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There’s lots wrong with buying up homes for investing so that prices of homes go up and people can’t afford homes. It’s some kind of flawed myopic morality that

There’s lots wrong with buying up homes for investing so that prices of homes go up and people can’t afford homes. It’s some kind of flawed myopic morality that says there’s nothing wrong with it.

lazide 1y ago
People aren’t “buying up homes for investing so that prices of homes go up and people can’t afford homes.” That may be an aggregate and long term effect, but i’ve never seen anyone actually motivated by something like that. At least not statistically. People with excess money (often dentists, doctors, middle managers, small business owners, etc), who don’t trust stocks or the banks, are buying houses because they think they can rent them to people for cashflow in the future (aka not have to eat dogfood!), or rent them out now to other people for money. People that otherwise couldn’t be in these houses, or those people would be buying them instead. Aka put their money to work. IMO, people doing that right now are going to lose their shirts, but that is risk/reward. I could be wildly wrong.
- blindriver 1y ago
  Why do you think they will lose their shirts
  - potato3732842 1y ago
    When everyone gets sick of it and votes for punitive taxes on residential property that is not owner occupied. I would prefer they deregulate the living shit out of constructing additional housing so all the small money can get into that (i.e. something productive instead of literal rent seeking) instead but I am not hopeful.
    - dboreham 1y ago
      This has happened in places like Scotland but I doubt it'll happen in the US. And if it did, courts would strike the law on the grounds "can't take property".
      - lillecarl 1y ago
        It's important to enable your abusers
      - potato3732842 1y ago
        I am not nearly as hopeful as you. First, states like RI are already making incremental steps toward it (they have started taxing non owner occupied non rented properties above a threshold, mainly to get the billionares with fancy waterfront vacation real estate to either live in the places or rent them out). It's only a matter of moving that stuff down the economic ladder. Second, all the "people oughta hang for this" quality legal precedent that enables. If you own a parcel and the government passes a bunch of laws saying you can't do things to the parcel going forward without jumping through economic non-starter sized hoops is that not a taking? They're basically forcing you to sell out to a developer big enough to jump through the hoops like in that supreme court case, only instead of a named developer it's basically a class of developers. And that's considered "not a taking". Straight up taxation is even less of a taking by comparison. I'd be much more in favor of the taxation if it weren't for all the laws preventing small time land owners and speculators from developing on a scale and budget that befits them but if new punitive taxes get passed without rolling back all sorts of other regulation it's probably very bad for them.
  - lazide 1y ago
    At some point the number of vacancies (for renting) causes enough cash flow issues people go bankrupt, or the number of non-investor buyers drops enough that it’s clear it’s just an investor bubble and investment value tanks. Real estate always goes through these cycles.
- kelipso 1y ago
  I am not saying it’s their motivation, but it is the end result. And since that is the end result, it is immoral. I’m sure every person and corporation has some reason for buying homes in excess, but it’s still wrong because homes and land are limited resources that people need to live.
  - lazide 1y ago
    Are you vegan?
appreciatorBus 1y ago
A lot of people over the last few decades have invested in electronics and computer manufacturing, and today electronics and computers are cheaper than they have ever been. If we’re going to have a theory about why housing is expensive it’s going to have to be deeper than just the idea that investing in something makes the price go up.
- mr_toad 1y ago
  The rapidly expanding supply of electronics and computing equipment drove prices down. Housing supply has not kept up with demand. It’s Econ 101.
  - MBCook 1y ago
    Furthermore usable land, let alone desirable, is a far more limited resource than silicon chips.
    - appreciatorBus 1y ago
      In every North American city facing rising housing costs, there is a literal ocean of usable, desirable land for housing, already serviced by municipal infrastructure. And every month, a percentage of that useable and desirable land comes up for sale, meaning it’s previous owner occupiers are voluntarily moving, and a new owner, if they chose, could redeploy the land in a way that provides homes to many more people, while not evicting anyone. Unfortunately, each of these cities has also made it illegal for this transition to happen, mandating that the only way you’re allowed to build larger buildings, (if at all) is by demolishing another large (and occupied) building first. We should change that!
      - mr_toad 1y ago
        In New Zealand the central government tried to weaken the building height restrictions, but some of the local governments have blatantly and illegally stuck to the old rules.
- 1y ago
epgui 1y ago
You're completely missing the point of the comment you're replying to, though. The parent comment suggests that the cost of investing is not high enough. Moreover, they suggest that it should not only be a higher cost, but that this cost should be redistributive.
- zdragnar 1y ago
  The proposed cost isn't redistributive, though. The investors aren't running a charity, and there's an inelastic supply, so they'll be passing the cost of all of those taxes on to the renters until they have a comfortable margin again.
  - deleted 1y ago
    [deleted]
  - epgui 1y ago
    You could argue that (I would disagree to some degree), but the comment I replied to didn't argue that.
- kelipso 1y ago
  You are completely missing the point of my comment though. I am saying it’s immoral to buy property in excess in the first place. So it should be discouraged, disincentivized, or made illegal, yes, and there are plenty of ways to do it, and sure, that is one of them.
MBCook 1y ago
As I said in another comment, there may be situations I’m not thinking of where this would be beneficial. For example buying up extremely dilapidated properties and flipping them for much more money after fixing them up. So I guess I’m a little cautious about just making it flat out illegal. I don’t know enough about the market to know if that would really be a problem. So I suggested a tax high enough to make it extremely undesirable to do. I figure the net effect will be to stop it.
lanfeust6 1y ago
They buy homes for investing with the expectation that prices soon rise, owing to demand and low interest rates, and inelastic supply. If you fix the supply issue then it would be moot. 30% of homes are not sitting empty, cities have a low vacancy rate. Often they rent out and we want low rents too. He solution is building more or having fewer people on the market for a home through low immigration, and only the former seems politically viable.

lazide 1y ago

People aren’t “buying up homes for investing so that prices of homes go up and people can’t afford homes.” That may be an aggregate and long term effect, but i’ve never seen anyone actually motivated by something like that. At least not statistically. People with excess money (often dentists, doctors, middle managers, small business owners, etc), who don’t trust stocks or the banks, are buying houses because they think they can rent them to people for cashflow in the future (aka not have to eat dogfood!), or rent them out now to other people for money. People that otherwise couldn’t be in these houses, or those people would be buying them instead. Aka put their money to work. IMO, people doing that right now are going to lose their shirts, but that is risk/reward. I could be wildly wrong.

blindriver 1y ago
Why do you think they will lose their shirts
- potato3732842 1y ago
  When everyone gets sick of it and votes for punitive taxes on residential property that is not owner occupied. I would prefer they deregulate the living shit out of constructing additional housing so all the small money can get into that (i.e. something productive instead of literal rent seeking) instead but I am not hopeful.
  - dboreham 1y ago
    This has happened in places like Scotland but I doubt it'll happen in the US. And if it did, courts would strike the law on the grounds "can't take property".
    - lillecarl 1y ago
      It's important to enable your abusers
    - potato3732842 1y ago
      I am not nearly as hopeful as you. First, states like RI are already making incremental steps toward it (they have started taxing non owner occupied non rented properties above a threshold, mainly to get the billionares with fancy waterfront vacation real estate to either live in the places or rent them out). It's only a matter of moving that stuff down the economic ladder. Second, all the "people oughta hang for this" quality legal precedent that enables. If you own a parcel and the government passes a bunch of laws saying you can't do things to the parcel going forward without jumping through economic non-starter sized hoops is that not a taking? They're basically forcing you to sell out to a developer big enough to jump through the hoops like in that supreme court case, only instead of a named developer it's basically a class of developers. And that's considered "not a taking". Straight up taxation is even less of a taking by comparison. I'd be much more in favor of the taxation if it weren't for all the laws preventing small time land owners and speculators from developing on a scale and budget that befits them but if new punitive taxes get passed without rolling back all sorts of other regulation it's probably very bad for them.
- lazide 1y ago
  At some point the number of vacancies (for renting) causes enough cash flow issues people go bankrupt, or the number of non-investor buyers drops enough that it’s clear it’s just an investor bubble and investment value tanks. Real estate always goes through these cycles.
kelipso 1y ago
I am not saying it’s their motivation, but it is the end result. And since that is the end result, it is immoral. I’m sure every person and corporation has some reason for buying homes in excess, but it’s still wrong because homes and land are limited resources that people need to live.
- lazide 1y ago
  Are you vegan?

appreciatorBus 1y ago

A lot of people over the last few decades have invested in electronics and computer manufacturing, and today electronics and computers are cheaper than they have ever been. If we’re going to have a theory about why housing is expensive it’s going to have to be deeper than just the idea that investing in something makes the price go up.

mr_toad 1y ago
The rapidly expanding supply of electronics and computing equipment drove prices down. Housing supply has not kept up with demand. It’s Econ 101.
- MBCook 1y ago
  Furthermore usable land, let alone desirable, is a far more limited resource than silicon chips.
  - appreciatorBus 1y ago
    In every North American city facing rising housing costs, there is a literal ocean of usable, desirable land for housing, already serviced by municipal infrastructure. And every month, a percentage of that useable and desirable land comes up for sale, meaning it’s previous owner occupiers are voluntarily moving, and a new owner, if they chose, could redeploy the land in a way that provides homes to many more people, while not evicting anyone. Unfortunately, each of these cities has also made it illegal for this transition to happen, mandating that the only way you’re allowed to build larger buildings, (if at all) is by demolishing another large (and occupied) building first. We should change that!
    - mr_toad 1y ago
      In New Zealand the central government tried to weaken the building height restrictions, but some of the local governments have blatantly and illegally stuck to the old rules.
1y ago

epgui 1y ago

You're completely missing the point of the comment you're replying to, though. The parent comment suggests that the cost of investing is not high enough. Moreover, they suggest that it should not only be a higher cost, but that this cost should be redistributive.

zdragnar 1y ago
The proposed cost isn't redistributive, though. The investors aren't running a charity, and there's an inelastic supply, so they'll be passing the cost of all of those taxes on to the renters until they have a comfortable margin again.
- deleted 1y ago
  [deleted]
- epgui 1y ago
  You could argue that (I would disagree to some degree), but the comment I replied to didn't argue that.
kelipso 1y ago
You are completely missing the point of my comment though. I am saying it’s immoral to buy property in excess in the first place. So it should be discouraged, disincentivized, or made illegal, yes, and there are plenty of ways to do it, and sure, that is one of them.

MBCook 1y ago

As I said in another comment, there may be situations I’m not thinking of where this would be beneficial. For example buying up extremely dilapidated properties and flipping them for much more money after fixing them up. So I guess I’m a little cautious about just making it flat out illegal. I don’t know enough about the market to know if that would really be a problem. So I suggested a tax high enough to make it extremely undesirable to do. I figure the net effect will be to stop it.

lanfeust6 1y ago

They buy homes for investing with the expectation that prices soon rise, owing to demand and low interest rates, and inelastic supply. If you fix the supply issue then it would be moot. 30% of homes are not sitting empty, cities have a low vacancy rate. Often they rent out and we want low rents too. He solution is building more or having fewer people on the market for a home through low immigration, and only the former seems politically viable.