Dutch cities want to ban property investors in all neighborhoods • Hacker News Board

Re: Dutch cities want to ban property investors in all neighborhoods

#481

Post by noahtallen » Sun, Sep 05, 2021, 5:11 PM UTC

logicchains wrote: post #428

sumedh wrote: post #222

Earlier quoted context omitted.

> you are part of the top 1% of the globe when it comes to wealth. So what, what do you want the person to do, go live in a hut? How is that person greedy compared to people with multiple houses?

>How is that person greedy compared to people with multiple houses? They're greedy because they think the world owes them cheap housing just by virtue of being born. The person who owns multiple houses actually did some work to earn the money to pay for them, they're not the one eyeing other people's property with envy.

The problem here is that, in general, you don’t get to own multiple houses by being a hard worker. You could be an extremely hard worker, but not make very much money. You could be very lazy and make loads of money. The reality is that the housing market is on a trajectory where most people cannot and will not be able to afford ownership, even for white collar jobs. Wages do not go up quickly for most folks either, so the cost of acquiring a house relative to your income continues to rise.

More specifically, say you enter society making $80k in a major city. You’re young, so this is normal. At this point in time, a house is not an option, because a mortgage would require $100k in savings. And if the housing market continues increasing like it has the past few years, that amount keeps going up. For most people, the rate that house prices go up is quicker than the rate they can save towards a down payment.

It’s important to note that a quickly accelerating housing market is EXTREMELY beneficial for investors. It creates a feedback loop which makes investments more common, which makes the prices go up further. Spending $400k this year and selling for $500k next year is an excellent investment opportunity.

Is it greedy to think that one deserves a home? Likely not. Is it greedy to make some extra money via property investment? Maybe sometimes, maybe not. The point isn’t that property investment is inherently bad, but that property investment is pricing most people out of the housing market.

As a hypothetical, would you like to live in a society where homes are not accessible for 90% of people? I personally do not want to live in a society where housing is extremely scarce. That’s a recipe for societal upheaval. If property investment is making the market spiral out of control, which it likely is, it benefits most people to curtail that problem.

Re: Dutch cities want to ban property investors in all neighborhoods

#482

Post by IkmoIkmo » Sun, Sep 05, 2021, 5:12 PM UTC

colechristensen wrote: post #422

IkmoIkmo wrote: post #328

Earlier quoted context omitted.

This is one of those terribly myopic and symbolic policies that the Netherlands (despite generally one of the best governed countries in the world) keeps falling for. Studies have shown over and over again that investors aren't causing the price increases in the Netherlands. Prices won't improve much. Renting is going to take a beating, which is already an extremely small sector in the Netherlands, among the smallest…

So the housing market is so inefficient that removing a significant source of demand won’t change prices? That is an exceptional claim that requires exceptional evidence.

No, that's not the claim. There's waterbed effects. Buy-to-let is done for the purpose of renting. If you take that rental supply away, rental prices go up, and demand for homes go up. Taking away buy-to-let demand thereby creates other demand that buy-to-let was supplying. You're just replacing the demand, not removing it.

Re: Dutch cities want to ban property investors in all neighborhoods

#483

Post by missedthecue » Sun, Sep 05, 2021, 5:17 PM UTC

colechristensen wrote: post #422

IkmoIkmo wrote: post #328

Earlier quoted context omitted.

This is one of those terribly myopic and symbolic policies that the Netherlands (despite generally one of the best governed countries in the world) keeps falling for. Studies have shown over and over again that investors aren't causing the price increases in the Netherlands. Prices won't improve much. Renting is going to take a beating, which is already an extremely small sector in the Netherlands, among the smallest…

So the housing market is so inefficient that removing a significant source of demand won’t change prices? That is an exceptional claim that requires exceptional evidence.

New Zealand banned foreign buyers a couple years ago and house prices are up 20-50% nationwide since then.

https://i.stuff.co.nz/life-style/homed/119636052/foreign-buy...

The problem is that people chronically overestimate the number of foreign buyers in the market. I can't find data for the Netherlands online, but for other western nations, it is around four or five percent of demand. Removing that will have essentially no noticable impact on housing prices as NZ has learned.

The advantage of a foreign ban is political in nature. Foreigners can't vote in local elections, so politicians lose very little, and the actual electorate is satisfied that government is 'doing something' about the problem.

It's a no lose situation for the politician, but at best it does nothing to reign in the issue of housing costs, and at worst it fans the flames of xenophobia.

Re: Dutch cities want to ban property investors in all neighborhoods

#484

Post by IkmoIkmo » Sun, Sep 05, 2021, 5:23 PM UTC

berkes wrote: post #367

IkmoIkmo wrote: post #320

Earlier quoted context omitted.

Not sure why the amen is applicable to Dutch cities. I'll take the local perspective from Amsterdam as an example, but it applies more broadly to the other cities as well here. Regarding point 1: There's no real issues with long-term vacancies (the municipality already has laws in-place which fine owners of vacant homes), typically sits between 1 and 2%. That should obviously go down to 0 as much as possible, but it'…

Studies have shown that in the Netherlands only a tiny part of the rapidly increasing price is due to shortage and the majority due to investers. The exact opposite of what you say. I'm not saying you are wrong. I'm saying that what you pose as established facts are highly debated in the Netherlands at the least. I'm on mobile, so finding English studies is hard. Maybe parent author could cite some of the studies (s)…

So the study you referenced was ordered by the Minister of the Interior, and it's been the most heavily cited study in the past few years.

If you read it, you'll find it explicitly states they could not establish a causal relationship between investors and increased prices. (i.e. it says exactly what I stated).

They do find a correlation (which is heavily referenced in the news and misinterpreted), which would be expected. Investors who study the market and are investing professionally, are more likely than the average, and definitely more likely than below-average, to invest in neighbourhoods which turn out to see more price increases than neighbourhoods that investors chose not to invest in. That's of course because it's their job and their expertise. It doesn't mean they're causing the price increases.

It's a bit like saying there's a correlation in prices between prices of stocks of companies that professional investors choose to invest in or not. That's obvious, professional investors seek returns, and are expected to invest in such companies. But the investors aren't causing the tech stocks to become valuable. They simply are, by way of their profits. Google (once established) isn't high-value because investors choose to buy its shares. Investors detect the value and pursue to own it. Real estate is no different. Which is why the study found a correlation, but explicitly did not establish a causal relationship.

Re: Dutch cities want to ban property investors in all neighborhoods

#485

Post by wallacoloo » Sun, Sep 05, 2021, 5:23 PM UTC

rocqua wrote: post #155

nmca wrote: post #42

In the long term, the ethically right answer seems pretty clearly to me to be a land value tax [0]. But due to encouragement of home ownership [1], that's not going to democratically tenable in a lot of countries for 20+ years. Unfortunate situation. [0] In 1879, a man asked "How come all this new economic development and industrialized technology hasn't eliminated poverty and oppression?" That man was Henry George,…

Homeownership is a great ideal. Letting people work towards having a place to live without paying rent is great for independence. What is stupid is promoting Homeownership as a personal investment for the individual home-owner. A home is already a great thing to own financially, because it 'produces' not having to pay rent. There is no need to also have it pay 5% a year for people who have 100% leverage (which is ver…

Just a note that 100% leverage would mean that you’re borrowing against 100% of the portion of the asset you bought to purchase more of the asset. I.e. you put 50% money down and borrowed to buy the other 50%.

A typical 20% down-payment in the US gets you 400% leverage (you used your 20% ownership 4 times over in order to purchase the other 80%).

5% down gets you 1900% leverage.

If you put $50000 down (5%) on a $1M home, it rises by 1% ($10000) and you sell it, then you just made a 20% return on your initial investment. You were leveraged 1900%, and so you got a return 1900% above what you would have without borrowing any $. Nobody serious advises that kind of leverage on any asset except for real-estate, AFAIK.

Re: Dutch cities want to ban property investors in all neighborhoods

#486

Post by nine_k » Sun, Sep 05, 2021, 5:24 PM UTC

MomoXenosaga wrote: post #353

IkmoIkmo wrote: post #320

Earlier quoted context omitted.

Not sure why the amen is applicable to Dutch cities. I'll take the local perspective from Amsterdam as an example, but it applies more broadly to the other cities as well here. Regarding point 1: There's no real issues with long-term vacancies (the municipality already has laws in-place which fine owners of vacant homes), typically sits between 1 and 2%. That should obviously go down to 0 as much as possible, but it'…

The Netherlands is just too rich that it is working against itself. We have created a society where every person wants their own house- 17 million people 10 million houses. And the Netherlands is a magnet for migrants- compared to most of the world the streets are paved with gold. And no matter how much the prices go up people can and will pay. Unless there's a mayor economic recession things will not get better.

I wonder if Amsterdam specifically is filled with single-family houses. I suppose some larger apartment houses must exist, housing a few families.

Re: Dutch cities want to ban property investors in all neighborhoods

#487

Post by skybrian » Sun, Sep 05, 2021, 5:30 PM UTC

IkmoIkmo wrote: post #482

colechristensen wrote: post #422

Earlier quoted context omitted.

So the housing market is so inefficient that removing a significant source of demand won’t change prices? That is an exceptional claim that requires exceptional evidence.

No, that's not the claim. There's waterbed effects. Buy-to-let is done for the purpose of renting. If you take that rental supply away, rental prices go up, and demand for homes go up. Taking away buy-to-let demand thereby creates other demand that buy-to-let was supplying. You're just replacing the demand, not removing it.

Could you spell out why this doesn’t just move demand around? Aren’t the same number of people as before looking for a place to live?

(I also don’t know what you mean by “waterbed.”)

Re: Dutch cities want to ban property investors in all neighborhoods

#488

Post by emodendroket » Sun, Sep 05, 2021, 5:45 PM UTC

llampx wrote: post #356

emodendroket wrote: post #281

Earlier quoted context omitted.

If a business can only exist by having serfs it wildly underpays then maybe it deserves to lose out to the big chains.

Big chains aren't exactly known for treating unskilled workers with kids gloves. Amazon comes to mind, as does Walmart.

And yet they pay substantially better wages with better benefits on average. Even labor law compliance is much better (not to mention that small businesses are exempt from many regulations in the first place).

Re: Dutch cities want to ban property investors in all neighborhoods

#489

Post by emodendroket » Sun, Sep 05, 2021, 5:46 PM UTC

seanmcdirmid wrote: post #418

emodendroket wrote: post #281

Earlier quoted context omitted.

If a business can only exist by having serfs it wildly underpays then maybe it deserves to lose out to the big chains.

Or they could turn to automation, eliminate their labor costs substantially. Eg that cafe can turn into a bunch of vending machines.

Sure, they could do that too.

Re: Dutch cities want to ban property investors in all neighborhoods

#490

Post by mancerayder » Sun, Sep 05, 2021, 5:53 PM UTC

afuchs wrote: post #477

makomk wrote: post #106

Earlier quoted context omitted.

Unfortunately, the British press and all the wealthy people with second homes still have Brexit as a scapegoat for why cafes and shops in tourist destinations can't find staff. Never mind the fact that AirBNB and second homes have pushed up house prices and rents to the point that it's impossible to live there on the kind of pay those jobs have, according to the media it's all the fault of Brexit driving away the for…

There's a dead comment later in this thread which using directed abusive language towards another commenter while linking to a Louis Rossmann video. The video [1] was interesting, although the dead comment seemed to completely ignore the video's [1] main point, where Louis talks about a hypothesis [2] where in New York City there may be an incentive structure between real estate investors and banks which is creating…

Well, when you apply for loans the bank will want to know (and will send an appraiser) to estimate sales and rental values. If the developer's expectations on rental or sales income on a multifamily property are higher than the reality, and they lower sales prices (condos) or rental amounts, there's potential for them to get called to provide more capital. Because they may reappraise. What I've just explained probably has its own vocabulary I'm not using in the commercial real estate world, but my experience here is that my building has this problem and the brokers explained why they preferred to leave things vacant.

As it turns out, after 18 months, as the city comes back after the pandemic, the vacancies are now suddenly much lower. The building for 1/3 full for years.