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Investors snagged 1 in 5 homes for sale in Boston area, worsening housing crisis

56 points by ilamont 3y ago

annoyingnoob 3y ago
I don't live in Boston. I put my house up for sale a week ago, the first offer is from an investor.
- sethammons 3y ago
  I don't live in Boston. We received one offer on our house that they later rescinded (after being on contract for a few weeks, effectively blocking other potentially interested parties during the summer). After that, no offers. We were selling at around half the cost-per-square foot of everyone else in the area. Now the house is off the market and we apparently have a vacation home. Just saying, while some areas are crazy hot, some are not.
  - annoyingnoob 3y ago
    There seems to be interest. This offer came from one of my neighbors that already owns 2 or 3 houses on the street.
  - JoeAltmaier 3y ago
    Not sure how exactly an offer rescinded cost you? Wasn't there earnest money involved?
Bostonian 3y ago
I think the common perception that investors make housing unaffordable is wrong. Investors want rent-paying tenants and have an incentive to build, maintain, and upgrade housing. Here is the abstract of a recent working paper "The Impact of Institutional Investors on Homeownership and Neighborhood Access" https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4554831 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4554831 'I estimate a demand system to study the effects of institutional investors’ conversion of large fractions of owner-occupied housing into rentals in the suburbs of US cities. I find the purchases and subsequent conversions of houses resulted in a tradeoff between homeowners and renters. Institutional investors decreased the housing available for owner-occupancy by 30% of the homes they converted, and their demand shock raised the price of housing in a census PUMA by 7.4pp per 1pp of housing they purchased. Higher prices made it harder for people to buy homes. However, the institutional investors increased the supply of homes available for renter occupancy by 69% of the houses they converted, and lowered rents by 2.3pp per 1pp of housing they purchased. The increase in the supply of rental housing allowed the financially constrained to move into neighborhoods that previously had few rental units. The people who moved into institutional investor-owned homes had lower incomes, a lower likelihood of having a bachelor’s degree, were more likely to be white, came from areas with worse historic economic mobility, and came from areas with lower school test scores than others who moved into the same census tracts. The findings suggest that institutional investors made it harder for people to purchase homes, but easier for renters to access neighborhoods that previously had few rentals.'
- sys32768 3y ago
  Most of the investment houses in my area are used as vacation rentals for half the year, so they're only for rent at market price to tenants about six months out of the year.
  - gloryjulio 3y ago
    The resolution is simple, crack down hard on short term rentals and empty homes , ensure that only long term rentals or the owners who actually live in the house are allowed. or u have to pay a huge monthly tax or fine Then the next step is to build like a crazy. The only way to cull the demand is to actually meet the demand. Just make the investment as unappealing as possible. Whether these can be put into practice, that's another story
    - fiddlerwoaroof 3y ago
      I wonder how demographics play into this: if the median current homeowner (primary residence) age is close enough to the median age people die or go into assisted living facilities, then we might see market conditions change drastically in various parts of the country.
    - creer 3y ago
      Also that you cannot have both that and the tourism industry that this area - presumably - partly lives from. You might say "but hotels" but these short term rentals are being rented because they are wanted.
      - gloryjulio 3y ago
        Hotel is just more regulated short termed rental, which is exactly what we should be doing - regulate the short rentals home more, make it economically inappealling. The tourists can pay for the hotels
        candiodari 3y ago
efitz 3y ago
https://archive.ph/ndoUh https://archive.ph/ndoUh
TehShrike 3y ago
If the house rental market is clearing, and the house ownership market is clearing, it's difficult to take the premise of the article very seriously.
- nerdponx 3y ago
  Why would that be the case? This is an issue of allocation, you can't read that off of aggregate supply and demand curves.
  - TehShrike 3y ago
    If the rental market is clearing, and the ownership market is clearing, that means that the same number of houses are being lived in as there were before the houses were sold. If there aren't enough houses for people to live in as the market could bear, that's an issue of building more houses, not who owns the current houses.
    - nerdponx 3y ago
      > If the rental market is clearing, and the ownership market is clearing, that means that the same number of houses are being lived in as there were before the houses were sold. It's not just about the number of homes. It's also about the prices of those homes. The crisis is not necessarily that people literally can't find a place to rent; it's that they can't afford it.
      - TehShrike 3y ago
        The price of renting/buying is a function of the number of houses available more than it is the type of entity that owns the houses.
        nerdponx 3y ago
        The article clearly posits that investor-owners tend to charge more than other owners, either in resale price or rent, disproportionate to the value of the improvements they make to the property. That is, the article asserts that investor-owned properties cost more than non-investor-owned properties. Maybe the analysis in the underlying report is flawed (and it very likely could be), but that's the claim. It's not a claim about what might happen, it's a claim about what is happening.
xt00 3y ago
Has there been a writeup on Vancouver BC and their taxes / rules etc they've imposed and outcomes? Would be interesting to know if that has moved the needle at all? It would be also interesting to understand how we could differentiate between "I'm buying a house to live in for a pile of money and hope that at worst it's price follows inflation so that my large pile of money does not devalue.." vs. "I'm an medium to large size investment company that purchases your house with the goal of making it an airbnb or doing some minimal level of work to spruce up the house to then rent out to corporate housing for a local big-tech company down the street for 8k per month"..
- spamizbad 3y ago
  https://wowa.ca/vancouver-housing-market https://wowa.ca/vancouver-housing-market Doesn't seem like it really had much of an effect.
  - mjr00 3y ago
    The fact that anything is decreasing at all, when prices were continually increasing 20% YoY for a decade, is definitely an effect.
beaeglebeach 3y ago
I am mixing one 60 pound concrete bag at a time from the ground up to avoid this insanity from all sides. Fuck the investors, fuck the homeowners, fuck the landlords, fuck the general contractors, and fuck the legislators who pass zoning and codes.
- snakeyjake 3y ago
  >fuck the legislators who pass zoning and codes. I've been a volunteer firefighter for almost 20 years and have seen the results of the work of people who think they know better than building codes many times. And I thank my lucky stars every day that I live in a place with strict zoning, unlike Texas where an oil refinery can be located adjacent to high-density housing.
  - beaeglebeach 3y ago
    Cool, I am building to code but I never could have built to code if it were required, because I have a day job and no time for inspections. So I built without code inspections. My experience is I know far more of the code than average volunteer firefighter who has probably never even looked at them, although perhaps not you.
    - techsupporter 3y ago
      > So I built without code inspections. Building code and its associated inspections aren't, primarily, for you. They're for the people around you and the people who come after you. You might be the greatest builder on the planet. I, as the tenant or owner who lives in the structure after you, have no way of knowing that absent you following the process that says a separate entity confirmed that you built a safe structure. I, as your neighbor two parcels down, have no way of knowing that you did or didn't build a building that is likely to burn down and take half of the area with it. To head off what I'm sure is the inevitable reply along the lines of "I will live in this house until I die" and/or "there is no one around me for the next 100 miles", that's fine, but those are situations that can change. Code, and having the inspection, confirms that you did what society asked of you to keep the rest of us safe. (Is the building code and its associated inspections fallible? Absolutely. But deliberately flaunting them because you just didn't have time is similarly not an excuse.)
tempnow987 3y ago
Investors are banking on the idea in part that the governments will make it hard for others to compete with them by restricting new housing. Not a super bad bet. At least in the bay area the layer of regulations and hoop jumping is very very daunting. Plenty of "funny" stories - all of which mean that it's very very very hard to build new housing at any meaningful scale for reasonable costs. Boston likely has many of the same factors. Investors want barriers to competition - and governments and taxpayers provide it.
toomuchtodo 3y ago
https://medium.com/@chrisjeffrieshomelessromantic/report-44-of-all-single-family-home-purchases-were-by-private-equity-firms-in-2023-0c0ff591a701 https://medium.com/@chrisjeffrieshomelessromantic/report-44-... ("Report: 44% of all Single-Family Home Purchases were by Private Equity Firms in 2023")
saghm 3y ago
I grew up in a suburb not far from Boston, and my parents still live in the house I grew up in. Somehow some real estate database got my email in it associated with my parents address, so I occasionally get emails addressed to my father asking if he's interested in selling the house, which is amusing since my email is in the format lastname.firstname.middleinitial@<provider>, and my father's first name is not the same as my own or even beginning with my middle initial (not that even a human would necessarily come to the conclusion that the data was wrong, let alone an email bot). It sounds like this might have been coming from a private investor like the article describes. I sometimes joke with my parents that they should hope the offer isn't too good or I might take them up on it someday!
disillusioned 3y ago
The rallying cry of Georgists is "land value tax would solve this," and at least in Detroit, they're looking to try it. The concept is a very interesting one, but I think that the overarching shift towards institutional mega-REIT ownership of a significant portion of housing inventory, coupled with the obvious pervasive NIMBYism against density, continues to exacerbate the ability for basically anyone truly middle-class or below, to ever actually be able to buy a home. NYT has a great piece on the Georgist approach being considered in Detroit: https://www.nytimes.com/2023/11/12/business/georgism-land-tax-housing.html?unlocked_article_code=1.DU0.CxAF.p5OZQGmwbnDr&smid=url-share https://www.nytimes.com/2023/11/12/business/georgism-land-ta... Here's The Economist's short summary as well: https://www.economist.com/united-states/2023/10/05/detroit-wants-to-be-the-first-big-american-city-to-tax-land-value https://www.economist.com/united-states/2023/10/05/detroit-w... They also had a piece about how in Switzerland, essentially no one new is able to purchase a home, so it's become a nation of renters: https://www.nytimes.com/2023/11/06/realestate/zurich-switzerland-renting-homes.html?unlocked_article_code=1.DU0.VKA8.YD8-yQ_fYmp_&smid=url-share https://www.nytimes.com/2023/11/06/realestate/zurich-switzer...
- troupe 3y ago
  "at least in Detroit, they're looking to try it." Is Detroit a place with a really tight housing market? It wasn't that long ago that neighbors were offering potential purchasers of near by houses dinner every week for a year to encourage them to go ahead and buy it because they didn't want more empty houses on their block.
  - AnimalMuppet 3y ago
    Lovely. "A place that doesn't have the problems Georgism is designed to solve is planning to test Georgism." That's going to make it close to a meaningless experiment. [Edit: Including politically meaningless. No matter what happens, one side or the other will use "wrong circumstances" as an escape hatch to deny the general applicability of the results.]
  - tivert 3y ago
    First two paragraphs of TFA: > When Mayor Mike Duggan talks about his accomplishments in Detroit, the list is both impressive and sad. He had the streetlights turned back on, and reopened closed parks. In the decade since he took office, the city has demolished some 25,000 blighted homes whose rusty debris and incubation of crime drag down neighborhoods. > The progress would be even greater, the mayor argues, if the city hadn’t been smothered by speculation. In the years after the Great Recession, tens of thousands of Detroit properties were bought by absentee landlords and faceless LLCs. The owners are so negligent and hard to find that the city mows their lawns without asking.
xnx 3y ago
This article is based on a report by "Metropolitan Area Planning Council". All of their goals ("sustainable land use, protection of natural resources, efficient and affordable transportation, a diverse housing stock...") are admirable, but are also things that increase the cost of housing.
- nerdponx 3y ago
  How does efficient and affordable transportation increase the cost of housing? It should be pretty clear that this decreases the cost of housing, by allowing people to live in a larger physical area. How does a diverse housing stock increase the cost of housing? When there's only a limited variety of housing available, competition for the less-available variety becomes intense and prices go through the roof. This is currently what's happening with smaller, older single-family homes.
  - xnx 3y ago
    It does seem counter intuitive. > How does efficient and affordable transportation increase the cost of housing? I'm not familiar enough with this organization, but "efficient and affordable transportation" is sometimes a euphemism for anti-car policies. > How does a diverse housing stock increase the cost of housing? Again, the specific positions can change everything, but this could mean opposing 5-over-1 development because there's "too much" already.
JoeAltmaier 3y ago
Confused: are the houses empty? No? Then they've had no impact on a housing crisis.
- jeffbee 3y ago
  There's just a vocal contingent of left politics who believe that what the people secretly crave is socialism, that tenants don't want merely shelter at a fair price but the elimination of property as a concept altogether, and this contingent has plenty of overlap with press reporters.
  - nerdponx 3y ago
    It's clear that you've never talked to any leftist about this, because what you're likely to hear is an argument that everyone should have the right to own their own home (yes, as private property). Are there are a lot of practical problems with a world that truly has no landlords? Of course. But it does you no good to make stuff up about a school of thought you clearly know nothing about and have never attempted to engage with.
    - jeffbee 3y ago
      You must be phoning this in from a different planet, or at least some other country. It is a plank of the DSA policy platform that only "social housing" be allowed to be built.
      - yuppie_scum 3y ago
        You’re really reaching here Jeff.
- nerdponx 3y ago
  This is a glib non-analysis that attempts to dismiss a legitimate and non-trivial problem. It's as much about prices as it is about quantity. The houses and rental units are there, they're just really expensive as a % of income.
bryanlarsen 3y ago
More than 1 in 5 people living in Boston rent. Virtually everybody who is renting rents from an investor. So this stat implies that the owner-occupier share is going up and the rental share is going down, which means that it should be pushing housing prices down and rental prices up.
RivieraKid 3y ago
I've been thinking about some kind of a model of the real estate market that would be able to explain past prices and estimate future prices based on several factors that change in time: current interest rates, expected future interest rates, disposable income, demographics, urbanization (people moving to cities), cost of building new houses, regulation, taxes. Maybe something like this already exists...
jeffbee 3y ago
This questionable analysis relies on the viewpoint that if an LLC owns a triplex, it is "investors", even if the owner lives there. This is simplistic, as well as stupid.
- sharkjacobs 3y ago
  Why would someone own their home through an LLC if it wasn't an investment property? What difference does it make if they live there?
- deleted 3y ago
  [deleted]
screye 3y ago
A: Investors snagged 1 in 5 homes for sale in Boston area B: worsening housing crisis 'A' does not lead to 'B'. Investors are money chasers. They will pursue gains where the system shows potential for gains. That simple. With the large amount of temporary residents (students & researchers) in Boston, it is the perfect city for corporate rental properties. American cities are woefully under-built. Boston is especially primed for further densification, because it has the infrastructure (other than the current MBTA hiccup) and walkability to scale up with more people. Sadly, the US treats houses as an odd combination of emotional-basic-need and investment. It would've been fine if it was one or the other. The emotional-basic-need part of it allows local individuals to exercise more control on housing in their neighborhood than would be allowed for any other tradeable-investment. The investment part of it leads to the expectations of prices needing to always go up. So you get high upside, and protection from downside at the expense of everyone who isn't a home owner. Investors exploit this dissonance, but it is entirely on the administration for allowing it to exist in the first place. If housing height limits were eased & housing regulations were relaxed (2 fire exits in every building, parking minimum, ""environmental certifications""), then these investors would only be able to make money off thin margins by predicting demand. (like commodity trading). But instead, the US gives unjustifiably oppressive privileges to all homeowners including large investing companies, and now, we're seeing the natural results of it.
- TheCleric 3y ago
  A does not ALWAYS lead to B, but if the area has a scarcity of housing, then it will. Here's the basic logic in my head: We'll say the total cost of available housing in an area is H. These investors now own 0.2H They will then do one of 2 things: Either put the housing back on the market for more than they paid (they are investors after all). We'll say they want to make P% profit. So the cost of the housing that was .2 * H is now .2 * H * (1 + P/100) = .2 * H + P * H / 5. So now the total cost of available housing has gone up, meaning that any housing difficulties are now worse. The other alternative is even more bleak. The investors buy the housing, and then hold on to it (without renting it) in hopes of making something higher than P% at a future date. We now have 0-20% less housing on the market, which means that housing difficulties are now worse. No matter how you slice it, injecting investors (i.e., middle men) into a scarce market will only ever increase cost or scarcity.

56 points by ilamont 3y ago

annoyingnoob 3y ago

I don't live in Boston. I put my house up for sale a week ago, the first offer is from an investor.

sethammons 3y ago
I don't live in Boston. We received one offer on our house that they later rescinded (after being on contract for a few weeks, effectively blocking other potentially interested parties during the summer). After that, no offers. We were selling at around half the cost-per-square foot of everyone else in the area. Now the house is off the market and we apparently have a vacation home. Just saying, while some areas are crazy hot, some are not.
- annoyingnoob 3y ago
  There seems to be interest. This offer came from one of my neighbors that already owns 2 or 3 houses on the street.
- JoeAltmaier 3y ago
  Not sure how exactly an offer rescinded cost you? Wasn't there earnest money involved?

Bostonian 3y ago

I think the common perception that investors make housing unaffordable is wrong. Investors want rent-paying tenants and have an incentive to build, maintain, and upgrade housing. Here is the abstract of a recent working paper "The Impact of Institutional Investors on Homeownership and Neighborhood Access" https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4554831 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4554831 'I estimate a demand system to study the effects of institutional investors’ conversion of large fractions of owner-occupied housing into rentals in the suburbs of US cities. I find the purchases and subsequent conversions of houses resulted in a tradeoff between homeowners and renters. Institutional investors decreased the housing available for owner-occupancy by 30% of the homes they converted, and their demand shock raised the price of housing in a census PUMA by 7.4pp per 1pp of housing they purchased. Higher prices made it harder for people to buy homes. However, the institutional investors increased the supply of homes available for renter occupancy by 69% of the houses they converted, and lowered rents by 2.3pp per 1pp of housing they purchased. The increase in the supply of rental housing allowed the financially constrained to move into neighborhoods that previously had few rental units. The people who moved into institutional investor-owned homes had lower incomes, a lower likelihood of having a bachelor’s degree, were more likely to be white, came from areas with worse historic economic mobility, and came from areas with lower school test scores than others who moved into the same census tracts. The findings suggest that institutional investors made it harder for people to purchase homes, but easier for renters to access neighborhoods that previously had few rentals.'

sys32768 3y ago
Most of the investment houses in my area are used as vacation rentals for half the year, so they're only for rent at market price to tenants about six months out of the year.
- gloryjulio 3y ago
  The resolution is simple, crack down hard on short term rentals and empty homes , ensure that only long term rentals or the owners who actually live in the house are allowed. or u have to pay a huge monthly tax or fine Then the next step is to build like a crazy. The only way to cull the demand is to actually meet the demand. Just make the investment as unappealing as possible. Whether these can be put into practice, that's another story
  - fiddlerwoaroof 3y ago
    I wonder how demographics play into this: if the median current homeowner (primary residence) age is close enough to the median age people die or go into assisted living facilities, then we might see market conditions change drastically in various parts of the country.
  - creer 3y ago
    Also that you cannot have both that and the tourism industry that this area - presumably - partly lives from. You might say "but hotels" but these short term rentals are being rented because they are wanted.
    - gloryjulio 3y ago
      Hotel is just more regulated short termed rental, which is exactly what we should be doing - regulate the short rentals home more, make it economically inappealling. The tourists can pay for the hotels
      - candiodari 3y ago

efitz 3y ago

https://archive.ph/ndoUh https://archive.ph/ndoUh

TehShrike 3y ago

If the house rental market is clearing, and the house ownership market is clearing, it's difficult to take the premise of the article very seriously.

nerdponx 3y ago
Why would that be the case? This is an issue of allocation, you can't read that off of aggregate supply and demand curves.
- TehShrike 3y ago
  If the rental market is clearing, and the ownership market is clearing, that means that the same number of houses are being lived in as there were before the houses were sold. If there aren't enough houses for people to live in as the market could bear, that's an issue of building more houses, not who owns the current houses.
  - nerdponx 3y ago
    > If the rental market is clearing, and the ownership market is clearing, that means that the same number of houses are being lived in as there were before the houses were sold. It's not just about the number of homes. It's also about the prices of those homes. The crisis is not necessarily that people literally can't find a place to rent; it's that they can't afford it.
    - TehShrike 3y ago
      The price of renting/buying is a function of the number of houses available more than it is the type of entity that owns the houses.
      - nerdponx 3y ago
        The article clearly posits that investor-owners tend to charge more than other owners, either in resale price or rent, disproportionate to the value of the improvements they make to the property. That is, the article asserts that investor-owned properties cost more than non-investor-owned properties. Maybe the analysis in the underlying report is flawed (and it very likely could be), but that's the claim. It's not a claim about what might happen, it's a claim about what is happening.

xt00 3y ago

Has there been a writeup on Vancouver BC and their taxes / rules etc they've imposed and outcomes? Would be interesting to know if that has moved the needle at all? It would be also interesting to understand how we could differentiate between "I'm buying a house to live in for a pile of money and hope that at worst it's price follows inflation so that my large pile of money does not devalue.." vs. "I'm an medium to large size investment company that purchases your house with the goal of making it an airbnb or doing some minimal level of work to spruce up the house to then rent out to corporate housing for a local big-tech company down the street for 8k per month"..

spamizbad 3y ago
https://wowa.ca/vancouver-housing-market https://wowa.ca/vancouver-housing-market Doesn't seem like it really had much of an effect.
- mjr00 3y ago
  The fact that anything is decreasing at all, when prices were continually increasing 20% YoY for a decade, is definitely an effect.

beaeglebeach 3y ago

I am mixing one 60 pound concrete bag at a time from the ground up to avoid this insanity from all sides. Fuck the investors, fuck the homeowners, fuck the landlords, fuck the general contractors, and fuck the legislators who pass zoning and codes.

snakeyjake 3y ago
>fuck the legislators who pass zoning and codes. I've been a volunteer firefighter for almost 20 years and have seen the results of the work of people who think they know better than building codes many times. And I thank my lucky stars every day that I live in a place with strict zoning, unlike Texas where an oil refinery can be located adjacent to high-density housing.
- beaeglebeach 3y ago
  Cool, I am building to code but I never could have built to code if it were required, because I have a day job and no time for inspections. So I built without code inspections. My experience is I know far more of the code than average volunteer firefighter who has probably never even looked at them, although perhaps not you.
  - techsupporter 3y ago
    > So I built without code inspections. Building code and its associated inspections aren't, primarily, for you. They're for the people around you and the people who come after you. You might be the greatest builder on the planet. I, as the tenant or owner who lives in the structure after you, have no way of knowing that absent you following the process that says a separate entity confirmed that you built a safe structure. I, as your neighbor two parcels down, have no way of knowing that you did or didn't build a building that is likely to burn down and take half of the area with it. To head off what I'm sure is the inevitable reply along the lines of "I will live in this house until I die" and/or "there is no one around me for the next 100 miles", that's fine, but those are situations that can change. Code, and having the inspection, confirms that you did what society asked of you to keep the rest of us safe. (Is the building code and its associated inspections fallible? Absolutely. But deliberately flaunting them because you just didn't have time is similarly not an excuse.)

tempnow987 3y ago

Investors are banking on the idea in part that the governments will make it hard for others to compete with them by restricting new housing. Not a super bad bet. At least in the bay area the layer of regulations and hoop jumping is very very daunting. Plenty of "funny" stories - all of which mean that it's very very very hard to build new housing at any meaningful scale for reasonable costs. Boston likely has many of the same factors. Investors want barriers to competition - and governments and taxpayers provide it.

toomuchtodo 3y ago

https://medium.com/@chrisjeffrieshomelessromantic/report-44-of-all-single-family-home-purchases-were-by-private-equity-firms-in-2023-0c0ff591a701 https://medium.com/@chrisjeffrieshomelessromantic/report-44-... ("Report: 44% of all Single-Family Home Purchases were by Private Equity Firms in 2023")

saghm 3y ago

I grew up in a suburb not far from Boston, and my parents still live in the house I grew up in. Somehow some real estate database got my email in it associated with my parents address, so I occasionally get emails addressed to my father asking if he's interested in selling the house, which is amusing since my email is in the format lastname.firstname.middleinitial@<provider>, and my father's first name is not the same as my own or even beginning with my middle initial (not that even a human would necessarily come to the conclusion that the data was wrong, let alone an email bot). It sounds like this might have been coming from a private investor like the article describes. I sometimes joke with my parents that they should hope the offer isn't too good or I might take them up on it someday!

disillusioned 3y ago

The rallying cry of Georgists is "land value tax would solve this," and at least in Detroit, they're looking to try it. The concept is a very interesting one, but I think that the overarching shift towards institutional mega-REIT ownership of a significant portion of housing inventory, coupled with the obvious pervasive NIMBYism against density, continues to exacerbate the ability for basically anyone truly middle-class or below, to ever actually be able to buy a home. NYT has a great piece on the Georgist approach being considered in Detroit: https://www.nytimes.com/2023/11/12/business/georgism-land-tax-housing.html?unlocked_article_code=1.DU0.CxAF.p5OZQGmwbnDr&smid=url-share https://www.nytimes.com/2023/11/12/business/georgism-land-ta... Here's The Economist's short summary as well: https://www.economist.com/united-states/2023/10/05/detroit-wants-to-be-the-first-big-american-city-to-tax-land-value https://www.economist.com/united-states/2023/10/05/detroit-w... They also had a piece about how in Switzerland, essentially no one new is able to purchase a home, so it's become a nation of renters: https://www.nytimes.com/2023/11/06/realestate/zurich-switzerland-renting-homes.html?unlocked_article_code=1.DU0.VKA8.YD8-yQ_fYmp_&smid=url-share https://www.nytimes.com/2023/11/06/realestate/zurich-switzer...

troupe 3y ago
"at least in Detroit, they're looking to try it." Is Detroit a place with a really tight housing market? It wasn't that long ago that neighbors were offering potential purchasers of near by houses dinner every week for a year to encourage them to go ahead and buy it because they didn't want more empty houses on their block.
- AnimalMuppet 3y ago
  Lovely. "A place that doesn't have the problems Georgism is designed to solve is planning to test Georgism." That's going to make it close to a meaningless experiment. [Edit: Including politically meaningless. No matter what happens, one side or the other will use "wrong circumstances" as an escape hatch to deny the general applicability of the results.]
- tivert 3y ago
  First two paragraphs of TFA: > When Mayor Mike Duggan talks about his accomplishments in Detroit, the list is both impressive and sad. He had the streetlights turned back on, and reopened closed parks. In the decade since he took office, the city has demolished some 25,000 blighted homes whose rusty debris and incubation of crime drag down neighborhoods. > The progress would be even greater, the mayor argues, if the city hadn’t been smothered by speculation. In the years after the Great Recession, tens of thousands of Detroit properties were bought by absentee landlords and faceless LLCs. The owners are so negligent and hard to find that the city mows their lawns without asking.

xnx 3y ago

This article is based on a report by "Metropolitan Area Planning Council". All of their goals ("sustainable land use, protection of natural resources, efficient and affordable transportation, a diverse housing stock...") are admirable, but are also things that increase the cost of housing.

nerdponx 3y ago
How does efficient and affordable transportation increase the cost of housing? It should be pretty clear that this decreases the cost of housing, by allowing people to live in a larger physical area. How does a diverse housing stock increase the cost of housing? When there's only a limited variety of housing available, competition for the less-available variety becomes intense and prices go through the roof. This is currently what's happening with smaller, older single-family homes.
- xnx 3y ago
  It does seem counter intuitive. > How does efficient and affordable transportation increase the cost of housing? I'm not familiar enough with this organization, but "efficient and affordable transportation" is sometimes a euphemism for anti-car policies. > How does a diverse housing stock increase the cost of housing? Again, the specific positions can change everything, but this could mean opposing 5-over-1 development because there's "too much" already.

JoeAltmaier 3y ago

Confused: are the houses empty? No? Then they've had no impact on a housing crisis.

jeffbee 3y ago
There's just a vocal contingent of left politics who believe that what the people secretly crave is socialism, that tenants don't want merely shelter at a fair price but the elimination of property as a concept altogether, and this contingent has plenty of overlap with press reporters.
- nerdponx 3y ago
  It's clear that you've never talked to any leftist about this, because what you're likely to hear is an argument that everyone should have the right to own their own home (yes, as private property). Are there are a lot of practical problems with a world that truly has no landlords? Of course. But it does you no good to make stuff up about a school of thought you clearly know nothing about and have never attempted to engage with.
  - jeffbee 3y ago
    You must be phoning this in from a different planet, or at least some other country. It is a plank of the DSA policy platform that only "social housing" be allowed to be built.
    - yuppie_scum 3y ago
      You’re really reaching here Jeff.
nerdponx 3y ago
This is a glib non-analysis that attempts to dismiss a legitimate and non-trivial problem. It's as much about prices as it is about quantity. The houses and rental units are there, they're just really expensive as a % of income.

bryanlarsen 3y ago

More than 1 in 5 people living in Boston rent. Virtually everybody who is renting rents from an investor. So this stat implies that the owner-occupier share is going up and the rental share is going down, which means that it should be pushing housing prices down and rental prices up.

RivieraKid 3y ago

I've been thinking about some kind of a model of the real estate market that would be able to explain past prices and estimate future prices based on several factors that change in time: current interest rates, expected future interest rates, disposable income, demographics, urbanization (people moving to cities), cost of building new houses, regulation, taxes. Maybe something like this already exists...

jeffbee 3y ago

This questionable analysis relies on the viewpoint that if an LLC owns a triplex, it is "investors", even if the owner lives there. This is simplistic, as well as stupid.

sharkjacobs 3y ago
Why would someone own their home through an LLC if it wasn't an investment property? What difference does it make if they live there?
deleted 3y ago
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screye 3y ago

A: Investors snagged 1 in 5 homes for sale in Boston area B: worsening housing crisis 'A' does not lead to 'B'. Investors are money chasers. They will pursue gains where the system shows potential for gains. That simple. With the large amount of temporary residents (students & researchers) in Boston, it is the perfect city for corporate rental properties. American cities are woefully under-built. Boston is especially primed for further densification, because it has the infrastructure (other than the current MBTA hiccup) and walkability to scale up with more people. Sadly, the US treats houses as an odd combination of emotional-basic-need and investment. It would've been fine if it was one or the other. The emotional-basic-need part of it allows local individuals to exercise more control on housing in their neighborhood than would be allowed for any other tradeable-investment. The investment part of it leads to the expectations of prices needing to always go up. So you get high upside, and protection from downside at the expense of everyone who isn't a home owner. Investors exploit this dissonance, but it is entirely on the administration for allowing it to exist in the first place. If housing height limits were eased & housing regulations were relaxed (2 fire exits in every building, parking minimum, ""environmental certifications""), then these investors would only be able to make money off thin margins by predicting demand. (like commodity trading). But instead, the US gives unjustifiably oppressive privileges to all homeowners including large investing companies, and now, we're seeing the natural results of it.

TheCleric 3y ago
A does not ALWAYS lead to B, but if the area has a scarcity of housing, then it will. Here's the basic logic in my head: We'll say the total cost of available housing in an area is H. These investors now own 0.2H They will then do one of 2 things: Either put the housing back on the market for more than they paid (they are investors after all). We'll say they want to make P% profit. So the cost of the housing that was .2 * H is now .2 * H * (1 + P/100) = .2 * H + P * H / 5. So now the total cost of available housing has gone up, meaning that any housing difficulties are now worse. The other alternative is even more bleak. The investors buy the housing, and then hold on to it (without renting it) in hopes of making something higher than P% at a future date. We now have 0-20% less housing on the market, which means that housing difficulties are now worse. No matter how you slice it, injecting investors (i.e., middle men) into a scarce market will only ever increase cost or scarcity.