Without affordable housing, Vancouver risks becoming an economic ghost town • Hacker News Board

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#481

Post by MichaelBurge » Sat, Feb 13, 2016, 2:38 AM UTC

nwah1 wrote: post #328

fiatmoney wrote: post #287

Earlier quoted context omitted.

No doubt it reduces liquidity. Probably increases marginal prices as well. But I doubt it makes real estate more valuable in the aggregate except for maybe via second-order effects like policy stability or population composition.

Real estate has value because of the potential flows of rent that can be obtained. Property taxes fall on both land and improvements. While the taxes on improvements are passed on to the tenant, the taxes on land cannot be, as Adam Smith showed. The rent of land, being a case of a locational monopoly, is always as high as it can be. Thus, taxing land simply reduces the flows of rent that can be kept from controlling…

I hadn't heard of this principle that it's impossible to pass tax increases on to tenants. I can't really believe Adam Smith has shown this to be impossible, when I know people who have said (paraphrasing), "The previous landlord has raised rents to match increases in taxes, water, garbage bills(the utilities are effectively costs of land), and we consider this reasonable".

I feel like you could even make a bet on it: There's a nearby trailer park with some mobile homes on it. This should have value solely in the land, since the homes can be removed from the property. I'm counting the availability of utilities in the land. The county tax assessment on both land and improvements is public information. Suppose the tax assessment as a whole goes up 1.7%. If the trailer park owner is able to secure a 1.7% increase over the next year from his tenants, you pay him $10,000. Otherwise, he pays you $10,000. Do you trust Adam Smith enough to take that bet? It should be impossible, since that 1.7% includes an increase of taxes on the land which you're saying cannot be passed onto the tenant.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#482

Post by thinkdoge » Sat, Feb 13, 2016, 2:47 AM UTC

hvmonk wrote: post #464

rayiner wrote: post #447

Earlier quoted context omitted.

It's insane. The people who don't work live close to the business districts collecting social security paid for by the people who do work who have to commute in from afar for the privilege. Then the people who don't work vote themselves favorable property tax rules so they don't have to pay their fair share of keeping up the city.

oligarchy at micro level, creating obstacle in path of hard working common people. Prop 13 was created by these very elderly people only, and they are now reaping its benefits while the new generation suffers. Not saying all old people are like that, but this is what it is.

Don't worry, old people eventually die and we will be old.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#483

Post by chaostheory » Sat, Feb 13, 2016, 2:50 AM UTC

rsync wrote: post #224

msvan wrote: post #82

It seems like many major cities of the world are experiencing this problem, and no city has been able to come up with a good solution. It always leads to displacement and newspaper articles about displacement, but no real solutions. Here are a couple of solutions: 1. Build really tall. Hasn't worked out all that great in Hong Kong, though. 2. Rent control. This is often unfair and inflates price of non-rent controlle…

I have witnessed and seen the day to day effects of a city (albeit, a very small one) that did find a solution to this problem: Aspen, Colorado. It's a tremendous outlier - both in population (8000 full time residents) and in pricing ( even more expensive free market housing than any of the big markets that are typically discussed). The solution was to build city-subsidized "resident housing" that actual residents (a…

They already have this lottery system in various cities in the SF Bay Area. I'm sure it helps some, but it hasn't made a big dent in the housing problem.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#484

Post by verylongname » Sat, Feb 13, 2016, 2:51 AM UTC

gorkemyurt wrote: post #211

One of the main reasons of the housing crisis in the Bay Area is Prop 13 ( https://en.wikipedia.org/wiki/California_Proposition_13_(197... ) Prop 13 basically keeps the property taxes constant (or 1% increase) as the value of your house increases (doubles or triples). Your tax gets re-calculated only if you sell your house and the new owner starts paying potentially multiples of what the previous owner has been payin…

Moreover, in most of California, the supply of housing has been artificially restricted using overly stringent zoning rules and laws. I'm in favor of reasonable zoning rules, but in my city the only justification for limiting new constructing seems to be existing homeowners who "want to live in a small town" and enrich themselves at the expense of newcomers who have little choice but to settle in the area for economic reasons.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#485

Post by xyzzy_plugh » Sat, Feb 13, 2016, 2:54 AM UTC

DrScump wrote: post #476

rdlecler1 wrote: post #442

Earlier quoted context omitted.

Those house owning elderly you're feeling sorry benefitted from the biggest bull market it history. They may have saw 100x gains on their house while many youth will are spending 30-50% of their income on housing if they're lucky to get a good job. If they do, they can look forward to paying entitlements to these elderly people while they themselves may never see the same turn done to them because the system will be…

I can't imagine a single unimproved residence being anywhere in that neighborhood (even going all the way to 1978); examples are welcome.

Not accounting for inflation, it's not hard to believe:

    Median Home Values: Unadjusted

                     2000      1990      1980      1970     1960     1950    1940
 California        $211,500  $195,500   $84,500   $23,100  $15,100   $9,564  $3,527

The median alone is almost two orders of magnitude greater as of 2000, let alone 2016. I'm sure there is at least one bay-area home that has been untouched for 50 or 60 years that is now selling for well over a million.

From: https://www.census.gov/hhes/www/housing/census/historic/valu...

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#486

Post by thinkdoge » Sat, Feb 13, 2016, 2:55 AM UTC

toyg wrote: post #451

JoshTriplett wrote: post #443

Earlier quoted context omitted.

This sounds like an excellent argument for getting rid of property taxes altogether. Property taxes have some major fundamental problems, not least of which that using them to pay for local services tends to make such services better in more affluent areas and worse in less affluent areas. They produce potentially unbounded and unexpected expenses long after paying off the house itself (which impacts retirees and oth…

You are proposing to remove taxation on a bull market (property)? This would inflate prices even more, as investors make a run for nice tax-free properties. It doesn't make sense, sorry. You need to remove incentives to invest in property altogether . It's one of the worst and most unproductive markets, and not even a market in practice because everyone needs a home. My personal pope-emperor utopia would forbid compa…

Here's an idea. Make utility services scale with people density. Relax restrictions on how much they can profit off sqft. Single home dwellers are penalized with increased upkeep costs and higher density buildings are encouraged.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#487

Post by sergers » Sat, Feb 13, 2016, 3:03 AM UTC

i live in a subburb 30km outside vancouver.

have a 3000sqft house with a $600k mortgage.

my yearly income is 90k before taxes/deductions.

my mortgage is $2500.00 a month (a bit more than half months wage).

my property tax is ~5000.00 year

my house insurance is $1200.00 a year

my car insurance is ~$1300.00 a year

my city utilities is about $120.00/month

my car gas is about $400.00/month

my house natural gas is $150/month

my house hydro electric is ~$200/month

that just covers the necessities minus food.

i have friends who live in downtown core vancouver, paying the same as me for 600sqft condo.

that is more than half my gross income, very not affordable. thinking about relocating. can keep same position and just move remote... also had career change opps in dallas, ny, californa, etc at $120k+, better than here... but my whole family is here... my whole life is here.

tough decisions... always thought more money would lead me away, now lack of affordability will instead.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#488

Post by iofj » Sat, Feb 13, 2016, 3:06 AM UTC

ScottBurson wrote: post #449

brc wrote: post #377

Earlier quoted context omitted.

It's even worse in Australia, which most properties do not have a yearly property tax. So you pay a 'stamp duty' when you purchase the property, based on a % of the sale price. This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for s…

> This means you have people living in Sydney with multi-million dollar properties - which are just modest houses in now-desirable suburbs - who haven't paid any property tax since the 60's, and who can't move anywhere because they'd be up for so much stamp duty in one hit (easily 50-100k). I don't understand. When you're making millions on the sale of the property, how is 100k in stamp duty a problem? It's on the sa…

Why isn't every house incorporated (bought by a company, then have that company bought/sold instead of the house) ? Note: this is how it's done for a lot of houses in western europe, and there it's a 100% legal way to avoid this tax.

The problem is that you're going to have to pay 30% company tax on profits, and it's hard to get a mortgage. However this can always be structured so there aren't any profits (e.g. by improving the house, saving up for another house, ...)

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#489

Post by rayiner » Sat, Feb 13, 2016, 3:06 AM UTC

thinkdoge wrote: post #482

hvmonk wrote: post #464

Earlier quoted context omitted.

oligarchy at micro level, creating obstacle in path of hard working common people. Prop 13 was created by these very elderly people only, and they are now reaping its benefits while the new generation suffers. Not saying all old people are like that, but this is what it is.

Don't worry, old people eventually die and we will be old.

I'm retiring to Savannah when I'm old.

Re: Without affordable housing, Vancouver risks becoming an economic ghost town

#490

Post by msie » Sat, Feb 13, 2016, 3:07 AM UTC

throwaway2048 wrote: post #180

[deleted] wrote: post #170

[deleted]

The key point you are missing is that housing is being bought almost entirely by people who do not live there and never will, either as investment vehicles, or a way to safely move money out of china (real estate is one of the few things china allows Chinese citizens to invest in outside of china). They have no incentive to even rent, because of both frozen value property taxes, and the house generally forming a smal…

Wrong, there are not entire city blocks that have no lights on at night. There are some buildings under construction too.