Comment by cglan

I agree but there's only a single factor that matters: special treatment of mortgage loans. In tax. Government guarantees, both for owners and for banks. Special interest rates. Repo with government support. The list goes on.

And now you can say "yes, but ending those will cause a crash in house prices, which will hurt a lot of people, a lot of owners", which is true, but anything you do to change house prices will cause that hurt.

In a way you can look at it as the usual problem: governments effectively sold houses, handing out cash to constituents for votes and power, and now they want, maybe even need, them back. They can't pay to get them back. That's what the argument is about. If the government wanted to buy back houses the way everyone else has to play, by paying market price, nobody would be arguing much. Because of how property taxes work, even if governments crash the housing market, say by ending mortgage guarantees, governments will lose a lot of money they have already spent.

And the fundamental problem is not the division of houses, but how many there are. Crashing house prices is only part of the problem. They need to be torn down and rebuilt denser if you want to make any difference. That also needs to be paid for.

You have to be careful with this because multiple properties are also rented out. Restrictions can lead to low vacancy and higher rent prices

Yes, in 50 years, I hope we as a society respond to the struggles of people then too, instead of nit picking our way to destroying an entire two generations ability to build wealth like we have done here.

LLCs need to declare the beneficial owner(s), which is supposed to give transparency and KYC to corporate structures like that.

Shit even if not something like that, 5 homes in the middle quintile in my city would be around 2.4 million dollars. That's the entire net worth of a middle class family at the end of their earning years, including their house. The only people whose mom and pop have that kind of money to invest are rich folks. It's just as much a problem as the other thing in practical terms.

1 and 5 non-primary residence.

“I own no homes, and am buying a home”

“I own one home, and am buying a house”

“That makes you an investor”

“No that’s whack. When I buy a third - buying while owning two - then I will be an investor”

You have an off-by-one error.

Divorced people with 2 homes each that remarried and ended up with 4 homes? I've seen it happen. Finally they sold 2 of those homes..

I feel there's a major distinct difference between;

- a well off family who buys a 2nd home to make sure their kids are set

- a group of well off investors who pool funds, buys a 2nd home, with intention to "flip" it in the next 1-2 years and make 10%

Both are "investors", but I'd like to think the 1st are trying to build a better future, whereas the 2nd are just arbitraging.

In my area owning a trailer park home requires being in like the top 1% internationally. Owning 1 home in Oakland may be worse than owning 4 in Detroit, in terms of being an under-hated under-taxed elite.

Won't someone please think of the Capital!?!

I was suggesting that as a way to prevent purchasing homes to resell for more money. I actually meant it as a tax on the profits from a sale of a house.

I completely agree, we need homes for rent at reasonable rates.

But I forgot that a lot of the homes that were purchased for investing were purchased to rent out. A 75% tax on the profits from sale wouldn’t help. If it’s 75% on all profits, including rental income, it’ll destroy the rental market.

I can’t think of a decent answer off the top of my head. My suggestion was glib, but it was meant for the pretty easy case of just flipping.

Trying to control how many houses are purchased versus rented, and how you determine a reasonable rent or prevent that from being abused, is a lot harder.

A few or dozens, but not a large fraction of a city by one entity. The tax should be progressive and aggregate with ultimate holding companies/investors so they can't just gamify limits by creating a bunch of shell and holding companies.

They buy homes for investing with the expectation that prices soon rise, owing to demand and low interest rates, and inelastic supply. If you fix the supply issue then it would be moot.

30% of homes are not sitting empty, cities have a low vacancy rate. Often they rent out and we want low rents too.

He solution is building more or having fewer people on the market for a home through low immigration, and only the former seems politically viable.

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

People aren’t “buying up homes for investing so that prices of homes go up and people can’t afford homes.”

That may be an aggregate and long term effect, but i’ve never seen anyone actually motivated by something like that.

At least not statistically.

People with excess money (often dentists, doctors, middle managers, small business owners, etc), who don’t trust stocks or the banks, are buying houses because they think they can rent them to people for cashflow in the future (aka not have to eat dogfood!), or rent them out now to other people for money. People that otherwise couldn’t be in these houses, or those people would be buying them instead.

Aka put their money to work.

IMO, people doing that right now are going to lose their shirts, but that is risk/reward. I could be wildly wrong.

You're completely missing the point of the comment you're replying to, though.

The parent comment suggests that the cost of investing is not high enough. Moreover, they suggest that it should not only be a higher cost, but that this cost should be redistributive.

As I said in another comment, there may be situations I’m not thinking of where this would be beneficial. For example buying up extremely dilapidated properties and flipping them for much more money after fixing them up.

So I guess I’m a little cautious about just making it flat out illegal. I don’t know enough about the market to know if that would really be a problem.

So I suggested a tax high enough to make it extremely undesirable to do. I figure the net effect will be to stop it.

The nuance needed is in taxing progressively in relation to how many other properties are owned in aggregate by ultimate shareholders/holding companies and forbidding gamification tricks like putting every house into its own trust.

This is a classic fallacy trotted out every time someone suggests taxing the rich/corporations/landlords more.

"Oh, you can't do that, they'll just pass on the costs to consumers and keep their margins the same! Really, when you raise taxes on the wealthy, the only people you're hurting are the little people!!"

But evidence doesn't bear that out. Real economics are more complex than that, and especially given how things are right now, people can't afford more expensive homes, so trying to pass on additional costs is going to sharply reduce your available market.

I’m a bit concerned that not allowing this it all would have some sort of perverse effect that I’m not for seeing.

I’m not in the real estate industry so I’m sure there’s things I don’t know about.

So I picked a really big number to dissuade it, but left open the possibility.

I wonder about that.

If someone’s a billionaire and wants to play around by buying houses? Is that any better than an investment company doing it for the market?

How do you tell the difference between a rich person buying their third vacation home and buying a house they intend to sell for profit in a year or two through speculation?

Of course, on the other side, I’m aware of companies that own some company housing to let their employees use. How do you tell that from investing?

Maybe since they weren’t really doing it to make money they wouldn’t really care that the tax would be high when they sold it if they made a big profit.

It all gets really sticky. No special taxes gains on your primary residence, may be a lower tax (that 75% of what’s er) on a secondary residence.

But pretty quickly if you have that many houses personally you can probably afford to pay a high tax on gains. You’re not really what we want to optimize the market for anyway.

I just guessed at a big number. Maybe it should be 50%. Maybe it should be 90%. I have no idea. It seems like it should be legal, there have got to be cases where it might be useful. Buying and flipping houses from dilapidated neighborhood by turning it into something better.

I’m at the age where I wouldn’t mind a house. But they’re all gigantic, expensive, or both in my area. I have no idea how a normal family is ever supposed to afford one.

Sure, but if the price of housing is too high then price controls won't fix it either. You'd end up with no availability, or a decades-long waitlist for rent-controlled apartments like Stockholm.

The issue with housing affordability is that the market is often prevented from responding to high demand and low supply by regulation. SF is very restrictive with permitting housing construction, despite the incredibly high rents. It's not that the market forces are failing to incentivize housing construction, it's that developers are prevented from responding to market demand.

It's not the fault of private capital firms that local governments have essentially outlawed building new homes in many areas. The solution should be focused on restricting the ability of localities to do this, not restricting the ability of companies to buy real estate.

Hallelujah. Shout it from the rooftops!

Markets are powerful tools--perhaps the most powerful tool we have to shape human interactions. But too many people believe in a sort of market gospel ("Supply Side Jesus"); that market forces are as inevitable and inflexible as the force of gravity. In reality, policy choices shape markets and careful market design can deliver politically-favorable outcomes.

Markets work for us, not the other way around. "You shall not crucify mankind upon a cross of gold!"

Return to free markets in housing.

Rent control has a tendency to kill robust building.

> So basically remove all regulations and everything will fix itself automatically?

I didn't say that. I said "rent control". And yes, remove all regulations on rent.

> unless we want a return to the Gilded Age

The Gilded Age was a time of great prosperity in the US.

You could go the other direction -increasing the borrowing cost of purchasing a home for investment to ensure that borrowers with less capital can still afford homes in the same market.

As a hypothetical, you could tax their purchase at the same rate at which they're borrowing and use the funds to back loan guarantees for new/lower income purchasers.

The point is to impair the ROI for multi-home purchasers without limiting upside in the market.

NINJA loans were loans for people with no income and no jobs. What I’m proposing is cheaper access to cash for first time homebuyers. You’d still have to be credit worthy.

If it's so important, then my take is that the government should step in and make sure it happens and in some orderly way.

Cost cutting in my town for profits that go away just drains the local's pockets. If you want free market rules to apply, then profits going out of the town/city should be taxed harder to promote local businesses and community.

I think money is very important.

My experience is; if you get lucky, you might meet someone who will stay with you even without money, but you basically have to live through trauma together, to create that kind of bond. I feel like only extreme traumatic hardship can keep people together when they don't have money.

Some rich people feel jealous of poor people "This guy is dirt poor and yet his wife stayed with him." but they're missing the fact that these two people probably share so much trauma that it's very difficult to relate to anyone else after that. They stay together because they literally lack alternatives; nobody else can possibly understand their pain. Which is the core of their identity. It's not pleasant at all. Also, it's almost impossible to make new friends when you're poor for the same reason. You can't relate to anyone. People get rich for a small number of reasons (it's a unifying experience) but people get poor for a million different reasons which feels like falling through hundreds of different invisible cracks (it's a divisive experience).

Being poor, every time I do something unnecessary like small talk or making a joke, I feel unnatural and fake. At a profound level, I don't understand how it's possible to have friends 'just for fun'. Everything I do must have a path towards money. I feel guilty otherwise. I could have spent this time practicing my coding or writing skills or earning money.

Well that's some bullshit, from beginning to end.

> The problem isn’t a lack of housing, it’s a lot of breeding.

> As long as people keep having babies in excess of the replacement rate

To reiterate, the thread was about "breeding". The birth rate has fallen behind.

You are referring to the overall population growth being due to immigration. This may be true, but is unrelated. Respond to the post about why overpop is driving the housing pricing, not to the factual corrections.

7e specifically said "land". He (?) said that "the earth is full", even though the issue was the US housing supply. Well, the US has plenty of land for houses - even if people can't or won't live densely.

And whether there's a place for young people in the economy is not what's under discussion here.