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International investment and local rules push prices up faster than supply

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Re: International investment and local rules push prices up faster than supply

#21

Post by pydry »

BobbyJo wrote: post #9
kurthr wrote: post #8

Earlier quoted context omitted.

Some 10-15% of San Francisco housing is unoccupied. The exact why and how to fix it are arguable, but I'm doubtful the investment is actually helping. https://www.pacificresearch.org/time-to-ask-why-so-many-san-...

When a good's supply is constrained, it becomes a store of value. See: gold. Strangely enough, if housing got built in response to price increases, there would likely be less unused housing, because it would be seen less as a way to store capital.

When property taxes are higher housing is built more densely.

This is because the store of value quickly becomes a millstone around the owner's neck if it isnt being used efficiently. That's a feature if you want a healthy city and a bug if you're one of the ultra wealthy.

The UK is a bit like San Francisco in this respect. There are no property taxes, just something called a council tax (which is basically a poll tax) and "stamp duty" which is levied only on property transactions.

The latter is particularly toxic because it actively encourages property hoarding.

This is why London is an alpha world+ city which can't build up to save its life.

Re: International investment and local rules push prices up faster than supply

#22

Post by bawana »

thelastgallon wrote: post #6

Housings (US) greatest feature is money laundering: https://globalwitness.org/en/campaigns/corruption-and-money-... Most countries have residency by investment programs. Invest in real estate, prop up residential home pricing by injection wealthy foreigner/criminal money. Which imo is pretty idiotic.

esp in the Caribbean.If the FBI wants to find criminals, their short list of suspects should include Caribbean CBI applicants.

Re: International investment and local rules push prices up faster than supply

#23

Post by jounker »

pydry wrote: post #20
legitster wrote: post #11

Earlier quoted context omitted.

It's kind of insane that you look at a city like San Francisco that's on a tiny bit of land in a desirable location and they absolutely refuse to build up. I get that their Victorian houses are pretty, but they're only about a 100 years old and they are now crammed full of people and cars. It's too young of a city to be sycophantically in love with its past self.

That's partly the effect of prop 13. When land (or its proxy, property) is detaxed then property becomes a valuable commodity to hoard and guard the value of jealously. So, it attracts the foreign investors looking for stores of value and encourages NIMBYism. If the tax bill of properties in high value locations went up with land value then it would encourage people to stop hoarding and to sell up and have their prop…

This.

Re: International investment and local rules push prices up faster than supply

#24

Post by ericd »

pydry wrote: post #20
legitster wrote: post #11

Earlier quoted context omitted.

It's kind of insane that you look at a city like San Francisco that's on a tiny bit of land in a desirable location and they absolutely refuse to build up. I get that their Victorian houses are pretty, but they're only about a 100 years old and they are now crammed full of people and cars. It's too young of a city to be sycophantically in love with its past self.

That's partly the effect of prop 13. When land (or its proxy, property) is detaxed then property becomes a valuable commodity to hoard and guard the value of jealously. So, it attracts the foreign investors looking for stores of value and encourages NIMBYism. If the tax bill of properties in high value locations went up with land value then it would encourage people to stop hoarding and to sell up and have their prop…

Yeah, I had dinner with a REIT exec a few years ago, they explicitly called out how they loved how Prop 13 kept the CA property market inflated and NIMBYism strong. Absolutely worth trying to tear it down if you care about housing affordability.

Re: International investment and local rules push prices up faster than supply

#25

Post by thatfrenchguy »

pydry wrote: post #20
legitster wrote: post #11

Earlier quoted context omitted.

It's kind of insane that you look at a city like San Francisco that's on a tiny bit of land in a desirable location and they absolutely refuse to build up. I get that their Victorian houses are pretty, but they're only about a 100 years old and they are now crammed full of people and cars. It's too young of a city to be sycophantically in love with its past self.

That's partly the effect of prop 13. When land (or its proxy, property) is detaxed then property becomes a valuable commodity to hoard and guard the value of jealously. So, it attracts the foreign investors looking for stores of value and encourages NIMBYism. If the tax bill of properties in high value locations went up with land value then it would encourage people to stop hoarding and to sell up and have their prop…

This is an issue in other cities that don’t have prop 13 fwiw, the United States just does not do redevelopment barring a few poor inner neighborhoods getting gentrified by foreclosures in like Houston or Dallas. That’s the natural consequence of individual ownership of houses.

Re: International investment and local rules push prices up faster than supply

#26

Post by thatfrenchguy »

legitster wrote: post #11
ripley12 wrote: post #5

Awful headline and I doubt it's what the author would have chosen, given that her comments are much more to do with supply: > “In San Francisco, demand is reflected in increased prices,” she says. “In Charlotte, demand is reflected in increased quantities.” > “A big takeaway is that cities are in control of a big portion of their supply sensitivity,” Gorback says. “It’s cities that control zoning. It’s cities that co…

It's kind of insane that you look at a city like San Francisco that's on a tiny bit of land in a desirable location and they absolutely refuse to build up. I get that their Victorian houses are pretty, but they're only about a 100 years old and they are now crammed full of people and cars. It's too young of a city to be sycophantically in love with its past self.

> 100 years old

It’s 2026, they’re more like 140 year old by now :)

> now crammed full of people and cars

Funnily enough, if you look at the 1950 census, in every single building I have lived in in San Francisco, there were more people than there are now :).

The city has so much underdeveloped land (come on, 2% of of the surface of of the second densest city in the US spent on the lowest density sport ever, golf???), tearing down our heritage does not make sense when we have so much usable space.

Re: International investment and local rules push prices up faster than supply

#27

Post by AnthonyMouse »

pydry wrote: post #20
legitster wrote: post #11

Earlier quoted context omitted.

It's kind of insane that you look at a city like San Francisco that's on a tiny bit of land in a desirable location and they absolutely refuse to build up. I get that their Victorian houses are pretty, but they're only about a 100 years old and they are now crammed full of people and cars. It's too young of a city to be sycophantically in love with its past self.

That's partly the effect of prop 13. When land (or its proxy, property) is detaxed then property becomes a valuable commodity to hoard and guard the value of jealously. So, it attracts the foreign investors looking for stores of value and encourages NIMBYism. If the tax bill of properties in high value locations went up with land value then it would encourage people to stop hoarding and to sell up and have their prop…

> So, it attracts the foreign investors looking for stores of value and encourages NIMBYism.

This doesn't make a lot of sense for two reasons.

The first is that real estate is more the exception than the rule in being subject to property tax to begin with. If foreign investors want a store of value that minimizes "property tax" then they could just buy stocks or bonds etc. Which is why "foreign investors" are a red herring that pundits keep bringing up because it's clickbait or because they want a scapegoat to divert attention from the real problem (which is zoning).

The second is that if you have a place where taxes are lower than other places, that's the place people should be lobbying to build things. Who wants their lower taxes to be on a $1M single family home when they could be on a $100M skyscraper? The main reason this isn't happening is that the effective property tax rate in California is ~0.7% compared to the national average of ~0.9%, which isn't enough different to make a dramatic difference.

The real problem with prop 13 is that it resets on sale transactions or if you build anything, which does provide a major deterrent to construction because then existing property owners neither want to sell to a developer and use the money to buy something else nor build anything on their property themselves since either one would result in a huge tax hike.

Re: International investment and local rules push prices up faster than supply

#28

Post by uniqueusername7 »

roenxi wrote: post #15
BobbyJo wrote: post #9

Earlier quoted context omitted.

When a good's supply is constrained, it becomes a store of value. See: gold. Strangely enough, if housing got built in response to price increases, there would likely be less unused housing, because it would be seen less as a way to store capital.

> When a good's supply is constrained, it becomes a store of value. See: gold. That doesn't make sense as stated, because every physical commodity is supply-constrained to some extent, even and especially the ones that are extremely bad stores of value. Picking on Fermium (it has a nice atomic number) - Fermium is supply constrained and it makes a horrible store of value because it rapidly morphs into something else.…

While houses depreciate, both they and the ground they are built on tend to have a very low chance of experiencing spontaneous transmutation, so I'm not sure how good of an example fermium is.

Re: International investment and local rules push prices up faster than supply

#30

Post by the_why_of_y »

thelastgallon wrote: post #6

Housings (US) greatest feature is money laundering: https://globalwitness.org/en/campaigns/corruption-and-money-... Most countries have residency by investment programs. Invest in real estate, prop up residential home pricing by injection wealthy foreigner/criminal money. Which imo is pretty idiotic.

Congress did improve the situation with the Corporate Transparency Act in 2020, but then Trump became president again and simply announced that the law will no longer be enforced, and now what is left of the Republican party wants to repeal it altogether.

https://newrepublic.com/article/211855/republicans-making-wo...

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