Landlords basically have no other option, we don't really have a credit score system like the US does, so it's much harder to verify how trustworthy you are. There are agencies that can tell you if somebody's currently in debt or not, but as far as I'm aware, somebody with no credit history is basically indistinguishable from somebody with "good" history.
Some may consider it the end-goal, to be fair - as eventually you'd drive landlords completely out of business. The problem is that this is antithetical to higher density, because you need landlords of some form if you have anything denser than a duplex. You can have condos perhaps, but not everyone can afford to get into one, or even wants to.
And if there's a lack of landlords willing to rent, there will be a lack of landlords willing to build to rent, and so the housing stock will continue to increase at a glacial pace.
The laws of unintended consequences can strike in weird ways - making it easier to evict may result in more housing in total ...
Most of Europe somehow manages to live in individually-owned private apartments. Even if you rent, the landlord will rarely own the entire building.
Great! Housing should never have been allowed to become a commodity.
How do you solve the problem of condo owners not maintaining a property and letting problems fester for a couple decades after which they might be dead or move out?
There is normally a kind of owners assembly in which the various owners can take (binding) decisions or action regarding such problems or anything that concerns the building as a whole. It might not be mandatory in all countries I suppose, but it should be.
Extreme examples include: https://en.wikipedia.org/wiki/Surfside_condominium_collapse
I cannot express how much pain occurred to figure that out! Still occurring.
The good news for them is, in 5-10 years the dynamics will likely look very different. It's already been changing against landlords, for instance with the covid rent holds, rent control expanding in some areas, cost of money rising and changing market dynamics, etc. I expect a lot of landlords will be trying to exit shortly, and the ones who think they can't are going to be trying to squeeze as much return as they can - as their expected future return due to speculative property prices disappears.
So poster - it might be more worthwhile taking an inventory of who is around you (and if the influence they have is helping you), what YOU actually want your life to look like long term and your own values, and figure out how to get there and if you're willing to pay that price or not.
It may produce more bespoke, custom houses though. But they'll only go to those who can afford to do a LOT more to get it.
The reason why that listing has a $15k broker fee is exactly BECAUSE of the weird and hard to deal with reality that is a rent controlled apartment in NYC.
There are probably other off the books type things going on too, IMO.
If you want something transparent and easy to get for the average person, making it a commodity with clear rules is exactly what you want! If you want to incentivize gaming the system, the other direction encourages that.
Regardless of if it is a commodity or not, there needs to be constant vigilance regarding manipulation, scams, etc. Scams and manipulations are easier to hide when goods AREN'T commodities. There are some amazing horror stories (on both 'sides' of the economy) behind NYC rent controlled apartments and living in NYC in general.
[https://www.merriam-webster.com/dictionary/commodity]
From the link:
"1 : an economic good: such as a : a product of agriculture or mining agricultural commodities like grain and corn b : an article of commerce especially when delivered for shipment reported the damaged commodities to officials c : a mass-produced unspecialized product commodity chemicals commodity memory chips 2 a : something useful or valued that valuable commodity, patience also : THING, ENTITY b : CONVENIENCE, ADVANTAGE … the many commodities incidental to the life of a public office … —Charles Lamb 3 : a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price 4 : one that is subject to ready exchange or exploitation within a market … stars as individuals and as commodities of the film industry. —Film Quarterly 5 obsolete : QUANTITY, LOT"
As it is though, the social housing sector is woefully underfunded, leading to sometimes decades-long waiting lists (at least where I live, in the Netherlands).
In countries where housing was socialized they had a system of residency. You couldn't move to another city, without a permit. If you live in Tholen, you shouldn't be able to move to Amsterdam, unless you mary someone from there or if society determines there's a social need for more workers in the capital.
After all, you can't socialize things while maintaining bourgeois concepts like "freedom of movement". You can't eat the cake and have it too, right?
Sure, maybe not everyone will be able to live smack in the center of Amsterdam, but there’s enough space in other parts of the city, not to mention nearby places like Amstelveen, Hoofddorp or Almere (which, you will know, house mostly ‘overflow’ from the Amsterdam market).
It isn't expensive to build such areas, so there is no reason not to do it except if you want to punish the poor.
The key is which ones insulate the giver (landlord/lender) from non-payment (e.g., which are guaranteed by the government).
In the aforementioned situation, the home owner is both creating equity and saving 25% extra each month.
It creates a very broken situation. But the Dutch government has coddled home owners for four to five decades already. And the real estate market is often zero sum, where advantaging one group disadvantages another.
Time to make home owners bleed for a couple of decades. Balance must be restored.
Why? What value do they provide, other than having a bunch of money upfront? I’d argue there are many, many ways to fund building construction other than for-profit ownership
Providing capital is useful! You can't just ignore that.
And it’s much much much easier to eventually evict someone and lose thousands than to try to get loaned money back from someone who is judgement proof, losing hundreds of thousands.
I think you’d agree that we could fund a national/regional/global system that would provide a sufficient safety net for a system where everyone is paying into some kind of equity for their land. You just don’t agree that it’s worth it / sets the right incentives / a bunch of other reasons I could never think of that I’m sure are sound. But I hope you see why taking the “but everything’s on fire!!!!” macro perspective is appealing in theory :)
Just like school loans.
Automobile loans.
Etc.
As it should be. Why would you want to allow someone to be judged for _not_ having been in debt in the past?
You can always ask for references if they rented before, that might help somewhat.
Holding zero balances on accounts means you aren’t costing them money, which is better than defaulting on loans, not making payments, etc. but doesn’t mean you actually made them much money. People who never get into debt are generally not valuable customers for companies who make their money off interest.
People who require they keep book keeping/overhead for (aka keep active accounts), while not paying them money are actually costing them money.
If you show a past history of being able to cost them money, and then not actually doing so, or even making them money, that is certainly better than actually costing them money.
Aka, you held some debt for awhile, but made your payments and paid it off. Those are high credit score/low risk folks.
Having large outstanding credit balances (especially escalating ones) and only making minimum payments means you’re currently making them money, but are a relatively high risk of costing them money shortly in the future when you inevitably default. Which is a low credit score/high credit risk.
If you have high open credit, but rarely use it, they can’t tell if you’re high risk (you’re waiting to blow all your credit and leave the country) or low risk (would work yourself to the bone to pay every dollar back and would never overcommit) - but one thing is for sure, you aren’t actually making them money right now, and there is some risk you’ll max out your credit and disappear.
If you are paying ongoing interest and never default though, you’re the gravy customer for a CC company, as you’re be paying them waaaaay more interest than anyone else. So medium credit score, medium credit risk.
It’s a balancing act.
Someone with zero credit history is a complete unknown, which for various reasons is likely the highest risk of all, and why it’s also only slightly easier to get credit in that situation than if you were a serial bankruptcy machine.
To some extent, renting an apartment does take on some debt. You're basically being loaned the property in exchange for making interest payments.
Which, to me, they should not be allowed to do. I'm yet to find a rental property that lets you pay rent in arrears, so there's absolutely no use of credit occurring.
Not to mention you have the ability to literally burn down their property (even by accident) with no real way they can stop you, since you have the run of the place. At best they can try to lock you up afterwards, but if you do it right it would be nearly impossible to prove.
Having a tenant in possession is always a 'credit' risk.
If it's credit, report it. Don't charge people a fee to do so. I'm actually fairly surprised the bureaus haven't forbidden this. And if I was a renter and this was being done to me as a condition of rental I'd be disputing the tradeline.
> they've always got some degree of 'arrears' risk going on.
That's not a default of an extended line of credit.
> Not to mention you have the ability to literally burn down their property (even by accident) with no real way they can stop you
That's your investment risk as a landlord and why you carry insurance, still has nothing to do with my creditworthiness. Like you say, "even by accident".
Same reason some employers like to check your credit if they expect you to be handling their or their customers money.
A track record of following your agreements when other people’s money is at stake, in a way they can get what is agreed on at the end of the day is important to them - and to if they want to place their money or assets in your hands going forward. There are many ways for a loan, or tenant, to go south and be a bad deal for them.
If that is inconvenient for you, they’ll usually be happy to tell you to bother someone else instead. If they’re smart, anyway. Dumb lenders lose principal, and that’s death to them if they do it too often.
Personally I don’t write loans/notes or rent out property because I’m not interested in dealing with the manipulation or excuses. I do have excellent credit though. And have had people write private notes for some side projects of mine. YMMV.
You pay upfront for the use of a home/apartment/condo - you are not being extended any kind of credit.
For the same reason prepaid phones don't report to credit bureaus.
That corner cases exist where you might be out money through the fault - or not - of the tenant doesn't make it a credit instrument.
All of your examples are entirely understandable - they're just not credit.
That's why there are separate reporting agencies for tenants and evictions.
No matter how you slice it, you are not extending credit to anyone by renting your home.
> A track record of following your agreements when other people’s money is at stake, in a way they can get what is agreed on at the end of the day is important to them - and to if they want to place their money or assets in your hands.
Now you're trying to conflate doing a credit _check_ for prospective tenants (something I have zero issue with and is completely different to this) with "allowing property management companies to, for a fee of course, report your entirely-paid-in-advance rental / lease payments as credit arrangements in arrears.
Perhaps if you start billing your rent in arrears, there would be a case for this.
To wit, the fact that in some situations you might be out some money doesn’t mean you have extended someone credit.
> If credit is the concept of ‘I get back what I loaned out, plus agreed upon interest per the agreement’
By your argument if you lend me your car and ask me to fill it with gas/replace the gas I used and I don’t, you could report my default to a CRA. Somehow I don’t think that would work.
Did you read it before replying?
For instance, I literally said a lease is ‘credit like’. Not actually credit. And that some landlords and employers might want to check your credit report before engaging with you to see how you do with credit, as they might give them useful information on how you might do in other areas they care about - not that they would report their own activities there.
The car loaner situation is also completely inapplicable to a lease - which, btw, is almost the exact same broad structure as a bond.
Possession of X is given to debtor in exchange for monthly payments of Y with some additional conditions, and in the event of default or end of term, X needs to be returned to the bond writer in whole. With optionally some funds held in escrow (security deposit) in case of default or damage to X.
It’s real property for a given time in exchange for rent of course, not a chunk of principal for time in exchange for interest, but it’s the same kind of deal.
And similar to most bonds, the full interest/rent amount isn’t paid up front. It’s done for given periods of time (a month being pretty standard).
Now one could imagine a way a car loaner could be structured so that payment of gas IS payment for the loaner, and even how it could be structured as an automobile lease. But it would require that structure no? And would be pretty ridiculous paperwork wise.
Property leases already follow that structure.
Right - leases are credit-like, somewhat. However, leaving aside the concept of eviction taking time (that to me is investment risk, not 'extending credit') - lease payments are made in advance, and when I was a tenant, every single one had a clause allowing for termination in the event that prompt payment was not made, in advance.
My objection there is that these payments should not be being reported to Credit Reporting Agencies because they're not credit.
And as supporting evidence, if they were credit, every tenant for decades would have every lease or rental agreement being reported as a matter of business. Why has that not happened? Because it's not credit. And now, some "innovative" companies are offering to work with Property Managers and landlords to offer it as a "service" to their tenants.
However, you look at things and very quickly you realize the benefit to the tenant is almost a side effect:
These services charge a fee to the tenant, a portion of which goes to the landlord (can you say kickback?), and if you look at the websites of these services, the "allow your tenants to record good payment history on their credit report" is but one bullet point. Every other bullet point talks about the benefits to you as a landlord.
You mentioned landlords doing credit checks to establish a sense of the tenant's fiscal responsibility. I think that is fine. As for evictions, damage, deposits being withheld, and so on - there's a need for that. And it exists, entirely separate to the CRAs.
This whole thread started because of one point, that I don't believe they should be able to report it as a credit tradeline, because it's not. And I still think the single biggest argument I have that that's the case is that it's only been in the last three or so years that this has been offered, when credit reporting has been around since the 1980s.
You REALLY need a lease to not be a type of credit, and hence not be within the scope of a credit reporting agency? Or included in a credit score?
Though, notably, not like anyone necessarily needs to care if it fits the nominal term on their sign if they want to take on new business right? (though various regulations can of course come into play in some cases)
Hell, a ton of their revenue now seems to come straight from 'credit monitoring' services which are only thinly veiled scams near as I can tell.
The issue I have with the argument you're making, is that as you yourself note - investment risk is fundamentally the umbrella under which credit risk lives. And that is the same umbrella that landlord/tenant risk lives under. And in fact, the risk that a landlord takes on with a tenant is SO CLOSE to the risk that someone takes on with lending someone money, that it's an ALMOST artificial distinction.
Near as I can tell mostly due to historical reasons.
Renting existed long before standardized currency (and hence the ability to loan someone currency). And since having a roof over ones head is rather fundamental to being able to survive at all in most places, the power dynamic is prone to abuse in many concrete ways unique to property.
But, for example, leasing a car is 100% tracked by credit reporting agencies on a credit report. And the difference between leasing a car and leasing a house is... the car can move? and isn't generally a primary residence for anyone. and is cheaper.
So actually aren't renters being screwed here, because paying their rent on time could actually help them build a better credit score by showing they CAN do credit-like activities on time - without having to go into 'debt'?
In fact, wouldn't it actually HELP renters move to owning (by having lower costs to borrow on their mortgage), if they could build a better credit score by renting? And it seems like companies have picked up on that, which is why they're offering it for a fee.
One of the biggest complaints I've heard from folks (and felt myself) for instance, is that paying an equivalent amount in rent does nothing to qualify oneself for paying a similar mortgage. But if reported on credit and included in credit score, it would.
So if you really don't want the credit agencies to be reporting on it, I guess the question is - why?
Too much centralization in an already too powerful set of entities?
Too much transparency in an area prone to really screw some people who have a hard time behaving? After all, the downside would be someone who can't pay their rent would also have a hard time getting a mortgage, but that generally already happens.
Too much absolutism/numericalism for something that "shouldn't be"?
Think they're a bunch of assholes who need to die?
I can see some reasons why you'd object, I'm just not buying the reason you're using on it's face. It's like saying home depot can't sell furniture because they're a 'home improvement' store, and furniture doesn't improve the home itself, but just the experience of living in it. And that no one would benefit from buying furniture there.
And besides that there are other places who specialize in selling furniture.
Which okay maybe? But perhaps you just hate Home Depot? Or maybe you own a furniture store?
I can certainly empathize if that is the case! I don't know though.
Unfortunately, they do provide a lot of value in specific situations which others are unable to do, which is why they continue to do pretty well. Lame.
It also isn't clear that them also just selling furniture and 'eating' all the local furniture stores like almost everything else they have done is anything anyone is going to work hard to stop, and maybe Home Depot is good enough.
A loan has a risk to the principal that you’ll not repay it in full. A lease has a risk to the principal that you’ll drive down the value of the property or even destroy it. Same difference, approximately.
Both have the actual cost they’ll be worth less at the end of the term than they were beforehand, due to inflation and wear/tear.
The biggest difference between a loan and a lease is that instead of them giving you x amount of $ directly (aka exclusive control of that money), they’re giving you exclusive or semi-exclusive control of an asset they value at x amount of $.
And that the asset has an address attached to it, and you can live there.
And that's actually good. What more could you possibly need to know other than a person's revenues and their debt to be able to decide if they're capable of paying rent? Why would you care if they've had or had not had debt previously? The American credit score system is dystopian (it can literally make or break your life because it's being abused by prospective landlords or employers) and broken (made by private entities who suffer no consequences in case of mistakes, be they leaking your data or mistaking identities).
Also, often in pretty bad shape, so easy to take pity on. Until they screw you personally, anyway.
And that would be easy to see when you ask them for proof of revenue before renting to them...
Oh and don’t have a friend pretending to be their boss on the other side. Easier to do now than ever, especially with all the free phone and text services.
Used to be you had to have a friend halfway decent with forgery at least (or with a similar enough name and a real job they’d buy it).
Or steal someone’s mail.
Or any number of scams.
And don’t worry, very few judges will throw them in jail if there are a bunch of kids in tow - even if they aren’t actually theirs, unless you can prove it.
Some people never stopped modifying those ‘F’’s into A’s on their report cards, and just got better at it not getting caught.
Good due diligence should catch it of course, but it’s always a game of cat and mouse.
How thorough would you need to be to feel comfortable? How thorough do you think you would you need to be to actually not get scammed with 99% certainty?
> we don't really have a credit score system like the US does
Shady predatory credit rating agencies like in US or even Germany are abomination, it's a thing to avoid not to follow.
I personally think it's awful to see elderly people getting priced out of a house they've owned for decades, young families have to move their kids in their high school years because the taxes have become unmanageable, how it disproportionately impacts POC as gentrification occurs, and all the other ways it impacts people's lives who just thought they were buying a house to set roots for their lives/families but then externalities cause it to suddenly become unaffordable.
It's extremely perverse when you consider that these people's tax dollars are often used by politicians to encourage the very "growth" that contributes to their affordability problem. They court corporations and give huge tax breaks to move their offices/factories to Texas, which drives up the demand for housing, etc.
If grandpa and grandma are just living in their house in Texas and surviving on the last of the pension, they're not even vaguely in the same category as a property owner deciding which of the next condo buildings to buy.
The exact situation you're referring to caused Prop 13 in CA, and something has to be done before something like that gets enacted.
Prop 13 wasn't passed as a law to help the unfortunate. It was anti tax hatred of the government. Jarvis wanted a "tax revolt" which is why all property in the state, even oil fields and golf courses, gets the tax break.
No, but it was sold to the public that way of course.
Today yeah the marketing is 100% that it's a welfare program for seniors.
Do you have any more information? At first blush I can see how inheritance schemes would create massive loopholes in this for example.
If so I wonder if that can create the opposite of the problem of elderly people being forced out by rising taxes. Namely someone who wants to move out but can't afford to because after all the deferred taxes are paid from the proceeds of a sale they won't have enough left for another place.
Again, these things are already done in other states, and it doesn’t have to be perfection, just better than it currently is.
There's another way that is better than it currently is, without the downside of building a potentially large debt if the senior manages to live a long time after retirement before finally needing to move.
That's exemptions and/or freezes. E.g., here in Washington if you are at least 61 and have a disposable income under 70% of your county median income they freeze the assessed value of your property and exempt you from part of the state-wide property tax. On a $400k assessed value home that would cut the taxes from $3400/year to $2200/year in my county. The 70% threshold is $65k.
There are more exemptions at 60% ($56k) and 50% ($46k) that remove more of the state-wide tax and also some of county and city taxes. For those below the 50% threshold in my county that would reduce the tax on a $400k assessed home to $900/year.
Washington does also have a tax deferral program, but that is aimed to low income in general rather than seniors. I think it is meant for cases where you have a temporary reduction of income but are expected to recover.
They’ll just record them and wait. It’s the one thing the government has that normal companies/people can’t do. Wait it out over lifetimes.
If I were 5x leveraged my net worth on a jackpot like that I'd probably cash out and move to an island to.
Depending on the structure of TX property taxes, it is certainly possible to have your tax bill increasing rapidly while property values are stagnant or even falling.
You can’t have your cake and eat it too. Everyone wants their home to be worth more and more year over year but doesn’t want to incur any obligation for it.
How do you square that with the idea that communities and social connections are more important? Look at what California did with prop 13. It’s a disaster by all accounts. We need to switch models not create more complicated exemptions around property taxation.
Land Value Tax is more equitable and doesn’t have the intrinsic volatility and unpredictably of how we do property taxes today which is assessed in the unit value not the land and only punishes under utilization and vacant land holdings. This encourages building and to some extent smaller parcels of land per unit built
Yet somehow I dont think those two personas make any amount of the "everyone" posting here on HN
Another way to think about it: they’re selling at a premium well over they bought it for.
While I’m no fan of the act of moving, it’s not the end of the world. It’s not like these folks are being forced to take huge losses on their homes in the ultra majority of cases.
Housing being seen as this generational I own it forever thing that Americans have doesn’t also square with the American narrative of housing as an investment.
It’s one or the other. If you want housing to be seen as something that more or less “always goes up” but you can’t be taxed in the increased value then you are by nature distorting market dynamics you don’t see elsewhere. IE if I make more money I’m taxed more in income tax, for example, and this is generally accepted as something the government can do
It's not a premium. It's what housing costs. If they take their "premium" and buy the next house, their tax bill is unchanged (more or less). They have to actually go find a house that is much cheaper so they can afford the tax bill.
More often than not, it causes them to move out of an area that has seen growth to an area that has not seen as much. This might be moving from Houston to a suburb of Houston, or moving from a suburb of Houston, to a small town 100 miles outside Houston.
The correct "Other way to think about it" is like telling someone this;
You bought this property when the neighborhood was worth nothing. You lived here for years when it was nothing. That might mean it was rural or crime ridden or whatever; but it was cheap and you could afford it. Good job sticking it out all those years and then letting "us" build it up around you. However, now that we've done that, we feel you are still a nothing if you can't afford the tax bill, so go find another rural/crime ridden area to live in. That's where you belong.
In practice it’s not that cut and dry
I agree with this part. Viewing it as investment is the wrong choice.
This makes it more of a modest investment overall, one that people would stop tying their entire net with to
Deferring tax increases based on the sale of a house until the next owner is what California does and it’s a disaster.
Land value taxes are more equitable and treat it closer to a commodity and drive more efficient utilization
I'm not sure i agree with this take.
The building is clearly a depreciating asset. If left alone the house will eventually be worth nothing because a decrept properly carries liabilities instead (neighborhoid fire hazard, penalties , fees etc) So there no nominal value there.
Onward to the land. The only real reason for land to appreciate is because it ia scarce resource. But then you see that the land also has a carrying cost (taxes) that is fixed regardless of its use. Therein lies the dilemma. If land is an asset that generates expense , and then that expense only grows as time passes but theres no income associated with it, are you really seeing land appreciation when you sell, or are you simply recouping your carrying cost during the term it was held?
Not necessarily. The fact that they're getting priced out right now via taxes on the estimated value of the house doesn't mean they can sell the house at that value (being forced to sell) and that they can find a cheaper alternative that works as well for them. So they can be in for a net loss, all things considered.
Meanwhile, I'm pretty sore about the 10% year over year thing, particularly when I hear about how Republicans run a low-tax state or that a wealth tax is unconstitutional/infeasible. I pay my wealth tax every year, but I suspect I'm too poor for the kind of wealth tax they mean. I can at least enjoy the irony.
True but if you're turning 65 after you're tax bill has grown 10% for over a decade as your transitioning to your fixed income years; it's not a good thing just to freeze the tax bill. You might not have time to earn and save enough to cover the value it gets frozen at. It does help soften the blow for many though.
> But honestly it might be better for them to downsize into something more appropriate and perhaps free up the larger houses for families.
I wholeheartedly despise this line of thought, unless it's coming from their individual decision to downsize. You're basically treating the house like a commodity. It's a Home this person lived in, raised family in, hopes to continue hosting holidays in, where grandchildren can go to visit, etc. They should be able to use it until they decide to leave. On average, they only have another decade or so of life left anyway after their taxes get frozen at 65, let them enjoy their home.
It either is an asset or it’s a commodity as far as the market goes. If you want generational housing and for housing to be generally affordable something has to give. Kill it as an asset class and you get what you’re looking for.
10 years is a long time in the housing market. Assets sitting for 10 years under utilized is another way to think about it.
These two ideas - that housing is an investment and that people shouldn’t be incurring tax burdens on them like this - do not square
I personally do not think 10 years is that long in housing. Sure a lot can change in housing over that time but at any given moment, If I'm in need of housing and supply doesn't exist, I can build a custom home in less than 2 years. I can buy in a development basically immediately. This might not be a global truth but it's the state of things in Texas specifically, and has been for a long time. Affordability is the limiting factor, not time.
I think the property taxes in Texas make sense if RE grows at rate of inflation. For a long time, we had affordable housing and now that's not necessarily the case. So the rules/laws need to change to protect people from getting priced out due to taxes is all. It's an issue that didn't bother anyone before because they were assuming their raise in income would cover the raise in taxes. But wages don't increase 10% annually like our taxes do (whole other topic LOL!) so they get put in a hole. Anyone coming into the market now knows the prices, it's all available information, and they can decided if they want to move here or not. It could all be a bubble that pops and corrects one day, but not until inbound population growth slows down.
I don’t propose what you’re saying either. A land value tax is more than sufficient, by any research I’ve seen on this topic. It doesn’t in any sense mean what you’re saying here. Only that under utilized land (usually classified as unbuilt or vacant) is taxed more heavily. Thats one facet. The other is that it shifts the property tax off of building values and onto land values can make both buildings and land less expensive. This has a knock off affect of reducing the value of real estate holdings to varying degrees in terms of value in the short term but stabilizes in the medium and long term.
That would be better in my view but as it exists today, we instead have to rely on building more housing or putting more existing supply in the market, neither of which in broad strokes are happening in a way that keeps pace with demand unfortunately
Also: not everyone who can afford to buy a home can buy a home built from scratch. There are different classes of home buyers and the vast majority aren’t moving into custom homes like that. Its unreasonable to think that it’s common place in aggregate
No, housing is a cost, not an productive investment.
What we actually want, as a society, is for housing prices to go down so people can live places.
Removal of sub class zoning for housing would also be beneficial. Its one thing to zone an area for industrial vs housing but it should not be permitted that when land is zoned for housing they can zone specifically for single occupancy homes for example.
Fact is, everyone needs that to happen right now.
If we change the latter, expectations related to the former will change too.
Quite the opposite, regulation of the housing market rarely ends well. There's quite a few countries that can speak to the horrible deadlocks that occur when regulation suffocates the housing market.
There's nothing particularly wrong with investment per se, now if you make the market so regulated such that there's no competition, you're destroying any kind of forces that push the price down, or if you make the investment so costly the prices go up to compensante.
Heck, there's even countries where the regulation was so insane it was far better to hold an empty home than to actually rent it out.
The issue is availability of property flat out. As long as there's no incentive to make affordable property available, every actor wants their property values to rise and cares little for the negative effects it has on everything else.
Those property taxes exist for good reason because you have to be able to pay for the services / infrastructure from it. Without those matching the area, problematic spirals occur.
What, their retirement savings? How much is recommended to be saved by 65 now - 2 million dollars or something?
Alternatives exist (eg taxable value set by what you paid not marked to market)
Having one reducing reliance on property taxes
I will also accept inheritance tax at 90%, if you really want to skip property taxes :)
LVT would actually negate the parent posters complaints, as only the underlying land would be assessed and the penalties only really kick in if the land is unoccupied or is not utilized (sitting vacant is the most common of this, followed by lack of utilization, for instance under many LVT implementations large lot owners with single homes also get hit with underutilization penalties to encourage subdividing and utilization of the land which is a net win for society And often the immediate land owner. Objections tend to philosophical on this point)
It disincentives empty / under-utilized land holdings like vacant lots or lots that could support more utilization (usually via an activities like building homes on top and selling / renting them or farming)
There is nuance in implementation details but in broad strokes that covers it in tl;dr fashion
I’m glad we cap ours at 3%. And our community hasn’t collapsed for lack of property tax revenue yet.
And we are a progressive state, while Texas is conservative. Would have thought it would work out the other way around but I guess not.
https://www.nbcdfw.com/news/local/frisco-soldier-gets-home-b...
The amount was in the low hundreds (maybe $300).
HOA liened her house, then forced sale.
A local landlord put a bid that was found later to be about 70% under market (like $125,000 offered for a $400,000 home). The HOA Board voted to accept the offer and sold the house to this landlord.
In the drama that unfollowed there was also this little nugget: the landlord was on the HOA Board, and was one of the ones who pushed for the forced sale, and then voted in favor of the Board accepting his short offer on the house.
I don't recall the details of the outcome, although I believe some compensation was paid out to her.
Our rates are 23 mil.
I think this is outside the realm of what most people run into affordability wise and frankly at that level of income I’m willing to bet affording the property tax is much less of a concern
Do you actually have numbers on this? It's a huge talking point for the anti tax crowd but as far as I can tell there's no epidemic of house rich boomers being forced out of their homes.
If you are at least 61, and your disposable income is less than 70% of the median income for your county you get two forms of property tax relief:
1. The assessed value of your property is frozen at the value of the first year you signed up for the tax relief. If your disposable income goes about the threshold for a year but comes back down the next you won't lose your frozen assessment. If you go above the threshold for two consecutive years you do lose the freeze. When it comes back down again you get a new freeze at whatever the current assessment is.
2. You are exempt from all "excess property taxes" and part of the state property tax that is for schools. An "excess property tax" generally means voter-approved levies, such as local school taxes.
If your disposable income is under 60% of the median income for your county but above 50% in addition to #1 and #2, you get:
3. You are exempt from regular property taxes on the maximum of $50k or 35% of the property value, but not more than $70k. For example for a $400k property you'd be exempt for $70k, so your regular property taxes would be computed as if your property was assessed at $330k.
If your disposable is under 50% of the median income for your county, in addition to #1 and #2, instead of #3 you get:
#4. You are exempt from regular property taxes on the maximum of $60k or 60% of the property value. For a $400k property this would mean regular property taxes would be based on a value of $160k.
In my county the 70/60/50% thresholds are $65k/$56k/$46k.
In my county a $400k assessed value home for someone below the $46k threshold would have an annual tax of $900, compared to around $3400 for someone not in the tax relief program. Here is a breakdown of the two (with some rounding):
$300 $ 760 fire
$240 $1000 state general
$ 930 local school
$140 $ 360 county road
$100 $ 260 county
$ 50 $ 130 stormwater management
$ 40 $ 111 regional library
$ 7 $ 18 PUD
$ 2 $ 2 noxious weed
Where this love for arbitrary taxation comes from? How much have you donated to your mayor's electoral campaign? Do you golf with aldermen?
You can own two housing units untaxed, as long as you can produce evidence you spent at least 30 days a year in each of them. This doesn't disrupt non-speculators-- even the modest rich with a single vacation home, or the snowbirds who have a home in Minnesota and a winter place in Arizona don't see an impact.
Anything beyond that? Annual tax of 70% of its appraised value.
Nothing appreciates fast enough to justify holding it at that cost, so you'd see a fire-sale on housing. Add some cheap state-backed credit to lubricate the transition period, and unoccupied units glut the market while renters become owners.
Multi-family structures might create some interesting situations. With the landlord effectively forced to divest himself of properties, he has to reinvent himself as a service contractor, bidding for the maintenance contract on the buildings he once owned. This would be a great moment for karmic feedback against the ones who had neglected quality and safety-- who'd contract for $200/month maintenance from the same firm that never fixed anything when you paid $1500/month for maintenance-plus-land-access?
LVT only works if it is applied uniformly and with zoning reform. It will actually be a tax break for landlords because they are utilizing their property near the limit of its value.
* Land ownership is generally public record, or at least orchestrated at local government levels for property tax assessment, school enrollment eligiblity, and other similar local services.
* Some states already have concepts of presence-- different tax regimes for part-year residents versus full-year.
I'd expect that this would end up being relevant in only a very narrow set of cases. Most cases are slam-dunk clearly "owner occupier" versus "investor-owned", and hopefully they'd put more than a HN post worth of effort trying to define rules that handle the ambiguous cases.
I tend to be a bit suspicious of the LVT, because it can create toxic consequences for individual landowners.
Sure, if I have an empty lot and a new Job Factory opens next door, a rising LVT creates incentive for me to build. But if I already had a house there, my LVT has tripled and my house is no longer affordable.
Locking the LVT to the current owner might prevent that toxicity, but it also encourage all sorts of evasion strategies.
Why punish people who helped build the place? Why would you want to steal value from people who simply want to be left alone?
If you want to buuld you dont need to kick people out that have less than you. Instead, you have to make it easier for others to build. If the state makes that impossible via state taxes and regulation, blame the state not the citizen that simply wants to live happy.
Classmates with income only from the job centre are unable to find a place to live, although that’s hardly better anywhere. In London the rents are astronomical and competitive but the cycle of finding, viewing, renting and moving is still running fine. In Hamburg people can’t even find apartments for rent.
"Apartments don’t come with kitchens in Germany" - https://alisajordanwrites.com/2018/08/06/apartments-dont-com...
This is so fucking stupid it deserves a dedicated room in the Museum of The Stupid. Kitchens are so fitted to the physical rooms they are in, they are basically part of the house like walls, floors, ceilings and doors.
It's totally mad, isn't it!
And yes, darkness, there was literally no light whatsoever in either of the bathrooms unless our next-door neighbour helped out with some basic light fittings he had kicking around...
A lot of social housing is currently reaching that 30 year mark, and it's barely being replaced. And costs for new constructions simply don't make a lot of sense right now, also affected by increasing building standards - which also prevent conversion of much vacant commercial space.
Recently, the current government decided this game was unfair, and tightened taxes and housing regulations to the point where it only really makes sense now for large corporate landlords. Unsurprisingly this led to landlords exiting the market, and now there are too few rentals, leading to insane rents.
This system isn't always managed as well as it could be — subsidized unit requirements are layered on top of that, and in St. Paul the payoff period is only thirty years, which has made some developers balk. The political factions often imagine all investors as good or bad instead of as a force that can be managed to achieve desired social outcomes.
It’s a way to get around some of the issues that rent control causes, such as reducing construction.
Unfortunately, due to how our rental market works, it’s largely young people living in those more expensive apartments, which is terrible for birth rates and inter-generational equality.
https://youtu.be/mav_Y0ZcVpw showing a random purchasable apartment in Russia.
Ownership is nice for the long term, but sometimes people just aren't ready for that. Some careers nowadays involve several training periods which happen in multiple different cities and stretch out for 8-12 years. Sometimes to get a good job in a less dynamic city you are better off working in SF/NY for a few years after school even if that's not where you want to end up. Maybe people learn faster that way. Retirees may be better off renting if they don't want to do maintenance and may only live there for a decade before moving into assisted living.
I have a strong feeling that "worst decor and electrics, terrible ventilation and mould" is indeed an actual high-end housing in Berlin. A modern bright renovated house with brand new appliances would definitely be frowned upon by a typical german landlord.
Every reluctant landlord capitulates and sells... eventually.
It's the same intention: Increase the short term return on capital
German rental market is one of the things I decided I will never again deal with in my lifetime. There is finite number of refrigerators and washing machines one can buy, finite number of deposit disputes one wants to experience.
Whatever people think about migrants we can at least agree that everyone living in an area (town/city/country) all should have a roof over their head.
The real problem seems the disconnect between people, companies, processes and regulations getting in the way of building and the people, companies, processes and regulations wanting to move there or expand the population.
In my section of Germany, housing is even worse with rent caps and tenant rights, plus a lack of housing. Tenants are hard to move on, so landlords are painfully cautious about getting the right tenants - and there isn't a lot of money to maintain properties either, it seems. Our place has the worst decor and electrics, terrible ventilation and mould. And I think we're at the high end.
Systems geared up for incumbents, like "council houses for life" in London, ought to be sunset, just to get housing moving again. I don't think rent control works well, but I don't think open market rent works either. Anything critical with a limited supply needs to be externally regulated in ways that keep the wheels moving.