If you sell a house these days, the buyer might be a pension fund | Hacker News Reader

If you sell a house these days, the buyer might be a pension fund

wsj.com

671 pointszpeti1,082 comments

Here's why investors buy up houses: they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good investment.

Here's one who comes right out and explains this:

> Meanwhile, local opposition to building is so commonplace and the approval process so cumbersome, time consuming, and expensive, even when a proposed project complies entirely with requirements, approvals are not forthcoming, at least in an expeditious manner and needed supply is simply not provided. Recently I heard of a new acronym to add to my vocabulary: CAVE, Citizens Against Virtually Everything, to be added to NIMBYISM and BANANA (Build Absolutely Nothing Anywhere Near Anyone).

https://www.clearcapllc.com/2021/04/27/q1-2021-clear-capital...

Support groups like https://yimbyaction.org/ if you want to 'stick it to the investors'. If there's a credible threat to build plenty of housing, they'll move on.

Also, the low supply of new houses already created a market for them to control. If there’s already a bottleneck, then half your job is already done. Buy everything up, and continue buying new ones at a decent rate to maintain the bottleneck. A veritable housing OPEC controlling the outflow and production of homes. Sinister stuff.

Congress absolutely needs to do something about this.

In Queens and Brooklyn, before the Amazon NYC Headquarters was derailed, they had bus tours of Chinese investors, driving around, looking for for sale signs. It was crazy.

That has been very common for the last 30 years and AFAIK hasn't slowed down.

30 years? That seems like a long time for China. Maybe the Japanese and/or Koreans?

30 years ago was only the 1990s, its on track.

You lost me at the end. You lack political acumen if you think this is how politics works: " If there's a credible threat to build plenty of housing, they'll move on."

The Yimbies supported Mayor Breed. She hasn't changed the political problems in SF that you're (for the most part, accurately) diagnosing here.

The problem with most anti-activist government screeds like this is that they lack the same nuance and sophistication they would bring to, for example, commenting on a market analysis. I'm almost certain your position here is "end zoning." I'm fine with that. But it takes way more than shit posting, and the people who believe what you do are literally at the top of the city's government in San Francisco, and nothing has changed.

You need a better understanding of politics and a sharper theory of change. Just applying your own premise to this comment, investors are actually relying on people like YOU failing to learn more about politics and failing to understand how to better communicate about politics. YOU are part of the problem, not above it.

I don't live in San Francisco, and our local YIMBY group is getting things done, thank you very much. We helped nudge our local representatives towards passing HB2001 in Oregon, which will add to the supply of more affordable homes. We've helped get apartments built locally. We speak regularly with our city councilors.

It takes a lot more than being 'highly online' and YIMBY groups are doing that work.

Now that duplexes are allowed, how long does it take to get one approved?

Still too long. The bill has not been fully implemented as cities have a few years to adapt it into their code.

But you just keep pushing where you can.

Do you have any ideas to propose then, as actionable advice for activists to improve their effectiveness?

Yes. Do better than this: "If there's a credible threat to build plenty of housing, they'll move on."

What's needed is a mainstream, national name-n'-shame strategy that identifies specific officials and offices that are causing the block in housing. Make the target highly specific and concrete, and ensure the messaging is big tent -- don't make it anti-municipal government. Make it anti-zoning.

It's a waste of political bandwidth that most Americans know the name of at least one random House Rep that represents their partisan opponent either because Fox News or MSNBC, but none of us has any idea about the bureaucrats who are making terrible anti-housing policy decisions every day and driving up the cost of owning shelter.

Read this article and tell me how the amount of pro-YIMBY energy hasn't yet turned this into a major, populist outcry against specific people and specific government agencies: https://www.sfchronicle.com/bayarea/place/article/The-quest-...

Maybe it's because people disagree with you--people who like where they live and don't prefer radical changes and ideas. Maybe you should go talk to some of them and learn about what they want and why they prefer stable policies.

What you call "anti-housing" others call "pro-stability."

I think this assumes that diversity of opinion among an electorate is what's responsible for one movement's ineptitude. The movement to change zoning can improve AND reasonable people can disagree about it's outcome. If your only point is that there are pro-zoning people who disagree with me -- that point is obvious and does not conflict with anything I've said.

I don’t even understand this comment at all. So the solution to NIMBY activists controlling local government is to do... nothing? You know YIMBY is itself an activist movement right? Activist isn’t a code word for “crazy left wing people I don’t like”, it just means people who are hyper politically active (moreover N/Y IMBY is not clearly demarcated on political lines IMO).

All you have done is said the person you are replying to is an idiot for YIMBY but the only argument is that they support Breed. That’s definitely part of the problem but in SF the board of supervisors also hold a lot of power and those are more important. Also, Breed is supported as a least-worst candidate.

If you don't understand the comment "at all," I suspect replying to you won't resolve the issue.

>All you have done is said the person you are replying to is an idiot for YIMBY but the only argument is that they support Breed.

That's not all I've said. Read slower.

"Read slower"

Write clearer

More clearly?

Since you understand politics so well you understand Mayor Breed can't unilaterally write housing policy. She has to work with the Board of Supervisors. The Board is dominated by a group of politicians that aren't really YIMBY supported as far as I know.

Since your reading comprehension is so high, you'll agree then that supporting yimby groups won't be sufficient to generate the credible threat that the original comment suggests will be sufficient to dissuade investors

Since yours is, you'll see that the original comment didn't say it would be sufficient. Those were two separate sentences.

This is one sentence: "Support groups like https://yimbyaction.org/ if you want to 'stick it to the investors'."

I'm done here. Feel free to defend bad activism or advance whatever incorrect semantic interpretation you have of our exchange.

Love CAVE and BANANA acronyms! Very good summary of world in 2021 (sadly).

DILDO (double income large dog owners)

I'd say the tax advantages have a lot to do with it to.

A portfolio of several thousand Prop 13 jackpots is a pretty good situation to be in.

Makes me wish that they would increase property taxes for multiple residence owners & make sure to include residential conglomerates.

It should be that each additional house after the first has a tax penalty that increases on a logarithmic scale to make it financially unsavory for people to own more than one house. In an ideal world, owning multiple homes would be an ostentatious display of wealth and not a common investment vehicle.

The wealthy will just create a bunch of LLCs that own one house each.

Indeed— like a lot of these things, it would punish upper-middle class families who inherit a cottage, but not affect anyone with >5 residences since at scale the work needed to evade becomes worthwhile.

There's already multiple rules for "primary residency", you could structure a progressive property tax off of that.

Then single family homes owned by LLCs should be taxed out the ass. I know it's a cat and mouse game, but if a corporation is the owner of a home that should be a dead give away that it should be taxed at a higher rate than for one owned by an individual.

That's a lot more complicated than a land value tax.

I know Californians are sickened by the idea that taxes could go up when the house you live in is worth more but this happens all over the world and it's honestly just fine.

Not only investment but also as a safe holding of value or shadow banking unit of account. Once you get enough money there's no safe place to keep it. While banks are relatively low friction, real estate ownership is like an account with the state, "guaranteed" by our attachment to the structure of our society and the government's "monopoly" on legitimate violence.

I just experienced something similar to this and it makes me wonder if much of this is just perception.

We recently dealt with an out of state builder pushing to have a property that was zoned Neighborhood Commercial to be rezoned to something more flexible so that he could build 49 town homes with 49 parking spots on 5 acres of land.

Everybody opposed the rezoning and fought to defeat it. The project would have been the most dense townhome development in 4 counties.

There is uniform agreement that people want commercial projects built there as zoned, but I wonder if the opposition would be classified as NIMBY?

Without knowing more, it sounds complicated: denser infill housing is good in so many ways. Mixed use, with commercial on the ground floor and housing above is even better in many situations, but not all developers do that kind of thing. So it kind of depends on what the alternatives are and what the housing situation is like where you live. There are places where "the perfect is the enemy of the good" in terms of what gets built.

Commercial is critical for '15 minute neighborhoods': https://www.strongtowns.org/journal/2019/9/6/7-rules-for-cre... - but without the density to support local commerce, it's tough to justify it.

But I don't think 15 minute neighborhoods are likely what your angry neighbors had in mind, so most likely just NIMBYism.

Where I live now is planned to be a 15 minute neighborhood. I moved into one of the first new developments of many, all residential, all within a 5-10 minute walk of a train station.

There are about 1000 housing units being built, and there has been zero commercial development. It's great that they are building dwelling units here all around transit, but the only businesses that already exist are industrial, a gas station, and a dollar store. Commercial land owners have been refusing to sell to developers as they watch their land value increase. It's a real shame, but it does seem better than what existed before and the area certainly has potential.

Yes, this is what NIMBY means. "I am ok with more housing, just not by me."

The specifics will vary in every case, but in every case it will be some argument on why THIS is not the right place to build more housing. For every possible value of this. Areas that don't have extremely local control over zoning do a better job of combatting this.

Yes lol.

This is kind of textbook NIMBY although it is possible taking away the commercial zoning could make the area too light on commercial activity.

But one of the main contributors to housing shortages is that areas have been overly permissive with commercial zoning (since they don’t have residents, city expenditure is low) which causes imbalances in the amount of jobs:people in an area. That in turn not only increases prices but increases traffic as some portion of people must be commuting from afar to fill those jobs.

Bingo. Balance is way more important than density. It should be mandated by state law. Doesn't need to be per-city; you could have a system to trade jobs vs housing with neighboring cities or something.

A major irony is that California is approaching this all wrong. The "let Scott Wiener build whatever he wants" laws are in some cases being used to make the problem worse. See: Vallco Mall redevelopment plan, more jobs than housing.

Yes.

If you believe that no town homes should be built in the U.S. than you might not qualify as NIMBY.

But if you believe that town homes shouldn't be built next to you that's the definition of NIMBY. Of course every instance has a long list of reasons why next to them is especially bad, character of the neighborhood, parking issues, infrastructure, etc....

But the end result of everyone fighting increased density in their neighborhood is we have a less density (bad for environment) and more expensive housing.

The irony is that density means more people, more homes, more availability.

That means more jobs open up and makes the place more lively. More desireable.

That means the house property value will go up.

They are thinking "will this make the property value go down in the next 5 years"? vs "will this make the property value skyrocket in the next 10 years".

We are catering to short-term gains at the expense of long-term.

That’s only true up to a tipping point when poor people move in. Parts of Detroit are a great example where poor people are diving down the value of houses around them.

People essentially want to be surrounded by people of almost exactly their economic class to somewhat richer. To rich and stores they can’t afford to stay ie gentrification, to poor and you have to move ie white flight.

I'm not sure what parts of Detroit you're talking about, I can't think of a single neighborhood that is struggling with that problem, blight and abandonement? Sure.

Blight is a direct result of people in the area being to poor to afford to maintain infrastructure.

As to driving prices down, some houses in good condition are selling for ~25-50k which would be worth more basically anywhere else in the US.

That's not because a bunch of poor people moved into the neighborhoods. That's because the middle class moved away or lost their jobs.

It’s not just a question of the middle class moving away, people die which means you need more people moving in. As soon as the mix of people moving in starts to include less affluent people it eventually gets dominated by them simply because their are more people as you move down the income curve.

The transition within a city is rarely about some specific employer shutting down. The more general case is homes age and different areas become attractive over time. You can find areas where nearly identical homes where build across a wide area, yet one community falls into disrepair while another becomes desirable simply based on school zoning.

I think you have it exactly backwards the cost goes down due to the area being a less desirable location allowing the poor to afford the houses there. If you analyzed the situation better it is extremely likely that there is an underlying cause that isn't poor people moving in. The economic situation in Detroit has been shit and getting shittier for years now leading to the people who are more capable and therefore able to command a higher salary to tend to move elsewhere.

A house that a doctor and a lawyer are competing to buy is going to be go for more than the one an auto mechanic and a fireman are competing for.

It is a little bit of both, at least when it comes to maintaining a local public school’s rating. People will oppose lower income housing to prevent the children of lower income people from attending the same schools, which might cause the school’s rating to go down. Which would then be downward pressure on the price of the land.

Every real estate website has school ratings for each house listing because it is such a sought after amenity.

Honestly, Detroit had nowhere to go but up. The city was so poor that even a decade ago downtown was a hot mess where there was virtually nobody there after 6 PM.

It also means you can get walkability and nice things like shops and leisure activities without having to buy a car and drive literally everywhere.

That needs a commitment to commercial space on the first floor and underground parking for tenants so that surface parking is available to customers without the need for massive lots. Builders who want to extract maximum profit with the cheapest construction won't go for it.

So, the status quo has to change. Not an easy job, but the rest of the world shows how it can be done.

That also means "those people" can walk into your neighborhood, and many are motivated not to let that happen.

I lived in an area that, for years, refused to let an old railroad track be converted into a trail because it would connect a working class area of the town to an upper middle class area via a miles-long footpath.

Maybe. If zoning is fluid and organic, you might get those. And they are nice things that many people value.

But, in existing zones? Maybe not - you'd have to convince people to change residential to commercial/retail. And changes to parking minimums, which always seem to screw up projects (they almost always require more parking than a "free market" would dictate).

More homes and more people doesn't necessarily make an area more desirable. Many people prefer space, privacy, and quiet. Those things are more important to them than property values.

That is fantastic for retirement but 80% of people who live in Urban areas value above all else seemingly proximity to jobs which are driven themselves by the proximity of many people which is often driven by the proximity to desirable features like ports.

Retirement isn't the issue. Most people who live in suburban areas today close to live in low density areas. They don't want their neighborhoods to become urban regardless of what that would mean for proximity to jobs and other desirable features.

Stop trying to tell people what they ought to want. Not everyone agrees.

Not the parent, but upthread we're talking about density and zoning in cities, not in suburban or rural areas. I get that people who want to live in a suburban or rural environment have different priorities, and they're free to set building policy to achieve those goals.

But it feels like (in SF at least) we have people with conflicting goals: they want to live in a city, but they want their experience to be similar to suburbia.

I want to live in a city and for it to actually feel like an urban environment! I want to walk everywhere for my day-to-day needs, and take transit for everything else. I want to sell my car and rent one only for the times I want to leave the city. But we're in this weird middle state where that often doesn't work. My guess is that the only place in the US where it really does work is NYC, and then maybe even only really in Manhattan.

>My guess is that the only place in the US where it really does work is NYC, and then maybe even only really in Manhattan.

It's probably the case that it's the only place in the country where it's considered perfectly normal as an adult not to own a car even if you have plenty of money.

There are--especially given Zipcar/Uber/etc.--other cities where people can get buy without owning a car, especially if it's a young post-college lifestyle. But it probably requires organizing your life around not owning a car to a certain degree.

"[T]hey want to live in a city, but they want their experience to be similar to suburbia". I would agree for all quadrants except the northeast quadrant. That is the most dense for population and mass transit. There is a real urban vibe in northeast quadrant.

I have been told that central Washington D.C. and Chicago are also very transit and pedestrian friendly. It is not a requirement to own a car in those places.

>who live in Urban areas value above all else seemingly proximity to jobs

Many jobs are in the suburban areas near metros rather than in metros themselves. SV is somewhat unusual in that a large swath of suburban area is as expensive or more expensive than in the city itself. This isn't the case with a lot of cities.

Many NIMBYs aren't purely financially driven. What they want is for their neighborhood to stay exactly as it was when they moved in, with the same type of people, and same amount of traffic.

Bay Area has plenty of this type. Many of them already have had property value skyrocket (50K -> 2M is not uncommon), so they can just have both (high property values, and preserve their neighborhood exactly as they want it).

Honestly I think this would be fine. The problem is they allow FANG to build giant offices, which brings new 400k-income jobs and bids up the restricted supply.

I think they should be forced to choose one or the other. Keep their SFH and say no to FANG, or accept townhomes and condos to balance out the new jobs.

This is also in part due to tax revenue. Because of Prop 13, residential units in CA generate very little property tax revenue (revenue which doesn't grow much until the property changes hands, which is unpredictable). Commercial units don't have this problem, so municipalities can depend on a decent amount of property tax, with predictable increases over time.

Prop 13 applies to commercial property too, I'm pretty sure.

I think commercial property just doesn't burden the city. A Google office has private security, a fire suppression system, and doesn't house kids who need to attend the school district.

Commercial property does burden the transit systems (LOL for CA) and roads. The road issue is pernicious because they take up enormous amounts of real estate to begin with and are extremely difficult to expand after the fact. This is one of the primary arguments against building high-rise housing in SoCal. Neither the transit systems nor the roads are able to deal with the additional people. The roads probably never will at this point--there is no room to expand them. Yet the transit systems are woefully underdeveloped for the size of the population and would take years to catch up even if the local politics supported them.

I see a lot of this from People on Nextdoor. They see their favorite landmark demolished to build yet another block of apartments and condos. I've seen a sporting goods store gone, a furniture store gone. A bowling alley was saved but it will be built around. Some places I've seen low density industrial being replaced with housing. Some people fear that at the end it will just be housing and big box stores left.

Look at any typical city in North America, your priciest neighborhood likely has low density.

People tend to work away from where they live (at least for high paying jobs) and prefer having ample space at home therefore I don't think higher density would increase property value as you stated.

The priciest neighborhood ($2MM+) in my city is low density and full of mansions for sports stars and execs for of all the local F500 companies. But the next tier in price ($1MM-$2MM) is actually pretty high density housing abutting downtown.

Once you get into the $500-$1MM range density falls again, as these are the McMansions in suburbia. Density keeps dropping as price goes down until you get into the slums territory, which are basically the pockets of urban blight that haven't been redeveloped yet.

Can you share the city name? I'm curious to learn more.

You're looking at one half of a normal distribution and seeing "more is less" (more money is less houses per square meter), and you're reacting to someone looking at the other half of the normal distribution and he's seeing "more is more". You're both right, just not looking at the entire picture.

You are probably looking at price per home, not price per acre.

When I worked in New York City, there was a stark contrast between senior management. Some lived very rich & urban -- West Village single family townhouse or Upper East/West side high rise, and others lived in a huge suburban home in Greenwich, Connecticut or Long Island. It was a weird mix. I could never figure out why they chose one over the other.

> They are thinking "will this make the property value go down in the next 5 years"? vs "will this make the property value skyrocket in the next 10 years".

Not even. Near here, there was a proposal from the city to increase middle-density housing.

They hired economic forecasters. Their projection, that property values would "decrease" from 13% YOY increases (we are in one of the highest increasing cities in the country) to 9% YOY.

In other words, you'd still see your home value _increasing_ 53% in five years (versus 84%), not decreasing...

... and people still acted like the city wanted to shoot their first-born in the streets.

Exactly. Parents bought a house in relatively scarcely populated area. Then 10000 neighbours moved in. Now they own the largest property in the neighborhood. Guess what that does with the price...

Not everyone cares about greed-driven financials (houses as "investments") nor wants to live in a "lively" place. I'll take my peace and quiet, thanks...and my stable property values and town size.

What if you're someone who thinks building stack-and-pack residences is the incorrect response for an investor-manufactured housing shortage?

Then your thoughts are incorrect.

Portland, Ore. is facing a huge housing crisis because single-home zoning prevented increasing density. Without the ability to create more housing on existing land, there is a shortage. It's that simple. They recently passed a law allowing more dense developments, and that will create more supply. There are currently 10 apartment projects in flight in the city, so there is no cabal conspiring to not build housing as you suggested.

Unfortunately, current homeowners love the shortage because it is increasing the value of their homes in ways we haven't seen since ... ever. Which is incredibly short-sighted because the economy will stall without housing, which will crater the boom. Moreso because if they sell, where are they going to move in the same town? They would need to sell and leave town to someplace cheaper. It is amazing to me how many people don't think one more step ahead.

Yes, I’m familiar with that narrative. Perhaps it is reality in _Portland_and_handful_of_other_places. In that case, you’re actually specifying the different case of solving a real housing shortage, not a manufactured shortage.

I routinely take 3-mile walks through my neighborhood in NE Los Angeles. There are at least two homes on each block that are unoccupied. The nearby stack and pack developments don’t offset the inventory sitting idle.

If I understand your argument correctly, you are making an un-evidenced claim that a cabal of housing developers are conspiring creating a housing shortage despite the biggest housing boom in the US since post WW2, while also claiming single-dwelling zoning as the root cause is somehow just an anecdote?

it doesn't take some kind of cabal to do the incentivized thing, plow millions/billions into properties and don't bother with the hassle of renters when the amount they increase is far more than you would have gotten from rent before you flip them.

Vacant houses do not match the behavior of private equity investors. PE will rent out houses and viciously profit maximize at every step.

Vacant homes from "investors" are almost certainly older residents that have moved, or passed away and left it to kids that haven't figured out what to do, or just owners in the area that have locked in low property taxes and don't want to bother with the hassle of renters.

These are precisely the small-time landholders that benefit the most from stopping apartments from being built, because the source of their investment games is entirely from scarcity.

And the cure is precisely to take away their ability to limit housing by building what you call "stack and pack."

Handwave much?

I would like to engage constructively, but I'm not sure what you doubt, and you seem to be holding me to a far different standard than you hold your own comments to.

Here's the behavior of PE firms when it comes to renting houses, they rent them out and charge for everything:

https://www.nytimes.com/2020/03/04/magazine/wall-street-land...

As for the vacancy rates, how do you know the homes are vacant, and what is the proper vacancy rate? These can be looked up in from Census ACS estimates, though I hear that the Post Office sometimes has better data.

I would say that a healthy vacancy rate is at least 7%, possibly higher.

https://news.bloombergtax.com/daily-tax-report-state/u-s-cit...

I'm quite familiar both with Vancouver's and Oakland's vacancy taxes, and have endeavored to get them enacted in my town. Not because it will solve any housing problem, but because it's a nice revenue stream for various much needed services, and it eliminates one way that people try to wriggle out of the need to build more homes.

If anything, Vancouver is solid evidence that vacant homes are not the problem, despite so many current homeowners being desperate to use them as an excuse not to build more homes. In Vancouver, the tax provides a small income stream, but has changed nothing at all structurally. And that's in combination with the foreign purchaser tax.

The one solution is to start building what people want, what you derisively call "stack and pack", in sufficient numbers over a long enough period of time to satisfy everyone's desire for housing.

We are not off the mark by 10% in the amount of homes needed in LA or the Bay Area, we are 30%-50% off or more. We have been under building for decades now.

No, I'm making an evidenced claim. I have observed this with my own eyes. And you're moving the goalposts.

I'm saying by taking inventory off the market by buying houses and leaving them vacant, investors are contributing to the housing shortage. I'm pretty sure collectively controlling a small percentage of the market, investors can cause an increase in the cost of housing, per the law of supply and demand.

Portland has an Urban Growth Boundary [1] that makes it very difficult (de-facto illegal) to build new housing on undeveloped land. That is a major cause of the housing shortage, but it was passed by people like you who wanted it to artificially densify the city. Current homeowners who want to maximize their house's value would be in favor of keeping the urban growth boundary (it restricts the supply of houses) and encouraging high density projects (if apartments can be built on a lot, it makes it more valuable), which coincidentally is the status quo in Portland and other cities on the west coast. You may personally hate sprawl for various reasons, but there is a reason why the sprawling cities of the South and Midwest are cheaper than the densifying cities of the PNW, despite many of them having larger populations. Building apartments and tearing down houses lowers the price of apartments and raises the price of houses; it's simple supply and demand. Repealing both zoning regulations and the urban growth boundary would result in a free market, but don't be surprised if people make lifestyle choices you don't approve of and the suburbs sprawl outwards in such an environment.

[1] https://www.oregonmetro.gov/sites/default/files/2020/02/24/U... Anything outside the yellow line can't be developed without a massive legal fight.

That's great. I really appreciate the growth boundary. It is one of the reasons I like Portland. That's not at all what I'm referring to. In fact, my position, is that removing the single-family zoning restriction is a good thing. That works against sprawl.

> people like you

I think you may have been triggered by poor reading comprehension and gone off in a fit of ignorant rage and assumed I thought sprawl was a good thing.

My reading comprehension is fine. I'm well aware you're an urbanist who hates sprawl and cars and loves density and transit. You need to work on yours, because I never said that you like sprawl (in fact, I said the exact opposite: "You may personally hate sprawl for various reasons"), only that urban growth boundaries raise the cost of housing and that "NIMBYs", if they were motivated by increasing their property values instead of concerns over the character of their neighborhoods, would support policies like urban growth boundaries and upzoning because they result in a reduction in the supply of houses and an increase in the potential land usage value. You argued that they loved a shortage of housing because it increases property values, and I pointed out that the reality is more nuanced.

How are you any different that the someone who doesn't want an apartment building built because it would change the character of the neighborhood? Both of you support policies that increase the cost of housing in the hopes that everyone will live the lifestyle that each of you prefer. You prefer multi-family housing and want people to live in it, and support policies that make it expensive to live in single-family housing. The hypothetical NIMBY (who is, as mentioned previously, not someone who is purely interested in maximizing their house's value) prefers to live in single family homes and wants it to be expensive to live in multi-family housing. I'm sure you'll reply with some handwavy thing about sustainability and externalities, but the NIMBY can similarly bring up crime, noise, congestion, and other issues with dense living. There is no difference other than which housing type the two groups prefer.

I would be less hostile if urbanists like yourself would just admit that they want to force everyone to live their prefered lifestyle instead of hiding behind bogus economical and questionable environmental arguments. If you truly just wanted the option to rent apartments then there would be no need for policies like urban growth boundaries. Removing both the zoning rules and the boundaries would allow for housing that people want to be developed, but what would you do if your neighbors make the "wrong" choice?

> I would be less hostile

You've been nothing but hostile in this discussion (and apparently from your history, many others). Also you literally edited a comment to deny a claim you made. Just stop.

You edited a comment to change your reply from being an attack based on something I did not say to including an actual argument, and I have not edited a comment beside grammatical changes/minor clarifications and my argument is consistent. Just stop commenting if you can't address my points or hold a discussion.

> Building apartments and tearing down houses lowers the price of apartments and raises the price of houses; it's simple supply and demand.

Do you have evidence of this? I would think increasing the supply of housing would have a downward effect on all housing. Sure, if you're really set on a SFH and there are fewer of them, you'll have to compete. But I think people who want a SFH want a SFH _neighborhood_, and there's an unanswered question to what extent different types of housing can substitute for one another.

The value of _land_ may increase with zoning because development rights are still in limited supply, and the profit opportunity for a developer has gone up. But I don't see many SFH owners clamoring to let their neighbors on both sides be replaced with 5-over-1.

The housing market is not perfectly fungible. A three bedroom house is not replaceable with a studio apartment, and building a studio apartment would only lower the price of houses if there were a lot of people living in houses who would prefer to live in such an apartment. Generally the reverse is true, as more Americans aspire to own a house than live to in an apartment. This survey[1] shows this; look at the difference between live in city and want to live in suburb versus live in suburb and want to live in city. It's not a perfect proxy because many cities have houses and many suburban areas have apartments, but it should give you a general idea. This means that building houses may lower the price of apartments because there are people living in apartments who would prefer not to be. Once they move out, they open up a spot for someone who wants to live there. Three bedroom apartments are much less frequently built than 0-2 bedrooms (the smaller the floor plan, the more tend to be built), but there are still many intangibles like owning the land underneath your building and physical separation from neighbors that lead some people to prefer a house over an equivalently sized apartment/condo.

In addition, many suburban areas are not exclusively single-family houses; they already contain a mixture of apartment buildings and commercial areas, so I dispute your point that single family home buyers insist on exclusively single-family neighborhoods. In most suburban areas I've seen, the apartment buildings tend to cluster together, often near a commercial area, so if you're deep in a sea of houses it's unlikely that your next door neighbor will sell to a developer. People may not be excited if their next door neighbor sells to a developer who plans to build an apartment complex, but that doesn't change the value of their lot, which has increased because the developer is willing to pay more for it if they can build bigger buildings on it.

I was talking about a market with no rules restricting what can be built, and in such a market the neighbor has no say, so their personal opinion is irrelevant. The guy I was arguing with wanted restrictions on housing types he liked to be repealed, but wanted restrictions on housing types he didn't like to be enacted, and I was trying to point out that hypocrisy. Building houses versus apartments is a balancing act governed by demand, but market distortions like banning one type of housing or another can cause an undersupply of certain types of housing, which leads to an increase in prices for the type of housing that is undersupplied and for the substitute it's would-be buyers end up using.

[1] https://news.gallup.com/poll/245249/americans-big-idea-livin...

Didn't say it was perfectly fungible, just fungible enough that a significant enough increase in other types of supply might bring down SFHs. Either that or the true value of a SFH in a no longer housing constrained San Francisco really is $2.5 million.

If you believe that SFH buyers do not insist on SFH neighborhoods (whole cities are not neighborhoods), and should welcome denser zoning because it makes their lot more attractive for redevelopment, go circulate a petition for this among SFH owners and see how far it gets.

You're thinking far too narrowly on SF. In SF, there are people sharing a rented house and treating it as de facto apartments, so my argument still holds. Outside of college towns, that is normally a rare thing, so it isn't applicable for most metro areas that haven't been frozen in time for decades. The Bay Area is a terrible example because they've banned ALL types of housing, not just apartments. They have an urban growth boundary and haven't upgraded their infrastructure to support their growing population, which means that for a given commute time, people must live closer to work than they would with better infrastructure, which increases the number of bidders for each property near offices. I suspect though that even if enough apartments are built in SF so that single-family homes become single-family again, the price of a house there will still be millions. For example, look at the Upper East and West Sides of New York, where there are townhouses worth millions to tens of millions, just like there are in SF, but they are surrounded by massive apartment buildings. Those townhouses are also protected by zoning (In the local government's words: "R8B contextual districts are designed to preserve the character and scale of taller rowhouse neighborhoods."), and they'd be worth even more if a skyscraper could be built there. You could argue NYC still needs more apartments there, but the value of that townhouse's land would still be high, as the developer who wants to build another skyscraper with hundreds of units can afford to pay far more than all but the very richest potential homeowners. A regular New Yorker who wants a house, while they may be priced out of Manhattan, still has the option of moving to New Jersey or somewhere on Long Island and commuting in, as NYC sprawled in addition to building up. If they want to stay a homeowner in Manhattan (or a San Francisco) then they have to outbid the developers.

To your other point about insisting on SFH-only neighborhoods, in large parts of the country, there are apartment buildings and large commercial areas spread between and in single family neighborhoods, and that hasn't stopped people from buying houses there. I wasn't arguing that they all should support higher density zoning, just that it is in their financial best interest to do so. Another major problem is that because the Bay Area has refused to build anything for decades, it has decades of unmet (or to use urbanist language "induced") demand for houses, apartments, roads, transit, etc. that has to be met before prices and congestion will start to go down. To maximize housing affordability you need a mix of sprawl and density with appropriate infrastructure for the type housing built, and if you only do one type of growth you will have many people who are unhappy, which is why in another comment in this thread I accused the YIMBY urbanist of being the same as a NIMBY SFH owner, just with a different preferred housing type. The Gallup survey I linked earlier shows that there are more people currently living in cities (presumably in apartments) who wish to live in suburbs or rural areas (presumably in houses) than the reverse, so there is an unmet demand for "sprawl" and options like remote work.

My major point if a SFH owner in SF was purely motivated by money, they would welcome development on their land and wish to limit it on others'. Many of them aren't though, and they aren't lying or using euphemisms when they say they want the character of their neighborhood preserved. I hear tons of arguments that they are opposing multi-family housing because it would lower their property values, and that just doesn't make sense. A San Francisco with an apartment built for everyone there who wants one and no other changes would most likely still have million dollar houses, though the rent of the apartments would be less.

I think if you are using derisive terms like "stack and pack" for apartments then you are probably precisely the investor that is manufacturing the housing crisis.

Apartments create greater affordability, they allow for designing cities with lower carbon impact than single-unit homes, they allow better community, more connections, cradle-to-grave living, they allow people to survive without having to get in a car to do any task during the day. They are fantastic. I would live in a "stack and pack" home in an instant if they were allowed in my community.

Your points are true, and I’m in favor of building more housing, however the single family home has traditionally been a financial boon for lots of Americans, and having to pay for rent every month vs keeping some of that value in your mortgage is hard to discount.

I guess I’m just saying there should be cheap smaller houses and condos in cities too, not just rental places.

It's weird, people say the same things whether it's condos or apartments. Where I live, they will typically be derided as "luxury condos" despite being less than half the price of detached homes in the area.

(One of my more heretical opinions is that homes and land shouldn't be considered investments, and should perhaps not be a method of wealth building, as it turns every person into an investor whether they want to be or not. Which fuels regular people to take control of the local political processes that block new homes with talk of "luxury condos" and "stack and pack." If we are going to do something like this I'd favor a sovereign wealth REIT that redistributes the wealth more evenly and removed the financial incentive to be anti-competitive in land use decisions. That, or tax away all profits from speculation on land gains.)

try living in one. they are great maybe from age 24-29. they typically cost more than a mortgage in my area. you don't talk to people when you are that close. I find the greater the distance between neighbors the better the relationship.

I lived in a few recently, after living in a detached house, and my experience was not as you describe. The buildings housed all ages and we were all friendly with each other, and if someone was in the shared outdoor space, a neighbor would quite often come to join them. In the building before that, there was no shared space, but everyone was friendly, no different than the detached house place where I live now.

Which isn't to say anybody should be forced into a multi-unit building and mixed-use neighborhoods. But as you point out, prices for these types of settings are often higher than detached homes, indicating that they are under supplied and more people want them then are currently allowed to live in them.

I am right at the end of your range and noticing similar trends among my similar-aged peers. We all talked of condos a few years ago, but the single family home with room to breathe and quiet is overtaking our previous desires. I am still conflicted due to my hate of commuting, but the more I read about and experience the downfalls of busy-area living (noise pollution, air pollution, inability to change much about the property, etc) the more I feel the desire to buy straight up acreage in Wyoming.

I also see a lot better community with less people, and I'm sure there are many reasons for that.

How can investors decrease the supply of housing?

By backing policies and politicians that constrain the expansion of public and affordable private housing in the face of an increasing population. Or by purchasing homes they do not intend to use as a primary residence.

An investment property still has people living in it?

I've never heard of investors lobbying against social housing (in the UK at least).

Forcing investors and developers to provide "affordable housing" arguably makes the problem worse. I.e. it makes it harder to make a profit and therefore disincentivises building new homes.

> An investment property still has people living in it?

Investment properties don't always turn into occupied rentals; sometimes they turn into vacation/secondary homes, airbnbs, &ct. They can also end up vacant if the dwelling is being used purely as an investment vehicle or if the landlord is uninterested in lowering rent in response to market forces, although it's hard (for me, a lay person who doesn't want to spend more than a couple minutes googling) to know if those are significant quantities of homes or just a rounding error.

>I've never heard of investors lobbying against social housing (in the UK at least).

I don't know how UK politics works, but in the US, large investment banks and lobbying groups pour huge amounts of money into our political system, and individual investors also happen to be voters. For example, the last CA ballot measure which would've improved housing justice somewhat (2020's prop 21) saw heavily-financed opposition from landlord associations.

>Forcing investors and developers to provide "affordable housing" arguably makes the problem worse. I.e. it makes it harder to make a profit and therefore disincentivises building new homes.

I don't really have opinions about whether you should force developers to provide affordable housing in new developments, since I think trying to wield market forces to fix social problems has a poor track record in general. If you (well, the government, civil society, whatever) want to incentivize building new affordable homes, you should just build them yourself.

No. People always say density helps availability, and price increases are due to the denser areas being more desirable.

The major factor driving housing inflation is restricted supply, which is relative to demand. Demand is created primarily by jobs. The difference between jobs and employed residents (with overhead for non-working family members etc) drives the imbalance. If demand was being met, prices would plummet.

This factor is orthogonal to overall density. The Bay Area is expensive because there is not enough housing for the jobs. If San Jose became as dense as SF, it would not help anything, unless that growth was focused primarily on housing. But San Jose already supplies net housing and SF supplies net jobs. These are not small imbalances either; they are both 6 figures in 2008 ACS commute data. (Unfortunately that dataset seems to be compiled very infrequently, but I doubt things have changed much other than density increasing.)

To me, the issue depends in large part on the context: What kind of area are you in? Rural? Urban? And what is the availability of housing and the economic diversity of the neighborhood?

I don't think it's useful to try to determine if some loaded, politicized, pejorative term applies by definition.

49 parking spaces for 49 houses seems like a disaster in anywhere other than the densest of US cities. Surely most houses have at least 2 drivers?

5 Acres is 2 Hectares, so that's about 25 houses per hectare. Typical new housing estates in the UK is about 25 hours per hectare, with minimum of 3 parking spaces (including a garage if given) for a 4 bed, and 2 for a 3 bed.

Even that number of spaces is too low - especially when one is a garage (which nobody uses to park their car)

The real disaster (environmental and economic) is that so many places regulate parking so strictly rather than being more market-oriented and allowing people to figure out how much they want.

https://www.planetizen.com/features/113459-perils-central-pl...

If nobody was allowed to park on public land, that could work

Certainly in the UK it's common for people to expect to own an extra 50 square foot of land for a car or two, usually abandoned to block the pavement. This impacts everyone, especially those of us who don't drive.

It's not really market oriented, it's tragedy of the commons oriented, as developers will build the cheapest thing they can on the premise that new residents can use existing parking, resulting in a reduction of value for others utilizing those commons. By not having parking minimums, it allows developers to pass those costs onto surrounding residents. There are townhouse neighborhoods near me with nearly impassable streets, people crossing 4 lane roads, spreading into surrounding areas, having to walk over 1km to their home from their parking due to insufficient parking minimums. Everyone sees it is a giant problem now, but it is too late to fix. These minimums are there for a reason.

The solution isn't to build more parking, its to reduce the need for car trips. Improve transit and support commercial development in the neighborhood.

The fact is that we're in a housing affordability crisis. We need builders to build "cheapest thing they can" right now because housing is insanely expensive in most urban areas. Parking minimums make housing more expensive, and the fact that people are buying these homes is saying something important: housing is more important than parking.

Yes parking is nice, and there are costs associated with not having a dedicated parking space for each person. But those costs pale in comparison to the costs we pay for having a severe housing shortage. The economic costs, the costs paid in rents, the costs paid in health.

There isn't a world where you can have it all. But its clear that we need more housing, not more parking, and there is an unavoidable trade-off between the two.

Improved transit works in megacities because of rapid transit but in this case they might add a bus route or the bus might come every 1/2 hour. You still do not have the scale to make public transit work unless you turn this place into an actual city.

You can't improve the transport until you start building high density housing, that's not 10 units per acre.

10 units per acre is 1 house per 5k sqft lot--this is plainly single family detached housing. No one in that zoning is having parking issues. When you start talking about 35duc then you start having parking issues--but at 35duc, you're totally within the realm of being able to justify more frequent bus service for a town with 200k+ people. But if you're in a small town with very progressive density allowances like that, then the solution is simple: improve zoning to encourage more neighborhood commercial. No need to worry about transit in that case.

But 10 units per acre is what was being proposed with just 1 parking space per dwelling. That acre is not going to get increased commercial (not enough customers in walking distance, no parking for people driving in), or transit (not dense enough)

Go for 35 per acre sure, you don't need 70 parking spaces then, because (assuming it isn't literally 35 units in the middle of suburbia) you get commercial and transit (people still got to get to work - maybe in WFH stays around that will change)

I'd be interested to see the land use code where this 10 duc with one allowable parking spot is going. This must be a HUUUGE townhouse to go there if its only permitted to fit one car.

is it 1 car garage or literally, a garage with no driveway? if a link to a specific example was mentioned above in this thread i missed it

Another solution is robotaxis. If ridehailing becomes easily affordable You will have your nice neighborhood back. Robotaxis can pick you up in a minute and go to park and recharge in some distant multi story parking.

That is a science fiction fantasy, not something we can plan on in any reasonable time frame.

If you have an area dense enough to have reliable uber then perhaps it works, but uber (and taxis in general) fall down with families with young children - the kind of people buying low density housing being suggested

It's impossible to take a "market-oriented" approach to parking when street parking exists. Either you remove the street parking, you regulate the space somehow, or you have a tragedy of the commons that pisses everyone off. In context, it sounds like the developer was obviously planning to take advantage of existing street parking to reduce the number of spaces built; it was, as described, the densest development in the area, at a below-normal spaces-per-unit for such an area.

The issue is that in areas with sufficient parking, on-street parking has few restrictions; maybe you have to move your car every few days and might have a scheduled street cleaning that you need to move for, but you don't need to obtain a permit or feed a meter or worry about where guests might park.

If you put a building with insufficient parking near there, users of that building are likely to park on the nearby streets and that reduces the utility of the street parking for the existing residents; either they may no longer be able to find parking readily, or they need to manage permits, etc.

It's different if you build in an area that already has tightly restricted parking. If you move into a downtown LA building without enough parking for your vehicles, you're not going to be able to find a free spot nearby and you won't reduce the utility of your neighbors.

What if I told you that in many areas households don’t even need a single car?

If you require large amounts of parking everywhere and commensurately large roads, everything ends up so spread out that car based transportation seems like a necessity. It’s a self perpetuating cycle. If you don’t require so much land to be dedicated to cars you can build things denser and lower or even remove the need for personal cars.

I think one car per household is fine for townhomes assuming most are 2-3 bedrooms. A lot of families only need one car.

It's just not like that in reality. There is a townhouse neighborhood near me with 1.25 spots per house, and it is a disaster. A lot of places are occupied by people with roomates, not families. It's the kind of place where most people need a car for their job- work trucks abound, people drive uber or doordash, etc. Not everyone takes a laptop to the office every day. The roads are nearly impassable, people park 1km away. I knew someone trying to run a small business out of their home there (piano lessons) but there was nowhere for customers to park. There is bus service there, but they reduced the number of routes due to insufficient usage.

Yeah, there is for sure a chicken-egg problem here. If the existing public transportation isn’t good then people will just not have enough parking. If everything is still spread apart, or there aren’t sidewalks or biking infrastructure, there won’t be walking or biking to the office or work site.

Although I will say, living in a neighborhood with very little parking, I am sure people who insist on owning a car anyway will think it’s a disaster too. But I love it because everything is close by and I can get around through a variety of non-car methods. But to get to that point takes time.

This really depends on too many variables of the surrounding area. There are places this could work, but I would argue there are more areas where this would not.

> What if I told you that in many areas households don’t even need a single car?

That's in very dense urban cities. Given the numbers in question (low density 10 houses/acre) that's not going to be the case.

> What if I told you that in many areas households don’t even need a single car?

Any part of the US where a street of townhomes would be more dense than the existing status quo is not one of these areas.

In my city (Milwaukee Wi) there are plenty of areas with single family houses, less than 10 units/acre with 0-1 cars per house.

It’s not that uncommon in the US, especially in poorer areas

> What if I told you that in many areas households don’t even need a single car?

Sure, if they live near public transportation. I would vote down a dense housing development of it didn't have access to public transportation

>Minimum of 3 parking spaces for a 4 bed in the UK?

This is certainly not my experience, unless you are counting on street parking and even then, that's a stretch

I'm only thinking of new developments

I'm thinking 5 bed sorry, yes 2 spaces for 3/4, 3 spaces for 5 - at least in my local authority.

Given that almost always one of those is a garage which almost never has a car, reality is tons of on street parking (or rather on pavement parking)

Another example that cars take too much space. Public transportation is the answer.

and bikes

So, what? What business is it of the local government? Why can't we just let consenting adults make their own personal decisions about the details of the housing and parking they choose to live in?

Some people may only need limited parking. Some people may not need any parking. Maybe they're making a mistake and will regret it. Maybe not. Maybe nobody wants that, in which case the developer will pay the cost. Who cares! This is how freedom works. Can we please just stop ramming regulations down people's throats. "Well, no trust me. I'm from the zoning board and I know you're really gonna need two parking spots."

Imagine if we had a clothing board, and anytime a company came out with a new apparel style they had to get approval. "I just don't think anybody wants shorts that far above the knee. Permission denied". Just let the market decide, for God's sakes.

Because there are external costs. The “consenting adults” narrative is false. Not enough parking means people living there will use street parking in nearby areas affecting the residents of those communities. This happens all the time.

This line of dialogue is a very strong demonstration of how car-centric transportation model leads to a perverse anti-social urban development mindset. Unused parking is quite literally the least productive and least attractive use of land, I simply can't fathom seeing it as attractive.

If the discussion was about high density living then sure. It's not, it's about 10 houses per acre, that's decidedly low density - lower than the tipping point where people don't own cars.

Sure, I'm saying it's a mistake for governments to have planned to support such districts in the first place (by building wide roads with on-street parking, the highways to connect the district to the productive parts of the city, presumably lots of car-oriented policy in other parts of the city to keep density low for the sake of traffic, keep parking high for the sake of those in low-density districts, etc).

This problem only exists because street parking is heavily subsidized at below market rates. In urban cores, street parking is often 90% cheaper than garage parking.

True, but again, if there exist people who currently rely on street parking and your solution is to raise prices so that new residents could compete for street parking then this still affects old residents. Gentrification is an externality too.

I am not saying we should stop doing everything that has externalities -- clearly we can't do that. It's just important to know that these transactions are not "between consenting adults" that dont affect others. Just because an owner of some land, some developers, and some perspective tenants agree on something doesn't mean it wont negatively affect a bunch of other people. And ignoring a bunch of other people entirely is not the correct choice.

The market doesn't decide, and everyone suffers. Ban people from storing their vehicles on public property and you're fine, but until that happens you're stuck with the externalities.

Oh and stop low density housing like this being built in cities.

What if that development was walking distance to transit? I live in SF Bayarea suburb in a SFH with a wife and a elementary school aged kid. We have 1 car that is parked in our driveway(on our property). For everything else there is a commuter train within 10-15minute walk and uber within reach.

Limited parking does incentivize non-car-oriented lifestyle. Im all for it.

I'm all in for subways everywhere but do you feel as comfortable getting in a rush hour car after covid? I'm starting to think subways and megacities might not be the safest way to live.

I feel perfectly safe using public transit. 36,120 people died in traffic in 2019 in the United States. When there isn't a pandemic going on and I'm getting the annual flu vaccine, I feel pretty darn safe compared to driving

But there is an ongoing pandemic going on we can't go back to 2019. The new delta variant makes the vaccine weak. What are the chances this mutates again and again? It doesn't seem like a healthy approach for humans anymore.

The US has notably low public transport usage, yet has one of the highest death rates in the world

Singapore has high barriers to car ownership and has one of the lowest.

https://www.smartcitiesdive.com/ex/sustainablecitiescollecti...

I do actually feel safe getting in public transit while covid’s ongoing, and I’m in Tokyo (and taking two of the busiest lines in the world as part of my commute - Chuo and Yamanote).

At this point it seems obvious to me that having windows open, everyone wearing masks, and everyone shutting up, is sufficient to make public transit safe. Because if it wasn’t Tokyo would be in a _much_ worse situation. I fully admit I don’t have rigorous data to back this up, but I kind of can’t see how it could be otherwise.

> Limited parking does incentivize non-car-oriented lifestyle. Im all for it.

No it doesn't, it incentivizes parking arguments and a tragedy of the commons, and creates people who will vote for policies that will convert public land into parking spaces.

I would prefer to reduce on street parking, and increase on street cycle lanes. It sounds like you would too.

By only providing 1 parking space per dwelling you end up with an increased demand for on street parking.

Congratulations, Central Planner! It sounds like individuals and markets almost won.

lol, that’s not even that dense. We have SFH here in the Bay Area just like that. Lots of places where people have 4000sqft lots with their relatively normal houses.

I had to laugh at “the most dense development”. 400sqm is absolute luxury in Europe, and plenty of space for a massive detached house with a garden and garage. A house on the high end here sits on less than 150m2 (northern europe).

Yes. But birthrate is only half in the Europe compared to the U.S.

And what does that have to do with anything? The USA would need 3 billion citizens to rival the density of the Netherlands.

Or are you implying you need a 500sqm house to raise two kids?

> 400sqm is absolute luxury in Europe, and plenty of space for a massive detached house with a garden and garage. A house on the high end here sits on less than 150m2 (northern europe).

Just how "massive" can that house be with a garden (say, 35sqm) and a garage (36sqm)? You can probably build a fine house in the remaining 330sqm, no doubt, but I'd hardly call it "massive". Maybe "generous".

OTOH, it might be a point-of-view problem: I'm in South Africa, with a 700sqm building on a 2000sqm plot, in a nice area near the train/bus stop, near all amenities.

It's definitely a point of view problem. We currently own a 90sqm, 3-bed house in the UK and it's not small by any measure here. On this street there are definitely smaller houses than this and people live here with families just fine. Also quite a wealthy area not a dump.

From that point of view, 400sqm sounds positively like a mansion to me. Sure, would love that much space, but I have no idea if houses this large even exist anywhere nearby to buy, I've certainly haven't seen any.

Exactly. The largest homes around here are barely above 200sqm, and cost 2-3 million. Most houses have two or three floors though.

> Everybody opposed the rezoning and fought to defeat it.

Why? That's kind of an important point.

For example, unless this is NYC or similar, 49 townhomes is going to need a minimum of at least 110 parking spots (just to hold the occupants alone, assuming no one ever has guests ever). A realistic parking minimum should be 2.5 spots per townhouse.

A lot of builders outsource their pollution to the local neighborhood, especially on infrastructure (parking, water, sewer, electrical, natgas, etc). It's a common reason to opposed development, and it's a good one.

It's usually done to save cash, and it saves literally just pennies. (Parking on these projects, for example, is always less than 6% of the total cost. Cuts to sewer and electrical are less than 12% of total cost). Builders do it anyway, builders will generally build the literally shittiest thing code lets them get away with -- they'd build buildings that fall apart in the slightest breeze, if it were legal to do so.

This is why zoning rules, building codes, and the large piles of regulations are so important.

> The project would have been the most dense townhome development in 4 counties.

Ok, that means it would likely carry the highest prices per square foot in 4 counties, which means it would immediately make that neighborhood the most expensive neighborhood in 4 counties. Could that be a reason it was opposed? Density isn't free, it's a form of financial pollution that the other residents will mostly have carry the burden of. Not everywhere is California, not everywhere gets free unlimited property tax lock-ins. If you built a luxury townhouse next to a generic house, their taxes will spike 200%+ to cover your luxury development, and all nearby rents would spike in a similar way against nearby renters.

I get that California and San Francisco specifically is it's own unique terrible experience. But here in the Midwest, generally speaking, locals are pretty reasonable. You can get away with building almost anything you want, so long as you don't screw over the locals. (And I mean that quite literally, we have almost 100 new developments here in our small city, including the worlds gaudiest ugliest castle monstrosity -- zoning never stops builders ever, you can build anything you want anywhere you want, as long as you don't hurt too many people)

What is actually happening in most cases, is that some sort of builder wants to screw over all residents, residents rightly complain, and then those residents get labeled "NIMBY". The only time a project gets cancelled is when it makes residents bleed so much, they push back hard. And even then, local residents only win that fight about ~40% of the time.

> Ok, that means it would likely carry the highest prices per square foot in 4 counties, which means it would immediately make that neighborhood the most expensive neighborhood in 4 counties. Could that be a reason it was opposed?

Artificially constraining expensive housing isn't a good thing. If the demand is there in the first place, doing so just means that the people who are interested will insteaad buy or rent existing homes that could have otherwise gone to lower-wealth families.

> Artificially constraining expensive housing isn't a good thing

Again, this isn't California. This is the Midwest. We have gentrification problems even in cities that are still losing population. And we've never constrained housing, for our cities that are slowly growing, many have built more new units than residents for years now. Most cities have no meaningful housing shortage here, but every city currently has a housing market manipulation problem.

> If the demand is there in the first place, doing so just means that the people who are interested will insteaad buy or rent existing homes that could have otherwise gone to lower-wealth families.

Or you could just reduce demand. Perhaps Pension Funds shouldn't be allowed to buy housing at all. Make them invest in something that doesn't hurt citizens. That would reduce prices instantly, without requiring the construction of fake-unusable for-equity-firms-to-hold-only housing.

In what world does it make sense for real humans to have to compete with private equity firms or pension funds for housing? Real humans are constrained by their incomes (incomes that famously haven't grown in decades), everything else is not.

I'll do you one better maybe people that don't intend to live in them at least half the time shouldn't be able to buy a second home.

I agree 100%

>A realistic parking minimum should be 2.5 spots per townhouse.

A realistic approach in the face of coming climate doom would be max 0.5, for the people that really need cars as primary transport due to disability etc.

In theory sure, but that's not realistic, it just induces sprawl.

Great, you manage to artificially limit parking. So the new housing development moves another 10 miles outside of town, to get away from your artificial limit, and now their mowing down a cornfield out there instead for their build, so they can get the parking residents actually need.

If cities want to be a solution to climate change, they have to let people actually live in them. That means, they have to care about the price points of developments (they can't just keep deflecting and saying "luxury housing lowers prices in 50+ years when it trickles down") and they have to care about supporting residents actual transportation needs. (they can't just hide behind "everyone will bike or whatever").

Everytime they deflect on either of those, another farm or forest gets razed instead.

I’m not opposed to people who want to live out in the boonies, but given the extra cost of infrastructure to service them, they should have to pay for the privilege.

They never do though. It’s always the poor neighborhoods close in that subsidize the rich people in the suburbs.

There is no extra infrastructure cost.

Longer roads, longer sidewalks, longer water and sewer pipes. Longer electric and phone cabling. Of course it costs more.

When you live in the boonies, utilities are provided for by the local municipality. Water is usually well water. Waste goes to a septic tank.

There is no additional infrastructure cost placed on cities. You are just plain wrong.

The suburbs in my area are all served by the local city. I’m not talking about rural areas.

Ah, your original comment said "boonies" which denotes rural areas far outside of a city.

You have no idea what you're talking about. Towns in the boonies don't fund themselves the same way as cities, nor do they provide the same level of public utilities and services. Many small towns only provide electrical service and basic copper phone service--no water, sewer, high-speed internet, etc.

> Longer roads, longer sidewalks, longer water and sewer pipes.

Digging a trench for that new pipe out in boonies over a dirt field can be done in an afternoon by one guy with a backhoe. Putting in the same length of pipe underground in Manhattan will probably take a decade and astronomical amount of money.

^ So accurate!

Los Angeles is suffering from this. Towers and towers of expensive apartments left empty at 4000+/mo meanwhile the homeless population grows and the population on the border of homelessness grows.

Traffic increases as people move out of the city center and need to commute in and then those people are taxed through congestion charges or tolls and provided with no, or tremendously expensive, parking.

The whole effort seems to conspire against exactly what made the city a city. Dense, mixed zoned, mixed class living

The developer wants to build the densest housing in four counties with little parking, and nobody has asked the real question: is this planned as Section 8/affordable housing? It sounds like it. Section 8 is guaranteed income for the landlord and probably a headache for the neighbors, especially if they had no poverty in the area before. A very similar situation happened in my rural village, where a developer decided some commercial property would make a great spot for dense, low-income housing; the village fought it and got called racist by the courts, who forced the village to rezone and the village council to undergo racial sensitivity training.

Where do you expect poor people to live exactly?

The standard answer has a convenient acronym: NIMBY.

In places that can support additional social services not available in remote communities. The poor are being kicked out of cities.

In the big city where they currently live. The rural village I'm in now has a 7% poverty rate, while the nearest big city has a 21% poverty rate. The big city would like to redistribute its poor to suburbs and rural areas and redevelop ("gentrify") the land the poor used to occupy. Poor people don't suddenly come into existence ex nihilo: they exist and live somewhere now. They just need to move into the countryside because the urban real estate is worth too much for them to live on it.

I guess the other option is that poor people should just be homeless?

The social services costs will be higher than the tax base. City planning involves carefully balancing priorities. If the community is made up of 100 rural homes introducing 100 townhomes used for section 8 property incomes creates chaos.

The developers building the complex are going to be insulated from having low-income housing in their vicinity.

I hope they appealed that ruling. Elected or appointed judge?

I don't believe you. Civil court judges don't have the authority to order elected politicians to undergo racial sensitivity training. Citation needed

If you can only build dense housing in the places where there are no few jobs and few people it doesn't help much. The fact that the locals are by definition negatively impacted by new development is a great reason to take virtually all say away from the locals.

Anyone who is already a home owner will find that increasing supply of homes a necessary function of the society decreases the value of the asset in which they have parked most of their wealth. Even when it increases the value you can't get them on board. Look at your own logic.

> my taxes will spike 200%+ to cover your luxury development

You aren't covering the cost of their development they are actually increasing the value of your property. For your taxes to spike 200% they would literally have to triple the value of your property. It's like they are throwing hundreds of thousands of dollars in bags full of hundred dollar bills over your fence and you are complaining about income tax.

Presumably if someone did something like build a crack house and halved the value of your property you wouldn't thank them for halving your tax bill!

Basically for any given project locals have interests that are almost always out of alignment with the rest of society. The some people in aggregate elect your state wide officials but at least those folks are apt to think and plan based on a broader perspective than the locals whose attitude is universally "I've got mine"

This is both the worst timeline and the worst most selfish nation.

> It's like they are throwing hundreds of thousands of dollars in bags full of hundred dollar bills over your fence and you are complaining about income tax.

They aren't throwing dollars over the fence, they're throwing debt over the fence.

Sure, my property is on-paper worth more. If I cash that out, I just have to spend it all (every other house got more expensive by an equal amount, and I have to live somewhere). And the new person who buys it now has to cover all that extra debt directly in their mortgage, they get soaked too!

Property values are not real wealth, it's not real money. It's fake. Coastal folks can treat it like it's real, because they can play markets against each other, they can depend on moving to some "low COL" area as their cash-out-to-real-money exit strategy. Those of us in low COL already (or who can't play markets, because they have to stay here for family/work reasons) don't have similar luck, the chain ends here, there's nowhere left to go.

> Presumably if someone did something like build a crack house and halved the value of your property you wouldn't thank them for halving your tax bill!

I would thank them, actually. Property should depreciate. It's the only way housing will ever get affordable for real humans again. I don't expect to get every dollar I paid for a house, back again. No one should.

> locals have interests that are almost always out of alignment with the rest of society.

Locals are the "rest of society". Locals don't all own property, half of our locals rent. Locals who own, still often have kids who need to buy houses, and they want them to be able to afford to live near them. The selfish behaviour seems to be coming entirely from developers or 'urbanists' who think if they just keep ignoring the ramifications of their actions, they can strongarm society into accepting forever-increasing housing costs. Why you paint "Locals" with that brush, when Locals carry every penny of those increased costs, I have no idea.

> Property values are not real wealth, it's not real money.

I don’t know, having $100k+ more in equity than a couple years ago it acts like having an asset with real monetary value when I go to a bank looking for credit, having a big effect on both the amount of funds I have access to and the terms on which I can get them.

It’s not liquid like cash, so there is more work to take advantage of it, but its definitely real.

The utility of your argument relies on it being something burdensome like a 200% increase but in fact if your property went up by 200% for building a complex it would in fact be extraordinary not only for the nation but for your area as well. If your 200k house for example went up to 600k you could in fact sell it and have a money fight with hundreds of thousands of dollars of real profit in your new living room even after you paid off the capital gains especially when the first 250k single or 500k married couple is tax free.

When you reduced the projected change in price to a more reasonable increase like 10% your argument about not being able to move to a lower col area becomes true because everything has gone up equally but it is hard to argue that the increase has greatly burdened your life to the point that people ought not be allowed to build on property they own.

For example locally if assessed value went from 200k to 220k my taxes would increase 16 per month. 400-450k would net me a cool $41 per month.

Looking at actually realistic figures makes it much harder to justify constraining housing supply which negatively effects all of society in order to optimize your tax bill.

> but in fact if your property went up by 200% for building a complex it would in fact be extraordinary

It's not, at least in the us. In the past nine years, my house went from a real-world value of ~$90k (2012), to now being worth ~$240k (2021), despite wages being mostly flat. This is not uncommon, most homes in this or any nearby city have posted somewhat similar gains (plus or minus 10%). This property specifically, recorded it's highest jump ($40k over a single year) in the year after they built luxury apartments in the lot directly behind it.

And that's not a NYC / SF / Chicago / Seattle / Austin type hip place. It's just generic small-city Midwest nowheresville. A place with no restrictions on housing construction whatsoever, and has entire neighborhoods of new development in the past decade to prove it.

> If your 200k house for example went up to 600k you could in fact sell it and have a money fight with hundreds of thousands of dollars of real profit in your new living room

You are not getting it. No, I literally can not do that. If my house went from 200k to 600k, then every other house has also gone up a similar amount. If I sell my house to cash out, my family is homeless, I don't have a "new living room". And if I want a "new living room" to live in, I have to give every single dollar of that 600k back, for some new property at similar high prices. It's not real money, it's debt that I happen to be holding in my hands in paper form, and the future occupant of my house is now on the hook for.

Californians simply can not seem to wrap their head around this. They just assume the money is real, because "move to the south or the midwest" is always an option for them, so they can cash out and keep a bunch of it. Some of us already live in these places, and don't have a magic "high quality housing at cheaper-than-my-home-market rate" place to escape to.

> justify constraining housing supply

Literally no one is arguing to constrain housing supply. Blocking a shitty luxury development never constrains housing, it frees it to be used for real housing.

Fighting against Poisoned Milk sales is not "justifying constraining milk supplies". Fighting against cost-raising developments for private equity firms is not in any way "justifying less housing". You can want more housing and not want everyone's rent to spike, these are not in conflict in any way.

>They just assume the money is real, because "move to the south or the midwest" is always an option for them, so they can cash out and keep a bunch of it. Some of us already live in these places, and don't have a magic "high quality housing at cheaper-than-my-home-market rate" place to escape to.

Yeah, it's absolutely disgusting.

To be clear housing went up 18% per year for 9 years which is materially different than a housing development causing your house to go up 200%. Teasing out the effect would involve looking at similar areas with different development profiles and would be complicated by the fact that the luxury development is more likely to be built in areas that have themselves recently become more desirable..

Whatever you discovered assigning all growth in your property value to that singular event is clearly erronious. As you mentioned all houses in urban areas have gone up substantially. If we assign 10% of that effect to adjacent luxury development we would conclude they had added 15k to your property value. Of course tax calculations vary by state but lets go with WA for a for instance.

It costs you about $12 a month if you save monthly towards your annual property tax. If we assign 20% to the presence of the luxury development which is almost certainly too much it cost you closer to $25 a month.

The truth is certainly underwhelming.

> It's like they are throwing hundreds of thousands of dollars in bags full of hundred dollar bills over your fence

Surely you realize that's not how it works. If the appraisal value goes up, the only receiving any money is the government from their increased tax collection. The owner didn't receive a penny.

Parking minimums should not exist, for about 1000 reasons. For further reading on the topic, check out 'the high cost of free parking'. They are a failed experiment from the mid-20th century.

Many places are switching to parking maximums instead of minimums.

I think they exist because in reality, people start parking in driveways (blocking in people that may need to leave home for, say, work/school) or worse - they double-park or loiter in ever more congested circular drives around the neighborhood looking for parking.

"Everybody" opposed it except I imagine the process did not gather the input of the fifty families who could live there.

> I wonder if the opposition would be classified as NIMBY

If a protected classification like gentrification or environmental impact can be found, then it isn't NIMBY anymore.

Say for example, if the town homes projected to be priced higher than the neighborhood, there is a gentrification angle. Density often requires some environmental impact review. For example, a change in development density might have significant water runoff impacts that require a retention area large enough to make the development economically unviable.

I think finding a potential habitat for an endangered species is the strongest reclassification from NIMBY because it doesn't require any change to existing structures, mostly freezes things in place and has regulation from redundant inscrutable jurisdictions and the support of outside organizations that are generally successful and seeking new cases to work on.

The developer used a Variance to change zoning rules.

Many Bay Area (I only know this market)counties will happily acccept the fee (upwards of $1000), and 99.99% of the time the Variance is not granted. I truly believe counties count on the fees for revenue.

I 've noticed a slight lightening up though.

Gavin Newsome made it much easier to build certain structures. He made in-law units (ADU) easier to build.

What happened is wealthy people took advantage of the laws, and added extra feet to their already huge house. These ADU will not be rented out to low income, or even strangers. The wealthy found a loophole, and used it to remodel their homes. Oh yea, their is still a lot of kissing town officials ass in order to build anything.

Neusome also mandated new apartments, and reasonably hosing, to be built. It is a great move. He slashed a lot of red tape. It's still a pain though. You will have town officials arguing over siding, window placement, gardens, exactly whom will be living in the ADU.

NIMBY's are alive and well in my county. Just about everytime we want to build a homeless shelter; homeowners scream, and officials listen. (Towns are panicking now over homeless. The homeless camps are getting bigger, and Thurston Howell III does not like looking at them. The Supreme court gave the homeless some rights though. Cops can't just harass them to move quite as easily as they did in the past.)

I have watched towns/counties harass homeowners who want to build since the 80's. (I was going to buy a cabin, and I knew the foundation would need to be replaced. Half the cabin was sitting on a redwood stump. I just wanted to put a foundation in, and it wasen't possible due to zoning.)

I don't like our building system. They make the process rediculiously expensive, and complicated (remember you, tge architect, the contractor, will be going to many meetings with town offivials begging to remodel, or build. They love saying no.

It's become a disensentive for middle class homeowners to remodel.

I currently have one fear over new residential building. It's water in the Bay Area. This drought does not feel temporary.

I woukd like to see apartment complexes build adjacent to 101, but the water shortage needs to be addressed.

At this point, I only trust care about very low income, and the homeless. I have never seen so many people without a roof over their heads.

For one thing, the zoning was probably there because the local NIMBY opinion.

How does this not play out like Archegos in the end?

https://www.bloomberg.com/opinion/articles/2021-04-08/archeg...

If you’re politically connected and influential, you get bailed out. Also, Blackrock is intermediating people’s pensions, so they’re ultimately just levering up retirees against the future generations of home buyers (empowered by the Fed). Think the politically connected Fed/DC/Davos crowd is simply going to just hand over power and influence?

Aha. So, basically, there are some failures in this particular market that make it more difficult for prices to correct themselves?

The Fed buying $40B of MBS bonds a month sure isn’t helping

> Support groups like https://yimbyaction.org/ if you want to 'stick it to the investors'.

I’m pretty sure you’re not sticking it to investors if you support development.

You might be sticking it to different investors.

Disincentivize the rent-seeking investors.

Incentivize the investors creating and selling something of value.

Precisely. Also, really, the vast majority of benefits from housing scarcity accrue to existing homeowners:

https://oregoneconomicanalysis.com/2021/03/16/who-benefits-f...

The word "investor" is conflating two things. On one hand you've got "investment" where someone pays up front for materials, construction workers, and equipment, producing a building, and then makes money by selling or renting that building. This is good, because it resulted in a building that people can live in. On the other hand you've got "investment" where someone purchased a preexisting building, in a way that's disconnected from the process that caused it to get built in the first place. This is usually neutral or bad.

So yes, it's sticking it to different investors. But that's a good thing! Stick it to the investors for whom "investment" means pushing dollars around, rather than the ones for whom investment means construction.

A major reason the first investor built the building is because he/she knew someone else would buy it later.

Otherwise people can only invest things they're ready to run themselves basically forever. This would destroy the economy.

Investors in passive assets can go screw themselves.

Developers aren't passive asset investors, they ... you know ... actually create things.

Why artificially? People move into single family dwelling neighborhoods because they have lower crime and better schools. There’s nothing artificial about selecting the best environment for yourself and your family.

Is it necessary to artificially editorialize when you’re making what is, at its root, a thinly veiled socio-political point?

I agree. I moved to a suburban single family home neighborhood specifically because I like the environment of a neighborhood with suburban single family homes. That suits me and my family. Others might like low-rise apartment buildings and townhomes, and they should have access to neighborhoods with that type of housing. Others might like high-rise apartments, and those neighborhoods should be available too. Why is it so bad that many different types of neighborhoods exist?

As an Oregonian I’m a little disgusted with social activists in Portland couching their impending rape of many neighborhoods across the state as YIMBY when this policy was designed to attack rural Oregon specifically.

Nimbys fight against higher density housing everywhere. Read the BANANA definition up thread.

So why would people like you oppose development of other single family homes in your area? Or go out of your way to oppose development of high density buildings around transit stations? (Don't take it personally, but you know that many people will in principle oppose a mixed density development in not far from their homes - 5-10miles. Or pedestrianization of a street, in the middle of their town)

Look at the map of LA, where there's miles upon miles of low rise buildings... That need not be there, if a few high density blocks were created.

Or the insanity of San Francisco...

> Why artificially?

Artificial in the sense of "caused or produced by a human and especially social or political agency" (see https://www.merriam-webster.com/dictionary/artificial).

When prices of something get higher, people naturally try to make more of it to increase supply and cash in on that demand. If a law or zoning regulation or whatever prevents that from happening, that's artificial.

It's not really a statement about whether those laws or regulations are better overall. It's a comparison to other types of investment alternatives which follow the normal laws of supply and demand and have the (lower) earnings to go along with it.

And, at least in California, realtors will always push prices up. It’s pretty much never in their best interest to lower the price. Even the buyer’s agent gets paid a percentage of the sale price, so if they try to lower it they’d be essentially working against themselves. And this is without even accounting for all the schemes realtors create (like listing below market to get a lot of offers and create artificially high demand to put pressure on the top offers to increase their bids as high as possible, as well as make them waive their contingencies).

Fun fact: Listings in California used to contain a unilateral offer of subagency by default. So _all_ realtors were legally bound to work in the seller's interest, even if a buyer had reached out to them in the first place. So you can imagine how often you would disclose your buying criteria to "your" agent only to have them utilize that against you.

That sounds insightful, but there's no point in screwing a buyer for a tiny today payday.

Those agents work on volume, so if you think they're pushing you to not get the lowest price, it's so they can close the deal, not because their incentives aren't aligned with yours. If they're telling you to offer more, it's because they have better knowledge of the market and the game than you.

They're banking on many commissions a month, not on the fractional share of that extra $10k you don't want to fork over.

It’s similar (if symmetrical) to the situation with recruiters — most of their money comes from getting you an offer and you then accepting it. Negotiating a better salary gives them more money, but costs time that would’ve been better spent getting another person a job.

The fact that they're focused on volume is exactly why their incentives are not aligned with yours.

> That sounds insightful, but there's no point in screwing a buyer for a tiny today payday.

Except: 1) most people will only buy a property once, so there’s very little potential downside for the agent, and 2) is not about screwing the buyer over, is about driving the whole market higher so they can keep pumping their commissions up and convincing more owners to sell. The latter is specially easy to do in smaller cities/communities served only by a small number of local realtors.

There’s plenty of people trying to game almost any valuable market in the world. You don’t think at least some realtors (of course not all of them) are trying to do the same? Specially when most of the buyers and sellers are in it for just one transaction in their whole lives, and there’s so much money involved?

Think of it as the prisoners dilemma. If you play once, the optimal is to screw over the other player. That’s what realtors are facing 90% of the time, a sequence of one-time prisoners dilemmas. Except if they do it right, they get to increase the value of the outcomes over time.

> most people will only buy a property once, so there’s very little potential downside for the agent,

Agents do get repeat and referral business if they don't suck; the agent we use has been involved in several sales and a purchase for our extended family in a few years, and we've referred other people to her, too.

> Specially when most of the buyers and sellers are in it for just one transaction in their whole lives,

The median person who buys a home at least once buys significantly more than one in their lifetime (the lowest estimate I’ve seen is around 3, 5+ seems more common), “first-time” homebuyers (which are just people who haven't owned and occupied a home in the last three years, not people who have never owned a previous home) only make up about third of homebuyers.

> the agent we use has been involved in several sales and a purchase for our extended family in a few years, and we've referred other people to her, too.

Great, so you are wealthy and have wealthy friends and family. Cool. That still doesn’t mean agents are not trying to get prices up.

Your experience could mean that your agent noticed you had money and decided it would be in her best interest to treat you well.

You got me about how many times someone buys property. I looked it up and it seems like “most people can expect to own three homes during their lifetimes”. So, let’s say you buy your first home at 30 and die at 81, and own each house for the same time, then you’ll buy a new house every (81-30)/3 = 17 years. It’s very hard for me to believe that an agent will try to get someone a lower price just so they can work with them again 17 years later.

Also, given rising housing prices and the state of overall student debt/rising costs of education, I would bet that the average number of houses someone buys/owns in a lifetime is going to drastically go down in the next few decades (thus reducing even further the possibility of an agent of getting repeat business from a single client, unless maybe they are as wealthy as you and your friends and family).

> Great, so you are wealthy and have wealthy friends and family.

Relative to HN, probably not; globally, definitely, for California...that’s sort of a fuzzy matter of perspective (probably not for a California homeowner), but, eh, whatever. Not the point. My point is that satisfaction is not completely irrelevant for agents.

> That still doesn’t mean agents are not trying to get prices up.

Maybe, though even if they aren't hoping for repeat or referral business the incentives are more for agents to close deals as rapidly as possible; most buyers are going to be looking near the limit of what they can afford anyway, a buyer's agent trying to push them higher is just going to make the process slower. A seller's agent wanting to maximize price would actually be acting in their principal’s interest, but even on the seller side the incentive is to get a deal and close rather than drag things out for a little bump; spending twice the work for a an extra 10% on thr sale price (and thus commission) isn’t a winning move even though it may be what the seller would want.

> Also, given rising housing prices and the state of overall student debt/rising costs of education, I would bet that the average number of houses someone buys/owns in a lifetime is going to drastically go down in the next few decades

The sources I’ve seen have shown it going up recently (increasing economic inequality and buy/rent price ratio should probably have that effect by cutting some of the people that would buy the fewest houses entirely out of homeownership.)

This depends heavily on the market at the time, since there are pressures from multiple directions.

All else being equal, 6% of a higher price beats 6% of a lower price. But 6% of a lower price today in exchange for an hour of work beats $0 if the buyer walks and is not so easily replaced, and it might even beat 6% of a higher price if the higher price comes after many additional hours of work.

Over a long enough timeframe, the trend is toward higher prices, but it's not clear how much of a factor agents are in that, compared to many other factors.

> Over a long enough timeframe, the trend is toward higher prices, but it's not clear how much of a factor agents are in that, compared to many other factors.

I can't imagine agents would have much of an impact when compared to other causes of rising house prices. The way I see it, is that they are more of a kind of facilitator to increase the efficiency of the market, and don't have as much of a role in market behavior.

There is a half-open set of prices the buyer will pay: [0..max).

There is a half-open set of prices the seller will accept: (min..$\infty$]

If these sets do not intersect, there's no deal no matter what the agents do.

If the sets do intersect, the agents collude to ensure that the sale closes at the HIGHEST price in the intersection.

That is why realtors are such a big factor in the housing crisis. They collude to push all of the transactional surplus to the seller, because both agents work for the seller.

I have yet to encounter a realtor that competent, or possessing perfect information, but your mileage may vary.

Some of this is changing - I've heard that Redfin agents (who are employees - they don't split commissions the way other brokerages do) get paid a bonus structure that's tiered based on list price. So at the time they show you the house, the bonus they get if you buy it is already set, regardless what you pay for it. They still do have an incentive to show you more expensive homes, but they don't have an incentive to jack up your bid during the negotiations so that they get 3% of a bigger sale price. They also get paid for a bunch of other activities (like giving tours, writing offers, typing up agent notes that you see on the website), so it's not a total loss for them if you don't end up winning the bid.

See, I used to think that maybe with the different compensation structure, Redfin agents' interested might end up being more in line with the buyers. I ended up working with one, and realized that is absolutely not the case.

First, yes, Redfin agents don't get commissions the way traditional real estates agents get commissions. However, Redfin agents do still want to close as many deals as possible. Also, while real estate agents have a tough job finding good leads (especially given that leads don't exactly keep buying property) Redfin agents do not have a tough time finding leads (they have one phenomenal website that just gives them constant leads). What it results in is that a good traditional agent will put in a lot more work to find an appropriate place for you, because not only do they rely on you buying through them, but more importantly, they rely on you being happy enough that you recommend them to other people.

Redfin does not need your recommendations, as they've got a line out the door. So if anything starts getting difficult with your purchase, Redfin has no incentive to stick around and figure it out.

I've bought three properties and made an offer that fell through on one, and looked around other times. I've tried both traditional agents and a Redfin agent, and will never again work with Redfin.

Yes, I have seen this too. It works against sellers too, in a cooler market; they are more incentivized to close quickly than to find the best price. Considering it's relatively trivial to list and find just about any kind of good these days, I just don't see the added value that agents bring to either side being worth much at all.

It works for a certain type of buyer, one who basically wants to drive the process themselves and just needs an agent for guidance. This described us pretty well, and many other Millennials. We basically just wanted an agent because we were househunting during COVID and needed one to literally get in the door, and to help guide us through the paperwork and process since we were FTHBs. Redfin was great for this; our agent didn't pressure us to buy or steer us toward any particular homes, then he had a bunch of useful information when it came time to negotiating and putting in an actual offer.

So, I wasn’t a first time home buyer and didn’t hand holding. What I did need was an argent which was actually working for me, not just trying to close at all costs.

I think in situations where the property doesn’t have any issues, where you’re just going in to buy a place, they can work out fine. Unfortunately you have no idea what kind of place you’re looking at until you’re trying to buy it.

Every worthwhile agent will have a ton of useful information before and after you purchase.

Interesting theory. My CA realtor told me to bid below asking price and we got the house.

Repeat business is a good motivator. We were happy with the realtor after our first purchase, used them to sell that property and again, in our second search and then recommended them to friends who made purchases. The marginal income they could have gotten by pushing us to a higher price are dwarfed by their combined earnings.

Prices are set by supply and demand. Realtors don’t control that.

Build 1-10 million 400 sq-ft studio apartments will solve the housing price problem.

Existing inventory can cover families.

Supply and demand. I think of demand as people looking to live in homes, not investors. If that was the case, demand should have dropped off a cliff after covid when they closed the borders. Our countries have negative birth rates. Immigration is the only source of new people. So you must have come to the conclusion at this point that the demand is purely investment driven via speculation. Now see a problem with just building more houses? They will just keep driving speculation until it all collapses leaving us with many many homes that will be wayyyy too cheap. And it will collapse, investors are purely just trading with themselves at this point as less and less people are participating in the market.

People moving around inside of a country is also a source of demand.

The price of condos in San Francisco dropped 10% with COVID-19. The prices in the Tahoe area are up about 20 - 30% over the past 12 months.

The demand moved to single family homes, because people wanted a yard, when they were locked down at home, with few things open.

Now that California and San Francisco is opening back up, the real estate demand is coming back, as are the prices. Yes, speculation and investment is part of the story. But also a lot of people made a lot of money in the stock merket over the past 12 months, and are looking to upgrade their housing.

Please no. There is no need to squeeze new buyers and force them into subtandard conditions. There's no reason cities can't redevelop 2 neighborhoods to 10 stories instead of 1 neighborhood to 5 and still have livable 1-2br apartments. The "where will we fit everything" issue is manufactured by NIMBYs who think a designated area for micro-housing or single story ADUs in the backs of lots will spoil their views less. It's another way to maintain the class boundary while appearing socially responsible.

Blaming real estate agents is just silly. They're salespeople so of course they're going to try to maximize commissions. Ultimately it's up to the buyer to agree on the price or walk away.

Listing prices are almost totally meaningless. At most they're just a starting point for initial negotiations.

> Listing prices are almost totally meaningless. At most they're just a starting point for initial negotiations.

Not sure if you have no experience in real state at all, or just want to play devil’s advocate.

The listing price can have a huge effect. Like I described before, if the listing price is lower than the perceived value of the listing, it makes it attractive to a wider audience, because people that wouldn’t be able to afford the property at the “real” price will think they can now afford it, thus there will be a lot more offers and that gives the realtors (and seller) very good leverage. This happened to me personally, on “the first round” the seller got 40 offers, so the agent used that to pump up the price and make it look like there was a lot of interest (surely there was, but for an unrealistically low price). There were only 3 offers on the “second round”. After 3-4 rounds, the property ended up going for 20%+ over asking and the buyer had to waive all contingencies. Without the artificially low listing price, they would have probably gotten one or two offers at the most and most likely would have not been able to get the buyer to waive contingencies.

Conversely, if the listing price is too high, the property might take a long time to sell, and lowering the price signals that the seller is either in a hurry or that there’s an issue with the property, either way the seller loses a lot of negotiating power.

I have experience in real estate. Listing prices are largely irrelevant. Your concern is completely misplaced and you don't understand causality. Multiple rounds of bidding are common in high demand areas regardless of whether the listing price is aligned with the market value.

> Even the buyer’s agent gets paid a percentage of the sale price, so if they try to lower it they’d be essentially working against themselves.

Yeah, I really wish we normalized fee-for-service for buyer's agents. Agree on a fair hourly rate for their time, plus some constant fee for actually closing. The agent can have more consistent income over time, and the buyer can know that the agent's incentives are not misaligned. Buyers at the lower end of the market also don't get lesser attention.

But I think because we have normalized the commission structure, there's now also a bias effect, where the agents who are most willing to agree to a fee-for-service arrangement are the agents who are least successful/satisfied under the commission model.

https://www.nytimes.com/2019/10/24/business/real-estate-fee-...

> Even the buyer’s agent gets paid a percentage of the sale price, so if they try to lower it they’d be essentially working against themselves.

This makes me hopping mad. On what crazy world can they be considered the "buyer's" agent when their incentives are exactly opposite to those of the buyer?

It's like if defense attorneys were expected to argue for the prosecution, and everybody was okay with this.

I'd like to add my n=1 as a counterpoint to this.

I sold a house just before the pandemic struck. The realtor I chose, via a friend-of-friend connection, operated several agencies each with several agents; I would guess he had a few dozen people total working under him.

One thing quickly became apparent as we moved through the various processes involved in selling a home – he had his agencies and his agents optimize for volume. In the regions of CA where he operated, "throughput" was definitely not an issue, and so deliberately pricing homes low would cause them to sell faster and allow him / his agents to move onto the next client faster. Given the context, it seems clear to me this would yield more over the long term than fighting tooth and nail to drag out individual transactions to eke out every possible penny.

I caught onto this just before officially listing my house, and insisted we increase the asking price (recommended by him / his team) by 10% – a move he / his team objected to rather frankly. Nonetheless, the sale was completed within 6 weeks or so, at my asking price.

(And seems worth adding he never said thank you for the 10% [relative] extra he earned on the commission)

After I spent my entire net worth plus a good chunk of my future net worth on this house you can be damn right I’m going to vote to protect its value.

“Screw you, I got mine!”

The capitalistic attitude in a nutshell.

More like "I got screwed and I'd rather other people get screwed than get screwed further." Obviously not selfless, but I don't think the housing market is their fault.

Yeah why fix anything ever? If it was bad for me it should be bad for them too right?

In fact, I'll actively try to make things worse for them to try and eke out a little profit.

Do you own/mortgage a house you're willing to lose what you put in?

BANANA results in higher homeless rates, that means that denying any building anywhere... you're actively supporting increase in homelessness.

Hmmm this just seems like a bad decision on your part. I bought my house in 2018 and it was expensive, yes, but definitely manageable on my salary. I definitely would not buy a house right now, especially if it required spending 'my entire net worth plus a good chunk of my future net worth'.

What key metrics do you observe when it boils down to determining whether or not you feel it is a good or bad time to buy?

Almost everyone spends more than their present net worth on their house. It’s great for you that you didn’t have to but I’m not in the minority.

It's a vicious cycle – OP and others are forced to commit most of their wealth to own a home because of all the NIMBYs that came before them, and on and on.

Nah... That's just ignorance.

It's like the American opposition to pedestrianization of blocks. Pedestrianized blocks increase local business footfall and increase high margin economic activity.

New developments in your community increase value of your home, far better than restricting development.

How's that? Genuinely curious.

Opposition to development hurts the homeowners value, a lot.

The value of your home doesn't only depend on the fact that it's in a rich neighborhood with beautiful lawns, but the services and proximity to said services.

NYC is desireable, not because it's a big city... but because you can get services there. Take away the services - you take away all of the value proposition.

In my area, we have everything around us (big retailers, malls, nightlife, etc.) in the suburbs in a well-off area in South Florida. How would adding more houses appreciate my property's value?

More people = more service consumers = more jobs = higher demand for housing = higher demand for services

For most Americans, if you want to own property you drain most of your savings and take on debt worth many times your annual income. If people did not do this the demand for real estate would crater.

If "protect its value" means maintain and strengthen it, retrofit it against likely disasters, plant gardens and craft way to preserve the products, add off-grid energey infrastructure, etc., then that's great.

If it means try to use the heavy hand of the state to prevent others from living their best life, then you aren't protecting anything; you're violently stealing the future net worth of others and making it your own.

It’s all violent stealing back to the white people who took this land from its settlers at the wrong end of a gun. I got ripped off and I’m not going to be the bigger man and be the first person in this chain to say “it’s ok, I don’t mind losing a million dollars on this.”

Hyperbole doesn't help here. Legalizing four-plexes in your neighborhood will almost never knock a million dollars off your home's value. I bet it'd be hard to find many examples of upzoning causing SFHs to drop significantly in price anywhere.

Gambling your entire net worth on a single hyper-local investment is not a good idea.

Sadly in many parts of the US, that is how one gets access to the best public schools -- via home purchases. Many of the best public schools are in districts w/o a large number of rentals.

It’s a great idea, it means that my kids will go to school with other kids whose parents care a lot about their education. A large amount of money shouldn’t be needed for that, but I didn’t see another way to achieve that outcome.

Schools can go downhill pretty fast, and often do.

Markets also go downhill. If you really went all out with paying for it, you also need to hope that your employment will remain stable. People who are very comfortable with their job and predict no downsides are often the ones getting bitten when the market changes, as it always does.

It is worthwhile to recognize that there is nothing unusual in this response, many homeowners feel this way.

But then by same token we can also move to justifying other things, like not hiring people without CS degrees (I spent $xxx,xxx on my CS degree, I want to protect its value), only hiring other MBAs, only hiring people with prior experience in tech companies etc. – which can perpetuate and amplify inequality in opportunity among society.

At what point do we move from that to a more altruistic viewpoint? I am genuinely not sure.

There's "wanting to protect the value of your home" and there's "I'm going to vote NIMBY/BANANA and screw everybody else out of a place to live because I decided to 'invest' all my money in this house and expect it to be a nest egg that catapults me out of the working class." It sounds like the parent is in the latter category.

Is the problem "losing value in my house" or "not realizing astronomical gains like my peers"? And if building much-needed housing does decrease your house's value then hey, maybe your house was overvalued at the price you paid and you made a bad 'investment'. Why punish everyone else and artificially strangle housing supply to cover your bad decision?

> they know your neighbors will do the dirty work of artificially constraining the housing supply

And then the same middle-class (mostly white, with some Asian mix on the West Coast) plays the "revolt game" of supporting the Afro-American and Latino US population, blaming the latter's condition only on racism, totally ignoring the class war now unfolding in the States of which they (said middle-class) are the "baddies" part. Absolutely appalling.

This comment is too on the nose, but there is truth to it. In the hypocrisy of urban nimbys, oblivious to the fact that their actions directly contribute to income inequality.

They know that the current government planning regulations mean that getting anything built is extremely difficult. They know that due to supply and demand that this makes property a wise investment. Blame planning regulations. I read recently that Japan and new Zealand scrapped various regulations and this led to stabilization / lower of property prices.

Near me, someone is sticking up protest letters at bus stops complaining a developer wants to build flats. For heaven's sake, people need to live somewhere, please do build.

It probably didn’t hurt that Japan has a declining population, so supply > demand

California and NYC have a declining population.

Along with huge portions of the rural midwest.

It all has to do with meeting the demand where the demand exists.

Just distorted number because of increases homelessness. Sarcasm , however, there is a bit truth to that.

If you cherry pick data during COVID that's true. But it was the first year since 1900 with any decline and state forecasters say it's more to do with over 50,000 COVID related deaths and less migration from other countries (the largest source of population growth for CA for many years now) because other countries were locked down. As far as I know, no one expect that decline to be anything more than a very temporary thing.

California's population expansion clearly hit a wall back in 2017-2018, pre-pandemic. 2019 saw their population expansion de facto stop. The rate of growth has been dropping rapidly toward zero for much of the past decade, and they reached that line before the pandemic hit, it's not a new trend due to Covid.

This decade it'll go negative. The exodus - a desperate flight from California's particularly horrible governments and epic mismanagement - will get worse yet, not better.

Fewer people want to live in California and it's very obvious why.

2010 to 2020, California saw a 6% population expansion. The slowest decade of population growth in a century for the state. Year to year, it went from very slow growth at the beginning, to zero by the end. Next is a contraction.

Texas by contrast saw 16% expansion in that time. It's booming and it's also very obvious why.

Fled California a dozen years ago. I miss the weather, but otherwise glad to have left.

Gang violence, over regulation, out of control prices, etc.

Can’t imagine going back with all this nonsense around legalizing shop lifting, segregation coming back.

Let the downvotes start

I’m sure the place you moved is perfect with no problems whatsoever. Just like California used to be back in the good old days before things changed.

Yeah, I note that these kinds of spammy comments used to always mention Texas.

Now I note they don't mention Texas quite so much, anymore.

It doesn't need to be downvoted. You identified yourself with your word choice.

Separately I hate the over usage of the word "fled". No one was chasing anyone. In an age of basically yearly refugee crises in the world it's terrible to see its overuse.

Fled means to “run away”. What does have to do with “chasing” and refugees?

> This decade it'll go negative. The exodus - a desperate flight from California's particularly horrible governments and epic mismanagement - will get worse yet, not better.

"You can tell that the government has failed and nobody wants to live their by the fact that it's too expensive" doesn't really add up to me...

Texas cities have lots of empty surrounding land to sprawl into further, which massively helps with supply and prices. This is not some magic feat of government. They're less dense, not more dense.

People leave California primarily because of housing prices, or because they are in industries which are leaving California because they're not longer growth companies (e.g. HP)

First of all, the data actually shows that while 90-100k people moved from CA to TX every year since 2019, about 40-50k moved from TX to CA, and the demographics of the TX->CA move is higher income, educated earners, and the move from CA->TX is far less Silicon Valley elite, and far more from the central valley, and tends to be blue collar.

Growth follows an S-curve, and in every major successful city in the world, be it NY, London, Seoul, Shanghai, or Tokyo, eventually you run into a slowdown, as cost of living increases.

A contraction in CA's population won't be bad, because CA is still brain draining the rest of the country and still receiving a higher chunk of investment funds compared to other states.

https://www.jec.senate.gov/public/index.cfm/republicans/2019... https://www.statista.com/statistics/424167/venture-capital-i...

Reducing the burden of non-growth industries by sending them to TX along with blue collar workers, while taking the lions share of immigration of people with advanced degrees, as well as the lionshare of VC investment, seems like a good trade.

Honestly, Arizona is looking a lot better to me than Texas over the next decade. With 6 new state of the art semiconductor fabs under construction (2 TSMC, 2 Intel, 1 Samsung, 1 NXP) totalling $50 billion, another $100 billion in investment promised by TSMC, and the recently enacted $50 billion Senate semiconductor package, if you're looking for the next Silicon Valley, the Silicon Desert looks more like an early real estate opportunity than the Silicon Hills.

I don't think California has much to worry about, everything that makes the state great: It's natural environment, weather, colleges, parks, industry nexii, it's diverse culture, food, wine country, etc is still there. I know you desparately want to run with the conservative talking points on taxes and regulations, but CA's population growth issues have little to do with "high taxes" as many conservatives claim. Median CA household income is $57k, the State effective tax rate on that income is 3.7%, which puts CA in the middle of the pack when it comes to state tax burdens. CA only really takes a big bite of you if you make a lot of money, but as I've already explained, CA has net positive migration of high income earners, and net positive business migration/creation too.

The proposed semiconductor fabs seem legitimately crazy. It's a desert state with 87% of the desert in extreme drought. The state is already planning on needing "mitigation" water. Don't fabs need water? I recall reading something about tsmc and water usage.

> so supply > demand

Nope.

Japan has a declining population, but the population keeps urbanising. So while there's hefty supply (literally millions of unoccupied housing inventory) in places nobody wants to live in, there is not in places where people are moving to (large cities).

There's very regularly news and posts about unoccupied houses ("akiya") being literally given away by government and local authorities because even at auction for pennies nobody wants to bid on rural properties. There was one going through here just last week.

Some prefectures are nearing 20% vacancy rates, but they're places like… well basically all of Shikoku which is largely mountainous and rural, and has been bleeding population at a rate of 5%/decade since 2000.

Yep.

Japan's urban population is somewhere between stagnating and declining, not increasing. The contraction trend is even worse in most of their cities other than Tokyo.

Simultaneously the percentage of the population that is urban, is very slowly increasing.

Those are two very different things. Their cities are net contracting in population. They're now nationally losing people faster than they're urbanizing. They're currently losing around a quarter of a million people per year nationally. Their cities are not expanding faster than that drop. And given their already very high urbanization rate (and very slow rate of urbanization increase), it's unlikely anything will significantly change in that regard. This decade will see either a mostly flat population trend in Tokyo, or a modest contraction. What it won't show, is a meaningful expansion, as their national population contraction gets worse.

The pandemic put enough pressure on Tokyo that it actually contracted for the first time in ~25 years.

February 25, 2021

"Tokyo, Feb. 25 (Jiji Press)--Tokyo's estimated population fell by 662 from a year before to 13,952,915 as of Feb. 1, marking its first year-on-year decline in about 25 years, the metropolitan government said Thursday."

https://www.nippon.com/en/news/yjj2021022500969/

However, if you go back further, you can see the trend was already toward decline. This is from 2019:

June, 2019, The Guardian

"Has Tokyo reached ‘peak city’?"

"One could argue that the world’s biggest city has hit a sweet spot: a flatlining population, pervasive transit and little gentrification. But is ‘peak city’ even possible – and where does Tokyo go from here?"

"Unlike many megacities, the world’s largest metropolitan area has largely stopped growing, either in land or population."

https://www.theguardian.com/cities/2019/jun/14/has-tokyo-rea...

>>>Some prefectures are nearing 20% vacancy rates, but they're places like… well basically all of Shikoku which is largely mountainous and rural, and has been bleeding population at a rate of 5%/decade since 2000.

That's crazy to me, Tokushima in Shikoku was on my short list of "ideal relocation spots". With just a few hours of scenic driving, you can be in Kochi, Takamatsu, Matsuyama, Okayama, or Wakayama. All with populations of 300,000-700,000 (so decent mid-tier cities). So you could easily geographically distribute 4-5 girlfriends across those towns and combine them with some awesome driving experiences in-between.

Osaka and Kobe aren't much further if you really want a big-city party nightlife occasionally too.

> So you could easily geographically distribute 4-5 girlfriends across those towns

This comment took an unexpected turn. Why can you not have girlfriends in the same town?

You'd be surprised at how easily they can run into each other, or have overlapping social circles. It's a drama risk. Different cities that are hours apart is a "good enough" risk mitigation compromise short of dating women in different countries and flying them (or yourself) around regularly.

The parts of Shikoku that are right next to bridges to not-Shikoku are doing alright. But even then, it's hard to make a case for Tokushima over an equivalent place across the water (I guess Himeji?).

Japan not so much scrapped various regulations as their regulations are just different - and nationwide.

One of the effects of how their zoning classes work is that you don't have "residential-only" zones with no shops or other amenities - instead you have zones defined along the lines of maximum nuisance and with overlapping uses. You have a total of 12 zones, which start from "exclusively low rise residential" that are essentially low density houses that can be also small shops or offices + schools, to exclusively industrial zones that prevent residential or other construction - but it's a spectrum between them.

https://urbankchoze.blogspot.com/2014/04/japanese-zoning.htm...

Every now and then I watch one of these Japanese "video walk" channels on YouTube and find myself despairing at how wildly better their land use is than in the US.

Obviously some of that is to be expected of an island nation versus a continent-spanning one. And yet, so much of Tokyo seems like it's built at the scale of a small-town main street: Between the major roads with their skyscrapers sit networks of pedestrian-friendly streets with little shops and restaurants, often crossed by even smaller yokocho which themselves have bars and flats. Quiet side streets intermix residential buildings and even single-family homes, and yet somehow these little districts are all linked up together into the world's largest metropolis.

> Obviously some of that is to be expected of an island nation versus a continent-spanning one.

It has little to do with "island nation", most nations use mixed zoning, it's certainly the standard in europe (and recent developments are gravitating towards more mixed zoning e.g. Amsterdam's eastern docklands). It could have to do with being an old nation, but even then that's not actually true, the US existed for a while before cars happened.

In the US, we invented zoning, mostly to exclude black people from white neighborhoods. And now we use it to prop up property values and continue to keep poor people out of wealthy neighborhoods.

Now I'm speculating, but I wonder if Japan, being mostly Japanese people, didn't have such a large group to exclude from certain neighborhoods? So they didn't entrench the institution of local control and exclusionary zoning?

google burakumin

The public schools I taught at in Japan kept (private) lists of which kids came from burakumin families.

Japan traditionally had a caste system where certain people were restricted to certain neighbourhoods. There was a lot of official effort to break that up after the war, but you can still tell which neighbourhoods are which.

It's my understanding that Japan's housing regulations are mostly driven by a long history of all their buildings falling over in an earthquake every couple of decades.

This was one of the biggest things that struck me when I visited Japan. Their cities are just so much friendlier/better than 99% of American cities.

I live in Edinburgh in Scotland. Best feature is tenement flats with shops or bars below. Old town is especially mixed use and it's brilliant because of it.

One of the more personally infuriating aspects of Brexit for me is that I can't just drop in to Aberdeen or elsewhere in Scotland and move there for longer. :(

Thank you for posting that.

I've lived in Japan for 30 years, and I've never seen the topic so clearly explained.

Edit: BTW, in case you were wondering about the special zoning classification, "bathhouses with private rooms" are in a very different business than bathhouses without private rooms.

NZ has not got anything near price stability. It’s going mental as they all sell the same houses to each other over and over

Throwing Canada in the mix! We got excited over our 5%+ GDP growth in Q1 until we realize 4% of it was housing!

A neighbor was complaining just the other day about a developer want to build two houses on a sliver of land in our small historic town. I've got no reason to support this. There's space to build an apartment building near me but no one want to do that (a building, in fact, burned down a while back and hasn't been rebuilt).

Neighbors want no development. Developers want to build more of the ubber expensive houses the neighbors want to protect. You need regulations that encourage dense, ideally very dense, housing. Enough dense housing and you can "preserve the character" (if not the home values) of the smallish towns.

Of course, those regulations to support dense housing need to be supported by other things; like money for streets, sewer, water, etc. If the town's streets are already crowded with traffic and it's sewer system can barely keep up, then building dense housing it going to destroy the town. And for a town that is already "in place", adding a bigger sewer system is hard. Widening streets is even more difficult because you'd need to buy up the land that the current builds are on. It's not as simple a solution as "build dense housing" makes it sound.

What about throwing as much money as it takes to not only build new towns with dense housing in places where those towns don't already exist, but to make those new places to live much more desirable than a pre-planned new development normally would be? I imagine the political will isn't there. The answer to me would be an ultimatum. Either yes in your backyard, or a tax is levied for a new development that won't be total crap.

This sounds like the original motivation of some ghost towns in China.

Yeah I agree. I can't think of many examples where this seems to have worked. Very much a chicken and egg problem, but I'd think with enough funds available there would be a way to make it work.

Bootstrapping.

Generally the area gets bootstrapped by some major need or force that is so potent that it establishes a vibrant economy around, and if it's potent enough, even after the need has passed.

Major civics projects like damns might do this. (Grand Coulee damn along the Columbia River comes to mind.)

Ongoing jobs like military bases might provide enough logistical need. Or a factories / exploitation of natural resources (fishing, forestry, coal, iron, processing / shipping along waterways) where there's sufficient density. Sometimes it's conditions favorable for the flow of talent, like good worker protections and a rich field of jobs so that someone can settle and build resources: Opportunity that, IMO the rich have largely denied those born in the 80s and after via housing policies and investments exactly like those mentioned in the article.

Density brings in more tax revenue to pay for expanding the sewers and can support more mass transit to reduce traffic -- no street widening needed.

In many cities, it's the poorer denser neighborhoods that subsidize the more affluent less dense neighborhoods.

Scroll down to red and green map here: https://www.strongtowns.org/journal/2015/5/10/lafayette

You can really add things like sewers after the fact. You either need to add them before or during the addition of more (higher density) housing. Generally, this means that the builder of the new housing is required to foot the bill for that added capacity, which can make it not worth the cost.

The same tends to be true of roads, but with less catastrophic results. In a town where going 2 miles can take 20 minutes, adding a lot more housing without adding road capacity is not a great plan.

I meant to say that you can't add sewers after the fact, but now it's too late to edit. My apologies for any confusion.

You've got it exactly backwards. Density is cheaper and more sustainable than running miles and miles of brand new sewerage, roads etc into spread-out suburbs.

The big difference between Japanese and American cities is that Japan is built for trains, which scale up really well, and the US is built for cars, which don't.

I don't have it backwards, you're just not following what I'm saying. I agree that denser housing and construction in general is far more efficient. However...

I'm not talking about constructing a town from scratch. I'm talking about an existing town. Adding the infrastructure for high density housing to a town that wasn't originally designed for it is very expensive.

Current "trend" is medium density housing, with smaller roads. Most of US is 9+ months out of the year a walkable climate.

Putting down a small self driving street car for short trips removes a lot of road congestion in town. And if you just place navigation tags into the pavement - you avoid the need for expensive AI based nav system.

Japan sometimes don't care much about such issues caused by building large apartment, like extremely crowded station/train and lack of nursery school. I don't know it's good thing, but these are often complained.

You can't just ignore things insufficient sewers or water. And insufficient roads isn't much better.

In addition to the other replies, I've see cases where the city only approves construction on the condition that some of the land is allocated to city use. That means if the edges are developed first, it's possible for the city to get the room to expand infrastructure.

> I read recently that Japan and new Zealand scrapped various regulations and this led to stabilization / lower of property prices.

I don't know about Japan, but that can't possibly be right about NZ. Nobody in our generation will ever be able to afford a home in Auckland.

Land Value Tax sorely needed.

Same in Canada. I am in the top 3% of wage earners in the entire country and can not "afford" to buy. Average price is > 1 million. At > 1 million, a 20% down payment is required in cash. That would basically take my well balanced portfolio into pure real estate holdings not to mention a massive tax hit to sell 200k+ of my portfolio. I used quotes in afford because I could afford it, but I feel it would be a huge mistake

Sounds like you need to grow balls like your fellow Canadians and go “all in”. Most folks I know buying throw every dollar they have into a house plus a hundred thousand from the bank of mom and dad.

You’ll never be able to afford unless you do it.

I'll stick with never. Rents keep dropping. It's almost like it's... pure speculation with no fundamentals. Surely that can't be the case, otherwise rents would keep dropping! Oh no!

Rent is not dropping. It is going up, rapidly.

Oh you checked the numbers for me? Oh darn. If rent is rapidly going up and purchasing is more and more impossible, I guess the only natural conclusion is everyone making mid six figures will all be unable to live in homes any more. Maybe even homeless? I should probably just drop out.

Similar story here. We modified our expectations and bought a smaller home AND kept the well balanced portfolio. So far so good.

Deregulation of the construction market was a disaster for New Zealand, and cost the country billions of dollars [1].

Also, New Zealand has some of the least affordable housing in the world, and it's only getting worse.

[1] https://en.wikipedia.org/wiki/Leaky_homes_crisis

Another reason to consider: money printing and inflation

This is a dumb investment. In order for the entier country to not descend into dysfunctional chaos there will have to be statewide laws that prevent this sort of brain damage.

When that happens there will be nothing keeping the prices of individual housing units in these areas up.

By that time - funds will have charged their fees, personnel will have earned their bonuses, etc.

I think also that high lumber prices combined with tariffs contribute quite a bit.

this is interesting, when supply is artificially limited so reliably you can bank long term investments on it. Pretty amazing.

Housing is not a normal rational market like a market for shoes, every ecobonist knows that much.

Housing supply cannot, and never could fix the problem. There is no city or country in the world where this has ever succeeded.

The house prices are rising because of increasing financialisation of our economy, cheap credit and low interest rates.

700,000 people left London during pandemic, put prices keep rising.

If we offered 300 year long mortgages that get passed on to your next of kin, house prices would quadruple overnight. The price of a house has no relationship to it's utility, like it does for all other goods. You know you will always be able to sell it for more to the bext sucker.

False, false, and false.

True, financialisation is a factor, combating that must be part of the solution.

"False" is a hell of an elaborate argument, very convincing when placed against 50 years of data across 5 countries, all leading to same skyrocketing housing prices.

Nothing more needed to refute an argument of said quality. If I delivered one million finished apartments to your city anywhere in the world today, the average price would go down. How about ten or a hundred million? Q.E.D.

Housing scarcity is real, whether you believe it or not.

I'm really not sure that's true. I don't know exactly how many were built, but Melbourne (Australia) added a lot of CBD apartments and the price continued to shoot up.

Those were overwhelmingly tiny/cheap/low-quality/investor-bought apartments, but the fact is they were still there.

That there are places where foreign buyers outnumber locals ten to one, or other govt interference happens, do not refute basics of economics. Australian cities are tiny compared to Asia or even LA, and certainly units built were not in the millions.

i.e. if your locality has additional issues, the solution is to fix them. Don't use them as excuses to build less housing for folks that need it.

You accuse others of economic illeteracy while yourself fail to grasp or address basic concepts like inelastic goods and market failure.

I see the church of free market is strong here.

Open an article by an actual economist, not a political pundit. They know for a fact you can't build your way out of the housing bubble.

https://www.ft.com/content/e1160d72-8414-371e-94dc-3c4c7a499...

Lead, follow, or get out of the way.

> they know your neighbors will do the dirty work of artificially constraining the housing supply, which makes it a good investment

...until your neighbors are all renters, at which point the tide turns?

A lot of renters are nimbys as well, due to misconceptions, or other factors such as rent-control affecting their outlook.

Err…no one wants their neighborhood to suddenly have a bunch of new unknown people in it, right? You don’t have to be a nimby to be concerned about who you live next to. It’s not a “misconception” in that sense, especially if moving is impossible because of rent control, as you mention.

Perhaps we need better protections around dealing with insufferable neighbors and other neighborhood changes’ negative impacts, and people will object less?

I live in a big city, and currently know maybe 1% of the neighbors if lucky. Unknown folks are not a concern.

I believe you, on the other hand, you’re one data point, and apartment buildings have stricter rules about acceptable activities and behavior (as I propose above).

Even in the biggest cities, apartment buildings often have board that approve sales and/or new residents.

I would not call it artificially constrained supply. New construction in the vicinity has an effect on the quality of life in the existing houses/flats. In the end space is indeed physically constrained, especially where people want to live. Even from that scarcity perspective a lot of low density construction just seems like waste.

I guess you could get both perspectives behind a Georgism type land value tax.

If you could unravel all perverse effects of American localist planning and regulation, it would be great.

But if the idea is just "let the developers build where they want and that solves everything", that idea is wrong. Developers don't want to build the dense, affordable house that's needed. Developers want to take advantage of the existing housing and housing expectation and build one bigger house or bigger development one ring out among the suburbs.

What's needed is dense construction near to cities and regulations to support that. And "Yimby" and so forth aren't supporting no regulations, they're supporting pure developer friendly regulations, which won't do anything but give them a piece of the present perverse "gold rush".

Developers make money by building what people want.

What is this nonsense? Yimbys are support upzoning property, so denser housing can be built. They support removing parking minimums so denser housing can be built.

Most places (where I live, Nevada City, for example) upzoning and reducing parking limits would just create problems. It's the actual central areas where you want to allow much greater density. A denser outlying suburb isn't a win.

Outlying suburbs should see an increase in the sorts of things that make them "places". Cafes, bakeries, bars, restaurants, offices, markets, schools, plazas, bookstores, and so on. Then they can further densify without automatically driving more commute traffic into the city.

Doesn't make sense that increasing density from very low to merely low in an outlying suburb would result in cafes and bakeries. You're talking places already oriented to the automobile, where people drive to the whatever cafe or bakery they already like in a large area.

You're assuming that those local businesses can just spin up and wait what, months? years? for the density to reach levels that will sustain said local businesses. Most people don't have the money to throw down the drain like that merely wishing for the urbanist utopia to arrive. In the real world, money matters, timescales matter, customers matter, etc.

I've been trying to build a house for myself. Going through all the hoops is not only cumbersome and expensive - but nearly impossible. I've run into legal tiff's between the county and nearby city. The city wants me to pay $40,000 for a sewer hookup for a single family dwelling when the sewer line is literally right along the road in front of where we will build the house. This is because the city has a beef to pick with the county and they are charging me based on the size of my parcel rather than the number of hookups I need. My house is actually in the county (but in the city impact zone). So now I'm spending my time combing through legal records, state supreme court case rulings, etc. all relevant to my situation to try to get things resolved. Literally everything is a fight. I even had to push and fight to get a build-right for the parcel - because it is currently zoned ag - which my country requires a max house density of 40 acres per house. I could rezone - but that would require me to get permission of all my neighbors to rezone so that my new residential zoning would be contiguous with existing residential zoning. I've had to fight to get permission to have an arch/rainbow driveway. Then I wanted to have an accessory dwelling, but ag zoning doesn't allow this either - never mind that this is totally allowed for all residential zoning types in the county and nearby city. And on and on. I've spent several hundreds of hours and tens of thousands of dollars trying to jump through all these hoops - and I haven't even started building anything yet!

There is lots of ag zoned land around me. nobody wants it rezoned to residential as that means more people and most people don't want more people around. People always buy the ag lots cause they are cheap and have low taxes if you have ag activity, and then want to build more housing on them than the zoning allows, because that is lucrative.

just use a septic field instead of the sewer hookup if the county won't play ball. then they can't increase your sewer rates every year.

Unfortunately, the health district won't issue a permit because of the existence of the "will serve" letter from the city. So this is turning into quite the ordeal to get sorted out. I'm really hoping to keep things out of the courts, but that is a very real possibility. And I live in a relatively low-regulation state. I don't know how anybody ever builds anything in CA or NY.

> And I live in a relatively low-regulation state. I don't know how anybody ever builds anything in CA or NY.

I'm not an American so I don't know anything about your system. But perhaps the existence of many state level regulations crowds out the city and state level regulations and therefore you get less uncooperativity and more straightforwardness?

Really I think the state ought to be setting complete menus that the local governments can pick from and apply in specific areas. If it's not possible to build a house in some location, it should be clear that it's not possible to build a house in that location. And if it is, it should be clear that it is.

> I'm not an American so I don't know anything about your system. But perhaps the existence of many state level regulations crowds out the city and state level regulations and therefore you get less uncooperativity and more straightforwardness?

It's less that it's any more straightforward in NY or CA, it's just that zoning and NIMBYism regulation is not the sole domain of either American political party. You can't escape it by moving to a red state.

The usual canard is something like "California won't build more dense housing, so I'm moving to Texas," but housing is even less dense in Texas, so lower costs are not caused by less regulation around housing density! It's just that the ratio of supply to demand isn't as out of whack yet, as metro area populations have been lower and the cities themselves less landlocked, so building out has been easier and cheaper.

Rural Montana here: you can do pretty much whatever you want. From time to time I muse about building a nuclear waste dump...

Makes me miss the Rockies

I have not lived in Rural New York in over thirty years, but when I did, there were unzoned areas in the Southern Tier, and looking at what got built there, it was clear that it was unzoned. I am certain that many of the properties were uninsurable. I knew one resourceful individual that built his own house, basic carpentry, started with tar paper exterior over open stud frame, no windows, just one door, no interior walls. None. There was the kitchen sink, five feet away, there was the toilet and bathroom sink. The interior 'insulation' and walls were discarded carpets nailed to the wall studs. Power came into a fuse panel, that only had (first year) a single double plug outlet, and a single ceiling light. The next year, he picked up a dozen windows from the dump, someone else had upgraded, and installed windows, and sheet rocked the external walls. As he 'rocked', starting low and working up the walls, he filled the voids with crumbled newspapers (also from the dump) for insulation. Are we having fun yet? So at the end of year two, he had tar paper siding (and roof), newspaper insulated exterior walls, no interior walls, and an newspaper insulated sheetrock ceiling. He also installed plugs around the perimeter exterior walls, and added a couple more ceiling lights. Almost entirely from found and recycled material. That is what no zoning will get you. I moved away around then, and have not been back. I don't know anyone that lives in that particular county any longer.

I had >30 acres (12 ha) in a famously restrictive county in CA in 1999. Zoned for timber production, one house per parcel.

Before the building permit was issued I had spent $120k on a fourteen-inch stack of documents and fees, for a house of 2200 ft^2 (~200 m^2).

It has got much more restrictive in the intervening time. New construction in the timber production zones has just about halted.

what if you just build it? What are the sanctions? Can you legalise it later?

They force you to tear it down. If you don’t they will and charge you for it.

That being said there was one guy in LA who built a massive house called the enterprise I think. Edit: he lost in court and is being forced to demolish it.

I've never been able to wrap my head around why things work like this. If what you build isn't a nuisance to neighbors, houses the same number of people as before, and doesn't pose a safety or environmental hazard, what business is it of anyone else?

I've met a significant number of otherwise carefully law abiding people with various non-permitted remodels and even outbuildings. (I guess the latter won't work so well in the future now that we have regularly collected high resolution elevation maps). It really seems like something is wrong with how this is handled across most of the US.

Building codes are written in blood.

I assume you're referring to the safety and environmental aspects that motivate them? Which (to reiterate from above) I recognize the importance of. The trouble is all the things that run afoul of local zoning rules (and sometimes even local code!) for no obvious reason other than "that's what it says".

The refusal to issue a septic permit noted in a nearby comment is a prime example. Such things should be "will issue" so long as they won't cause any health or environmental problems in that location.

> The refusal to issue a septic permit noted in a nearby comment is a prime example

The problem isn't that they're forbidden from using a septic field when there's a perfectly good sewer line nearby. The problem is that they're being charged $40k for a sewerage connection. Where I live, it costs only $1000 for all the permits and inspections required for a new connection.

"Only" $1000. That's an absurdly high amount for what amounts to a visual compliance inspection in my opinion.

I would have to disagree that the unreasonably high fee is the only problem there. Charging a captive customer an unreasonable amount is certainly abusive. But so is arbitrarily forbidding what is permitted on private land. Such restrictions should require clear and articulable justification based on real world impact.

> That's an absurdly high amount for what amounts to a visual compliance inspection in my opinion.

This is really outside my wheelhouse, but I could see an argument being made about the capacity of the larger system.

E.g. The direct, marginal cost of installing service to your house is $200 to review the plans, send the guy out for an inspection etc. But the added capacity requirements of you and the 10 new houses in your development puts an upstream sewer out of capacity, costing $50,000 to upgrade. If you don't charge the full marginal cost through the whole system for the upgrade, either the rest of the city is subsidizing your marginal cost, or there's a significant monetary shortfall on the short (say 1-3 year) timeframe, and you'll hope a rate increase is approved to make up for it.

It's an interesting point, but bear in mind that the scenarios raised in this and adjacent threads didn't involve subdividing but rather just hooking up an existing lot. One would hope that system capacity was at least sufficient for the lots that already existed when it went in.

If there were a need to charge for capacity upgrades, it seems such things should be billed separately and explicitly. (My electric bill itemizes hookup, transmission, and generation among other things.)

And absolutely none of it explains why septic should be disallowed!

If the infrastructure is available, it had to be built, and someone paid for it. If there wasn't a hookup before, then it seems reasonable to pay the full share to recoup the investment, even if the line is right there. Otherwise the infrastructure investment would have to be paid by someone else, or from other taxes.

These days, septic should be disallowed, if a reasonable sewer is available, as these days the effluents contain all kinds of toxic and non-degradable stuff that poisons the land and ground water. Over here, lossy septic tanks are illegal. You can either hookup to a sewer, treat your wastewater in situ via certified processes or, under some conditions, use a non-draining septic tank and have the wastewater treated.

> "Only" $1000

I don't know your profession but let's take a statistical guess and say you're a software developer.

If I asked you to drive out to my place to take a look at 500 lines of Javascript, and tell me if the code is kosher, and if you're wrong I'm going to sue you. How much would you want to be paid to do that?

> if you're wrong I'm going to sue you

I think the local municipality typically sends an employee out to do the inspection? At least that's how it worked for me in the past (tbf that wasn't specifically sewer though). Permits having a nominal paperwork fee is understandable.

I very much doubt that the inspector only visits one property per day, or that they are paid anywhere near $1000 per day.

The legal risk is on the provider of the service, which is not the employee. Obviously the employee is not getting the entire fee themselves.

$40k only gets you permission to hook up. The inspections, excavation, and most of the plumbing work needs to be paid for by the owner independently. So all the work that actually costs resources to do is not part of that $40k fee.

No, a fair number are written in green ink. Green for someone else.

Devil's advocate: without regulations and permits, how do we know that what you're building isn't a nuisance etc. etc.?

That's why I never suggested the (obviously fatally flawed) idea of abolishing regulations and permits. Rather I raised an objection to the current state of their implementation.

States with this amount of obstructive ossification, such as the Byzantine Empire or Austria-Hungary, don't generally stand the test of time. Just before Austria-Hungary's collapse following WWI, the collection of taxes in Dalmatia (now Croatia) cost twice as much as it raised [0]. We still use the word Byzantine today to describe systems that are "complicated, secret and difficult to change" [1].

I don't know what this could mean at the city or county level. Keep an eye out for wayward Sultans and Allied powers?

[0] https://taxfoundation.org/taxes-and-late-austrian-empire

[1] https://www.oxfordlearnersdictionaries.com/definition/englis...

> States with this amount of obstructive ossification, such as the Byzantine Empire or Austria-Hungary, don't generally stand the test of time.

Even if you only count from the time it didn’t share an Emporer with the West, rather than viewing it as a linear continuation of the Roman State, looking at the Eastern Roman Empire as somehow a state that did a substandard job of standing the test of time is, well, implicitly setting a really high bar, since even counted from the partition its, what, the second longest lasting state in history?

While I totally agree with the point you're trying to make, to be fair to the Byzantines, having a continuous state structure for a near millennium (500-1200 CE) is actually the near opposite of ossification leading to speedy collapse.

To Western Europeans coming from the very loose state structure of feudalism, the fact that the Byzantine Empire was effectively a modern state (similar to ancient China) was practically incomprehensible to them. Hence the phrase! On the flip-side, the level of institutional capacity let the Romans and Byzantines ride out incompetent Emperors fairly well compared to feudal states that would quickly disintegrate with one bad roll of the "off-spring lottery".

This is one reason I'm wary of any big structural changes to the US tripartite system. "Abolish the Senate!" or "abolish the Supreme court!" sounds like a fun adventure in governance but, regardless of personal political tilt, the system gives people time to organize against bad policy. It's hard to get policy I like, but the same processes slow policy I don't like down enough to organize against it.

Even the most blatantly tyrannical presidents through history hit a wall of bureaucracy. It's slow, but people like me tend to get murdered when tyrants take over, so I'll take it over a quick changing system that can easily turn against me.

Why did you buy a lot zoned ag when you clearly wanted one zoned residential? A little due diligence before purchasing the lot and you would either know what you in for and still buy or decide it's too much of a hassle and walk.

They probably bought a lot smaller than 40 acres and assumed that logically, a single dwelling would be allowed since otherwise a dwelling would be impossible.

That is not a logical assumption.

If "a dwelling would be impossible", the logical conclusion is that zero dwellings would be allowed.

This situation is the norm in US unincorporated zoning. I have never heard of any unincorporated jurisdiction with a "minimum residences per parcel regardless of parcel size" exception. If there is such a jurisdiction, it's the exception not the rule.

There is a limit to how many dwellings an area can support without major infrastructure upgrades (sewerage, water lines, new roads, additional sheriff's deputies). This limit has to be divided among the parcels. The fairest way to do it is by acreage. "Minimum acres per dwelling" is just the reciprocal expression of "maximum dwellings per acre" and more well-behaved since fractional acres make sense but fractional dwellings do not.

Giving tiny postage-stamp parcels the right to build one dwelling would be a windfall for all the kooky "sliver parcels" created by things like railroads and surveyors' errors. Those obnoxious error parcels are made undevelopable in order to encourage that they be merged into a neighboring parcel.

I didn't buy it until I figured out the (very convoluted and possible) way to build on it while ag. Because rezoning is a long, expensive process that can trivially be blocked by a single neighbor that doesn't want to rezone with me. I wanted the parcel because it was in what I considered a desirable location for a reasonable price. In my region, finding property is getting very difficult - and unless you want to go super far away from civilization, you don't have so many options.

It sounds like you signed up for something like the fight you’re having.

You are lucky that you can even abuse it that much. My home country seems a bit stricter. My grandparents split their farm between my uncle, aunt and mother, with the later two only inheriting a house. When my mother tried to pass it on to my brother someone noted that it handn't been part of a farm or used to house farmworkers for years and should be torn down. The plot it stood on had to be converted to residential to deal with that surprise.

Costs like for all city services are standard everywhere in California.

The reason is proposition 13. Cities can't raise taxes to pay for services so they basically have to charge for each service "a la carte". That sewer charge is more or less for what you and others are going to get from the city over some longer time frame. It suck but the alternative is home owners paying taxes, which home owners have decided they don't want to do.

I would suggest subdividing the parcel.

This explains why the price per unit is very high, but the land itself is valuable in the first place because there's high demand for it and that land would be even more valuable if it were legal to build more units on it, which would lower the price per unit, but increase the overall value of the investment.

This is what's called a win-win.

Consider that:

- Most American households own their home.

- Homeowners vote at substantially higher rates than renters.

- Home equity is one of the largest components of American wealth (roughly equal with retirement accounts).

Taken together it's difficult to see how home values will be allowed to fall.

> Most American households own their home.

Do you have a reference for that? I'm interested to see how it breaks down. I have to assume this is true because of America's aging population.

There's data released directly by the US Census Bureau for this: https://fred.stlouisfed.org/series/RHORUSQ156N

Wiki says 64.2% in 2018.

Ref: https://en.wikipedia.org/wiki/Home-ownership_in_the_United_S...

> Taken together it's difficult to see how home values will be allowed to fall.

If you allow increased density, and you use it to provide actually valuable homes (rather than studio/one/two bed apartments or the like mostly intended as a store of wealth), then land value can go up while unit value goes down.

This means people joining the market can buy for a couple of years salary, while people already in the market can exit and downsize for a decade's salary.

I would very much like this to be true. Do you have a citable source?

Is there a market in the US where density and population growth has made land cheaper? I can't think of one.

Development increases the value of land in the long run, that's nearly tautological; investors in land will benefit from this increase just like the developers themselves do. I think there's a high likelihood that the markets for "home with land" and "condo" diverge further in the future. Increased demand and density only increases the scarcity of single family homes with actual plots of land in popular areas.

There are a lot of vacant/under-utilized properties, especially ones zoned commercial, next to high-demand residential areas in my town. The owners seem to be just sitting on the property and waiting, vs actually fully making use of it currently.

I'd go a step further: why are we arguing about single-family homes when we have homeless people camped out around unused commercial and industrial properties? That's the property that's being wasted and could most-easily be re-utilized. If you have continual high demand it will be difficult to add supply fast enough once you run out of empty surrounding land (that's the biggest difference between the big coastal cities and the Phoenix/Dallas/Atlantas of the world) because it requires demolition and higher-density construction), but at the very least if you're in that situation, attack the empty areas harder!

(Whether or not there's ANY good sustainable long-term solution for perpetual demand growth is another question entirely...)

It’s low rates and the realization that they can artificially constrict supply. It’s rent seeking and until a decade ago, it was absent in SFR.

If only so many people didn't treat land and houses like investments, there wouldn't be such a disastrous hoarding problem. Henry George's Land Value Tax [1][2] seems like an obvious economic fix that would require a large fraction of the population to change how they think about land and natural resources, but most of them are invested in such a way (i.e. owning multiple houses on multiple parcels of land, often without renting anything out) that it is in their economic self-interest to block any such proposals. Although, I suppose this situation isn't unique. The world has long been doomed by coordination problems.

[1] https://astralcodexten.substack.com/p/your-book-review-progr...

[2] https://en.m.wikipedia.org/wiki/Land_value_tax

I already pay a Land Value Tax to my town.

Land value taxes ignore the value of buildings constructed on the land. It’s very different from current property taxes because it incentivizes density.

The usual advocacy point is to reduce most of the other taxes and send the LVT way up. "We should have a land value tax" is usually meant to mean "most tax should be on land".

Wouldn't this accelerate the displacement of less wealthy home owners in neighborhoods that are being gentrified?

Many counties in Texas have solved this by setting a 10% maximum year over year increase in property/land tax for people LIVING in their homes. There are also locks and exemptions carved out for those over 65 and disabled veterans.

Yeah there should be exemptions (i.e. standard deductions) to help low-income people (retirees with low savings, such as those dependent on social security or disabled, etc) and for people's primary residence.

What we don't want is a 50 year old who fully owns a $2 mil house and has $15 mil in the stock market and $1 mil in cash to be exempted from most property tax, but a 30 year old with $200k total assets to be on the hook for the full property tax rate. That doesn't make sense.

It will incentivize construction of dense housing, which distributes the same amount of land tax over a larger number of residents. People get displaced by gentrification because current policy encourages landlords to hoard old structures instead of building as much as possible.

I'm not aware of any locality in the US that has a pure Land Value Tax. There are a few localities in Pennsylvania that have a split value tax, with separate rates for land and structures.

There are definitely counties here in Florida that value land and improvements separately. But there's often no separation as far as how they're taxed. It's just all added together. Here's the listing for Tropicana Field, which is owned by the county and therefore qualified as "municipal" use:

https://www.pcpao.org/?pg=https://www.pcpao.org/general.php?...

Just/Market Value: $108,535,551

Land Adjusted Value: $46,160,000

Only partially true. You pay a *property* tax, which does sometimes have a land component to it, but mostly is a tax on the purchase price of your home.

A Georgist-style land tax proposes a tax on solely the land, so a 2000sq-ft lot is the same regardless of a $10mil home or not.

This would require an appraiser that regularly re-evaluates the value of the land-- but we already do that! But with homes.

Furthermore, a property tax still leaves open lots of tax-shenanigans. "Look, my home is actually worth half the appraised price, thus I should be taxed half." It's harder to do so with land, since you can't easily "hide"/play tricks with its value from a regulator.

Texas (what the original article in the original post revolves around) has the 5th highest property tax in the country and the urban areas have some of the outright highest property taxes in the country on a per city or county basis. This is both a land value tax and property tax.

There's a distinction in [1]:

> Common property taxes include land value, which usually has a separate assessment. Thus, land value taxation already exists in many jurisdictions. Some jurisdictions have attempted to rely more heavily on it. In Pennsylvania certain cities raised the tax on land value while reducing the tax on improvement/building/structure values.

[1] https://en.wikipedia.org/wiki/Land_value_tax#United_States

It's a Property Tax which is significantly worse than a Land Value Tax.

Firstly it encourages urban sprawl, which is bad for the environment and bad for cost of living and housing access.

Secondly it penalizes productive value add. Build something beautiful and you're punished for doing so.

Thirdly it doesn't have the same logical justification as the Land Value Tax, which is to tax ownership of scarce, zero sum, excludable, naturally occurring resources that aren't the product of labor.

You don't know that. There are places on the East Coast, namely Pennsylvania and Delaware that I can think of, that have implemented LVT. Normally they are hybrid approaches though.

> Everybody works but the vacant lot. I paid $3600 for this lot and will hold 'till I get $6000. The profit is unearned increment made possible by the presence of this community and enterprise of its people. I take the profit without earning it. for the remedy read Henry George.

- Billboard posted in an empty lot, Rockford Illinois, 1914

It's a bit discouraging that over a century later the same problem still remains.

Pretty sure a plot of land in Rockford, IL is still worth about $3600 though :)

That's a common meme - that asset appreciation is unearned wealth.

But it's not.

That investor could've spent the 3600 on hookers and blackjack.

Investors freezing their money in communities in the form of real estate or other investment is a key part of those communites becoming richer and more complex.

There's a real risk of losing your money - there's no worse financial nightmare than holding real estate that you're trying to sell for years... but no-one is buying

How did the investor in that empty lot make the community richer?

It was used for blackjack and hookers.

Speculative investment without asset improvements like that is the worst kind, but it still serves to stabilize prices for other investors. At worst, the speculator loses their shirt and a more capable capital allocator gets to work with the money.

So.. investor helps other investors? Great. What about the common man?

>that asset appreciation is unearned wealth

I'm sure we can agree the vacant lot never improved itself. It's not unearned -- it's earned by the surrounding community improving things -- which make that lot more attractive.

The incentives don't align. If that community was to massively regress e.g. unfavorable rezoning -- the value of that lot would plummet.

However in this case it's likely to be partially addressed by paying land value taxes which disincentivizes leaving it vacant -- what Henry George was getting at and wasn't there at the time.

Any benefit is earned with a suitable definition of "earned"...

For remedy read this wikipedia page: https://en.wikipedia.org/wiki/Land_value_tax

I agree that we need to stop treating houses as investments, because they're a basic fundamental need everyone has.

IMO, the problem could be fixed by having stricter laws prohibiting people who aren't residents from owning homes in another country. The requirement to become a resident is only to live in a country for over 6 months out of the year. Before that, you can just rent. We could also do things like limit the number of houses a person can own, and tax every house sale based on capital gains (even primary residences).

However, another problem we have is that interest rates are too low, and there isn't enough construction. Those are harder problems to solve. I really think we should build more, but we'd need denser construction as well. What do you do if you need land to build and there's already a house there, or someone already owns the land? Maybe it's kind of silly to have this idea that a person can "own" a piece of this planet we all live on, but we probably don't want to live in a communist country where the government owns every home and everyone is renting either.

As for interest rates, this is driven by our current economic policy and money printing. Maybe there's a way to somehow detach the interest rate used for mortgages from that in other areas. Surely, the government could print stimulus money and direct it where it's needed without interest rates being artificially controlled? The main problem with these near-zero interest rates is that they completely kill the free market. We keep zombie companies alive and we allow people to speculate on home prices endlessly. That's not natural. In a "true" free market, there's a natural equilibrium between offer and demand, both home prices and rents will fluctuate but they will balance out. My ex's parents bought a home in the 1970s, they only had high school education and were both making minimum wage. Said home is now worth over a million and out of reach of anyone not making 200K+ household income.

Something like this would effectively bar any person born in India who tried to immigrate to the U.S. in the last ~5 years from ever buying a house, unless they got married to a citizen. Broad strokes, I agree that residency requirements might help with reducing speculative investment, but maybe phrased in terms of how long you're in the country, not literally permanent residency as a legal threshold.

Not necessarily - for example in China foreigners are limited to owning one house. That limits speculation but does not provide hindrance for someone honestly trying to live.

In China nobody owns a house, it is just leased from government for 70 years.

What’s the “not necessarily” in response to here?

That policies restricting who can buy homes will hurt immigrants.

In general, of course not, but GP originally proposed specifically forbidding non-permanent residents from buying houses. How is that not hurting immigrants?

The policy does not have to be binary - you can forbid non-permanent residents from buying more than one home instead.

Agreed that the policy doesn't have to be binary, but GP's original phrasing was literally "ban non-permanent residents from buying property," which is what I was responding to.

Yes I agree, I meant residency requirement, requiring that people live in a country for at least 6 months before buying a house, which could be done on a work or student visa.

"permanent" residency was your contribution, so there's no need to rebut it -- just don't propose it in the first place.

I edited my comment, I had written "permanent resident", when what I actually meant was just "resident".

So, also make holiday homes also illegal?

Maybe? They are a luxury for the upper middle class, and you could easily rent one the same way you rent an airbnb. Those holiday homes do need to belong to someone though, so I suppose it makes no sense to outright ban own multiple homes, but we could structure it so that resale is more highly taxed, particularly resale after a short time (i.e. people "flipping" properties).

This is already a solved problem: property tax + homestead exemption.

Ok...we need more houses so tax the hell out of developers?!

You need people to be able to build and flip properties without being taxed at all. The current taxes are carving a modest profit down to "not worth it" for a lot of people who could otherwise build and revitalize affordable housing.

More taxes on home sales results in less homes for sale.

IMO we should probably reduce taxes on house builders. Maybe even give them tax exemptions. Do what we can to increase supply.

Speculators wanting to buy a house, redo the kitchen, and mark up the price 20% 6 months later though? We could just let older, unrenovated houses be cheap. That opens up deals to new home buyers. You can redo the kitchen after buying the house if you really care. You don't need some middle man to do it and mark up the house.

Lots of people want to buy a move-in-ready house. Many don’t know much about construction, don’t know which end of a hammer to hold, can’t afford to have a house sit idle for 3 months while a renovation happens, and want to have the “Apple” experience for one or two hundred a month more in their mortgage payment.

That’s the service flippers provide, IMO. (I’m not one but I think they’re more helpful than not in terms of providing housing that owner-occupants want.)

There's flippers who truly restore a dilapidated house and help resuscitate a neighborhood, and there are flippers who put a thin veneer of newness on a rotting frame, bury the waste in the backyard, and then still try to charge the same as the first kind. We don't need more of the second kind.

Maybe if it's not in the middle of an urban area the rules don't need to be strict.

Or just tax them differently than a primary residence.

Stable and long term living arrangements are something the government should be incentivizing so primary residences should be taxed minimally.

Vacation houses and income properties should be taxed higher.

Do you think the problem with money printing by governments is that people own houses in another country?

> but we probably don't want to live in a communist country where the government owns every home and everyone is renting either.

Yes, like the famously communist state of, checks notes, Singapore.

Sorry for the snarky reply, but I don't think calling the breaking of monopoly power/taxing unearned rents is communism.

Is that how it works in Singapore? I know in China you lease land from the government for 50 or 100 years. I do think it's important to be open to ideas, and I think there probably ought to be redistribution of wealth, particularly when it comes to land ownership. That has to be balanced with some minimum set of rights so that people can't be randomly evicted because people in power want that land, and that when people are evicted, they receive fair compensation.

It's not so different than how the US operates, except the lease is called a deed and it's term is indefinite. The government can still take "your" land away if you stop paying taxes or they need it for something else.

The most objectionable part of real-world communism is the authoritarianism that goes along with it. Singapore is extremely authoritarian.

Landlording is not the problem.

Not everyone wants to own the place they live in. Lots of people plan on only being in a location for a year or two or four, and would rather just rent.

Some people would just rather rent indefinitely.

The problem is free handouts for homeowners in general.

The handouts entice the landlords, because for the last 30 years with the exception of 3 years (2005-2008) - housing on leverage has absolutely destroyed equities as an investment.

If you got rid of the handouts, this wouldn't be the case. Then you wouldn't have people like Blackrock gobbling up houses. They'd just be buying equities (the things that are supposed to be investments?) instead.

Do not miss the bigger thing.

A generation ago : trade policy => offshoring of shippable jobs

This generation : monetary policy => institutional ownership of the common home

I recently went down the Geoist/LVT rabbit-hole myself. It strikes me as uniquely appealing across the political spectrum, since it reduces tax on wealth-creation AND redistributes wealth from the rich to the poor.

Sadly, this very fact provokes enough superficial resistance to keep it out of the Overton window. Whenever it comes up, shouters on either side have plenty of ammo to blast it, saying things to the effect of "how could you propose giving the other side what they want!?!"

It is kept out of the Overton window because the rich guard nothing more jealously than their unearned income.

It's not like you or I get to decide what goes in the window.

It's less to do with appeal to people on the other side of economic divides, and more to do with the impossibility of selling "the great thing is that it incentivises your next door neighbour to build a high rise" and "sure, your parents will have to downsize because their pension won't cover the tax burden of the house they spent their lifetime saving for, but on the other hand it's great how many investors and companies don't have to pay any tax at all" to the average voter, who cares a lot more about such concrete matters than handwavy claims about efficiency or equity.

> the great thing is that it incentivises your next door neighbour to build a high rise

This is more about NIMBY attitudes and zoning laws, which are separate issues.

> their pension won't cover the tax burden of the house they spent their lifetime saving for

An LVT won't tax the house, only the value of the land. If the plot itself is hyper-valuable, that's not a bad place to be, financially speaking. Beyond that, "won't someone think of the poor landowners?" doesn't strike me as a very compelling argument in this day and age.

> This is more about NIMBY attitudes and zoning laws, which are separate issues.

NIMBY issues and zoning laws are very much not separate issues when one of the chief selling points of LVT is building denser. It's a selling point the public aren't buying because they mostly don't want the value-maximising development next door, and being taxed as if they could develop it whilst still living in a zoned area so they can't is obviously worse. Sure, an LVT can be designed with deductions and exemptions for land use restrictions (and would have to be), but that's conceding away one of its key purported advantages.

> An LVT won't tax the house, only the value of the land. If the plot itself is hyper-valuable, that's not a bad place to be, financially speaking. Beyond that, "won't someone think of the poor landowners?" doesn't strike me as a very compelling argument in this day and age.

"Let's ignore the poor landowners" is a much worse place to be if you're trying to win over the large portion of the electorate which owns some land, which in most cases is probably the second most valuable thing they own after the house they live in (which is separate from the land for tax valuation purposes, but not in the reality that if they can't afford the land it sits on, they're under pressure to sell their home) and not closely coupled to their current income. The general principle of Georgist efficiency is that people on low incomes relative to the value of the land their house are forced to sell and this should drive down land prices for everyone, but the prospect of devaluation or forced sale of very expensive stuff they've already paid for is even less appealing to voters than being taxed on next year's unspent income. (Also, the entities which own the majority of the land turn out to be both less profitable and more relevant to the cost of basic goods like food than the businesses liberated from tax)

Regardless of whether you think these are not insurmountable problems for LVT or not, the thought of being caricatured as the guy who wants the tax system to force people to develop their homes into nice efficient apartment towers or sell in a great hurry to someone with deeper pockets is a much bigger concern for politicians than the thought people with different economic philosophies might actually agree with them for a change.

It's never appealing to make a long time member of a community leave because they can no longer afford the land they've owned for years, because other people say "I want that"

I move to a cheap, small town. I embed myself in the community and help build it up over decades. And then, at the peak popularity, in part due to my presence, I am forced out, because someone who has never been here says that they would like to live here.

You don't see a problem with this?

You've obviously never seen a Nextdoor thread about rent control.

> I move to a cheap, small town. I embed myself in the community and help build it up over decades. And then, at the peak popularity, in part due to my presence, I am forced out, because someone who has never been here says that they would like to live here.

Why would you be forced out? Yes, taxes on the underlying land would increase because it is more valuable, but you would be able to move into a new property in the same community, as housing would increase in density. Now if you don't want to live in a denser community, that's fine, but you don't really have a right to prevent the densification.

It sounds to me like GP’s concern is that their LVT would go up (across the entire town) due to popularity and become unaffordable (forcing them out economically), rather than being concerned with increasing density.

So I would need to sell the 2 BR single family home I've lived in for 30 years, and move to some other part of town to live in a 1BR apartment, because someone from some other part of the country can pay more in tax for the property I've lived on?

Most proposals in this direction (e.g. Glen Weyl's "Radical Markets", [1]) make reasonable exemptions for basic personal needs, so people don't get thrown out of their (modest) homes or lose their personal belongings unexpectedly. The point isn't to kick you out of your village, it's to make speculative investments in real estate unattractive.

[1] http://assets.press.princeton.edu/chapters/s11222.pdf

And then, at the peak popularity, in part due to my presence, I am forced out, because someone who has never been here says that they would like to live here.

This is exactly what is happening in parts of Utah. Planners accounted for natural growth and a standard rate of in-migration, but there has been a flood of people from out of state forcing out the locals who made these places what they are by living in them for decades.

I guess I'm confused; how is this not a description of the current system? How are LVTs supposed to make this kind of thing worse?

It may be in some areas, not in others - depending on how their tax system works. Prop 13(which has massive flaws and abuses) in CA is an example, as well as states which just generally have low property tax rates because they derive their revenue from other sources like income tax.

You don't think geoism is just naive? This idea that the state can magically assign a value to property and not have it go sideways for the politically disenfranchised (the poor) is pure fantasy. If you haven't gone through the process of buying a house. I suggest trying it (especially during a frothy market), and each step of the way stop and think, "how would geoism get turned around to screw the poor".

Poor people don't own property, though. So how could it disenfranchise them?

In this case, I am saying that political disenfranchisement is the dominant reason for poverty, and how well meaning policies can wind putting in barriers poor people from owning property in the first place. I'm sure you can imagine how this closes the cycle.

Wouldn't the LVT reduce property prices, which counteracts that?

> Wouldn't the LVT reduce property prices, which counteracts that?

1. Don't assume

2. If you are poor, which do you think is easier? A higher initial capital expenditure? Or a higher upkeep cost?

It will reduce property prices, ceteris paribus. The only ambiguity is if the extent is such that it fully offsets the opposite impact of higher upkeep cost from the perspective of a poor person. I don't know the answer to that question, do you?

Another factor: it'll encourage apartment construction, which will increase housing supply, which should help poor people.

> 2. If you are poor, which do you think is easier? A higher initial capital expenditure? Or a higher upkeep cost?

Higher upkeep cost is the easier one. Many poor people have a steady an income, but no saved wealth. That's why there are many people able to pay 1800/mo for rent for years, and never able to buy their own home.

And this would make LVT the better option for a poor person, since it would turn "buying" a home into "renting" the land from the state, along with buying the building, which is obviously possible (as seen by the existence of poor renters).

> Many poor people have a steady an income

I see you've not been poor.

The relevant case is people who have no income, but have a substantial amount of wealth (enough to buy a home). I'm not sure how you can consider that poor.

No. if you are poor, it is a real dynamic to get modestly frequent, but unreliable bumps in income. Of course these days there is no incentive to save that because of inflation, but if that weren't as much of a problem, you could consider saving up to buy a home, but you ABSOLUTELY cannot count on those sorts of things to sustain a mortgage payment, or land taxes. Like I said, you don't understand. Please, do not ever be in a place where you are making policy.

I understand what you’re getting at a bit better now, but you still haven’t explained why the current situation, where one needs to save 20% for the down payment, and then pay a monthly mortgage payment, is better for the poor.

Where are these places where the buying prices of land is cheap, but the land tax would be high? The buying prices is simply the year rent divided by some discount rate, so typically, the buying price would 20x the yearly rent/tax. That’s a large amount to have to save up (assuming a mortgage is out, like you say).

I'll give the standard reply here: this sounds mainly like a criticism of the current system. Are you specifically proposing some loophole in geoism that could be gamed in such a way to make things worse for the poor, beyond how things stand in the current system? Or is this more of a "things will end up badly for the poor no matter what we do" kind of sentiment? I can certainly understand that, but it isn't a good excuse for apathy.

It concentrates an important axis of power (setting prices on a rivalrous good) into the hands of the few. That is necessarily worse for the disenfranchised. I thought that was clear from my comment, I guess not.

My statement is not one of apathy, but a prediction of worse comparative outcomes with mechanistic backing.

Who are "the few" in this case?

This is a fully general refutation of ANY system, because rich people game every system, including and especially the current one. Why should the current one be favored?

The trick is to find a system that, despite attempts to game it, has an incentive structure that isn't already explicitly tilted in favor of the rich. Geoism is one such system.

I aver that it's more difficult for a rich person to game a decentralized system than a centralized one. A land tax necessarily concentrates an important axis of power into the hands of fewer people.

I’ve ranted about this before but CA Prop 13 not only makes housing a good investment, but one that you’re extremely incentivized to hold onto forever and never move. Two people can be living in houses next to each other valued around 1.5m, and one of them will be paying 1/10th the tax. If anyone wants to buy a house, they have to first be able to afford the property, so the barriers to entry are so much higher for those who didn’t have the foresight to purchase a home 40 years ago.

It’s not even residential that’s the most disturbing though. One of the biggest beneficiaries of this tax break is Disney: https://www.ocregister.com/2010/06/03/disneyland-businesses-...

Prop 13 biggest beneficiaries are corporations.

> so the barriers to entry are so much higher for those who didn’t have the foresight to purchase a home 40 years ago.

40 years ago it was still expensive to buy otherwise everyone would have bought, including the investment funds

40 years ago a home in the Bay Area cost about 3x median income. Now it is more than 10x. Buyers in 1981 benefitted enormously from high interest rates. I know they whine about it now, but objectively it was a massive windfall for buyers.

> 40 years ago a home in the Bay Area cost about 3x median income. Now it is more than 10x.

Interest rated have fallen 10x

> Buyers in 1981 benefitted enormously from high interest rates.

They didn’t benefit from paying more for a money loan. They benefited from being able to refinance on always lower rates, and the corresponding rise in asset price

> it was a massive windfall for buyers

It was a wealth grab. They're the ones that voted for prop 13, and they're the ones benefitting. Meanwhile it's the Millennials and all subsequent generations that are stuck paying for their social security.

You’re saying that old people should be driven out of their houses because younger, richer people deserve to live in their houses. I’m sure your feelings will change as you get older.

Paying taxes on unearned gains is not "driven out of your house". You can keep the house and pay taxes on the gains.

> I’m sure your feelings will change as you get older.

Yes, this is the problem. Extreme self-interest and entitlement to massive windfalls.

How are old people with no income supposed to afford capital gains taxes?

And if house prices go down do they get a refund?

Mark to market property taxes do go lower when assessments go lower.

You don't get a refund for the intervening years of mania. Oh we're sorry we almost kicked you out of your house because everyone else was paying out the nose for houses because they speculated Amazon would build it's hq there that year so sorry about that. Here's your 50k in taxes back with interest.

In that scenario it sounds like the person "forced out" would have received a huge windfall of cash, and could ostensibly buy their same house back for much less than they sold it for at the height of the mania.

> the person "forced out" would have received a huge windfall of cash, and could ostensibly buy their same house back

Don't assume. That person had to live somewhere, possibly at equally inflated prices. Now add in the the cost of two unnecessary moves.

> and if you sucked it up and paid the state? Maybe you had a sick family member that you were taking care of and the chaos of a move would have been too much to deal with. Sorry, chum. Bad luck of the draw.

What has happened (at least in my locality) is in years of high assessment increases they cut the rates so the increase is buffered. They typically don't set the tax rate until they see how the initial assessments are coming in.

The other program some counties around here do is property tax exclusion for low income seniors.

Or working class people. For a large fraction of people if their taxes are going up faster than their wages are going up they do not have a reasonable way to get higher wages to pay for the tax.

There is very little controversy over not taxing unrealized gains when it comes to income tax [1]. I'm not sure why doing the same thing for unrealized gains in property value is controversial.

It's not like most of the things property taxes pay for are proportional to the value of the property. The changes each year in costs to provide roads, schools, libraries, police and fire, and utilities to my house and my neighbor's houses generally has little to do with the changes in the market value of our homes. So why should the taxes that pay those things be tied to market value of the house?

More sensible would be to take the costs to provide the services the tax pays for, and divide it among the houses that receive the services, equally or taking into account usage (e.g., the amount for sewer might be proportional to the number of bedrooms). If we want it to be a progressive tax, apportion it according to the relative market values of the properties, but determine the total amount for the neighborhood solely by how much money the tax needs to raise to provide the services used by that neighborhood.

[1] There is controversy over tricks and schemes used to effectively realize them while escaping taxation.

> It's not like most of the things property taxes pay for are proportional to the value of the property

Exactly! The extraordinary taxes on property are a result of unfair distribution of cost of services. A city needs to collect for a budget of $X... so they distribute the costs the best they can.

It's not a tax on the gains, it's tax based on the estimated current market value, which could go up or down.

Prop 13 is a limits how much property tax can increase in a year. So hypothetically without prop 13 it would possible that the value of your house jumps 10x and then you're stuck with paying 10x the amount of property tax that year.

I don't think we need to remove it completely but some adjustments like applicable only to a primary residence and not investment or commercial properties would probably go a long way.

If the value of my home jumped 10x in a year, I would be ecstatic. Are you kidding?

Why so? You don't see that gain unless you sell, at which point you'll probably buy another house that has also risen 10x.

In a lot of places, if not most, property taxes are based on the assessed "current market value" of your house and audited annually, which can change a lot from year to year. Property taxes are paid annually, not when the house sells. If the house goes up 10x in a year, the property tax also rises which makes it very hard on a fixed income when you're retired, especially when the gov't artificially calculates inflation at a lower rate so they don't have to pay as much in social security benefits to those seniors reducing their purchasing power over time.

Property taxes are supposed to cover your local government's running services - police, fire brigade, trash/sanitation, water and roads.

Properly distributed, they should not be high.

Property taxes are not a slush fund for the government, nor should they be deferrable. They are intended to be running expenses.

And the fact property taxes are often used as a slush fund makes those of us paying attention very sensitive to their increase. With those taxes comes bureaucratic power and control, often leading to more taxes and less of a say over how one lives one's life.

If the value then drops 10x, you won’t get your property tax refunded. If prices end up going up and down like bitcoin, you’d need to have some protection.

> If the value then drops 10x, you won’t get your property tax refunded.

That's right. And why would it?

But also: your example is imaginary. When was the last time that house values dropped 10x or even 5x? It's counterproductive to make tax policy based on the extreme cases that have never happened.

I'm planning on living in my house for a very long time, it's my home, not an investment. I don't want my home value going up 10x unless I'm planning on selling it. In this market, I couldn't replace my house if I sold it anyway.

> it's my home, not an investment

Oh great! I'll take one of those. Maybe two. Where do I sign up?

Shouldn't pass on to your heirs either.

Someone who owns a house in cali is a milionaire. I am not sure it applies to immigrant who just moved to California.

The old person would have sold the house a long time ago because of the rise of their property tax. They wouldn’t be millionaires. They would have to sell their home for a small gain and then rent for the rest of their lives. And since they are old they have no income so they need to keep moving to cheaper and cheaper apartments.

Sounds like a great way to live a life, just because younger people feel like they deserve to live in their house.

> just because younger people feel like they deserve to live in their house.

Well, they do deserve those houses. If we expect young people to work, pay taxes and raise new generation. This is yet another middle finger to young people. No wonder birth rate is in toilet.

If their property taxes increased to the point where they cannot afford it, then that means that their property value increased significantly. Excuse me if I don't feel too bad for somebody who just reaped a massive windfall.

The "won't somebody think of granny?" argument doesn't really work when advocating for a policy that disproportionately subsidizes non-grannies.

The greatest day of my life will be the day I owe the IRS $1 million dollars.

People generally buy a house because they want to live in it. The nominal value of the house does nothing to benefit them.

“Reaped a massive windfall” if and only if they sell their house. The problem is unless they’re both looking to sell and move into a lower COL area, that doesn’t do them much good.

My house today is worth 2x what I paid for it a decade ago. Which is great except for the fact that housing costs around here are closer to 3-4x what they were a decade ago. Even if I wanted to sell, I couldn’t find any livable housing for the same price within the same area.

> if and only if they sell their house

Buy. Borrow. Die.

> Sounds like a great way to live a life, just because younger people feel like they deserve to live in their house.

At one point, I'm fairly sure all those old people you're talking about were young people who felt like they deserved to live in their house. The difference is that, well, they were able to. I don't think you're intentionally saying "You came of age after 1980, kiddo, so suck it," but that's nonetheless the outcome. Proposition 13 certainly isn't the only reason that housing prices in California have skyrocketed, and housing prices have always been more expensive here than the US median -- but the gap between the California median and the US median started increasing immediately after Proposition 13 was passed and just kept accelerating.

All people deserve to be housed.

> Someone who owns a house in cali is a milionaire

I own a house in California. I have substantially less than $1 million net worth. Not complaining, to be sure, but it simply isn't even remotely true that all California homeowners are millionaires.

That may have been the case when Prop 13 was sold to the public, but at this point it's mostly being used to accumulate wealth, not keep people on fixed incomes in their lifelong homes. If that was the goal, there is a much better solution - let the elderly accumulate the tax bill against the value of the house, and collect from the estate when they pass.

When houses get sold, capital gains need to be paid. This is nothing new.

Meanwhile, in many neighborhoods, the older, wealthy, established residents are paying 1/3rd the taxes needed to support infrastructure and services, compared to newer, younger residents who are trying to establish a nest-egg and raise families without the benefits the older generations had. There is no one solution that will work for every neighborhood, but prop 13 is economic warfare on the young. Portraying it as young tech millionaires against poor, old retirees is not true for a large portion of those affected here in the present.

Citation otherwise this is just your biased anecdote.

There’s plenty of turnover in California on par with other states. If prop 13 were somehow so powerful a factor not to sell, you would see a lot less house sales which you don’t.

In my city, half the houses were sold in the last 20 years which sounds pretty good to me. The idea that property taxes are frozen to 30 years ago and governments are starving for money is fiction.

In places like Toronto where property taxes get assessed every year, the property taxes 1/3 for an equivalent house price.

California could have increased their property tax revenue by 12 billion if they had passed the partial repeal last year: https://dornsife.usc.edu/assets/sites/242/docs/Updated_2019_...

Not if the house gets sold by a kid after their parents died. At that point, the capital gains tax basis gets reset.

In the current tax climate, we will never sell our houses. It's an amazing way to transfer wealth while avoid capital gains.

And if they don't want to sell, the kids keep the original prop 13 tax limitations as well. The current housing policies and tax system is a disaster.

I think this is something that is really under appreciated. When there is inherited property, the cost-basis is reset to when the parents died and the Prop 13 basis is also inherited now if it becomes their primary residence. This is a huge advantage for those people who happen into this sort of situation.

Something like prop 13 isn't the only way to avoid that.

Some jurisdictions allow you to defer property tax indefinitely in the form of a lien against the house which seems like a reasonable way to do it.

Some of my neighbors are seniors who are on social security. Their houses were bought for about $160k in the 1970s. Which is expensive back then. Now they are worth $2M but they have no intention to move. Where would they live? And how can they afford the $30k/yr property tax?

What stops people from selling their homes isn’t prop 13, it’s the ridiculous rise in house prices in the last 15 years. It creates no mobility. Stop bitching about Prop 13, that is a lazy and short sighted and wrong explanation for house prices. Look at the inventory these days. It’s low because no one wants to sell their homes because where are they going to move to?

You misunderstand - the whole point of the scheme is they don't have to pay the property tax. It gets (partially or entirely) accumulated in a lien against the house, and the seniors stay as long as they want.

When they choose to sell, or their estate sells, the property tax is settled first from the proceeds of the sale.

I'm saying this scheme is in place in other locations to address the same problem you describe, and seems to be working better than prop 13 (at solving that).

Where would they live? With a budget of 2 million dollars- they could own an extravagant home practically anywhere in the US while pocketing hundreds of thousands of dollars.

I have no idea why people who are living off of social security should be in the most desirable housing in the entire country

Why should they be forced to sell a house that they earned and paid for?

Nobody is forced to do anything. They can certainly leverage their significant equity in the home to pay those taxes, they can take a lien like many other states allow for in these situations, etc.

But frankly I don't understand why a retiree who is living off of social security would sit on a multi million dollar asset, rather than cashing out and increasing their standard of living many times over by moving. And I don't think they are a victim by having generated 10-20x returns on their home

Why should they get services, that are paid by people with no money?

Also - they wouldn't be paying $30k per year. If you had a rational government cost distribution among people in the area, you wouldn't need to charge people $30k just in property taxes.

And then - they also haven't paid their fair share of taxes in decades, so why do they get to be in a highly privileged position?

Imagine if I didn't pay any income tax for 50 years - would you excuse me, if I turned 60?

> Where would they live? And how can they afford the $30k/yr property tax?

With proposition 19, approved in last election, seniors can move to a different place and carry their original property taxes with them.

https://ballotpedia.org/California_Proposition_19,_Property_...

> And how can they afford the $30k/yr property tax?

The suggestion is to make them no pay that annually in cash, but rather on the future gains of the house.

Their house (or rather, the land) is going up in value far more than that per year. Asking them to forgo a fraction of their speculative real estate gains, when they never even plan to access it (according to you), does not make sense.

So what it seems like you are really saying is that they deserve to have full speculative real estate gains accessible to them, just because they are wealthier than younger people and were able to get into the capitalism game earlier. That due to their unearned wealth, that they did nothing to create, that comes purely at the expense of others being able to live in the area because land is zero sum. They should have to pay less just because they have greater power? Absolutely not.

Saying "I'm so wealthy that I can't pay taxes, and I'm not willing to even delay paying taxes until sale" is fundamental wrong-headed.

The law should take into consideration those cases and not charge them $30k/yr in cash for property taxes if they don't have the money in cash to pay it. One solution mentioned elsewhere is a lien against the inflation-adjusted value appreciation of the house.

The solution isn't to let wealthy older homeowners get away with not paying proper property taxes though, which is how it is now.

the California Tax Postponment Program protects low income seniors and the disabled. They have 0 risk of being displaced by property taxes no matter what.

Prop 13 is wholly unnecessary

I own a house in East Bay, and paying >$10k/yr of property tax. While I don't mind tax in principle, it greatly annoys me that I'm paying much more than my neighbors just because I bought it a few years ago.

And why would my opinion change when I get older? Prop 13 won't do shit to lower my taxes, I'll have less income and still be paying through the nose, because the city needs money and half of its residents are paying virtually nothing. If anything, I'll be even crankier about the whole situation.

>why would my opinion change when I get older? Your opinion might change if property price around East Bay continue to appreciate and your new neighbors are paying even more.

A pitch copied straight from pyramid scams.

It's a pyramid scheme, people newly entering the housing market radically subsidize the asset values of those who entered before them.

> And why would my opinion change when I get older? Prop 13 won't do shit to lower my taxes

It will, in real terms, since the assessment increase limit is the lower of 2% or the rate of inflation each year, guaranteeing that over the long term the assessed value and tax go down in real terms.

Which isn’t to say your opinion should change, just that the self-interest equation does.

That's BS. If I pay $10k in property taxes(excl school taxes), that means I cannot invest that money into something more tangible. Thus depriving me of working investments to subsidize wealthier individuals is worse, than steadily increasing taxes.

That taxes compete with other potential uses of money is obviously true, and equally obviously irrelevant to the discussion of whether Prop 13 will or will not lower your real tax bill over the time you own a home.

That's the problem. Prop13 makes your taxes high upfront, with lower taxes later on. This is counter intuitive, when you want to encourage people to buy homes.

> Prop13 makes your taxes high upfront, with lower taxes later on

No, Prop 13’s rate limit makee your taxes low upfront — the 1% cap on nominal rates is far below the national median effective rate, and the nominal rate is before applying the effects of the assessment limits — and the limit on annual assessment increases to the lower of inflation or 2% makes it even lower later on.

A lot of people focus on the second in isolation to say new home buyers subsidize existing owners in CA, but really both types of owners are subsidized by income and sales tax payers, its just new homeowners are slightly less subsidized.

> This is counter intuitive, when you want to encourage people to buy homes.

“Barely taxed now, and even less taxed later” does a very good job of encouraging people to want to buy homes in California, and also of discouraging them from wanting to sell homes in California, as evidenced by price trends.

What it doesn't do is make homes affordable to buy, but then encouraging people to want to buy and making them affordable are goals that are inherently in some tension, given the effect of demand on price.

Or maybe property tax shouldn't be a thing... Or be substantially smaller.

This was a red herring when prop 13 was passed, and is a red herring now. 49 other states don't have prop 13, and yet seniors aren't priced out of their homes.

There are plenty of other solutions. Some states allow you to just pay the same amount each year and put the difference as a lien on the house until you sell. Some states have something like prop 13, but it is applied to entire counties. ie. They allow the entire county to raise their income from property tax by 1% annually. So everyone's home gets reassessed for its value and then the tax rate is set so that the whole county goes up 1%. This means that in some cases people's property taxes actually go down if one area had a massive increase in value.

Every other state figured out a way to avoid this problem. California just loves its "rent control for the wealthy" which is what Prop 13 is.

Prop 13 is the single worst law in California and must go.

And I say this as someone who owns multiple properties in CA, and in fact for one of them, the profit comes entirely from the fact that the tax rate was set in the 70s. If I had to pay property tax on the current value, I'd just sell it because there would be no profit to be had. And in my primary home, my neighbors subsidize me by paying twice what I do even though their homes are worth less. And I subsidize my neighbor who has been here since the 60s and pays 1/10 of what I do for the same services.

And if you're still really concerned about old people losing their homes, at least support getting rid of Prop 13 for all non-primary homes. There is absolutely no reason a rental property should be protected from property tax increases.

> This was a red herring when prop 13 was passed, and is a red herring now. 49 other states don't have prop 13, and yet seniors aren't priced out of their homes.

Prop 13 is bad in at least half a dozen ways, but I'm not so sure this problem isn't coming elsewhere or even is absent. It seems to me California may have experienced a leading edge of metro dynamics that are going to come for other states soon.

> everyone's home gets reassessed for its value and then the tax rate is set so that the whole county goes up 1%.

That's interesting.

> And if you're still really concerned about old people losing their homes, at least support getting rid of Prop 13 for all non-primary homes

I think something like this is right (and wasn't this attempted by proposition a few years ago?). Residence-first real estate policy needs to include tax that increases on the number of properties owned (and maybe even more steeply in a supply constrained market).

> and wasn't this attempted by proposition a few years ago?

Yes, in the last election. And sadly it was defeated because as usual with state propositions, the side with the most money (developers in this case) were able to convince the public with inaccurate propaganda.

> Residence-first real estate policy needs to include tax that increases on the number of properties owned (and maybe even more steeply in a supply constrained market).

People might try to get around this by forming corporations or trusts that hold max one property each. There is really no need to count how many other properties someone holds. Just do a re-assessment every year and ratchet up the assessed value on all housing that the owner does not occupy, including vacant property and renter-occupied. Seems a lot simpler.

It's pretty easy for the taxman to detect such shenanigans. There are a bunch of corporate laws that only apply when certain limits are met, like minimum revenue or 50 employees, etc. It's illegal to form extra corporations to get around those rules, and the regulators usually catch on.

I'd be especially easy in California because every foreign (out of state) corporation has to register with the state and tell them who the beneficial owners are. It would be fairly easy to trace it back to actual people.

If a corporation own a property - that it should pay the full tax, no exemptions. Primary residence clauses must never apply to corporations

> I think something like this is right (and wasn't this attempted by proposition a few years ago?).

No, a much more limited reform that would have effected some, but not all, commercial and industrial property (but not any, even non-primary, residential) was, and was defeated.

> You’re saying that old people should be driven out of their houses because younger, richer people deserve to live in their houses. I’m sure your feelings will change as you get older.

Or maybe, make it so that property tax increases are limited but only if the owner:

1. Is past retirement age 2. The owner lives in the property. 3. The owner does not have the means to pay the normal property tax rates.

This is how most other States' solve this problem. Instead of freezing property tax rates across the board, they narrowly limit property taxes of old residents that don't have the means to pay the normal property tax rate.

What you're suggesting is that the solution to the problem should be targeted at the actual problem trying to be solved.

Seems like a lot to ask, so clearly the best way forward is to just continue shoveling more wealth onto the already-wealthy at the expense of people entering the workforce and housing market, and even then still not actually solving the original problem we sought out to solve in the first place.

These poor millionaires!

> You’re saying that old people should be driven out of their houses because younger, richer people deserve to live in their houses.

Believing that tax bills should be equal doesn't imply that; one can believe in equal taxation of same-value property and not think that property tax should ever force people out of property they own. Deferrable-by-default property tax (either entirely or increases above base year) are better than assessment increase limits at avoiding people being forced out, but do less to transfer wealth up the to already-wealthy elites.

Except that prop 13 tax rates can be inherited.

California used cheap migrant work force for decades, but that stream is drying up. This pyramid scheme is one of reasons.

> I’ve ranted about this before but CA Prop 13 not only makes housing a good investment, but one that you’re extremely incentivized to hold onto forever and never move.

Not “never move”, just never sell. When you are ready and able to upgrade to a new home, you convert the existing one to a rental property with rents to cover costs with a suitable risk premium (but don’t worry about additional profit), and then benefit from the appreciation and protection from full-value reassessment on both properties, rinse and repeat as needed.

This assumes that you don't need the equity in the first house to get the mortgage on the second house.

No, the price has gone up so much you remortgage and get cash out to buy the next place.

> CA Prop 13 not only makes housing a good investment, but one that you’re extremely incentivized to hold onto forever and never move

AKA "segregation with extra steps"

Or, anyone who didn't have the foresight to be born 60+ years ago and buy land in their early twenties.

Prop 13 is so ridiculously unfair and distortionary. I wonder is there a way to legally challenge Prop 13 on the basis that it confers a kind of durational residency benefit (see Shapiro v. Thompson)?

Yes.

https://harvardcrcl.org/wp-content/uploads/sites/10/2018/11/...

Norlidger v. Hahn (worth a read https://www.law.cornell.edu/supct/html/90-1912.ZD.html) didn't make it but also didn't address the Fair Housing Act.

Prop 13, especially the extensions that preserve tax rates through bloodlines, disparately impacts minorities even though that wasn't the explicit intent of the law. Turns out that intent doesn't matter on issues of race so there's legal precedent to overturn the law.

It's also a huge grant to older generations, which violates the Equal Protection Clause of the 14th amendment, IMO. But I'm not a Supreme, so I dunno.

I agree with Justice Stevens that it's a violation of equal protection, and the state supreme court of Delaware recently did to when they struck down their version of Prop 13, but as you'll see in my Cornell link above the rest of the court upheld the law.

If it's marketed as a revenue neutral tax, where all the savings are passed on to middle-income earners through income-tax cuts, you might have some success.

If the population is increasing, then land and, to a lesser extent, housing are investments.

If the population is increasing and population density is prevented from increasing then housing is a good investment.

Americans want to live in 2500+ sqft homes with long driveways, no sidewalks, etc. Like it or not, that's the modern American dream.

The Economist is a fan:

https://duckduckgo.com/?q=site%3Aeconomist.com+land+value+ta...

The biggest thing preventing widespread adoption of a land value tax is the implementation. Someone still needs to decide what the land is worth, there isn't an objectively fair way to separate out the value of the land from the improvements.

Or put another way, many of the same tactics can be used to distort/contest appraisals "dark stores" and deed restrictions that prevent other uses, but without an objective way to combat them

My theory is that bank loans are to blame. When we say someone has "bought" a home, it's rare that they've actually bought it, rather they've just signed a contract promising that they'll pay back a huge sum of money they don't have over a long period of time. This creates a market of buying and selling of -- in the words of Mark in The Wolf of Wall Street -- fairy dust. Big numbers like £500k, £600k are thrown around that nobody actually has.

The ability to loan large amounts of money like this detaches people from the actual buying power of their money and the price of the property they're buying. Two grand in the bank is a nice amount of money. A two grand price increase on a property amortised over 20 years is considered to be nothing because the repayments are almost the same.

The solution to bring prices back down to ground level in my view is to end mortgages. Require the money up front and therefore force prices to drop until an equilibrium of affordability is reached. Needless to say this will never happen because the people who have the power to push for this are the ones benefiting from the status quo.

NB: I am not an economist.

Strong disagree. If that were the case only the wealthy would own homes. Available financing certainly pushes the prices up a bit as more people can buy homes, but homes really are often worth 500-600k, if you simply do a comparison to renting, and probably even more so if you factor in inflation risk, interest rate risk, and the equity gained in the house.

I'm pro-LVT, but I wish that people would stop conflating it with Georgism. The controversial part about Georgism is that only land should be taxed. This might have been a reasonable position 100 years ago, but not in the digital age.

Georgism in general, that is not only LVT but also analogous concepts for anything which ought to be commons (natural resources, pollution, etc) would go a long way into solving a significant amount of issues.

Part of why I like bitcoin is because the artifical digital scarcity should in theory reduce pressure from the housing market by attracting speculators to a much more liquid, low maintenance, and secure asset. Just anecdotally, I feel more inclined to invest my money into bitcoin than real estate. I wonder if there are others like me?

This is what happens when you keep printing money and keep mortgage rates incredibly low.

All that money's gotta go somewhere. Hey, at least the CPI isn't going up right? Its only the most expensive thing in most people's lives that has doubled in cost in about 10 years. Same thing for stock prices, and slowly other commodity prices are catching up as well.

Non-homeowners are being shafted by this fed/ecb policy. Every year the gap between poor and rich grows larger as a result.

upvoting but also this just feels like yet another contributing factor to the accumulation of wealth that was happening anyways.

> Its only the most expensive thing in most people's lives that has doubled in cost in about 10 years.

Most people pay for housing by monthly payments, making the nominal value of the house irrelevant if the monthly payment stays the same. Further, you should consider the home owner's "basket of goods" to include the hypothetical rent they'd be paying for an equivalent house. Their mortgage payments and home ownership are then more like taking a loan to buy a fixed-income asset that gets renegotiated annually. A home owner who lives in their home is both a landlord and a tenant.

I'm not a home-owner, and I don't feel shafted. My stock market holdings have kept pace or done better than if I'd purchased a house.

Non homeowners are paying way more whilst getting less in return.

I really dont understand the logic of being OK with paying double for a house, just because the buyer can sell it for the same amount (or higher) afterwards.

I could purchase a 150m2 house with my salary a decade ago. Now I could find a 75m2 house that would be too expensive for me. I dont care about being able to sell the house for more money afterwards, it doesn't matter, because I have to live somewhere anyways. So any profits gained will (probably) be factored into the purchase price of the next house I'm buying.

i am confused by your first sentence. what do non-homeowners sell?

Some people say "Well, you're paying more but you can also sell it for more afterwards". But non-homeowners are still paying more for less. That's the argument I am trying to make (poorly)

My rent doesn't change with interest rates.

That's true, rent keeps going up?

A fixed loan doesn't change with interest rates either.

Rent increases are a cause of inflation (as part of the basket of goods that defines inflation), which in turn causes interest rate increases, which then cause home price decreases.

Homes are like fixed-income securities. When interest rates go up, the value of existing securities goes down.

So does my mortgage that is why it is called 15 year FIXED.

Yes, as I said, you care about the monthly payment, not the lump sum price of the house.

Daily no. But higher interest rates and high inflation absolutely leads to higher rents each year when your lease renews (unless of course your in some rent controlled environment).

No, but in 20 years you’ll be paying rent with expensive 2041 dollars while the 30 year fixed rate mortgage is still being paid in cheap 2021 dollars.

Yes, but it turns out I came out ahead from 1990-2021 by having all my investments in the stock market instead of housing.

> Some people say "Well, you're paying more but you can also sell it for more afterwards".

No, they don’t, even talking about non-homeowners, because non-homeowners aren’t paying that much more (rents aren’t increasing the way purchase prices are, the rstio between them is increasing), and non-homeowners have nothing to sell, unless you are referring to subleasing as selling.

> But non-homeowners are still paying more for less.

I think you mean “first-time homebuyers”, but that just means it is more attractive to invest elsewhere while renting than jump into personal home ownership. No one is losing anything, certain choices are just becoming less favored.

> paying double for a house

Are you talking about monthly payment or lump sum? When the lump sum doubles yet the monthly payment is the same, has the cost really changed? To me, no. I was never going to buy lump sum, so I only care about monthly payment.

Presumably, owing money for 60 years instead of 30 years will cost you much more in the long run. And more baked in interest early in the loan means less recovered when you sell.

How the hell do you find a 60-year loan? Sign me up! Remember, leverage is what makes home ownership a good investment.

The premise I replied to was the lump sum doubling and the monthly staying the same. The only way for that to happen is to extend the period.

You forgot interest rates changing, which is the primary cause of the recent home price changes. Remember, the mortgage market has a set of standard terms, like a 30-year-fixed.

Your liability has. If the interest rates goes back up to late 20th rates, your monthly payment isn't going to stay the same.

Only if its a variable rate loan

After all the adjustable rate issues from the last housing crisis, I believe most mortgages since them have been fixed rate. I don't care what interest rates do, my mortgage rate is never going up.

This touches on another point. For home owners like myself, inflation is a good thing as it makes my highest monthly expense relatively cheaper.

Ah, this may be country-dependant. It's pretty much impossible to get longer than 10 years fixed here in the UK, and the rates are high.

In the US 30 year fixed rate mortgages are common (standard?). Rates have also bumped around record low territory for years.

I know people who refied into 15 year fixed, but the rates have typically been so close I didn't see the point. Just pay more each month on your own and avoid the costs of the refi.

Rates might have little to do with whether refinancing from 30-year to 15-year makes sense. The most important factor is how long you plan on living in the house compared to the difference in interest paid between the two amortization schedules during that time. The longer you stay in the house, the larger the difference to where paying refinancing fees is virtually free.

On the typical fixed rate loan, amortization schedules are a function of rate, time, and payment. If someone wants to accelerate the schedule, they just need to pay more principal each month.

So, if someone already has a 30 year and the 15 year rate isn't much different, refing into a 15 isn't necessary. Just start paying monthly like a 15 and it will get close enough.

Also, if I already had a high rate loan and was refing where the 15/30 rates are very close, I would go 30. That way I can pay it like a 15, but have the flexibility to pay less if, for example, I lost my job.

Finally, this is why it's common to make 1 extra payment each year as it will shave ~4 years off the end of the loan.

https://www.trulia.com/blog/make-one-extra-mortgage-payment-...

>When the lump sum doubles yet the monthly payment is the same, has the cost really changed?

Yes of course it has. You've just over doubled (interest rates are low but they're not nil) the time it's taken to pay back that loan.

It's a 30-year mortgage either way. The time frame is exactly the same.

The only difference is the down payment, which matters because a bigger down payment means more opportunity cost of stock market gains.

Your payments go towards both interest and principal in a proportion that varies over the lifetime of the loan, such that your time frame is set by the terms of the loan. If you get a 30-year fixed rate mortgage, you pay it back in 30 years, regardless of the loan amount or interest rate. Look up "amortization table" if you're curious.

But the only way for the lump sum to double and the repayment to stay the same is to lengthen the loan period?

> repayment to stay the same

You mean the repayment amount? I'm not sure what you're asking.

Of the lump sum price (principal), interest rate, loan term (time), and monthly payment, you can only change three of the four, for a fixed rate loan. The fourth is defined by the combination of the others.

> I really dont understand the logic of being OK with paying double for a house

Double what? The price someone paid years ago under totally different market conditions?

In the future prices might be halved or double again - act accordingly

Here's why this matters to you. When the Fed funds rate is at 10%, the mortgage rate is 13% or so. That says that the risk that you have is 3% above the risk free rate.

When the Fed funds rate is 0%, your mortgage rate is 3%, that same difference in the Fed Funds rate.

But wait, think of that like we think of absorption. If I have a capacity to absorb of 1L and can absorb 50% of a liquid, then I will break when 2L is poured. If I bring my absorption rate to 98%, then I now break at 50L. If the government can absorb at 99.99% rates and you absorb at 97% rates, they can absorb 10000L while you can only absorb 33L.

If you want the government to control every decision regarding money in the future, you want the interest rate to be as low as possible. If you want people to use free markets to decide where money flows, you want high interest rates. Why is politics so contentious? Interest rates are dropping.

> ... that same difference in the Fed Funds rate.

The differential between mortgage rates and the federal funds rate is only driven in part by regulation. The rest is market forces and the perceived risk of rising inflation. If we had certainty on how inflation would change for the next 30 years, mortgage rates could be pushed to a negligible margin above the federal funds rate.

> If you want the government to control every decision regarding money in the future, you want the interest rate to be as low as possible. If you want people to use free markets to decide where money flows, you want high interest rates.

You haven't explained this assertion. I see it a different way. If we want consumer demand to decide how capital is invested, then we want more inflation. Inflation transfers wealth from creditors to debtors. Debtors spend their money, which indicates what's useful to produce. If we want a handful of bankers to make guesses (and often guess incorrectly) about what people will want to buy, then we want low inflation, transferring wealth from debtors to creditors.

The problem with (excessively) low inflation and supply-side economics in general is that the suppliers must make their choices with a decreasing level of information on what will be demanded. It's only through consumer demand and its pressure on supply that reveals what's important through market forces. Otherwise we may as well go back to central planning.

Note that I'm not advocating for fluctuating inflation. All parties benefit from stable inflation rates. Uncertainty is dead weight loss.

> Most people pay for housing by monthly payments, making the nominal value of the house irrelevant if the monthly payment stays the same.

Except homeowners get price exposure to the value of their home on the market. If you purchase and then go through a downturn which devalues your house, now you’re in the hole: you can’t use the sale price of the home to pay off the loan, so you’re stuck in that home until its value climbs again or you earn enough to pay off the loss.

Higher values means it takes longer for you to cover any % decline with wages, so you lose mobility for longer in a downturn. Irrelevant if you truly want to live in that place for 30 years, but not many people can actually make that commitment.

> Except homeowners get price exposure ... you’re stuck in that home until its value climbs again or you earn enough to pay off the loss.

> ... Higher values

Higher values at the time of purchase or at the time of sale? The latter doesn't jive with the idea of being "underwater" on the loan, since you'd have benefited from the price exposure.

Higher values at the time of purchase is relative to what the home was worth in the past, but our efficient market theory tells us that the price today can be considered neither high nor low (yes, Shiller might disagree).

I guess you're pointing out that interest rates are near zero, so that there's really only one way for them to go. I'm not so sure, because in some ways it's a Zeno's Paradox situation. I don't always care about the number of basis points the interest rate has changed, but the percent change of the interest rate. I get more benefit from the rate going from 4% to 3% than I did when it went from 5% to 4%. We can always get closer to 0%, because there's an infinite number of subdivisions we can make.

Right now interest rates are low, they cannot use them as a tool in a crisis, for this reason they are printing money to lower the overall debt obligation of the US. Inflating away our debt. This will eventually lead to inflation at which point the interest rates will rise again (prediction, at the end of the decade). This is the correct play for where we are in the long term debt cycle. In my opinion, this is happening a little earlier than it should, but it might just be a sneak preview provided by the pandemic.

Stock prices are rising because the interest rates are so low. A ton of institutional money that was in bonds is now out seeking yield. This moves a ton of money into stocks and, as we see in the article, real estate.

The labor class has been shafted for years by the US dollar being the global reserve currency, causing us to run persistent trade deficits. This has off-shored manufacturing and gutted our capabilities. If the US weakens the dollar and rebuilds the manufacturing base, which they appear to be trying to do with the investment in semiconductors, I think we will be in a much better position. I am happy with the stimulus because it does both, weaken the dollar and invest in US capabilities. We just need to make sure it flows to the correct places.

> We just need to make sure it flows to the correct places.

That's the key, and also something that's unsolved. History shows that a lot of the money will be squandered in increasing "clever" ways, and it may take until the end of the decade before the public even realizes that it happened.

> Right now interest rates are low, they cannot use them as a tool in a

No, interest rate are low because they are using them as a tool in a crisis.

They were already used as a tool, and so can't be used further (due to irrational fears of nominally negative interest rates). Printing money is effectively equivalent to lowering rates.

“Printing money” isn’t a literal description, its a metaphor for a bunch of other “loose money” monetary policy choices which increase the money supply including, not alternative to, maintaining low interest rate targets (in fact, most of the other actions are the means by which actual rates are kept near the target rates, rather than actions in addition to acheiving rate targets), which is an ongoing intervention.

They were trending low before COVID. Western nations are simply trying to stave off deflation as more people move into retirement and less have kids.

> for this reason they are printing money to lower the overall debt obligation of the US

Except the way the US does it, the Treasury issues debt and then the Fed prints to buy the debt. So when we print $1T, we also take on $1T in debt. I know you mean lowering through inflation but as long as it's done this way I don't see how it matters. If the dollar looses 50%, we then need to issue $2T in debt and print $2T the next time.

The original trillion in debt can be paid back with 50% "cheaper" dollars though, right? That's the "trick" as I understand it.

Yea I guess that's true, I feel like it only matters the first time you do it though. Like if year 1 you do $1T of debt, your debt burden after 1 year is $1T. In year 2, you inflate 50%, but need to borrow $2T. Your debt is now, in year 1 dollars, effectively (1 + 2) * .50 = $1.5T. Year 3 you do it again and take $3T in debt. Now effective debt load (in year 1 dollars) is (1.5 + 3) * .50 = $2.25T. So effective debt continues to increase despite the inflation.

But each time you take more debt on, you presumably get some value from it, and if that value is greater than the interest on the debt in real terms you come out ahead. It's not money for free, it's money for cheap.

Not arguing with you, but are you suggesting that raising mortgage rates and/or stopping the printing of money will get rid of the Blackrocks and make housing affordable to the working class?

The argument might be that in that event, housing becomes less attractive as an investment to the Blackrocks of the world, and they have alternative lower risk sources of return in a higher interest rate environment?

> Its only the most expensive thing in most people's lives

For homeowners, it is the most expensive thing, but homeowners are winning on it because they get the value of the asset appreciating.

For non-homeowners, the reason CPI isn’t going up is that rents aren’t rising with purchase prices, its the purchase:rent ratio going up. So it isn’t hurting them, either.

but homeowners can't actually access that value because they would need to immediately use the money to buy another house. They don't let you continue to live in the house after you have sold it.

You could rent after selling. Or you could move to a cheaper market. Or you could downsize in your current market. There are of course many ways to access the value of the house.

The root cause here isn't really the Fed. We've been under-building housing since 1990, back when rates were 5-8%. If you track new housing starts against adult population, you'll see some pretty terrible things.

Granted this is lower than rates were in the 1980s. But if the answer here is you need to keep rates at 10-15% to build sufficient housing I don't see how that's politically tenable.

Low rates are effectively a demand-side subsidy for housing I think, similar to other policies. But as you point out, if you restrict the supply-side, demand-side subsidy can be counter-productive.

Based on US Census data, it actually looks like we're building about the same as we had in the past, if not more: https://tradingeconomics.com/united-states/housing-starts

These are building starts (i.e. permits obtained, but construction not having broken ground yet), but the more complete US Census data at the .gov website shows that completions haven't been far behind starts within the last five years.

> This is what happens when you keep printing money

The problem isn't "printing money", inflation is a good thing as it encourages investment and maintains the movement of money. The problem is that printed money is only being put towards one purpose - capital markets - so the capital markets are what inflates (at the expense of everything else). If the printed money was being used on infrastructure payments, or some other distributed investment, the inflation would go to general labor first, which then would spread the inflation across the entire economy as they made individual purchase decisions.

It's tempting to say house prices and interest rates are opposite sides of the same coin, but the situation is messy.

I mean ultimately what I want is to pay 35-40% of my take home salary on a mortgage, just I like I pay now in rent.

The reality is though, here in the UK, that I need to save 2-3 years of take home pay, to put down on a deposit for a mortgage that will see me pay 50% of my take home pay, and I will still end up living in an inferior property to what I'm renting.

Meanwhile my landlord, who bought the place I'm in the 90s, is making a profit.

I doubt they are getting mortgages on these properties if they are overpaying the half.

More likely is that they have no where else to part their money anymore.

The illusion of realty appreciation transcends recent quantitative easing.

I don't really agree. Japan has had very easy money and QE for ten years longer than the West. Yet, it's one of the few housing markets in the world where prices have not risen in 25 years.[1] Runaway housing costs are everywhere and always a phenomenon that results supply constraints. Usually entirely zoning/regulatory driven. Usually due to NIMBY activism.

Given supply constraints, I agree that easy money probably does drive up prices. But without artificial constraints, any rise in price would just dissipate back into higher supplies. That's why you see QE result in higher housing costs, but not higher car prices.

[1]https://www.wsj.com/articles/what-housing-crisis-in-japan-ho...

Japan's population is declining. What's your point?

Why would you expect house prices to go up when there's a ridiculous oversupply of housing. There's only 55M households in Japan, and there's ~9M vacant homes. That's ~14% of homes.

Housing is an expense unless there's someone to live in it and pay rent.

Tokyo is growing faster than New York, London, or most other major Western metros.[1] (It's true Japan as a whole has slow growth, but Tokyo still has robust growth because or rural to urban migration.) Yet real housing prices have not risen in Tokyo in 25 years.

[1]https://livejapan.com/en/in-tokyo/in-pref-tokyo/in-tokyo_sub...

Tokyo had THE BIGGEST property bubble in the history of the world 30 years ago: https://en.m.wikipedia.org/wiki/Japanese_asset_price_bubble

It arguably has STILL not deflated.

At one point, the Emperor's Palace alone was worth more than all the real estate in California: https://www.scmp.com/magazines/style/news-trends/article/309...

I guess if you believe those valuations made sense, then sure.

Even so, normal people can and do buy property in close proximity to the city center all the time, and cheap rent spots are easy to come by. Minato-ku was definitely crazy overspeculated, but go 15 minutes away by train and you get an order of magnitude cheaper housing.

This hurts people who already own houses, too - property taxes are assessed on the appraised value of the home, which is a function of what the similarly-sized houses in your area sold for most recently. My property taxes have increased 10% every year for the past several years (and it would have been more if not for a legislative 10% annual cap). I worry that there will come a day when I've paid off my mortgage but won't be able to afford to pay the real estate tax any more.

Once you can't afford to pay the GOVERNMENT any more because property taxes have skyrocketed out of control I'm sure a private company will be happy to swoop in and buy your house out from under you.

So you’d rather have an inefficient use of property that sits languishing just because some one owned it in the past? One of the benefits of taxing property is that it encourages productive use. Use it or lose it. The increasing velocity of property transfers helps increase economic activity.

Yes. I'm happy with inefficient use of our water supplies as well as our housing supply.

And are you happy with the concentration of wealth and power that results in fallow land being unused, Inherited and never conveyed to someone that would actually use it?

If it's someone's FIRST and ONLY house then no taxes.

Take the concept of a homestead exemption and make that for everyone's first house so people have shelter once they pay off their house that's not constantly threatened to be taken from them at the whim of government property assessors.

Investment land and whatever else can be taxed.

Property taxes do not have to go up because the assessment goes up. I have had assessments go up, but the tax rate go down because the town did not increase its budget.

In the long run it probably will though, since higher land values will probably cause increases in wages and other costs. But it does not have to be proportionally as much as the land value increase.

The government has a claim to your property. The government is strongly influenced by lobbyists. The government is also gerrymandered.

The government always needs more money.

Why would your property taxes not continue to go up endlessly?

> Why would your property taxes not continue to go up endlessly?

IIUC, you're arguing that we should expect that ^^^ outcome, because of the political/economic dynamics you mentioned earlier.

My understanding is that, except in towns/cities undergoing gentrification, U.S. municipal property taxes are pretty constant (modulo inflation).

So it sounds like the outcome predicted by that theory probably isn't happening. Wouldn't this cast doubt on the theory?

> My understanding is that, except in towns/cities undergoing gentrification, U.S. municipal property taxes are pretty constant (modulo inflation).

Yes, except for places experiencing increasing real property values, real property taxes aren’t increasing.

But the discussion was about places with sustained real property value increase, so that generality is irrelevant.

The scare scenario is still wrong, but for different reasons.

>Yes, except for places experiencing increasing real property values, real property taxes aren’t increasing.

Unless you're referencing the California instances in which Prop 13 protects homeowners from increases of more than 2%, I'm not sure what you mean. Nationwide property taxes increase over 5% YoY, while general inflation was far less [0]

[0] https://www.marketwatch.com/story/homeowners-are-facing-the-...

[1] https://www.statista.com/statistics/244983/projected-inflati...

Your conclusion is based on a series of questionable premises and you assume causation that doesn’t necessarily follow. What support do you have for saying that because the government is influenced by lobbyists and gerrymandering that necessarily means property taxes will go up endlessly.

In fact the evidence is that property taxes don’t go up endlessly they are actually highly stable when adjusted for inflation. Further many states don’t have property tax, or expressly cap them.

Finally everyone always needs more money, individual and companies included. Why should government be any different. Governments are just human organizations like any other. They just have a different role and responsibility.

> Why would your property taxes not continue to go up endlessly?

I do expect them to go up endlessly, but I expect for everything else to also go up endlessly (in nominal terms).

I am not a tax expert, but my understanding is that each State sets their own formula for property taxes.

In every state I have lived in, the first factor of that "property tax formula" is always "Assessed Value" of said property, and then the formula continues from there based on a slew of criteria (property type, exemptions, etc.).

So you are correct that "Property taxes do not have to go up because the assessment goes up." but it is misleading since property tax is generally going to go increase if assessment increases and all other factors are held equal.

It is more accurate to say property taxes are going up because government expenditures go up. That might be partly caused in the long term due to increases in land prices, since the services your taxes pay for are performed by people that may need to buy land, but it’s not a 1 to 1 relationship in the short term.

I have seen tax rates drop from 1.25% to 1% and the opposite also happens when the tax collections come up short.

I can give an example. I used to have land in NJ a few years ago, and the total property tax went up year after year. If I recall, the tax rate went from ~1.5% to slightly above 2%, and the assessment barely went up. The property tax went up due to government expenses coming in higher than expected due to all the debt NJ is in that was not counted as debt (underfunded DB pensions). In fact, I lost money on that land because it was worth less since prospective buyers know the property tax will continue to rise, so they have to budget for that.

On the other hand, I had land in FL at the same time, which has appreciated a lot and was assessed for more. But the total property tax paid stayed more or less the same, since the tax rate came down since the government’s expenditures did not move as much, and/or were offset by new payers.

The property tax formulas have more to do with what proportion of the government’s expenses is each land owner liable for, but the total tax collected does not need to rise in step with total land value increase.

This is why CA has prop 13 which limits increases to property taxes from year to year specifically because CA had seem property boom/bust cycles kicking people out of homes because of irrational real estate prices.

Well, no, California has Prop 13, because wealthy investors in property used constructed images of that scenario to build support for a law to transfer more wealth to the already wealthy, not because its was a real problem (and, even if it was, Prop 13 doesn’t focus on dealing with that problem.)

There are problems with prop 13, but it does prevent people from being kicked out of their owned homes for temporary market conditions that are out of their control.

Imho the problem was that the politics of the day got it passed to cover commercial properties too, when it really should just cover primary residences. And not secondary homes or rental properties.

The California Tax Postponment Program prevents displacement of low income seniors and the disabled. Prop 13 is wholly unnecessary.

These programs often have terrible red tape and even awareness problems. They also ignore people who aren’t seniors but may be going through temporary rough spots. I prefer to have the prop 13 rules fundamentally built in an applied to all primary residences as a measure to provide a more universal stability of a home.

> These programs often have terrible red tape and even awareness problems.

Prop 13 is $30B (billion!) per year. Surely there are cheaper ways to fix the "red tape" and "awareness problems",

I would prefer that prop13 did not apply to commercial property, and that it only applied to the first 500k of home value.

> not because its was a real problem (and, even if it was, Prop 13 doesn’t focus on dealing with that problem.)

California politicians were working on solutions to the property tax problem for years. The same year prop 13 was on ballot, something else was on ballot to fix the problem, which would have done a much better, targeted job - but unfortunately big money poured into prop 13 and that got passed.

My parents bought a new house in 73, and by the time prop 13 passed it was worth around 3x the purchase price. They both worked in tech and were close to having to sell their house (they had 4 kids).

It was a real problem, prop 13 was just a bad solution.

Towns normally set the property tax rate to meet their budget, so appraisals increasing across the board would not increase you property taxes.

Prop 13 leads to perverse outcomes like subsidizing slums and trust fund kids while penalizing new homeowners and people improving their property. It's also simply unjust for two neighbors with similar properties to pay different rates based on their age or even ancestry.

I say it is unjust for a fixed income senior citizen or disability insurance recipient to have their property tax base grow to a point where they must flee their home of decades. The callus answer is to force the person to sell and take their gains and move so a younger person with higher wages can afford their once-home. I think it is unjust to remove an older, less abled, and less employment-opportunitied person from their environment.

I replied elsewhere: nobody is having to flee anything. If they would rather sell and keep gains rather than spend them to continue living there, that's their choice.

Arkansas has a petition going around right now to axe property taxes completely. I believe other states do not have property taxes already as well.

All US states currently have property taxes [1].

[1] https://learn.roofstock.com/blog/states-without-property-tax

It's a popular notion for the redneck crowd.

It never happens because it the math just doesn't work out. State/local revenues boil down to: property taxes, sales/use taxes, excise taxes, fees and income taxes. The big revenue streams are property taxes (schools, towns), sales taxes (county/state), and income taxes (state). Fees mostly sustain individual programs and have limited revenue potential - you can't make a fishing license $1000.

So when you get rid of property taxes, you get rid of local control of the levy, which sounds great until Little Rock doesn't want to provide state funds to pay your football coach $200k. Even in a middle of the road state like Arkansas, the pressure to meet Medicaid and other other state program dependencies would make it difficult to fund local government. You'll have a revolt if try to levy a 20% sales tax.

The talk radio answer is "shrink the government!". That means layoff cops, firemen, close schools and libraries, eliminate school sports and close public resources like parks, libraries and suspend things like street lighting. That will make reactionaries happy, but employers will leave.

That makes sense but 14 states allow local governments to enact their own income taxes. This seems like an easy fix. The problem with property taxes is that they’re taxing wealth which is not creating monetary value which can be used to pay the fees.

Your language seems a bit elitist, even for me.

Nonetheless, the content of what you said seems reasonable and sound. Thank you for helping me understand this.

Sorry if I came off a little strong. I used to serve on a school board. Things would get intense sometimes.

See also, parts of Southern Oregon which went ahead and did this anyway since all the logging companies were already gone.

I agree, the unwashed masses can all send their kids to private schools and hire their own security as do I.

(Wow, I don't understand the public sometimes.)

This totally depends on the jurisdiction. In NYS, your taxing authority (town, school district) has some levy that is approved. Your share of the levy is roughly your property's assessed value divided by the total assessed value of properties in that taxing jurisdiction. There are some complicating factors like when a taxing authority like a school district spans multiple assessing authorities (like a town/city); but the basic concept is sound.

I was very surprised when I learned other places charge you some fixed fraction of the property value; and as that value goes up the budget of the municipality goes up.

That's almost never a worry that plays out. Property taxes are usually a levy, allocated prorata based on total assessed value.

If your taxes are going up dramatically as values rise, that's either a sign of issues with equalization rates (the county/town/city needs to periodically reassess), or that other areas in the jurisdiction are declining relative to value. You often see that in cities where property values often mirrors the old "redline" maps... gentrification gets you million dollar condos, but two blocks away some tenement is declining in relative value.

It's a good thing that the value of your house is going up though, right? I suppose it might be upsetting to have to sell your house if it becomes too expensive, but that's a really nice problem to have imo.

> have to sell your house

Not particularly, if every other house is too expensive for a normal person to afford.

You do realize that once you sell the house you'll have money which can be used to buy a different house, right?

I really don't see how you're complaining -- the value of your home is going up way more in absolute terms than the property tax you're paying.

If you don't have cash, take out a small mortgage on the house to pay the property taxes. You'll still come out ahead in the end.

That was a joke, right?

Why is it a joke? Your property value went up significantly, you are in fact a winner. Why should you get to shirk your responsibility to your community?

re-pasting from an earlier comment of mine:

You seem to have missed my original comment.

Any senior citizen who owns their home (mortgage all or mostly paid off) can take out whatever size mortgage necessary to pay property taxes. Since it's backed by the house's larger value itself.

Who's making them "flee their home"...? That would only happen if it's already mortgaged to the hilt, but then they're already on the verge of losing it anyways.

They could take an loan against the unrealized gain on their asset if they'd like to continue living there. If they'd rather sell and keep the cash, that's their choice. Letting them both keep the windfall and shortchange their community doesn't make sense.

In addition, California (and I suspect other states) have a means tested property tax postponement program that allows low income homeowners to defer taxes until they move out, sell, refinance, or die as a substitute for obtaining a private loan.

It's still a pain. And once you bought a house, you might like to think of it as an unmovable good (literally, in many languages). Now your cash flow doesn't permit you to live there.

Also, with low/zero IR, PV of tax payments is infinite, it's not like increasing house price is offsetting that.

I mean, you're basically arguing against property taxes. Sure, property taxes are a "pain", but so are all taxes. But yes, that's literally how property taxes work -- you don't get to live somewhere infinitely long without paying property taxes.

In practical terms though, property taxes aren't infinite -- they're only for as long as you're alive. And you can realize your increasing house price while you're alive too (or your kids can). And I know people who have come out very much ahead in that equation in certain gentrifying areas, e.g. turning a $30K investment in 1985 into an $8M sale in 2020.

So within reasonable "non-infinite" time frames, an increasing house price can be very, very, very much offsetting property taxes. That's just a fact.

> I mean, you're basically arguing against property taxes.

Not really. You’re saying it is no issue that tax goes up proportionally to house value, I’m saying it is much more onerous than, say, your income tax increasing with income.

Also, if the end objective is “pay tax to local government and make it so that wealthier people pay more”, there are tons of ways of doing it without this anti-feature. Slice of income tax, tax depending on property size (not price) etc.

> This hurts people who already own houses, too - property taxes are assessed on the appraised value of the home,

Actual asset values increasing aren’t a harm, and there is basically no place in the US with property taxes high enough that them increasing due to market value can possibly offset the utility (and realizable benefit) of the increase in value, even without the (common, if not usually as ridiculously low as California’s) caps on annual assessment increases that assure that properties that don’t change hands are systematically undertaxed when rapid sustained market increases occur.

Modern financing provides plenty of ways to access equity, so this is very much a non-issue. Though its an issue the property-rich like to pretend is real, because it supports policy that cuts them more breaks and makes things that much worse for everyone else, e.g., CA Prop 13.

This can be fixed somewhat by excluding primary residence from such taxes (essentially a tax-free allowance of 1). This cuts at hoarding real estate as investment, is a nice extra tax on people buying second homes, and doesn't (directly) affect 99% of homeowners who only ever own one house.

I'm not sure I support land taxes etc. but this at least deals with your objection.

So the people who live in an area shouldn't be the ones paying the taxes to support the area?

Someone else should pay the taxes for them?

Either your tax would come entirely from income - huge handout to homeowners / cost to non-homeonwers - regressive. OR your sales tax would be so crushing that no one would ever buy anything in your community.

Or you could live in a fantasy land.

If it’s sarcasm I detect in your otherwise fine post, it doesn’t add to the content.

There are many ways to fund the local area. UK has explicit “council tax”, based on property value, but not as a fixed percentage, rather more linked to the percentage of the house value - so your tax bill doesn’t double just because other peoples houses appreciated. These are paid for all houses, and go to the local government. I think this is indeed one of the main sources of income for local councils.

But for example for capital gains tax, which goes fully to the central government, primary residence is excluded.

This means that people buying property as investments end up paying CGT but not ordinary house owners. If investment properties are rented out, it is the renters that pay council tax, as the actual inhabitants of the properties.

There are so many ways to skin a rabbit with taxes, you could tailor it pretty well to discriminate between homeowners and investors.

> My property taxes have increased 10% every year for the past several years

How I know you don't live in California.

You would love Prop 13 then that has capped the amount that property taxes can increase per year.

Be careful though, your public schools and other services paid for by property taxes are going to suffer as the cash flow dries up....

Strange argument considering public schools (and in general _many_ public services) in CA are in terrible condition. Maybe I'm missing the point though.

Huh?

He’s making the argument that what you observe is a direct effect of Prop 13.

You may disagree, but it’s very much not a strange argument.

Prop 13 kneecapped the ability for municipalities to fund themselves in the way they traditionally do in the US, and public services got vastly worse.

Yet somehow total tax burden for those in the state is well above other places, including those with functional public services. I wish it were easier to figure out where the money goes.

CA school funding per student is above the national median. If some schools are in terrible condition then it's due to incompetent management, not lack of funding. Conditions in my local CA public schools seem reasonably good.

CA cost of everything is above the national median, no surprise dollar spent per pupil is higher. If it were the same that would mean teachers are making significantly less and who knows what other compromises. Prop 13 changed a lot about how schools are funded (local vs state) and has lead to some challenges in certain districts relative to others, and it took decades for education funding to reach parity with pre prop 13 levels.

https://www.ppic.org/content/pubs/op/OP_998JCOP.pdf

There is another way it hurts homeowners: the high cost of housing increases the cost of upgrading and maintaining the home you own, mostly via the construction labor market - because the workers need to pay for the roofs over their heads too.

Therefore, just keeping the depreciation of your house at bay ends up becoming expensive. If you are lucky enough to enjoy DIY work like I do, you can avoid this somewhat, but the moment you need to do any major renovation that you don't have the time and skills to do yourself, it costs about the same as a purchase.

Property taxes in most of america are a made up number. The county needs $X and levies Y% in property tax and the auditors use a formula to solve for $Z, which is the value of an individual home. This is exactly why, all over the country, you'll find houses that just sold for $500k which have an "appraised value" of like $120k. Property taxes are dictated by the size of $X, not really the value or volume of houses.

Some areas have legislation that prevents property taxes from increasing at too fast a rate. In those regions, the formula is changed a bit so that newer residences are charged at a high initial rate.

> Property taxes in most of america are a made up number.

Except in States that have property tax and no income tax, the appraised value is close to the sale value, usually slightly under.

So in a 500k example, the appraised value is something like 450k (or more). Then your property tax might be 2% of that appraised value, which results in a $9,000 property tax bill every year, even when you retire.

If speculative buying drives up the price over 10 years, it also drives up the appraised value and also your tax bill

Depends on where you live. In CA property taxes are assessed on the appraised value of the home when you bought it. If you give the deed to your kids they can pay taxes at this rate as well. Plenty of homeowners and landlords in CA are enjoying their locked in 1976 tax rate today. It used to be you'd help your kid get a job at you or your friends company, now you just hand them the deed of the dingbat apartment your father built on the lot of your former single family home in the 1970s before that was illegal, and they are set for life without ever having to work a job again. Getting 5 units of people paying market rate for a 1 bedroom means you are making over 6 figures.

Even with the artificial constraints in many places, in the end property tax should generally be relatively independent of property value in absolute terms. E.g. in Oregon we have a 3% cap on assessed value, and that probably helped some people for a couple years early on after the law was passed, but over the longer term it doesn't really matter. The only effect assessed value has is on the size of your particular slice of the total tax revenue.

We've changed the URL from https://twitter.com/APhilosophae/status/1402434266970140676 to the article it points to, in keeping with the HN guidelines:

"Please submit the original source. If a post reports on something found on another site, submit the latter."

https://news.ycombinator.com/newsguidelines.html

I know this is an unpopular opinion, but houses should not be used as investments.

Every person on the planet has the need and the right to live somewhere.

Unfortunately the way it works today, allow a small fraction of the population to buy more and more houses at the expense of the majority of people who are constantly out bidden and forced to rent, thus fueling this circle. Landlord get richer, buys more houses and so on.

The only way to stop this is taxes! Should not be convenient to buy houses for the sole purpose of renting them amount, especially for foreigners, see Denmark.

The problem (I think) is that the Fed has dumped too much money into the system. There are no assets left to buy at reasonable prices. So now investors are buying homes.

This is the downside to the current "bailout". I think the last "bailout" was a bit more lean. People were hurt, but in different ways than they are today.

REITs have been doing this for a long time. It accelerated after 2008 because of the housing collapse which was triggered by Banks creating to much money rather than the Fed.

Fannie and Freddie bought up a lot of subprime mortgages.

Red herring. Most origination of subprime started with private market actors. GSEs were a fraction of the market; very late to the game and never held anywhere near what investment banks did.

My personal experience. With mega rental companies.

I moved into one of Invitation homes a few years ago. Looked nice when we drove up, didn’t think about why all the windows were open when we signed paperwork.

Their negligence nearly killed my family, and left us with life long injuries. The gas line was leaking natural gas, improper installation? the furnace and stove were emoting lethal levels of carbon monoxide. Detector was defective.

A portion of the AC fell into the kids room. One wall got so hot it burned my wife. Only reason we didn’t die is smell was so bad we nearly always had all windows open.

At every stage they lied and did what they could to cover up problems.

This is also a reason not to use gas anything inside houses - heat using heat pumps, cook using induction surfaces or electric appliances.

66,781,000 Detached Single Family Homes in the US [0]

$272,400 median home selling price in the US, 2020 [1]

That's just over $18 Trillion for the entire US Detached Single Family Home market. I'd be interested to know how much Blackrock has budgeted for this fund (and how much of the spend is leveraged, and up to what number. And who else is doing the same type of fund and to what magnitude).

Note that per Statista, the median home price is anticipated to increase from $272,400 to $324,000 between Q4 2020 and Q2 2022. That's a 20% increase in real estate over an 18 month period. Given that we're seeing this story now, Blackrock likely executed these purchases many months ago. Their fund is likely leveraged, making the potential profits huge.

It looks like a very high-stakes play by Blackrock, which I know to be a hedge fund, so perhaps part and parcel of their business.

[0] https://www.statista.com/statistics/377896/owner-occupied-ho...

[1] https://www.statista.com/statistics/272776/median-price-of-e...

Median != mean. Multiplying it literally means "The value of this particular house I know nothing about times 66 millions".

Well, that is true.

Looks like the average is $368,400:

https://ycharts.com/indicators/us_existing_singlefamily_home...

>It looks like a very high-stakes play by Blackrock

In what sense? That housing could collapse in price after they made a large investment in it (and since housing is a huge market, Blackrock could have leveraged up to a higher amount than typical)?

Market cap of Apple is over $2 Trillion, they could have leveraged pretty far into this too.

The problem is the government mandated houses be piggy banks for middle class people, all but allowing large institutional investors to take advantage of the rule system put in place to protect and increase prices: low interest rates, local control of land use (to kill new supply), etc. It was a side effect to allow others to benefit from the scheme.

Its fine to blame gov for somethings but for low supply? Really? NIMBYs are the only ones restricting supply in the Bay Area. They are the voters too and millenials don't vote as much on such non-trivial issues.

As for CA prop 13, also voted by people. Don't like it? VOTE AGAINST IT. Else, stop complaining. The system is working exactly as voted by the people who vote. If this is such a big issue then why are people consistently voting for them?

> The country’s most prolific home builder [DR Horton] booked roughly twice what it typically makes selling houses to the middle class—an encouraging debut in the business of selling entire neighborhoods to investors.

https://www.wsj.com/articles/if-you-sell-a-house-these-days-...

I see no future for this model.

The reason is simple. Individual buyers avoid high-rental areas because they know the renters will depress home values. This sets up a reinforcing cycle. The neighborhood fills up with renters with no incentive to invest in the costly maintenance required to keep properties attractive. Landlords have little incentive to invest in long-term improvements, either.

Tragedy of the commons. Step by step, the neighborhood slides into the abyss.

So let the Blackrock's of the world buy up entire neighborhoods and turn them into rentals. As soon as the inevitable mean reversion happens in house prices, these home rental businesses will be toast.

I chuckled at the headline because financial planners have always said that owning real estate for renting out was a more reliable source of retirement income than anything else. However, it is annoying at how some places where there is strong demand, there are few new projects going up. I personally have been amazed at how much new housing has been (and is currently being) developed in the "south bay" (which are the communities Mtn View, Sunnyvale, Santa Clara, and San Jose.

Ever since mixed commercial/residential started getting approved we've had over a dozen large re-developments of lots that were purely commercial/industrial into mixed residential / commercial. The entire AMD and former Spansion campuses have been re-done this way and produced both hundreds of new homes and several new commercial leasing opportunities. Sunnyvale's revised downtown went from 100% commercial to 50 / 50 commercial and residential. So that is pretty amazing to me.

Sigh. They know land is the real wealth. And since current buying generation does not know this, it's ripe to snap up. In addition it is very hard for the current generation to even own. This is were I detest free market economy because it creates such an unfair situation. And this leads me to think things like houses should be capped. Everyone should be able to have a piece of land and a home. Corporations can lease land from cities but should never own. The idea here is simple, corporations cannot be treated the same as an individual human.

This doesn't make a lot of sense to me. Why would an entity trying to maximize profits pay an extra 20-50% to purchase an illiquid asset?

I suppose when your investment horizon if 40+ years (and interest rates are low), you can afford you have a longer ROI ?

Sort of like investing crazy money into startups. Big bets hoping to get a once-in-thousand-years cashcow.

Make enough bets and it works out.

It's the least risky asset on the time horizon that they're operating on.

Not that risk really matters much because Blackrock is too big to fail anyway.

Reaching for yield. People will need housing, and assets are inflating because there’s more capital chasing fewer returns. Lock up housing assets, you’re locking in returns.

They have so much money there's nothing really left to spend it on.

Once you own all housing, what's to stop you from increasing rents?

Presumably your own desire to maximize revenue. If you charge a rent that your tenant can't afford, then you get nothing.

If you own all options and the renter needs to have some sort of housing, they'll pay anyway. The end result is that the owner will start collecting a larger percent of the renter's earnings.

I'd give up housing before food. There's a limit to how high that percentage can be.

The point is that landlords will be able to suck up the income that you spend on non-essentials and luxuries.

Only when demand exceeds supply and people have that extra income.

Edit: which is common in desirable places with lots of well paying jobs.

There are cheap places to rent and buy in the fly over states but not as much opportunity, hence the price

> I'd give up housing before food.

Lack of food can be fixed in a day. Lack of housing can be impossible to overcome ever.

I don't get this.

Both things could be fixed in a day. Also, both of them could be impossible to overcome ever. What's the distinction you're trying to draw. If it comes down to an acute situation where I had to choose, I (and most I think) would choose to eat. I understand in the real world, there probably wouldn't be such a clear choice.

When you make housing too expensive, people just get up and move. People are not surfs and are not trapped or stuck living in a house they can't afford. It might not happen overnight but populations do migrate due to housing costing too much.

> When you make housing too expensive, people just get up and move.

Not when all the jobs in that household are here.

> People are not surfs and are not trapped or stuck living in a house they can't afford.

They are when all the jobs in that household are here.

> It might not happen overnight but populations do migrate due to housing costing too much.

People who are facing homelessness this year aren't thinking about market corrections that are decades away.

The move BlackRock will do, based on their history, is to incentivize increases in adjacencies to drive value. What I mean by that is that they will, for example, encourage new office complexes in locations favorable to their new rental domains. Think SF bay area’s natural and warped logic locating massive complexes on the peninsula or ST instead of Fremont/San Jose.

Right, but the greater the share of the market you own, the less you have to invest in making your offering more attractive, and the more you can start simply increasing rents.

They along with others are trying to build a monopoly/oligopoly in housing. Naturally we would expect regulations against this, but the fact that it's going this far is a bad sign.

Regulatory backlash.

We're waiting

Rent control has been instituted or strengthened as a response to rising rents in cities across the country.

Maybe. I'm skeptical it's enough though. Clearly, the intention is to see how much they can get away with as monopolists.

"In 2016, with the real-estate market heating up in metropolitan areas across the country, single-family rental companies also started pushing the limits of how much they could raise rent every year. American Homes 4 Rent raised rents by 11 percent between 2016 and 2018; the average rents in the top 30 markets in the country increased by just 6 percent over the same time, according to Zillow. American Homes 4 Rent owned 70 percent more properties in the first nine months of 2018 than in the same period in 2014, but it collected 150 percent more rent. “It’s up to us to educate tenants in a new way that there will be annual rental rate increases,” David Singelyn, the CEO of American Homes 4 Rent, said at an investor’s forum in 2017. “This has been a very passively managed industry for 30, 40 years, up until the institutional players came in.” [1]

[1]https://www.theatlantic.com/technology/archive/2019/02/singl...

Since land is a limited asset they can effectively corner the market in specific regions and gain pricing power, allowing them to turn that 20% purchase price premium into a hefty profit.

Cities can counter this by allowing more new construction but backfilling Single Family Residences requires land and that may not be readily available within certain commute distances.

It's slightly more complicated than that because what they'll do is keep the properties and rent them. There being few houses to buy increases the demand for rent, and cornering the rental market means you can control rent prices.

There is no analysis anywhere that suggests Blackrock is poised to corner the rental market.

They certainly get better mortgage rates than their middle-class competitors or maybe they just buy it outright which would save $100k's in the long-run.

It doesn't make sense because the headline and linked tweets misrepresented the facts of the WSJ article it sourced its info from. I quote "Blackrock is buying every single family house they can find, paying 20-50% above asking price and outbidding normal home buyer..." and then he links to https://www.wsj.com/articles/if-you-sell-a-house-these-days-...

The general thrust that institutional investment groups have increased their purchasing of single-family residential homes over the last decade is true (around 20% to 25% of all such transactions now, IIRC). And it may be true that such buyers are pushing up home prices in many areas. I haven't done any analysis of that so I cannot comment on it.

However, the tweets are ... not quite correct. First off, the transaction in the article was a deal where Blackrock purchased a set of 124 rental properties that was already owned by an institution (D.R. Horton). It was this complex https://www.amberpineshomes.com/floorplans. The seller is quoted as saying "We certainly wouldn’t expect every single-family community we sell to sell at a 50% gross margin", which isn't the same as 50% above asking price. Various groups bid on the complex and, from another linked article, all bids came within a few % of each other. Any seller would hope to sell with some sort of positive gross margin. The seller's statement indicates that 50% may be high for residential real estate and thus is an indicator that the market in that area is quite hot.

The average price per home in the deal was $258k. Perhaps a bit high given the average size in the complex, but... If you examine the location (because real estate is all about location), we're talking about a small town outside of Houston that has grown in population from 56k to 91k between 2010 and 2019. The median family income there in 2016 was $60k. So this looks like a high growth area with upside potential.

The buyers are probably making a bet that the homes there will see substantial appreciation in the future because of this growth. The seller probably either wanted the cash injection, didn't want to manage rentals anymore or otherwise prioritized some short term concerns over long term asset yields.

To sum up, the people at Blackrock is not stupid. They won't pay a premium everywhere. They'll only do it in areas where their analysis shows that they will make it back along with a substantial profit. Is this good for society as a whole? Perhaps not. But that's not their problem.

When you add the no-interest rate environment that creates price bubbles and mortgagtes where people never build significant equity, this destroys the ability of families to build wealth, it turns young people into urbanized share cropping serfs. I guess young people can look forward to owning nothing and being happy about it?

The only people who can compete to own property in an environment like this are the extremely wealthy, or those of very independent means. This marks the end of opportunity for generations of working people.

A.k.a. The Carvana model. This is what Carvana and other "no-haggle, no-test-drive" startups are doing with the whole used car market in many areas. They aggresively buy up all the used cars in an area (or at least as many as they can) from dealerships and private sellers in order to make themselves the only entity with used cars for sale. Which they happen to be selling at 20% above true market value. But hey, you can buy the car from an app on your phone without the burden of haggling with a salesman or even a test-drive!

In which areas does Carvana own all the cars for sale?

> Which they happen to be selling at 20% above true market value.

If carvana is not providing that value, then there should exist plenty of sellers that want a piece of that 20%, such as car dealerships and individuals themselves.

This is a market with plenty of buyers and sellers, and low transaction costs. I see no reason why Carvana would be able to corner it.

Middlemen leeching off of middlemen. Allow car manufacturers to sell directly to consumers and the problem will sort itself out.

I shop for used vehicles fairly regularly and don’t see evidence of this. Prices are high right now but not because any one entity has a lot of inventory. Keep in mind that a healthy market for used cars encourages more owners to sell and get something new. Local and regional markets can only become tight to an extent because cars and buyers move around the country when it makes financial sense.

A bit late to the convo, but we literally just signed over the contract of our house in Austin.

5 days on the market, 4 offers, 1 family, 1 family trust, 2 investment firms. All offers 20-50k over asking, 0 conditions.

I hope that holds. I have a buddy/tenant that is waiting for an IPO this month. When it finally drops, he'll know what he can afford and then he'll start house shopping. I likely won't be able to have my house on the market until August.

Congratulations!

Definitely hope it works out for him. Thank you for the well wishes btw.

Over are the days where supply and demand controlled allocation of resources to get the goods to every man, woman and child.

Big demand, lack of workers? Price and pay rise to meet the challenge. This part of market economy always made sense to me. Like a muscle growing stronger in response to increased exertion.

Now the wealthy have decided that this is way too boring because what good does it do them if people actually attain wealth for themselves? There'll be no motivation to run faster in their hamster wheels to create more wealth to be siphoned off.

Works as intended.

We should increase (double?) property taxes on single-family residences owned by corporations.

These shifts in the housing market are destroying the middle class as an increasing number of Americans will never own any equity in their residences over their lifetimes.

I went on Zillow and looked at the house I'm renting (not in a major market) and it went up $28K in expected value in the last 30 days.

Can't see buying in this market at all. Fully expect my rent to be raised after my 1 year lease is up.

Who's improving what?

At least you have somewhere to live. Our rental is being sold. There are no rentals in this county and few in the next.

All of our jobs are here.

Sorry to hear that :-(

Same......... I'm essentially being forced to buy as renting isn't an option and we can't move.

In my neighborhood the bank owns a house and has owned it since it was foreclosed upon about three years ago. The house is completely falling apart. It is unlivable. The house is tarpped. Apparently also filled with mold. The yard has rotting wood and weeds that are taller than my head. And no one will do anything about it.

The city will fine the bank $100 for each infraction and that is it. The bank could care less.

I am not sure of the bank’s end goal, but I suspect they are waiting for it to be a total loss, get insurance money, and then sell the property as land, which is worth now about what they paid for it anyway.

Meanwhile the local housing market is extremely supply constrained with houses going for over listing price and yet, the bank is not listing it because they think they can get more if they let it fall apart.

Very strange. Typically banks try to sell foreclosures ASAP to the extent that most go the 'short sale' route where they just force a sale. Given it has been only 3 years and it's already inhabitable; something probably went very wrong preventing it from being sold. It's possible the previous tenants just destroyed it... it's really surprising how bad some people treat their home.

How often do people trash a previously un-trashed residence on the way out when being evicted or foreclosed? I suspect it’s much more common behavior than anyone wants to admit.

When I was looking at homes a year ago we looked at a few foreclosures and they were usually pretty rough. Not always because someone was destructive on the way out, but because there was something else wrong in that person’s life and the house became a reflection of that.

> Typically banks try to sell foreclosures ASAP to the extent that most go the 'short sale' route where they just force a sale.

Short sale (which is generally not forced, but is usually win-win for the borrower and bank, so often ultimately approved after the bank convinces themselves that denying it won't let them extract more from the borrower) is typically favored for many reasons including the fact that (while there may technically be liability) borrowers who are foreclosed upon have very little incentive not to damage thr property to the extent that it enables them to extract even miniscule additional value, so things like stripping resellable (even at small fractions of the value they provide in the house) materials like pipes, wiring, and notionally-permanently-installed fixtures is extremely common.

It was in pretty bad shape before the foreclosure. The person’s health was failing. They probably could never comfortably afford the house. The deterioration has only accelerated since the foreclosure.

Maybe they suspect that a developer may want that land.

Is it somehow crazy or unpalatable to say that there should be a law against institutional investors and corporations from owning residential real estate that was built for owner-occupiers? Bc there should be a law and it should have been passed by congress yesterday.

While this may sound great in theory, private property in the United States does not work this way. The federal government's role is not to dictate such things; states may, but even state laws may run afoul of the Constitution. Private property is a fact of life and law in the United States and only amendments to the Constitution can change that.

I really wish there will be a Subprime 2.0 and this time without bailouts.

Here's what we need: if the beneficial owner of a property is not a resident of that state the property tax rate should be punitively high. This includes any corporations or LLCs that own property.

It's important that we have property as an investment vehicle... to a point. After all, that's where the pool of rental properties comes from. But this kind of national carpet bombing of housing supply by hedge funds is the last thing we need.

As another example of what I consider a disgusting practice: hedge funds have bought up the trailer parks and then jacking up the rent. These houses are technically "mobile" but actually have limited mobility. Each move also damages the property. These should be owned collectively by the residents of the trailer park. But hedge funds know they essentially have a captive market to prey on.

Much like when Goldman Sachs created an investment vehicle for wheat and then drove up the global cost to profit at the expense of actually killing people who couldn't afford to eat, I put this in the same category as disgusting and morally reprehensible. And while it's up to politicians to fix it, you can still hate the players.

One of my "out there" political ideas is that because land is a zero-sum game, corporate entities should not be allowed to own it. Only real people (or specific entities which are a collection of real people) who are permanent residents of the country in question should be allowed to own land. And from there, there should be an upper limit on how much any one individual is allowed to own.

And here I thought the paranoia surrounding urban real estate prices over the past decade was bad (Remember the countless pieces about foreign investment dollars, induced demand causing gentrification, empty condo buildings, et cetera?)

Now urban money has started spilling out of major urban centers during covid, and demand for space has had a major uptick no less, so the rest of the country is experiencing a fraction of the insane price growth that major cities have seen for two straight decades.

Yeah, it sucks. No, your "evil investment money" thesis is still wrong, or at best misleading. It's essentially supply and demand (added with some inflation and supply shocks), you can either hope demand goes down or your city can plan to add more supply. Those have only ever been the two options.

Thanks to the Fed for low interest rates and constant QE. Can't wait for tomorrow's inflation numbers - just kidding they'll juice the numbers like they always do with hedonic adjustments so they can pretend the standard of living for the middle class isn't in decline.

Yes.

This just happened to me. I put my home up for market %15 over market - was offered cash that same day by an investor. I didn't use an Agent to list (this is my 3rd home sell) and set my own buyer agent compensation on the MLS. Anyhow, they seem like pros.

And how did you list directly on the MLS without an agent?

Its worse than that. As a tenant, you cannot have people who are not on the lease stay long term without them going through a background check. This means that you may end up increasing the homelessness of relatives with temporary financial issues and also isolating potential mates with financial issues from living with their significant others until married, forcing the better financially equipped mate to take a hit to their credit/rent risk and lose the ability to rent in a better area. Also, you are severely limited in the things you can do at leased residences. Garden? Maybe not if its in the lease.

It needs to be significantly easier to buy a first house than a second house. Getting a first mortgage is "easy" until you factor in the "mortgage insurance" scam. Rent seeking should not be such an appealing option to make money. The result is a bunch of scummy landlords, essentially utilizing the poors to "keep down" the other poors through rent exploitation. Basically the "upper middle" class is the gatekeeper preventing lower classes from having social mobility by maximizing rent exploitation. It's a great system because it prevents the real upper classes from having to get their hands dirty.

Rent control makes landlords very hesitant to add new people to a lease. Otherwise the unit can just be passed from friend to friend and never get back to market.

> Otherwise the unit can just be passed from friend to friend and never get back to market.

I'm not sure how this is unfair. Considering the way capital gains are taxed after the sale it seems like the grandfathered-in rent controls are just a lever at the opposite end of the spectrum. But of course, we don't want to give any levers to the poors so it has to go.

We can want to support the poor and also recognize that prior attempts have unintended consequences or are ineffective. In this case rent control seems to reduce housing stock. The solution may be building more units so regulation should focus on that.

Anyone want to start some kind of kickstarter like company where funds are pooled for different projects that have a target plot of land with a layout for a future city? Investors could get to submit bids for sub plots for future houses and the project could start when some predefined minimum is met. All of this NIMBY/artificially constrained housing supply stuff functions as tons of glass ceilings for those trying to rise up and follow the american dream.

Sadly, archive.is is blocked in some countries

For a smaller, simpler, Javascript-free, ad-free page

   curl https://www.wsj.com/amp/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801 \
   |grep -Eo "(<p.*<\/p>)|(<h[12].*</h[12]>)|(<a href=.[^{].*</a>)" \
   |tr -cd '[ -~]' > 1.htm
   firefox ./1.htm

Looks like you need to set the user agent for this to work (I went with "User-Agent: Mozilla/5.0 (Macintosh; Intel Mac OS X 10_13_1) AppleWebKit/537.36 (K HTML, like Gecko) Chrome/61.0.3163.100 Safari/537.36" and it worked)

curl is for examples on HN. In practice, I never use curl and I never send a user-agent header. If use -H"User-Agent" (no space after the H) it should work fine. Example below. I cannot even think of a single website that requires a user-agent header in order to retrieve a page, but if you send one it will likely be used for something. Fingerprinting, changing the "UI" and blocking are a few uses that come to mind.

    curl -H"User-Agent" https://www.wsj.com/amp/articles/if-you-sell-a-house-these-days-the-buyer-might-be-a-pension-fund-11617544801 \
    |grep -Eo "(<p.*<\/p>)|(<h[12].*</h[12]>)|(<a href=.[^{].*</a>)" \
    |tr -cd '[ -~]' > 1.htm
    firefox ./1.htm

If the "remote work" future is here, then this will just push people out further to the middle of nowhere instead of suburbans towns.

Affordable, widely accessible:

- TVs, video game systems, smartphones - Fast food, snacks - Clothing, fashion accessories

Unaffordable, hard to find:

- Houses - Healthy food - Cars - Ammo

Bread and circuses.

The implementation of a land value tax is the most significant barrier to widespread adoption. There is no objectively fair way to separate the value of the land from the value of the improvements, thus someone has to decide what the land is worth. Alternatively, without an objective mechanism to oppose them, many of the same strategies can be used to distort/contest appraisals,.https://apkwind.com/showbox-apk/ "dark stores," and deed restrictions that preclude other uses

https://apkwind.com, https://apkwind.com/spotify-premium-apk/, https://apkwind.com/blackmart-alpha-apk/

The superoverrich are currently drowning in money. They don't know what to do with their money anymore. That's how you end up with the ridiculous stock marked and the bitcoin surges.

If just a fraction of that money were put to good use, society would benefit immensely. We could pay to improve public schools for example, or offer a public healthcare option.

I'm about 99% sure I'll get downvoted for this but how do I sell my house a pension fund? I have a house with a renter in it and I would gladly sell it to anyone who would buy it without having to displace the renter. Right now, I'm stuck holding it for a little while longer because the renter and I have an agreement.

You could put it on the market and have contingencies that satisfy your agreement. As for selling to a pension fund specifically, I think that would be more work than it might be worth, and you'd probably be better off making it open to all types of buyers.

Private buyers are usually looking for homes to live in and the one institutional buyer I've spoken to gives any existing renters the boot as soon as they take the title. The linked story sold an entire block of rentals as one lot. Maybe I'll get lucky and someone at a fund will see this thread and be interested in the idea.

If you want to fuck with landlords all you have to do is repeal your local zoning codes. Institutional money is pouring in because American cities have erected ridiculous barriers to entry in the housing market, making appreciation of home prices state policy. Repeal those barriers and make landlords poor again.

That actually messes with single family home owners more. I would love to provide more housing and make more money.

I don't care. Landlords aren't "providing housing" they are just money conduits. It is demonstrably the labor of their tenants which provides the housing, and the pendulum needs to swing back in the tenants' favor for a while.

I think they are. They are purchasing an asset that others may not be able to afford and making it available. Additionally, they're funding construction of more housing wherever possible. Are tenants just money conduits for the corporations they work for?

Link to actual article: https://www.wsj.com/articles/if-you-sell-a-house-these-days-...

(Also, the article is now over two months old.)

We've changed the URL to that now. Thanks!

Submitted URL was https://twitter.com/APhilosophae/status/1402434266970140676

I thought HN had a policy of doing direct links to articles?

https://www.wsj.com/articles/if-you-sell-a-house-these-days-...

the twitter thread has several links

I'm sometimes afraid of these "mega-corps" that have the effect of really changing things. Sometimes in a bad way. Sadly, once you've got money, you can earn much more. What the limit to t->infinity ? One single corp dominating the world ?

Isn't that the problem in game economies as well? Making virtual money begets making more virtual money leading to exponential growths. Some games solve it by making items more expensive for hoarders. In real life we pretend that growth inequality does not exist.

I like the thought experiment of taking that to its absurd logical conclusion.

I'm sure there are some fun ones. Eg, Once a single corporation is in control of everything, and everything that comes in is profit and everything that goes out is a loss then the only missive left is to cut all losses, no? How do we do that? Burn the planet? Can't lose if there's nothing to lose.

Reminds me of the paperclip problem[1].

[1] https://voxeu.org/article/ai-and-paperclip-problem

Welcome to Costco, I love you.

> Home equity is the main financial element that middle class families use to build wealth, and black rock, a federal reserve funded financial institution is buying up all the houses to make sure that young families can’t build wealth.

Faulty logic. First, though historically people have used home equity to build wealth, that hasn't been the best method of building wealth. Most of those people would have been better off continuing to rent and investing in the stock market instead.

Second, building wealth through alternatives to home ownership may be better for a large portion of the population that finds the very fact of their residence decreases the value of a home relative to other homes.

>> Most of those people would have been better off continuing to rent and investing in the stock market instead.

It's hard or impossible for individuals to get 5 to 1 leverage at low interest rates for investing in stocks.

But the only reason you'd want 5-to-1 leverage on a house would be to have a hope of keeping up with stocks. Also, it'd be 4:1, right, if you're doing 20% down?

Home values are believed to be less risky. Accordingly, they appreciate more slowly. To make them a good investment, you take leverage until they approximate the risk/return ratio you desire.

Remember, there are huge buyers like BlackRock out there that make the market efficient. If home prices drop to the extent that investing in a house is better than the stock market, then the investors swoop in and the prices go up until the two asset types are equivalent (including the fact that one generally borrows to buy a house).

Anyone know how to contact them directly and sell without an agent. Boy that would be easy

This is troubling, as houses can usually be either an investment or affordable. Pension funds are assuming huge risks, which cements the political will to keep housing unaffordable with sky-high ever-growing prices.

The sweet irony, that in the end privatized pensions created a sort of socialism via capitalistic means, more thoroughly central integrating every economic branch then lenin could ever have dreamed for.

Poisoning innovation and competition, by simply owning whole industry sectors, and demanding "rock-steady" profits without disruption.

Investing in ever larger centralization schemes aka disruptions were external organizations protected enterprise-profits. (Taxis)

Eating even the black-market, by dragging "dead-money" from tax-havens and criminal enterprises into investment bubbles like the housing market.

The article fails to mention that Blackrock has been buying up homes since the 2008 crash. This was a very very long play given that they started this when housing was destroyed 13 years ago.

https://threadreaderapp.com/thread/1402434266970140676.html

People who think that building more housing will lower rents don't understand https://en.wikipedia.org/wiki/Induced_demand

It will not bring rents down. Rents in the Bay Area, for example, will NEVER be "reasonable". Building more housing will only turn the Bay Area into LA, or NYC.

Try living in any place with high density, it's still expensive.

This is just phase one. The real money will get made when they start artificially constraining housing stock. In my area (central NJ), the big player is Berkshire.

Yup, post-covid is just like pre-coivd. Private equaity, investors buying up homes, and home prices keep going up. Nothing changed except higher prices and less supply. It goes to show how the media, who since 2012 have been calling housing a bubble and imploring people to sell, have been wrong. I remember someone sold their home in 2012 in the Bay Area for what at the time was a lot ($1.2 million). I bet he regrets it now.

Are they trying to flip these or trying to rent them?

I'm curious why Blackrock thinks these homes are worth this much if the rest of the market currently doesn't.

So… if I have fundrise investments and one of the investments is the house I sold them… then technically I still own part of my house?

If they’re paying 20-50% above asking, does that mean they’re expecting inflation to subsidize their borrowing to buy these houses?

This just happened to me. Put my home on the market by myself without an agent - priced it 15% over market - got a corporate cash offer that day 5% more than THAT listing. Cash, no banks and little closing fees. Without agents this is an insane savings and price. We do have a pool and those are fought over.

Inflation is happening. Investors are buying houses before the inflation hits the home housing market.

Some people think inflation won't happening. These investors are betting incredible inflation, because this may be the first time where large scale investors are buying houses individually (except 2008 mortgage crisis).

Mortgage rates have been falling for the past 40 years. Now they might start rising (emphasis on might). If they do, could that reverse the continuous rise of housing prices? That is how the bond market works, which has also seen rate drops and prices rises for the past few decades now.

this is actually good. once people no longer own homes they are going to stop voting for people who artificially prop up home prices by restricting supply through zoning and land use rules. Long term positive for our political system.

Who controls--in the end, this means with violence, if necessary--the land you live on? Do you want it to be you, or someone who doesn't care one whit for you or your family?

Corollary: if you're buying a house, your competing bid might be a pension fund.

Lots of houses are bought in blocks as well. In denser parts of cities or in areas near major throughfares, land assemblies are fairly common. These take all the properties and bundle them into a new property worth way more.

So can we expect to see stories about Blackrock lawyers showing up at HOA meetings?

Buying up houses is a play/bet on inflation.

If you expect inflation on the currency, and can buy a more stable asset on leverage then the inflation eats your loan. Taken to the extreme you basically get the asset for free.

At a philosophical level, I am opposed to the idea of funds being able to hold onto property like a pure monetary asset.

Past the primary residence, individual landlords have some plausible deniability for having a 2nd/3rd home. Maybe they want to return to the house one day. Maybe it is a vacation home. A lot of folks on HN are libertarian and believe in the power of the free market. When supply can be kept artificially scarce, the market stops being free. The Bay Area is a master class in this.

Among developed countries, the US is uniquely incompetent at urban development. They've created unsustainable suburbs and made every attempt possible to destroy cities. What's worse, is that generations of this pattern have led to rosy eyed images of suburbs among the younger generation and a skewed perspective of what cities look like. I live in an international group home, and Americans are unique in their desire to stay in suburbs. The Europeans, South Asians and East Asians would all much prefer to stay near the 'happening parts', and even their choices of suburbs are far denser than 99% of US cities.

Lastly, allowing foreign investors to snatch an essential and scarce resource from the hands of your own citizens is incompetence bordering on malice worth the dismissal of everyone involved. Trump did a lot of things wrong, but the US could learn some protectionism. (I am not even American)

________________________________

I am usually more reserved in my opinion when engaging with people whose intellect I respect. But, this is an exception.

[rant] I truly believe that the NIMBY & fans of American urban planning are as objectively in the wrong as one can be on a topic with as much emotional subjectivity as housing. It is a strong accusation, but people who still vehemently oppose densification of America are brainwashed , blinded by greed or both. [\rant]

I am neither brainwashed, nor blinded by greed, nor am I "objectively wrong." The vast array of opinions in this comment thread alone prove this topic is anything but objective. If I may borrow and turn another popular thought-terminating phrase: No, the science is not settled on this topic.

I built a house a couple of years ago for two times annual income. I was responsible. I work in tech, yes, but I didn't buy my house to flip it. I bought it because I have a wife and two kids and I want my kids to live in a nice neighborhood and, overall, have a good growing-up experience. I found that here. I'm not a NIMBY; I haven't attended a single city council or planning board meeting since moving here. I take good care of my property, working the soil with my own two hands, even. I love where I live and my neighbors do, too. We get along (imagine that).

Many years ago I lived in New York City, young and single, in a tiny apartment in a crappy, dirty apartment building. I wouldn't trade what I have now for that life no matter how good you say it will be. I've lived both sides--growing up in a small dairy town, moving to Manhattan, then moving on and seeking a better life in small town America.

There is no need to be so hateful and bitter. There are many, many people who are not in it for greed. You just don't hear them getting loud on Hacker News because they are too busy raising families and working jobs like most of us. Try and have some empathy.

> hateful and bitter

Agreed. I am deliberate about what things I choose to be riled up by. American planning happens to make that small list.

My comment was a pure rant in a way that was unproductive.

I also agree that there is nothing objective here, which is why I tried to phrase it in the 'as objective as something subjective can be' form. But I guess it was a bit convoluted.

_____

Let me be specific: Post WW2 car-mandating endless suburbia built without any regard for financial or environmental sustainability is something I actively dislike.

> single, in a tiny apartment in a crappy, dirty apartment building

This gets to the core of the brainwashing I speak of. American cities were left to the dogs during white flight, and they haven't recovered since. There can only be one NYC in the nation. There a dozens of other ways to build sustainable & beautiful cities. NYC's subway system is pretty shabby for a city its size and the city feels haphazardly built. A lot of European capitals in comparison have wonderful examples of apartments that don't suck and subway systems that are a joy to use.

I am not anti-village or even anti-suburb. There is such as thing as well built suburbs. Plus,villages are bound to be low density by their very nature. But villages also tend to be quite sustainable. Strongtowns.org have written a ton of articles on this, and notjustbikes [1] does a great job of elaborating on this.

Urbanist communities have spent agonizingly long talking about the 'missing middle' [2] in housing. The options aren't NYC like shoulder to shoulder density or single family zoning. There are a plethora of options that lie in the middle.

> car-mandating

The car-mandating part is important too. It is one thing to want a huge house with a huge garden. It is another to protest building of non-single family homes in plots near you. Especially when asset prices continue to appreciate as wages stay flat. That's Nimbyism.

It forces a village level of density on any area that's a few miles outside the downtown mandating cars as the only possible form of transport.

> I love where I live and my neighbors do, too. We get along

Exactly, then why not let everyone have that choice?: The choice of living in an arrangement they desire in a manner that is reasonably priced. Imagine if it was illegal for you to build a house on your own land in a manner that you desired, even when it was safe and affected no one else. That's exactly what's happened to middle housing in the US.

> without any regard for financial or environmental sustainability

This is my last point. After all that, the cost of maintaining low density essential public infrastructure (electricity, water, roads, etc) is much much higher than that in denser neighborhoods. This video by not-just-bikes go into detail on this point. [3]

> brainwashed

brainwashing is rarely implied in the literal sense. In most cases, it implies a situation where a person refuses to acknowledge negatives of a system even when it's staring them in the face. America has doomed its cities and implemented laws that strongly favor suburbs. If I grew up here, I would also think that cities were terrible too. Here, people live in cities transiently and usually in rentals. They never develop a relationship with neighbors or drop roots, because they move out the second they have their first child.

> I want my kids to live in a nice neighborhood and, overall, have a good growing-up experience.

The negatives of cities are very much the negatives of American cities. The many positives of American suburbs would look less great if they had to pay the real cost of maintaining their infrastructure. NotJustBikes has an entire video [4] on how sustainable cities provide a significantly better growing-up experience for children than American suburbs. I highly recommend it.

People spend thousands on visiting Europeans cities for the summer. People fantasize about how dreamy such a place would be and retiring there. By all definitions, these ARE their cities. That's what cities in developed countries could've been like. Alas, the New World seems to lack the creativity to imagine such a place back home.

[1] https://www.youtube.com/channel/UC0intLFzLaudFG-xAvUEO-A

[2] https://missingmiddlehousing.com/

[3] https://www.youtube.com/watch?v=7IsMeKl-Sv0

[4] https://www.youtube.com/watch?v=ul_xzyCDT98&t=1s

Shouldn't we do something to curb institutions making "investments" that do nothing productive except pump the bubble? Dont these institutions have am obligation to act responsibly?

As has been pointed out repeatedly, this has the net effect transferring homes from owners to renters, which does not directly impact access or affordability; the housing stock remains available.

Do you think people should be able to buy affordable homes? Isn't affordability affected when you are competing with companies with deep pockets? When those companies need ROI do you think they will prioritize housing affordability over profitability?

I'm not sure how much I care about whether people own or rent. The politics of the place I live are controlled by owners and are renter-hostile; I don't think increasing the rental stock is a bad thing, and am inclined to believe --- without making any value judgement about REITs and Blackrock ---- that it's probably a net positive.

The compulsion to own homes and tie people's finances to the real estate market is a US idiosyncrasy. It's not, for instance, how they do it in much of Europe.

Increasing the rental stock in an area of low rental units is one thing, but is not what the article is discussing. I'm not sure the relevance of the European housing market.

I don't understand the moral valence of an imbalance (in any sense) between owner-occupied and rented housing. Could you help me see where you're coming from here?

I bring up Europe just to observe that it's not a settled norm, even in rich western societies, that homeownership is somehow better or prosocial.

> Could you help me see where you're coming from here?

I like affordable housing and think everyone should be entitled to it. Whether renting or to own.

Right, but this doesn't change that; in fact, increased rental stock probably increases affordability, both directly and in a bunch of knock-on ways involving zoning and variance decisions.

The article is about investment companies purchasing houses at a premium driving up the cost of ownership and renting. The article provides examples of this, not just speculation. People are seeing this happen in their communities, including my own, so I don't think it's enough to say "probably increases affordability". If you weren't able to read the article because of the paywall, see link below.

https://archive.is/aBK10

I've read the article (again) and I don't see it providing examples of these firms having a significant impact on rent; if I then go to one of the large firms they link to (Invitation Homes) and look at their rental stock in my area, it's not only broadly in line with what home rental prices are, but the numbers are roughly where they were 5 years ago, too.

This article is linked in the main article which talks about the rising rental rates. Invitation homes talked about in the article is owned by Blackrock.

https://archive.is/JgQwb

That is incredible that your rental prices have remained roughly the same over the last 5 years. Invitation homes is also in my area (PNW) and yes, checking their website, their rates are in line with other rates in the area... except... these are rates which have grown 10% YOY for the past 8 years. It's the same story for the cost of homes. I sold my home this year for 50% more than what I paid for it exactly 4 years ago. Rent for homes in that neighborhood (identical homes) went from 1700 to 2700 (60%) in that same timeframe.

If anything, hopefully we can realize that we live in drastically different housing markets and that affects our opinions on the subject.

To my mind that backs his thesis. External factors are driving home prices in your area to increase and similarly not in his neighborhood. The existence of a blackrock investment isn’t casually linked to those prices (at least not in a simple form).

I'm concerned not only about the Blackrocks, but also smaller investors fueled by cheap cash and wealth fantasies based on flipping and FIRE/4HWW. The depressed, small city in northern New York featured in this article (https://www.uticaod.com/in-depth/news/2021/04/07/vaccination...) has people buying houses sight unseen from other states, which might be a good thing if they intend to live there, create businesses, build up the city's tax base, and invest in the community. However, I am very skeptical any of that will happen based on the many reasons cited in the article.

I can't see how this ends well.

At least in Minneapolis, everyone who's buying a remotely desirable family house is paying a lot above the asking price, although what I've seem is more like 10–15%.

If they are paying over asking price, this just means sellers don't fully understand the market. No investor is going to persistently overpay.

One can read the linked article here: https://archive.ph/aBK10

paying 20-50% over asking price is an interesting move. To make money on that over-pricing you have to price rent accordingly. The only way to keep rents up is to limit inventory. If you can't stop the building of new houses, what's their out?

Sounds like a good time to exit Blackrock as your money manager?

> If you can't stop the building of new houses, what's their out?

Many areas have significantly slowed (or prevented) the building of new houses. Blackrock probably doesn't expect this to change. Supply is constrained and doesn't seem to be getting better. In their eyes, being in the market with a limited supply, high demand, and no major changes to supply production seems to be worth the premium.

I live in Portugal and we currently live a dreadful scenario.

In developed countries a house shouldn't take 40 years to pay

Pass higher property taxes, further lower deductions based upon wealth of buyer, and build build build.

Twitter is a bad blogging platform.

What's with the link to the weird Twitter rant about The Great Reset?

Lol they should just buy bitcoin, digital real estate is more durable

@dang: Why did you change the URL from the original twitter thread?

https://twitter.com/APhilosophae/status/1402434266970140676

Probably because https://mobile.twitter.com/APhilosophae/status/1402449561864... and, a little earlier, https://mobile.twitter.com/APhilosophae/status/1402448040997... show it's a thread by a raving conspiracy theorist. (Or, at best, someone very successfully impersonating one.)

EDIT: But yeah, crackpot or not, that's a lot more sources than just the one. So yes, a weird switch.

I really wish we'd get some innovation in the housing market. 3D printing of houses or something could be epic. "Just" disrupt the current construction companies... It's clear they can't keep up with the demand right now.

Location matters too. I don’t think the problem is making a log cabin in the woods.

Sure, we can't print more ground to build on. But it's another cause of increasing real estate prices here in the Netherlands.

Probably need to zone some of that agricultural land (60% of land usage in the netherlands) into housing, if we want to give young homeowners a chance at owning property.

Oof… trading food for shelter seems like a problem I wouldn’t want to think about

Just take it from flowers...

I think the disruption will come from the civil planning side of the equation. When we can figure out how to build a city on the edge of Arizona that people actually want to live in then we can begin to leverage more efficient and automated building techniques like 3d printing houses and stuff.

It takes more than houses; also entertainment, food, infrastructure, jobs, etc. Otherwise, you're 100% right, location is king and nobody wants to move away from a fun/profitable/valuable city to live in an abandoned mining town in Oklahoma just so they can own a home.

As dystopian as it might sound, I wonder if there is some way to "crowdfund" or "preorder" a new township location. Everyone signs up, pledges like 1,000 USD or something with a lease extending at least 3+ years. And developers can use that money to build an entirely new township in a location with cheaper land. This might help alleviate the problems that come along during a cold start with requiring critical mass adoption before a location is desireable to live in. (Not suggesting this exact course because having an entire town owned by a single developer sounds like a capitalist hellscape; just thinking out loud, I don't know what the actual solution would be)

I believe something similar is already happening with something like the Culdesac project. (I have no affiliation with this project, just so happen to live near it and have heard about it a few times) : https://culdesac.com/

Like this? https://archive.curbed.com/2019/5/31/18639098/california-cit...

Yes, although in hindsight it's easy to say that was poorly executed. It looks far too big and tried to be more than it should have been in my opinion. I'm thinking more along the lines of small neighborhoods on the edge of a city that can provide stronger logistical support.

Closer to Sun City Arizona.

> ... This caught the eye of the FTC, which said the advertising was deceptive and ordered the city’s developers to stop ...

This is also an interesting point in the article. Was it actually a scam or just overly ambitious and poorly executed?

Axios just had a little blurb about this: https://www.axios.com/housing-prices-construction-costs-8acb...

The bottom line is that local land-use laws are murky and problems with local codes are very difficult to predict and control for at scale - and that's the way existing homeowners want it.

It's interesting too that homeowners are such a powerful lobby, but without a single entity setting policy or giving talking points. It is, essentially, our culture. This is the way we want it to be. At least for now.

Isn't prefab a thing in the US? I have a hunch 3D printing won't solve the issue since you need not just walls, but plumbing, electricity, windows, doors, etc. Then again, imagine Blackrock or someone else just starts buying land. You're screwed anyway.

this,

if half of Europe could solve their housing crisis after ww2 thanks to plattenbau, so should the us.

Lack of housing is not a technology or industrial problem. New homes can be made easily and relatively cheaply if given the go ahead.

Lack of housing is by policy. By ensuring there are not enough houses ensures there is more demand than supply, which means higher housing prices, which means higher mortgages. The mortgage market is based on rising house prices. The banking industry is based on the mortgage industry. Low house prices, would mean a falling mortgage market, which means a banking crises. Given that the banking cartel has more influence on politicians than the populous, we have this current state of affairs.

Remember, in the 1950s a new build home would cost about 1 years salary. Now one year's salary might only buy a nice car. Building technology hasn't gotten worse, it's much better and cheaper. It's not the construction companies that need disrupting.

Edit: Also I should say that that was the state of affairs until just recently. This recent move by Blackrock and the like is the prelude to massive inflation. They are abandoning paper assets (cash, equities etc) and investing in hard assets like housing, farmland and commodities.

Blackrock is not abandoning anything or massively shifting strategy they have always been a real estate focused investor and have a multi decade history of residential single family investment. This is not evidence of coming inflation.

Remember, in the 1950s a new build home would cost about 1 years salary

I'm afraid that is mostly a myth. This source (https://www.longtermtrends.net/home-price-median-annual-inco...) shows that the home price to median household income multiple in 1950 was around 6, or about the same as now. It did fall quite dramatically during the late 1950's, going a bit under 5x by 1960 and nearing an all time low of just over 4x by the late 1990's.

This other source (https://archive.curbed.com/2018/4/10/17219786/buying-a-house...) shows that median household income in 1950 was $3,000 and the median "home value" was $7,400. Which is still 2.45x. By 2000, the multiple had declined to 2.17. I suspect the media home sale price was substantially higher.

Both sources show a surge in home prices during the housing bubble between 2000 and 2010.

Note, you also get a LOT more house now than you did in the 1950's. Much much larger, much higher quality, many more amenities, etc.

Except construction costs are insane nowadays, and there is a massive shortage of trade workers. Your theory could hold true if we just considered existing homes, but the costs to build a new home have went through the roof in the last decade.

How can you be SO certain that it isn't a technological problem?

[0]https://en.wikipedia.org/wiki/Plattenbau

Real estate is a good hedge against fiat currency.

How can anyone read and conclude that the US is anything other than dying and on life support? Our government is ran by corporations, and it is not going to change. Not to say that we have some cyberpunk future ahead of us - that looks a bit too optimistic at this point. As much as I personally despise communism, it's hard not to admit that the Chinese have a much superior government (not that they're even communist at this point) to our own. Larry Fink and most of his associates should be getting the "Jack Ma treatment".

How can anyone read and conclude that the US is anything other than dying and on life support?

Perhaps by looking outside the window? By walking around your town/city? By driving to nearby locations? By talking to people and asking them about their lives rather than their opinion of the lives of other people they've never met? By trusting what you see more than than drivel spouted by tin-foil hat loons?

A 100% capital gains tax on residential properties unless the seller claims that property as their sole residence for last 5 + years.

That should fix it.

About time the real estate market got more efficient

I was always turned off by how slow and illiquid that market was

Aside from the distraction of the author's nuttery, the issue is probably the most salient one for the American middle class over the next century.

Either very strong measures are imposed to limit / de-incentivize real estate speculation and hoarding, or the vast, vast majority of the population is entirely excluded from any kind of property ownership.

And while simplistic 'conspiracy' thinking definitely is of a much lower value than rigorous analysis, there is IMO merit to at least acknowledging that the politically powerful class might overlap substantially with the rentier (property ownership) class and thus resist any such reform taking place. It shouldn't be out of bounds to speculate on the motives of powerful actors, even if it is obviously not the same as making evidence-based claims.

This comment refers to the original URL, https://twitter.com/APhilosophae/status/1402434266970140676, which we've since replaced with the article it points to (in keeping with the site guidelines).

But a Twitter URL actually shows a thread, not just a single tweet. And this thread had a lot more links than just that single WSJ article. On the whole, I think the substitution was for the worse, not better. (And if the guidelines actually demand it, they need to be changed.)

I don't want to be that guy but I feel like Americans and majority of the democratic World have forgotten that the laws they keep criticizing are the ones THEY voted for.

Protesting is fine but I never see voters take responsibility for their own bad choices. They are heavily influenced by so-called influencers and vote according to them instead of their own thinking. CA Prop 13 is something people of CA voted for. It is obviously working for majority of the people in CA. So whats the whining about? People of SF elected Boudin and are not signing enough recall petitions, surely its working for most people.

Democracy doesn't guarantee utopia, their will be some people mad about the system. But they have to accept they are in minority. There is no conspiracy, voters need to take responsibility for their own wrong choices first.

This explains a lot actually.

Spring-Fall 2020 my town (Coeur d'Alene, ID) had a bunch of real estate investors going door to door offering to buy houses. My parents had to shoo them away a couple times...same people. Through this year we have this incredible shortage of houses (not to mention a surge of newcoming residents).

The part I find interesting though is that the average house price in my area went up 25-50%...which pretty much lines up with what it seems these companies were paying.

It isn't the only issue here though...a significant number of people who move here are purchasing a second home as well in order to have a "vacation rental" which is further driving the housing crisis.

Average rate of pay in my area is $20/hr but in order to purchase the average house you are required to make 3x that amount to be eligible. (Minimum wage here is $7.25/hr)

Landlords see the rising prices and say "I'm losing money by not raising rents" and now a 1bd apartment is going for $1k/month (so you need to make $25-30k/year to be eligible). The "solution" they have is to build more apartments to house people...but those apartments are controlled heavily by large corporate interests who own multiple buildings and are controlling the prices.

I have talked personally with more than one of the investment realtors who came through (candidly) and one of them specifically said she "buys houses but does not sell them..." and she used that as justification to the argument that realtors raise the cost of houses by "flipping them".

It is a mess. Coeur d'Alene,ID was listed as the hottest real estate market in the US. Ketchum and Boise are having similar issues.

Why Idaho you might ask? Well...we have non disclosure laws which make it so you are not required to disclose the last selling price. We also have a 2017 law preventing any type of limitation on vacation rentals. The list goes on and on.

Not sure where everyone is going to live...or who is going to do the work...but the locals are being phased out. Homelessness/Rough living are becoming more common and Ketchum was even discussing tent cities. [1]

I have nothing but hope for the world. Someday people may realize that profiting from housing is profiting from another person's pain and poverty. It sucks that a 40% increase on property values are not enough for the investors...they need to raise rents too.

[1] https://www.thedailybeast.com/the-superrich-bought-up-ketchu... (google brings a few more results that may be more recent)

The lack of empathy is certainly sad, but seems to be a constant of the human condition. Not all of us are like that, of course, but many are, and those that are unempathetic tend to want to rule over those of us that are.

Things went off the rails at the end...

> Well, the banks are controlled by and in bed with the same cabal buying everything up. You think this will be corrected by market forces when it is a financial and political pincher movement pushed by the same cabal that stole the 2020 election & hid COVID Truth? You are fucked.

https://twitter.com/APhilosophae/status/1402449561864577024

IMO, weakens the entire 'thread' and makes it much less trustworthy, even though I do believe this about institutional real estate investors. 'Feudalism' might be a bit extreme, but this will definitely impact the middle class in a very real way.

Yeah what the heck happened there.

"same cabal"

Everything is a grand singular conspiracy to someone these days. Happens on HN too, every few bad news type post has some accusation that whatever outcome was because of a conspiracy.

The crazy thing is that no grand conspiracy is required, this is just a function (and an entirely predictable one) of the ever increasing levels of wealth inequality that we see. No political "pincher" movement required, it's just people with money finding ways to use that money to make more money.

As an aside, this isn't a username I expected to ever see again.

Agreed. Most of this is just obvious motivations to do a thing.

Recent HN article about the SCOTUS and CFAA ruling was full of folks who felt that CFAA must have been some corporatism-ish conspiracy to pass (Computer Fraud and Abuse Act) a law back in 1986 and then criminalize basic policy rules as a serious crime. And yet apparently they just chose not to do that at any sort of scale...

Rather, the most logical explanation is that some folks made some bad choices when it came to applying that law, because it was convenient for them.

As far as my username, duxup loves you.

>this isn't a username I expected to ever see again

Mind if I ask what you mean by this?

duxup was a fairly prolific user on kuro5hin (https://en.wikipedia.org/wiki/Kuro5hin).

You don't need a formal conspiracy when interests converge. Often attributed to George Carlin.

Consider that you may be far too trusting if you’re not considering conspiracy as a possibility at this point…

I would argue exactly the opposite.

A conspiracy means that the truth about something is different from what we currently know. JFK, moon landing, flat Earth.

Where is the conspiracy with banks buying houses en masse? They intend to turn every middle class family into a permanent renter and take any profit of the housing market for themselves. This is exactly what’s happening.

We can simply say that this problem is more important than people believe, or that the media does not talk about it enough because it’s difficult to write about. But there’s no conspiracy here.

con•spir•a•cy kən-spîr′ə-sē► n.

An agreement to perform together an illegal, wrongful, or subversive act.

Like, maybe the Fed is conspiring with the gov. and big banks to fleece the American people of their real estate assets…? Have you no ability to question things?

Well, to be fair, there was a self-decribed cabal of sorts that worked to change election laws, curtail protests, and pressure social media companies leading up to the 2020 election.

Whether what they did was in any way illicit or undermines the integrity of U.S. elections is of course up for debate, but the fact that a secret coordinated effort of powerful people "conspired" (if you will) to influence the outcome of the election is I think well established.

https://time.com/5936036/secret-2020-election-campaign/

That's not fair, that's just some unrelated thing...

Yeah, different cabal.

Cabals really should coordinate better to avoid confusion.

Is it time to disrupt cabals?

Where's Y Cabalnator when you need it?

I didn't claim it was all the same cabal. However, it's very likely there are some actors with membership in both.

It was a conspiracy that the original twitter thread brought up, and you seemed to be criticizing conspiratorial thinking in general.

My point was that, of the conspiracies mentioned by the original user, the conspiracy to influence the 2020 election was openly acknowledged by its participants.

I guess I don't really understand the idea that "oh there was a conspiracy of some sort, sometime..." when it has no connection to the claimed conspiracy.

Seems like that's a common refrain from conspiracy theory fans, when they can't find evidence for their claim 'well there was another thing' comes up.... I'm not sure what they're trying to say.

People using "The Great Reset" as a pejorative tend to have their views deeply rooted in right-leaning garbage conspiracy theories. Surely there's a better source for what Black Rock is doing than this person's Twitter thread.

> Only the worlds largest asset manager and the leading proponent of The Great Reset.

https://twitter.com/APhilosophae/status/1402437638423035906

I think an objective case can be made that Covid has irrevocably changed the economy in way that has created new winners and losers, without it being part of a grand conspiracy.

I agree with that. Of course, this does not necessarily imply that a large people will not choose to believe in a grand conspiracy regardless of whether or not such a conspiracy actually exists.

While I don't know what the tweeter understands by 'The Great Reset', it actually is a thing [0]. What's your understanding of it?

[0] https://www.weforum.org/great-reset/

There was this in the FT [1] just over two weeks ago, "BlackRock bets on UK retirement housing", but it's about investing in building for defined sectors (retirement, student accommodation etc) and also shared ownership: Separately, BlackRock Real Assets is funding the £362m purchase of 3,000 shared-ownership homes by landlord Heylo Housing.

The article was archived shortly after publication [2].

I've not seen anything about buying up existing private homes at a big mark-up, though.

[1] https://www.ft.com/content/0d965c11-936e-4467-b98f-f4d34fae2...

[2] https://archive.is/AgiIg

What conspiracy? “You’ll own nothing and you’ll be happy.” is something they said.

Who is "they"? Some article in a newspaper? A handful of researchers and futurists?

Edit: Got it. It's from a list of unsurprising predictions from [at least] the marketing department of the World Economic Forum. Thanks.

I believe it was a video that the World Economic Forum put out on their YouTube in 2020. I am not sure if they took it down or not since then.

Generally speaking, I think it's a reference to this video with predictions of the future. Whether or not it was advocacy for that outcome is the subject of debate, but it does appear to be an actual WEF video. https://www.facebook.com/worldeconomicforum/videos/101539205...

WEF's official video [1]. They took down the article they had on this topic, probably due to backlash [2].

[1]https://www.youtube.com/watch?v=lBBxWtKKQiA [2]https://www.weforum.org/agenda/2016/11/shopping-i-can-t-real...

No offense, and I'll take the downvotes for being blunt, but this is political nonsense that doesn't belong on HN: people aren't going to to buy into a particular group's Proper Noun'd Concept off _obvious_ hyperbole (who actually thinks property, as a concept, is going away) that was apparently erased once it was used to hyperbole and wish a Proper Noun political concept into being.

They likely believe they don't need our buy in.

To be clear, that framing was chosen to _politely_ continue discussion.

I like walking in and out with a clear head from threads, voting behavior changed, and you're always going to get downvoted through the floor for disagreeing. Might as well know it was because of that, than because you were incurious or impolite.

I didn't downvote you if that's what you're implying. I don't downvote anything.

WEF also still has a 'the great reset' section on their official website https://www.weforum.org/focus/the-great-reset. WEF is essentially all those billionaires that meetup in davos every year

World Economic Forum had a tweet with about 2 min long video describing the near future this way. I believe the tweet was deleted last year.

It was from a series of predictions made by the WEF in 2016 about life in 2030[0].

The claim of many is that the WEF wants to bring about a world in which the vast majority of people don't have ownership.

Reuters "fact checks"[1] this claim by saying that it was merely a prediction, and that it isn't actually a goal listed on their website.

I find the fact check unpersuasive. The WEF says "you will be happy" about not owning anything. That they would even think that reveals something about the values of that organization. If that is part of what they would consider to be a happier world, why would they not push for it (in private, if not in public)?

[0]https://www.facebook.com/worldeconomicforum/videos/101539205... [1]https://www.reuters.com/article/factcheck-wef-idUSL1N2MR1UU

It feels like this analysis is missing something, ex. have you had any property rights taken away in the ensuing 5 years? If discourse hinges on a 2 minute YouTube video and refusing to accept any downplaying of it, what hope does discourse have? There's approximately infinite two minute YouTube videos

edit: -4 in 7 minutes, anyone have tips on exactly how you are allowed to discuss any of this without wholesale accepting it?

> edit: -4 in 7 minutes, anyone have tips on exactly how you are allowed to discuss any of this without wholesale accepting it?

It is against the rules to complain about downvotes.

Someone else disagreed without receiving similar downvotes.

Your downvotes are probably because of statements like "and refusing to accept any downplaying of it". It's not that I would refuse to accept any downplaying, just that I don't find the ones offered to be persuasive.

If you focus on attacking the argument at hand, rather than on the mental state or character of those you are arguing with, you will have more success.

it's not against the rules to complain about downvotes, common misconception! I know you didn't know and this isn't a commentary, or question of, or related to, your mental state or character.

I'm genuinely unaware what part of the unedited tweet includes the factors you mention, namely questioning mental state or character. Reproduced here, I can't find anything, I'm trying really hard:

I recognize that the edits include the factor you mention, those edits occurred enough after an unusually high number of downvotes, and the scored has rebounded since. Note this has nothing to do with anyone else's mental state or character, nor questioning it, or in anyway intended to relate to it.

Let me quote[0]:

> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.

As to your question:

> I'm genuinely unaware what part of the unedited tweet includes the factors you mention, namely questioning mental state or character.

For clarification: by mental state, I mean simply another person's state of mind (beliefs, intentions, etc) not mental health (sanity or intelligence).

In this case, saying that people would refuse to accept any downplaying of the WEF statement presumes knowledge about the beliefs of others. As Scott Adam's would say, it's "mind reading". Frankly, you don't know whether I or anyone else would refuse any downplaying. You only know that we refuse the ones provided.

Now, we all have to model the beliefs and intentions of others, but we are often a lot worse at it than we think, and even more so in online communication. Therefore it is best to avoid such "mind reading" language.

Of course, I am making assumptions about the intentions of the WEF! But I'm careful to separate what they actually said from what I infer about their intentions.

[0]https://news.ycombinator.com/newsguidelines.html

> Please don't comment about the voting on comments. It never does any good, and it makes boring reading.

What part of that says its "against the rules", as claimed?

> For clarification: by mental state, I mean simply another person's state of mind (beliefs, intentions, etc) not mental health (sanity or intelligence).

Sounds right.

> In this case, saying that people would refuse to accept any downplaying of the WEF statement presumes knowledge about the beliefs of others. As Scott Adam's would say, it's "mind reading". Frankly, you don't know whether I or anyone else would refuse any downplaying. You only know that we refuse the ones provided.

What would Scott Adams say about you recasting any questioning as downplaying, then invoking a general statement from him in service of furthering recasting questioning as "mind reading", then self-assuredly letting me know that you're being frank, not glib, when you tell me I don't know what you'll accept.

All of this, btw, not responding to the question you claim you're answering, quoted as if you were answering, and now you've burdened with further broad claims about _my_ state of mind and what you believe I _think_ I'm arguing

Give me some rope here, let me redirect: you're claiming that the set of following words, bounded by " marks:

"It feels like this analysis is missing something, ex. have you had any property rights taken away in the ensuing 5 years? If discourse hinges on a 2 minute YouTube video and refusing to accept any downplaying of it, what hope does discourse have? There's approximately infinite two minute YouTube videos"

contains:

- questioning a person's mental state (as in beliefs, intetions)

- questioning a person's character

- a statement that people would refuse to accept any downplaying of the WEF statement

- mind reading

Unfortunately, giving you charity here also reads as mind-reading under the extremely broad definition you've given it, so forgive me if what I perceive as normal conversational banter is yet another violation of the rules I missed: I believe you got in over your skis and tried to rope in a discussion of your readings of Scott Adams and what you think he said as an answer to "what's the best way to talk about this so I don't get downvoted?", and you've unintentionally tripled down on explaining that the downvotes are a result of the edit that came after the downvotes.

EDIT: Lordy I didn't realize you were the original person I replied to. You haven't engaged with a single comment I've made in this thread, just meta-explained why you don't need to engage with anything ever. Scott would have your head on a platter for invoking him in defense of this post-modern argumentation style

It's pretty clearly just a provocative list of predictions and not a call to action. It's like a commercial from 1995 saying "You'll have a phone in your pocket everywhere you go". They're predicting it will be a major trend that consumers adopt because it will makes sense when it comes. It's not even that crazy of a prediction. There's loads of shit in my house that I use maybe once a year and I wouldn't mind sharing with others via drone.

An NGO comprised of the world's wealthiest corporations telling the rest of us that we will "own nothing and be happy" is a bit cheeky, to say the least.

WEF said it themselves, then deleted it after backlash.

Here is a link to the since-deleted Tweet from the World Economic Forum: https://web.archive.org/web/20200919112906/https://twitter.c...

They pulled the Tweet, and they pulled the video, but here, you can read the Forbes article: https://www.forbes.com/sites/worldeconomicforum/2016/11/10/s...

Right in that first paragraph: "I don't own a car. I don't own a house." The title is "Welcome To 2030: I Own Nothing, Have No Privacy And Life Has Never Been Better."

Frankly, I don't care if the people noticing this lounge around in period-authentic SS uniforms at night, what's true is true, no matter who picks up on it.

And it's a trend along with the "hey, those bugs, you should try eating them!" articles that are so breathlessly hyped.

Now, it says "You WILL own nothing and you WILL be happy." This wasn't just some rando blogpost, it went through a lot of editorial eyes and hands. Will is very interesting. It's not optional. There's no choice involved.

It was a social media video put out by some of those "researchers and futurists," namely the World Economic Forum. You can find copies of the original video on YouTube: https://www.youtube.com/watch?v=aztvWxRKqDQ The thing that makes this more than just a crackpot futurist's prediction is that the World Economic Forum actually does gather together government and business leaders from around the world and serves as a site for networking among them. This is the sort of networking that Assange called "conspiracy" in his early essays: powerful people exist in connected graphs that allow them, whether well-meaning or conscious of ill intent, to act to prop up authoritarian power structures and repress freedoms. And so you end up with world leaders repeating the World Economic Forum's discourse of a "great reset." Here is Justin Trudeau via Global News explaining how the COVID pandemic provides "an opportunity for a reset" that is primarily economic: https://www.youtube.com/watch?v=n2fp0Jeyjvw . Trudeau is an "Agenda Contributor" at the WEF: https://www.weforum.org/agenda/authors/justin-trudeau . So, when the WEF puts out a social media clip claiming that society is changing to replace ownership with rental, a fundamental change to the existing wealth distribution in favor of corporations over individuals, you know that world leaders like Trudeau are heavily involved with those same futurists. That's what separates their predictions from those of, say, Robert X Cringely.

The conspiracy, which was not mentioned in this thread, but is all over youtube and twitter, is that the WEF is somehow going to reset everyone's wealth to zero and enact communism.

A video where futurists predict that you'll rent almost everything instead of buying it, isn't the same thing as evidence that the WEF is enacting communism.

Let's try to be clear about the nuance and details of what we're talking about.

People and organizations with wealth are dumping their money into the stock market or real estate because the dollar is being intentionally devalued.

Your complaint is the label? Great Reset sounds apt.

There are many things that would make great labels if not for the history or people associated with them. I would love to make a "Fox News" that shares news about foxes...

Uh, have you listened to their podcast? [0] The discussion of the great reset is not rooted in conspiracy theories, but rather direct quotations uttered by extremely problematic individuals who have a broad history of sketchiness, corruption, and warmongering.

I take strong issue with your careful labeling of those with whom you disagree as all leaning in one direction politically.

[0] https://pod.link/1517364006

The Great Reset is predominantly used by conspiracy Twitter and it isn't close. It is blown out of proportion relative to its original context, and amounts to sloppy punditry trying overfit an interpretation of the world. One of its least helpful usages is as a weapon against debate/policies that attempt to address collective action problems such as climate change.

It kind of reminds me of what was done with "New World Order", which people seem to be moving on from since the conspiracy pundit predictions haven't been realized (e.g. no world authoritarian government yet).

You keep changing your terms. First it was right-wingers, now it's conspiracy Twitter. What is "conspiracy Twitter," and what does it have to do with the right wing of US political discourse? Why are we conflating these terms so willingly?

I made direct reference to "The Great Reset," itself, from the very purveyors of it - the WEF. There's no need, nor any value, in trying to conflate my response to you with this strawman group you're forming.

> (e.g. no world authoritarian government yet)

Your interpretation of the world is highly specious. Have you been in a coma for these past 1.5 years?

> One of its least helpful usages

Very interesting choice of words, least helpful. Seems to me like you have a strong ideological alignment with the goals of the World Economic Forum.

See, it's so easy to flip your entire script and end up presenting the exact case being made by the conspiracy theory people. The New World Order fanatics could see the WEF as their fictitious enemies moving on to a new strategy, specifically because there is now an authoritarian government established. And it could be seen as a sloppy form of punditry, overfit atop a very specific and narrowly-targeted interpretation of the world, making the conspiracy people all the more mad that more people don't see things their way. Because there could be "real collective action," if more people did see it their way.

Under those considerations, I would be naive to be any less skeptical of your position, than I am of the conspiracy theory strawmen you're establishing here.

The actual "The Great Reset," pursued by the WEF is concerning specifically because it seeks to align economic interests globally, forcing them into a densely-regulated system through negative incentives. It forgoes and utterly mocks the notion that knowledge ought to be distributed, decentralized, and localized. There are not just huge economic concerns here, but ethical ones as well. Wars will be fought over the disagreements spawned from the aims of these zealots.

The whole thread is off the rails, just conspiracy and rumour

If you think that was disturbing, check out the substack linked to the twitter account. Full on nut job.

It went off the rails at the beginning. After the WSJ article about how pension fund managers are buying homes as investment vehicles, he immediately veered into fantasyland citing only blogs or his imagination. The Great Reset has a homepage and it has nothing to do with anything he's ranting about.

https://www.weforum.org/great-reset/

Ok, cabal is a strong word and the election stealing/truth hiding is certainly off the rails in my opinion as well.

But here's some perhaps interesting information on top 5 shareholders of largest US banks [1]:

JP Morgan Chase: Blackrock 6.4 Vanguard 4.7 State Street 4.5 Blackrock 2.7 Blackrock 2.5

Bank of America: Berkshire 6.9 Blackrock 5.3 Vanguard 4.5 state street 4.3 Fidelity 2.1

Citigroup: Blackrock 6.1 Vanguard 4.5 State Street 4.2 Fidelity 3.6 Capital world Inv 2.4

Wells Fargo: Berkshire 8.8 Blackrock 5.4 Vanguard 4.5 State street 4.0 Fidelity 3.5

US Bank: Blackrock 7.4 Vanguard 4.5 Fidelity 4.4 State Street 4.4 Berkshire 4.3

So although yes this does go off the rails a bit, not unreasonable to question the (possibly perverse) incentives banks face given their ownership. Book by Eric Posner and Glen Weyl called Radical Markets explores those incentives a bit.

[1] Jose Azar et. al. Ultimate ownership and Bank competition https://papers.ssrn.com/sol3/papers/cfm?abstract_id=2710252

It’s worth noting those Black Rock holdings are almost certainly through indexed mutual funds and ETFs.

If you calculated the ownership across all banks in the US Blackrock would not own nearly so high a percentage.

Also worth noting they have similar ownership stakes in other public companies for the same reason, and somewhat limited leverage over any of them because they can't threaten to pull their investment

Blackrock also owns over 6 percent of Apple. I wonder if this "great reset" includes buying everybody's iPhones.

Aren't most of these holdings through funds? It's not Blackrock, Vanguard or Fidelity that's holding those shares, it's people and institutions who are investing in their funds.

That's a necessary point, but who really has the power? What is the chance that the investors will pull out, especially if they are making a profit?

Blackrock Vanguard et al have tremendous influence as shareholders even if it's via an index fund... see what they did to Exxon Mobil a few weeks ago!

Exactly right - BlackRock and other large indexers have no legal obligation to follow the recommendation of an independent adviser (like ISS, Glass Lewis) in a proxy contest, even for a passive fund. In most cases they passively anticipate the index provider's (S&P, Russell, MSCI, etc.) moves for corporate actions, but management elections for the board and executives are much more subjective as they don't influence the position itself (note that the manager can sometimes also be the index provider, like BlackRock = iShares). The smaller index managers almost exclusively follow the proxy adviser's recommendation because they don't have the resources to analyze board decisions for ~8,000 different companies.

Vanguard in particular is just a bunch of different mutual funds and ETFs. It doesn't do hedge fund type investing.

I was going to say, people need to learn how to make a point and leave out extraneous claims since those extraneous claims usually attack the credibility of their legitimate points ...

... but the urge to ignore my own advice is too strong since the extraneous claim is a huge head-scratcher. Doesn't this person realize the person who lost the election is a real estate developer? I realize this isn't the same thing as an investor, but it is close enough in this case.

It really was a bad end. Pretty much describes how capitalism's natural end will fuck us over, and then decides to throw in some support for the billionaire landlord president he liked...

> capitalism's natural end

where's Capitalism and where's Federal Reserve funded institutions that represent the big deep state aiming at controlling all aspects of your life.

Conspiracy theories are the new urban folklore.

They get disconnected from their origins, repackaged and repurposed like a durable material.

"Cabal" traditionally is a dog-whistle for the antisemitism conspiracy about why the Nazis claim they lost WW1.

It's been durable. Lots of uses of cabal these days shed those nazi roots and repurpose it to just mean "those corrupted by wealth and power". It's still really, extremely close to a very dangerous form of anti-semitism, but it's possible for one to exist without the other.

It's really fascinating how transitive these lies are and how they can be composited like higher level programming objects to form essentially different flavors of insanity. I wish humans weren't like this but eh, don't know how to change it

The main reason the homes are being bought up is the lumber and steal costs. Right now, it would cost me $500k to build a house that last year would cost me $190k. Real quotes I got for a possible build. More details on what I’m seeing here:

https://austingwalters.com/stagflation-is-here-monetary-infl...

With that being the case and the dollar appearing to be weakening, it makes since for them to buy anything they can.

Those homes they are buying for $300k would cost $500-$600k to build...

Regarding the great reset - here’s a Bloomberg article on how to navigate it: https://www.bloomberg.com/opinion/articles/2021-05-31/how-to...

It’s real and it’s here.

The point about lumber is accurate. We are getting a fence built for our house, and our contractor says the lumber has gone from $12 a board to $28 a board over the last few months. He's had to revise his estimates upward lest he lose money on the job.

We are refraining from building a deck due to lumber prices. Maybe next year.

Or I buy a mill and cut my own lumber. I’ve got plenty of trees I can take down and use.

Your numbers are off for most areas. There has been inflation in construction material prices, but that's only one part of the total price of building homes. The other major components include land prices, labor, and permits. So costs could have only doubled from $300k to $600k in areas with very cheap land and permits where materials make up the dominant share of the total cost.

This comment refers to the original URL, https://twitter.com/APhilosophae/status/1402434266970140676, which we've since replaced with the article it points to (in keeping with the site guidelines).

And that guideline often results in confusing, disjointed comment threads.

Enforcing banal, insigificant titles diminishes meaningful discussion hinged on the actual point of the submission.

Strangely, but anecdotally, the titles that I see getting changed are ones involving race, state actors, or corporations.

What these moves feel like is censorship of story title that mention, for instance, Black people, the Chinese Communist Party, or multinationals like BlackRock.

> often results in confusing, disjointed comment threads

It can, which is why I posted replies to the relevant comments in this thread. It's still usually a net win, though, to replace a secondary/derived source with the article it's derived from, especially when the secondary/derived source is adding sensational spin.

> Strangely, but anecdotally, the titles that I see getting changed are

I think you may be getting bit by what I call the notice-dislike bias [1]. You (i.e. all of us) are much more likely to see, and to put emphasis on, the changes that you dislike or disagree with, and to de-emphasize, or simply not notice in the first place, the ones that seem normal or ok. This leads to false feelings of generality [2]. Your comment is well above the median in quality because you at least said "anecdotally"; most users who post general claims about HN don't seem to consider that there may be any bias in such perceptions at all!

From a moderation perspective I can tell you for sure that there's no singling out of any topics over others when it comes to applying the title guideline. Of course, titles on divisive topics are more likely to be inflammatory and therefore linkbaity, and thus 'hit' the guideline, but that's a skew in the data, not the moderators.

As for "censorship", that word has gotten diluted to the point that it seems to just mean "change I disapprove of". You can use it to describe HN title edits if you like, but I think it's a bit of a stretch.

[1] https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que... - it would be great to find a less lame name for this, but it's the best I've found so far

[2] https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

There's an achive link in the top comment, and I think replying to that with the original URL would help rather than making fact of the change burried in the comments, but I can't reply to that archive link post.

When users post those paywall workaround URLs, we sometimes disable replies (when we see them), because usually the replies repeat the same old tedious argument about paywalls that has been off topic for years (https://news.ycombinator.com/item?id=10178989, https://news.ycombinator.com/newsfaq.html).

We could turn that off so you could post the originally submitted URL, except I'm not sure that there are significant subthreads getting distorted by this change. I already put that URL at the top of the ones I saw, like the GP.

Probably worth pointing out this twitter account is promoting the idea that the 2020 election was stolen. To me that casts suspicion on their other assertions.

I follow this account and others like it because it allows one to be exposed to things like the idea that COVID leaked from a lab a year ago.

Skepticism is warranted in all cases, of course, but I think it's extremely healthy to keep in tune with a variety of subcommunities who are in and of themselves skeptics of many mainstream narratives.

I don't understand how you can manage, honestly. The absolute swarm of conspiracies around COVID and the election overwhelmed me and i wasn't even trying to stay informed on them. Furthermore, even if i was trying to stay informed on them it seems like a full time job trying to discern the "maybe not entirely moronic" conspiracies to the completely batshit ones. Most are batshit, it seems.

Sounds exhausting.

I find that the times it is exhausting is when I've been overly attached to my own beliefs such that there's an emotional response to being exposed to claims in conflict to them. The best way to overcome this inhibitor to open mindedness in my opinion is to just ensure you have a broad exposure such that it becomes normal and unimpactful to read many things you strongly disagree with regularly.

While I agree that it's healthy to keep a broad set of sources, I find that once a source has shown to be untrustworthy on some topic, I discount them on other topics too. There is a difference between having a certain worldview and twisting facts to your narrative.

Unfortunately, a good chunk of the Republican party in the U.S. is happily ignoring facts around the last presidential election. There is little use in exposing yourself to their faux complaints. Much like it was not useful to read up on the "Russian connection" that was invented to attack Trump. So when people fall prey to these ideas, I discount their opinion. I stop reading them. No reason to willingly absorb noise.

These people you mention aren’t generating these theories nor am I suggesting we take their conclusions into consideration - my point is they have value as relays which are connected to networks you otherwise would not have access to, and as alternative relevancy ranking algorithms over the set of published information. For example, this WSJ article gets an increased weight in being exposed to me as a side effect of not masking out this person who is promoting it based upon their own, more widely scoped, conspiracy theory.

I don't know if reading about how someone is the devil or how vaccines put 5G computer chips in my arm will ever not be draining.

Something else to be skeptical of: skepticism.

A good amount of skepticism is great. Questioning everything is belligerent and actually close-minded rather than open.

There's no objective measure for one to define what is a "good amount" of skepticism. The trap of using this as an excuse to shield yourself from people who have a higher level of conspiratorial or counter-consensus thinking than you prefer or have yourself is one worth trying to be mindful of. Claiming there are people who "question everything" is a yellow flag, imo, because that literally doesn't exist, though I know you were speaking hyperbolically. But having the capacity to bucket people into a group who "questions everything" despite the reality such a person literally cannot exist, may mean you are over-weighting this mental model.

It sounds like you agree that there is a "bad amount" of skepticism but no way to measure that either?

Then it is as easy for me to say you have fallen into the trap of being overly skeptical but are using an excuse to shield yourself from people that would call you a raving nutter.

I don't worry too much about finding a way to measure what a "good amount" of skepticism is. Like pornography, I know it when I see, er, smell it.

No, I reject the over-simplified model in general, but my argument is that whatever terms you are, in your own model, using to mean "good" and "bad" and "too much" and "too little" are irrelevant to the question of, even if you could define them clearly, if you can also place and measure a valid threshold. Given the problem here specifically is the epistemological value of consuming views you currently disagree with, by setting yourself up as judge and jury of who is considered worth listening to you're just begging the question, regardless of your framework to act as said judge.

At the end of the day, you have scarce attention, so there are necessarily heuristics you need to use to navigate information and consuming it due to opportunity costs. But my argument is that pegging some people and not others as "too skeptical" is low on the list of good heuristics.

What you describe is called pseudoskepticism.

https://en.m.wikipedia.org/wiki/Pseudoskepticism

Conspiracy proponents act like the lab leak theory being true is some game changer. It's the stupidest thing. Even if it wasn't leaked, China sure did a lot to mess up and exacerbate the early response to the pandemic for the world. Additionally, people have been critical of wet markets in China from early on, one suspected source of where it first spread to humans.

I have no problem with investigating if it was a lab leak or anything else, but enough with trying to turn this into some political wedge issue that people wield as a cudgel against 'the sheeple'. Skepticism here isn't some neutral point of view.

> trying to turn this into some political wedge issue that you wield as a cudgel against 'the sheeple'

This thing you did here is mind-reading - nothing you wrote here is present in my original comment. You may be living in a small set of filter bubbles compared to the average.

I changed "you" to "people" since I meant it in the general sense of how self-proclaimed skeptics treat this topic and say condescending things like this:

> You may be living in a small set of filter bubbles compared to the average.

Understood - I rescind my comment since the way it was written I interpreted it to mean you were accusing me personally of doing this.

I am not sure why, if your original comment was properly interpreted the way I did, it would be unfair to posit the idea of you living in limited filter bubbles. It's nothing to be ashamed of since we are all continually being victimized by social media algorithms into being exposed to information they feel will drive changes in our behavior. Everyone lives in filter bubbles. I don't know how to properly engage someone with the idea they ought to consider they're in a particularly narrow set without them feeling attacked. The best I've seen in some areas of inquiry is a tool you can use to analyze your twitter account to understand the scope of news sources you interact with, but that's limited obviously given the domain constraint. Even then it's hard to convince a person they are living on a overly-constrained information diet.

I will add, separately:

> Conspiracy proponents act like the lab leak theory being true is some game changer. It's the stupidest thing.

On the virus issue specifically, here are three mainstream narratives that have been largely up-ended, and if you were in tune with a variety of viewpoints you would have been exposed to for your own conclusions before they became mainstream:

- "Coronavirus" was an immense threat and it was wise to prepare for it arriving and turning into a pandemic. Government actions to cut it off eg by banning travel was warranted. (Promoted in Jan 2020 in certain circles, discounted by consensus)

- Being a likely airborne pathogen, wearing masks (particularly N95s) was wise. (Promoted from Jan, in March the surgeon general and others claimed there was no reason to wear masks.)

- Given the proximity to the lab the idea this came from the lab was a worthy explanation worth investigating. (Promoted from March by my recollection)

For me, I was wearing a medical-grade mask in stores and stocking up on supplies in January 2020 due to my exposure to this information with a relatively open mind. I don't discount the possibility that, given that I have advanced lung disease, this priming reduced my prior probabilities of catching and even dying from this pandemic. I was mentally a few weeks ahead of the narratives I read in the media throughout this pandemic and made a variety of decisions around risk management that were in conflict with what felt like the average consensus. This doesn't mean I was confident in these theories per se, but when you're forced into making risk adjusted decisions having a diversity of ideas swirling in your head opens the possibility of having a better risk calculus, esp if the goal is to be conservative.

That's a broken calendar is right once a year situation.

This is a false mental model because there is no singular calendar. If you are actually exposed to a variety of ideas there is no obvious, universal set of narratives you can point to as having a clean bisection between one or two 'calendars.' Tribalism does cause things to increasingly cut that way, but the mental model is still a false one.

They also push the idea of "The Great Reset" in that thread, which is another conspiracy theory that is tied up with FEMA putting people in camps in abandoned Walmarts, Bill Gates chipping us through the Covid-19 vaccine, and Q-anon.

As soon as they brought up "The Great Reset" I found the whole thread lost credibility.

great reset is not a conspiracy theory[1]. however, attributing abandoned walmarts to the great reset is a theory.

1: https://www.weforum.org/great-reset

> "The Great Reset" in that thread, which is another conspiracy theory"

Curious to see the argument _against_ "The Great Reset" tbf.

Dismissing someone because they hold a viewpoint you disagree with is childish and dangerous to our society. By that logic we should all be dismissing CNN reporting because they were peddling Covington kids and russian collusion among other things proven to be false. We should all be striving to take in all sources of information and use our best judgement to judge and interpret them.

There is a host of terms used in that thread that point to the person as a conspiracy theorist. "The Cabal", "The Great Reset". These are terms used in the Qanon community constantly.

It has to do with the person lacking credibility based on their own statements than them holding an opposing viewpoint.

I have no idea what those things are and I'll give you the benefit of the doubt but the twitter post referenced a wsj.com article. I don't think we should shoot him down for linking to a trusted source.

> Russian Collusion

There is really strong evidence that there is Russian Collusion. The Muller report is full of actions by the Trump election team that point to them working in conjunction with Russia and Russian Agents.

Do you cast aspersions like this on people who think the 2016 election was stolen? They tend to be a lot more respected, but they’re just as incorrect.

I haven't heard that one.

2000 election stolen? Absolutely.

That seems unlikely. Here’s one high-profile example: https://www.washingtonpost.com/politics/hillary-clinton-trum...

Wow, how is it I had forgotten the FBI Director, James Comey, announcing just days before the election that Hillary Clinton was being investigated?

It's been a strange past 4 years....

This comment refers to the original URL, https://twitter.com/APhilosophae/status/1402434266970140676, which we've since replaced with the article it points to (in keeping with the site guidelines).

Twitter is an awful blogging format when your message takes more than one tweet. It makes you blend in as well, making it easier for fake news to spread - you aren’t that different from a billion other accounts all saying striking things. At least with a blog, you have a more recognizable identity and the ability to write more than a few words at a time

We know. This sentiment is expressed literally every time a Twitter thread is posted to HN. Use threadreaderapp unroll and move on.

"Please don't complain about website formatting, back-button breakage, and similar annoyances. They're too common to be interesting. Exception: when the author is present. Then friendly feedback might be helpful."

https://news.ycombinator.com/newsguidelines.html

We detached this subthread from https://news.ycombinator.com/item?id=27449544.

This could be an interesting topic but a rant about cabals and the Great Reset is probably not the right starting point.

Call it what you want, but the obvious fallout of this is that valuable assets will be owned by very few people, and rented out. A tenet of the Great Reset is that "you will own nothing and be happy".

The US is printing money which will lead to like a 10% inflation rate probably.

Even now food is noticable more expensive.

So, over the course of a few years these are good investments.

For the same reason people (and Blackrock is interested or has already) bought Bitcoin.

Sidestepping all the emotional comments. It's open market. Adopt to it.

1. Build more homes.

2. Sell to Blackrock or whatever at 2x or 3x your cost.

3. Profit!

Have you tried 1 in most places?

No lot availability. No materials to build the house. No workers available to build the house. Etc.

Then the problem is NOT "Blackrock buying homes".

It's elsewhere.

The problem is that Blackrock is taking advantage of "free money" to get in on this arbitrage while it can, while normal people don't have anywhere close to the same opportunities to take advantage of "free money". Naturally, Banks eat up all land and houses, and then "you will own nothing and be happy", as per WEF.

Add in zoning and NIMBYs and getting anything built is a nightmare.

And zoning laws designed to keep houses expensive.

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