4 ms·

How can you make housing not an investment? Require set constant purchase and sale prices on land and houses? Lots of people buy a starter house with the inten

How can you make housing not an investment? Require set constant purchase and sale prices on land and houses? Lots of people buy a starter house with the intention of selling for more when they, for example, start having kids and need a bigger house.

djohnston 4y ago
How about.. increasing the property tax rate exponentially with the number of properties held. Few people are arguing that a mom-pop rental business needs to be shut down. These conglomerates with > 10,000 properties are the serious problem, even the data from the article points this out clearly.
- jimbob45 4y ago
  I really like your idea but I don't know how you'd reconcile it with organizations simply forming a shell over many smaller companies with a few properties each.
  - Jochim 4y ago
    I mean the simplest solution would be to tax the holding company as well.
  - djohnston 4y ago
    FTC, IRS, and the whoop whoop sound of da police
- beebmam 4y ago
  Or just increase property tax across the board. An increase in property tax will drive housing prices downwards.
  - djohnston 4y ago
    I don't want it to be harder for someone to buy their first house (I also want to buy my first house haha). I want it to be harder for some thing to buy it's 10,001st house.
    - pwinnski 4y ago
      Homestead exemptions can keep property taxes low on one house per person, allowing property taxes on investment properties to skyrocket without any effect on first-time buyers, or really any homeowners. In theory.
    - mywittyname 4y ago
      Not sure this is feasible. A) People can hide how many houses they "own" rather easily. B) People with 10,000 houses have 10,000 times the economic incentive to run for office and/or press elected officials to make things easier on them. The best approach is to press for over-development of housing. It doesn't matter if someone owns 1 house, or 1000 houses, so long as there is more than enough homes for everyone. Idea: have a property tax line item that's based on the ratio of population / housing units. The higher that ratio, the higher the tax. The tax revenue is used to cover the costs of constructing more housing units, which lowers the tax.
  - al_mandi 4y ago
    So you're basically now paying rent to the government. Want to really address the problem (and many other problem with today's economic system)? Prohibit interest bearing loans.
    - analognoise 4y ago
      How do you handle the risk of defaults? If you never charged interest wouldn't anyone who offered loans just go out of business? I do think credit scores are a scam (as are overdraft fees) and that rates should be reasonable, but no interest would make nobody lend money. I like having a car loan - I was able to buy a car with current safety features. Without it I'd have to buy some unsafe (or unreliable) clunker in cash.
      - al_mandi 4y ago
        By prohibiting interest bearing loans, loans become relegated to purely an act of charity, and as you point out, there will no longer be businesses that are built only or mostly to lend money and profit off of usury. And that's a good thing. There's no reason why the car manufacturers won't be able to offer 0% interest on moderate term loans (a few years long). They already do today when they want to sell cars. This will drive prices down actually. You can also have longer term leases without interest, effectively paying for depreciation and the company can profit from leasing the car.
- acomjean 4y ago
  Where I live, they lop off a large value for tax purposes if you live in your property: "shifts the tax burden within the residential class from owners of moderately valued residential properties to the owners of vacation homes, higher valued homes and residential properties not occupied by the owner, including apartments and vacant lands." https://www.mass.gov/doc/living-with-the-residential-exemption/download https://www.mass.gov/doc/living-with-the-residential-exempti... It hasn't seemed to help, but maybe it has a little.....
- hemloc_io 4y ago
  I want to agree, but at the end of the day the corps doing this are taking crappy properties and renovating them. They want to fix it up and resell it or charge higher rents than the current owners. That's how they make their profits. Usually they have a maintenance staff that takes care of the property as well or add additional services. Mom and pop landlords don't do any of that usually, and just hand someone a key w/ a call to the occasional contractor to fix something instead of an actual company. Most need a warm body to pay off their mortgage so they can sell it in the future and pocket the cash. We need to fix the supply side, if the corp takes the properties that are broken down and fixes them that's a good thing. The problem comes when people who are around there now cannot afford the new rents they either become homeless or leave. How far they have to leave depends on the supply of housing in the surrounding area, which b/c of the shortage is pretty low. With a huge supply of housing, it's possible to move next door or down the street and not much changes. If we build more rents will go down, regardless of who the owners are. Prices to buy homes too for normal people. Getting people to build more is the problem, high construction costs, zoning/permiting, local opposition etc.
  - MrRiddle 4y ago
    > but at the end of the day the corps doing this are taking crappy properties and renovating them. They want to fix it up and resell it or charge higher rents than the current owners. Could it be the reason that those properties are too expensive for a regular Joe to fix up because of investors in the first place.
lumost 4y ago
One solution is to force depreciating by selling “leases” to land rather than land. Cities could roll out such a policy directly when making unused land available or other activities.
- _fat_santa 4y ago
  Hawaii does that and it wrecks the housing market, because it creates two tiers of housing: leased land and owned land housing. All you will end up with is all the expensive property is going to be on "purchased land" and all the cheap properties will be on leased land. Hawaii has a good reason for doing this because land is scarce and there is no place to go. Basically anywhere else this would be idotic IMO.
  - colinmhayes 4y ago
    All land should be leased from the government. That's what a land value tax is and there are many, many reasons it works much better than our current land system.
    - settrans 4y ago
      In effect it already is: we lack allodial title in the United States anyhow, and all land is subject to taking by eminent domain and taxation by local governments.
sideshowb 4y ago
A high level of land value tax. If the family home you aspire to wasn't also climbing in price, you wouldn't need to sell your starter home at a profit.
shkkmo 4y ago
High property taxes based on land value. This makes the land itself a liability that is offset only by the owners to extract value from the property by improving and using it. This property is still an investment via improving the property to enhance income potential, but less of a speculative bet on the overall state of the market.
- shagie 4y ago
  What does that do for an existing single family house that someone inherited / moved into as their parents moved out? It wasn't bought as an investment - its a place to live. A high property tax based on land value would suggest that all the places people need to live would need to be generating income, have a high income for the family, or they'd need to move into a place where that land value is distributed across a wider base of households.
  - shkkmo 4y ago
    If someone inherits a single family house and don't view the property as providing enough value as a residence or rental to cover the land taxes, then they should sell the property or redevelop it at a higher density that better matches the value of the the land. Of course land should be producing economic value. If it doesn't or thr value produced doesn't match the land's value, then something is wrong.
Sohcahtoa82 4y ago
Buying a house to live in while you save for something bigger is different from buying property for the sole purpose of renting it out. The latter are financial vampires, sucking money from lower classes, pushing housing prices higher, locking more people out of ownership.
- settrans 4y ago
  Are the developers of apartment buildings financial vampires too? The people who literally are adding supply to the market (and therefore lowering prices, because supply and demand)?
dinosaurdynasty 4y ago
Build more housing (remove NIMBY-style policies that lead to less housing being built).
onionisafruit 4y ago
The communist answer is to not allow anybody to purchase real estate.
novantadue 4y ago
single family housing is not an investment in japan, they tear down and rebuild. https://robbreport.com/shelter/home-design/japanese-homes-are-ephemeral-facing-demolition-just-22-years-in-heres-why-1234608438/ https://robbreport.com/shelter/home-design/japanese-homes-ar...
tejohnso 4y ago
> How can you make housing not an investment? I think if it's an investment, that's fine. The problem is when housing is allowed to become a speculative investment, and the investment activity on housing begins to seriously threaten the actual housing activity. So for example you could do one or more of the following: - Adjust mortgage rates on homes owned but not lived in (eg: triple them) - Completely ban owning more than one home - Implement a sliding tax on rental income (the more units you collect on, the higher the tax you pay) - Bring back (or implement) rent controls and have them geared to cost of living Basically anything that makes it less feasible to profit off of people who just want a safe place to live.
- hemloc_io 4y ago
  I agree that housing shouldn't be a speculative investment, but cutting demand for building housing will decrease the amount of housing. https://www.dailymail.co.uk/news/article-11119259/Hundreds-queue-one-rental-property-Dublin-Irish-capitals-housing-shortage-crisis.html https://www.dailymail.co.uk/news/article-11119259/Hundreds-q...
  - tejohnso 4y ago
    From your linked article: " The unprecedented number of refugees arriving in Ireland has put pressure on the country's housing crisis, despite generous offers to host Ukrainian families. " I'm not sure how that results in cutting demand for building housing. The article is basically saying there's a crisis with few reasons offered. How / why / what would be cutting demand for building housing? Demand is the last thing I'd be worried about. People need a place to live, and they need the housing to live in, so there's always going to be demand for building it.
- giaour 4y ago
  > The problem is when housing is allowed to become a speculative investment I don’t think the distinction you’re drawing makes sense; there are plenty of ways to speculate in an otherwise healthy housing market (e.g. move to a gentrifying neighborhood in the hopes of moving again in a few years when your property is worth more). It seems like the common theme for the ills you identify is housing being un- or under-utilized while the owner is expecting or reaping the rewards of capital appreciation. More straightforward policy responses to that could include imposing a surtax on unoccupied property or taxing imputed rent regardless of occupancy.
helen___keller 4y ago
> Lots of people buy a starter house with the intention of selling for more when they, for example, start having kids and need a bigger house. This is the problem though. Capital gains for the seller represents inflation on an equivalent lifestyle for the next buyer. First time buyer programs, lower mortgage rates, etc, are all just smokescreens to try and grow the pyramid one more level before it becomes evidently unsustainable. Exponential growth is too powerful: if housing is a good investment for long enough, it becomes unaffordable, period.
hemloc_io 4y ago
Either deregulate to allow for developers to build more, or have the govt step in and build more. (Maybe even both) Nothing should stop housing from being an investment in the same way that any good effected by supply and demand is, but there's a difference with the price of housing going up at at slightly over the rate of inflation and what we've seen the last couple years across the entire market. (Or even the decade before that in the bay area.) 10-20% a year rises in the COL is insane, and encourages rent seeking by current housing owners to the detriment of everyone else. Public policy should favor the former, and punish the later.
mytailorisrich 4y ago
There is no problem with property being an investment. Prices are constrained by people's incomes and over the 20th century incomes have grown faster than inflation (people have got richer). This leaves space for positive returns without necessarily hurting affordability. Now, in many places construction has slowed a lot and capital is cheap, which is really what has caused prices to skyrocket. Eventually, incomes will still constrain the market, though, especially in lettings.

djohnston 4y ago

How about.. increasing the property tax rate exponentially with the number of properties held. Few people are arguing that a mom-pop rental business needs to be shut down. These conglomerates with > 10,000 properties are the serious problem, even the data from the article points this out clearly.

jimbob45 4y ago
I really like your idea but I don't know how you'd reconcile it with organizations simply forming a shell over many smaller companies with a few properties each.
- Jochim 4y ago
  I mean the simplest solution would be to tax the holding company as well.
- djohnston 4y ago
  FTC, IRS, and the whoop whoop sound of da police
beebmam 4y ago
Or just increase property tax across the board. An increase in property tax will drive housing prices downwards.
- djohnston 4y ago
  I don't want it to be harder for someone to buy their first house (I also want to buy my first house haha). I want it to be harder for some thing to buy it's 10,001st house.
  - pwinnski 4y ago
    Homestead exemptions can keep property taxes low on one house per person, allowing property taxes on investment properties to skyrocket without any effect on first-time buyers, or really any homeowners. In theory.
  - mywittyname 4y ago
    Not sure this is feasible. A) People can hide how many houses they "own" rather easily. B) People with 10,000 houses have 10,000 times the economic incentive to run for office and/or press elected officials to make things easier on them. The best approach is to press for over-development of housing. It doesn't matter if someone owns 1 house, or 1000 houses, so long as there is more than enough homes for everyone. Idea: have a property tax line item that's based on the ratio of population / housing units. The higher that ratio, the higher the tax. The tax revenue is used to cover the costs of constructing more housing units, which lowers the tax.
- al_mandi 4y ago
  So you're basically now paying rent to the government. Want to really address the problem (and many other problem with today's economic system)? Prohibit interest bearing loans.
  - analognoise 4y ago
    How do you handle the risk of defaults? If you never charged interest wouldn't anyone who offered loans just go out of business? I do think credit scores are a scam (as are overdraft fees) and that rates should be reasonable, but no interest would make nobody lend money. I like having a car loan - I was able to buy a car with current safety features. Without it I'd have to buy some unsafe (or unreliable) clunker in cash.
    - al_mandi 4y ago
      By prohibiting interest bearing loans, loans become relegated to purely an act of charity, and as you point out, there will no longer be businesses that are built only or mostly to lend money and profit off of usury. And that's a good thing. There's no reason why the car manufacturers won't be able to offer 0% interest on moderate term loans (a few years long). They already do today when they want to sell cars. This will drive prices down actually. You can also have longer term leases without interest, effectively paying for depreciation and the company can profit from leasing the car.
acomjean 4y ago
Where I live, they lop off a large value for tax purposes if you live in your property: "shifts the tax burden within the residential class from owners of moderately valued residential properties to the owners of vacation homes, higher valued homes and residential properties not occupied by the owner, including apartments and vacant lands." https://www.mass.gov/doc/living-with-the-residential-exemption/download https://www.mass.gov/doc/living-with-the-residential-exempti... It hasn't seemed to help, but maybe it has a little.....
hemloc_io 4y ago
I want to agree, but at the end of the day the corps doing this are taking crappy properties and renovating them. They want to fix it up and resell it or charge higher rents than the current owners. That's how they make their profits. Usually they have a maintenance staff that takes care of the property as well or add additional services. Mom and pop landlords don't do any of that usually, and just hand someone a key w/ a call to the occasional contractor to fix something instead of an actual company. Most need a warm body to pay off their mortgage so they can sell it in the future and pocket the cash. We need to fix the supply side, if the corp takes the properties that are broken down and fixes them that's a good thing. The problem comes when people who are around there now cannot afford the new rents they either become homeless or leave. How far they have to leave depends on the supply of housing in the surrounding area, which b/c of the shortage is pretty low. With a huge supply of housing, it's possible to move next door or down the street and not much changes. If we build more rents will go down, regardless of who the owners are. Prices to buy homes too for normal people. Getting people to build more is the problem, high construction costs, zoning/permiting, local opposition etc.
- MrRiddle 4y ago
  > but at the end of the day the corps doing this are taking crappy properties and renovating them. They want to fix it up and resell it or charge higher rents than the current owners. Could it be the reason that those properties are too expensive for a regular Joe to fix up because of investors in the first place.

lumost 4y ago

One solution is to force depreciating by selling “leases” to land rather than land. Cities could roll out such a policy directly when making unused land available or other activities.

_fat_santa 4y ago
Hawaii does that and it wrecks the housing market, because it creates two tiers of housing: leased land and owned land housing. All you will end up with is all the expensive property is going to be on "purchased land" and all the cheap properties will be on leased land. Hawaii has a good reason for doing this because land is scarce and there is no place to go. Basically anywhere else this would be idotic IMO.
- colinmhayes 4y ago
  All land should be leased from the government. That's what a land value tax is and there are many, many reasons it works much better than our current land system.
  - settrans 4y ago
    In effect it already is: we lack allodial title in the United States anyhow, and all land is subject to taking by eminent domain and taxation by local governments.

sideshowb 4y ago

A high level of land value tax. If the family home you aspire to wasn't also climbing in price, you wouldn't need to sell your starter home at a profit.

shkkmo 4y ago

High property taxes based on land value. This makes the land itself a liability that is offset only by the owners to extract value from the property by improving and using it. This property is still an investment via improving the property to enhance income potential, but less of a speculative bet on the overall state of the market.

shagie 4y ago
What does that do for an existing single family house that someone inherited / moved into as their parents moved out? It wasn't bought as an investment - its a place to live. A high property tax based on land value would suggest that all the places people need to live would need to be generating income, have a high income for the family, or they'd need to move into a place where that land value is distributed across a wider base of households.
- shkkmo 4y ago
  If someone inherits a single family house and don't view the property as providing enough value as a residence or rental to cover the land taxes, then they should sell the property or redevelop it at a higher density that better matches the value of the the land. Of course land should be producing economic value. If it doesn't or thr value produced doesn't match the land's value, then something is wrong.

Sohcahtoa82 4y ago

Buying a house to live in while you save for something bigger is different from buying property for the sole purpose of renting it out. The latter are financial vampires, sucking money from lower classes, pushing housing prices higher, locking more people out of ownership.

settrans 4y ago
Are the developers of apartment buildings financial vampires too? The people who literally are adding supply to the market (and therefore lowering prices, because supply and demand)?

dinosaurdynasty 4y ago

Build more housing (remove NIMBY-style policies that lead to less housing being built).

onionisafruit 4y ago

The communist answer is to not allow anybody to purchase real estate.

novantadue 4y ago

single family housing is not an investment in japan, they tear down and rebuild. https://robbreport.com/shelter/home-design/japanese-homes-are-ephemeral-facing-demolition-just-22-years-in-heres-why-1234608438/ https://robbreport.com/shelter/home-design/japanese-homes-ar...

tejohnso 4y ago

> How can you make housing not an investment? I think if it's an investment, that's fine. The problem is when housing is allowed to become a speculative investment, and the investment activity on housing begins to seriously threaten the actual housing activity. So for example you could do one or more of the following: - Adjust mortgage rates on homes owned but not lived in (eg: triple them) - Completely ban owning more than one home - Implement a sliding tax on rental income (the more units you collect on, the higher the tax you pay) - Bring back (or implement) rent controls and have them geared to cost of living Basically anything that makes it less feasible to profit off of people who just want a safe place to live.

hemloc_io 4y ago
I agree that housing shouldn't be a speculative investment, but cutting demand for building housing will decrease the amount of housing. https://www.dailymail.co.uk/news/article-11119259/Hundreds-queue-one-rental-property-Dublin-Irish-capitals-housing-shortage-crisis.html https://www.dailymail.co.uk/news/article-11119259/Hundreds-q...
- tejohnso 4y ago
  From your linked article: " The unprecedented number of refugees arriving in Ireland has put pressure on the country's housing crisis, despite generous offers to host Ukrainian families. " I'm not sure how that results in cutting demand for building housing. The article is basically saying there's a crisis with few reasons offered. How / why / what would be cutting demand for building housing? Demand is the last thing I'd be worried about. People need a place to live, and they need the housing to live in, so there's always going to be demand for building it.
giaour 4y ago
> The problem is when housing is allowed to become a speculative investment I don’t think the distinction you’re drawing makes sense; there are plenty of ways to speculate in an otherwise healthy housing market (e.g. move to a gentrifying neighborhood in the hopes of moving again in a few years when your property is worth more). It seems like the common theme for the ills you identify is housing being un- or under-utilized while the owner is expecting or reaping the rewards of capital appreciation. More straightforward policy responses to that could include imposing a surtax on unoccupied property or taxing imputed rent regardless of occupancy.

helen___keller 4y ago

> Lots of people buy a starter house with the intention of selling for more when they, for example, start having kids and need a bigger house. This is the problem though. Capital gains for the seller represents inflation on an equivalent lifestyle for the next buyer. First time buyer programs, lower mortgage rates, etc, are all just smokescreens to try and grow the pyramid one more level before it becomes evidently unsustainable. Exponential growth is too powerful: if housing is a good investment for long enough, it becomes unaffordable, period.

hemloc_io 4y ago

Either deregulate to allow for developers to build more, or have the govt step in and build more. (Maybe even both) Nothing should stop housing from being an investment in the same way that any good effected by supply and demand is, but there's a difference with the price of housing going up at at slightly over the rate of inflation and what we've seen the last couple years across the entire market. (Or even the decade before that in the bay area.) 10-20% a year rises in the COL is insane, and encourages rent seeking by current housing owners to the detriment of everyone else. Public policy should favor the former, and punish the later.

mytailorisrich 4y ago

There is no problem with property being an investment. Prices are constrained by people's incomes and over the 20th century incomes have grown faster than inflation (people have got richer). This leaves space for positive returns without necessarily hurting affordability. Now, in many places construction has slowed a lot and capital is cheap, which is really what has caused prices to skyrocket. Eventually, incomes will still constrain the market, though, especially in lettings.