5 ms·

This is one of those things that a proper tax structure would do wonders - those who hoard housing should get a kick from a exponential tax. Like, what value a

This is one of those things that a proper tax structure would do wonders - those who hoard housing should get a kick from a exponential tax. Like, what value are those corporations bringing to people, to the market, and to a country by hoarding houses other than controlling the renting market for some areas? How is that a good thing?

refurb 5y ago
Presumably they are buying up houses to rent. If they buy too many they can’t rent them out, they lose money. I’m not convinced it’s a problem. Again, all roads point back to supply. Build enough homes and the issue is moot.
- usrn 5y ago
  It's both supply and demand. You need construction and limited immigration. That's why for example Tokyo is so cheap.
  - bombcar 5y ago
    Technically you just need construction to outstrip people looking for homes. One of the problems is people can move quite quickly from one side of a country to another, it's a matter of weeks. But from empty lot to new house is a matter of months at best, years at worst.
    - usrn 5y ago
      Immigration must be limited to the degree that construction can happen. Because it can be raised almost to an arbitrarily high degree it's very easy to overwhelm domestic home production.
Cthulhu_ 5y ago
> those who hoard housing should get a kick from a exponential tax. Yes, but at the same time it should not be possible for them to pass those costs on to people renting the house; rents should be fixed, or based on things like floor space and amenities. But personally I think everyone should have a way in to the housing market. Renting is throwing away money; it goes into someone else's pocket and it's gone. When you buy a house you pay off a mortgage on the one hand, and (in today's economy) your property appreciates in value. Combine that with the issue that over here, a mortgage is cheaper than rent, and you can see how it's a huge issue. I've spent something like €50.000 in rent before I finally bought a house; part of that was because I didn't want any longer term commitments, part was because I couldn't afford a house because even then the price of housing was going up sharply already. That's a lot of money that I'll never see again.
- nameisname 5y ago
  As you said in your comment there is a market for renting. I think in an ideal world, housing prices would not increase so rapidly. I remember a time where houses went up a lot more from quality renovations than just waiting a few months. A situation like that would increase the demand on rent and make it less appealing for slumlords and give them more incentive to keep quality tenants happy instead of viewing them as a space filler until you can cash out in a year.
- TimPC 5y ago
  Buying is throwing away money too, often just as much as the rent you were paying. Yes some portion of what you pay goes to principle and you eventually own the home but the following amounts are just lost money: - interest on the loan - utility bills - property taxes You also have to replace anything that breaks and are responsible for all repairs on the property. Many of these replacements and repairs don’t increase the value of the home. At best buying a home is a forced investment plan. It forces you to take money above and beyond the cost of rent and put it into a savings vehicle that generally generates good returns. But if you’re renting you could just as easily put that excess money into the stock market if you have the discipline to not spend it.
  - vel0city 5y ago
    You're missing a big point of buying with a fixed mortgage though -- its partially a hedge against housing cost inflation. Sure, property taxes will go up as property values increase, but taxes aren't really that large of the total housing cost of my home. Taxes could double and it still wouldn't be the majority of the cost of my house. Most of my monthly cost of my house is P&I, values that won't go up. My mortgage, insurance, taxes, and savings towards repairs is now a good bit less than the current rent at my last apartment just a couple of miles from my house. But my house has over twice the square footage, a private garage, a private yard, etc.
    - joejerryronnie 5y ago
      But you’re sacrificing the flexibility of renting. While I agree the benefits of home ownership far outweigh long term renting, there are some trade-offs.
fennecfoxen 5y ago
They are translating between a lump sum and an income stream. They are making a six-figure asset available for the low four figures a month, without someone needing to bring six figures of money, or five to six figures of down payment and closing costs and five times as much debt. If the six figure asset actually falls 50% in value, the tenant is not stuck and does not lose a penny. In short, they’re offering homes to rent. You can live in the home without buying the home. That’s the value. It’s kinda huge. And to some extent it becomes class warfare to deny this to renters. These investors are betting big on the houses’ value going up, and expect them to go up a fair bit. This is essentially a bet that the housing market will fail to add new supply, and that anyone who does not own a home yet will suffer greatly from increased rent. And if we’re fighting over is rules on specifically who can buy, instead of doing things to actually make new homes, it seems a fairly sure bet to me.
- cehrlich 5y ago
  You say this as though it wasn’t possible to rent before everything got bought out by corporations
  - fennecfoxen 5y ago
    You may notice that the US population has grown, and continues to grow, and the abstract group comprised of "people who rent homes" continue to grow, and to need more to rent. Corporations happen to be the ones filling this need now. Of course there is nothing that says they have to, or that it has to be corporations, nor is there any special noble virtue that we should ascribe to them beyond that of a prudent investment, nor is there some special reward beyond what they can earn in commerce. It is also possible that significant new construction, falling home prices, or general prosperity could make members of the group of renters leave the group, in favor of ownership. Renting something bought by an individual (or a very small corporation) was possible and remains possible. But if there was enough of this happening, the corporations who rent might have serious difficulty finding a profit. It is worth noting that, in a major shift, major home builders expect 50% of their business will soon be in built-to-rent neighborhoods, up from something like 6% today. This is an illustration of how prices are a signal used across the economy to determine what gets done. (Taylor Morrison Home's numbers, from this recent article: https://www.wsj.com/articles/built-to-rent-suburbs-are-poised-to-spread-across-the-u-s-11623075610 https://www.wsj.com/articles/built-to-rent-suburbs-are-poise... ) I refer to the US because it is closer to me. I understand that Canada experiences similar trends.
usrn 5y ago
They'll just restructure it so each house (or small group of houses) is held by smaller corporations or other entities. In fact even smallish landlords already do that now but I think it's because credit gets cheaper that way rather than for taxes.
- libertine 5y ago
  Those structures exist because they're allowed to exist, nowadays it's pretty easy to link those structures if governments wanted. Try to dodge some IRS stuff and you'll see how efficient the government is.
  - usrn 5y ago
    I think you underestimate what wealthy people and corporations will do to dodge taxes.
cle 5y ago
As a renter, I preferred to rent from a corporation with predictable, reliable property management. I preferred living in apartments for exactly this reason. Houses managed by individuals were always way more annoying due to hit-or-miss management issues. (I agree that corporations hoarding housing is a problem...but they do bring value in some specific areas, even if net value is negative.)
- libertine 5y ago
  I don't have a problem with corporation managing properties. That's not the problem. For me people could even pay a premium if they want that assurance. The problem seems to boil down to access to money and the destruction it causes, simply because we play by different sets of rules. Housing used to be an asset class that was accessible to people, apparently it's a matter of time before it'll be yet another asset limited to a few bunch. They simply have to drive the prices up enough, and outbid people, which is whats happening. So you have to level the playing field by giving everyone the same type of access to cash, or you make hoarding houses more expensive to the point of being unsustainable.
jcranberry 5y ago
They rent out homes to people who cant or dont want to buy presumably. There's also the matter of new developments.

refurb 5y ago

Presumably they are buying up houses to rent. If they buy too many they can’t rent them out, they lose money. I’m not convinced it’s a problem. Again, all roads point back to supply. Build enough homes and the issue is moot.

usrn 5y ago
It's both supply and demand. You need construction and limited immigration. That's why for example Tokyo is so cheap.
- bombcar 5y ago
  Technically you just need construction to outstrip people looking for homes. One of the problems is people can move quite quickly from one side of a country to another, it's a matter of weeks. But from empty lot to new house is a matter of months at best, years at worst.
  - usrn 5y ago
    Immigration must be limited to the degree that construction can happen. Because it can be raised almost to an arbitrarily high degree it's very easy to overwhelm domestic home production.

Cthulhu_ 5y ago

> those who hoard housing should get a kick from a exponential tax. Yes, but at the same time it should not be possible for them to pass those costs on to people renting the house; rents should be fixed, or based on things like floor space and amenities. But personally I think everyone should have a way in to the housing market. Renting is throwing away money; it goes into someone else's pocket and it's gone. When you buy a house you pay off a mortgage on the one hand, and (in today's economy) your property appreciates in value. Combine that with the issue that over here, a mortgage is cheaper than rent, and you can see how it's a huge issue. I've spent something like €50.000 in rent before I finally bought a house; part of that was because I didn't want any longer term commitments, part was because I couldn't afford a house because even then the price of housing was going up sharply already. That's a lot of money that I'll never see again.

nameisname 5y ago
As you said in your comment there is a market for renting. I think in an ideal world, housing prices would not increase so rapidly. I remember a time where houses went up a lot more from quality renovations than just waiting a few months. A situation like that would increase the demand on rent and make it less appealing for slumlords and give them more incentive to keep quality tenants happy instead of viewing them as a space filler until you can cash out in a year.
TimPC 5y ago
Buying is throwing away money too, often just as much as the rent you were paying. Yes some portion of what you pay goes to principle and you eventually own the home but the following amounts are just lost money: - interest on the loan - utility bills - property taxes You also have to replace anything that breaks and are responsible for all repairs on the property. Many of these replacements and repairs don’t increase the value of the home. At best buying a home is a forced investment plan. It forces you to take money above and beyond the cost of rent and put it into a savings vehicle that generally generates good returns. But if you’re renting you could just as easily put that excess money into the stock market if you have the discipline to not spend it.
- vel0city 5y ago
  You're missing a big point of buying with a fixed mortgage though -- its partially a hedge against housing cost inflation. Sure, property taxes will go up as property values increase, but taxes aren't really that large of the total housing cost of my home. Taxes could double and it still wouldn't be the majority of the cost of my house. Most of my monthly cost of my house is P&I, values that won't go up. My mortgage, insurance, taxes, and savings towards repairs is now a good bit less than the current rent at my last apartment just a couple of miles from my house. But my house has over twice the square footage, a private garage, a private yard, etc.
  - joejerryronnie 5y ago
    But you’re sacrificing the flexibility of renting. While I agree the benefits of home ownership far outweigh long term renting, there are some trade-offs.

fennecfoxen 5y ago

They are translating between a lump sum and an income stream. They are making a six-figure asset available for the low four figures a month, without someone needing to bring six figures of money, or five to six figures of down payment and closing costs and five times as much debt. If the six figure asset actually falls 50% in value, the tenant is not stuck and does not lose a penny. In short, they’re offering homes to rent. You can live in the home without buying the home. That’s the value. It’s kinda huge. And to some extent it becomes class warfare to deny this to renters. These investors are betting big on the houses’ value going up, and expect them to go up a fair bit. This is essentially a bet that the housing market will fail to add new supply, and that anyone who does not own a home yet will suffer greatly from increased rent. And if we’re fighting over is rules on specifically who can buy, instead of doing things to actually make new homes, it seems a fairly sure bet to me.

cehrlich 5y ago
You say this as though it wasn’t possible to rent before everything got bought out by corporations
- fennecfoxen 5y ago
  You may notice that the US population has grown, and continues to grow, and the abstract group comprised of "people who rent homes" continue to grow, and to need more to rent. Corporations happen to be the ones filling this need now. Of course there is nothing that says they have to, or that it has to be corporations, nor is there any special noble virtue that we should ascribe to them beyond that of a prudent investment, nor is there some special reward beyond what they can earn in commerce. It is also possible that significant new construction, falling home prices, or general prosperity could make members of the group of renters leave the group, in favor of ownership. Renting something bought by an individual (or a very small corporation) was possible and remains possible. But if there was enough of this happening, the corporations who rent might have serious difficulty finding a profit. It is worth noting that, in a major shift, major home builders expect 50% of their business will soon be in built-to-rent neighborhoods, up from something like 6% today. This is an illustration of how prices are a signal used across the economy to determine what gets done. (Taylor Morrison Home's numbers, from this recent article: https://www.wsj.com/articles/built-to-rent-suburbs-are-poised-to-spread-across-the-u-s-11623075610 https://www.wsj.com/articles/built-to-rent-suburbs-are-poise... ) I refer to the US because it is closer to me. I understand that Canada experiences similar trends.

usrn 5y ago

They'll just restructure it so each house (or small group of houses) is held by smaller corporations or other entities. In fact even smallish landlords already do that now but I think it's because credit gets cheaper that way rather than for taxes.

libertine 5y ago
Those structures exist because they're allowed to exist, nowadays it's pretty easy to link those structures if governments wanted. Try to dodge some IRS stuff and you'll see how efficient the government is.
- usrn 5y ago
  I think you underestimate what wealthy people and corporations will do to dodge taxes.

cle 5y ago

As a renter, I preferred to rent from a corporation with predictable, reliable property management. I preferred living in apartments for exactly this reason. Houses managed by individuals were always way more annoying due to hit-or-miss management issues. (I agree that corporations hoarding housing is a problem...but they do bring value in some specific areas, even if net value is negative.)

libertine 5y ago
I don't have a problem with corporation managing properties. That's not the problem. For me people could even pay a premium if they want that assurance. The problem seems to boil down to access to money and the destruction it causes, simply because we play by different sets of rules. Housing used to be an asset class that was accessible to people, apparently it's a matter of time before it'll be yet another asset limited to a few bunch. They simply have to drive the prices up enough, and outbid people, which is whats happening. So you have to level the playing field by giving everyone the same type of access to cash, or you make hoarding houses more expensive to the point of being unsustainable.

jcranberry 5y ago

They rent out homes to people who cant or dont want to buy presumably. There's also the matter of new developments.