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> The U.S. Treasury Department will soon propose a rule that would effectively end anonymous luxury-home purchases, closing a loophole that the agency says allo

by zer8k 3y ago

> The U.S. Treasury Department will soon propose a rule that would effectively end anonymous luxury-home purchases, closing a loophole that the agency says allows corrupt oligarchs, terrorists and other criminals to hide ill-gotten gains. Almost good enough. How about we make it harder for non-citizens to buy any homes too? Citizens should get first pick of any dwelling. Many countries do this, even in the west, and it would go a long way in stopping the crazy house prices in the west/southwest. It could even be extended to give preference to people who have established residency in a region. My original low COL hometown was overrun during the California exodus and housing jumped 3x in 5 years. The average house is now well over 6x average income. No resident could dream of affording even the shittiest starter home in this double-whammy environment.

grecy 3y ago
Even better would be stopping any entity other than a real person from owning residential property. Companies can invest in and profit from commercial real estate. Leave houses for people.
- tenebrisalietum 3y ago
  This would likely over time make apartment complexes the number one thing built in residential zones, since there's probably no way to not have companies/businesses owning apartment complexes.
  - bonestamp2 3y ago
    That might be fine because that's probably what the market needs most right now. The law can be changed later if it's having a negative effect.
    - brailsafe 3y ago
      Ya I'd be perfectly fine with this, though it's a pretty superficial suggestion with all kinds of externalities to consider.
  - grecy 3y ago
    Then just have individual people own individual apartments. Easy enough.
AequitasOmnibus 3y ago
If we’re talking about ideal housing policies, why not extend it to say that individuals seeking primary residence should get priority over investors or secondary purchasers. AirBNB operators are just as predatory if not more in these markets than non-citizens.
- cstejerean 3y ago
  How would you implement "get priority"? I think there's already some prioritization in terms of being easier to get loans for a primary residence, and better tax treatment, etc. But I'm not sure how you'd prevent an investor from outbidding an individual looking to buy a primary residence. You'd have to force the seller to accept a worse offer, and even if such a law was passed I don't think it would survive scrutiny from the courts.
  - AequitasOmnibus 3y ago
    I think the easiest way would be to change local property taxes in a way that disincentivizes investors. For example: a “cap” on property taxes for purchasers who declare the home as their primary residence, and a substantially higher tax rate for secondary homes that compounds per home owned by the investor in the jurisdiction (e.g. Primary Resident owner gets capped property taxes at 3% while AirBNB investor who owns 4 homes would get taxed at 15% on investment house 1, 30% on house 2, 45% on house 3 and 60% on house 4).
    - muro 3y ago
      You could still have each property be a primary residence for a different family member, but it might still help.
    - ke88y 3y ago
      If you are going to do this, it needs to be paired with price controls on rental housing. Otherwise the expense is passed on and becomes a de facto regressive tax on (usually poor) renters. With respect to short term rentals in particular, outright bans are the easiest and most effective policy. Some cities allow for 30 days of short-term renting as long as the unit is a primary residence for the property owner for the other 335 days of the year. I think that's a fair compromise that achieves the ostensible goal of the "sharing economy" without hotel-ifying the entire city's housing stock.
tycho-newman 3y ago
[dead]
darth_avocado 3y ago
> It could even be extended to give preference to people who have established residency in a region How do you propose establishing residency if you cannot buy a house? Be forced to rent even if you can buy a house? Basically what you’re proposing if citizens not being able to have mobility in the country. If you’re born in the economic centers or scenic places, good for you, but in case you were born in middle of Montana, good luck because you can’t go anywhere else.
- ke88y 3y ago
  No, no need to rent. The solution is pretty trivial, and even battle-tested because the problem has already been solved for mortgages (lenders really care whether a piece of property is your primary residence) and for income tax (your primary residence really matters). Simply require people to attest that they are purchasing the property as their primary residence, with significant penalties for fraud. You can make enforcement and public accountability even easier by ublishing both owner info and a boolean "is_primary_residence" flag in every county's plat maps/parcel database. I suggest lawmakers could additionally add an x-month grace period, for x =~ 3*<average time on market for like properties in the past 12 months>, which allows people to have a generous period of overlapping ownership while they are moving. Perhaps even allow an auto-appeal process that adds x more time if you can show that you listed the property for sale at around the assessed value and had no offers within say 10% of your asking price.
baja_blast 3y ago
I say a worse problem than foreigners buying real estate is large private equity groups like Blackstone buying up homes across the country and turning them into rentals.
- sanp 3y ago
  So, maybe this is to ensure that foreign buyers do not compete with PE?
- moate 3y ago
  Exactly. I could give a fuck who owns the houses in an area, as long as it's lots of individuals vs a single mega-corp that can then singlehandedly influence inventory and pricing.
- brailsafe 3y ago
  I think it's more like foreign private equity firms, local private real estate investment trusts, local private equity firms, foreign individuals with money that came from _somewhere_, and then local individuals with boomer parents' money, depending on country, area, and age group perhaps.
singleshot_ 3y ago
> It could even be extended to give preference to people who have established residency in a region Not consistent with the Constitution. If you take a peek at the Privileges and Immunities clause of Article IV and the associated case law you will see we are all allowed to move to new States and be on “equal footing” with residents of that state after a reasonable delay.
ompogUe 3y ago
Canada started doing this this year: non-citizens cannot buy residential properties for 2 years: https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/consultations/prohibition-purchase-residential-property-non-canadians-act https://www.cmhc-schl.gc.ca/professionals/housing-markets-da...
- singleshot_ 3y ago
  …in certain areas which could generally be characterized as “urban”, meaning outside of census agglomerations or whatever they call them in Canada, houses are fair game.
  - ompogUe 3y ago
    aha - good to know, thank you! Makes sense - huge prices for junk in Vancouver or Toronto, while mansions in outport Nova Scotia are empty and towns in Newfoundland are forced to resettle.
WirelessGigabit 3y ago
Phoenix, AZ?

by zer8k 3y ago

grecy 3y ago

Even better would be stopping any entity other than a real person from owning residential property. Companies can invest in and profit from commercial real estate. Leave houses for people.

tenebrisalietum 3y ago
This would likely over time make apartment complexes the number one thing built in residential zones, since there's probably no way to not have companies/businesses owning apartment complexes.
- bonestamp2 3y ago
  That might be fine because that's probably what the market needs most right now. The law can be changed later if it's having a negative effect.
  - brailsafe 3y ago
    Ya I'd be perfectly fine with this, though it's a pretty superficial suggestion with all kinds of externalities to consider.
- grecy 3y ago
  Then just have individual people own individual apartments. Easy enough.

AequitasOmnibus 3y ago

If we’re talking about ideal housing policies, why not extend it to say that individuals seeking primary residence should get priority over investors or secondary purchasers. AirBNB operators are just as predatory if not more in these markets than non-citizens.

cstejerean 3y ago
How would you implement "get priority"? I think there's already some prioritization in terms of being easier to get loans for a primary residence, and better tax treatment, etc. But I'm not sure how you'd prevent an investor from outbidding an individual looking to buy a primary residence. You'd have to force the seller to accept a worse offer, and even if such a law was passed I don't think it would survive scrutiny from the courts.
- AequitasOmnibus 3y ago
  I think the easiest way would be to change local property taxes in a way that disincentivizes investors. For example: a “cap” on property taxes for purchasers who declare the home as their primary residence, and a substantially higher tax rate for secondary homes that compounds per home owned by the investor in the jurisdiction (e.g. Primary Resident owner gets capped property taxes at 3% while AirBNB investor who owns 4 homes would get taxed at 15% on investment house 1, 30% on house 2, 45% on house 3 and 60% on house 4).
  - muro 3y ago
    You could still have each property be a primary residence for a different family member, but it might still help.
  - ke88y 3y ago
    If you are going to do this, it needs to be paired with price controls on rental housing. Otherwise the expense is passed on and becomes a de facto regressive tax on (usually poor) renters. With respect to short term rentals in particular, outright bans are the easiest and most effective policy. Some cities allow for 30 days of short-term renting as long as the unit is a primary residence for the property owner for the other 335 days of the year. I think that's a fair compromise that achieves the ostensible goal of the "sharing economy" without hotel-ifying the entire city's housing stock.

tycho-newman 3y ago

[dead]

darth_avocado 3y ago

> It could even be extended to give preference to people who have established residency in a region How do you propose establishing residency if you cannot buy a house? Be forced to rent even if you can buy a house? Basically what you’re proposing if citizens not being able to have mobility in the country. If you’re born in the economic centers or scenic places, good for you, but in case you were born in middle of Montana, good luck because you can’t go anywhere else.

ke88y 3y ago
No, no need to rent. The solution is pretty trivial, and even battle-tested because the problem has already been solved for mortgages (lenders really care whether a piece of property is your primary residence) and for income tax (your primary residence really matters). Simply require people to attest that they are purchasing the property as their primary residence, with significant penalties for fraud. You can make enforcement and public accountability even easier by ublishing both owner info and a boolean "is_primary_residence" flag in every county's plat maps/parcel database. I suggest lawmakers could additionally add an x-month grace period, for x =~ 3*<average time on market for like properties in the past 12 months>, which allows people to have a generous period of overlapping ownership while they are moving. Perhaps even allow an auto-appeal process that adds x more time if you can show that you listed the property for sale at around the assessed value and had no offers within say 10% of your asking price.

baja_blast 3y ago

I say a worse problem than foreigners buying real estate is large private equity groups like Blackstone buying up homes across the country and turning them into rentals.

sanp 3y ago
So, maybe this is to ensure that foreign buyers do not compete with PE?
moate 3y ago
Exactly. I could give a fuck who owns the houses in an area, as long as it's lots of individuals vs a single mega-corp that can then singlehandedly influence inventory and pricing.
brailsafe 3y ago
I think it's more like foreign private equity firms, local private real estate investment trusts, local private equity firms, foreign individuals with money that came from _somewhere_, and then local individuals with boomer parents' money, depending on country, area, and age group perhaps.

singleshot_ 3y ago

> It could even be extended to give preference to people who have established residency in a region Not consistent with the Constitution. If you take a peek at the Privileges and Immunities clause of Article IV and the associated case law you will see we are all allowed to move to new States and be on “equal footing” with residents of that state after a reasonable delay.

ompogUe 3y ago

Canada started doing this this year: non-citizens cannot buy residential properties for 2 years: https://www.cmhc-schl.gc.ca/professionals/housing-markets-data-and-research/housing-research/consultations/prohibition-purchase-residential-property-non-canadians-act https://www.cmhc-schl.gc.ca/professionals/housing-markets-da...

singleshot_ 3y ago
…in certain areas which could generally be characterized as “urban”, meaning outside of census agglomerations or whatever they call them in Canada, houses are fair game.
- ompogUe 3y ago
  aha - good to know, thank you! Makes sense - huge prices for junk in Vancouver or Toronto, while mansions in outport Nova Scotia are empty and towns in Newfoundland are forced to resettle.

WirelessGigabit 3y ago

Phoenix, AZ?