Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value.
The counter-argument people make is "that would de-incentivize investment which would reduce the future housing supply". But I call b.s. on that. Residents would be able to afford new construction and maintenance if those things had lower price pressure.
It should raise the bar on an investor attempting to profit by owning property. They should need to do a substantially better job at maintaining and increasing the value of real estate to justify owning it instead of a resident.
If I was moving to NYC for 6 months, or 2 years, there’s no way I want to spend tens of thousands of dollars buying-and-then-selling a property.
I can show you plenty of places with $3k+ rents in SF with prop 13 property taxes that have not changed their tax meaningfully in decades. Taxes have absolutely no effect on what the renter pays. The tenant is always paying the land value. It's just going straight to the landlord if you don't have a land value tax, and it goes to society if you do. If you are going to buy a valuable property, why do you need to pay twice[0]?
If you adjust the land tax such that it equals the accruing land value, the price of land becomes zero. The local government can then use that tax money to do all sorts of things[1]. They can also use that as a way to reduce other taxes. Get rid of sales and income taxes. The Henry George Theorem states that a land tax should be able to solely fund governmental services. After all, all taxes come out of rents, so if you tax income, then that disincentives work, so you get less work. If you tax buildings, you get less buildings. If you tax land, there's always a set amount, so there is no harmful effects.
If the entire market is faced by a new tax all at once, you will see rents rise. Costs across the board went up, and every property owner isn't going to operate at a loss.
> Tax everyone according to the value of the unimproved value of their land.
Sure. This is the exact opposite of what the parent post was suggesting, where they suggested taxing people different based on the use of the same land improvements.
> every property owner isn't going to operate at a loss
So they will then sell. But who would buy at current prices? The main effect of a change in tax rate is a one-time change in the market price of the property. Someone won't be under water if the property was $1. The market will find a new clearing price.
I'm sympathetic to current owners, and this is why I prefer to combine the implementation of the Land Value Tax with a Land Tax credit equal to the existing value of the land to the deed owner. This will allow everyone to be net neutral over the transition period, and would even be net positive as the risk of ones property value dropping in recessions would go away.
Nope. Sorry but that's not how it works.
If the landlord has to pay 4x tax they will pass some (all) of that increase to the renter. Also, a 4x increase in tax != 4x increase in rent.
So, say the property is worth 1mil$, and you pay 1% tax. That's 10k. You charge 3k rent. The taxman makes the tax 4%, now you have to pay 40k. You decide to pass 30k to the renter. So now they pay 36k+30k rent per year. 4x tax, 2x rent.
If a landlord does this, sure. Renters find a new place. No brainer. If all landlords do this, the renters arr fucked. Finding a new place will not save you. In effect you make it way worse on the renters.
The solution to the housing crisis is not some trick involving taxes, rent caps, adding more rules etc. The solution is simple: build more housing. That's the only thing that will work and will bring down the pressure.
We also need to stop conflating affordable housing with home ownership. If you are having trouble finding a place to rent you can afford there is no way you can buy a house. I feel like the HN bubble w/ our high sky salaries is somewhat disconnected from what the average person can actually do.
How much of a tax gets passed along to the consumer is modeled in an introductory macroeconomics course. It depends upon the elasticity of supply and demand. A tax falls primarily on the side of the transaction with the lower elasticity, because they are less able to adapt behavior to avoid the tax.
https://www.khanacademy.org/economics-finance-domain/microec...
The reason economists like a land-value tax is because the elasticity of supply for land is effectively zero: there is a fixed amount of land, and regardless of what the tax rate is, landowners are either going to seek a return on their ownership or will sell it to someone else who'll get a better return. Elasticity of demand is pretty low too, but it's not zero: people can double up with roommates, move in with families, or become homeowners. So a tax on unimproved land ends up falling almost entirely on the landlord, with relatively little long-term impact on rents.
In practice, we're likely to see pretty severe reallocations of land and short-term price dislocations, as existing landowners find that their usage is not productive enough to pay the tax and so they need to sell to new firms who will use the land in different ways. But this is working-as-intended: the goal of an LVT is to incentivize better usage of land through high-density development of desirable parcels, individual homeownership (when density makes sense), and commercial activity.
There are at least two problems with your logic: if you take all the land you can make the claim about the elasticity of supply, but not all land is created equal. Location, infrastructure, usage all factor into this. Taking the example of unimproved land. If I buy a piece of the said land near a town and don't use it for anything I just pay the tax on it and effectively lose money, right? What if the city builds infra near my land that makes it effective now to develop? Should I pay more tax now? It's still unimproved. Should I pay more tax in case of a rezoning if I could potentially build a house but I don't? See how I actually created one class of land by substracting from another!
If I can buy and afford (ie have the capital) to hold land for the long term + I can see where new developments are going to take I will be incentivized to hoard land. I can also make the case that it's undeveloped and I should pay less tax.
Now there is land that just sits there when it could be used for farming. Now we are having food and housing shortages.
To answer all your questions:
"If I buy a piece of the said land near a town and don't use it for anything I just pay the tax on it and effectively lose money, right?"
Yup. Don't do that.
"What if the city builds infra near my land that makes it effective now to develop? Should I pay more tax now?"
Yes, you should.
This is actually one of the biggest arguments for a LVT, and it has three angles. The first is moral - it's society that's building the schools/parks/transit/infra that made the land value go up, so it should be society that reaps the benefits. After all, the property owner didn't pay to build that subway stop, they just got lucky and got to free-ride off of public benefits. It makes sense that the returns for building public infrastructure go back to the public in the form of additional tax revenue, which they can use to fund maintenance and new infrastructure.
The second is the economic flip-side of this: an LVT provides an incentive to right-size the government. Without this economic feedback loop, there's no check on public-sector spending tax revenues in inefficient ways. Who cares whether a new transit stop benefits residents vs. provides a boondoggle to contractors, if the benefits to residents are all captured by landlords rather than either the residents or the government? But if further public funding is contingent upon raising rents and hence tax revenues within the city, the incentive is to spend money in ways that will actually make the city more desirable and justify those higher rents.
The third economic argument is on individual landlords and developers. An LVT discourages speculation - if you're sitting on that unimproved lot and not getting any revenue from it, you're still paying taxes and will eventually go broke. Your incentive is to sell it to a developer who will build more housing on it, so that more people can enjoy the public amenities that made the land valuable in the first place. Leading into your next question:
"Should I pay more tax in case of a rezoning if I could potentially build a house but I don't?"
Yes. That's how you ensure that land is fully utilized and people who need housing can get it.
"If I can buy and afford (ie have the capital) to hold land for the long term + I can see where new developments are going to take I will be incentivized to hoard land."
It's the opposite way around - you're disincentivized from hoarding land, because you have to pay taxes on the land that's not cash-flowing. You're incentivized to sell to the people who are actually going to build and buy those new developments.
"I can also make the case that it's undeveloped and I should pay less tax."
You can also make the case that the government should just give you money, but in both that and your example, you'd be wrong. Everybody pays the same land tax, based on the unimproved value of the land. A developer who built an 80-unit apartment complex on 2 acres might pay $200K/year; a speculator who sits on 2 acres of undeveloped land also pays $200K/year. The difference is that the developer might be pulling in $2M/year and making a profit of $1.8M/year, while the speculator is slowly going broke. That and the developer is providing housing for 80 families while the speculator is doing nothing useful.
> Yes, you should.
Doesn't this make NIMBYism even more tempting? I've got to be against any changes near my land, because it's going to increase my taxes and push me to move. In addition to not liking change in general.
A rational economic actor would not be a NIMBY under these conditions, because the increase in land values exceeds the increased tax they would pay, and so they could always sell their property for a profit and buy another one farther away from infrastructure if they don't like it.
In reality, people are change-averse and irrational for a variety of reasons, chief among them emotional attachment. So it wouldn't surprise me if people resist development in practice. A lot of NIMBYism is already of this vein - upzoning a property usually increases its value (because it can be redeveloped into more units), but is also frequently fiercely resisted by existing residents who won't sell at any price.
Note that a system can be rational even if participants are not - capitalism is, because actors who are irrational eventually go bankrupt and are forced to work for actors who are economically rational. That doesn't stop it from being unpopular, which, again, capitalism is. Many of the political issues getting an LVT adopted stem from this.
If you have a hundred thousand properties to collect data on, you can get a pretty good idea of "a 3BR unit increases the value of the property this much, a 2BR unit increases it by this much, X feet in height result in this change in value, per parking space the value increases by this much". Sophisticated real-estate investors and the banks that fund them are running this calculation anyway, that's how they know which properties are good deals. Once you have a formula for this, you plug in the stats of the property in question to figure out the value of the improvements, and then the unimproved value of the land is everything left over.
The price of the property is based on the return that the landlord can return. This should be obvious.
If you increase the tax by 4x, the most likely result is the market value will drop from $1 million to something like $250k-500k. The renters will be paying the same value. The new owner will have the same ROI that the previous owner had. Just different buying price and lower return per rental.
Also, what people don't get is that the same people that set the tax are the people that have the land and the political and economic power. Why would they do something that goes againt their best interest? We're all cool and open to all kinds of things until it happens in out backyards.
Not really. This assumes it must remain a rental property.
What will happen is that this $1M property which was previously a rental now becomes a ~$1M property which is owner-occupied. The owner isn't going to take a 500K-750K loss just to keep it a rental.
Then why are investors a problem?
If investors are investing in land and leaving it empty waiting for the local city to build valuable infrastructure around them before they sell it, that's a major problem.
A land value tax will see the former do better and the later to do much worse.
No, not like that.
As a society we need to decide if we want to have the cake or eat the cake. If I own the land, I own the land. The city has a responsibility to consider this (and many other things) when developing infra.
There are a multitude of levers that can be pulled to deincentivize this behavior, but the tragedy is that the people who benefit from it are hand in hand with the people that make and apply the rules.
This seems to assume that a rental property is forever a rental property and will continue to be rented at market price no matter what.
But that's not true. It's only a rental property if the owner can rent it out and not be losing money. If the conditions change (like taxes on it) so that's it can no longer be profitable, it is taken off the rental market (most likely by selling to someone who wants to live in it).
If that's one unit, no problem, the renter can go elsewhere. In the proposal being discussed where all rental units have a 4x tax increase, this applies to all rental units at once. Rent prices go way up and most rental units disappear from the market.
This is why I am for the value of all land being taxed. No distortions.
but, that's the point. you can't reduce real estate prices without reducing real estate prices.
Of course taxes have an effect on the rent price.
If the property tax is very low and the market price rent for that unit is very high, you're right, the owner will charge the high price and pocket the difference.
But the reverse is obviously not true. If the property tax is quadrupled (as per OP proposal) and now the rent no longer covers the ownership costs there are only two possible outcomes: the rent goes up to cover the costs, or, if nobody is willing to pay the new higher rent the owner sells the property off to someone who wants to live in it instead of renting.
The latter is good if we want to incentivize home ownership for everyone. But it does take a former rental unit off the rental market, so if there are people hoping to rent a place, it's bad.
Why ?
How do you figure the unimproved value of land ?
There is so much land in this country why do we have to fight over the coastal regions ?
Why not incentivize building out other areas and creating population hubs ?
The value of the unimproved value of land comes from your neighbors. It comes from your city. When roads and sewers and train stations are built, the value of being close to that infrastructure is given to the existing landowner. By properly returning this value to the city that created it, it gives them funding that they can use to build more infrastructure.
Eventually with a Land Value Tax is in place, what you propose of building new cities will happen. If you treat a city like a company, we might even see investment companies funding new cities. They make an investment of an infrastructure, get a profit, then they can use those profits and give back to their shareholders - the citizens. Or they could use those profits to build another city. The existing paradigm doesn't allow proper investment.
Right now they only charge for their costs and let the landowners take their share while the renters don't see a dime. Imagine if a company was not allowed to make a profit, and could only sell for a cost. That's exactly what happens with real estate today. They let landowners sit on empty lots that appreciate while they do nothing. They incentivize minimum parking requirements and single family zoned cities.
You wouldn't be able to until I told you what kind of home you are allowed to build. If I only allow you to build a shack or make it a park you won't be able to extract any money by renting it out and thus you wouldn't buy it at any price, even though the neighborhood should command a steep price. If on the other hand I allow you to build a sky scraper of n storeys high, you will now be able to given other information on rents in the area that people are willing to pay.
What is interesting is that the dynamic actually flips once there is adequate zoning. Take a look at this[0] video on Tokyo zoning and how he talks about living in an industrial zoned area. He talks about how it's cheaper to do so, and if you want to move to a single family zoned area, it's actually more expensive!
Under the current system, landowners want their own land to be zoned as high as possible, while they want everyone else's land to be zoned as low as possible. Since 1 < everyone else, when people vote on zoning it is zoned as low as possible. With a LVT the system flips, everyone wants their land to be zoned as low as they desire, and they want everyone else's land to be zoned as high as possible. They would only accept land zoned restrictively if those people would pay higher taxes for the exclusive use of it.
This is a system with proper incentives.
In either system living in an industrial zone (or on the edge of it) will cost less as it is less desirable to live there (noise, air pollution, smells, further from grocery store, no parks etc) and nobody in their right mind would pay high rent there. Nothing to do with land value taxes.
Zoning changes what people will build there (we assumed it was even legal to have housing in an industrial zone there). If you rezone a residential area industrial and make it illegal to have housing there guess what will happen (assuming there's demand for industrially zoned areas)
What would be true in the new paradigm is that places would only allowed to be zoned lower if people are willing to pay for that exclusive access. It's not just industrial areas, all higher zoned areas would be cheaper than lower zoned areas.
Land Value Tax incentivizes proper zoning, as the more scarce the housing is, the higher the tax. Proper zoning(like Tokyo has without a land value tax) flips the structure.
In fact the residential zoned houses at the edge of the industrial zone are worth less potentially than the industrial piece of land on that edge. (maybe not, because residential neighbors will get complainy ;))
I am saying that I don't see how a land value tax does what you propose. I had no idea what that even was until I read these posts and looked it up.
I don't see what you mean by zoned "lower" and "higher" actually. I can zone the land for another New York City in the middle of flyover country and that doesn't mean people will come just like that. The price this will command will be super low because there's nothing there (this is actually part of your land value tax system's reasoning). If I can find someone interested at all.
If instead I zone it agricultural I can sell it depending on vicinity to a small town, how flat it is (mountain side? No thank you for big agri, only small homesteaders will pay you a little at all). Flat and great soil near other agri infrastructure? Now we are talking pricy!
1. The inherit value of the land - rivers, gold or oil being key examples.
2. The nearby infrastructure
3. The zoning policies
4. The community and commercial services
If there is land zoned for another NYC, with the infrastructure of NYC, including the excellent port access, it would very quickly become worth what NYC is worth as people showed up. We see this with the pop-up cities in China after they reach completion. Though no doubt some will stay in ghost status forever.
It is up to the local government to do what they can to make the most of their land, just as much as it is up to the landowner of an individual parcel to do what they can to make the most of their land. The city is incentivized to zone the area so that it is valued highest. If they do a poor job of that, that is on them.
I don't see why it needs a land value tax and having one causes anything. All the things you are putting into your land value calculation cause that. Not the tax.
Now don't get me wrong. I'd love me a land value tax as it would probably mean I'd pay less for where I live. But that's it so far. Color me unconvinced otherwise.
I'm a programmer, as most are on this website. The thing that mostly interests me is when incremental changes don't lead to global maximums. As are most who study AI and say, Agile development. When is it that prisoner's dilemmas occur?
I pay attention to things like programmers who fix the bug they introduced fix the bug at a deeper level[0], I pay attention to Simple Made Easy[1], I pay attention to the systemic effects[2].
I point out that the Land Value Tax is so simple and yet fixes so many things. It fixes an inherit problem with society at a deep level. You need to pay attention to the incentives and how they mold the eventual outcomes. Land value taxation leads to correctly aligned incentives.
[0]: https://news.ycombinator.com/item?id=28128729
Currently the closest example is Singapore[0], but they have much more central control than what a Georgist would find ideal. 99 year leases are far to long, and shorter leases would have much more beneficial effects.
Detroit was an example of a city that massively expanded[1] because of it, but eventually lost it's way.
Harrison, PA[2] is an example of a city that 'recently' used a revenue neutral split-rate system to keep from going bankrupt.
[0]: https://progressandpoverty.substack.com/p/singapore-economic...
[1]: https://www.dollarsandsense.org/archives/2013/0813clevelandg...
[2]: https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g...
It already is. There are many tax incentives geared towards making owning cheaper. If owning was t already subsidized do you really think anyone would be handing out 4% 30-yr fixed rate mortgages like candy? Removing these would also make housing prices crash, which would lower both purchase cost AND rent, yet I don’t see many people pushing that idea forward (because it also makes it almost impossible for most people to buy)
The “I think people should own property, so I’m okay making it more expensive for people who don’t” is bullshit.
> a lower portion of housing should be rentals
Without numbers (the baseline you’re considering as true, and the number that is “acceptable”) this is just trying to impose a specific viewpoint without any data to back it up.
Housing being used as a bet on appreciation, which fuels buying, which causes appreciation is best solved by building more housing. The way to make housing cheaper (or not be a speculation vehicle) is to build more housing. Full stop.
How much more expensive proportionally matters; it should be up for discussion democratically.
To own property is to accept responsibility for the land, architecture, and legal liability. If you abdicate that responsibility to another party you should pay for a service; and the bar should be high for the standards of that service.
There's no fundamental reason real estate transaction costs should be what they are.
There are other costs and risk though. Many places that have transfer taxes, plus inspection costs, appraisal costs, title insurance costs, and loan origination costs.
You also have to accomodate the risk or some major issue in the 1-2 years you're living there. "Saving some money over rent" doesn't necessarily justify the risk of having to cover costs for HVAC/electrical/plumbing work that has to be done.
If you have a bunch of properties with no stable ownership, where the buck will just be passed to the next person every couple of years, properties will fall into disrepair (moreso than they do now), and temporary bandaid fixes will be (more) or the norm.
Ie, I don't believe short-term property ownership is good for the property long-term.
Those other costs should be driven to a much lower floor as well. The majority could be automated, and likely are in the process of being (e.g. loan origination costs).
Essentially the only fundamental cost should be inspection: which is ultimately the buyer (and their lender) offloading systems assessment onto a third party. Who, if you read the fine print for inspectors and case law, is generally not legally liable if they miss something.
> some major issue
The solution to property maintenance seems surmountable. Require it for dense, neighbor-impacting scenarios (HOA, etc), and fund it via loans against the underlying asset (HELOC or home equity loans).
I'm sympathetic to your point, but I don't think it takes primacy over enabling individuals to own their own home.
I'm sorry but you can't make more housing appear by simply raising the barrier of entry and throwing sticks in $INSERT_EVIL_GROUP's front bicycle wheel. Ultimately, things need to be cheaper and easier to build, and this will come at the cost of some people's freedoms (expropriating their land for redevelopment, displacing people for redevelopment, preventing bike shedding about neighbors' preferences).
It's easy to take a dump on so called rent-seeking landlords. But picture yourself becoming a landlord; imagine you're this newly minted, high spirited multi-family property owner and you want to do good for your neighborhood without becoming a charity and ruining yourself. Then look at what your options would be. In many US urban areas, there's already a lot of regulation in place that would drive you mad in your inability to make things better for your tenants and yourself in a sustainable manner. The rules literally push you into what you're seeing in the rental market (crappy apartments with high rent).
It works out if high density housing is built and then all sold as condos. People could pool together and buy land as a coop-style group, and then develop it as high density housing. But then its facing organizational hurdles (coop-style orgs don't have the best outcomes) and the whole thing need to survive years long timelines (to design, permit and build) while staying focused to avoid cost avalanches. Good luck!
I don't have an agenda in this (unlike other commenters suggested) and would love to discover a better way of doing all this. I think the current system is flawed but I don't hear convincing alternatives. And what's there right now is better than a feudal system, that's for sure... Hey, back then, Lords were owner occupiers! How has that worked out for the peasants?
Hence why I think the issue isn't about taxing more for stuff like "not owner occupied", but more about the opposite: make it faster and easier and cheaper to build high density residences. Then prices will fall and the affordable market will be served by smaller developers.
They would be against it because it would mean they can never move, since they are now underwater on their mortgages.
Most people who only own one property don’t care about its impact on their net worth unless they are planning on downsizing, since they can’t just liquidate the house to purchase other things as they can with other assets.
And if they don't sell, they wouldn't care much. Yeah, annoying, but as long as you pay the installments, not much changes in practice.
No. Suppose I buy a million dollar house at 20% down. I thus owe $800k in principal to the bank. I live in the house for a few years, and build up $100k in additional equity beyond my down payment.
If housing prices stayed the same, I could sell the house for $1M, use $700k of that to pay off my remaining principal, and use the remaining $300k towards my next $1M house. (If housing prices appreciated by 20%, I have $300k in equity and $200k in profit to put towards another $1.2M house.)
Now suppose the housing market crashes by 50% and my house is worth $500k. If I sell my house for $500k, I still owe $200k of principal to the bank. I don’t have any leftover money to go towards another $500k house, or even a $0 house; instead, I have $200k in debt that buys me absolutely nothing.
And in some states, such as California, on the original purchase loan they cannot; it's non-recourse.
But they sold your loan long ago, and trying to "do the math" and resell a new underwater one doesn't work.
In the event we implemented a market-wide adjustment, presumably we'd suspend business-as-usual to more evenly allocate that through the transition.
For all the people saying "it doesn't matter how much you tax landlords, the market rate is what the renters are willing to pay", don't be silly. Just take your argument to the extreme then. Why stop at 4x, why not charge 10x, 100x, or 1000x? Obviously as you raise taxes on landlording, the number and/or quality of rental units will go down and/or the prices will go up.
See Oh the Urbanity!'s recent video on the topic https://youtu.be/q3gtZcTdXaI
I think ownership is better because people value securing the shelter where they sleep. Renting is worse because you can't make decisions about how to improve land and architecture. You are only permitted to be there under a limited contractual agreement vs. being able to stay put until you decide to sell.
Anti-renting people emphasize the control inherent in the relationship. Landlord sets the rules, including price; tenant required to abide. (Attempts to address the market by regulation here have had their share of severe side effects)
Pro-renting people emphasize the affordability and ability to offer housing to those without access to the capital to purchase, as well as the shift of asset risk (physical and market) from the renter to landlord.
The central evil seems not the existence of renting, but the ability of a landlord to capture underlying asset appreciation and charge rent.
Coupled with areas of constrained supply, this leads to landlords getting richer and renters... not. Which seems unfair.
Agreed that it transfers risks and hassles to the landlord. It doesn't transfer any costs though, as they'll be bundled in the rent price.
Renting is like using AWS. You pay for the convenience of someone else taking care of the hardware, but they're making a profit from providing that service.
What works in small town USA won't necessarily make sense in a Big 6, unless it affects huge national investors like Blackrock but not your small landlords or medium multi-family dwelling manager/owners.
Also, "tax them? might as well kill them!" is the type of nefariously silly exaggeration that is used to shut down discussions. Yours doesn't go quite that far, and I get the point of your example but don't find that limits of infinity are generally helpful.
Are the prices so high because people in Paris are willing to pay much higher rents more people in London? Or are they so high because renting in Paris is super risky for the landlord due to aggressive tenant protections?
It’s just easier to compare the high-end of the market because offering is similar and concentrated in central areas, whereas lower-end real estate is scattered across lots of very different areas.
Applying a cost increase across the board, in a way where everyone knows it was across the board, will reset the market floor. If California (just as an example) can out and said "There will be a flat $200/month tax on all home rentals" you can be damn sure that every available property would align to +$200 over the course of a year or two.
Not exactly, rent price is either the max renters are willing to pay, or, a small percentage on top of ownership costs, whichever is higher.
In the case of the latter, if nobody shows up willing to pay the higher price then the rental unit is removed from the market. It won't make the price go down because the owner won't rent it out at a loss.
This reduces the supply of housing in use.
I feel restrictive zoning is a much bigger issue than empty unsustainable houses.
>making property taxes substantially higher for non-owner-occupied property.
>but everyone who owns property would be against it because they don't want to see their assets drop in value.
After the initial dip, prices will rise again because residents will vote out every city government that tries to implement zoning that doesn't increase the value of their property.
It seems likely the only way this happens is if the majority of real estate is owned by corporations or governments.
Replace "corporations" with "wealthy nobility" and we don't need to imagine how that plays out. Historically that's never been good for workers.
People who own nothing have little power.
How do you see this being so?
That would do the most damage.
You're depreciating your asset? You don't get to depreciate, and deduct repair/maintenance costs.
You're depreciating? You don't get to 1031 the asset as well (and avoid recapture).
Regarding government back loans, I think you're right, ish. It's very weird that it's a thing at all, and that you can use subsidized loans for up to 4 unit properties. BUT I do believe this availability has been an on-ramp to a career in real estate, and a wealth building mechanism, for many, many previously-disadvantaged people. It's definitely been bastardized into something else over the last decade.
That aside though, individuals are limited to a maximum of 10 government-backed morgages, and it becomes much more difficult to qualify for new ones after 4. While yes, that sounds like a lot, large real estate companies that are managing 10s of thousands of units are not utilizing these programs, and eliminating them would serve only to limit the "mom and pop landlords" that, frankly, tend to offer a lot more flexibility for tenants than large management companies do.
But that in turn means rents would go up substantially since the owner of that unit is now paying a lot more taxes on it because they rent it out instead of living in it themselves.
If the desired goal is to incentivize everyone to own their home and get rid of rentals mostly, that may work. But if there are people who want to rent affordably, it doesn't.
It is already difficult to make money in real estate. Your proposal would reduce housing stock.
Including those on minimum wage? Including secondary education students who have no income? Including (international/visiting) folks on a (consulting) contract that may not want to settle in the location?
There are many situations in which rental housing is the solution for people.
> They should need to do a substantially better job at maintaining and increasing the value of real estate to justify owning it instead of a resident.
"Increasing the value of real estate" is not the only metric to judge things by. Proving a valuable service to the public is another.
Then we can address that via rental vouchers to offset the taxes.
Real estate has the same problem as healthcare, in that it's an enormously complicated system, where any adjustment always has negative outcomes.
However, I agree with parent that the central and most critical failing is -- we are not incentivizing owner-occupied home construction at an accessible price point.
And a critical component of that is decoupling {build and sell to commercial landlord} and {build and sell to occupying owner}. The former will always be able to deploy more capital, and thus drive up the asset price to levels the latter can't afford.
And just to make it explicit: this is independent of density. You can have dense development that is still owner occupied (individual units).
If people can't pay to own property because it's easier for regulators and mega-owners to only have to deal with bulk-owners, then there's not a human-class. One cause is not enough resources in local government. Shrinking the abilities of the public servants until offices become autocratic, oligarchic hellholes is a long-favored strategy in consolidating authority.
We're in an era that has to balance a lot of novel challenges, but they have seemed to tip in the favor of the few over the many for the past generation or two.
For the 10000th time, this isn't what rent-seeking means.
That's roughly 20% and then another 20%.
If you wanted to go with this approach, the better solution is to remove tax deductions for corporate residential real estate investment
You need to build more. Everything else is just redistributing scarcity one way or other.
Do you have a reference to back up this statement? Have you ever spoken to any homeless people and asked them what they think about this?
Clearly there are some limits in which your statement holds; I would prefer to be homeless in a city in the UK than held in a forced labour camp with housing for example. I think once you include some basic minimum requirements very few people would prefer to be homeless.
I've seen numerous reports where homeless people say they don't use shelters because they're unsafe or the shelter's rules are too restrictive (eg "The shelter where I stayed briefly, you had to be in line. They technically opened at 7:00, but you had to be in line at 4:30 in the afternoon to be able to get your bed back..." [0]). I guess I don't know what homeless people would choose if they were offered a home in a far off town or something, but AFAIK, the only general options presented to homeless people are shelters, homelessness, and maybe social services in cities willing to work on the problem.
[0] https://www.npr.org/2012/12/06/166666265/why-some-homeless-c...
It’s totally reasonable to expect a bare minimum of compliance in order to get taxpayer funded housing. I don’t know if you have friends or family who are heroin addicts but I can promise you they are not pleasant people to be around, especially when they start stealing to fund their habit.
Also, people in half way houses or assisted living absolutely should be sober so they don’t cause anyone else in the facility to regress, but it is a hard problem. These people often need intense rehabilitation and these programs are neither quick or cheap. Someone has to run the program and success is never guaranteed. Mandatory government funded rehab would be AMAZING, but imagine how many people would crow about their “freedom” to shoot up meth is being infringed if that happened at the federal level.
This is a very hard problem and there aren’t easy solutions. My opinion changed a bit after I married a girl with a masters in social work. This is very draining heavy emotional capital work.
After working with foster and adoption of two preteens from an unhealthy home situation my opinions have changed a bit as well. Compassion is hard - it should push us to do. Now if I can just work on being less blunt ...
When someone has thrown themselves off a bridge, do we send out rescuers always or only under particular circumstances?
I’ve always tried to get food for betters outside of grocery stores or pharmacies whenever they’re asking for money.
My bullshit detector went off right here. Housing isn't complicated. It's only complicated by investment money being involved. Having a roof over ones head is a basic human right.
In Australia, the market is so hot, very few young people can afford anything, if you're living in a nice place, you can easily be kicked out after your rent doubles. I know of good, professional people who migrated to Australia and went back to their home country of this behavior.
It's complicated because we've made it complicated. I also think it's why we're living in a world with a lot less creativity. Who can make nice things when all we're doing is racing to the bottom to make ends meet ?
Is housing expensive in popular cities or everywhere?
What is preventing people (you?) from building cheap houses on cheap land? Is it regulation?
We are headed for a massive population crash almost everywhere, the housing market will completely collapse in the next 10 years and will not recover.
You can look at Japan and Italy as a head up, they are starting to give away houses in the countryside.
We're not. Many countries predict stable populations at worst for several decades still. Some continue to predict population growths. Politicians are all too eager to use immigration as a way to band-aid low birthrates, and many are already subsidizing children more.
Your last line gives it away too. Japan is primarily crashing in the countryside. Tokyo is lagging behind by almost two decades, only just starting to drop. The high housing prices globally are primarily in urban and suburban areas. Many of those areas are still growing tremendously at the expense of rural areas. People don't want to live in rural areas because there are no jobs. Even if there was a crash, it hardly matters if populations continue to rise or remain stable in areas where housing is getting too expensive for the jobs provided.
So if China's population starts to crash or their economy goes bad at some stage what effect will this then have on the Australian market (for example)?
I'm guessing not much because the inflationary property price damage has been done. It's a curious thought.
Also in the case for "steady populations with little growth", wouldn't this mean that property prices will also stabilize and eventually drop? This stabilized property market will be interesting because people won't be able to make the huge capital gains and returns they were used too? A lot of property investors are also probably pretty heavily indebted and so any type of economic trouble might put many in a precarious position.
Practice can be seen by the many cultural shifts we had which had zero to do with population growth / housing shortages, but still increased prices tremendously. Higher loans, longer mortgages and lower interest rates, for one. Increased dual incomes is another.
This combined with climate change and it's ability to change the landscape (literally) makes it getting harder to predict where people might actually want to live.
For example, I visited Scottsdale, Arizona not long ago which is going through it's own mini-boom at the moment. Will that be a nice place to live in ten years with rising temps? One would have to ask the question? Would people still pay huge money to live in Tahoe with poor snow quality and lots of bush fires in summer?
You did say there's too many variables :)
You by a house at 100k$ with 90k$ of mortgage, your government print money making your mortgage worth less, bam you got a 200k$ house with 90k$ mortgage. Your 10k$ gave you 110k$ While your currency is worth half of its previous value.
It was the easiest way to get rich for a long time, it work as long as the currency keep debasing (you can count on that) and the housing market is good.
I, and most people, don't have $10,000 to spend, and even that wouldn't be nearly enough to build a house, let alone buy a cheap lot of land, let alone install a septic system and a well, post for gas and maintenance for my car, all while incurring the time cost of living farther from work.
For many people, this isn't true.
A lot of people would easily be able to afford to buy or build in a nicer area if there wasn't so much competition for land or housing due to investment. I think if there was much much higher cost of non-owner-occupied housing, you'd just see people move into nicer areas with less financial pressure to do so. This sounds like a nice thing.
Interesting new problem Japan is facing is that even in the areas where they're giving houses away, they're starting to have trouble servicing the surrounding infrastructure, roads etc which I guess is from not enough taxes, administration and construction workers left to keep these areas a float.
https://ourworldindata.org/future-population-growth#global-p...
And thus, it is complicated. Also worth taking into consideration: we may not be able to do otherwise. Currently, for sure (hence the commonality of conversations on this topic), and perhaps never if we don't/can't change the way we think.
They are thinking of what to do with their piles of cash, and how to make their piles grow. They are absolutely not concerned about the wellbeing of individuals outside their own organizations/families.
This is basically the housing ownership version of the monopoly concept (and I don't specifically mean the game). There are, or were, laws to prevent companies from becoming monopolies. People (and governments) realized that once a company grows and consumes or blocks out all its competition, things eventually get very bad for the consumers/public.
There seem to be quite a few people on HN in the "regulation is bad" camp, but there are a lot of regulations such as the ones related to prevention of monopolies which are critically important. And now we see that there need to be similar regulations to prevent the equivalent in housing.
For this to naturally correct itself (and laws to become demanded by the people and written by the government) will take decades and likely some level of revolt. Maybe it will happen sooner than I think. It will be ironic if the camp that has been promoting gun ownership while simultaneously screwing its supporters becomes subject to forceful demands of its angry former followers. (Actually we see this right now in US politics when someone from "the good team" finally speaks out loud negatively about their great leader. The "good team" followers become immediately vicious and threatening. Perhaps once enough of those armed good old boys finally put their puzzles together and realize they've been fooled on a grand scale, we'll start to see some change.)
I wonder: can you overcome this way of thinking?
> People (and governments) realized that once a company grows and consumes or blocks out all its competition, things eventually get very bad for the consumers/public.
Realized to some degree.
> And now we see that there need to be similar regulations to prevent the equivalent in housing.
Some see this, some see other things (sometimes the opposite). Whose visions are correct?
> It will be ironic if the camp that has been promoting gun ownership while simultaneously screwing its supporters becomes subject to forceful demands of its angry former followers.
It would be even more ironic if all followers began to question the stories their leaders tell them, and the stories they tell themselves.
> Perhaps once enough of those armed good old boys finally put their puzzles together and realize they've been fooled on a grand scale, we'll start to see some change.
Surely, to some degree. But even more powerful would be if all people could do this simultaneously...or even a critical mass of people, especially if they managed to do it according to a non-partisan methodology. Perhaps someone will create something like that some day. Or, perhaps not, and we will remain at this local optimum indefinitely, content in the knowledge that it is all someone else's fault.
Prove it.
Perhaps OP meant to write "According to the UN, having a roof over ones head is a basic human right."
I could ask if you continuing to live is your human right.
I'm not sure there's any absolute decree that everyone can agree on that says you deserve to live. However, we evolved people tend to assume that every human deserves to continue living (at least until our differences become too great, at which time we sometimes just kill each other).
Therefore, your demand for proof that having shelter is a human right is bunk.
The stellman of 'housing is a human right' is 'everyone should have adequate shelter', and that's a far more productive starting point. The 'right' angle adds nothing.
With that being said, I don't think it's unreasonable to expect that assertions about human rights by organizations such as the UN be internally consistent. The UN claims that human rights are universal. Human rights such as to food, shelter, medicine, etc. fail this universality. To provide them requires taking resources from others and reallocating them. Therefore, they are conditional upon the ability of a society to reallocate these resources. Therefore, they cannot be human rights, and assertions to the contrary should be identified as being politically motivated.
II. To not be killed is a basic human right.
=> Having shelter is a basic human right QED
For that matter I guess I would disagree with the UN. Someone who forfeits their basic human rights, for example, would not be entitled to them. So in that sense they're not universal.
There are many things that, as a society, we should do our best to make sure everyone has access to; housing, food, medical care, etc. The more people that have access to them, the better off we, as a society, are. Whether or not those things are a "basic human right" is debatable; but they fact that you need them to survive doesn't define them as such.
> but they fact that you need them to survive doesn't define them as such
Isn't that basically saying that surviving needn't be in a definition of 'human right'?
Yes, because "surviving" isn't a human right. It's something we, as a society, should do our best to make sure everyone is able to do, but that's not the same as saying it's a human right. If it was, then "not having a heart attack" would be a human right, which is clearly ridiculous.
I'll put it to you like this. If you believe there is a human right, then someone can't pursue it if they're dead. So if, in order to pursue that right, they need to pursue being alive, the pursuit of being alive falls within that right, no?
I think it might help people understand to put it in terms like this: there are 100 housing units out there and 150 people. How do we solve the problem?
I was talking to a NIMBY and converted her to YIMBY by relating to her that in Santiago anybody builds whatever the fuck wherever the fuck, zoning be damned basically, and that leads to rent being like $150 a month. For real, you get what you get in SF for $4000 a month for ah...$400 a month in Santiago. And the minimum is very low. Sometimes $100.
Case in point Marc Andressen’s family as we discussed recently https://news.ycombinator.com/item?id=32350657
People complain about how bad zoning is, and I agree that municipalities can get carried away with it, but most people highly underestimate the impact zoning has had on their lives and take even moderately executed city planning for granted.
I know that’s not the case in Chile for any of the central neighborhoods (Yungay, Brazil, Lastarria, Franklin, etc…) which I think are probably close to SF in terms of size. 325k CLP is about the lower end for a nice, small 2BR. You can get more rooms but the square footage is smaller. Las Condes/Vitacura goes up from there.
You can buy a nice 2BR apartment for $175k USD though.
So those are all beautiful quaint neighborhoods--myself I'm in Lastarria, but come on that's expensive. Yungay, little less. Barrio Brasil, no he cotizado [I haven't seen prices]. Franklin I don't know. I bet Franklin isn't that bad. But uh, try Estación Central. Another place I heard of that sounded like a great idea was Parque Forestal near Baquedano. Huge places at a third the going rate, just because of the violence, which I seek out because it comes with low rent, and which I in particular can handle, as a local. That's my niche. Las Condes/Vitacura is of course much more expensive, because first there's zoning, second it's for GCU--gente como uno[1], they're much more restrictive with buildings than other neighborhoods. Another cheap one is Ñuñoa, practically no zoning, on the subway line and there's tons of huge buildings.
But you gotta be a street cat and adjust expectations. So for instance, there's lots of burglary. All the time. Steal anything, shoes shaver knives children's toys all kinds of shit. Anything. But they're looking for the macbooks. Violence: there's guns these days. It depends on the neighborhood. Bad sentences for armed crooks, like I knew in rehab a guy who put a kitchen knife like between his cheeks but at any rate in his pants for protection when he was partying in the poorer parts of town. He got busted, it looked bad on him, weapons are forbidden. But dude then there's poorer and poorer neighborhoods, cheaper and cheaper rent, it's only a matter of being tough enough for the cheap street. People live in Maipú (pronounced as you fear) for hella cheap.
You just mentioned the neighborhoods where the privileged live. Those are all nice neighborhoods, for the HN crowd, American-friendly (they'll cheat you and steal from you--not from me, but from you--but hell it's cheaper than SF rent). Hell, go live near Pajaritos or Neptuno, I can tell you the rent won't fuck up your checking account. And none of the places I mentioned are tent cities, there's those here too, along with--more common previously--poblaciones callampa, shroomtowns, popping up out of nowhere squatting on unsuited land like shrooms out of the ground, from one day to the next.
It's a mixture of continents. Europe in Sector Oriente, Asia a bit in Patronato (my agent scouted there when he needed Asian actors/models), like there's real Latin American poverty too, but not that that's worse, just poverty is suffering, not a stain on the dignity of the sufferer.
But there's no overlap with San Francisco. The most expensive Santiago place will come in cheaper than the cheapest San Francisco place.
[1] This is a joke indigenous to Chile. They idea is going back not many generations, the people in the target audience for this joke had some money and some status, before downward mobility as the fortunes of the country rose and fell repeatedly. So there's an in-crowd. Specifically, in Chile, one sociological measure of status is whether you have a Spanish surname. So Gutiérrez, Pérez, those are considered--by sociologists, and in general by the culture--low status. Then on the other side is the Basque surnames, with lots of z's and r's, very recognizable, long names. Basques did very well for themselves in Chile, and that's more or less the only thing that matters for status really, is money. Power much less. It has to do with the neoliberal economy, so like the lay of the land up til 2019 was best understood by reading an introductory economics textbook, whereas in America it's the Bible. Money is everything, and like how you go about getting it, where it springs and where it's scarce, and the myriad ways you get fucked when you don't know the trick they're pulling on you. Which you can usually figure out, again with an econ textbook. Gente como uno is like an in-joke of the recent immigrants, not the very recent immigrants from eg Venezuela, but the wave from before which had non-Spanish surnames, like Basque, but also Italian or Dutch or German, or English is good too, Irish is very good in Chile in particular despite the Irish community being vanishingly small (most of it mixed in producing more redheads than blondes, blonde hair is incredibly rare in Chile, to the point any shade of hair that is brown or blonde is called "rubio", which stands for blond/blonde. I got put down as "rubio" in castings, it's a cultural thing, in America I say I have brown hair. It's just blond by American standards, platinum blond, like many Chilean men I know before their hair darkens dramatically (Pedro Pascal being one example, the Mandalorian. I saw an analog picture of him as a child, platinum blond, just darkened dramatically, to jet black, this happens to some Chilean men), so platinum blond, is incredibly rare here, 1 in 10000 people or so. Like if you're a blonde woman interested in Latin men like the bravado the dancing, and sure it's the safest part of Latin America, if you're blonde Chile is not for you, it's considered intimidatingly beautiful, nobody will hit on you. So I'm told.
Comparing via square footage, it's true - cheapest SF place is more expensive than most expensive Santiago place, but 3BR Parque Forestral penthouses (Even Barrio Italia) used to push $750k, for example, which you could get a 1BR place in SF for at the time probably too. If you go outside of SF city limits it gets much harder to compare.
Of course, these are just housing costs. Other things end up being more expensive in Chile in a different ways. We have kids, and even mediocre public schools like you find in the bay area are better than almost all private schools in Chile.
So in that, you agreed with me. Let me take the chance to agree with you, public schools ("liceos") are not as good as Chile deserves. Well first off very underfunded, if you go and send your kids to Nido de Aguilas that's about the same budget per student as an American public school. And it's the best education. Just yeah it's hard scratching up that change in the Chilean economy, as it stands today. And there's plenty of schools, just education in America is subsidized and you have to pay your way in Chile.
Globalism has made it easier to do global business in much of the US, logistics, transportation, and communication have changed dramatically since then.
People take for granted the fact that you can pop into any small town grocery store and find a vegetable grown in another country. That’s a relatively recent possibility.
But there’s also many cities of 100-300k residents with plenty of affordable housing and Fortune 500 offices.
I watched my grandparent’s hometown (Newton, IA) become less and less desirable over the decades after Maytag moved the factory to China. They diversified a bit by adding a race track, but it’s a shell of its former self. Cheaper offshoring (not from one party or another, but encouraged by politicians on both sides) really wrecked the economy of small US cities and towns.
Double up or move to a cheaper place
That’s how the US west was populated, it’s how the US east was populated too - migration
Virtually every other problem is either a distraction or an indirect consequence (e.g. NIMBYs, too much luxury housing) of this core issue.
When you tax land value, the initial price of the property drops to offset, which makes it easier for less wealthy people to afford a down payment. A perfect land value tax would set the price of land at zero with a hefty month tax payment.
If this raises more tax money then the government can meaningfully spend, you simply give it back evenly to the community. Note that, just like the carbon fee and dividend system, still incentivizes that people use as little land as they can.
[0]: https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g...
Since this incentivizes increasing the housing supply, zoning would quickly change from exclusionary to abundant. With those new homes being built, people would choose to move from their worn-down house into something new and better, and their current property would eventually have the same fate. It's not kicking people who love their homes out, it's letting people leave their homes for better ones.
You would still have apartments. You would still have AirBNB's. You would still have co-ops. You would still have houses.
Any tax money in excess of what is currently paid would be currently would simply be given back as a citizen's dividend, unless that tax money could be better spent on infrastructure, infrastructure that would pay for itself in higher land taxes that would yield even more land tax share dividends.
Land being a liability means that the "owner" will have zero incentive to hoard it. It will mean that owners of low rise property in high demand locations wont be doing everything in their power to inhibit high rise development because theyre sitting on a pot of gold. Theyll be sitting on a pot of taxes instead.
It means any undeveloped land will be developed or sold to somebody who will.
It means slumlords who rent out shit housing will lose money.
We all recognise that this is the appropriate way to deal with electronic spectrum - auctioning off time limited rights. The idea that your great-great-grandfather owned 400-405MHz so you should too is no less ridiculous.
How much rental vacancy is needed for there to be enough space for people to move around? 3-5%? Too low and you have gridlock.
https://www.census.gov/housing/hvs/files/currenthvspress.pdf
Home vacancy rates are currently at about 0.9%(!!)[2]
These are both very low. In home vacancies it's probably the lowest the US has ever seen, and in rental rates it's almost the lowest, and many metropolitan areas are probably experiencing the lowest rate they've ever seen.
Supply is the problem. Almost every other comment I see on this topic seems to suggest that the issue is something else, but this is all really simple economics. Supply in the places where people want to live is very low, demand is very high (and possibly higher than ever due to pandemic pressures), prices go up up up until the supply-demand curve settles down.
I'm not afraid to use the government to try create justice in housing, but the fact is that the only thing that really matters at scale today is SUPPLY. If we get more supply in the places people actually want to live, prices will go down. The fastest and cheapest (and probably only) way a government can make this happen at the scale needed is by making construction of (or conversion to) new dwellings much cheaper. If you are proposing policies that don't do this, I think the best outcome is nothing and the likely outcome is an even more messed up market that will inevitably privilege the rich over the poor.
As far as commoditizing housing, I just don't think it's a problem (and probably not very viable either) so long as there is enough housing supply. Anyone who thinks the residential-real-estate party is never going to stop is out of their mind or trying to scam investors. The party will stop.
[1]https://www.census.gov/library/stories/2022/05/housing-vacan.... [2]https://fred.stlouisfed.org/series/USHVAC [3]https://ipropertymanagement.com/research/rental-vacancy-rate...
... why is this the top comment?
If you consider it not helpful in the discussion, then please down vote it. This will help to lower its ranking.
I don't like looking at a house as an investment, but it currently is. I'm a very frugal person and I save as much of my money as I can. Nevertheless, at 33, when I first met with my financial planner one of the first things she told me was that I'd already maxed out and exhausted places I could legally stick my money for long term investment... besides a house. There are a couple alternatives, but they likely won't be around long. One was a life insurance market account that you push money into every month - turns out, due to it's tax free nature, it can rival the growth of a home. Historically, when houses were lower barrier to entry, they were the simplest and most effective form of saving money.
Next, location. I don't need to live somewhere fancy, but when I bought a starter home ($200k) in Dallas the only place I could afford was about 45 minutes north of the city. My commutes to any place I could work were long. Prior to this I had moved to the country to save money to buy that house. My commute was 2.5 hours every day. Even with mass transportation, my commute would be long due to the size of the DFW metroplex. This weighed on me every day. I was missing time with my dogs and family.
I was trapped in a scenario with a bunch of tradeoffs that all yielded similar results just as the Dallas market was heating up. Quite literally, the only reason I got my house is because no one bid on it. It had been hit by a tornado and leveled a year prior. People were very superstitious about buying the house.
What's insane is that we never consider the obvious alternative. GOVERNMENTS HAVE TO PAY FOR THE HOUSING THEY NEED.
It's true that developers will not build if they can't make a profit. So we raise money through taxes and treat housing like an investment in our future.
This American notion of "free market or nothing" has left us with unlivable cities of sprawling suburban houses because that's where the profit is. But that's not what's good for our long term future. It turns out you can't laissez-faire your way to good urban planning
While I agree America needs to put in some serious work into urban planning, the current and recent past of the US urban planning is anything but laissez-faire: strict zoning, housing codes, permits for most major building actions, minimum parking requirements...
Yeah, a bit of hyperbole. It seems more that the mess of regulations are just patches on top of patches, sometimes with conflicting intent and not with much long term design.
And a lot of it is controlled at a extremely local level. This means we end up with paradoxes where everyone acknowledges that we need more houses, nobody wants to densify areas near themselves. It's always someone else's problem.
It's the same story with power shortages in California. We need more generation but plant after plant was denied because the locals objected to the proposal for building near them.
It's clear we need planning at the state level and override local municipalities to force development. If they complain then the response should be "you had your chance to solve it and blew it. Too late now. "
These all assume that the cost of new development is the building/development itself. It isn't. It's the land.
The correct solution to this is a land tax based on the assessed value of the land.
You land-tax to make sure the most efficient buildings end up using the land. But the construction industry in towns like SF and NYC is mostly constrained by what you can get approved, which comes down to connections and what politician-pleasing giveaways you have to tack on.
And expensive downtown Manhattan land has lots of potential competition, but with transportation infrastructure costs running $2 billion a mile (!!!!!)
There is NO one single point of influence that works the way we want it to, and that starts right at the 2nd-order effects, not even tertiary effects.
So, maybe an example of turning on & engaging the motor of a boat on a lake would be the primary effect is the boat accelerates, the secondary effect is the wave/wake created, and the tertiary effect is the wake bouncing other boats and it's effects on shore.
So with this land tax example, the primary effect of the tax is increased revenues for the city and costs for the landholders, the secondary effect would be restring ownership/renters to a wealthier set of people, and the tertiary effect might be changes in the mix of transportation used like more private cars and less public transport...
1. Some people talk about "land tax" meaning a tax on the value of _only_ the land. So you pay a tax based on the land, but not anything built on it.
2. Some people talk about "land tax" meaning a tax on the value of the property if you were to sell it; including any construction on it. This is the common situation in the US, to the best of my knowledge.
The former, taxing _only_ the land, is what (I believe) a lot of people are talking about when they say it will promote more/better construction on the existing land. Because you're paying the same tax regardless of what is built on it, so build whatever it the most useful for you.
The only shortage is in homes that are not investment properties
That’s how you build slums. Which I think is what you’re proposing.
> because that's the only way a developer can recoup their enormous land acquisition,
There you go - in order to make it cheap you need a land tax, nothing else will work (alternatives have been rehashed over and over decades by georgists).
Without land tax the property market is stalled without market clearing and both tenants and developers get stuck. You won't find a solution by catering to either. The solution resides outside of this left and right dimension.
If you want the real solution, you go asks georgists. If you want to score politics points with YIMBYs or NIMBYs you keep beating the same dead horse forever.
How would land-taxing make it cheap ?
The other issue is vacancy. 10% of homes are unoccupied. Coming up with ways to fill even some of those properties would be hugely impactful.
This is the second time I've seen this number thrown around, but as near as I can tell it's completely wrong[0]. Homeowner vacancy has never reached higher than 3%, and the 10% figure was rental vacancy at the height of the last recession: it's now 5.8%.
Aside from the fact that the number itself is outdated, it also lumps the entire US into a single category. Most of the land in the US isn't suffering from a housing crisis, and including homes in those areas in one big national vacancy rate doesn't help understand the degree to which vacancy is playing a role in the big cities. You need to be looking at vacancy by neighborhood, not by country.
[0] https://www.census.gov/library/stories/2022/05/housing-vacan...
The government should excecise it's power of taxation to take the profits of an investment housing sell (as defined above: multiple property owner selling at profit) with something like a 95% tax on profit and use that to build competitive housing (not for the homeless but for the regular person).
It is doable politically but only if there is support with the people. This bullshit about your housing being an equity investment and other related sentiment needs to go away.
(I would actually like us to deregulate housing construction past the point where flipping is no longer economic.)
Many sellers don't want to do this.
Consider someone who inherits their parents house, 1000 miles away. The house needs renovation.
You want them to uproot their lives or find a "service provider" (1000 miles away) instead of just doing an "as is" sale to someone who will do the renovation and sell it.
Sellers want out. There's no social benefit to making that more difficult.
Many buyers aren't interested in doing a renovation, and most of the other things apply.
People who renovate for a living do have those things.
You seem to think that holding out for more money is no-cost - you're wrong.
Flippers lose money if they're wrong about the market, so why are you so insistent that it's wrong for them to make money?
Which reminds me, how long does someone have to own something for you to be okay with them selling?
People can sell whenever they want, my restriction is the profit margin. I have no problem with that margin being more and more over time so long as that rate is nationally set to be uniform.
Flipping as a service requires waiting by buyers and/or sellers which costs them money. Why is that a good thing? (A renovation may take 6-12 months.)
That's a general contractor, not a flipper. The key difference is who takes on the risk: if I hire a general contractor and they turn out to be not very good at their job, that's my problem.
The tax break should be made if someone's primary residence is occupied for at least 35% of a tax year. A number intentionally just a tiny bit bigger than one third, so the break can only apply to a maximum of two homes, but low enough to be flexible.
I will paraphrase wrongly attributed to Bill Gates quote.
15m should be enough for each worker in this world.
Marx would be very happy hearing this.
[0] https://scholar.harvard.edu/files/glaeser/files/why_is_manha...
Encouraging people to just live somewhere else because they can no longer afford the home they've owned for decades undermines the entire premise of home ownership because it means that you may own the deed today, but you only control the property as long as the financial system underpinning your local real estate market operates within a range that you can afford.
And in 40 years when you're retired and on a fixed income that assumed you'd be paying a property tax rate that has now doubled and you can no longer afford the property, then it becomes your turn to GTFO and make room for the people who can afford it.
Who is to blame that you stagnated financially all these years and the place you lived increased in value? You could sell the property you own and move somewhere else(cheaper) "living like a millionare". Chances are that if you are too poor to afford tax on the property you own or the places around (i.e restaurants surely got more expensive too) then you don't fell like you belong there anymore. You find the place hostile. Your friends may have moved as well or now they are too rich to hang out with you. If you don't want to get into this situation you should either make sure you have enough money when you retire or plan your retirement somewhere else or just consider that buying a property in the world's biggest financial center doesn't mean you will afford it forever. Change is part of life. Also consider that when you purchased your house you increased the value of the properties around and forced some people to move somewhere elese too. It's the circle of life, survival of the fittest.
However, if you feel differently, we could make gains in property tax payable on death or property sale.
When you take a look at Tokyo, who have had stable housing prices, and have a sane zoning system, what you see is that people can live where they want to live. Yes you have some skyscrapers. But you also have many places that aren't.
That’s what price does
I am as YIMBY as they come regarding zoning, but this is a complete non-sequitur. It also shows a casual disregard for basic republican values: the right to freely associate and to withhold one's labor.
An international comparative perspective, as well as a regional perspective, do not suggest that construction union density can explain the widespread housing affordability crisis in the U.S.
Only 12.6% of American construction workers are union, and residential construction is a less union dense subsector than commercial real-estate or large-scale infrastructure.
Many countries have both dramatically lower housing costs and higher union density in the construction trades that the United States [1].
Within the U.S., it's clear there are problems provisioning housing where construction workers on residential projects are rarely if ever union (e.g. Virginia, Florida).
> I am as YIMBY as they come regarding zoning, but this is a complete non-sequitur. It also shows a casual disregard for basic republican values: the right to freely associate and to withhold one's labor.
It does no such thing. Rather, it's noting that unions raise the cost of many things they are associated with; especially construction. The value added by the union being in place isn't being questioned (or even commented on). Just the fact that they add cost.
The same is true of safety regulations. Those regulations (generally) add a lot of value by keeping people safe/alive. But every safety regulation _also_ adds to the cost. Pointing out that they add to the cost in no way belittles their benefit or the desire to have them.
People want to live where they want to live (near family, jobs, culture etc)
Take NYC for instance. Politicians try to address the NYC housing crisis from a demand/cost perspective. Rent is too high? Let's just screw the property owner and cap the rent. Or let's just raise minimum wage to make it easier for people to live in those properties.
The result in both cases: you didn't have enough housing before, you don't have enough housing now. You give more money to people, rents will just go up. You cap the rent, there's still a huge number of people that can't live where they want and you make it impossible for existing tenants to move (or for new/more development to be built, for that matter)
So, what instead? You want to build more housing in NYC? Great, that should work. But you have to make it cheap. Deregulate construction, get rid of unions, prioritize developer rights over tenant or homeowner rights. What? You don't think these are good things? Okay, but then you'll have to sit back and watch new construction trickle in and result in 'luxury' housing because that's the only way a developer can recoup their enormous land acquisition, regulation and construction costs. So the challenge with housing is that it requires fundamentally difficult decisions. To pretend that you can just spend 100 billion (or even a trillion) and the problem will be solved and people will be happy, is an illusion.