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Without affordable housing, Vancouver risks becoming an economic ghost town

business.financialpost.com

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

#541

Post by shostack »

gozur88 wrote: post #477
shostack wrote: post #461

Earlier quoted context omitted.

While that sucks, that sort of self-correcting market pressure is in fact required for a healthy real estate market. Yes, people would have been pushed out as prices increased. But as areas gentrify, there is no guarantee that the farmers and tradespeople who lived there get to stay forever. That's how other markets work. It sucks to those pushed out, but eventually taxes increase to the point where demand for the ar…

>Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. People over 55 can transfer the tax basis of their primary residence. In all cases if they move somewhere in the same county, and depending on local ordinances inter-county. So retired people living in the Peninsula can afford to move to other areas.

What you're leaving out of the equation though is that often times people that old who have lived here forever either have their home fully or mostly paid off. Sure it likely appreciated quite a bit, but depending on their savings, they may not be able to afford a new home in the area at market rates regardless of the tax situation, especially if they are retired and on fixed income. So instead they stay in their home and don't sell. Or they pass it on to the next generation who doesn't sell.

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

#542

Post by DrScump »

xyzzy_plugh wrote: post #485
DrScump wrote: post #476

Earlier quoted context omitted.

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…

You realize that somebody who bought in 1940 or earlier is over 100 years old now, right? (assuming becoming a homeowner at age 25). Not a significant demographic.

Beyond that, those numbers are fudged and do not reflect the changing value of the dollar. $3,537 in 1940 is $59,711 in 2015 dollars[0] (or $43,382 in 2000 dollars[0]), so your "two orders of magnitude" claim falls to a mere factor of less than 5 times, or And again, that isn't even a level comparison given that housing construction costs are far higher (well beyond the rate of inflation) due to more features, stricter building codes, modern appliances, permits, ...

[0] http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=3527&year1=1940...

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

#543

Post by gozur88 »

shostack wrote: post #541
gozur88 wrote: post #477

Earlier quoted context omitted.

>Further, since you'd have increased liquidity without Prop 13, people could actually afford to move to other areas so there would be more inventory. People over 55 can transfer the tax basis of their primary residence. In all cases if they move somewhere in the same county, and depending on local ordinances inter-county. So retired people living in the Peninsula can afford to move to other areas.

What you're leaving out of the equation though is that often times people that old who have lived here forever either have their home fully or mostly paid off. Sure it likely appreciated quite a bit, but depending on their savings, they may not be able to afford a new home in the area at market rates regardless of the tax situation, especially if they are retired and on fixed income. So instead they stay in their hom…

Eh, why would they not be able to afford a new home after selling the old one? Usually when people retire they're looking for a smaller home that's easier to take care of.

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

#544

Post by DrScump »

drfuchs wrote: post #517
DrScump wrote: post #476

Earlier quoted context omitted.

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

Parts of Palo Alto were very blue collar post WWII. I knew one nonagenarian who bought his house new in 1949 for $10k, and it sold, unimproved, for $2.2m on his death over a year ago. Also a centenarian still living in her original 1950 $10k house that Zillow now estimates at $2.3m. So, there's 220x gains. Clearly, all the value is in the land. Property tax in 2013 was about $1k in both cases; both have new neighbors…

In nominal dollars.

I really doubt that. I just checked a friend's house who has lived in PA since 1952, and they are paying $3200.

Anybody can look up what actual property taxes are paid here:

https://payments.sccgov.org/propertytax/Secured

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

#545

Post by thaumasiotes »

mcshicks wrote: post #435
thaumasiotes wrote: post #363

Earlier quoted context omitted.

> Retired people save money by staying put, young workers can't afford to move in. This is a problem of housing stock. If you build more housing, it's not going to be occupied by people who've been sitting on it for the last 50 years. That's impossible, because it's new.

Well sort of. Consider a couple in a 4 bedroom house who's kids have moved out, but don't move into a smaller place (say 2 bedroom condo) because they would have to pay a bigger tax bill. So there are two bedrooms not being used because of taxes.

> Consider a couple in a 4 bedroom house who's kids have moved out, but don't move into a smaller place (say 2 bedroom condo)

This would theoretically deal with the problem of having young couples with many children who can only afford to live in a 2-bedroom condo, because all the bigger housing is occupied by old people with empty nests and the only new housing is 2-bedroom condos or smaller. But, if you're not interested in forcing the old people to leave, it doesn't solve the problem of housing supply -- you'll still need some housing for the old couple and some more, separate, housing for the new large family, and if you don't build additional housing to accommodate the incoming people you'll end up with a housing shortage, regardless of whether old people shift from their existing homes into smaller ones or not. As long as you're building housing for the people who move in, you might as well build it in the sizes they demand.

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

#546

Post by adiabatty »

rayiner wrote: post #508
Grishnakh wrote: post #500

Earlier quoted context omitted.

I disagree. If the housing costs shoot way up, why should those people suddenly pay more money? Did a real estate bubble suddenly make it more expensive to police the area? I don't think so. The city doesn't need more money, it needs to stick to its budget.

It's not about raising more money, it's about fairly apportioning the tax burden. Why should two homeowners with the same value of property pay different amounts of taxes just because one is old and has owned the house a long time?

On the other hand, why should your tax bill go up simply because other people are willing to spend increasingly large amounts of money to buy a house like yours?

It's not like income tax where your tax bill only goes up when you get more money to pay it with.

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

#547

Post by gberger »

DrScump wrote: post #544
drfuchs wrote: post #517

Earlier quoted context omitted.

Parts of Palo Alto were very blue collar post WWII. I knew one nonagenarian who bought his house new in 1949 for $10k, and it sold, unimproved, for $2.2m on his death over a year ago. Also a centenarian still living in her original 1950 $10k house that Zillow now estimates at $2.3m. So, there's 220x gains. Clearly, all the value is in the land. Property tax in 2013 was about $1k in both cases; both have new neighbors…

In nominal dollars . I really doubt that. I just checked a friend's house who has lived in PA since 1952, and they are paying $3200. Anybody can look up what actual property taxes are paid here: https://payments.sccgov.org/propertytax/Secured

According to [1], $10k in 1950 corresponds to about $100k in 2015.

So the gain is 23x, which is still insane.

[1] http://www.usinflationcalculator.com/

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

#548

Post by DrScump »

gberger wrote: post #547
DrScump wrote: post #544

Earlier quoted context omitted.

In nominal dollars . I really doubt that. I just checked a friend's house who has lived in PA since 1952, and they are paying $3200. Anybody can look up what actual property taxes are paid here: https://payments.sccgov.org/propertytax/Secured

According to [1], $10k in 1950 corresponds to about $100k in 2015. So the gain is 23x, which is still insane. [1] http://www.usinflationcalculator.com/

I was using the official Federal government site estimator as I indicated above:

http://data.bls.gov/cgi-bin/cpicalc.pl

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

#549

Post by lmm »

Symbiote wrote: post #317
lmm wrote: post #132

Earlier quoted context omitted.

And yet London's population continues to grow at an astonishing rate, and businesses continue to move into London. Doesn't seem like the high prices are doing any harm to me.

People live in worse and worse conditions. A single bedroom, that when built as the spare room for kids to play in or a visitor, costs £400/month. Myself and several friends have left London. Perhaps I've been replaced by a 21 year old British graduate, but this seems less likely than 10 years ago. https://www.gumtree.com/single-room-flatshare/london

Well, someone's replaced you, since the population is growing rather than shrinking. I've only been here 7 years (since graduation) but more and more of my similarly-aged friends are coming to London. I think it's young people rather than retirees, graduates rather than not, and I'm not sure I care whether British (though I think most are).

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

#550

Post by mahyarm »

adiabatty wrote: post #546
rayiner wrote: post #508

Earlier quoted context omitted.

It's not about raising more money, it's about fairly apportioning the tax burden. Why should two homeowners with the same value of property pay different amounts of taxes just because one is old and has owned the house a long time?

On the other hand, why should your tax bill go up simply because other people are willing to spend increasingly large amounts of money to buy a house like yours? It's not like income tax where your tax bill only goes up when you get more money to pay it with.

Because when their own bills go up, they have an incentive to vote for things that bring the cost of housing down. When they don't have to pay for the cost of housing, but instead personally benefit through increased housing value, they will of course vote for it.
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