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Discussion (69 Comments)Read Original on HackerNews
Housing debt has to expand or the economy tanks because the money supply shrinks. Since we are at the end of the current debt cycle, housing has gone vertical. It will collapse because eventually exponential curves can't fit reality. We may be seeing the start of that now.
The core problem is how we create money and who benefits from it. That's what needs to be fixed.
If you want to live of your rents, buy a commercial or industrial building, speculate with that. But residential construction should be protected to ensure each household is able to buy one with the average country salary.
We should reward the person who lives in a normal house below their means, and buys an apartment as an investment (which is private capital into new construction that wouldn't have happened if they didn't do it), then rents it out, which increases stock on the rental market, and decreases rental yields.
If you want to tax ALL housing the same, including people's only house, then sure, go for it. Or better yet, tax all land ownership. Just don't distort people's behavior by making a special exception for their main house.
If you take speculation out of the housing market, storing net worth in your main house becomes a lot less attractive.
A house used to be viewed as a consumable good a hundred years ago, not an appreciating asset. (Before the New Deal commoditized mortgages)
This creates a distortion where people buy the biggest house they can afford, because everything else gets taxed.
Their houses aren’t even “investments” to them, they’re lifestyle properties that also may increase in value.
In the Uk, at least, stamp duty is an obvious and infuriating driver of either buying big early or never downsizing. I did the former, parents do the latter.
Easy to solve the incentive problem yet we never will
I see no reason why someone providing capital to build a building and then renting it out to cover cost of that capital, maintenance and building cost is unreasonable or bad thing.
Issue really is when market is manipulated to keep prices going up beyond inflation or normal changes in demand. That really ruins everything. Real estate shouldn't really appreciate at all over time beyond inflation.
In no particular order:
- Financing company
- Realtor x 2 (both seller and buyer)
- loan servicing company (may or may not be the financing company)
- Insurance companies (multiple, depending on how financing is achieved, everything from property itself, to title, to PMI)
- Appraisers
- Home inspectors
- Closing attorneys
- County tax office
- City tax office
Basically... there's a reason that renting is the right call if you're not buying to hold for at least 5 years, ideally 10.
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There absolutely is speculation in housing markets, but at least in the markets I'm familiar with - it's not really the landlords who are renting houses that are doing the speculation. It's the folks who buy up 100+ houses in depressed/low-income neighborhoods during recessions and then sit on empty property for years.
The problem is the scale of investment. For example, 3 companies own 19,000 houses, or 11% of the rental market, in the Atlanta, GA area[0]. The market is being "manipulated" in that investors with vast amounts of cash are outbidding folks trying to buy a primary residence, and by owning tens of thousands of homes, you exert a measure of control over the housing supply (i.e. "manipulation").
I don't believe that companies should have the ability to own so many houses, and the easiest way to curb this is to progressively tax investment property to the point that isn't financially feasible to own tens, let alone thousands, of homes.
0: https://news.gsu.edu/2024/02/26/researchers-find-three-compa...
I think forcing people to buy home is worse than some party owning lot of homes.
Also, buying or building and operating an apartment complex isn't speculation in general, unless you consider basically any financial investment speculation.
Same goes for commercial, but in that case, I'd even suggest forefeiture if you are not reducing requested rent within a year of vacancy. Let someone else take over if you overspent.
All data indicates it's not the case, as well as common sense.
So the 2nd, 3rd house taxes could be relatively low but for the 10th they would be ginormous.
These people do not affect rents in any meaningful way.
> Small investors who owned between one and five properties held 87% of the single-family homes owned by investors; those owning six to 10 properties owned another 4%
https://www.prnewswire.com/news-releases/real-estate-investo...
Some companies buy and update homes then resell them. They don’t all do a cheap flip with a massive markup. Neither do all of them hold them long term to charge high rents. That seems like something that should probably be regulated rather than outright banned.
Beyond single-family homes, it’s very rare for someone to build an apartment building with all of the units already sold. In fact, most are not coops or condos and are rented long term. Those rents also keep going up. A big part of that is how hard it is to get a new complex, especially a mid-rise or high-rise building, permitted to build.
> But residential construction should be protected to ensure each household is able to buy one with the average country salary
is political suicide, because you’re giving every voter with existing property a haircut on money they believe they already have, that they’ve usually borrowed to buy, and that they’ve financially planned on appreciating. Per Jean-Claude Juncker, “ We all know what to do, we just don’t know how to get re-elected after we’ve done it”
You tell people: You have 20 years to sell your second/third residential properties, even at a good tax premium. But in 20 years you MUST have sold or you Will pay lots.of.taxes.
Edit: anyhow... I dont pretend to try to solve this complex issue in a couple of HN comments. It's just a general sentiment I have that the.only way to remove speculation from residential property is by government mandate.
I'm all for this. And I am "part of the problem " as I own 2 houses in 2 different states, and rent one at a freaking high rent price, because the market in that area is crazy.
If you wanted to incentivize home buying for young families, then the demographic that needs the most incentives are old people whose kids moved out decades ago. Every single person I know has two aging parents living in 4 or 5 bedroom homes by themselves, my own included. I know people are sentimental about the homes they grew up in, but this is the biggest lever you could move: hike property taxes on properties with unused occupancy.
If you want to keep the home in the family, then this encourages the parents to give the home to one of their kids who actually need it because they're starting a family of their own.
this proposition literally solves nothing
and for the record I own one real estate, which I bought without mortgage and live there with my family
Also for land tax and similar: raise them by a lot and use that money to pay for a tax-exemption for one home
https://en.wikipedia.org/wiki/Chinese_property_sector_crisis...
I wonder when Xi will come up with a witty one liner for that one.
Maybe regulations put too much burden on homeownership but slums create huge issues as well. Basic plumbing shouldn't be taken for granted.
But they also establish a minimum bar to _be_ housed. If you can’t afford a (by global standards) very nice home, you will be on the streets.
you can apply this for pretty much everything, who will decide what can be used for speculation? I want much rather free market than someone deciding what I can buy with my earned money
yeah, and gold should be for making space stuff, electronics or jewelerry, and water should be for drinking/cooking, not for having fun in swimming pool, etc.
edit: the problem in China is not expensive real estate, but no options to invest money, Chinese stock is shit, you would earn pretty much nothing over 10 year period, made that mistake once, even real estate prices are not really growing in China, my in laws bought apartment many years ago, now they would be lucky to sell it for zero profit, blame chinese economy with minimal real growth causing minimal inflation causing all these issues
on the other hand it's nice to come to China after 9 years and find out meals in restaurant cost pretty much same as 9 years ago, unnelievable in Europe, sadly so are their salaries and I have still seen job ads offering like 2500-3500RMB same as 10 years ago, though you can rent small apartment for 1200-1600 RMB (talking both about Beijing suburbs)
nice bonus in China is you can't even own the land with your house, just lease it for few decades
The intentions of a government aren't enough. You need feedback systems. China doesn't have effective feedback systems, because the CCP actively destroys them. No one is "turning towards China" - they have negative net migration since 1968 (https://data.worldbank.org/indicator/SM.POP.NETM?locations=C...).
Whether you think that’s a good thing or not depends on whether you _actually_ believe in meritocracy or not. I’ve found most people don’t believe in it as much as they say they do.
I would 100% support measures that inhibit corporations from owning residential property.
Apartments are probably a special case, but I'm not entirely convinced the age of giant corporate complexes is a good one.
I also don't necessarily mind if a PERSON owns a house and rents it out (e.g., to spend a year somewhere else, or because it's a lake house or something), but I get suspicious of they own a bunch of them and make it a business. Denying corporate status would discourage that.