax statistic is misleading. Most Americans do pay social security payroll taxes, which are income taxes, they’re just not called “income tax.”
    • jdavis703 5y ago
      Even though social security is administered as a pay-go program, the amount of social security you can withdraw is based on how much you put in. This makes it much more like a forced savings account than a tax.
    • shados 5y ago
      Social security is more of a forced 401k. You will get back the money (in theory), but yes, it's not progressive and impact the poor more than the rich. It's a bit of an iffy one. If the social security system rolled up into federal income tax, it would be much more progressive, but it would likely receive significant pushback in the political space (not knowing its history, I assume it was structured as a separate thing exactly for that reason. I should read up). Still, the point still stand: federal income taxes are quite progressive, and would surprise most people who wave their angry fist asking for the rich to be taxed more. The problem is mostly at the state and local level. The top 50% pays 97% of federal income tax. If you include most types of taxes, including social security, you end up with something a little less polarized: the top 1% have an effective tax rate of a little under 34%, while the poors are around 20%. One could easily argue it's not progressive enough, but it's still not the usual narrative of "I pay more taxes than millionaires". A a handful of ultra rich abuse loopholes to death to pay very little, and these people are averaged in the statistics (so the average rich person actually pays more than the stats show, if only a little). It's a minority though.
• rayiner 5y ago
  Segueing from “rich” to “multi-billionaires” is a neat trick by rich professionals to divert attention from themselves. Five years ago, we moved into a 3,000 square foot house in the Annapolis suburbs. We are right on the water so it cost a princely $485,000. But it was easy to get a house in the neighborhood for $300,000 or so, or just 4 times the county’s median income. As a result, the neighborhood has lots of young families (many without college degrees!), retirees, etc. Today, the house next door is under contract for double the price, and is smaller than ours. As far as I can tell, there’s no billionaires or even centi-millionaires anywhere near us. Just upper middle class people whose 401ks have done really well thanks to the Fed printing money like crazy, not to mention upper middle class welfare like more than a year of deferred student loan payments. (Lower income folks with student loans were already eligible for income based repayment.) Reaganism has won so completely in America that even AOC doesn’t want to tax upper middle class people. But these are the people directly competing with the middle class for fixed resources. They’re the people driving residents out of gentrifying neighborhoods, driving up the price of coffee, etc. There’s not enough 0.01%-ers out there to move the needle on these assets and services.
  • mywittyname 5y ago
    Well, and most people have fucked up views on what defines "upper middle class". There was a topic on reddit the other night where the most popular posts were saying, without jest, that upper middle class starts at $10 million bucks in liquid savings (and ends around $50MM). That seems to be a typical view on income and wealth in this country: people's opinions are wealth are out or proportion with reality by factors of like 100. For reference, upper middle class technically starts at around $120k/yr, so $10MM could pay 80 years of an upper middle class income. So there's no conceivable way an actual upper middle class family could actually save enough to be consider what the public thinks of as upper middle class.
    • shadilay 5y ago
      I think a bigger factor is that wealth is almost entirely defined by where you live. 120k/yr would be a lot in Iowa but not so much in SF.