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Comment by dba7dba | Hacker News Reader

The REAL cause of the housing crisis is more and more rich people/companies view real estate as a way to make money. Not just as a way to park wealth to defend against inflation, but to make $. With astounding return rate.

Frankly, I think the only way housing crisis can be resolved is

1. taxing severely anyone who owns multiple house/condos (not apartment units) with the plan of renting. Probably gradually higher tax rate based on number of units or monthly rent fee.

2. Heavy tax for profit made from flipping a house.

The goals of the tax would be to control excessive amount of $ from flowing into real estate.

Real estate investment is made out to be a really smart/great investment. But why?

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It's a good investment at the right time. Most of the time it's a place to live. If you're over leveraged it could be bad. Of course it depends. But the potential rate of return can be pretty astounding.

Anecdotally, I bought a modest house in Seattle a long time ago, when you could do zero down payments so I just paid some closing costs, etc. I rented out rooms to friends to cover most of the mortgage. I was making less than 6 figures at the time. After 3 years, I sold it. After commissions, etc the return on investment was 12x. And it was tax free. If I'd kept it another 10 years until the current boom, apparently the ROI would have been closer to 40x. Not many other investment vehicles can offer that. Of course I moved to the bay area and didn't immediately buy a new house so I'm totally screwed now, along with everyone else.

If your goal is to create a Venezuela like housing crisis sure, you could do 1 & 2. I'm not sure the rest of us want that.

My goal is not to create a Venezuela like housing crisis.

But housing investment is sucking in $ from everywhere, even non-American investors. Some at top are raking in money while everyone else is paying for it.

There is a reason more and more wealth is concentrated in less and less people at the top.

Sounds reasonable. And I'd add that a house is not only seen as an investment but also a safe investment, so people are going out and leveraging themselves through a bank loan to 5x their downpayment. I don't think I could buy anything else that big with such great interest rates.

Agreed. Real estate investing should be disincentivized.

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