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

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

#481

Post by tzs » Wed, Jun 09, 2021, 5:39 PM UTC

plank_time wrote: post #271

gowld wrote: post #224

Earlier quoted context omitted.

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?

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.

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

#482

Post by jiofih » Wed, Jun 09, 2021, 5:39 PM UTC

brightball wrote: post #218

davidw wrote: post #125

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, approv…

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…

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).

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

#483

Post by WarOnPrivacy » Wed, Jun 09, 2021, 5:40 PM UTC

browningstreet wrote: post #411

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.

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

#484

Post by jonfw » Wed, Jun 09, 2021, 5:41 PM UTC

plank_time wrote: post #311

ska wrote: post #273

Earlier quoted context omitted.

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 mobilit…

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

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

#485

Post by dragonwriter » Wed, Jun 09, 2021, 5:41 PM UTC

seanp2k2 wrote: post #170

cosmojg wrote: post #32

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 wit…

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 t…

> 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.

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

#486

Post by Ekaros » Wed, Jun 09, 2021, 5:42 PM UTC

mirker wrote: post #93

adflux wrote: post #44

Earlier quoted context omitted.

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...

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

#487

Post by davidw » Wed, Jun 09, 2021, 5:42 PM UTC

MoosePirate wrote: post #416

an_opabinia wrote: post #396

Earlier quoted context omitted.

> 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...

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

#488

Post by fshbbdssbbgdd » Wed, Jun 09, 2021, 5:42 PM UTC

tengbretson wrote: post #328

Smaug123 wrote: post #121

Earlier quoted context omitted.

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?

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.

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

#489

Post by nitrogen » Wed, Jun 09, 2021, 5:42 PM UTC

cycrutchfield wrote: post #330

plank_time wrote: post #258

Earlier quoted context omitted.

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 deser…

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.

People generally buy a house because they want to live in it. The nominal value of the house does nothing to benefit them.

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

#490

Post by TomVDB » Wed, Jun 09, 2021, 5:42 PM UTC

plank_time wrote: post #311

ska wrote: post #273

Earlier quoted context omitted.

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 mobilit…

> 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_...