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In my anecdotal experience in NYC+NYS the vast majority of buyers are investors, not homeowners. Properties are bought up to be flipped, added to the short ter

In my anecdotal experience in NYC+NYS the vast majority of buyers are investors, not homeowners. Properties are bought up to be flipped, added to the short term rental market, and/or bought as secondary/tertiary homes. I can think of a few things that would work toward resolving this that would not destroy existing homeowners. 1. Statewide bans on short term rentals 2. Huge increase in short term rental taxes to the point where it's barely profitable 3. Adjustable property taxes based on vacancy. Something like a 5x property tax multiple for 50% vacancy and scaling down to 1x for 5% vacancy. These proceeds should go toward a public/private partnership to build more housing.

itsoktocry 4y ago
>Statewide bans on short term rentals I live in Canada, but we have the same issues. It's going to be a very interesting cross-generational political battle. The sheer number of "normal people" who own investment properties and AirBNBs now is extraordinary. I know people scraping by working average jobs that own multiple units. Meanwhile, the younger generation can't buy a home. We've normalized the idea that real estate can't lose and everyone should own multiple properties, and we can't come back from that without one side suffering a ton of pain.
- mschuster91 4y ago
  At the very least we can kick out Chinese and Russian "investors" that only want a way to keep their cash safe from their dictatorship governments. That should drive down our prices and put some pressure on the elites to push for better governments at home.
  - IG_Semmelweiss 4y ago
    You forgot most kingdoms from the gulf. Of course, a major answer to this problem is to simply ban non-americans from buying american property, but that will implode real estate and hurt a lot of homeowners. That is the voting middle-upper class. The majority are voters. And they won't want any of that.
    - cudgy 4y ago
      > but that will implode real estate and hurt a lot of homeowners You can’t have your cake and eat it too. Homeowners need to get hurt in order for housing to be more affordable. Housing taking up huge chunks of earnings is a terrible state of affairs for citizens and the economy.
  - epicureanideal 4y ago
    Let them buy it, as long as we can keep building more. The problem is still that supply is artificially reduced.
    - arbitrary_name 4y ago
      What incentive do we, as a society, have for foreigners to use our land as a piggy bank? Given we already have chronic undersupply, shouldn't the default position be to prioritize citizens and others who can demonstrate a greater need?
      - epicureanideal 4y ago
        Assuming we could build more, in theory economies of scale would result from more development happening regardless of who the buyer is. And it would in theory result in overbuilding capacity for that many residents and then being left with spare capacity, the cost of which would be allocated in equal part ideally to the investor properties as well.
  - raydev 4y ago
    It unfortunately is "the very least" we can do, though. > That should drive down our prices No, in Canada, foreign owned properties make up a tiny percentage of the total, so banning it doesn't actually have any impact. Works as future protection for sure, but that's all. The "foreign investors" are a convenient strawman that hides bigger underlying problems.
    - more_corn 4y ago
      Didn’t Vancouver do this to good effect recently? 20% tax on foreign buyers caused a 15% dip in home prices?
- IgorPartola 4y ago
  In the US there are numerous incentives for buying a home. Your interest on your mortgage is tax free, the government offers cash back, etc. Renting gives most of these incentives to the landlord instead and they aren’t necessarily passed onto the renter. Most importantly, this means that if you have cash to invest, real estate has favorable tax treatment compared to other options so you suddenly have turned housing into a market that must rise decade over decade or the economy will collapse. The way to fix this is painful but it is to revoke all incentives and to make people put down 25-50% as down payments. It will cool the market to near absolute zero short term but it will help long term in keeping housing to actually be housing.
  - fritztastic 4y ago
    Maybe revoke the incentives for those who currently already own multiple properties. No sense in putting an additional financial barrier to people attempting to purchase a home to live in. Investors will be slightly affected by this but it seems like the type of measure that would deter first-time homeowners altogether- therefore exacervating the problem of so many properties being taken by people whose primary interest is profiteering, and leaving those who just want to own the place they live in the dust.
    - dexwiz 4y ago
      Many incentives are for first time buyers, or single home buyers. Taxes depend on region, but everywhere I see treats primary homes, secondary homes, and rentals as different classes of real estate. Now that doesn't mean the incentives aren't skewed. But I don't think landlords buying their 20th house are getting the same benefits as a first time buyer.
  - NovemberWhiskey 4y ago
    >Your interest on your mortgage is tax free, the government offers cash back, etc. I have no idea what "the governments offers cash back" means; but certainly the mortgage interest tax deduction is only available for homes in which you actually live for at least part of the year - it's not available for rental properties. You can deduct mortgage interest as an expenses if you're renting a property, but that's exactly the same as any other loan used for a business activity and not specific to real-estate.
- bamboozled 4y ago
  Same issues in Asia
rayiner 4y ago
You’re mixing up cause and effect. The investors are reacting to the supply shortage in cities like NYC, not causing it. They’re also jumping in because rising interest rates will shift the demand from buying to renting. Investors made up 20% of buyers in the last quarter across major metro areas: https://therealdeal.com/2022/06/15/investors-seize-record-share-of-home-purchases/ https://therealdeal.com/2022/06/15/investors-seize-record-sh.... Historically they’ve made up much less than that. Housing prices are skyrocketing where I live in exurban Maryland, and in Eugene Oregon where my wife is from, but there’s no investors to be seen in those places. I’m not certain what the cause is, but I’d suspect it’s two decades of central bank policies dumping cash into the economy.
- davidw 4y ago
  > The investors are reacting to the supply shortage in cities like NYC, not causing it. Correct. This article has the receipts: https://www.vox.com/platform/amp/22524829/wall-street-housing-market-blackrock-bubble https://www.vox.com/platform/amp/22524829/wall-street-housin... And the conclusion is worth sharing: > The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach. A huge part of the problem is the NIMBYs.
  - 93po 4y ago
    Yes, Wall Street is clearly not to blame. And Vox has no conflict of interest here to say this. It's not like they're 34% owned by Comcast, have had more than 6 large institutional investment firms invest in ownership, and more than a dozen well known angel investors as well. I am sure there is no undue influence to have this story written by someone who is sympathetic to Wall Street, Jerusalem Demsas, who is also anti-rent control, wrote an entire article and recorded a half hour podcast defending Zillow buying up entire neighborhoods, criticizes public housing as unsafe and that it could be fixed by privatizing it, and is extremely anti-zoning. Also one of the largest investors, Accel, totally didn't own Trulia, which was totally not bought by Zillow. And Zillow totally isn't a major advertiser on Vox[0]. [0] https://www.vox.com/ad/16158882/zillow-zestimate-explained https://www.vox.com/ad/16158882/zillow-zestimate-explained
endisneigh 4y ago
The places where there are a lot of short term rentals are the same places where there is a lot of tourism. In effect your first two points is just killing the states own tourism industry, no? A vacancy tax can be trivially avoided. Would there be an exception for renovation? Again, easy to game.
- parkingrift 4y ago
  Every tax is easy to game. Most people don't do it because the threat of enforcement is enough to get to 70-80%.
  - endisneigh 4y ago
    About 30% of people itemize their taxes, most of which are high income, the very same people buying all of the housing.
pj_mukh 4y ago
There’s really no need to do 1,2 if you can just do 3 + public/private partnership to build more. Airbnbs are legitimate demand. We just need over-supply now. The government should be able to step in.
BeetleB 4y ago
> Statewide bans on short term rentals Why solve a problem when you can just nuke it, right? I hang out with AirBnB investor folks. There's a simple solution that works: Require the owner live on the property. Every AirBnB investor will skip the city/county if that is the rule, but still leaves room for legitimate residents to make some money (e.g. rent out the basement, etc). The latter isn't taking housing away from anyone - for most owners it's not economical to convert the basement to make it a long term rental.
- jarnagin 4y ago
  One unfortunate side effect of this is that this behavior ultimately gets priced into the market. When a house with an ADU will reliably fetch 20% more than one without, then eventually all houses on the market will have ADUs, with the consequence that people buying will need to depend on short term rental income in order to make their mortgage. I’ve seen this happening where I live (West LA) over the last ten years, and it feels like a net decrease in quality of life for everyone at this point.
  - margalabargala 4y ago
    If every house has an ADU, then the effective number of housing units in that area has been doubled, putting downwards pressure on housing prices. If people bought their houses anticipating high rental income to make ends meet, that's a separate problem, and less bad than "people are becoming homeless because there are too few housing units".
    - twblalock 4y ago
      ADUs are not sold separately from the homes on the same lots, so the number of homes for sale has not doubled. The value of a lot with an ADU increases because the ADU offers rental income and/or extra living space to potential purchasers.
      - BeetleB 4y ago
        Could those ADUs not be used for long term rentals? If so, than I think that was the point being made - the effective number of units available goes up.
gnopgnip 4y ago
The Washington Post is saying 11% in the NYC metro. Dropping from15% a few years ago. But it varies locally, some areas are a lot higher. https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/ https://www.washingtonpost.com/business/interactive/2022/hou... NYC bans short term rentals in multi family buildings already, unless the host is also staying there and not renting the whole apartment. So the short term rental restrictions probably do help, but it is hard to compare nyc to more suburban and rural areas
- PhineasRex 4y ago
  Unfortunately enforcement mechanisms for rental law in NYC are virtually non-existent so AirBNB and like are still rampant.
partiallypro 4y ago
We could also...build more housing and eliminate most zoning restrictions. I also don't know what a "short term rental" is, that would devastate beach areas that rent out homes to tourists. I don't think that's a viable solution. Housing prices have not gone up in any major way in a few major industrialized countries, Japan, Korea, Germany. You know what they did? They built more housing. Building in San Francisco, New York, etc is near impossible, especially if you aren't connected. Communities often vote against new housing because a) they don't want certain people in their area and b) we've wrongly viewed housing as an investment vehicle and more housing hurts values.
- Ekaros 4y ago
  Unless those units are explicitly build for renting and zoned as such. Why should they be used by tourists and not locals?
  - userabchn 4y ago
    Why should they have to be explicitly built and zoned for renting? Why shouldn't they be used by tourists? Just make it easy to build more so that there is enough for everyone.
  - jaredklewis 4y ago
    Are there unlimited tourists? Sounds like a pretty sweet gig since tourism is like miracle grow for local economies. But alas no, there are not unlimited tourists, there is just limited housing supply. I get tired of bringing it up but I lived in a Tokyo apartment, 5 walk minutes from a train station, 10 min walk to a large park, nice schools, very quite area though just 5 minutes walk to lots of restaurants. 750 sq ft, 4th floor with elevator, 15 year old building (at the time). Rent was (at the exchange rates of the time) $860/month. Inflation adjusted that’s $1,075 which can’t gets you a spare bedroom in first tier American cities. At the time Tokyo had no restrictions on short term rentals nor on foreign investment or property investing or any kind. Tokyo’s big secret is that they let developers build apartment buildings.
VirusNewbie 4y ago
I think the best idea I've heard would be to excessively tax capital gains for the LAND appreciation. We don't' want to discourage people who actually provide value by buying properties and making them nicer or creating more units. A neighboring city of my suburb has large swathes of ranchy style homes on half an acre, those can easily be converted to triplexes or at least large family homes rather than tiny 3 bedrooms. We don't want to discourage investors from that sort of development. However, we do want to discourage investors from 'flipping' homes and riding up appreciation, or even worse, investors buying houses that just sit empty.
PragmaticPulp 4y ago
> Properties are bought up to be flipped, added to the short term rental market, and/or bought as secondary/tertiary homes. I have several friends in the contracting/home services industry. The stories I hear about home flippers buying houses, asking for the cheapest paint/flooring/light fixture work possible, and then relisiting the homes with a 50% markup are wild. It seems a lot of people got into flipping homes around the start of the pandemic and lucked into one of the sharpest real estate market increases in a long time. They assume it's an easy way to make a lot of money with their interior design skills, but really they would have profited just as much or more if they just sat on the home from 2020 to late 2021 and sold it after the market went up. I generally don't think outright bans work because the binary solutions become controversial and prone to political manipulation and stalling. Increasing taxes on these speculative transactions is the way to solve this, I think. Simply eliminating the 1031 exchange that allows investors to defer tax liabilities on real estate investments would make a huge, immediate change in the velocity of speculation. The real estate lobby would go ballistic at the proposal, but I think it needs to be done ASAP. It doesn't make sense that real estate investors get such special tax treatment.
- amluto 4y ago
  I would like to see the 1031 exchange become available for people who intent to occupy their properties. It makes no sense that someone could own and live in a home for 50 years, want to trade for a smaller home, and be unable to afford the taxes.
  - rhino369 4y ago
    You get a 250,000-500,000 exemption for a home you actually live in for 2 years.
    - amluto 4y ago
      Tell that to someone who lives in a perfectly ordinary, well maintained single family house in what is now an expensive part of the Bay Area that would sell for $3.5M, and whose basis is essentially zero. If they want to move to a nice condo selling for $2M, they can probably squeak by, but most of that $1.5M gain will disappear. This is a problem for people who want to move. But, and this is mostly speculation, this is bad for everyone else too. It makes the market less liquid, which means that people are less likely to live where they want. It also reduces the incentive to build the kinds of units people want to live in. Suppose you want to build 100 nice condos. It’s harder to sell them to existing homeowners, and, in turn, those owners’ homes don’t go on the market. With fewer houses on the market, a smaller stream of buyers with lots of money can keep buying houses at unreasonable prices, and the market prices get pushed up.
Aunche 4y ago
IIRC, NYC and Jersey City already made Airbnbs illegal unless if it's owner-occupied. Outside of ultra-luxury apartments like 432 Park Ave, there isn't really that much vacancy in NYC. Disincentivizing investing is a good way to make homes cheaper to buy, but it won't make renting any cheaper in places with already high demand. We can discourage investments simply with more equitable property taxes. Currently, more expensive apartments are taxed at a much lower rate than cheaper ones. https://www.bloomberg.com/graphics/2021-new-york-property-tax-benefits-rich/ https://www.bloomberg.com/graphics/2021-new-york-property-ta...
- mancerayder 4y ago
  Illegal for less than 30 days, right?
  - Aunche 4y ago
    Yeah. I think 30 days is a fair threshold because that weeds out the tourists but doesn't punish those with temporary job assignments and interns.
    - mancerayder 4y ago
      It's also a threshold for when tenant rights laws kick in.
- syspec 4y ago
  You certainly couldn't tell by looking at AirBNB for Manhattan that < 30 day rentals are illegal. https://www.airbnb.com/s/New-York--NY/homes?adults=1&place_id=ChIJOwg_06VPwokRYv534QaPC8g&refinement_paths%5B%5D=%2Fhomes&checkin=2022-11-01&checkout=2022-11-04 https://www.airbnb.com/s/New-York--NY/homes?adults=1&place_i...
spaceman_2020 4y ago
In my neck of the woods in New Delhi, the vast majority of new developments are scooped up by investors as well. Anecdotally, a lot of this is “black money” from government corruption. Since the cost basis of this investors is actually zero, they have infinite staying power. Drive through New Delhi’s suburbs and the towns nearby and you’ll see vast empty towers. Many have been on the block for years without any price cuts. Property prices have been largely stagnant and have underperformed inflation for a decade. Even now, the prices are beyond the reach of the vast majority of working Indians.
twblalock 4y ago
None of the policies you suggest were necessary in the past, when housing was much more affordable even though NYC was still drawing in many people from elsewhere. Why would those policies be necessary now? You need to look elsewhere for the cause of the problem.
- ericd 4y ago
  It's near 0% interest rates and devaluation of the currency, combined with central banks propping up the price of bonds, leading to strongly negative real yields on bonds, driving investors to seek something to retain the value of their money.
  - userabchn 4y ago
    ... and further combined with a decrease in supply of housing
missedthecue 4y ago
"In my anecdotal experience in NYC+NYS the vast majority of buyers are investors, not homeowners" I feel like we'd have non-anecdotal evidence about this somewhere. Nationwide, the number of investor buyers is 15%. Foreigners, the other boogeyman is below 5%
munk-a 4y ago
Short term speculation taxes would also help immensely - increase the taxes you'll owe on a sale of a property held for a short period in some graduated manner. This, coupled with a vacancy tax, should force more properties into productive hands.
joshspankit 4y ago
We have a similar issue here in Canada, but with one very troublesome addition: foreign investors. First it was for money laundering but now (in addition) increasingly it’s “regular people” in foreign countries who are seeing each neighbourhood explode in popularity, thinking that if they buy the rental income is how they will feed their families. They have no idea that the prices are simply inflated and unsustainable, let alone that they are most likely buying an unliveable property sight unseen. The net result is that each speculative group is boosting the other as they race for the sky and leave all the renters on the ground.
- raydev 4y ago
  There's no data to back up the claim that "foreign investors" are contributing to Canada's issues in any significant way. It certainly does not explain exploding house prices in small towns 2 and 3 hours outside of major cities, where vacancies are hitting record lows.
  - joshspankit 4y ago
    The history of Canadian real estate being used to launder money is right out there. Look at the Panama and Pandora papers.. Currently: “For years, foreign money has been coming into Canada to buy residential real estate,” “This has fuelled concerns about the impact on costs in cities like Vancouver and Toronto and worries about Canadians being priced out of the housing market in cities and towns across the country.” These are direct quotes from our Prime Minister Justin Trudeau. In addition, he's hoping that a plan to ban foreigners from purchasing residential real estate will get him re-elected. There may not be hard data YET, but it's clear that what the govt sees is in line with what we the public see. As for what we the public see: - Foreigners flying in to major airports, then taking taxi cabs to small towns and remote properties with the intent to purchase. And we're not talking one or two, we're talking about enough that taxi drivers are talking about how concerned they are about the pattern - Properties that have been un-sellable for years suddenly being purchased by foreign investors sight-unseen as the market heats up in that specific area - Rental properties being taken off the market: first purchased, then renos started and never finished - Residential houses (including house hacks and house rentals) being taken off the market by being purchased and held (in the past these kinds of properties were owned by holding companies that had a vested interest in making sure they do not have any more transactions and therefore fly under the radar, but more recently people are buying and holding until a future time where they can sell for more): A for sale sign goes away but no one ever moves in. - Property values going down when a buyer purchases a property then fails to hire a property manager (resulting in the house falling in to disrepair). Turns out they had no idea that there are no local property managers and it's just communities of people doing favours for each other. As for how that explains > exploding house prices in small towns 2 and 3 hours outside of major cities, where vacancies are hitting record lows Foreign investors aren't looking at proximity to cities, they're looking at what areas 'are hot'. They're typically overpaying which urges everyone to overpay, and we still have all the expected real estate purchases: people who want to escape the city after earning their down payments, new home buyers, domestic investors (including speculators), and so-on. The result is higher and higher prices being paid for less and less properties. Vacancies have severely dropped because in multiple local areas that are on my radar (either I'm there, have talked to someone there, or have contacts there) mainly because the number of places to rent have been reduced.
tempsy 4y ago
Have a hard time believing this is true in NYC proper. Most of the housing stock in NYC are co-ops, which have fairly strict rules about renting out units. Condos are significantly more expensive to purchase, and there is pretty much nothing you can purchase right now that would yield positive cash flow given how pricey real estate is even with rents so high. Airbnb is technically banned in NYC, and while I'm sure there continue to be illegal Airbnbs I don't see many listings myself that are for the entire unit as opposed to a room if it isn't a monthly rental.
- weeksie 4y ago
  If you just open Airbnb to nyc and check whole apartment there are like 800 listings right off the bat.
  - tempsy 4y ago
    that doesn’t tell you anything. it’s the short term airbnbs for the entire property that are illegal. you can still rent out a room in a place you live in as far as I know. or do monthly rentals.
    - weeksie 4y ago
      As I said above, that's with "WHOLE APARTMENT" checked. What I saw above was for a 3 day stay that for some reason defaulted to November. Those are 100% illegal and they are all available. Here, let me do the legwork for you, this one shows 413 stays: https://www.airbnb.com/s/New-York--New-York--United-States/homes?tab_id=home_tab&refinement_paths%5B%5D=%2Fhomes&flexible_trip_lengths%5B%5D=one_week&place_id=ChIJOwg_06VPwokRYv534QaPC8g&date_picker_type=calendar&adults=1&checkin=2022-09-06&checkout=2022-09-09&source=structured_search_input_header&search_type=user_map_move&room_types%5B%5D=Entire%20home%2Fapt&ne_lat=40.75846543339949&ne_lng=-73.93468722257296&sw_lat=40.699016039196394&sw_lng=-74.0209470644919&zoom=14&search_by_map=true https://www.airbnb.com/s/New-York--New-York--United-States/h...
jmyeet 4y ago
I don’t think we need a ban on short term rentals. Those actually do serve a purpose (and I don’t mean the AirBnB illegal hotel variety). Instead, only allow short term rentals where the owner is present. This means multi family units or rooms in houses or apartments. As for taxing them, it’s a nice idea but AirBnB is already not paying hotel taxes. As for vacancy taxes, I’m more skeptical just because this hasn’t seemed to have worked anywhere it’s been tried (eg Vancouver). We just need to stop being so friendly to people parking money in residential real estate with punitive taxation and restrictions.
varispeed 4y ago
> 1. Statewide bans on short term rentals They are very useful for victims of domestic abuse where there are no shelters available and other things like people working on short assignments - sure they could get a hotel, but for small business competing with big tax avoiding corporations is often an only way to make it work. Also people not always want to commit to long term rental if they don't know area or they change jobs often. > 2. Huge increase in short term rental taxes to the point where it's barely profitable These taxes will be moved on to the renters, so it will make crisis worse. 3. Adjustable property taxes based on vacancy. Something like a 5x property tax multiple for 50% vacancy and scaling down to 1x for 5% vacancy. This could work to an extent, but you'll find corporations hiring fake tenants if it makes financial sense. I think the crux of the matter is that residential property is treated like a legitimate investment. We should start from banning pension funds and other funds from investing in such packages - they drive prices up, as they want properties at any cost and tax property flippers.
prepend 4y ago
I live in the US and my county and city do something called a “homestead exemption” on property taxes that you get after living in a house for a year. It’s 10-20% of the value so it’s a few thousand a year. Cranking this up may be a way to reduce rentals and investment properties.
BizarroLand 4y ago
I would say that a simple palliative would be (possibly dramatically) increasing the taxes on single family homes that are not owner occupied. We have enough homes to end the housing crisis, it's just too cheap for businesses to horde them and profit off of the misery they are (hopefully unintentionally) creating. There are a lot of things that 1 person can do that are essentially harmless but when a hundred million people do at the same time can cause huge social and ecological damage.

itsoktocry 4y ago

>Statewide bans on short term rentals I live in Canada, but we have the same issues. It's going to be a very interesting cross-generational political battle. The sheer number of "normal people" who own investment properties and AirBNBs now is extraordinary. I know people scraping by working average jobs that own multiple units. Meanwhile, the younger generation can't buy a home. We've normalized the idea that real estate can't lose and everyone should own multiple properties, and we can't come back from that without one side suffering a ton of pain.

mschuster91 4y ago
At the very least we can kick out Chinese and Russian "investors" that only want a way to keep their cash safe from their dictatorship governments. That should drive down our prices and put some pressure on the elites to push for better governments at home.
- IG_Semmelweiss 4y ago
  You forgot most kingdoms from the gulf. Of course, a major answer to this problem is to simply ban non-americans from buying american property, but that will implode real estate and hurt a lot of homeowners. That is the voting middle-upper class. The majority are voters. And they won't want any of that.
  - cudgy 4y ago
    > but that will implode real estate and hurt a lot of homeowners You can’t have your cake and eat it too. Homeowners need to get hurt in order for housing to be more affordable. Housing taking up huge chunks of earnings is a terrible state of affairs for citizens and the economy.
- epicureanideal 4y ago
  Let them buy it, as long as we can keep building more. The problem is still that supply is artificially reduced.
  - arbitrary_name 4y ago
    What incentive do we, as a society, have for foreigners to use our land as a piggy bank? Given we already have chronic undersupply, shouldn't the default position be to prioritize citizens and others who can demonstrate a greater need?
    - epicureanideal 4y ago
      Assuming we could build more, in theory economies of scale would result from more development happening regardless of who the buyer is. And it would in theory result in overbuilding capacity for that many residents and then being left with spare capacity, the cost of which would be allocated in equal part ideally to the investor properties as well.
- raydev 4y ago
  It unfortunately is "the very least" we can do, though. > That should drive down our prices No, in Canada, foreign owned properties make up a tiny percentage of the total, so banning it doesn't actually have any impact. Works as future protection for sure, but that's all. The "foreign investors" are a convenient strawman that hides bigger underlying problems.
  - more_corn 4y ago
    Didn’t Vancouver do this to good effect recently? 20% tax on foreign buyers caused a 15% dip in home prices?
IgorPartola 4y ago
In the US there are numerous incentives for buying a home. Your interest on your mortgage is tax free, the government offers cash back, etc. Renting gives most of these incentives to the landlord instead and they aren’t necessarily passed onto the renter. Most importantly, this means that if you have cash to invest, real estate has favorable tax treatment compared to other options so you suddenly have turned housing into a market that must rise decade over decade or the economy will collapse. The way to fix this is painful but it is to revoke all incentives and to make people put down 25-50% as down payments. It will cool the market to near absolute zero short term but it will help long term in keeping housing to actually be housing.
- fritztastic 4y ago
  Maybe revoke the incentives for those who currently already own multiple properties. No sense in putting an additional financial barrier to people attempting to purchase a home to live in. Investors will be slightly affected by this but it seems like the type of measure that would deter first-time homeowners altogether- therefore exacervating the problem of so many properties being taken by people whose primary interest is profiteering, and leaving those who just want to own the place they live in the dust.
  - dexwiz 4y ago
    Many incentives are for first time buyers, or single home buyers. Taxes depend on region, but everywhere I see treats primary homes, secondary homes, and rentals as different classes of real estate. Now that doesn't mean the incentives aren't skewed. But I don't think landlords buying their 20th house are getting the same benefits as a first time buyer.
- NovemberWhiskey 4y ago
  >Your interest on your mortgage is tax free, the government offers cash back, etc. I have no idea what "the governments offers cash back" means; but certainly the mortgage interest tax deduction is only available for homes in which you actually live for at least part of the year - it's not available for rental properties. You can deduct mortgage interest as an expenses if you're renting a property, but that's exactly the same as any other loan used for a business activity and not specific to real-estate.
bamboozled 4y ago
Same issues in Asia

rayiner 4y ago

You’re mixing up cause and effect. The investors are reacting to the supply shortage in cities like NYC, not causing it. They’re also jumping in because rising interest rates will shift the demand from buying to renting. Investors made up 20% of buyers in the last quarter across major metro areas: https://therealdeal.com/2022/06/15/investors-seize-record-share-of-home-purchases/ https://therealdeal.com/2022/06/15/investors-seize-record-sh.... Historically they’ve made up much less than that. Housing prices are skyrocketing where I live in exurban Maryland, and in Eugene Oregon where my wife is from, but there’s no investors to be seen in those places. I’m not certain what the cause is, but I’d suspect it’s two decades of central bank policies dumping cash into the economy.

davidw 4y ago
> The investors are reacting to the supply shortage in cities like NYC, not causing it. Correct. This article has the receipts: https://www.vox.com/platform/amp/22524829/wall-street-housing-market-blackrock-bubble https://www.vox.com/platform/amp/22524829/wall-street-housin... And the conclusion is worth sharing: > The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach. A huge part of the problem is the NIMBYs.
- 93po 4y ago
  Yes, Wall Street is clearly not to blame. And Vox has no conflict of interest here to say this. It's not like they're 34% owned by Comcast, have had more than 6 large institutional investment firms invest in ownership, and more than a dozen well known angel investors as well. I am sure there is no undue influence to have this story written by someone who is sympathetic to Wall Street, Jerusalem Demsas, who is also anti-rent control, wrote an entire article and recorded a half hour podcast defending Zillow buying up entire neighborhoods, criticizes public housing as unsafe and that it could be fixed by privatizing it, and is extremely anti-zoning. Also one of the largest investors, Accel, totally didn't own Trulia, which was totally not bought by Zillow. And Zillow totally isn't a major advertiser on Vox[0]. [0] https://www.vox.com/ad/16158882/zillow-zestimate-explained https://www.vox.com/ad/16158882/zillow-zestimate-explained

endisneigh 4y ago

The places where there are a lot of short term rentals are the same places where there is a lot of tourism. In effect your first two points is just killing the states own tourism industry, no? A vacancy tax can be trivially avoided. Would there be an exception for renovation? Again, easy to game.

parkingrift 4y ago
Every tax is easy to game. Most people don't do it because the threat of enforcement is enough to get to 70-80%.
- endisneigh 4y ago
  About 30% of people itemize their taxes, most of which are high income, the very same people buying all of the housing.

pj_mukh 4y ago

There’s really no need to do 1,2 if you can just do 3 + public/private partnership to build more. Airbnbs are legitimate demand. We just need over-supply now. The government should be able to step in.

BeetleB 4y ago

> Statewide bans on short term rentals Why solve a problem when you can just nuke it, right? I hang out with AirBnB investor folks. There's a simple solution that works: Require the owner live on the property. Every AirBnB investor will skip the city/county if that is the rule, but still leaves room for legitimate residents to make some money (e.g. rent out the basement, etc). The latter isn't taking housing away from anyone - for most owners it's not economical to convert the basement to make it a long term rental.

jarnagin 4y ago
One unfortunate side effect of this is that this behavior ultimately gets priced into the market. When a house with an ADU will reliably fetch 20% more than one without, then eventually all houses on the market will have ADUs, with the consequence that people buying will need to depend on short term rental income in order to make their mortgage. I’ve seen this happening where I live (West LA) over the last ten years, and it feels like a net decrease in quality of life for everyone at this point.
- margalabargala 4y ago
  If every house has an ADU, then the effective number of housing units in that area has been doubled, putting downwards pressure on housing prices. If people bought their houses anticipating high rental income to make ends meet, that's a separate problem, and less bad than "people are becoming homeless because there are too few housing units".
  - twblalock 4y ago
    ADUs are not sold separately from the homes on the same lots, so the number of homes for sale has not doubled. The value of a lot with an ADU increases because the ADU offers rental income and/or extra living space to potential purchasers.
    - BeetleB 4y ago
      Could those ADUs not be used for long term rentals? If so, than I think that was the point being made - the effective number of units available goes up.

gnopgnip 4y ago

The Washington Post is saying 11% in the NYC metro. Dropping from15% a few years ago. But it varies locally, some areas are a lot higher. https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/ https://www.washingtonpost.com/business/interactive/2022/hou... NYC bans short term rentals in multi family buildings already, unless the host is also staying there and not renting the whole apartment. So the short term rental restrictions probably do help, but it is hard to compare nyc to more suburban and rural areas

PhineasRex 4y ago
Unfortunately enforcement mechanisms for rental law in NYC are virtually non-existent so AirBNB and like are still rampant.

partiallypro 4y ago

We could also...build more housing and eliminate most zoning restrictions. I also don't know what a "short term rental" is, that would devastate beach areas that rent out homes to tourists. I don't think that's a viable solution. Housing prices have not gone up in any major way in a few major industrialized countries, Japan, Korea, Germany. You know what they did? They built more housing. Building in San Francisco, New York, etc is near impossible, especially if you aren't connected. Communities often vote against new housing because a) they don't want certain people in their area and b) we've wrongly viewed housing as an investment vehicle and more housing hurts values.

Ekaros 4y ago
Unless those units are explicitly build for renting and zoned as such. Why should they be used by tourists and not locals?
- userabchn 4y ago
  Why should they have to be explicitly built and zoned for renting? Why shouldn't they be used by tourists? Just make it easy to build more so that there is enough for everyone.
- jaredklewis 4y ago
  Are there unlimited tourists? Sounds like a pretty sweet gig since tourism is like miracle grow for local economies. But alas no, there are not unlimited tourists, there is just limited housing supply. I get tired of bringing it up but I lived in a Tokyo apartment, 5 walk minutes from a train station, 10 min walk to a large park, nice schools, very quite area though just 5 minutes walk to lots of restaurants. 750 sq ft, 4th floor with elevator, 15 year old building (at the time). Rent was (at the exchange rates of the time) $860/month. Inflation adjusted that’s $1,075 which can’t gets you a spare bedroom in first tier American cities. At the time Tokyo had no restrictions on short term rentals nor on foreign investment or property investing or any kind. Tokyo’s big secret is that they let developers build apartment buildings.

VirusNewbie 4y ago

I think the best idea I've heard would be to excessively tax capital gains for the LAND appreciation. We don't' want to discourage people who actually provide value by buying properties and making them nicer or creating more units. A neighboring city of my suburb has large swathes of ranchy style homes on half an acre, those can easily be converted to triplexes or at least large family homes rather than tiny 3 bedrooms. We don't want to discourage investors from that sort of development. However, we do want to discourage investors from 'flipping' homes and riding up appreciation, or even worse, investors buying houses that just sit empty.

PragmaticPulp 4y ago

> Properties are bought up to be flipped, added to the short term rental market, and/or bought as secondary/tertiary homes. I have several friends in the contracting/home services industry. The stories I hear about home flippers buying houses, asking for the cheapest paint/flooring/light fixture work possible, and then relisiting the homes with a 50% markup are wild. It seems a lot of people got into flipping homes around the start of the pandemic and lucked into one of the sharpest real estate market increases in a long time. They assume it's an easy way to make a lot of money with their interior design skills, but really they would have profited just as much or more if they just sat on the home from 2020 to late 2021 and sold it after the market went up. I generally don't think outright bans work because the binary solutions become controversial and prone to political manipulation and stalling. Increasing taxes on these speculative transactions is the way to solve this, I think. Simply eliminating the 1031 exchange that allows investors to defer tax liabilities on real estate investments would make a huge, immediate change in the velocity of speculation. The real estate lobby would go ballistic at the proposal, but I think it needs to be done ASAP. It doesn't make sense that real estate investors get such special tax treatment.

amluto 4y ago
I would like to see the 1031 exchange become available for people who intent to occupy their properties. It makes no sense that someone could own and live in a home for 50 years, want to trade for a smaller home, and be unable to afford the taxes.
- rhino369 4y ago
  You get a 250,000-500,000 exemption for a home you actually live in for 2 years.
  - amluto 4y ago
    Tell that to someone who lives in a perfectly ordinary, well maintained single family house in what is now an expensive part of the Bay Area that would sell for $3.5M, and whose basis is essentially zero. If they want to move to a nice condo selling for $2M, they can probably squeak by, but most of that $1.5M gain will disappear. This is a problem for people who want to move. But, and this is mostly speculation, this is bad for everyone else too. It makes the market less liquid, which means that people are less likely to live where they want. It also reduces the incentive to build the kinds of units people want to live in. Suppose you want to build 100 nice condos. It’s harder to sell them to existing homeowners, and, in turn, those owners’ homes don’t go on the market. With fewer houses on the market, a smaller stream of buyers with lots of money can keep buying houses at unreasonable prices, and the market prices get pushed up.

Aunche 4y ago

IIRC, NYC and Jersey City already made Airbnbs illegal unless if it's owner-occupied. Outside of ultra-luxury apartments like 432 Park Ave, there isn't really that much vacancy in NYC. Disincentivizing investing is a good way to make homes cheaper to buy, but it won't make renting any cheaper in places with already high demand. We can discourage investments simply with more equitable property taxes. Currently, more expensive apartments are taxed at a much lower rate than cheaper ones. https://www.bloomberg.com/graphics/2021-new-york-property-tax-benefits-rich/ https://www.bloomberg.com/graphics/2021-new-york-property-ta...

mancerayder 4y ago
Illegal for less than 30 days, right?
- Aunche 4y ago
  Yeah. I think 30 days is a fair threshold because that weeds out the tourists but doesn't punish those with temporary job assignments and interns.
  - mancerayder 4y ago
    It's also a threshold for when tenant rights laws kick in.
syspec 4y ago
You certainly couldn't tell by looking at AirBNB for Manhattan that < 30 day rentals are illegal. https://www.airbnb.com/s/New-York--NY/homes?adults=1&place_id=ChIJOwg_06VPwokRYv534QaPC8g&refinement_paths%5B%5D=%2Fhomes&checkin=2022-11-01&checkout=2022-11-04 https://www.airbnb.com/s/New-York--NY/homes?adults=1&place_i...

spaceman_2020 4y ago

In my neck of the woods in New Delhi, the vast majority of new developments are scooped up by investors as well. Anecdotally, a lot of this is “black money” from government corruption. Since the cost basis of this investors is actually zero, they have infinite staying power. Drive through New Delhi’s suburbs and the towns nearby and you’ll see vast empty towers. Many have been on the block for years without any price cuts. Property prices have been largely stagnant and have underperformed inflation for a decade. Even now, the prices are beyond the reach of the vast majority of working Indians.

twblalock 4y ago

None of the policies you suggest were necessary in the past, when housing was much more affordable even though NYC was still drawing in many people from elsewhere. Why would those policies be necessary now? You need to look elsewhere for the cause of the problem.

ericd 4y ago
It's near 0% interest rates and devaluation of the currency, combined with central banks propping up the price of bonds, leading to strongly negative real yields on bonds, driving investors to seek something to retain the value of their money.
- userabchn 4y ago
  ... and further combined with a decrease in supply of housing

missedthecue 4y ago

"In my anecdotal experience in NYC+NYS the vast majority of buyers are investors, not homeowners" I feel like we'd have non-anecdotal evidence about this somewhere. Nationwide, the number of investor buyers is 15%. Foreigners, the other boogeyman is below 5%

munk-a 4y ago

Short term speculation taxes would also help immensely - increase the taxes you'll owe on a sale of a property held for a short period in some graduated manner. This, coupled with a vacancy tax, should force more properties into productive hands.

joshspankit 4y ago

We have a similar issue here in Canada, but with one very troublesome addition: foreign investors. First it was for money laundering but now (in addition) increasingly it’s “regular people” in foreign countries who are seeing each neighbourhood explode in popularity, thinking that if they buy the rental income is how they will feed their families. They have no idea that the prices are simply inflated and unsustainable, let alone that they are most likely buying an unliveable property sight unseen. The net result is that each speculative group is boosting the other as they race for the sky and leave all the renters on the ground.

raydev 4y ago
There's no data to back up the claim that "foreign investors" are contributing to Canada's issues in any significant way. It certainly does not explain exploding house prices in small towns 2 and 3 hours outside of major cities, where vacancies are hitting record lows.
- joshspankit 4y ago
  The history of Canadian real estate being used to launder money is right out there. Look at the Panama and Pandora papers.. Currently: “For years, foreign money has been coming into Canada to buy residential real estate,” “This has fuelled concerns about the impact on costs in cities like Vancouver and Toronto and worries about Canadians being priced out of the housing market in cities and towns across the country.” These are direct quotes from our Prime Minister Justin Trudeau. In addition, he's hoping that a plan to ban foreigners from purchasing residential real estate will get him re-elected. There may not be hard data YET, but it's clear that what the govt sees is in line with what we the public see. As for what we the public see: - Foreigners flying in to major airports, then taking taxi cabs to small towns and remote properties with the intent to purchase. And we're not talking one or two, we're talking about enough that taxi drivers are talking about how concerned they are about the pattern - Properties that have been un-sellable for years suddenly being purchased by foreign investors sight-unseen as the market heats up in that specific area - Rental properties being taken off the market: first purchased, then renos started and never finished - Residential houses (including house hacks and house rentals) being taken off the market by being purchased and held (in the past these kinds of properties were owned by holding companies that had a vested interest in making sure they do not have any more transactions and therefore fly under the radar, but more recently people are buying and holding until a future time where they can sell for more): A for sale sign goes away but no one ever moves in. - Property values going down when a buyer purchases a property then fails to hire a property manager (resulting in the house falling in to disrepair). Turns out they had no idea that there are no local property managers and it's just communities of people doing favours for each other. As for how that explains > exploding house prices in small towns 2 and 3 hours outside of major cities, where vacancies are hitting record lows Foreign investors aren't looking at proximity to cities, they're looking at what areas 'are hot'. They're typically overpaying which urges everyone to overpay, and we still have all the expected real estate purchases: people who want to escape the city after earning their down payments, new home buyers, domestic investors (including speculators), and so-on. The result is higher and higher prices being paid for less and less properties. Vacancies have severely dropped because in multiple local areas that are on my radar (either I'm there, have talked to someone there, or have contacts there) mainly because the number of places to rent have been reduced.

tempsy 4y ago

Have a hard time believing this is true in NYC proper. Most of the housing stock in NYC are co-ops, which have fairly strict rules about renting out units. Condos are significantly more expensive to purchase, and there is pretty much nothing you can purchase right now that would yield positive cash flow given how pricey real estate is even with rents so high. Airbnb is technically banned in NYC, and while I'm sure there continue to be illegal Airbnbs I don't see many listings myself that are for the entire unit as opposed to a room if it isn't a monthly rental.

weeksie 4y ago
If you just open Airbnb to nyc and check whole apartment there are like 800 listings right off the bat.
- tempsy 4y ago
  that doesn’t tell you anything. it’s the short term airbnbs for the entire property that are illegal. you can still rent out a room in a place you live in as far as I know. or do monthly rentals.
  - weeksie 4y ago
    As I said above, that's with "WHOLE APARTMENT" checked. What I saw above was for a 3 day stay that for some reason defaulted to November. Those are 100% illegal and they are all available. Here, let me do the legwork for you, this one shows 413 stays: https://www.airbnb.com/s/New-York--New-York--United-States/homes?tab_id=home_tab&refinement_paths%5B%5D=%2Fhomes&flexible_trip_lengths%5B%5D=one_week&place_id=ChIJOwg_06VPwokRYv534QaPC8g&date_picker_type=calendar&adults=1&checkin=2022-09-06&checkout=2022-09-09&source=structured_search_input_header&search_type=user_map_move&room_types%5B%5D=Entire%20home%2Fapt&ne_lat=40.75846543339949&ne_lng=-73.93468722257296&sw_lat=40.699016039196394&sw_lng=-74.0209470644919&zoom=14&search_by_map=true https://www.airbnb.com/s/New-York--New-York--United-States/h...

jmyeet 4y ago

I don’t think we need a ban on short term rentals. Those actually do serve a purpose (and I don’t mean the AirBnB illegal hotel variety). Instead, only allow short term rentals where the owner is present. This means multi family units or rooms in houses or apartments. As for taxing them, it’s a nice idea but AirBnB is already not paying hotel taxes. As for vacancy taxes, I’m more skeptical just because this hasn’t seemed to have worked anywhere it’s been tried (eg Vancouver). We just need to stop being so friendly to people parking money in residential real estate with punitive taxation and restrictions.

varispeed 4y ago

> 1. Statewide bans on short term rentals They are very useful for victims of domestic abuse where there are no shelters available and other things like people working on short assignments - sure they could get a hotel, but for small business competing with big tax avoiding corporations is often an only way to make it work. Also people not always want to commit to long term rental if they don't know area or they change jobs often. > 2. Huge increase in short term rental taxes to the point where it's barely profitable These taxes will be moved on to the renters, so it will make crisis worse. 3. Adjustable property taxes based on vacancy. Something like a 5x property tax multiple for 50% vacancy and scaling down to 1x for 5% vacancy. This could work to an extent, but you'll find corporations hiring fake tenants if it makes financial sense. I think the crux of the matter is that residential property is treated like a legitimate investment. We should start from banning pension funds and other funds from investing in such packages - they drive prices up, as they want properties at any cost and tax property flippers.

prepend 4y ago

I live in the US and my county and city do something called a “homestead exemption” on property taxes that you get after living in a house for a year. It’s 10-20% of the value so it’s a few thousand a year. Cranking this up may be a way to reduce rentals and investment properties.

BizarroLand 4y ago

I would say that a simple palliative would be (possibly dramatically) increasing the taxes on single family homes that are not owner occupied. We have enough homes to end the housing crisis, it's just too cheap for businesses to horde them and profit off of the misery they are (hopefully unintentionally) creating. There are a lot of things that 1 person can do that are essentially harmless but when a hundred million people do at the same time can cause huge social and ecological damage.