I wholeheartedly agree with this. My opinion is that governments should tax 2nd, 3rd and further housing so as to prevent people from accumulating residential buildings.
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.
A bad idea in isolation, because it forces people to store all their net worth into their main tax free house, causing people to squat in gigantic houses that they don't need or want. I've seen this distorted behavior in people I know.
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.
Why would someone want all their net worth in real estate properties rather than diversify with other investments, which if they wanted to could also still include the real estate sector?
For tax efficiency. The US, UK and many other countries have variations on this theme that the house you live in is taxed less than stocks, bonds or second properties.
This creates a distortion where people buy the biggest house they can afford, because everything else gets taxed.
From people I know: they aren’t aware of / comfortable with traditional financial instruments, so they just buy houses and have the rest in a savings account.
Their houses aren’t even “investments” to them, they’re lifestyle properties that also may increase in value.
This, 100x over. You invest 1 million USD in a house. The house loses 90% of it's value. You still own the house. You can live in it, hopefully you get some benefit from the investment, even if it has no market value.
You invest 1 million USD in the stock market. It loses 90% of it's value. You basically have nothing but a tax write off on future gains.
> people to squat in gigantic houses that they don't need
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
How do we feel about cottages or summer homes for people who live in poor weather climates? Is that a luxury that should be universally condemned? I woulnd't think those qualify as speculative but more like lifestyle money pits from what I have heard.
I am against "speculation" on any sort of real estate. On other hand I am not against real estate investments. And I don't think single family housing deserves any kind of special treatment.
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.
Lets say a transaction has 2 parties that want to extract value (builder, buyer) if there are 3 parties now everyone needs to make money. (builder, speculator, buyer) middle mans ALWAYS increase prices and add little to no value to the actual GDP of a country. They do offer financing, but a financing value of lets say 500k vs a construction value of 500k the construction value has more weight because it is fully finanical vlaue. the 500k investment might be part of a money multiplier which puts strain on the financial system. Speculators ALWAYS drive up prices. Just look at any field Private equity has touched.
I'm going to suggest that the "buy" case actually has far more interested parties trying to extract money.
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 difference is that all those parties serve a necessary function. We could debate the tax office - arguably the function of a transaction tax is precisely to deter speculation or sales for short-term use.
Some speculators serve a necessary function but many do not. In my area it's not uncommon to see homes listed where the last sale was ~6 months ago and it's clear they just slapped some paint on it, replaced appliances in ways that are not generally to my taste, and then doubled the asking price.
Yes, and those people aren't landlords renting the property.
So I'm not certain how to tie that back to the original discussion about not needing a special case to handle people accumulating multiple residential buildings.
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Side note - I don't see this case pretty much anywhere (and I'm literally in the process of looking at homes). I do see cases where a home sold 6 months to a year ago and the new price is ~10% higher, and I do see cases where a home sold in 2021/2022 and now the price is 2x higher.
But what I don't see any of is doubled sales price in a 6 month window with just a new coat of paint.
So I'm not certain how this is relevant at all given it's non-existent in any of the markets I'm looking at.
"Speculators" are not built-in middlemen, they are competing on bids with the buyer. Perhaps there could be some policy put in place to level the playing field between an owner-occupant who will bring mortgage-related red tape and an institutional investor who can make an immediate cash purchase, waive inspections, etc.
> 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.
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.
Limiting what companies can own would lead to increased demand for rental properties thus increased rents. Making the renters who are unable or willing to buy to have to pay increasing amounts of money. I do not see how that would fix housing in anyway.
I think forcing people to buy home is worse than some party owning lot of homes.
No, the easiest way to curb this is to make it easier to build homes so that supply is closer to the level of demand, not create even more policies that will reduce supply.
Controlling 11% of the rental market is not enough to manipulate it, and that's one of the most concentrated markets in the US if I remember correctly. It's not an actual issue. If those 3 companies are in fact colluding, use the existing laws against that to prosecute them instead of inventing more counterproductive policies.
Or unoccupancy tax. Forcing landlords to let at the price renters are willing to give will probably do some to reduce rent levels.
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.
There are very few people with that many houses anyway.
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%
Possibly but it would also create more private equity reits that would build and operate these multi-family units. There isn’t a clean solution without making it illegal for companies to own single-family homes.
You’d have to have exceptions to that. Many new homes are built as whole subdivisions, then sold to initial residential owners. Banks won’t lend on homes they can’t foreclose on as collateral, and banks are companies. Mortgage companies are for this purpose the same as banks.
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.
In theory I agree with everything but I’ll point out that:
> 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”
I understand, but what if you establish a 10/20 year increasing taxation scheme. Plus some decreasing tax incentive to sell residential property.
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.
Yes, and for any unit of gov't which is funded by property taxes, there's a second edge on that razor blade. Spiraling residential home values yield spiraling property tax revenues. And there are a whole lot of beneficiaries who feel entitled to their ever-growing cuts of the resulting gov't spending.
Just make it easier to build houses. It's like the Bitter Lesson, but for regulation-loving progressives.
Also, buying or building and operating an apartment complex isn't speculation in general, unless you consider basically any financial investment speculation.
Speculation is not really the issue, most of the issues are around regulations limiting construction.
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.
no problem, main apartment will be written in my name, 2nd in my wife's name, 3rd in my son's name, 4th in my daughter's name and for others I will just set up companies
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
You have to understand that our money supply is based on debt. It shouldn't be: the money supply is a public good and should be managed for the public good via citizens dividend or whatever, but currently it is debt-based and managed for the private good of the banks.
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.
It seems to me that if you want some sort of money creation management role in the economy, you need to restrict people's ability to lend and borrow from each other. So if you wanted to lend me money, or you wanted to borrow from me, we would have to apply for permission.
Off the top of my head, I can't think of anyone who's tried to restrict people's right to borrow from a willing lender. It doesn't seem like a good idea intuitively, but I do think it's something you must do if you want to have a money creation manager.
I don't disagree w/that definition (i think it's incomplete: store of value, medium of exchange, unit of account, etc) however when I use the term debt loosely here I mean the current privately issued, exponential, compounding interest mechanism.
That's the fundamental problem. This was recognized for a long time in the west, we banned usury, but now if you use that word people either have no idea what you are talking about or get mad at you because they make good money off it.
Commodity money isn't necessarily that though. Debt is useful between people that trust each other or intermediaries, but if you trust absolutely no one you can use useful commodities as money. These also happen to be the forms of money that tend to be more resistant to government collapse. They have intrinsic value that stand on its own and encapsulate already performed work rather than just the promise of it.
Where mortgage interest is a deductible expense (usually the case if savings interest is a taxable income) then one simple fix is to limit that to one home. Second homes or homes bought in speculation using borrowed money are at least less attractive then.
Also for land tax and similar: raise them by a lot and use that money to pay for a tax-exemption for one home
Social housing is the way to go. People who live in social housing are mandated to take free plumbing/electrician/whatever classes to serve the community. In this way people get some internal jobs and sense of community, while government reduces the costs of maintaining them.
People want to exempt housing from the laws of supply and demand. The reason real estate is expensive is that there is not enough housing available for everyone to own a house that wants a house. If we want inexpensive housing, we need a massive project in this country to build housing. There is no other way to fix it. There is no way to shuffle around ownership of existing housing stock that is going to magically make more houses available. There are not a bunch of houses sitting empty that people want to buy or move into.
Yep, building codes are a double edged sword. Yes, they make life better for housed people and avoid streets looking like an India-esque mess of exposed wiring and open sewers.
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.
Built my house for 60k (post-COVID dollars). A couple turns of 3" pipe into a tank. Up into a toilet. Not much more than that. It dumps into a big concrete tank and then from that the effluent goes out a couple pipes with holes drilled along it and into the soil. Quite clean and very cheap.
I think the 'plumbing' for sewage took me 2 days and $300 in pipe. The septic system was maybe $2000 in materials, you could easily replicate it with a shovel and a couple months of doing day labor on the weekends.
I take it for granted because it is extremely cheap, extremely easy, quite sanitary, and basically a footnote on building the shack. This ain't the 60s anymore, any tom/dick/harry can plumb a whole house using extremely forgiving pvc and pex with minimal cost or thought, though they're usually stopped by asinine licensing rules and the dumbass notion you need building plans (I had none).
Maybe severe capital controls and other heavy-handed and objectively unwise but politically desirable (for a certain group) financial policies aren't the best plan for maintaining a stable economy?
I wonder when Xi will come up with a witty one liner for that one.
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
I think energy is actually a good example here of how it should work. At least in the US, it's pretty tightly regulated. Utilities are allowed to run a profitable business, but it's not a totally free market like housing is. We could certainly use some regulations to prevent private equity from buying up millions of single family homes as assets.
It's hard to think of a market that is less free than housing, including electric utilities with the advent of solar. Probably pharmaceuticals? I'm sure there are a couple others. Calling it "totally free" is naive.
Because of how tightly coupled local taxation is to the real estate market, the political risk associated with angering local homeowners, and the regulatory capture performed by local government employees and supporters of the status quo, it's highly, highly regulated already in nearly every populated area of the US.
You say that as if those things have always required money. People had all of those things for hundreds of thousands of years before money was invented.
In the US economy and much of the rest of the world, money is decreasingly tied to the time or resources of people. It is increasingly tied to the money, market capture, and regulatory capture of corporations that specialize in finance rather than producing goods.
That's why they should be non profit and nationalised. Nobody mind paying taxes for the good stuff, everybody mind paying taxes for bottom tier private companies to mess with the bare necessities and charge a premium fo it
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...).
So the Chinese government making retirement unaffordable, making it impossible to invest in equities, under funding pensions, and then attacking the last thing people can invest in for retirement savings is what won Gen Z?
You're so conditioned against socialism that the only life plans you will consider are gambling your life's savings on a speculative asset, or working until you die. Not every country is constrained to these 2 options. Many of them would love for you to visit.
You'll note that I specified that China has no real broad pension system that can fund people in retirement and instead leans on the cultural norm of children taking care of their parents in old age. The (socialist) one child policy made this mathematically infeasible as 2 working adults now need to care for a child and 4 parents. The solution that Chinese people cleverly devised was to invest often at the behest of local party officials in property development, which aided in rural Chinese moving to cities, another CCP socialist policy. Then XI does a giant rug pull and attacks peoples' property/retirement savings.
Maybe look at the actual facts before trying to tun this into some dumb socialism vs not socialism argument.
that would be funny considering China is closer to economic collapse than west considering their zero inflation or salary growth for years and raising youth unemployment, I visited after 9 years since I moved away, salaries and prices in restaurants are pretty much same as 9 years ago, so much for growth, they are going for Japanese way...
Unaffordable housing turns entrepreneurship into a rare privilege.
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.
Which kind of meritocracy - the original definition that points out that “merit” is a function of wealth and social advantage, or today’s sanitized version that attributes merit to achievement while ignoring all the advantages that lead to ahievement? https://en.wikipedia.org/wiki/The_Rise_of_the_Meritocracy
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.
I wholeheartedly agree with this. My opinion is that governments should tax 2nd, 3rd and further housing so as to prevent people from accumulating residential buildings.
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.
A bad idea in isolation, because it forces people to store all their net worth into their main tax free house, causing people to squat in gigantic houses that they don't need or want. I've seen this distorted behavior in people I know.
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.
> store all their net worth into their main tax free house
If you take speculation out of the housing market, storing net worth in your main house becomes a lot less attractive.
Which was the way housing was for many years.
A house used to be viewed as a consumable good a hundred years ago, not an appreciating asset. (Before the New Deal commoditized mortgages)
Why would someone want all their net worth in real estate properties rather than diversify with other investments, which if they wanted to could also still include the real estate sector?
For tax efficiency. The US, UK and many other countries have variations on this theme that the house you live in is taxed less than stocks, bonds or second properties.
This creates a distortion where people buy the biggest house they can afford, because everything else gets taxed.
From people I know: they aren’t aware of / comfortable with traditional financial instruments, so they just buy houses and have the rest in a savings account.
Their houses aren’t even “investments” to them, they’re lifestyle properties that also may increase in value.
This, 100x over. You invest 1 million USD in a house. The house loses 90% of it's value. You still own the house. You can live in it, hopefully you get some benefit from the investment, even if it has no market value.
You invest 1 million USD in the stock market. It loses 90% of it's value. You basically have nothing but a tax write off on future gains.
> people to squat in gigantic houses that they don't need
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
[dead]
How do we feel about cottages or summer homes for people who live in poor weather climates? Is that a luxury that should be universally condemned? I woulnd't think those qualify as speculative but more like lifestyle money pits from what I have heard.
Several UK councils now charge double council tax (the monthly tax you pay for having a house) on second homes, exemptions notwithstanding.
I am against "speculation" on any sort of real estate. On other hand I am not against real estate investments. And I don't think single family housing deserves any kind of special treatment.
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.
Lets say a transaction has 2 parties that want to extract value (builder, buyer) if there are 3 parties now everyone needs to make money. (builder, speculator, buyer) middle mans ALWAYS increase prices and add little to no value to the actual GDP of a country. They do offer financing, but a financing value of lets say 500k vs a construction value of 500k the construction value has more weight because it is fully finanical vlaue. the 500k investment might be part of a money multiplier which puts strain on the financial system. Speculators ALWAYS drive up prices. Just look at any field Private equity has touched.
I'm going to suggest that the "buy" case actually has far more interested parties trying to extract money.
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 difference is that all those parties serve a necessary function. We could debate the tax office - arguably the function of a transaction tax is precisely to deter speculation or sales for short-term use.
Some speculators serve a necessary function but many do not. In my area it's not uncommon to see homes listed where the last sale was ~6 months ago and it's clear they just slapped some paint on it, replaced appliances in ways that are not generally to my taste, and then doubled the asking price.
Yes, and those people aren't landlords renting the property.
So I'm not certain how to tie that back to the original discussion about not needing a special case to handle people accumulating multiple residential buildings.
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Side note - I don't see this case pretty much anywhere (and I'm literally in the process of looking at homes). I do see cases where a home sold 6 months to a year ago and the new price is ~10% higher, and I do see cases where a home sold in 2021/2022 and now the price is 2x higher.
But what I don't see any of is doubled sales price in a 6 month window with just a new coat of paint.
So I'm not certain how this is relevant at all given it's non-existent in any of the markets I'm looking at.
"Speculators" are not built-in middlemen, they are competing on bids with the buyer. Perhaps there could be some policy put in place to level the playing field between an owner-occupant who will bring mortgage-related red tape and an institutional investor who can make an immediate cash purchase, waive inspections, etc.
> 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.
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...
Limiting what companies can own would lead to increased demand for rental properties thus increased rents. Making the renters who are unable or willing to buy to have to pay increasing amounts of money. I do not see how that would fix housing in anyway.
I think forcing people to buy home is worse than some party owning lot of homes.
No, the easiest way to curb this is to make it easier to build homes so that supply is closer to the level of demand, not create even more policies that will reduce supply.
Controlling 11% of the rental market is not enough to manipulate it, and that's one of the most concentrated markets in the US if I remember correctly. It's not an actual issue. If those 3 companies are in fact colluding, use the existing laws against that to prosecute them instead of inventing more counterproductive policies.
This is an indirect way to get at what we really need: a wealth tax. Don't treat the symptom, treat the disease.
Or unoccupancy tax. Forcing landlords to let at the price renters are willing to give will probably do some to reduce rent levels.
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.
Where does this misguided theory that there are vacant homes in desirable areas come from?
All data indicates it's not the case, as well as common sense.
I assume that increasing the taxes would just lead to higher rents, right?
Which would favour people with fewer houses, which don't have to pay the increased taxes and so their rents could be lower.
So the 2nd, 3rd house taxes could be relatively low but for the 10th they would be ginormous.
There are very few people with that many houses anyway.
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...
Possibly but it would also create more private equity reits that would build and operate these multi-family units. There isn’t a clean solution without making it illegal for companies to own single-family homes.
You’d have to have exceptions to that. Many new homes are built as whole subdivisions, then sold to initial residential owners. Banks won’t lend on homes they can’t foreclose on as collateral, and banks are companies. Mortgage companies are for this purpose the same as banks.
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.
In theory I agree with everything but I’ll point out that:
> 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”
I understand, but what if you establish a 10/20 year increasing taxation scheme. Plus some decreasing tax incentive to sell residential property.
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.
Yes, and for any unit of gov't which is funded by property taxes, there's a second edge on that razor blade. Spiraling residential home values yield spiraling property tax revenues. And there are a whole lot of beneficiaries who feel entitled to their ever-growing cuts of the resulting gov't spending.
Just make it easier to build houses. It's like the Bitter Lesson, but for regulation-loving progressives.
Also, buying or building and operating an apartment complex isn't speculation in general, unless you consider basically any financial investment speculation.
Speculation is not really the issue, most of the issues are around regulations limiting construction.
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.
no problem, main apartment will be written in my name, 2nd in my wife's name, 3rd in my son's name, 4th in my daughter's name and for others I will just set up companies
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
You have to understand that our money supply is based on debt. It shouldn't be: the money supply is a public good and should be managed for the public good via citizens dividend or whatever, but currently it is debt-based and managed for the private good of the banks.
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.
Money isn't managed by anyone. There's an excellent description here: https://www.bankofengland.co.uk/-/media/boe/files/quarterly-... Scan for the sentence "at that moment, new money is created" and then read the whole thing anyway ;)
It seems to me that if you want some sort of money creation management role in the economy, you need to restrict people's ability to lend and borrow from each other. So if you wanted to lend me money, or you wanted to borrow from me, we would have to apply for permission.
Off the top of my head, I can't think of anyone who's tried to restrict people's right to borrow from a willing lender. It doesn't seem like a good idea intuitively, but I do think it's something you must do if you want to have a money creation manager.
Money is a promise of future work or in other words debt itself.
I don't disagree w/that definition (i think it's incomplete: store of value, medium of exchange, unit of account, etc) however when I use the term debt loosely here I mean the current privately issued, exponential, compounding interest mechanism.
That's the fundamental problem. This was recognized for a long time in the west, we banned usury, but now if you use that word people either have no idea what you are talking about or get mad at you because they make good money off it.
Commodity money isn't necessarily that though. Debt is useful between people that trust each other or intermediaries, but if you trust absolutely no one you can use useful commodities as money. These also happen to be the forms of money that tend to be more resistant to government collapse. They have intrinsic value that stand on its own and encapsulate already performed work rather than just the promise of it.
Where mortgage interest is a deductible expense (usually the case if savings interest is a taxable income) then one simple fix is to limit that to one home. Second homes or homes bought in speculation using borrowed money are at least less attractive then.
Also for land tax and similar: raise them by a lot and use that money to pay for a tax-exemption for one home
Interesting timing, with Australian budget night (removal of tax discounts for both capital and trusts, and for investment in existing housing stock).
Chinese property sector crisis (2020–present)
https://en.wikipedia.org/wiki/Chinese_property_sector_crisis...
Social housing is the way to go. People who live in social housing are mandated to take free plumbing/electrician/whatever classes to serve the community. In this way people get some internal jobs and sense of community, while government reduces the costs of maintaining them.
People want to exempt housing from the laws of supply and demand. The reason real estate is expensive is that there is not enough housing available for everyone to own a house that wants a house. If we want inexpensive housing, we need a massive project in this country to build housing. There is no other way to fix it. There is no way to shuffle around ownership of existing housing stock that is going to magically make more houses available. There are not a bunch of houses sitting empty that people want to buy or move into.
Allow anyone to build a shack and shit into a hole on any postage stamp size of land they could get, and it would be far more affordable.
Yep, building codes are a double edged sword. Yes, they make life better for housed people and avoid streets looking like an India-esque mess of exposed wiring and open sewers.
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.
This leads to my long running joke about Austin: in Austin everyone can afford their own house. Otherwise you don't live here.
You can find places like that all over the world. They're slums.
Maybe regulations put too much burden on homeownership but slums create huge issues as well. Basic plumbing shouldn't be taken for granted.
Built my house for 60k (post-COVID dollars). A couple turns of 3" pipe into a tank. Up into a toilet. Not much more than that. It dumps into a big concrete tank and then from that the effluent goes out a couple pipes with holes drilled along it and into the soil. Quite clean and very cheap.
I think the 'plumbing' for sewage took me 2 days and $300 in pipe. The septic system was maybe $2000 in materials, you could easily replicate it with a shovel and a couple months of doing day labor on the weekends.
I take it for granted because it is extremely cheap, extremely easy, quite sanitary, and basically a footnote on building the shack. This ain't the 60s anymore, any tom/dick/harry can plumb a whole house using extremely forgiving pvc and pex with minimal cost or thought, though they're usually stopped by asinine licensing rules and the dumbass notion you need building plans (I had none).
Maybe severe capital controls and other heavy-handed and objectively unwise but politically desirable (for a certain group) financial policies aren't the best plan for maintaining a stable economy?
I wonder when Xi will come up with a witty one liner for that one.
XXX are for living, not for YYY
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
So is energy, food, water and space. And yet, all cost money.
False dichotomy. The fact that something costs money doesn't mean it has to become a speculative asset.
the argument here is that you cannot live without it. Everyone needs to have access to it
What does that add in the context of the OP?
I think energy is actually a good example here of how it should work. At least in the US, it's pretty tightly regulated. Utilities are allowed to run a profitable business, but it's not a totally free market like housing is. We could certainly use some regulations to prevent private equity from buying up millions of single family homes as assets.
It's hard to think of a market that is less free than housing, including electric utilities with the advent of solar. Probably pharmaceuticals? I'm sure there are a couple others. Calling it "totally free" is naive.
Because of how tightly coupled local taxation is to the real estate market, the political risk associated with angering local homeowners, and the regulatory capture performed by local government employees and supporters of the status quo, it's highly, highly regulated already in nearly every populated area of the US.
You say that as if those things have always required money. People had all of those things for hundreds of thousands of years before money was invented.
“Money” is just a way to say “people’s time and resources.”
In the US economy and much of the rest of the world, money is decreasingly tied to the time or resources of people. It is increasingly tied to the money, market capture, and regulatory capture of corporations that specialize in finance rather than producing goods.
Isn't that the point of economics? If you're just going to tie money to something obvious, you don't need economics.
Yes, you need economics even when most of the money is used to pay for something productive rather than extractive.
That's why they should be non profit and nationalised. Nobody mind paying taxes for the good stuff, everybody mind paying taxes for bottom tier private companies to mess with the bare necessities and charge a premium fo it
What kind of speculation exists over energy, water and space? I'm really curious to know.
energy speculation very obviously exists. Water and space not so much though at the margins I could see it.
Use your favorite search engine to ask “why is Nestlé evil”.
I'm not sure what your point is?
10 years ago: https://www.bbc.com/news/world-39512599
This is probably the reason why Gen Z is turning towards China and will eventually come out on top if a economic collapse in the west were to happen.
Within a few years Xi coined this phrase, China began having a massive real estate sector problem due in large part to speculation: https://en.wikipedia.org/wiki/Chinese_property_sector_crisis... . Part of this speculation (which the article I cite talks about) was due to private Chinese organizations, but it's also in part due to the Chinese government's decisions to overbuild in order to drive urbanization (https://en.wikipedia.org/wiki/Underoccupied_developments_in_...).
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...).
So the Chinese government making retirement unaffordable, making it impossible to invest in equities, under funding pensions, and then attacking the last thing people can invest in for retirement savings is what won Gen Z?
You're so conditioned against socialism that the only life plans you will consider are gambling your life's savings on a speculative asset, or working until you die. Not every country is constrained to these 2 options. Many of them would love for you to visit.
You'll note that I specified that China has no real broad pension system that can fund people in retirement and instead leans on the cultural norm of children taking care of their parents in old age. The (socialist) one child policy made this mathematically infeasible as 2 working adults now need to care for a child and 4 parents. The solution that Chinese people cleverly devised was to invest often at the behest of local party officials in property development, which aided in rural Chinese moving to cities, another CCP socialist policy. Then XI does a giant rug pull and attacks peoples' property/retirement savings.
Maybe look at the actual facts before trying to tun this into some dumb socialism vs not socialism argument.
that would be funny considering China is closer to economic collapse than west considering their zero inflation or salary growth for years and raising youth unemployment, I visited after 9 years since I moved away, salaries and prices in restaurants are pretty much same as 9 years ago, so much for growth, they are going for Japanese way...
Government causes speculation. Asks people not to speculate. Classic.
Yes, if Chinese people could buy their world ETF, like the rest of us, this wouldn't even be an issue.
Unaffordable housing turns entrepreneurship into a rare privilege.
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.
Which kind of meritocracy - the original definition that points out that “merit” is a function of wealth and social advantage, or today’s sanitized version that attributes merit to achievement while ignoring all the advantages that lead to ahievement? https://en.wikipedia.org/wiki/The_Rise_of_the_Meritocracy
It's not wrong.
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.