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A couple ideas for how to fix some real estate problems: 1. A zoning rule that requires home owners to live in the owned home. This would prevent remote/foreig

A couple ideas for how to fix some real estate problems: 1. A zoning rule that requires home owners to live in the owned home. This would prevent remote/foreign money from meddling with local housing in particular areas, and prevents big corps from buying up all the homes and forcing people to lease them out. Some people want to lease though, so that's why I think it's more appropriate as a zoning tool for particular areas than as a city or state-wide law. Maybe this could manifest as a leasing tax. (As an aside, in the US this wouldn't work for typical apartment buildings, however maybe we should consider apartment owning model like they have in Japan...) 2. Ban NDAs for real estate leases, period. They just allow for shenanigans like lying about how much a property was leased for in the past. NDAs are usually a cancer but I admit they can be useful in certain contexts; real estate is not a valid context for NDAs. 3. You can only deprecate the improved value, not the value of the land. "The land beneath a building does not deprecate, whereas the value of the building should." -- a good idea by huevosabio that I saw in this thread. 4. Owners pay taxes on the claimed lease value, regardless of current occupancy. This would disincentivize owners from just sitting on dozens of properties refusing to lease because nobody wants to pay their unrealistic exorbitant rates. This is a plague in New York at the moment, where all the owners are playing a game of chicken with the economy to try to artificially prop up their building valuations by pretending that the supply/demand curve doesn't exist even in the face of record breaking unoccupancy (is that a word?).

colinmhayes 4y ago
1. The foreign owner thing is really overblown. They mostly invest in extreme luxury apartment, not lots of cheaper ones. The mega reit buying residential properties is also overblown. 70% of rental properties are owned by individual investors. 4. Empty units isn't really a big problem. 4.5% of NYC apartments are vacant, the majority of those due to structural reasons such as tenants moving or repairs. The historical rate is around 3%, it's quite hard to get below that. The solution is simple. Build more units. Relax zoning requirements, incentivize density where it makes sense.
onlyrealcuzzo 4y ago
> You can only deprecate the improved value, not the value of the land. "The land beneath a building does not deprecate, whereas the value of the building should." -- a good idea by huevosabio that I saw in this thread. At least for residential R/E in the US - you cannot depreciate land from taxable income. > Owners pay taxes on the claimed lease value, regardless of current occupancy. This would disincentivize owners from just sitting on dozens of properties refusing to lease because nobody wants to pay their unrealistic exorbitant rates. You're misunderstanding the point. From an accounting perspective, you can pretend unleased units have revenue - and that vacancy is an expense. You can get loans on your revenues (imaginary money in the case of R/E). R/E speculators want as much debt as possible - because they know that debt (especially leveraged) at interest rates typical of the last 12 years was the free money cheat code. This incentives them to have empty units at 100% above market rates - because they can qualify for twice as much debt to buy more properties to do the same thing - to speculate further on leveraged appreciation. It's also the reason you regularly see building with outrageous rents yet they're giving you 3+ months free. Why not just lower the rent by 25%? Because then you qualify for 25% less new debt (which in many cases they need new debt just to cover their deeply negative cash-flow).
lbrito 4y ago
>A zoning rule that requires home owners to live in the owned home. This would reduce the housing stock. The way capitalism works is that some people have excess capital, and they invest it. Housing is one such investment. People don't need multiple houses to live in, so multi-property owners rent out their investments, which is great because there are many people that can only afford renting, not buying.
- djohnston 4y ago
  It's great to an extent but it seems obvious we passed that threshold during the pandemic. Now the combination of NIMBYISM and corporate landlords is creating insane distortions in particular locales. They are turning potential home owners into renters.
theandrewbailey 4y ago
> unoccupancy (is that a word?) Not really. Try using "vacancy" instead.
ChadNauseam 4y ago
5. Make it legal to build more houses We got into this hole by making it illegal to build. For example, it is illegal to build a building with 5 or more homes in 90% of San Francisco. (Buildings with 3 or more homes are illegal in 70%.) I appreciate galaxy-brained legislation as much as the next policy wonk, but the solution in this case is simple. Making it legal to build homes → greater supply of homes. Greater supply → lower prices. Ever notice that cars are not that expensive, even though many people absolutely need them and they're very complex machines with high safety standards? It helps that it's legal to build them. Our current situation is like if we made it illegal to produce new cars. Cars would get really expensive, and you'd had a bunch of people saying maybe you shouldn't be able to write off your rental car depreciation, or own a car you aren't driving, and that producing more cars can't possibly be the solution because most new cars are "luxury cars" and how exactly does more luxury cars help the car affordability problem again? Sorry, that got off the rails a bit. It's possible that some of your suggestions would be necessary too. But when you find yourself in a hole, your first step to getting out is to stop digging.
namlem 4y ago
None of this would have much impact. What is really needed is to abolish most forms of land use restrictions. Abolish parking minimums, abolish floor-area-ratio minimums, abolish single family zoning, abolish or severely limit community review of new housing developments. Neighborhoods built prior to WWII are nicer places to live precisely because these rules didn't exist when they were built. It was the insanity of post-war high modernist urban planning that destroyed American cities and suburbs.
- nemo44x 4y ago
  > Neighborhoods built prior to WWII are nicer places to live The East Coast is a great place to appreciate this dynamic. There are a lot of old suburbs and towns and they tend to be great places to live. The homes are beautiful and well maintained, the trees are mature, and they are generally expensive places to live. Contrast them with adjacent towns that were built up post WW2 and the homes are ugly and isolated from restaurants and shops and they probably don't have a train station. And the property values are generally much lower. Every non-rural home should be walkable to a real park, public transit into the anchoring city, and a town area with shops. So many post-WW2 suburbs are just wastelands where every home is an isolated island. But they aren't rural. It's weird.

colinmhayes 4y ago

1. The foreign owner thing is really overblown. They mostly invest in extreme luxury apartment, not lots of cheaper ones. The mega reit buying residential properties is also overblown. 70% of rental properties are owned by individual investors. 4. Empty units isn't really a big problem. 4.5% of NYC apartments are vacant, the majority of those due to structural reasons such as tenants moving or repairs. The historical rate is around 3%, it's quite hard to get below that. The solution is simple. Build more units. Relax zoning requirements, incentivize density where it makes sense.

onlyrealcuzzo 4y ago

> You can only deprecate the improved value, not the value of the land. "The land beneath a building does not deprecate, whereas the value of the building should." -- a good idea by huevosabio that I saw in this thread. At least for residential R/E in the US - you cannot depreciate land from taxable income. > Owners pay taxes on the claimed lease value, regardless of current occupancy. This would disincentivize owners from just sitting on dozens of properties refusing to lease because nobody wants to pay their unrealistic exorbitant rates. You're misunderstanding the point. From an accounting perspective, you can pretend unleased units have revenue - and that vacancy is an expense. You can get loans on your revenues (imaginary money in the case of R/E). R/E speculators want as much debt as possible - because they know that debt (especially leveraged) at interest rates typical of the last 12 years was the free money cheat code. This incentives them to have empty units at 100% above market rates - because they can qualify for twice as much debt to buy more properties to do the same thing - to speculate further on leveraged appreciation. It's also the reason you regularly see building with outrageous rents yet they're giving you 3+ months free. Why not just lower the rent by 25%? Because then you qualify for 25% less new debt (which in many cases they need new debt just to cover their deeply negative cash-flow).

lbrito 4y ago

>A zoning rule that requires home owners to live in the owned home. This would reduce the housing stock. The way capitalism works is that some people have excess capital, and they invest it. Housing is one such investment. People don't need multiple houses to live in, so multi-property owners rent out their investments, which is great because there are many people that can only afford renting, not buying.

djohnston 4y ago
It's great to an extent but it seems obvious we passed that threshold during the pandemic. Now the combination of NIMBYISM and corporate landlords is creating insane distortions in particular locales. They are turning potential home owners into renters.

theandrewbailey 4y ago

> unoccupancy (is that a word?) Not really. Try using "vacancy" instead.

ChadNauseam 4y ago

5. Make it legal to build more houses We got into this hole by making it illegal to build. For example, it is illegal to build a building with 5 or more homes in 90% of San Francisco. (Buildings with 3 or more homes are illegal in 70%.) I appreciate galaxy-brained legislation as much as the next policy wonk, but the solution in this case is simple. Making it legal to build homes → greater supply of homes. Greater supply → lower prices. Ever notice that cars are not that expensive, even though many people absolutely need them and they're very complex machines with high safety standards? It helps that it's legal to build them. Our current situation is like if we made it illegal to produce new cars. Cars would get really expensive, and you'd had a bunch of people saying maybe you shouldn't be able to write off your rental car depreciation, or own a car you aren't driving, and that producing more cars can't possibly be the solution because most new cars are "luxury cars" and how exactly does more luxury cars help the car affordability problem again? Sorry, that got off the rails a bit. It's possible that some of your suggestions would be necessary too. But when you find yourself in a hole, your first step to getting out is to stop digging.

namlem 4y ago

None of this would have much impact. What is really needed is to abolish most forms of land use restrictions. Abolish parking minimums, abolish floor-area-ratio minimums, abolish single family zoning, abolish or severely limit community review of new housing developments. Neighborhoods built prior to WWII are nicer places to live precisely because these rules didn't exist when they were built. It was the insanity of post-war high modernist urban planning that destroyed American cities and suburbs.

nemo44x 4y ago
> Neighborhoods built prior to WWII are nicer places to live The East Coast is a great place to appreciate this dynamic. There are a lot of old suburbs and towns and they tend to be great places to live. The homes are beautiful and well maintained, the trees are mature, and they are generally expensive places to live. Contrast them with adjacent towns that were built up post WW2 and the homes are ugly and isolated from restaurants and shops and they probably don't have a train station. And the property values are generally much lower. Every non-rural home should be walkable to a real park, public transit into the anchoring city, and a town area with shops. So many post-WW2 suburbs are just wastelands where every home is an isolated island. But they aren't rural. It's weird.