Tangentially: Vancouver has has an empty home tax for almost 5 years, this year the cities director of finance published a fairly long report that gives some insight on how it's going, including an EY report attached at the end. It's a long but pretty interesting read:
(two things I pulled out, they've put $115MM toward affordable housing directly from the tax, and, empty properties fell 20% 2020-2021 and the same again 2021-2022 - worth reading the report)
A little insight on Vancouver: PRC investment firms decided that the steady growth of the North American real estate market looked to provide great returns on investment. So, these firms started buying up large numbers of single-family homes in Vancouver. I've heard a few reasons for why they chose Vancouver: (1) the large amount of PRC nationals in Vancouver, (2) geographic proximity to the PRC (relative to other North American metropolitan areas), and (3) the closer relationship with the Canadian government (relative to the US).
Now, the investment firms took a different approach. Many ordinary people and even real estate firms will try to rent out their secondary properties, particularly if the property is in a major metropolitan area. Here, the firms didn't rent out the properties for any reason. Their investment strategy decreased the total available housing supply (for anyone, including renters) while demand kept increasing, so the home prices naturally skyrocketed. They sat on the properties and rode the tide.
The issue that Vancouver started encountering was that single-family homes on a regular residential block may be only 50% occupied. The end effect is you'd have families living on a regular ol' city block but with half the properties vacant, which destroys the development of community in that neighborhood. Also, because the Vancouver housing market pricing exploded, property taxes blew up, yet many residents' neighborhoods became a worse place to live. The housing market wasn't growing because of newfound desirability (e.g. Austin) or fresh industry (e.g. Atlanta and entertainment); in those cases, the new economic activity will provide benefit to the community in a variety of ways. The Vancouver situation only benefited the investment firms with no tangible benefit to the community.
Residents became understandably upset. Hence, the empty home tax was passed to disincentivize the investment firms' predatory investment strategy.
I believe the Prohibition on the Purchase of Residential Property by Non-Canadians Act went into effect this year, it's going to be interesting to see if that does anything to help the situation, I'm cautiously hopeful. Fun story: When I graduated from college (20ish years ago) I moved to Toronto, one of my school buddies was a Chinese guy who mentioned he would be able to get me decent rent on a unit in a new construction condo because of some family connection. I took him up on it and lived there for 2 years. Over those 2 years I lived on a "ghost floor" - I was the only person on my floor and nobody was on the floor above or below. A family office had bought up 3 floors in the building and I was living on one of them. It was surreal to say the least.
I'm sure they'll find a way around it, however it's worth noting The Act is on direct or indirect buying and specifically addresses people attempting to circumvent through incorporation. There are pretty stiff penalties for not doing good diligence of the source of the funds. I'm not disagreeing people will figure out ways around it, only that it isn't going to be quite as simple as that in practice.
>> A little insight on Vancouver: PRC investment firms decided that the steady growth of the North American real estate market looked to provide great returns on investment. So, these firms started buying up large numbers of single-family homes in Vancouver.
Reference required. Empirical evidence does not support your claim.
The PDF in the parent’s comment shows there were 1010 vacant homes in 2017 and 502 vancant homes in 2022.
Jens Avon Bergmann of MountainMath.ca did analysis after the 2021 numbers were released. His takeaway:
>> “The results demonstrate very little “toxic demand” leading to vacancies in BC, and provide valuable checks on estimates of “foreign” ownership.”
Please stop spreading this disinformation unless you have actual references with actual empirical evidence. It is actively harmful to supply-side solutions.
I am open to have my mind changed if you have evidence that toxic demand is actually causing significant harm. With significant harm defined as being one magnitude greater than the 500 vacant homes in the above PDF from the City of Vancouver.
"Analysis of land title records by TI Canada found that nearly half of the 100 most valuable residential properties in Greater Vancouver are held through structures that hide their beneficial owners. Nearly one-third of the properties are owned through shell companies, while at least 11 percent have a nominee listed on title. The use of nominees appears to be on the rise; more than a quarter of the high end homes bought in the last five years are owned by students or homemakers with no clear source of income. Trusts are also common ownership structures for luxury properties; titles for six of the 100 properties disclose that they are held through trusts, but the actual number may be much higher as there is no need to register a trust’s existence."
This is exactly why the Prohibition on the Purchase of Residential Property by Non-Canadians Act and considerably stricter source of income requirements went into effect this year. The reality is nobody really knows, people have a hunch one way, numbers show another, context another again. It's difficult to say.
Seems like there could be an opportunity for renters to approach vacant property owners and offer to stay in their homes for amounts, say, half of the vacancy tax.
> looked at census data on the nation’s 50 largest metropolitan areas and found there are 5.47 million vacant housing units, with an average vacancy rate of 7.22 percent.
This feels sensational. Imagine a common scenario: a unit is rented for 2 years (24 months), and then is vacant for 1 month while the owner repaints, performs maintenance, and relists the property for rental. That is 1/(24+1) = 4% vacancy. Given you can easily get to 4% vacancy with simple turnover, you can see why very low vacancy rates are bad for renters: they indicate it is extremely competitive to find housing. You can see this anecdotally in extremely tight housing markets like NYC where renters looking for apartments often report they need to move extremely quickly to secure rentals and some people even ofter to pay more than the listing price for desirable apartments.
I believe they accounted for this in the lending tree article. Looks like the main cause is units for rent at 26%, and units undergoing repair are at 6%.
I’ll say from personal experience it is somewhat rare to have this one month gap period between renters. I tend to see the super (manager) paint the unit in 1-2 days or even overnight. Then repairs can happen as the tenant reports them while living in the unit, barring any severe damage.
That example hit 4%, but that’s a long way from 7.22 percent. It’s common for rental properties to be occupied by the same tenants for 10 years or longer, 7.22% of that is 8.7+ months which suggests the 7.22% is further concentrated around shorter rental periods.
It’s the same deal with unemployment, 7% is much worse than 4% even though the numbers aren’t that far apart because it’s a composite of a baseline and issues.
You tend to know people like yourself. Young professionals move quiet frequently. Do you know anyone in a rent controlled or subsidized apartment? How many retired couples do you permit know? What about school teachers or police officers etc?
Also, looking at people who can’t tell if someone is 2 days into a 15 year stay which makes it easy to overestimate how mobile people are. You really need to look at things from the perspective of move out dates not how long people have been in their current apartment.
Professionals? Who move around based on changing income, family size, and neighborhood dynamics? Sure.
I know a lot of working class people who live in the same neighborhood they grew up in and have rented the whole time. Just depends on who you know a lot of I think.
I've moved 3 times in 7 years. But never has my old landlord or new landlord taken a month to repaint things. It's always been re-rented in under 2 weeks. This is all in NYC though, so things might be a bit different here.
For how many years of their life, how many 2-year cycles? You can switch jobs every 2 years for a 30-year career, but having a family slows things down, usually.
Common, really? Have you got any kind of figures to back that up? Because anecdotally speaking neither I nor anyone known to me has ever rented for anywhere near ten years. I always get curious when claimed statistics greatly disagree with my experience.
Nationally yea, rent control is one reason. NYC has people living in the same apartments for 30+ years.
Subsidized housing is another, the waiting list can be years long and people then generally stay until they are kicked out.
It’s also age related, retired people have fewer reasons to move and families are harder to relocate. Further looking at individuals you don’t yet know how long they are going to be in that location.
PS: 5.5% of renters have lived in their home for more than 20 years. Average is 3 years nationally at 7.22% that’s ~2.6 months between occupancy which seems long IMO.
And yet here I sit in a rental since 2005, and in software and IT the whole time. You just didn't happen to know me.
Your individual experience means essentially nothing, and I frankly disbelieve you don't even know anyone who has not or will not eventually have rented for 10 years, since they are everywhere.
Rent control in California isn't particularly protective of spiraling rents. The statewide law applies to 15+ year old units and per year rent increases are limited to 5% plus inflation or 10%, whichever is lower.
I’d guess that the vast majority of California renters are in big cities, where 3% rent control is typical. You get stuck after a year or two, unable to move without leaving the state, and landlords exploit this by neglecting repairs (i.e. lead, mold, asbestos). There is a pretty big range of “livable conditions” which I’ve experienced as a renter. So the divide between rich and poor (owner and renter) increases and the only socially acceptable solution it seems is yimbism, which seems to mean “increase the number of landlords until the problem disappears.” Or outright communism, where the state is the landlord, which has a history of failure.
To be fair, if rent can never go up more than 3% per year, how long until the landlord can't afford to do any repairs?
Property tax goes up 2% every year, so there's only 1% headroom. If some other expense starts to go up wildly (such as insurance has been doing for years now) it can eat that up and then the landlord is losing money every month, which leads to abandoned maintenance. Which isn't good for anyone.
In Los Angeles, it seems to be 4% per year + and additional 1% per covered utility. In addition, the controls only apply to older units. This 3% average in major cities in CA notion is a floating assumption without any hard analysis backing it as far as I've read. https://la.lawsoup.org/legal-guides/tenant-renter/rent-contr...
The property tax increase is at a max of 2% cap, it has not been a full 2% most years in my experience (anecdotally in my area).
Property tax is a finite fraction of a landlords costs, it could go up by 3% and the headroom exists on the rest of their expenses.
Further if all expenses increase by 3%, then profit also increases by 3%. With decades of inflation well below 3% landlords weren’t having issues affording repairs, they simply weren’t getting the maximum benefit from the area’s prosperity increasing.
The US has major issues with the state as landlord but other counties pull it off fairly well. That suggests me it’s the US that has the problem not the approach of having the government involved that’s at issue.
The US seems to default to doing the worst possible solution. Take long term rent control and private ownership, because like seriously WTF??? That’s literally combining the worst aspects of communism and capitalism.
Other countries that pull it off do so in extremely YIMBY ways: they simply build enough housing that market rents fall.
This debate over "public housing" vs "more landlords" is kind of dumb; both operate by increasing the supply of housing and rely on fundamental market factors to work.
One issue is with how the census/fed defines vacancy.
>A housing unit is vacant if no one is living in it at the time of the interview, unless its occupants are only temporarily absent. In addition, a vacant unit may be one which is entirely occupied by persons who have a usual residence elsewhere. New units not yet occupied are classified as vacant housing units if construction has reached a point where all exterior windows and doors are installed and final usable floors are in place.
If a builder is building a house and it has a roof/windows/doors/floors but no occupancy permit, utilities are not hooked up, and there are no appliances/furniture that is counted as 'vacant' even though you technically can't live there.
If I left an apartment today (12th) and my lease ends the 30th. Even if a lease is in place at the start of the next month that still counts as a vacancy.
If I have a 2nd home I share with family/friends/short term lease that is generally occupied, it's still "vacant".
This is the true math right here. An apartment that is occupied for a year, then takes a month to lease out again, results in an 8% vacancy rate. That’s just one of the reasons. People who think we can drive the vacancy rate down, even though it already stands at a record low, are crazy.
I hear such conflicting information. For a normal looking new development, I hear that developers are looking to offload asap to recoup the investment. Certain markets in America make it almost seem as if these investors are willing to wait years for rates to come back up.
I don't think Powell gives two fucks about the inflation or unemployment rate. Think he's very interested in cost of living and rent more than anything else. Housing prices barely have moved down at we're on the wrong side over 5%. If housing just thinks its going to wait this wait out and emerge from all of this with this inflated money house has left in tact, while the rest of get slammed by the waves, well ... well I guess I've seen dumber stuff.
Housing needs to get hit for any of this to be worthing anything.
There’s no conflict. Developers are building and selling as soon as they can. That’s their job and that’s their business model.
The people withholding units from the market are your normal landlords and speculators who can stomach reduced rents in the income. They need to be taxed out of existence. LVT continues to be the right answer here, both for incentivizing development and disincentivizing speculation/holdouts.
The vacancy rate suggests most vacant units are in-between occupants, something you'd require for a healthy market. The vacancy rate should probably be double what it is -- it's probably at historic lows.
The sentence says “may”. And the previous sentence says “ A housing unit is vacant if no one is living in it at the time of the interview, unless its occupants are only temporarily absent.”
I guess we would have to read further on how they determine temporary. But given the sampling method, I would guess people doing a door to door survey and noting it as temporary absent if it’s well kept?
We have both problems, but the issue with low construction is not developers simply deciding not to build and/or building but deciding not to sell.
The headwinds on construction are labor shortages, material shortages, zoning, and land prices. Zoning and land prices are both also alleviated by LVT.
Another option that I really like is forcing rent control on landlords who don't have at least 80% occupancy. Don't want to reduce your rents to market rate? Fine, the law will do that for you.
Places like Vancouver, Canada do this through a vacancy tax. It doesn't appear to do much as those leaving the unit vacant are the extreme wealthy and just factor in the tax to the cost of maintaining the house.
I always love this counterargument to penalty based enforcement in these sorts of situations. "The penalties don't seem to have the desired effect!" Then the natural conclusion is that they aren't high enough.
If you print a trillion dollars and give it to the lower and middle class, they'd spend a good chunk of it in a few days to a year(see covid checks and unemployment bonuses) eventually resulting in inflation that disproportionately affects the low income folks, so it's temporary relief which is great during things like pandemics. If the same money is given(or flows) to the super rich folks, they either save it or buy appreciable assets, since they already pretty much already have everything they need.
So the fed doesn't have any other good options. They cannot raise taxes on the rich or institute a wealth tax or 'take' the rich's assets. That's up to Congress. Blaming the Fed I think is unproductive because they seem to be doing their job trying to balance low inflation and a low unemployment rate as much as they can, within the limitations of only being able to change interest rates and quantitative tightening/easing(not to mention things like the war in Ukraine increasing energy prices which affect prices of almost everything). If you had the choice between high(or run away) inflation and slightly higher unemployment(which was historically low), what would you choose? Wage increases are eaten up by inflation.
Asset inflation at this point is a runaway process caused by companies raising prices to cover increased costs and adding a margin for safety because of volatility. Companies in one area raising prices has a downstream effect, both in raising costs for other producers, and in allowing other producers to raise prices because of people's expectation of "inflation."
> Asset inflation at this point is a runaway process caused by companies raising prices to cover increased costs and adding a margin for safety because of volatility
You could use the same exact reasons to justify wage inflation while suppressing asset inflation lol. Of course, we know who has the power to get what they want. It's called capitalism for a reason.
> The feds actions show they want high asset prices relative to wages.
It’s an economic axiom that high interest rates mean lower asset prices.
So can you explain what you mean?
Also - as far as I know every us city except for Miami has had a decline in real estate prices - so again - where are you and everyone in this thread getting information? Anecdotes?
To be precise, high real rates generally means lower asset prices. We came in at 0.4% Month over month CPI. Overnight rates are 5.5%, so we still have a historically low real rate (5.5-4.8=0.7% CPI, 5.5-3.6=1.9% Core CPI).
The Fed hasn't really squeezed hard. They're looking for a soft landing. We went from super loose negative real rates to just loose policy, but to hear Jay Powell say it, we're already tight and restrictive. We probably need to get up to 3%+ real rate (maybe 6%+ overnight rate) to get a good washout and some forced selling.
Because interest rates have been artificially low since 2001. And then we got money printing too after 2008.
Housing prices have nothing to do with 2023 interest rates. Well they do, the fact that they are stalling/falling is very much to do with the higher interest rates.
You can't look at 20+ years of loose monetary policy, take the 1 year of high interest rates, and blame that on high asset prices.
Btw, have you looked at stocks and bonds in the last 1 year? PE ratios? They've collapsed. Because asset prices collapse with high interest rates, and stocks and bonds are much faster at responding than real estate.
But still, real estate prices have fallen in every major city bar one.
Seems like they're trying to balance out the other end of the equation by punishing labor through very high interest rates. My personal pet theory is that the fed wanted to raise rates enough so that the static interest rates on student loan debt didn't look so absurd when student loan payments came back online. Otherwise people would be demanding student loan debt relief. That ~7% doesn't seem so silly now, it's about inline with mortgage rates. But when mortgages were approaching 2%, that same 7% looked usurious.
Developers are not investors. They borrow money to build and hope to sell at a profit. It’s just like a new car dealership. The “inventory” isn’t owned by the builder or lot, it’s owned by the bank. The builder pays interest, taxes, insurance, every day a home sits unsold. They are motivated to sell and due to market factors they are starting to offer steep discounts. Now existing homes are a bit of a different story. There is a mix of owners and investors and they are likely locked in at a comparably low rate. If they bought in the last 2 years they may even be underwater. And if looking to move they may need to get a certain price to be able to get into their next home.
The investors keeping a building empty don't care about return on investment like most investors do they want to hide assests from their local government and possible have a place to flee to if things get even worse locally.
Investors looking for a return on investment want to rent everything. They leave property empty when remodeling, or when between tenants.
If property prices are going up 10% per year and price to rent is 30:1 (Vancouver) - to some it's not worth the risk of renting out the property.
You're just banking on leveraged appreciation.
Take a $2M condo. The rent is will be ~$60k for a year. The appreciation will be ~$200k, and the the principal (@ 3% interest - which they have if they're leaving it empty - is $35k).
You're getting an expected $235k if you leave it empty, and $280k (after vacancy and management) if you take on the risk of renting it.
Why go through all the hassle when the government is doing everything they can to pump up prices on leverage?
That depends on cashflow needs, and just how sure someone is that their spreadsheet (and expected future value) will turn out to be true. For property prices to go up 10% yoy credibly, property in that market has to actually change hands after all, and that requires someone spending cash or financing every year do the deal and to produce the data.
If that stops happening, eventually everyone has to adjust their spreadsheets/models, and all the sudden that model gets very grim.
actual cashflow is real/concrete and hence has a momentum and credibility that tends to reduce panic. It gives time to wait out market valuation issues, since there is money to pay the bills coming in.
And once the money changes hands, it also is ‘permanently’ the owners. That reduces risk.
Expected market value? Not so much, on any of those fronts. And at some point, all but the most die hard true believers are going to want to know why they’re dumping cash into finance payments (or keeping cash locked up) for property that isn’t worth it.
At some point with speculation, enough people blink that it collapses.
Or maybe not. At least that is what everyone in that situation tells themselves.
But it isn’t panning out for Chinese firms anymore like it used to.
This takes time to actually happen though, as everyone has very strong incentives to keep wil-e-coyote’ing once they’ve run off the edge of the cliff.
And somehow people always find reasons to not update those spreadsheets when the numbers are going down instead of up. For many of them, they ran off this cliff many years ago.
And it does work, as long as there are enough ‘greater fools’ around, and there are a lot of greater fools, or they can afford to wait.
Boomers here and in China can still go for many years before they have to sell.
In high demand metropolitan areas, I don't see how housing prices are ever going to take a hit. There are plenty of young, well-paid professionals interested in good real estate who are capable of and willing to pay high prices. Demand is severely constrained because interest rates are high. I can't see how the needle is going to move unless rates drop.
For the purpose of understanding how housing markets work, I don’t think homes that the owners use part of the year and aren’t offered for rent should count. It doesn’t seem like there’s any mystery about that? They own it for their own use. Some places have very seasonal demand.
But the article also talks about some cities where there is housing for rent, but not at prices where anyone will rent it. That’s curious. It would be interesting to find out more about what’s going on there.
One big source of apartments being too expensive to rent is investment companies swooping in to buy apartment buildings, hoping the _building itself_ will appreciate in value, so that they can then sell it later at a profit. In this model, it's actually against the owner's interest to rent apartments because renters inevitably cause damage that needs fixing, which cuts into the owner's bottom line and makes the building less resellable. So, the solution is to charge exorbitant, insane above market rents; a small number of fools with more money than sense will rent at that price, and that will help cover loan interest costs, etc. in the meantime. With enough starting capital, renting to a few tenants at very high prices is a much better investment than renting to many tenants at market rates. You just hope that the building appreciates by a large margin in the next X years while your few, wealthy tenants pay your interest, and then you can sell the whole building to the next investor.
Now, is this ethical? Abso-fucking-lutely not. Not only is it basically a bigger fool scam, it takes an extremely valuable and important commodity (housing) out of the market for no reason other than financial gain. I'm of the opinion that apartment buildings should be required to maintain 80% occupancy or risk having their apartments go rent controlled; if you aren't willing to rent at market rates in order to provide the service you claim to provide, you're taking housing away from people who need it, and you should be punished for it. Sure, you can argue that real estate is an investment and therefore these ghouls have the right to do this, but IMO becoming a landlord should come with the social responsibility to _increase_ housing supply and availability, not decrease it. If you're not willing to play by those rules you shouldn't be allowed to participate in the market.
No major real estate investor has a thesis of pure speculation. That would be insane and banks would never underwrite it. (If anything, buying for speculation is almost entirely the business of individual households who get huge subsidies to do so.)
No. This is not how any of this works and you’re wildly speculating.
A multifamily property is worth some multiple of its Net Operating Income. Almost all
Multifamily properties are acquired with debt. No lender will grant a loan for a property that has a high asking price, high rents and high vacancy.
I’m not an expert in real estate but this doesn’t make a lot of sense to me. Sometimes tenants might do so much damage that it would be better to not have rented the unit at all, but this hardly seems likely for most tenants?
Also, it seems like an apartment building that’s mostly rented out would sell for more than one that’s mostly vacant and losing money? Assuming it’s not a teardown.
It seems like it’s similar to any other business. A profitable business would go for more than an unprofitable one.
I can see it as a reason to be picky about tenants, though.
Not when the primary asset of the business appreciates on its own. The fact that the building itself is an investment that can appreciate in value irrespective of its usage means that the incentives are misaligned.
in sleepy seacoast new hampshire I overheard a local with a sharp quip about the rich owners of vacant autumn luxury waterfront apartments: "it's not your presence we despise, it's your absence"
Probably should be careful what they wish for. It seems to me that unused vacation properties are optimal for the residents: they pay much higher taxes as a secondary residence and they don't cause traffic or consume any resources.
The community would rather either have cheaper housing for actual residents, or the wealthy person spending their money there regularly. What we have is the worst of both worlds.
When the wealthy vacation home owners actually take an interest in local politics and change the types of businesses (and pricing structure) through their upscale tastes and discretionary income, the residents are still unhappy. This is the classic $20 cheeseburger and martini bar problem in what used to be a blue collar town.
Restaurants are a tough business, so towns with a high vacancy rate end up being unable to support very many restaurants. Forget the quality of the restaurant, lots of these places barely have any restaurants (or they're very seasonal)
Honestly, I wonder if one could do a "benefit local business tax" where they tax the non primary residents and then just subsidize the types of local businesses they want to keep open (it's hard to design good systems for this though!)
You're presenting a false dichotomy here: "Either the rich people from elsewhere own the houses and don't live in them actively, or the rich people from elsewhere own the houses and do live in them actively."
There's a third option you're ignoring: The rich people from elsewhere don't own those houses. They're priced more affordably and owned by locals who genuinely care about the area.
Yup, locals in vacation areas always like to complain about their revenue & employment source.
Having a large cohort paying full property taxes without consuming services (police & school being the largest) either suppresses the locals taxes or increases the services they would be able to get otherwise.
Everyone wants to live in the goldilocks situation of a desirable area with low prices, good services, low taxes, good commutes (low traffic and-or good transit), and plentiful jobs. I've lived in various areas from rural, suburban to Manhattan and.. you can usually have 2.5 out of 5 at best.
I have a lot of sympathy for individuals in tourist areas - they didn't necessarily decide to live in a touristy place (they may have grown up there, they might be a teacher or have a job that brought them there unrelated to tourism)
In touristy Montana cities the amenities are nice sure, but people aren't there for that. They're there to ski or hike or bike.
Regarding your last point - Manhattan can hit 3/5 if you can coordinate your apt and work locations.
What kind of resources do you mean? They still have to heat and power their homes, so it still “consumes resources”. Unless you are talking about buying local groceries or something.
Propery taxes are the same in NH whether someone lives there full time or not, so it doesn’t matter that they aren’t there and would be equally valuable if they did live full time. The traffic argument is the only one I can see being true, except that traffic in the seacoast is awful already anyway with tourists driving back and forth to Maine.
Personally, I think having permanent residents is far better for a town than a graveyard of empty soulless homes, but I’m just a regular human being and I’m sure its just a matter of opinion at that point.
Utilities are paid for by use, so that's not really relevant to municipal finances. Even still, the power and water use of an unoccupied residence is obviously much lower than an occupied one.
Property taxes pay for municipal services like parks, schools, and police. The rest of the town's residents get better versions of those than they could afford otherwise. This isn't a very complex idea, regardless of whether you think the town would be better off with more people living within it full-time.
Yes but my point is that for an equally valuable house the property tax contributes equally to those resources whether they live there or not, but I can’t imagine the burden of someone living full time in a house of that value is very high on such resources. I understand what you are suggesting conceptually, but I disagree on the impact. If there are any numbers on such a resource burden maybe I’ll change my mind! I’m not sure if there is data out there for this kind of thing.
Unless you are suggesting replacing such a home with higher numbers of lower value homes. Obviously that would be a different story.
In my town schools are about 60-70% of property taxes and, with a new regional high school being built, that number will probably go up. That's pretty typical situation in Massachusetts towns around where I live.
We're certainly a year-round town. But it's a reality of a lot of coastal communities as you get up the coast further that, if they're not commercial fishing ports, they do largely close down in the winter. If there weren't summer homes and a tourist industry, not many people would live there.
Resources that are shared across taxpayers... They have to pay to heat and power their homes. They are also paying property taxes that support local schools, but they are not sending their kids to school, therefore benefitting everyone else with the tax dollars. They add a lot to tax base without adding to the cost. Even things such as sewage treatment and the roads of which they contribute to they use less of.
There's a really nice solution that works well in Switzerland - you either pay tax from the actual rent or a tax on a virtual rent, if the property stays unoccupied.
1% is insanely dysfunctionaly low. It doesn’t allow for units to stay vacant between tenants for repairs and cleaning. At 1% the unit is vacant for 3 days every year on average. That’s not enough time for basic things to be done and indicates an incredibly tight rental market
> It doesn’t allow for units to stay vacant between tenants for repairs and cleaning.
Cleaning is done by the previous tenant, or usually by a company the hire. Repairs are done on an on-going basis.
Helpful, I guess. But it feels like a case where aggregated data makes for a better narrative.
For example, the article says, "About 26.6 percent of the nation’s vacant housing units are actively available for rent." Does that mean the landlords are having trouble finding qualified tenants? If so, then the real issue is the disconnect between inventory and what those seeking shelter can afford.
A $5000 p/m unit being held back if 99% of those needing a place to live can't afford it.
Housing availablity is like jobs creation. X new jobs? Ok. Whatever. But at what rate of pay? With what benefits? A job is not a transparent unit of measure. The devil in these things is in the details.
If you look at the report, there are a few cities like Miami that reasonably fit a fairly HCOL area narrative with good growth prospects. And some other, like Raleigh, that are smaller markets but have had pretty good growth in tech and otherwise. But there are a lot of cities on that list like New Orleans and Memphis where real estate affordability is presumably in the context of mediocre employment prospects and low wages. Housing affordability is almost always going to be an issue if you can't get a job in the location.
> Housing affordability is almost always going to be an issue if you can't get a job in the location.
Perhaps. But supply (as in supply and demand) plays a key role as well. The ratio between higher-end and "affordable" seems to keep trending in the wrong direction.
I'm not suggesting everyone should own a home, that's impracticable and economically dangerous. On the otherhand, too much of a resource (e.g., hoysing) controlled by too few hands has serious economic consequences. Perhaps, eventually, sociopolitical consequences.
To put numbers to it, according to Zillow, the average New Orleans home value is $263,349, down 8.3% over the past year and goes to pending in around 53 days. (That's the city at the top of the list.) Obviously there are some large historic homes in Uptown that go for a lot more than that, but that doesn't really line up with the typical "housing in unaffordable" storyline except to the degree that--as is almost certainly the case in New Orleans--the job market is pretty poor in general.
How is your market for an essential commodity working if we need to have more than 6% of all inventory sitting around doing nothing, or else it's unaffordable?
Let's say you had a 0% vacancy rate in an area. All housing units are full. Now let's say you want to move to that area, or you're a young adult moving out of your parents' house. How do you do it?
If this doesn't seem reasonable to you, what vacancy rate would you find acceptable?
Just for argument's sake, it can be done: Renters are supposed to give notice months in advance, so landlords can advertise during that time. (And yes, painting etc takes some time, but not that much.)
if a property is empty for one month every two years, that's a 4.2% vacancy rate. That seems plenty reasonable - places need to be cleaned between tenancies, sometimes refurbished.
The. What is it? A right? What does that mean? I have a right to speech in the US. The government doesn’t provide me a laptop and hosting. I have a right to keep arms. The government doesn’t give me a Ruger.
Definition of a commodity. In economics, a commodity is defined as a tangible good that can be bought and sold or exchanged for products of similar value. Natural resources such as oil as well as basic foods like corn are two common types of commodities. Like other classes of assets such as stocks, commodities have value and can be traded on open markets. And like other assets, commodities can fluctuate in price according to supply and demand.
Housing does not meet any of the criteria to be a commodity. Commodities are undifferentiated bulk products widely available from many sources in which profits are minimal. Housing by contrast is completely unique owing to its location. Housing cannot be transported. Housing is not an easily substituted good. Sorghum is a commodity. The house at the corner of Grand and Lake is not a commodity.
There is only one solution, for a virtual market, storing its value in a real world comodity, that real people can no longer afford. Create virtual people, who earn better and let them move in, with the poor real world citizens.
Of course, the other solution would be increasing tax and just build massive oversupply of social housing- but that can not happen, as it would devalue the poker-chips, that are the stacks we life in.
Something about this doesn't really make sense. I mean how often do we hear that there is a housing shortage? Either we are being lied to that there is a shortage or these numbers are not what they seem?
It bothers me that in this article that in the same paragraph it mentions housing "deteriorating conditions" it gives percentages for housing in rent and being renovated, but ignores the percent for this important aspect? How much of this housing is actually in a livable state?
Maybe the original report actually gives these numbers so I will need to look at this closer.
But something about this really isn't adding up for me given what has been said time and time again over the last few years.
Edit: Ok so it seems like the reason this article doesn't mention this percent is because the lending tree one doesn't either. If I am reading this correctly it is only explaining about 52% (26.61 + 17.04 + 7.98) of this number. So what is the reason for the other roughly 50%? That is a huge percent to be seemingly ignoring but still taking into account for an attention grabbing headline.
I mean, we're being lied to that wages are causing inflation. We're being lied to that universal basic income will make people stop working. We were being lied to for decades that working from home was impossible. We were being lied to for decades that tax cuts for the rich will "trickle down" and help everyone else.
It's abundantly clear that the powers that be in the economic world are some combination of willfully lying and self-deluded about how various parts of the country's and the world's economy actually work. It would not surprise me at all if the statistics showing a "housing shortage" were either shortsightedly or deliberately ignoring particular categories of vacant housing.
I get where you are going with this, but everything you mentioned is harder to concretely say one way or another. It takes studies, looking at numbers, and tests.
But housing numbers are cut and dry. Worst case we have people who are trying to hide the numbers, but ultimately if the numbers can be found they are there. Gets a bit more complicated since you do need to account for wether or not there are people where those houses are and if the housing is in a livable state.
But it isn't like you can add an opinion disclaimer to housing numbers.
There are studies showing that all those things I said are lies are, in fact, untrue. (Well, the "working from home" one is a bit less clear-cut on an individual level—but it's still the case that we were being lied to that it was impossible, period, across the board.)
And as you've already noted, the article appears to be making bold claims while not showing all its work. Yes, this article is doing that while arguing for extra vacant homes—but what makes you think the opposite isn't also true? Beware of the Gell-Mann amnesia effect.
In our state, there's a lot of people who got burned during covid by people not paying rent and refusing to leave, and no realistic way to evict. There are still covid related restrictions on evictions in place. An acquaintance of mine has a kind heart and took in a homeless person. He's done this before on occasion. This time, the person is causing all kinds of problems and is unwilling to leave. He now has to live with this person in his house for a minimum of 6 months to get them evicted, even though no rent was ever paid or asked for.
He's never going to take in people again. Nor will he ever rent out to anyone again.
California Insider (channel killed by Youtube) documented how thousands of former rental units are sitting vacant in San Francisco because of issues like this.
Increasing the risk to landlords even more than it already is will only reduce available rentals even more.
This is also why you have to leave after x number of nights at a hotel in the US, where x is less than the number of nights it takes to qualify as a “permanent resident” in the hotel which would cause the hotel to have to go to court to evict them. It is usually 30 nights, but some states are up to 90 nights.
The court system being unreliable and backed up for months is a travesty of its own that has myriad downstream effects in society, including incentivizing discrimination.
> Because home-building became more expensive during the pandemic as a result of supply chain problems, developers tried to pass those prices off to renters to pay off loans.
This seems to be completely ignoring inflation and hinting at a greed narrative.
I think it's just equating the two, which probably isn't wrong, considering the record profits made even as inflation has skyrocketed.[1] Making less profit is not an option for all of these businesses (because of greed), so they pass 100% of the inflation on to the consumer, and then some.
This is housing trutherism - yes, there's a lot of vacant housing. These units are being renovated, are uninhabitable, are in areas that aren't really livable (a ton are in rural Upstate New York, and don't have heat for example).
It's also still too small a % of total housing to create a proper liquid market. I've seen a liquid housing market, in KC - it's amazing. In NYC, it's fucking miserable to convince a landlord to let you suck them off to the tune of 6k a month.
This is Flat Earth but for housing policy. Look at places that win the housing price war - they just build a shitload of housing. Houston, Dallas, increasingly MSP.
With Canada’s land to population ratio, each resident should have at least a private airfield and 100acre farm, and yet, people spend their whole lives paying mortgages for 1000 square feet sardines boxes called houses, and before they realize it, they gauge up the already abysmal prices so they can compensate their loss to milk the tenants, a never ending process to keep people busy when the land is empty and vacant all around us..
More suburban sprawl is not the answer. We're already seeing what happens when you build into fire areas, doing more of that is insanity. We should just fix our cities to meet the bare minimum of peer countries like Canada.
Mexico is significantly better at cities than CA. Fucking Guatemala has better urbanism.
It is insanity because it’s being sprawled by the same developers and same regulations. Sure, fixing existing cities is better option but it’s unrealistic to do so, because you will need an authoritarian set of decisions that will never happen in a democratic government when 2/3 of your voters are home owners and already paid their life savings in that house and want the returns now, yeah, that fix will never happen, the realistic option is to use the already vacant land -that surprise surprise it’s actually owned by the crown!- with new sets of regulations to ease the crisis, or absolutely nothing will substantially change.
It's crazy to me that housing is calculated as part of GDP - there's just something wrong about attaching a capitalistic value to someone having a roof above their head.
> It's crazy to me that housing is calculated as part of GDP
According to the NAHB, housing contribution to GDP occurs in 2 ways:
a) Residential investment (averaging roughly 3-5% of GDP), which includes construction of new single-family and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees.
b) Consumption spending on housing services (averaging roughly 12-13% of GDP), which includes gross rents and utilities paid by renters, as well as owners’ imputed rents and utility payments.
I've seen an uptick of reporting on 'vacant homes' like the journalists are hinting at a confiscation of private property to house homeless people or something. This isn't Stalinist USSR - you can't seize peoples farms or property for collective use. Being a dreg on society does not entitle you to others earthly possessions. I disagree with an empty home tax as well - property taxes are already being paid. Ban foreign investors from buying homes/property, ban corporations from hording property, encourage housing development and curb commercial/retail expansion.
https://council.vancouver.ca/20230510/documents/cfsc2.pdf
(two things I pulled out, they've put $115MM toward affordable housing directly from the tax, and, empty properties fell 20% 2020-2021 and the same again 2021-2022 - worth reading the report)