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It's the land, stupid: How the homebuilder cartel drives high housing prices

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Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#51

Post by b112 »

tamimio wrote: post #14

Fun fact: About 89% of Canada's land area (8,886,356 km² or 3,431,041 sq mi) is Crown land: 41% is federal Crown land and 48% is provincial Crown land. The remaining 11% is privately owned. For example, 92% of Quebec, 87% of Ontario, 95% of Newfoundland and Labrador, and 94% of the land in British Columbia are Crown land. So when you “buy” land, you actually become a tenant to the Crown. If you don’t pay the property…

Wildly inaccurate. No one owns crown land, if you buy land, that's "privately owned" If you don't pay property tax, eg you are in arrears, your land is seized and sold to pay your debt. Again, that has nothing to do with crown land.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#52

Post by stouset »

onemoresoop wrote: post #27
xnx wrote: post #5

No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where. It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.

Why does everyone want to live in the same few places? Because all ways to make money and a living are there! Give people the option to work remotely and they can live wherever they want, and that is not in crowded expensive cities most of the time.

We have made an enormous shift in that direction post-COVID and it turns out that: [drumroll] people still largely prefer to live in cities when financially viable. The price tag of cities is itself evidence of this. San Francisco isn’t expensive in a vacuum. If there wasn’t demand for housing at these prices, they would fall. And yet people continue to willingly pay an enormous premium for the privilege of living here.

I can walk across the street to get my groceries. I have at least fifty restaurants within walking distance. My doctor is four blocks away and a large hospital is six. I have access to a large park three blocks away.

There is a streetcar that goes straight downtown one block away and three buses that go throughout the city are right at the end of my block. I can bike to virtually anywhere I want to go if walking is too far or transit is annoying.

And all of this keeps us healthy. It’s no secret that obesity is approaching near universality in areas of the country where driving is the only option to reach basic amenities. It also correlates with reduced energy use and therefore to reduced greenhouse gas emissions.

Making cities cheaper goes a lot further than trying to make cheap but fundamentally broken suburbs and exurbs less hostile. And part of that is precisely what this article highlights: the rentier class siphoning away the profits of workers while providing little to no value themselves. And I say this as a homeowner (and therefore landowner) myself.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#53

Post by kaibee »

crooked-v wrote: post #11

Overconsolidating is bad, but the article's chain of logic falls apart for me because it doesn't actually make any connection to indicate that these companies wouldn't make even more money by building more homes, while ignoring that local permitting and approval process have gotten ever more pricey and complicated over even just the past two decades. For the extreme example, take a look at San Francisco, which has ap…

> because it doesn't actually make any connection to indicate that these companies wouldn't make even more money by building more homes,

I think it comes down to risk, effort, and available labor/resources. If it costs them nothing to hold the land and build only when they're very sure that the building will be profitable, then that's what they'll do. But once they have the whole construction side working on projects... if there's capital left over... why not buy up more land in the mean time? It makes it harder for your competition to build while you work through your backlog and it costs you basically nothing.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#54

Post by TulliusCicero »

dnissley wrote: post #41
xnx wrote: post #5

No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where. It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.

I feel like I need to make this point again and again: It's not about increasing the value of properties for most (after all, allowing apartments to be built in your neighborhood would increase the value of the remaining SFHs). It's about keeping the character of the neighborhood the same as it is now (SFH vibes), and all that comes with that ("family friendliness", etc).

Translation: keep out them poors.

Zoning that mandates low densities is used to economically segregate areas. They're invisibly gated communities enforced by the government. "Can't live here unless you can afford to buy/rent this much land."

One of the things I noticed while living in Munich was that the differences in apparent neighborhood prosperity in different parts of the city were vastly less extreme than in major US cities. Almost every neighborhood looked kind of vaguely middling, it was rare for a place to look obviously well-to-do or obviously run down.

And it makes that it's harder to get extreme differences there if at least medium density dwellings are allowed just about everywhere. Working class people may not be able to afford a whole house, but they may be able to afford an apartment in a given neighborhood.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#55

Post by aorloff »

tamimio wrote: post #14

Fun fact: About 89% of Canada's land area (8,886,356 km² or 3,431,041 sq mi) is Crown land: 41% is federal Crown land and 48% is provincial Crown land. The remaining 11% is privately owned. For example, 92% of Quebec, 87% of Ontario, 95% of Newfoundland and Labrador, and 94% of the land in British Columbia are Crown land. So when you “buy” land, you actually become a tenant to the Crown. If you don’t pay the property…

If you don't pay property taxes for long enough (usually 5 years) in the US, typically your property will be auctioned off at a county tax sale (assuming your lender hasn't paid the taxes and foreclosed first).

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#56

Post by xnx »

1986 wrote: post #49
xnx wrote: post #5

No shortage of land in the US, but everyone wants to live in the same few places (for good reason), and those places have a lot of restrictions on what can be built where. It's satisfying to blame a big bad "them" for this, but the problem is "us". We all want our properties to increase in value so we collectively conspire to suppress supply that would make our properties less valuable.

Did you know that a third of the US population lives in a rental property?

I didn't. Unfortunately, renters vote at a lower rate and don't vote with the same focus as property owners.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#57

Post by Spartan-S63 »

theoreticalmal wrote: post #33
nnf wrote: post #12

> tax the land of lot developers so they don’t hold land off the market. This is something I dealt with a few years ago. There were a few acreage lots (5-15 acres) my partner and I were considering buying and building a house on, and all of them had been in the $200k range a year or two before but had been bought by land speculators (in some cases by the same person). Prices went from ~$200k to ~$750k, which we weren…

This seems a lot like a tax on unrealized gains. You’re taxing something that might have value in the future, rather than it’s actual value now.

That's the idea, though. If you're sitting on an undeveloped or underdeveloped parcel of land, you should bear the cost of the value of the land. If it's in a rural area, you can probably weather the tax burden because it's worth a lot less than a surface parking lot in an urban area.

The idea behind such taxation is to destroy the deadweight losses created by land speculators. You either buy the land, develop it, and bear the weight of the tax on the fair assessment of the land's value, or you don't buy the land at all.

Property tax is predicated on the value of the structure now. Land-value taxes are predicated on the value of the land, developed or not. That will fluctuate based on the desirability of the surrounding area.

The irony is that property taxes are predicated on the value of the structure, but the practicalities of market forces are that the land is what's actually valuable. So rather than keep playing this mis-labeled game, we should embrace land-value taxes and have municipalities asses taxes without regard to the structure, just the potential economic value of the land.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#58

Post by mulmen »

tigen wrote: post #13

This paragraph looks wrong. "In 2005, when D.R. Horton sold a record number of homes, it made $1.47 billion. In 2023, when it built roughly half as many, its profit was a little over three times as high, or $4.7 billion. " It did not build half as many homes, it was 82917 homes in 2023 vs. 51172 in 2005. Also, the profit number should be corrected for inflation when comparing across almost 2 decades.

1.47 billion 2005 dollars is 2.29 billion 2023 dollars.

Profit per house in 2023 dollars:

$44,751.04 in 2005

$56,683.19 in 2023

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#59

Post by sroussey »

lotsofpulp wrote: post #38
theoreticalmal wrote: post #33

Earlier quoted context omitted.

This seems a lot like a tax on unrealized gains. You’re taxing something that might have value in the future, rather than it’s actual value now.

Yes, it’s called property tax, calculated by multiplying a property tax rate times assessed value of the property. Does anywhere not already have that?

Farther up they are talking about taxing based on what it could be worth, not what it is worth.

Re: It's the land, stupid: How the homebuilder cartel drives high housing prices

#60

Post by kaibee »

lotsofpulp wrote: post #38
theoreticalmal wrote: post #33

Earlier quoted context omitted.

This seems a lot like a tax on unrealized gains. You’re taxing something that might have value in the future, rather than it’s actual value now.

Yes, it’s called property tax, calculated by multiplying a property tax rate times assessed value of the property. Does anywhere not already have that?

A property tax is typically assessed on the value of land + property, and honestly, we don't do a good job of accurately pricing the land value aspect of it. So if you don't build anything and just own the land, your property tax will be very low.
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