4 ms·

> A "country" doesn't "decide" to make an asset class appreciate or depreciate. It's always been driven by supply and demand. But it does. The supply is partia

> A "country" doesn't "decide" to make an asset class appreciate or depreciate. It's always been driven by supply and demand. But it does. The supply is partially driven by speculators who bet on the prices continuing to grow. Currently, a lot of people are buying more expensive houses than they need because "house is a good investment". This (the speculators) can be easily stopped with a policy - e.g. tax heavily all profits from real estate sales, incl. primary residences. If taxes make it next to impossible to profit on increase of house value (the profit goes to treasury and not to seller), then the market would significantly cool down. The fact that we (for example) tax heavily income from work, but not from real estate speculation, is a CHOICE.

aww_dang 5y ago
Taxation is one angle to consider, but it isn't it an inadequate band-aid for the wounds caused by easy money, artificially low interest rates and the political incentives of the US's central banking system? Look at the root causes of asset price inflation.
- dd36 5y ago
  The root cause is long-term low interest rates but now that SFR is an asset class, the interest rate cycle won’t bring back the $150k home without a major crash that harms everyone. Tax policy that punishes large investors can help things land without a crash.
supperburg 5y ago
If you tax the whole of the delta then real estate development would scrape to a halt. So that obviously won’t work.
- killtimeatwork 5y ago
  It won't be affected at all, only resales (not initial sales) would be taxed.
  - supperburg 5y ago
    Do buildings not wear out? Are buildings not improved?
noduerme 5y ago
If you did that, who would want to build houses? Buying an asset because it will increase in demand is not "speculation", it's investing. Banning investment means no one will invest to make more houses.
- killtimeatwork 5y ago
  The taxation would be on resales only, not initial sales by developers. Also, if you increased the value of house (e.g. via renovation), the value increase would be tax-free upon resale, so that you can fully recoup the money you've put into the renovation.
  - noduerme 5y ago
    This is already true up to $250k. Look, I certainly don't think it's a good thing to build an economy on people or corporations flipping real estate. But active measures that would make it less attractive for people to buy a house, will drive that money elsewhere. As of 2020, 82.8 million residences in the US are owner-occupied. People have put their nest egg into a place to live, and that's good. It's a good thing that real estate is a safe place for people to put their savings to keep pace or outpace inflation. Imagine that money going into the stock market chasing gains. It would be a catastrophe. There is a true market for real estate driven by demand. A large number of houses in this country are owned by people who live in them, who are not speculators, but would only make the decision to own if it made financial sense.
    - dd36 5y ago
      It’s easy to treat taxation of primary and secondary residences different from rentals. Houses in this country are being purchased by large investors at rates never seen before. It only started happening in the last decade. SFR wasn’t previously an institutional asset class. That has increased demand for housing that used to make sense to buy on a lower income and reduced supply. They literally will buy every house they can that fits their buy box. Suddenly that $150k starter home is a forever rental. Frankly, I think tax policy may be the only way to fix it. That or prohibit ownership by large entities.

aww_dang 5y ago

Taxation is one angle to consider, but it isn't it an inadequate band-aid for the wounds caused by easy money, artificially low interest rates and the political incentives of the US's central banking system? Look at the root causes of asset price inflation.

dd36 5y ago
The root cause is long-term low interest rates but now that SFR is an asset class, the interest rate cycle won’t bring back the $150k home without a major crash that harms everyone. Tax policy that punishes large investors can help things land without a crash.

supperburg 5y ago

If you tax the whole of the delta then real estate development would scrape to a halt. So that obviously won’t work.

killtimeatwork 5y ago
It won't be affected at all, only resales (not initial sales) would be taxed.
- supperburg 5y ago
  Do buildings not wear out? Are buildings not improved?

noduerme 5y ago

If you did that, who would want to build houses? Buying an asset because it will increase in demand is not "speculation", it's investing. Banning investment means no one will invest to make more houses.

killtimeatwork 5y ago
The taxation would be on resales only, not initial sales by developers. Also, if you increased the value of house (e.g. via renovation), the value increase would be tax-free upon resale, so that you can fully recoup the money you've put into the renovation.
- noduerme 5y ago
  This is already true up to $250k. Look, I certainly don't think it's a good thing to build an economy on people or corporations flipping real estate. But active measures that would make it less attractive for people to buy a house, will drive that money elsewhere. As of 2020, 82.8 million residences in the US are owner-occupied. People have put their nest egg into a place to live, and that's good. It's a good thing that real estate is a safe place for people to put their savings to keep pace or outpace inflation. Imagine that money going into the stock market chasing gains. It would be a catastrophe. There is a true market for real estate driven by demand. A large number of houses in this country are owned by people who live in them, who are not speculators, but would only make the decision to own if it made financial sense.
  - dd36 5y ago
    It’s easy to treat taxation of primary and secondary residences different from rentals. Houses in this country are being purchased by large investors at rates never seen before. It only started happening in the last decade. SFR wasn’t previously an institutional asset class. That has increased demand for housing that used to make sense to buy on a lower income and reduced supply. They literally will buy every house they can that fits their buy box. Suddenly that $150k starter home is a forever rental. Frankly, I think tax policy may be the only way to fix it. That or prohibit ownership by large entities.