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I don't know how regulators can look at this number of vacancies and conclude that yes, the taxation on property with vaccancies is as high as it should be.
by scotty79 3y ago
I don't know how regulators can look at this number of vacancies and conclude that yes, the taxation on property with vaccancies is as high as it should be.
- lotsofpulp 3y agoShould be a formula that keeps increasing the tax liability per empty month, so eventually the owner has to dump it for zero or give it back to the government.
- bluGill 3y agoYou want a number of empty units in your city so that if you want to move there is a place to move to. No empty units means someone does without. You don't want too many empty units of course. some is needed. this price fixing is partially about units not even for rent which is a different problem you don't want. (but you want some units not for rent while they remodel)
- screenobobeano 3y agoI am really a proponent of the Chinese system. I’m a real estate investor and this “free market” isn’t going to last much longer since owning vacant homes will net you more than virtually anything else you could do legally. Real Estate is a free money machine, and it won’t stop until we adopt realistic government controlled system.
- carom 3y agoWhat is the Chinese system?
- deleted 3y ago[deleted]
- trimethylpurine 3y agoThe Chinese system restricts foreign nation state actors from buying everything so they will not be able to do what China is doing to the US. The US has only just started writing policies to address that (for example: [1]), probably because for so many decades Americans wanted to believe that China was an ally, or at least a well meaning business partner. China proves that capitalism doesn't work by destroying it. [1] https://www.faegredrinker.com/en/insights/publications/2024/1/influx-of-state-statutes-regulating-foreign-ownership-of-us-real-estate https://www.faegredrinker.com/en/insights/publications/2024/...
- xbmcuser 3y agoChina is not doing anything to the US, western countries were willing to hide the black money of countries before as it helped their economies. As China and other countries got richer the amount of money those people started bringing and putting into the real estate of western cities in the world exploded. The property market crash of 2008 and low interest rates made the situation worse. Now people in the west are crying about property prices but if they stopped allowing in black money from countries they would not face the problem they do. If they can find out about terror financing etc then they for sure can find all the corruption and black money coming into their countries/cities.
- trimethylpurine 3y ago>China is not doing anything to the US In many cases the ownership has been traced to government funding. The suspicion is that these are just the tip of the iceberg. So, at least in the eyes of the US Congress, based on some damning evidence, China is doing something to the US. That said, "black money" is also a problem. But I suspect that's the case in China as well. There's no way to eliminate all corruption, even in China.
- pyr0hu 3y agoChina is doing the same in the EU. In european capitals, they are buying up the properties, increasing the rents and pushing out young couples from renting flats for a reasonable price. There are districts in Budapest where all flats are owned by chinese people. How does it help the EU economies, if they are leasing without contract, without tax, without anything illegally? They came every month, you pay in cash, no trace (but this applies to 99% of hungary renting, so it's the issue with the current rental system), they aren't even injecting money into the economy this way. And it's getting ridiculous that 26-28 year old people cannot rent a flat by themselves and have to resort to renting a single room only for 30-40% of their salaries.
- Auracle 3y agoReal estate will continue to be a good investment as long as demand outstrips supply.
- deleted 3y ago[deleted]
- Georgelemental 3y agoDidn't the Chinese real estate market collapse recently, with several major bankruptcies?
- dash2 3y agoYeah, and allegedly the super-efficient government controlled system has built on the order of 4 bn houses for 1.5 bn Chinese. This might be the largest and most costly housing bubble in history, and I believe it happened partly because China is terrified of letting its banks fail. If you think the "Greenspan put" is a thing, just wait till you hear about the PBOC put.
- scotty79 3y agoIt's a proof that "just build more houses" will never work as a solution to housing problem. Investors are simply insatiable.
- oatmeal1 3y ago> Real Estate is a free money machine, and it won’t stop until we adopt realistic government controlled system. Real Estate will stop being a free money machine when the government stops artificially restricting housing supply with single-use, single-family zoning.
- __loam 3y agoI agree that we should relax residential zoning laws but it does feel pretty naive to think the free market alone will solve this. I doubt everyone being adequately housed is even the optimal state of the free market.
- Geisterde 3y agoIts not a free market, we are closer to communist than we are free markets.
- __loam 3y agoCommunist would be building concrete prefabs until we could house everyone. That's one of the few things the Soviets did right.
- scotty79 3y agoIt's kind of funny how Chinese communists tried to build enough concrete prefabs not only for people to be housed but also for people who want to invest and it backfired spectacularly. The investor class is simply insatiable and you can't just satisfy the demand because it's always growing beyond all reason. You need to curb investors interest in real estate.
- Geisterde 3y agoOk, I have an idea, lets stop printing new money directly into the housing market through the federal reserve. Without it, there is no guarentee that a house will appreciate, in fact most homes would be considered depreciating assets. The cost of homes would plung 80, maybe 90%, and housing would be radically more affordable. Id be totally hosed, but I would find that a reasonable compromise.
- kaashif 3y ago> it won’t stop until we adopt realistic government controlled system. Are you aware that the government is the entity preventing housing from being built in many cities? I don't think zoning should be abolished or anything but clearly the regulations the US has now, at least, are incorrect and restrict supply far too much.
- margalabargala 3y ago> Real Estate is a free money machine, and it won’t stop until we adopt realistic government controlled system. On the contrary, the skyrocketing homelessness rates around the country are showing that demand for housing is more elastic than people thought.
- pas 3y agowhat vacancy numbers are we talking about exactly? and how high are they, and how did they change over time?
- vineyardmike 3y agoNot OP but I had a similar experience. I lived in floor 30 of a “luxury” skyscraper in Seattle built after ~2015. We had an algorithm for pricing according to the landlord and the class action letter we received. Amazing water views and city views. Clearly desirable housing in a city flush with rich people and a massive housing shortage. I was the only occupant on the floor and the only tenant at the time ever to live in that unit. They tried to raise my rent like $1000/m when lease was up. We paid it since we had just gotten a raise. Next lease renewal was about $1000 again and we moved out because $2k extra was just too far above comparable units nearby. They literally offered us a Starbucks gift card to stay. We could see the other vacant units listed on the buildings website and they were always priced way above comparable units in neighboring buildings. Oh and to directly answer your question, I’m guessing the building was never more than half full. The mail room was never full, and the parking garage had about 20/100 spots in use.
- pas 3y agoThanks for the details! I'm asking because the overall rate is historically super low, and that kind of behavior from the landlords seems ... bananas - to use the terminus technicus. (But of course, maybe during ZIRP it was not a problem to try to experiment with various crazy - and inhumane - pricing schemes.) https://fred.stlouisfed.org/series/RHVRUSQ156N https://fred.stlouisfed.org/series/RHVRUSQ156N https://fred.stlouisfed.org/series/EVACANTUSQ176N https://fred.stlouisfed.org/series/EVACANTUSQ176N (estimated absolute number) https://fred.stlouisfed.org/series/EOFFMARUSQ176N https://fred.stlouisfed.org/series/EOFFMARUSQ176N (held off the market)
- vineyardmike 3y agoYea it was crazy. The data you showed says there were 7 million units held off-market. My building had only a few hundred tops. I wonder if there is more to the story though. I think that the building would be less desirable if it was full. Skyscrapers already have long lines for elevators, and common spaces get a lot of wear and tear from so many people in small areas. I wonder if they keep it below capacity while they can charge a “newness premium”, and once that fades they add extra units to the market to increase revenue.
- importantbrian 3y agoObligatory Georgism callout, but a high land value tax would solve this issue. Landlords would be forced to put the property to productive use, and it discourages the kind of speculative land holding that these companies are engaging in.
- leereeves 3y agoBut that tax would be passed on to renters, increasing rent for everyone. Unless you're talking about a tax on vacant properties.
- db48x 3y agoYes, but adopting Georgism would mean eliminating income taxes as well. In principle most people should end up paying less in taxes (because they don’t live in a densely–populated area, or because they live in a dense area but are in an apartment instead of a house on a whole acre), while the overall tax revenue stays the same.
- antonok 3y agoIt wouldn't get passed on. Without land value tax, holding real estate is a good enough investment on its own that rent prices can be left artificially inflated. LVT puts pressure on landlords to actually earn back the value of the property to avoid losing money. In practice, that means offering competitive pricing. This is a solid in-depth explanation, if you're interested: https://www.gameofrent.com/content/can-lvt-be-passed-on-to-tenants https://www.gameofrent.com/content/can-lvt-be-passed-on-to-t...
- leereeves 3y agoBut all landlords would pay the tax, and none of them would want to lower prices below their own costs. If it becomes impossible to rent properties profitably, then eventually there would just be fewer rentals available.
- djokkataja 3y ago
- pitaj 3y agoHigher vacancy rates are associated with lower rents and lower house prices. Vacancies are at the lowest rate in years in high demand areas.
- ikiris 3y agoBecause a large percentage of them have a fundamental belief that any taxation is theft.