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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?

#721

Post by NonNefarious »

hackerlight wrote: post #166
NonNefarious wrote: post #127

Earlier quoted context omitted.

I agree about the housing speculation, but I challenge the (oft-repeated) assertion that this has caused homelessness. If you could afford to pay SOME rent in an area that got more expensive, then you can move to a less-expensive area and pay the same rent.

Assuming no economic frictions whatsoever, which in reality is not the case, especially when it comes to someone moving their entire life away from their social network and their familiar surroundings.

So your thesis is that people decide to become homeless to retain their social network?

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#722

Post by NonNefarious »

chii wrote: post #135
NonNefarious wrote: post #123

Earlier quoted context omitted.

And what are we doing about CORPORATIONS buying up our neighborhoods? As far as I know, NOTHING.

"our" neighborhood implies that you own it - so if you owned something, and sold it, how can you complain that someone (or gasp, a corporation) is buying when you're selling?

No; it implies that WE own it.

I can complain because corporations enjoy purchasing advantages not available to individuals. Massive amounts of capital, for one thing, not to mention tax breaks and economies of scale that make it easy for them to dispense with financing and inspection contingencies.

When an elderly person dies and the children who inherit his property all live out of state, they're going to dump the property and split the proceeds. And they're going to maximize those proceeds and minimize the time to realize them. Corporations can take advantage of that.

So no, WE did not decide to sell. Think it through.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#723

Post by danielheath »

BlargMcLarg wrote: post #114
danielheath wrote: post #86

Earlier quoted context omitted.

A high land value tax moves the problem around (instead of young people not being able to buy a house, older folk can't afford to keep the large one they spent their lives in). In the process, it makes land completely unappealing to rent-seekers while incentivizing high-density development of desirable locations.

> older folk can't afford to keep the large one they spent their lives in This is only a problem if you believe older folks should continue to live in big luxury houses for a pittance (read: gain the benefits of luxury without having the detriments of luxury), or the country does not have enough smaller housing for them to move. In situations where housing is severely constrained at the cost of younger people, leavin…

I certainly feel that way, but the roughly-50% of voters who are either retired or close to retirement seem to disagree.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#724

Post by hackerlight »

NonNefarious wrote: post #721
hackerlight wrote: post #166

Earlier quoted context omitted.

Assuming no economic frictions whatsoever, which in reality is not the case, especially when it comes to someone moving their entire life away from their social network and their familiar surroundings.

So your thesis is that people decide to become homeless to retain their social network?

My thesis is that economic frictions cause cases of homelessness that were theoretically avoidable. Their current social network isn't the only friction. Low IQ, mental health issues, no familiarity with COL or opportunities or people in other locations. These are other frictions. All the stuff that gets in the way of people making an optimal decision.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#725

Post by hackerlight »

snapplebobapple wrote: post #156

It's a natural first impulse, but it's wrong. What is the correct impulse is to be concerned about how lopsided most cities zoning is towards single family, as that is what is driving the market power that makes real estate profitable as a financial asset. If most of a city was zoned to allow up to multi residential highrises rather than most of a city being zoned for single family it would cut the appreciation abili…

But there's a causal connection between the commoditization of land (not real estate per se) and these zoning laws. You've given people a financial incentive to vote in politicians who then implement these restrictions. There'd be nothing wrong with such commiditization (and indeed it would be a good thing) if and only if that causal link can be broken via land taxation.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#726

Post by carom »

ameister14 wrote: post #690
carom wrote: post #606

Earlier quoted context omitted.

So you have a city like Los Angeles or NYC. You convert all housing to single family homes. Can more people of fewer people live there now?

Why would you convert all housing to single family homes? Do people not own apartments for some reason?

>That said, without a rental market the price of houses goes way down.

I see that you are saying you would simply sell the apartments instead now. What is the solution for (e.g.) new grads who do not have a down payment yet? Why aren't tenants currently pooling their money, purchasing the properties they live at and converting it to a Tenancy in Common?

I do not think prices will drop without a rental market. Prices might even increase because you are making the market much less efficient. It will also make building new units more difficult as there will almost always be a holdout in the building.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#727

Post by chii »

NonNefarious wrote: post #722
chii wrote: post #135

Earlier quoted context omitted.

"our" neighborhood implies that you own it - so if you owned something, and sold it, how can you complain that someone (or gasp, a corporation) is buying when you're selling?

No; it implies that WE own it. I can complain because corporations enjoy purchasing advantages not available to individuals. Massive amounts of capital, for one thing, not to mention tax breaks and economies of scale that make it easy for them to dispense with financing and inspection contingencies. When an elderly person dies and the children who inherit his property all live out of state, they're going to dump the…

> they're going to dump the property and split the proceeds.

so you do agree that it is the individual that made the decision to sell, and that it isn't because the corporation is forcing them to sell.

Therefore, the character changes or selling is really just a sum of the aggregate behaviour of all of those individuals. It's like blaming the flood, when each individual rain drop is the reason for the flood in the first place.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#728

Post by criley2 »

grumple wrote: post #518
criley2 wrote: post #100

Tax land with a big fat rate (LVT) and give primary residence a big fat exception. Problem solved, and bonus, you can probably get rid of the income tax now.

Then you get a bunch of defaulted and abandoned properties. Cities often have a ton of property that nobody wants and sit on it for decades, and they make a bunch of weird rules that keep people from doing anything useful with the property once they do want it. The value of the properties would just drop to 0 and you'd get nothing in taxes for it.

? Sounds like the land value is incorrect then. If no one wants it, the land value has plummeted (it being a market at all) which means the taxation should be next to nothing.

If you can't get rid of low-value land that carries no taxation, then the problem isn't the tax scheme.

In reality, this wouldn't happen. Location location location means that valuable land would be invested in, and if the taxation scheme replaced other schemes, a business would be equally likely to pay the tax to get close to customers, but also locate other facilities in low-tax remote areas, which means we're instituting a type of zoning using market mechanisms.

The only time you get abandoned properties in mass is when the value on paper is much higher than the value in reality, and that's a bigger and deeper problem than any tax scheme.

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#729

Post by mrep »

jjav wrote: post #664
ItsMonkk wrote: post #638

Earlier quoted context omitted.

> So, say the property is worth 1mil$, and you pay 1% tax. That's 10k. You charge 3k rent. The taxman makes the tax 4%, now you have to pay 40k. You decide to pass 30k to the renter. So now they pay 36k+30k rent per year. 4x tax, 2x rent. The price of the property is based on the return that the landlord can return. This should be obvious. If you increase the tax by 4x, the most likely result is the market value will…

> If you increase the tax by 4x, the most likely result is the market value will drop from $1 million to something like $250k-500k. Not really. This assumes it must remain a rental property. What will happen is that this $1M property which was previously a rental now becomes a ~$1M property which is owner-occupied. The owner isn't going to take a 500K-750K loss just to keep it a rental.

So completely destroy the rental market? Do you really want a city where the only way you can move there is to full on buy a housing unit?

Re: Ask HN: Anyone else feels the commoditization of real estate is unethical?

#730

Post by rizoma_dev »

carom wrote: post #710
rizoma_dev wrote: post #689

Earlier quoted context omitted.

That's why I said if the tenant has been there for a sufficient time. If they have covered the unit's cost, plus maintenance, they have effectively paid for all the owner's expenses. Shouldn't it be enough to effectively own the property they actually live in?

No, they took on zero risk to be in that position. If my tenants lose their jobs they get six months free rent while I go through the eviction process. If I lose my job and can't get another I have to sell my property for a six figure loss. I can make this property a single family home or I can make it available to other people as housing that they can't afford to buy outright. I don't understand the landlord hate. T…

There's no sense in arguing about it if you're a landlord, you have a monetary interest in the housing market staying this way and your relationship with your tenants is inherently adversarial
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