6 ms·

The housing market won't cool until the political class is barred from owning multiple homes and speculating. Why would they act not in their interest?

daenz 5y ago
Wouldn't taxing uninhabited homes be more realistic and effective than banning people from owning things? If the tax hurts enough, then the prices drop so that uninhabited homes get people living in them.
- dec0dedab0de 5y ago
  I think this is the best solution. Should be for commercial property too. I've seen buildings be unoccupied for over 15 years, how can that be in anyone's best interest?
  - downrightmike 5y ago
    Owners are probably using that property to get a tax cut
    - pc86 5y ago
      If it's commercial property you're getting a tax cut whether it's rented out or not.
  - Gigachad 5y ago
    >how can that be in anyone's best interest? Often because lowering the rent lowers the value of the property which was based on its expected rental return. 15 years is quite extreme but it would often be preferable to go a few years without commercial tenants than to lower the rent and wipe out massive amounts of value.
    - alostpuppy 5y ago
      I’ve heard this before and it’s such a perverse set of incentives.
      - Gigachad 5y ago
        Agreed. Expected rental return is a perfectly valid way to assess the value of a building but I feel that having vacancies should detract from the value in a way you'd rather keep it occupied all the time.
        daenz 5y ago
        It should. But it sounds like there's an artificial valuation being propped up by not considering long stretches of vacancies. Of course, this only benefits people who own the properties...
- seanmcdirmid 5y ago
  Property tax is already kind of this: you have to pay tax on property owned regardless of whether you are putting it to productive use or not, so it pushes people to using property productively. China mostly lacks a property tax, so that is why property speculation over there is so bad (much worse than here in the USA). In China, it isn't worth renting your $1 million apartment for $1000/month, and doing so would only hurt resale value anyways (renovations are always redone by new owners, so renovating to support a tenant is a straight sunk cost).
- bdcravens 5y ago
  Most investors don't let homes sit empty; they let renters subsidize their speculation. Investment properties often have renters in them.
  - daenz 5y ago
    If the vacancy rates are too low for a vacancy tax to have an impact, then the other dial to turn would be creating more supply via higher density zoning, yes?
    - bdcravens 5y ago
      This assume builders will create the inventory with pressed margins.
      - daenz 5y ago
        True, but zoning has to come before anything else, so might as well tackle that as a first step towards increasing supply.
- charcircuit 5y ago
  But what if you own vacation houses? We shouldn't force people to rent out stuff they own.
  - AngryData 5y ago
    I think most people would be fine with people owning one vacation home or cabin but would find more than that excessive. An alternative would be looking at local housing demand and taxing according to local need of housing, but that would be pretty messy and prone to loopholes and corruption.
    - steve_gh 5y ago
      There are areas of the UK where local property taxes and other financial incentives (some form of zoning I think) to reduce the number of holiday homes. The problem is that local people are being priced out of the areas by holiday homes. And in rural areas that impacts the viability of schools (lower pupil numbers so higher costs per pupil), public transport, even local grocery store viability (less trade out of season, no workers).
  - ledauphin 5y ago
    why shouldn't we? a vacation home is wasted space for 90% of the year unless it's also rented out. Why wouldn't we want to use space more efficiently than that?
seanmcdirmid 5y ago
That has never stopped the housing market from cooling many times before. People keep tending to have short memories.
jseliger 5y ago
If demand is high, could we not increase supply? https://www.worksinprogress.co/issue/the-housing-theory-of-everything/ https://www.worksinprogress.co/issue/the-housing-theory-of-e.... That's what we did up until the '70s, when we empowered NIMBYs to block new housing units, with the results all around us.

daenz 5y ago

Wouldn't taxing uninhabited homes be more realistic and effective than banning people from owning things? If the tax hurts enough, then the prices drop so that uninhabited homes get people living in them.

dec0dedab0de 5y ago
I think this is the best solution. Should be for commercial property too. I've seen buildings be unoccupied for over 15 years, how can that be in anyone's best interest?
- downrightmike 5y ago
  Owners are probably using that property to get a tax cut
  - pc86 5y ago
    If it's commercial property you're getting a tax cut whether it's rented out or not.
- Gigachad 5y ago
  >how can that be in anyone's best interest? Often because lowering the rent lowers the value of the property which was based on its expected rental return. 15 years is quite extreme but it would often be preferable to go a few years without commercial tenants than to lower the rent and wipe out massive amounts of value.
  - alostpuppy 5y ago
    I’ve heard this before and it’s such a perverse set of incentives.
    - Gigachad 5y ago
      Agreed. Expected rental return is a perfectly valid way to assess the value of a building but I feel that having vacancies should detract from the value in a way you'd rather keep it occupied all the time.
      - daenz 5y ago
        It should. But it sounds like there's an artificial valuation being propped up by not considering long stretches of vacancies. Of course, this only benefits people who own the properties...
seanmcdirmid 5y ago
Property tax is already kind of this: you have to pay tax on property owned regardless of whether you are putting it to productive use or not, so it pushes people to using property productively. China mostly lacks a property tax, so that is why property speculation over there is so bad (much worse than here in the USA). In China, it isn't worth renting your $1 million apartment for $1000/month, and doing so would only hurt resale value anyways (renovations are always redone by new owners, so renovating to support a tenant is a straight sunk cost).
bdcravens 5y ago
Most investors don't let homes sit empty; they let renters subsidize their speculation. Investment properties often have renters in them.
- daenz 5y ago
  If the vacancy rates are too low for a vacancy tax to have an impact, then the other dial to turn would be creating more supply via higher density zoning, yes?
  - bdcravens 5y ago
    This assume builders will create the inventory with pressed margins.
    - daenz 5y ago
      True, but zoning has to come before anything else, so might as well tackle that as a first step towards increasing supply.
charcircuit 5y ago
But what if you own vacation houses? We shouldn't force people to rent out stuff they own.
- AngryData 5y ago
  I think most people would be fine with people owning one vacation home or cabin but would find more than that excessive. An alternative would be looking at local housing demand and taxing according to local need of housing, but that would be pretty messy and prone to loopholes and corruption.
  - steve_gh 5y ago
    There are areas of the UK where local property taxes and other financial incentives (some form of zoning I think) to reduce the number of holiday homes. The problem is that local people are being priced out of the areas by holiday homes. And in rural areas that impacts the viability of schools (lower pupil numbers so higher costs per pupil), public transport, even local grocery store viability (less trade out of season, no workers).
- ledauphin 5y ago
  why shouldn't we? a vacation home is wasted space for 90% of the year unless it's also rented out. Why wouldn't we want to use space more efficiently than that?

seanmcdirmid 5y ago

That has never stopped the housing market from cooling many times before. People keep tending to have short memories.

jseliger 5y ago

If demand is high, could we not increase supply? https://www.worksinprogress.co/issue/the-housing-theory-of-everything/ https://www.worksinprogress.co/issue/the-housing-theory-of-e.... That's what we did up until the '70s, when we empowered NIMBYs to block new housing units, with the results all around us.