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Comment by itsoktocry | Hacker News Reader

>Statewide bans on short term rentals

I live in Canada, but we have the same issues.

It's going to be a very interesting cross-generational political battle. The sheer number of "normal people" who own investment properties and AirBNBs now is extraordinary. I know people scraping by working average jobs that own multiple units. Meanwhile, the younger generation can't buy a home.

We've normalized the idea that real estate can't lose and everyone should own multiple properties, and we can't come back from that without one side suffering a ton of pain.

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In the US there are numerous incentives for buying a home. Your interest on your mortgage is tax free, the government offers cash back, etc. Renting gives most of these incentives to the landlord instead and they aren’t necessarily passed onto the renter. Most importantly, this means that if you have cash to invest, real estate has favorable tax treatment compared to other options so you suddenly have turned housing into a market that must rise decade over decade or the economy will collapse.

The way to fix this is painful but it is to revoke all incentives and to make people put down 25-50% as down payments. It will cool the market to near absolute zero short term but it will help long term in keeping housing to actually be housing.

Maybe revoke the incentives for those who currently already own multiple properties. No sense in putting an additional financial barrier to people attempting to purchase a home to live in. Investors will be slightly affected by this but it seems like the type of measure that would deter first-time homeowners altogether- therefore exacervating the problem of so many properties being taken by people whose primary interest is profiteering, and leaving those who just want to own the place they live in the dust.

Many incentives are for first time buyers, or single home buyers. Taxes depend on region, but everywhere I see treats primary homes, secondary homes, and rentals as different classes of real estate.

Now that doesn't mean the incentives aren't skewed. But I don't think landlords buying their 20th house are getting the same benefits as a first time buyer.

>Your interest on your mortgage is tax free, the government offers cash back, etc.

I have no idea what "the governments offers cash back" means; but certainly the mortgage interest tax deduction is only available for homes in which you actually live for at least part of the year - it's not available for rental properties.

You can deduct mortgage interest as an expenses if you're renting a property, but that's exactly the same as any other loan used for a business activity and not specific to real-estate.

> In the US there are numerous incentives for buying a home.

The big one being taxpayer funded 30 year fixed rate mortgages, and subsidizing the existence of 0% and 5% downpayment mortgages.

>Your interest on your mortgage is tax free,

Literally 90% of US tax filers do not benefit from this, since it requires itemizing.

>the government offers cash back, etc.

I have not heard of this.

If you rent out the property the interest is a tax deduction as a business expense. The taxes and insurance are also a tax deduction. You can still take the standard deduction at the personal level.

There are a variety of state, local and sometimes federal tax credits or down payment assistance for new home buyers.

Could you expand on your idea of how taxpayers are subsidizing mortgage rates and downpayments?

Mortgage interest is only deductible for your primary residence and one other home. Additionally, if you take out a second mortgage/HELOC, it’s only deductible if you use the money to improve the property.

There may be additional tax benefits that accrue to a business that is paying interest, but that’s separate from personal deductions.

Not to mention all of the tax kickbacks and money that goes to people who buy and develop houses in poorer areas.

> make people put down 25-50% as down payments.

I wonder, though, what percentage of buyers this would affect. Lots of houses are behind purchased now with 100% down.

You don't have to take the benefits away. Just tax ad 50% of land value per year for every residence over 1.1th that anyone owns a stake in. Also treat anyone who doesn't live in the region as if they already have 1 house.

Then there'll be plenty of stock.

Is this really true? Most incentives I know of are for first time home owners. Most landlords can't take advantage of them.

At the very least we can kick out Chinese and Russian "investors" that only want a way to keep their cash safe from their dictatorship governments. That should drive down our prices and put some pressure on the elites to push for better governments at home.

You forgot most kingdoms from the gulf.

Of course, a major answer to this problem is to simply ban non-americans from buying american property, but that will implode real estate and hurt a lot of homeowners.

That is the voting middle-upper class. The majority are voters. And they won't want any of that.

> but that will implode real estate and hurt a lot of homeowners

You can’t have your cake and eat it too. Homeowners need to get hurt in order for housing to be more affordable. Housing taking up huge chunks of earnings is a terrible state of affairs for citizens and the economy.

Let them buy it, as long as we can keep building more. The problem is still that supply is artificially reduced.

What incentive do we, as a society, have for foreigners to use our land as a piggy bank?

Given we already have chronic undersupply, shouldn't the default position be to prioritize citizens and others who can demonstrate a greater need?

Assuming we could build more, in theory economies of scale would result from more development happening regardless of who the buyer is. And it would in theory result in overbuilding capacity for that many residents and then being left with spare capacity, the cost of which would be allocated in equal part ideally to the investor properties as well.

It unfortunately is "the very least" we can do, though.

> That should drive down our prices

No, in Canada, foreign owned properties make up a tiny percentage of the total, so banning it doesn't actually have any impact. Works as future protection for sure, but that's all.

The "foreign investors" are a convenient strawman that hides bigger underlying problems.

Didn’t Vancouver do this to good effect recently? 20% tax on foreign buyers caused a 15% dip in home prices?

Same issues in Asia

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