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shortandsweet

What should we do robbyt?

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Taxing unoccupied homes and apartments will fix things real fast.

It's such a simple solution which would never pass almost anywhere in the world

Netherlands had laws discouraging speculators and hoarders from keeping empty homes:

https://en.wikipedia.org/wiki/Squatting_in_the_Netherlands

It's already passed in SF for retail [1] and other areas for non-retail.

Further, the revenue from that tax could be used to fund public housing to further drive down housing costs.

[1] https://www.bookweb.org/news/san-francisco-approves-vacant-p...

Berlin has such laws since 2014 and it is working poorly. Turns out that it is hard to get an overview of empty apartments. City government has to rely on other tenants reporting empty apartments.

Maybe something exponential? Small value first year, smallish value second year, expensive third year, super expensive afterwards.

How would that be done? If an address wasn’t claimed for a personal tax return for an owner or tenant, it gets a big tax bill?

This would be specifically to fix the problem of a builder making a bunch of apartments and slowly letting them into the market to artificially inflate home values.

Presumably, the building company would be the owners for all the empty apartments which would make it easy to find and tax. It would be more difficult to detect someone buying a home/apartment as an "investment".

At what point do they become apartments though? When the Certificate of Occupancy is issued? "No problem; those units aren't finished yet. [They need a smoke alarm to be legal units and somehow we haven't found the time to get around to it yet.]" Or whatever the threshold is between "this is a vacant lot" and "this is a taxable unoccupied unit", you're just providing incentive to stay on one side of that line if there is a glut of builders using this strategy.

IDK, probably have to do some research into how much time it takes to finish a unit to say when the clock starts ticking.

For example, obviously a smoke alarm is something that takes 15 minutes to install, so that wouldn't be when you start the clock.

You might be able to base it on when any single unit is sold in the block. That is "You sell 1 apartment, you've got a year to sell to rest or you are going to start seeing vacancy taxes".

> This would be specifically to fix the problem of a builder making a bunch of apartments and slowly letting them into the market to artificially inflate home values.

That isn't the reason rent is high in SF.

So, in Florida, you declare your primary residence, and it is taxed at a much lower rate than other property.

See ‘homestead exemption’. Other states use this term, but it means different things.

WV, for instance, only allows the exemption for people above a certain age.

Same in Indiana. But the proposed idea was to tax more heavily all unoccupied properties, not merely "all properties other than one's primary residence."

You mean add additional taxes? Presumably they are already taxed.

Does SF have homestead property tax exemptions? Where I live property taxes are quite high, unless the property is owner occupied. The second homes and rentals subsidized the taxes of those who live here.

SF, like all of California, has the worst possible property tax scheme. They passed "homestead" protections but did it for all property tax, not just homesteads.

Any property tax, from vacant lot to strip mall to vacation home to industrial plant, can not rise above 2% per year. Meanwhile property values rise 5%-10% per year. The only way for property to get reassessed at market value is to build on it or sell it.

This subsidizes speculation. If you own a vacant lot since 1970, and pay an effective tax rate of 0.05%, and building on it raises your taxes to 1%, you're taking a huge risk by deciding to enter the market now. Similarly, that super old 6-unit apartment building from 1930 has a ridiculously low tax basis; upgrading to 20 units hugely increases taxes.

If the problem is developers making a bunch of apartments and releasing them slowly, wouldn't such a tax just mean they'd switch to a strategy of making them slowly to get the same effect?

The governor of my state ripped toilets out of one of his mansions to make it "unlivable" for tax reasons. No doubt the developers could stall finishing units if they had to.

Literally nobody has ever done this. Large apartment builders have banks breathing down their necks. They try to lease up as fast as they can, which generally takes about a year to get to 90% because there's a lot of friction in getting people to move.

Vancouver does this, and it reveals that vacant homes are not the problem. There's a small additional revenue stream, and some college students get to rent our mansions for cheap, but it's simply not enough homes to have much of an impact.

The vacancy/spec tax spiked the amount of rentals hitting the market the year it came into effect, adding 8000-11000 that year depending on if you factor in new builds.

You're only gonna get that big impact one time, but it goes to show that the tax was worth doing.

Doesn't solve the problem by itself, but the tax will help.

The amount of units that suddenly appeared showed that there was a small percent of units "leaking" from every new build that never hit the market.

Land value tax would be simpler. Tax everything based on the unimproved value of the land. Unoccupied homes and apartments become money-losers, and owners are forced to sell them to people who would rent them out or occupy them, or else it becomes a money-losing enterprise. No need to figure out what's occupied or unoccupied, and no loopholes. Just tax the externality and let the market figure out the rest.

Really hard to do. Not because it’s a bad idea but because it’s hard to identify a vacant apartment. One example using utility bills as proof of residence can be gamed by paying people to go turn on the lights for a while. How can you tell that the property is actually empty?

Public housing projects.

You know, it's been a while since I left Potrero Hill, but I think that I heard the feds had taken over the public housing projects on the south side (you know, back where OJ Simpson grew up) because they were basically uninhabitable. What's the status on that?

But you know, that's last generation projects. What's the status on today's "affordable housing" projects? Oh, you say it costs $750,000 in construction costs alone for an "affordable" 2BR apartment? Oh dear me, that's rather ridiculously steep, isn't it...

https://www.nytimes.com/2020/02/20/us/California-housing-cos...

https://en.wikipedia.org/wiki/Public_housing_in_Singapore

Singapore relies heavily on cheap foreign construction workers. In order for that model to be applied in SF would require opening the Mexican border to allow for cheap immigrant workers to come to SF. That’s not going to fly for many reasons.

I always thought that most of the construction workers in SF are illegal immigrants from Mexico and have been for the last 30 years or more.

I always thought that there were about 8 million illegal immigrants in California, then 9/11 happened, but even after 9/11 the number never dipped below 1 or 2 million -- and if it got that low, it was only for a few years.

Also, I thought that when the numbers have gone down, from 8 million to 4 million, say, it is more because of an increase in economic opportunity in Mexico than it is because of an increase in the effectiveness of US border control.

And I thought that even with all his talk, Trump didn't improve US border control significantly.

But I don't have any direct motive to stay informed on this issue. E.g., I don't hire cheap workers. So it is possible I am misinformed.

That article puts the price of a new 5-room apartment in 2010 at $448,700 Singapore dollars (USD $337,000 at today's exchange rate). That's about 50% of the NYT's cited 2BR=USD$750k that doesn't even include the price of the land.

San Francisco as a political entity has neither the will nor the project management capacity to build anything at reasonable prices.

I have a friend living there now so it’s still inhabited, says his place is in pretty bad shape though.

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