5 ms·

Why is that relevant? It's not as if those properties remain vacant, that wouldn't exactly make sense from the investor perspective. You've got excess demand o

by pxmpxm 3y ago

Why is that relevant? It's not as if those properties remain vacant, that wouldn't exactly make sense from the investor perspective. You've got excess demand over supply, so prices go up. Just like with anything else, the solution is to add more supply. Build more houses and prices of houses will go down.

chongli 3y ago
The investors aren't building the houses. They're not developers. They're speculators. They're the real estate equivalent of scalpers buying up all the Taylor Swift tickets and reselling at huge markups. Except they're doing it with shelter, a basic human need, rather than a luxury entertainment product.
- amadeuspagel 3y ago
  Developers build houses so that they can sell them, and use the proceeds to build the next house.
  - chongli 3y ago
    Houses aren't being built. We've had a huge reduction in construction essentially since 2008. This is why the scalper analogy fits: it's a largely fixed supply with skyrocketing demand and investors see it as a gold rush.
    - amadeuspagel 3y ago
      > Houses aren't being built. OK, that's the problem then. If enough houses were built there would be no speculation either, just as there's no speculation in cars.
      - mantas 3y ago
        The problem with houses is if you just build - it won't solve anything. They have to be built in desirable locations. But then you've to either replace existing buildings in there. Or you need to extend commuting infrastructure. And in either case you need to build/upgrade social infrastructure. Including workforce for it.
- pxmpxm 3y ago
  Prices of housing or tswift tickets aren't going up because investors/scalpers, they are going up because again there's excess demand versus supply. Your entire example is predicated on this very fact: scalpers cannot compel middle age white women to all the sudden want to attend a concert, same way investors cannot induce genz kids to want to move to vancouver. Make more houses or taylor swift tickets and the whole thing resolves itself.
rufus_foreman 3y ago
>> Why is that relevant? It was relevant to me, I was reading the other thread that dang brought up and it reminded me that I had read this article yesterday and it seemed like something that would be interesting to other people also which is why I posted it.
dang 3y ago
The intersection of "housing" and "Canada" makes these two topics basically identical from a HN discussion point of view. The appearance of one thread on HN's frontpage often leads to follow-up submissions on related topics. We try to avoid giving such article clusters more than one slot, because frontpage space is the scarcest resource HN has: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=by%3Adang%20scarce&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que.... Normally we downweight the follow-up (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=follow-up%20downweight&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...), but in this case I let the follow-up "win" because it has a slightly more neutral basis for discussion, and the topic is flame-prone to begin with.
tmnvix 3y ago
If they become short term rentals they essentially 'become vacant' (just one example of why an investment property might be 'vacant'). Obviously I'm not suggesting that all do, but some will. By definition an owner occupier doesn't own a vacant property - only investors do, so the higher the proportion of investors the higher the proportion of underutilised properties.
- pxmpxm 3y ago
  > an owner occupier doesn't own a vacant property - only investors do ... underutilised properties. They invariably get rented out; you won't make any money for places that sit vacant...
  - tmnvix 3y ago
    > you won't make any money for places that sit vacant... You do if capital gains are sufficient (which has been true in many markets up until very recently).
    - pxmpxm 3y ago
      Houses burn cash monthly - utilities, maintenance, taxes etc. Absent of misguided government interventions (nyc rent control etc), it makes no economic sense to leave a property vacant versus renting it. Even in your hypothetical, you're still strictly better off renting it while capturing the gains. The mostly-empty cities in China is about the only place that I know of where vacant properties are being held as investment, but even there the problem is lack of demand rather than anything to do with who owns it. This whole topic seems like a specialization of https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo...

by pxmpxm 3y ago

chongli 3y ago

The investors aren't building the houses. They're not developers. They're speculators. They're the real estate equivalent of scalpers buying up all the Taylor Swift tickets and reselling at huge markups. Except they're doing it with shelter, a basic human need, rather than a luxury entertainment product.

amadeuspagel 3y ago
Developers build houses so that they can sell them, and use the proceeds to build the next house.
- chongli 3y ago
  Houses aren't being built. We've had a huge reduction in construction essentially since 2008. This is why the scalper analogy fits: it's a largely fixed supply with skyrocketing demand and investors see it as a gold rush.
  - amadeuspagel 3y ago
    > Houses aren't being built. OK, that's the problem then. If enough houses were built there would be no speculation either, just as there's no speculation in cars.
    - mantas 3y ago
      The problem with houses is if you just build - it won't solve anything. They have to be built in desirable locations. But then you've to either replace existing buildings in there. Or you need to extend commuting infrastructure. And in either case you need to build/upgrade social infrastructure. Including workforce for it.
pxmpxm 3y ago
Prices of housing or tswift tickets aren't going up because investors/scalpers, they are going up because again there's excess demand versus supply. Your entire example is predicated on this very fact: scalpers cannot compel middle age white women to all the sudden want to attend a concert, same way investors cannot induce genz kids to want to move to vancouver. Make more houses or taylor swift tickets and the whole thing resolves itself.

rufus_foreman 3y ago

>> Why is that relevant? It was relevant to me, I was reading the other thread that dang brought up and it reminded me that I had read this article yesterday and it seemed like something that would be interesting to other people also which is why I posted it.

dang 3y ago

The intersection of "housing" and "Canada" makes these two topics basically identical from a HN discussion point of view. The appearance of one thread on HN's frontpage often leads to follow-up submissions on related topics. We try to avoid giving such article clusters more than one slot, because frontpage space is the scarcest resource HN has: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=by%3Adang%20scarce&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que.... Normally we downweight the follow-up (https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=follow-up%20downweight&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...), but in this case I let the follow-up "win" because it has a slightly more neutral basis for discussion, and the topic is flame-prone to begin with.

tmnvix 3y ago

If they become short term rentals they essentially 'become vacant' (just one example of why an investment property might be 'vacant'). Obviously I'm not suggesting that all do, but some will. By definition an owner occupier doesn't own a vacant property - only investors do, so the higher the proportion of investors the higher the proportion of underutilised properties.

pxmpxm 3y ago
> an owner occupier doesn't own a vacant property - only investors do ... underutilised properties. They invariably get rented out; you won't make any money for places that sit vacant...
- tmnvix 3y ago
  > you won't make any money for places that sit vacant... You do if capital gains are sufficient (which has been true in many markets up until very recently).
  - pxmpxm 3y ago
    Houses burn cash monthly - utilities, maintenance, taxes etc. Absent of misguided government interventions (nyc rent control etc), it makes no economic sense to leave a property vacant versus renting it. Even in your hypothetical, you're still strictly better off renting it while capturing the gains. The mostly-empty cities in China is about the only place that I know of where vacant properties are being held as investment, but even there the problem is lack of demand rather than anything to do with who owns it. This whole topic seems like a specialization of https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theorem https://en.wikipedia.org/wiki/Modigliani%E2%80%93Miller_theo...