Yes, I think it would be a good idea to cap how many properties can be owned (at an amount reasonably high per private individual, but low for companies) although of course those intent on being real estate tycoons will find loopholes. I think, like many issues, this would best be implemented locally first. If a city/town has people who want less residential properties controlled by a few big owners (either for rent or to flip) they can demand their elected officials do something about it. Trying to enact broad change federally or even statewide casts too broad of a net with big holes that more likely than not would make it difficult for smaller owners to be able to do things but would most likely leave the international corporations only slightly inconvenienced. There really is no one solution that would be both effective and realistic but I do think it is very important for people to understand and discuss this topic, and not rely on assumptions. The market has changed drastically over time, as has public perception, and it's actually a lot more complicated than just "fill empty homes" and "foreign investors are owning all the houses".
Ask HN: Anyone else feels the commoditization of real estate is unethical?
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Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#282Despite the fierce rhetoric, the primary driver of the financialization of the US housing market has been A) US federal policy that grants preferential financial treatment of home ownership in the way of mortgage deductions and the Home Sale Tax Exemption B) Local and state governments which place supply restrictions on the construction of new homes, especially multi-family dwellings.
The latter is particularly serious. In normal markets, tight supply leads to higher prices. Producers respond to higher prices by increasing supply and prices moderate over time. In the housing market this is not happening: in high demand cities with well-paying jobs it is largely illegal to build new homes. Thus supply does not increase and prices continue to rise. In the oil industry in the 1970s, we saw how OPEC supply restrictions caused oil prices to rise. The same is happening in the housing market: local zoning laws are effectively operating as a cartel.
This government supported financialization of the housing market has created a haven for real estate speculators in the private sector. Continued low housing supply helps insure prices will continue to rise and thus make housing a good investment. This speculation makes the housing market even more frothy.
To break the cycle, we must end federal policies that encouraging housing to be seen as a primary asset investment for individuals; and we must reform local zoning laws that restrict new supply.
Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#283Earlier quoted context omitted.
And they pay more property tax.
Yeah, that's correct. But property tax also taxes improvements that the owner made themselves. This disincentivises improving land too much. The whole thing with Georgists and a land value tax is that it's specifically unearned wealth due to increases in unimproved land value that are taxed more.
The idea is the more and better improvements your property has the more you can afford to pay. I figure 50% of the reason they want a permit for any little thing is to ensure the tax assessor has a fresh view of the current state of improvements!
Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#284Like another comment here mentioned, housing is complicated. People don't want to live in a random house in the middle of nowhere ('roof over your head'). Some people prefer to be homeless on the street versus getting to a roof over their head that they don't like. People want to live where they want to live (near family, jobs, culture etc) Take NYC for instance. Politicians try to address the NYC housing crisis from…
I would start by making property taxes substantially higher for non-owner-occupied property. If you are rent-seeking rather than residing on the property you should pay way more, maybe 4x or higher, in taxes. Housing prices would crash and that would be the point; but everyone who owns property would be against it because they don't want to see their assets drop in value. The counter-argument people make is "that wou…
Remove depreciation, 1031b, and government backed loans for non owner occupied properties.
That would do the most damage.
Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#285Earlier quoted context omitted.
In the United States, we call that “property tax”.
Not really, property tax is based on the current value, which in theory includes all development. "In theory" because in California there are strategies for doing renovations without triggering a reassessment.
Yes, really. The property tax is a privilege tax paid in exchange for exclusive use of the land. That it is calculated on a basis that includes improvements is a truly meaningless distinction.
Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#286Real estate in America is perversely incentivized. In America, you are raised often to believe that you have not "made it" until you are a home owner...And, many folks are surprised to truly understand that even if you pay off a mortgage loan, that the government can confiscate your home after you fail to pay taxes. And, then poof, you are no longer a home owner. When i was a young kid, I thought that once you pay off a mortgage, that;s it, you never have to pay *anyone* any sort of "rent" ever again...But that's factually wrong, if one considers taxes a sort of rent. I'm not against government nor taxes, and actually i have been happy (yes, happy) to pay my taxes for the 2 decades that i was a home owner, because i saw directly the great school system and decent management of some (though not all) town infrastructure that came from tax proceeds/revenue...But, this idea that being a homeowner means you never have to pay a sort of "rent" (after paying off the mortgage) is just not true. And, yet, the real estate industry and other adjacent industries keep pushing that idea into your head. Many Americans are tricked into living under concidtions that are way above their means, simply to feel like they have "made it in America". I'd be happy if everyone was just honest about things: that a person doesn't really entirely own their home in the way that the idea is promoted.
Oh, and separate of the decades that i owned a home, I also ran global web operations and digital products for one of America's largest real estate companies...and i can tell you that there's alot that people would not want to know on "how the sausage gets made". While there are plenty of honorable and good employees and real estate agents, sadly there are still enough shady folks...and its not all their fault...mostly because the industry incentivizes bad behavior...and by bad behavior i don't mean illegal (though of course that happens too), i mean simply unethical behavior. And, with this industry having survived the dotcom boom, the great recession, the pandemic, etc....there's just no way that things will get less shady. More and more parasitic behavior is on the horizon for this industry, so it doesn't surprise me that more startups are yet to come. Or, maybe I've just been too deep in the industry?
A nd, don't even get me started on how foolishly many American towns (and of course American homes) have been designed towards suburbia instead of better, densely (and less resource wasting) approaches like towns in other countries.
Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#287I already posted a comment on this, but forgot to answer the actual question. I don’t think it follows that it’s wrong to commoditize basic necessities. Take, for example, food: the reason just about everyone in the western world can afford food is BECAUSE it is commoditized. I would like the barriers to home ownership to be lowered. On the other hand, I don’t think the rental market is evil. A lot of people can’t af…
Food is commoditized to the point where a lot of it involves slavery (Southern Europe) or exploitation of the state welfare system (UK), etc. So not quite the same.
Without homes to rent there would only be homes to buy and live in, taking all the rent seekers out the market would have a positive effect for most regular people because prices would fall to a level of basic affordability as we had had before 'buy to rent' became a bandwagon that everyone was jumping upon.
You can't introduce such wholescale inefficiency into a market without a lot of people suffering the consequences.
My parents bought their first house for about the same as the same house will fetch per month rental nowadays. That can't be right?
Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#288Earlier quoted context omitted.
It's amazing how many people in government globally refuse to understand this. The UK government has just been talking about inheritable 50 year mortgages. No one wants to build more housing. I think it might help people understand to put it in terms like this: there are 100 housing units out there and 150 people. How do we solve the problem?
Yeah. You just have to build more. Simple as that. I was talking to a NIMBY and converted her to YIMBY by relating to her that in Santiago anybody builds whatever the fuck wherever the fuck, zoning be damned basically, and that leads to rent being like $150 a month. For real, you get what you get in SF for $4000 a month for ah...$400 a month in Santiago. And the minimum is very low. Sometimes $100.
Santiago de Chile or Cuba?
I know that’s not the case in Chile for any of the central neighborhoods (Yungay, Brazil, Lastarria, Franklin, etc…) which I think are probably close to SF in terms of size. 325k CLP is about the lower end for a nice, small 2BR. You can get more rooms but the square footage is smaller. Las Condes/Vitacura goes up from there.
You can buy a nice 2BR apartment for $175k USD though.
Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#289I make ~4x my country's generous minimum wage and I'm struggling to find a decent flat I can afford - I'm not talking of something like a detached house, just a good flat in a non crappy urban area. I often wonder how people with an average job can stand the fact all they'll ever be able to own is a small flat in the middle of nowhere or in a run down area. The state of real estate is defeating.
I'm 95th percentile of my country's income according to government data, but struggling in the same way. Most of my friends who have houses have gotten them by inheritance or massive help from their parents. "Why aren't people having kids? Why is no one marrying and starting families anymore?" Like dude, if I can't afford to buy a small property for myself as a single occupant, I'm not going to dive straight in to ha…
Exactly, stability is the most important. I don't even care about large paycheck (like you said, 95th p.) if I still need to take a bad loan for 20 years in a country that has recently seen doubling in mortgage payments.
I just want to know it's going to be ok, for me and my family. After that requirement is satisfied we can talk about having kids, creating innovative companies, having breakthrough research. We can't achieve great things without this sort of stability.
Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?
#290I definitely do. It's something that turns a basic necessity into a speculative asset, with a price distorted by the money poured into it. Airbnb is also a deeply harmful influence on housing prices. Imagine if we did the same thing with, say, water: privatized it and then "democratized" ownership of it. It's easy to get retail investors to buy things at inflated, speculative prices, so the price of water would go up…
I have long supported the privatization and commiditization of water. It should be sold on the basis of supply and demand with markets, futures, and so forth. Don't like almond farms, bottled water companies pumping millions of gallons for the price of a $200 permit, and golf courses watering their courses during a drought? Then you should too.
One thing you can absolutely guarantee when it comes to a necessity of life commodity, a black swan event will occur and people will die because they are priced out of the market.
Imagine, if you will, when the Texas grid went all wonky and those people who choose to buy power at open market rates had to prepay for their $13,000 kw/hr electricity because the power company had a limit on how much credit they will give you. Now imagine a drought where there is a disruption in the water supply because a pump burned out due to record setting high temperatures.
I’m no cheerleader for big government but if people insist on having one there are valid activities that they should engage in to protect the citizens from getting bitch slapped by the invisible hand of the market. This being one of them considering how capital intensive it is to provide a reliable water supply.