Genuine Question, why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property (which would likely be distributed back to the locality, specifics not important), apply the same rules we do for pass-through taxation to mitigate loopholes, and automatically charge this elevated rate for properties owned by non-natural persons? I think this would just price in the externalities of corporate versus natural person living in a property for a locality.
Or maybe it's a tiered system. W/e.
On a related note, does anyone have anecdotal stories about the efficacy of Georgist tax policies?
> Genuine Question, why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property (which would likely be distributed back to the locality, specifics not important)
I am that person.
I own two duplexes in addition to my primary residence, for a total of four residential rental units – all 2/1s made up of ~750 sq ft each. Those additional properties that I own provide housing to 6 humans who can't purchase, or just prefer not to.
What you're proposing would result in one of two moves from my end:
1. I sell both properties and let someone/some entity (who doesn't work and/or manage the properties themselves, have any relationship with the tenants, will push rents to market prices immediately, etc etc) deal with it.
2. I scrape the lots, stand up single family homes, take my gains and walk inside ~18 months. That puts the 6 humans mentioned above out into a (very tight, <= 1% vacancy rate) rental market that'll bump their monthly rent expense by ~25% minimum and, overall, very likely reduce the headcount of humans housed.
Either way, it's a high level hit to individuals, the market, whatever. It doesn't result in any gains or economic corrections to the RE market.
> (which would likely be distributed back to the locality, specifics not important)
That's already happening in my scenario. I own & operate a General Contractor LLC entity that issues invoices to me, the property owner. The local city, county, and state are paid B&O, sales, etc taxes on those GC LLC invoices out of my personal pocket. Separately, my personal rental income is taxed appropriately at the federal level.
> I think this would just price in the externalities of corporate versus natural person living in a property for a locality.
You know what else can be priced in? Or wildly swing a market into affordability, normality, etc? Letting people build things. My lots are massive, but they consist of sheds and lawns instead of multiplying my units and housing more people.
It's impossible in my local market, and that's why it's carrying the <= 1% residential vacancy rate it has for 15+ years, and why rents are increasing at wild rates that no industry/job market inside 80 miles can support. Economics 101 says supply vs demand etc etc. Easy layups for anyone with half a brain. We don't have to modify anything outside of city/county zoning & the ability to infill everywhere.
The problem is not that rents are too low and sales prices are too high, which might make it appropriate to punish renting a unit and force landlords to sell. The problem is too few of both rental and ownership units.
I see this point oft repeated, usually as a shut-down for the above arguments. But i also see people claiming the complete opposite for their localities (that there are many many extra vacant homes being held than people that need them). It seems like the initial wave of arguments cited tons of statistics but over the months we've just stopped doing that for some reason as everyone's opinions have crystallized.
Stating such a strong assertion should still require at least a link
What's the reason that, with office occupancies down in so many places, there isn't a big push for conversion of commercial zoning to residential multi-family? Incentive programs to reward converting vacant spaces? Penalty taxes for holding vacant office space instead of selling it to someone who will figure out something to do with it?
Why is everyone (ok, fine, mostly economics & tech people) convinced this is such a wildly viable slam dunk of an idea?
Have y'all ever opened up a wall before and seen the electrical, plumbing, etc mechanical bits that make up a home? Any idea of what it'd cost to chop up that office space and feed every individual piece the necessary bits?
It's outrageous that we're even talking about this idea still. It'd require wildddddd tax advantages & federal spends in order to execute on it in any sense of the overarching idea.
> why can't we just charge a federal property tax 3-4x local property taxes for individuals who own >1 property
Trivially worked around. Use an LLC. Have it bought in a relative’s name. Have it bought in a rando’s name with a bulletproof lease with a $1 rent-to-own option at its termination.
Essentially, the property registry system becomes a farce. (You see this, for example, in India.) Simpler: a straight wealth tax that funds first time homebuyer incentives.
This could be improved by changing the criterion: an actual human needs to be registered as living in that house and live there. LLCs, trusts, and other entities don’t count.
If people want to split their time, fine, let them have as many houses as they want, declare what fraction of their time is spent in each one, and get that fractional credit for each one.
Worried about a couple taking the credit for each person separately? Fine, make the credit only reduce a fixed amount of tax per person — that $200M fancy house doesn’t get all of the tax waived just because one human is in it.
> an actual human needs to be registered as living in that house and live there
Relatives. Again, these measures have been implemented across the world. Miraculously, nobody owns two homes.
In cities, where competition for land is fiercest, I would further fully expect the tax to be borne by tenants. Because nothing was fundamentally fixed about the supply-demand mismatch.
Did you read the second half of my comment? If each human only gets to reduce tax on, say $500k of residence, then relatives are of limited value for abusing the system. And some of those relatives may prefer to claim their exemption on their own homes…
We could require more disclosures and auditing and regulations of those workarounds. It's not some digital thing that could be hidden anywhere, it's trivially easy to monitor or seize real property.
> it's trivially easy to monitor or seize real property
Anyone who owns property should be horrified at the notion of making it “trivially easy” to seize real property. That turns this into electoral toast. Its only utility is in distracting from zoning reform.
Also, the homeownership rate is 65% [1]. Second homeowners aren’t the problem.
Trivially easy refers to the physical act: show up with force. Not that it should be any more "trivially easy" to crack down on than, say, tax evasion - that is, you'd still have courts, etc. But don't act horrified at that. Eminent domain has been used many times in the US, it's not a novel concept. Foreclosure is also state-sanctioned and common.
But there are SIGNIFICANT interests who want to horde real property anonymously. "Fixing zoning" is not a solution to the problems that causes. The large-landlord/acquire-and-leave-vacant-waiting-for-appreciation interests are the very same interests that would BENEFIT from less zoning restrictions and the Manhattanization of more places, and corresponding increase in real property values per sqft of land. But the reason we don't make ownership of property more clear, or crack down on hording, is because those interests don't want us to.
"Simpler: a straight wealth tax that funds first time homebuyer incentives." - so we've got more inflation of property prices through financial incentives but actually let's not bother because guess who ALSO doesn't want a "straight wealth tax!" (And, of course, taxes aren't wildly worked around in this country anyway.)
> (Also, homeownership is 65% [1]. Second homeowners aren’t the problem.)
Is there a breakdown on what portion of this 65% own multiple homes? Personally, I’m not a fan of anyone who has more than 2 homes. One primary and one vacation or rental. Why does anyone need more than that?
Things are only "trivially worked around" if we let them be.
There is a concept you don't seem to be familiar with called "beneficial ownership". What this means is that if an LLC buys a house, a lot of jurisdictions require the "beneficial owner" to be known and to be taxed accordingly. The beneficial owner may not be on public records (the LLC will be) but the tax authorities will know.
Some jurisdictions don't do this or don't enforce it, which is a big part of why the London property market is the money laundering capital of the world [1].
So what would I like to see?
1. Eliminate the Mortgage Interest TAx Deduction. It's giving money to the wealthy;
2. Increase property taxes for any property owned by an LLC;
3. Require a beneficial owner to be recorded and maintained with tax authorities;
4. Treat any benefical owner or owner of any property in the state to be a tax resident of that state, which means their worldwide income is subject to the income taxes of that state;
5. In any sufficiently dense population area, single family housing ("SFH") zoning should be illegal;
6. A return to multi-family units as this is a class of housing that used to be really common but is now exceptionally rare. I'm fine with landlords to the extent that the landlord lives in the same property and suffers the same externalities from their tenant as their neighbours do. This includes AirBnB too;
7. Higher property taxes for SFHs that don't have an auxillary dwelling unit ("ADU") in any area where the median rent is above some threshold of the median income;
8. Do what Texas does with property taxes for Seniors: you can defer them until your death if you don't want to move. Otherwise you should downsize. We want to do the opposite of what California did with Prop 13 and pass massive tax breaks to Disney and wealthy landowners under the guise of "not kicking seniors out of their homes". In case you didn't know, the tax rate for Disneyland has basically remained unchanged since the 1960s thanks for Prop 13.
> concept you don't seem to be familiar with called "beneficial ownership"
I own one house, my spouse the next, my mom the next and then we do kids.
Your other ideas are much better. Were I a NIMBY politician, I’d distract from them with this tax idea. (As a Wyoming homeowner I positively love No. 4. Presently, I pay taxes when owed in every state I work in.)
> don’t see how those are trivially worked around in a country with a half decent government
Look at how people abuse rent controlled apartments. (All the way up to the current mayor.)
> People are not just going to give their relatives title to their property
This is literally what happens in places with such taxes. I wouldn’t bat an eye buying a house in my partner or a parent’s name if it saved 3x property taxes.
> I wouldn’t bat an eye buying a house in my partner or a parent’s name if it saved 3x property taxes.
That sounds like the policy had the desired effect. I.e home ownership is spread out across many people.
Those people cannot then own properties without being subject to those extra taxes. They'd be giving something up to help you, so would presumably benefiting somehow from your scheme.
I’m sick of rent control being vilified. If you’re not going to build more then you definitely need it. I’ve had my rent go up as much as 20%, forcing me to move on more than one occasion. If Prop 13 keeps the grandma in their home, then why can’t I have rent control that lets me stay put and provide stability?
Landlords will do the absolute minimum for repairs anyway, rent control or not.
> Saying that tracking who is the legal owner and beneficiary of a property is tough.
That doesn’t pass the sniff test - the legal owner has to pay property taxes so why can’t they track it that way? If it’s a trust then it’s the beneficiaries that are the owners.
In the absence of rent control i can see landlords just forwarding the cost of taxes, but that’s where I’m a huge proponent of it. Discourage investing in homes unless you really have the capital
And the MLS system is entirely voluntary and seemingly not updated timely, but it also doesn't include the secondary market, you know those pale skinny guys in the TV ads with dead eyes saying they'll buy any house no matter the condition. And there is a lot of secondary going on, probably more than the normal RE market.
Not everyone wants to be a homeowner or will have the means to purchase one even with additional incentives, and the increased property taxes are going to be passed to renters. Also, if you intend on purchasing a place to live, you're unlikely to purchase a place that requires a lot of renovations. Disincentivizing investors means fewer of these homes will be our purchased and some will even degrade to an unrepairable state, which further reduces housing supply, which makes it more expensive in the long run.
People want to come up with all kinds of reasons to poo poo this… but it really is what needs to be done to start improving things. In CA, owner occupied homes get a minuscule reduction in their property tax. Same mechanism can be used
I wish the system actually tried to solve problems with well thought out solutions.
To answer your question: politicians don’t want to piss off the wealthy class. Americans at large are skeptical of taxes because they don’t see it being used for anything useful.
This is solvable. If a trust owns the property, default to the highest tax rate. The trustee is then responsible for providing proof of the beneficial owner(s) if they want the "discount" rate.
This is basically how income tax law works for trusts. The highest tax bracket is reached very quickly to quash the first order shenanigans that might result from more preferential treatment
Not sure how it's down there, but my understanding is even if we have housing crisis, legislations that would actually bring down the housing prices is also bad for us. RE market is about 10%+ of the entire GDP, so we want individuals to park their money and use it as an investment vehicle as a part of the consumption cycle. Combine it with "i'll just buy it for my child/spouse/mom/dad" and so on, it's not really that easy to implement either.
> legislations that would actually bring down the housing prices is also bad for us
Then perhaps we should make a 20 year rollout plan to help us adjust; but, individuals being able to live in a location for a consistent price and other improved social safety nets are a net positive for society and government is supposed to work *for* society as a whole, not just the elites
I’m a renter, and I would love that. That being said, majority of people in North America own their homes. Since looking at your property as an investment has been normalized, those voters wouldn’t really like that. Something similar is happening in China, where MoM the average housing is depreciating, and they’re trying hard to balance out the economy with incredible investments into manufacturing and tech. I’m not entirely sure how that would pan out in the west.
> looking at your property as an investment has been normalized
That's a bigger deal than it sounds. The farther we move from a "classical" sense of property toward the notion that it's the stuff of an idealized economic game answerable to nothing outside itself besides the positive law, the farther our lives are decoupled from history, culture and community. If we go there full-throttle we are no longer a civilization.
“Real estate and rental and leasing” for my province. Construction is separate. It is at 18%+ here, so I just rolled it down to 10 for the country-wide average. Probably much higher than that. This is Canadian numbers though, as I mentioned, I’m not sure how it is down there.
> RE market is about 10%+ of the entire GDP, so we want individuals to park their money and use it as an investment vehicle as a part of the consumption cycle.
Hard no, that’s how we got here. When it’s part of the investment cycle, developers won’t build or build only ones that maximize profits, NIMBYism thrives, and it makes it so that the only people able to buy are the ones who least need it.
If you have enough money to buy a __house__ for someone else, then you have enough money to pay much higher taxes. This isn’t like buying a car for someone.
Btw, the GDP contribution is about 18% [1] due to price being propped by extensive construction on the supply side. This is by design, and we shouldn’t be encouraging it.
There’s nothing inherently wrong with people owning multiple properties. It’s not even a significant driver of the housing shortage. The main driver of the housing shortage is local zoning codes that forbid the construction of new homes, especially multi-family housing.
The real, genuine answer is that the rich run the world and don't want that so they'll convince poor people it's actually bad for them. This works for any issue. It ensures that completely sound ideas get shot down. See "muh freedom", "it's bad for the economy", "communism", "taxing the rich hurts job growth", "this will just make rent go up" etc.
I disagree with your "natural" person qualification. "Non-natural persons" includes anyone with a work visa or green card. It's hard enough for most people to get these, much less become fully naturalized citizens. Plus, the waiting time isn't guaranteed in length: it's variable based on the political climate. It's hard enough for immigrants today. Making the viability of home ownership based on political whims only worsens it. Shouldn't we prefer these immigrants become homeowners, increasing their "investment" in their local communities?
"Natural" and "naturalized" do not refer to the same concept. "Natural person" includes those with work visas or green cards.
>A natural person is a living human being. Legal systems can attach rights and duties to natural persons without their express consent.
>The concept of a natural person appears in business law and bankruptcy law, where it provides a contrast with an artificial person or a legal person which is an entity that is treated as a person for legal purposes. While natural person describes an actual human being, artificial person describes a partnership, corporation, or some other entity that has been provided with legal personhood by statute.
This is a difficult conversation to have, and not unintentionally so. I hope I come across as respectful and unpatronizing as possible (and apologize since I probably don't.)
While we have intelligent people discussing pie-in-the-sky solutions, barely-related tangential issues, and even misdirected injection attacks, the causes of the housing crisis are not only well-known to (honest) economists [1], but can be verified by looking at the market pre- and post-1970.
It's hard enough to tune in to the correct analysis in the cacophony. When once in a blue moon it comes from the bully pulpit [2], it still gets shot down in a sea of misdirection.
Houston's market is still "normal." It was normal before 1970 and has been normal since. Price spikes are also normal and intended. Over time, S&D will respond and bring them back in line.
The solution is indeed build build build. The reason it didn't happen automatically in the first place is disingenuous land use laws like suppressive zoning.
Another MIT course that I absolutely love (went through it twice) is "Environmental Technologies in Buildings" [1]. It covers a very wide breadth of topics, like sun radiation, photo-voltaics, wind, insulation, human perception of heat and lighting, etc. Just all around fascinating. Professor Reinhart is a pleasure to learn from. There's also and Edx course with lecture recordings for it [2].
Maybe what we need is improvment to hyper-adobe which is being touted as a manual 3D Printer(humans being the processor). The wasp 3d printer looks promising. I wonder if we can simplify it to be manual by maybe stradling the first foot high layer. Alternatively, we could design modern modular wall sectkions akin to SIPs, ive seen some creative pvc sheets out of china lately.
Yes and there are no third places where people can hangout locally. Out of all we know about humans up to 1950 is that we don't live full lives out in the burbs.
We need to stop treating real restate--especially residential real estate--as a mechanism for creating wealth.
there are enough homeowners that they vote for politicians and policies that will increase the value of their "investments". All this does is simply steal money from the next generation. Our entire economic system is designed to transfer wealth from the young and poor and the old and wealthy.
There is a distinction here to be made between "private property" (what we have now) and "personal property", which would be a far more ideal outcome.
Personal property simply means that you're allowed to own your own home. You're either not allowed to buy up huge tracts of homes to restrict supply and jack up prices or, if you do, you're taxed punitively for it.
Landlords. We need to get rid of landlords. 50+ years ago, the UK came close to this with a surprisingly simple solution [1].
This alone isn't sufficient but it's an important part. The other big part is to have a supply of social housing [2] so the private sector simply can't manipulate hte market.
Unfortunately, when Americans in particular hear a term like "social housing" they lose their minds and they immediately go to ghettoes or projects. Don't think that. Think Vienna [3][4].
No political remedy will work until there's a culture shift, and that's probably still a generation or two away. The baseline that people seek isn't just a reliable place to sleep, eat, and clean themselves.
They want the television-depicted life: a home which they only (at most) share with a partner and some pre-adult children, where everyone has their own bedroom, and there's probably at least one more bedroom to enjoy as an office or rec room, a kitchen suitable for entertaining, maybe a finished basement, parking for a few cars, no shared walls, and convenient access to whatever their work and whatever they like to attend in their free time. They'll tolerate a little less, but will refuse to take the social issue as resolved if they have to.
That's a far far cry from both the traditional history of multi-generational homes, boarding houses, and one room cottages and the modern political vision of "social housing". You can award contracts to all the builders you want, or open the market for them to chase whatever money you think is out there, but you're not going to be able to practically deliver the homes people want for everybody who wants them. Expectations need to be reconciled too, and we have almost no means to affect that.
Wrong. People respond to incentives. If you have 50 years of intensives pointing to one system, then that's what you are gone get. And then you have commenters going all 'see this is what people want'.
The reality is, there is plenty of evidence that people still like other types of building and other types of neighborhoods. They were simply made illegal, economically terrible or destroyed with some other means.
You act like there wasn't a massive top-down government program to produce exactly the system the US has. There is a reason only the US looks like the US (expect for maybe Canada). Its because its was top down government policy.
The US systematically red-lines pretty much all inner-cities. Created a mortgage market that financed only single family homes in suberbia. These were often cheaper then rent you had to pay in social housing at the time.
This was then cast in concrete with some of the most strict zoning regulation anywhere. Making it basically impossible to do any other kind of development outside of the already existing city (that was redlined).
To support this a massive highway building program, with highways rammed right into the city center. Destroying large parts of existing cities. Then in those cities laws were imposed to create massive amounts of parking, at direct expense of the poorer people that lived in these cities.
Cars blocked public transport (often private back then) and made it non-competitive, destroying mostly car free neighborhoods that depended on that.
And of course it continues. The way the tax system works it systematically distributes tax dollars from city centers to the outside. Even poorer districts closer to city centers are more productive then suberiba. So you have those areas that get neglected, but even if they weren't neglected, they would still overpay on their taxes.
The same kind of unfair structure exists when it comes to utility as well. With existing urban cores overpaying and suberiba under-paying.
And of course lets not forget that all those new roads and new highways were a massive often infrastructure investment, something that street-car, bus and trains didn't get.
But yeah, it was totally 'culture' that lead to situation. It wasn't at all a top down system. To be sure, there were lots of willing people in power on the local level that were more then happy to follow those things.
People respond to intensive. If all of a sudden subberbia would pay fair taxes and far utilities. And that goes even more for Walmark and friends, the predators of the current system. If the zoning laws didn't exist. If those highways were ripped away. If parking all of a sudden had to pay. If highway money was reinvested in high intensity bases and trains. If all those things happened, this 'culture' wouldn't survived for a generation.
> And one room cottages and the modern political vision of "social housing".
Clearly you have no understanding how 'social housing' works in places like Vienna.
> but you're not going to be able to practically deliver the homes people want for everybody who wants them.
There is plenty of evidence that there is high demand for things other then single family homes. This is simply a fact. You can see this in the property prices alone. Anywhere that has a nice mixed used development, prices go threw the roof because demand is so high. The issue is supply, not demand.
Go look at the data analysis by urban3, their data shows this pretty clearly.
Instead of trying to invent new property classes and try untested social theories, let’s do what is known to work:
A. Stop the financialization of homes at the federal level by getting rid of the mortgage tax deduction and the sales tax exclusion on the sale of a personal home.
B. At the local level, reform zoning and remove the draconian restrictions on new home construction, especially of multi-family housing near transit. This will fix the supply issue, the primary driver of high home prices in high demand metros.
Once we remove these artificial government policy distortions that affect both demand and supply in the housing market, an actual free market will arise and drive down prices, especially of older, existing homes.
"Social Housing" sounds like a bad idea. Whenever something is "socially owned," it means it is controlled by a few who have wormed their way into the power position to control whom get to utilize that something. It comes down to who decides who can live in this social housing, and whether one could be kicked out by the whim of some bureaucrats or some committees. It's the HOA nightmare multiplies 100 times.
Basically it's what is your right and claim to this "social housing"? Pretty soon that right will become a personal ownership right, and private real estate ownership is back and so is commercial real estate.
Canada also has a dearth of startups, or new ways of making wealth. The only two ways are resource extraction and squatting on property. If Canadians can become more used to risk and put some of the pension fund into startups and new technology, things could be different.
It is shocking that the godfather of the modern AI boom taught at University of Toronto and yet Canada is not even in the picture when it comes to AI and it won't ever be.
Anyone who wants to see the current state of how the alt-mainstream thinking on this subject is shifting is welcome to indulge in the inventories over at [r/Canada, r/CanadaHousing, r/CanadaHousing2, r/TorontoRealEstate]. Anything that is not related to immigration or housing is essentially treated as a distraction. There is a simmering build up of disillusionment, anti-immigration and perhaps xenophobia that was usually not tolerated/allowed (hence the more spicy off-shoot CanadaHousing2), but the emotions have more or less found a stable equilibrium, and it’s not pretty.
I don’t have answers here, I can just observe the situation and blink.
This is the same tax trick that the obscenely wealthy use with their stock portfolios. It's a "fantastic" way of accessing accrued wealth without paying taxes on it.
I think I would prefer that we investigate this more thoroughly, as well, to reduce some of these tricks that further stratify the haves and the have-nots.
The thing being omissed here is that there's a cost-basic step-up when you die.
So, if the value of the home increased by say 2x the taxes on it are 0 because the cost-basis on it isn't the price your parents bought it for; it's the price when they died and you got it.
This works out a lot better for stocks because when you created the company and gave yourself a million stock units for a total of $1 (not each) and those stocks appreciated to be $300 each that's a ton of capital gains. Except when you die and it's stepped up its not. -- https://www.investopedia.com/terms/s/stepupinbasis.asp
Yeah anytime the whole 'we already have enough houses' has been tested it has been found false. Demand in cities is constantly growing, and cities with green belts and all kinds of regulation simply can't expand. Total stock is irrelevant. The British solution if continued would also lead to rises as demand in cities grows.
> so the private sector simply can't manipulate hte market
They are not 'manipulating' the market, they simply have assets that are valuable because of high demand. You can only restrict supply if some other private developer can not simply buy land and build, and take that advantage away from you. If there was actually enough places to build, then the profit maximizing strategy is to build as many high value houses as fast as you can. And that's exactly how street car subburbs were built on mass. All these theories about how nothing is possible without defeating 'landlords' are just not true. Its the currently existing laws and regulation that set the board and people just play that game.
The reality is that we know the solution. We know that those places that build enough housing of the type demand by the market have lower rates, this has been proven over and over again.
In Britain Labor basically created a laws that made private house building much, much harder. They of course did this because they believed they would build lots of social housing. Of course because of money issues and their political downfall this didn't continue. But also off course, the laws restricting supply were not changed. So Labor and Tory both have a hand in the problem.
The problem are perfectly clear. Build more houses in places people want to live. It doesn't even matter if its social housing or private. I believe the market is perfectly capable of building the right kind of housing. But of course you can also do it with social housing. There are many ways to entourage more building. We need to stop making this about some political fight and simply look at the market basics.
In Houston Texas, the market did build many houses, and prices were comparatively low. But of course because of the type of regulation that still existed, this resulted mostly US style subburban sprawl. But I guess better then simply increasing prices. There is tons of other data that shows corroboration between house building and rents.
We don't have to totally re-imagine property rights law, we aren't gone abolish private property and renting isn't inherently bad. We simply need to create rules that make actual sense and provide the necessary infrastructure.
I'm not necessarily against some of the rules against landlords that you suggest, but we simply can't pretend that it is a solution by itself. The notion that all private ownership and renting is inherently hurtful is one of the biggest myths that's preventing any progress on this issue.
We know what to do, land-value tax, right-to-build, proper land-use planning, densification, take the space away from cars, transport oriented development. And this can be done entirely by the government if that your political bend.
> All this does is simply steal money from the next generation.
It actually enriches the next generation. We still have houses from the 16th century, still providing value for our community to this day.
I’m sorry to be negative because I agree with the general sentiment that society needs to stop treating “home value go up” as its primary retirement plan, and get rid of our allergy to social housing, but that first Guardian article about banning rental housing is just so bad on so many levels.
He says Britain doesn’t have a housing shortage because the ratio of homes to households hasn’t changed even as prices have gone up—but treating Britain as one big housing market is ridiculous, there have been massive shifts in economic geography over the last 5 decades. There is a housing shortage in the areas with well paying jobs and a housing surplus in the areas with no jobs. People should get to choose to move to a place where they can make a living!
He also says London’s population hasn’t changed in the last 50 years as prices have gone up without new housing being built—uhh no shit! If very little new housing was built in that period, how could the area’s population go up significantly? What happened instead is that, because demand rose and supply didn’t, the population stayed the same and the static supply went to the highest bidder. This is just mind-numbing economic illiteracy. Where does he think a population increase would go in London if London doesn’t increase housing supply?? The static supply is WHY the population didn’t grow! Literally exact same issue as NYC and the expensive parts of California.
He says developers would never build enough housing because it would drive down the price they can command—has this guy ever heard of the tragedy of the commons?? This is literally how markets work when there’s adequate competition. Econ 101. (And I’m not talking about fringy free-market-absolutist econ; Marx understood perfectly well that market competition drives down prices.) For a couple examples, Austin and Minneapolis have generated enough new supply to tank the price of rent. And imagine how ridiculous this argument sounds about anything but housing. “TV companies would never produce more TVs because that would bring down the price they can charge.” Oh wait…
It’s also totally left out (because there is no answer) how overall affordability would get better by getting rid of renting and only having owner-occupied housing. It’s the same amount of demand for the same amount of supply!
Finally, please just don’t take away my ability to rent! At my current place in life I don’t want to lock up a ton of money in real estate and be stuck in one place (much harder to move frequently due to transaction costs). Maybe later in life I’ll buy, but right now I want to rent (and invest my money in other things instead of a home). We need both kinds.
Ughhh. This author’s way of thinking is exactly why many of the most productive and ostensibly progressive cities (London, SF, NYC…) are prohibitively expensive, denying everyone but the rich the ability to live there. It’s easy to understand the right’s desire to send property values to the stratosphere (“fuck the poor, and fuck you too, I got mine”). But the left ties itself in these crazy knots to bring about the same result, hurting the working class we claim to care about, and it’s baffling.
Don’t overthink it, just build a fuckton of housing where there’s the most economic opportunity, both private sector (because central planning is notoriously not the best at creating enough supply) and social housing (because the market never works for literally everyone, and also because why not, more housing is good).
Or maybe it's a tiered system. W/e.
On a related note, does anyone have anecdotal stories about the efficacy of Georgist tax policies?
I am that person.
I own two duplexes in addition to my primary residence, for a total of four residential rental units – all 2/1s made up of ~750 sq ft each. Those additional properties that I own provide housing to 6 humans who can't purchase, or just prefer not to.
What you're proposing would result in one of two moves from my end:
1. I sell both properties and let someone/some entity (who doesn't work and/or manage the properties themselves, have any relationship with the tenants, will push rents to market prices immediately, etc etc) deal with it.
2. I scrape the lots, stand up single family homes, take my gains and walk inside ~18 months. That puts the 6 humans mentioned above out into a (very tight, <= 1% vacancy rate) rental market that'll bump their monthly rent expense by ~25% minimum and, overall, very likely reduce the headcount of humans housed.
Either way, it's a high level hit to individuals, the market, whatever. It doesn't result in any gains or economic corrections to the RE market.
> (which would likely be distributed back to the locality, specifics not important)
That's already happening in my scenario. I own & operate a General Contractor LLC entity that issues invoices to me, the property owner. The local city, county, and state are paid B&O, sales, etc taxes on those GC LLC invoices out of my personal pocket. Separately, my personal rental income is taxed appropriately at the federal level.
> I think this would just price in the externalities of corporate versus natural person living in a property for a locality.
You know what else can be priced in? Or wildly swing a market into affordability, normality, etc? Letting people build things. My lots are massive, but they consist of sheds and lawns instead of multiplying my units and housing more people.
It's impossible in my local market, and that's why it's carrying the <= 1% residential vacancy rate it has for 15+ years, and why rents are increasing at wild rates that no industry/job market inside 80 miles can support. Economics 101 says supply vs demand etc etc. Easy layups for anyone with half a brain. We don't have to modify anything outside of city/county zoning & the ability to infill everywhere.
Of course you just ignore the fact that one of the reasons they can't purchase is because you're hoarding the damn houses.
You can't buy what isn't for sale.
Stating such a strong assertion should still require at least a link
But that's reality. Go on loopnet and you can see plenty of buildings for sale.
We don't have enough pie (houses).
We need more houses.
Not a campaign to distribute a massive shortage slightly more evenly.
It's a distribution problem.
It would cost more to convert them then you could sell the units for.
The people who own those buildings are desperate to fill them. They'd convert if it made sense.
They aren't part of some evil cabal to have commercial buildings sit empty to push up residential property prices.
Have y'all ever opened up a wall before and seen the electrical, plumbing, etc mechanical bits that make up a home? Any idea of what it'd cost to chop up that office space and feed every individual piece the necessary bits?
It's outrageous that we're even talking about this idea still. It'd require wildddddd tax advantages & federal spends in order to execute on it in any sense of the overarching idea.
Trivially worked around. Use an LLC. Have it bought in a relative’s name. Have it bought in a rando’s name with a bulletproof lease with a $1 rent-to-own option at its termination.
Essentially, the property registry system becomes a farce. (You see this, for example, in India.) Simpler: a straight wealth tax that funds first time homebuyer incentives.
If people want to split their time, fine, let them have as many houses as they want, declare what fraction of their time is spent in each one, and get that fractional credit for each one.
Worried about a couple taking the credit for each person separately? Fine, make the credit only reduce a fixed amount of tax per person — that $200M fancy house doesn’t get all of the tax waived just because one human is in it.
Relatives. Again, these measures have been implemented across the world. Miraculously, nobody owns two homes.
In cities, where competition for land is fiercest, I would further fully expect the tax to be borne by tenants. Because nothing was fundamentally fixed about the supply-demand mismatch.
We could require more disclosures and auditing and regulations of those workarounds. It's not some digital thing that could be hidden anywhere, it's trivially easy to monitor or seize real property.
Anyone who owns property should be horrified at the notion of making it “trivially easy” to seize real property. That turns this into electoral toast. Its only utility is in distracting from zoning reform.
Also, the homeownership rate is 65% [1]. Second homeowners aren’t the problem.
[1] https://fred.stlouisfed.org/series/RHORUSQ156N
But there are SIGNIFICANT interests who want to horde real property anonymously. "Fixing zoning" is not a solution to the problems that causes. The large-landlord/acquire-and-leave-vacant-waiting-for-appreciation interests are the very same interests that would BENEFIT from less zoning restrictions and the Manhattanization of more places, and corresponding increase in real property values per sqft of land. But the reason we don't make ownership of property more clear, or crack down on hording, is because those interests don't want us to.
"Simpler: a straight wealth tax that funds first time homebuyer incentives." - so we've got more inflation of property prices through financial incentives but actually let's not bother because guess who ALSO doesn't want a "straight wealth tax!" (And, of course, taxes aren't wildly worked around in this country anyway.)
Is there a breakdown on what portion of this 65% own multiple homes? Personally, I’m not a fan of anyone who has more than 2 homes. One primary and one vacation or rental. Why does anyone need more than that?
Idk, why does anyone need anything beyond sustenance? Outside resort towns, I’m sceptical this is anything but a bogeyman.
There is a concept you don't seem to be familiar with called "beneficial ownership". What this means is that if an LLC buys a house, a lot of jurisdictions require the "beneficial owner" to be known and to be taxed accordingly. The beneficial owner may not be on public records (the LLC will be) but the tax authorities will know.
Some jurisdictions don't do this or don't enforce it, which is a big part of why the London property market is the money laundering capital of the world [1].
So what would I like to see?
1. Eliminate the Mortgage Interest TAx Deduction. It's giving money to the wealthy;
2. Increase property taxes for any property owned by an LLC;
3. Require a beneficial owner to be recorded and maintained with tax authorities;
4. Treat any benefical owner or owner of any property in the state to be a tax resident of that state, which means their worldwide income is subject to the income taxes of that state;
5. In any sufficiently dense population area, single family housing ("SFH") zoning should be illegal;
6. A return to multi-family units as this is a class of housing that used to be really common but is now exceptionally rare. I'm fine with landlords to the extent that the landlord lives in the same property and suffers the same externalities from their tenant as their neighbours do. This includes AirBnB too;
7. Higher property taxes for SFHs that don't have an auxillary dwelling unit ("ADU") in any area where the median rent is above some threshold of the median income;
8. Do what Texas does with property taxes for Seniors: you can defer them until your death if you don't want to move. Otherwise you should downsize. We want to do the opposite of what California did with Prop 13 and pass massive tax breaks to Disney and wealthy landowners under the guise of "not kicking seniors out of their homes". In case you didn't know, the tax rate for Disneyland has basically remained unchanged since the 1960s thanks for Prop 13.
That's probably a good start but not egverything.
[1]: https://www.youtube.com/watch?v=gyk12Wf_TeQ
I own one house, my spouse the next, my mom the next and then we do kids.
Your other ideas are much better. Were I a NIMBY politician, I’d distract from them with this tax idea. (As a Wyoming homeowner I positively love No. 4. Presently, I pay taxes when owed in every state I work in.)
People are not just going to give their relatives title to their property. LLC’s can be required to name the beneficial owner.
The rent-to-own lease farce can also be trivially uncovered by requiring rents to be public, like real estate sales are in most jurisdictions.
Look at how people abuse rent controlled apartments. (All the way up to the current mayor.)
> People are not just going to give their relatives title to their property
This is literally what happens in places with such taxes. I wouldn’t bat an eye buying a house in my partner or a parent’s name if it saved 3x property taxes.
That sounds like the policy had the desired effect. I.e home ownership is spread out across many people.
Those people cannot then own properties without being subject to those extra taxes. They'd be giving something up to help you, so would presumably benefiting somehow from your scheme.
Landlords will do the absolute minimum for repairs anyway, rent control or not.
Not vilifying it. Saying that tracking who is the legal owner and beneficiary of a property is tough.
Given the present market state, I wouldn’t be surprised if such a tax measure increased rents.
That doesn’t pass the sniff test - the legal owner has to pay property taxes so why can’t they track it that way? If it’s a trust then it’s the beneficiaries that are the owners.
In the absence of rent control i can see landlords just forwarding the cost of taxes, but that’s where I’m a huge proponent of it. Discourage investing in homes unless you really have the capital
Actually, they all are now required to register who the beneficial owners are for every LLC - https://home.treasury.gov/news/press-releases/jy2015
The primary real estate market is new builds. Everything else is secondary.
You need a populist leader to achieve that, but, well, no one wants one I guess.
I wish the system actually tried to solve problems with well thought out solutions.
To answer your question: politicians don’t want to piss off the wealthy class. Americans at large are skeptical of taxes because they don’t see it being used for anything useful.
> automatically charge this elevated rate for properties owned by non-natural persons
People can politically fuck around with occupancy laws and all this other stuff, non of it solves the problem.
We know how to solve the problem, there is no mystery. Its simply a political problem to implement it.
Then perhaps we should make a 20 year rollout plan to help us adjust; but, individuals being able to live in a location for a consistent price and other improved social safety nets are a net positive for society and government is supposed to work *for* society as a whole, not just the elites
That's a bigger deal than it sounds. The farther we move from a "classical" sense of property toward the notion that it's the stuff of an idealized economic game answerable to nothing outside itself besides the positive law, the farther our lives are decoupled from history, culture and community. If we go there full-throttle we are no longer a civilization.
Source? Construction, commissions, renovations and lending maybe. But all that keeps happening in a constant real-price model.
“Real estate and rental and leasing” for my province. Construction is separate. It is at 18%+ here, so I just rolled it down to 10 for the country-wide average. Probably much higher than that. This is Canadian numbers though, as I mentioned, I’m not sure how it is down there.
Hard no, that’s how we got here. When it’s part of the investment cycle, developers won’t build or build only ones that maximize profits, NIMBYism thrives, and it makes it so that the only people able to buy are the ones who least need it.
If you have enough money to buy a __house__ for someone else, then you have enough money to pay much higher taxes. This isn’t like buying a car for someone.
Btw, the GDP contribution is about 18% [1] due to price being propped by extensive construction on the supply side. This is by design, and we shouldn’t be encouraging it.
[1] https://www.nahb.org/news-and-economics/housing-economics/ho...
>A natural person is a living human being. Legal systems can attach rights and duties to natural persons without their express consent.
>The concept of a natural person appears in business law and bankruptcy law, where it provides a contrast with an artificial person or a legal person which is an entity that is treated as a person for legal purposes. While natural person describes an actual human being, artificial person describes a partnership, corporation, or some other entity that has been provided with legal personhood by statute.
https://www.law.cornell.edu/wex/natural_person
It's legalese for a "human being".
While we have intelligent people discussing pie-in-the-sky solutions, barely-related tangential issues, and even misdirected injection attacks, the causes of the housing crisis are not only well-known to (honest) economists [1], but can be verified by looking at the market pre- and post-1970.
It's hard enough to tune in to the correct analysis in the cacophony. When once in a blue moon it comes from the bully pulpit [2], it still gets shot down in a sea of misdirection.
[1] https://archive.nytimes.com/krugman.blogs.nytimes.com/2017/0...
[2] https://www.politico.com/story/2016/09/obama-takes-on-zoning...
Check Houston house price hikes in the past 3 years. Once investment funds arrived prices soared by over 2x in some areas. Still no zoning.
The solution is one. BUILD BUILD BUILD.
The solution is indeed build build build. The reason it didn't happen automatically in the first place is disingenuous land use laws like suppressive zoning.
[1] https://ocw.mit.edu/courses/11-350-sustainable-real-estate-s...
[2] https://www.edx.org/learn/sustainable-development/massachuse...
Those who own real estate and rent it out should be motivated to create more housing. They should get tax breaks. Not penalized with more taxes.
Thats the only sustainable way.
https://www.youtube.com/playlist?list=PLUl4u3cNGP63Np7g0Xtk9...
https://missingmiddlehousing.com
there are enough homeowners that they vote for politicians and policies that will increase the value of their "investments". All this does is simply steal money from the next generation. Our entire economic system is designed to transfer wealth from the young and poor and the old and wealthy.
There is a distinction here to be made between "private property" (what we have now) and "personal property", which would be a far more ideal outcome.
Personal property simply means that you're allowed to own your own home. You're either not allowed to buy up huge tracts of homes to restrict supply and jack up prices or, if you do, you're taxed punitively for it.
Landlords. We need to get rid of landlords. 50+ years ago, the UK came close to this with a surprisingly simple solution [1].
This alone isn't sufficient but it's an important part. The other big part is to have a supply of social housing [2] so the private sector simply can't manipulate hte market.
Unfortunately, when Americans in particular hear a term like "social housing" they lose their minds and they immediately go to ghettoes or projects. Don't think that. Think Vienna [3][4].
[1]: https://www.theguardian.com/lifeandstyle/2024/mar/19/end-of-...
[2]: https://www.allianceforhousingjustice.org/us-social-housing-...
[3]: https://www.politico.eu/article/vienna-social-housing-archit...
[4]: https://www.theguardian.com/lifeandstyle/2024/jan/10/the-soc...
They want the television-depicted life: a home which they only (at most) share with a partner and some pre-adult children, where everyone has their own bedroom, and there's probably at least one more bedroom to enjoy as an office or rec room, a kitchen suitable for entertaining, maybe a finished basement, parking for a few cars, no shared walls, and convenient access to whatever their work and whatever they like to attend in their free time. They'll tolerate a little less, but will refuse to take the social issue as resolved if they have to.
That's a far far cry from both the traditional history of multi-generational homes, boarding houses, and one room cottages and the modern political vision of "social housing". You can award contracts to all the builders you want, or open the market for them to chase whatever money you think is out there, but you're not going to be able to practically deliver the homes people want for everybody who wants them. Expectations need to be reconciled too, and we have almost no means to affect that.
The reality is, there is plenty of evidence that people still like other types of building and other types of neighborhoods. They were simply made illegal, economically terrible or destroyed with some other means.
You act like there wasn't a massive top-down government program to produce exactly the system the US has. There is a reason only the US looks like the US (expect for maybe Canada). Its because its was top down government policy.
The US systematically red-lines pretty much all inner-cities. Created a mortgage market that financed only single family homes in suberbia. These were often cheaper then rent you had to pay in social housing at the time.
This was then cast in concrete with some of the most strict zoning regulation anywhere. Making it basically impossible to do any other kind of development outside of the already existing city (that was redlined).
To support this a massive highway building program, with highways rammed right into the city center. Destroying large parts of existing cities. Then in those cities laws were imposed to create massive amounts of parking, at direct expense of the poorer people that lived in these cities.
Cars blocked public transport (often private back then) and made it non-competitive, destroying mostly car free neighborhoods that depended on that.
And of course it continues. The way the tax system works it systematically distributes tax dollars from city centers to the outside. Even poorer districts closer to city centers are more productive then suberiba. So you have those areas that get neglected, but even if they weren't neglected, they would still overpay on their taxes.
The same kind of unfair structure exists when it comes to utility as well. With existing urban cores overpaying and suberiba under-paying.
And of course lets not forget that all those new roads and new highways were a massive often infrastructure investment, something that street-car, bus and trains didn't get.
But yeah, it was totally 'culture' that lead to situation. It wasn't at all a top down system. To be sure, there were lots of willing people in power on the local level that were more then happy to follow those things.
People respond to intensive. If all of a sudden subberbia would pay fair taxes and far utilities. And that goes even more for Walmark and friends, the predators of the current system. If the zoning laws didn't exist. If those highways were ripped away. If parking all of a sudden had to pay. If highway money was reinvested in high intensity bases and trains. If all those things happened, this 'culture' wouldn't survived for a generation.
> And one room cottages and the modern political vision of "social housing".
Clearly you have no understanding how 'social housing' works in places like Vienna.
> but you're not going to be able to practically deliver the homes people want for everybody who wants them.
There is plenty of evidence that there is high demand for things other then single family homes. This is simply a fact. You can see this in the property prices alone. Anywhere that has a nice mixed used development, prices go threw the roof because demand is so high. The issue is supply, not demand.
Go look at the data analysis by urban3, their data shows this pretty clearly.
A. Stop the financialization of homes at the federal level by getting rid of the mortgage tax deduction and the sales tax exclusion on the sale of a personal home.
B. At the local level, reform zoning and remove the draconian restrictions on new home construction, especially of multi-family housing near transit. This will fix the supply issue, the primary driver of high home prices in high demand metros.
Once we remove these artificial government policy distortions that affect both demand and supply in the housing market, an actual free market will arise and drive down prices, especially of older, existing homes.
Basically it's what is your right and claim to this "social housing"? Pretty soon that right will become a personal ownership right, and private real estate ownership is back and so is commercial real estate.
It is shocking that the godfather of the modern AI boom taught at University of Toronto and yet Canada is not even in the picture when it comes to AI and it won't ever be.
I don’t have answers here, I can just observe the situation and blink.
Some people get reverse mortgages so they can spend some of the equity of the home while they still live in it:
https://www.canada.ca/en/financial-consumer-agency/services/...
I think I would prefer that we investigate this more thoroughly, as well, to reduce some of these tricks that further stratify the haves and the have-nots.
So, if the value of the home increased by say 2x the taxes on it are 0 because the cost-basis on it isn't the price your parents bought it for; it's the price when they died and you got it.
This works out a lot better for stocks because when you created the company and gave yourself a million stock units for a total of $1 (not each) and those stocks appreciated to be $300 each that's a ton of capital gains. Except when you die and it's stepped up its not. -- https://www.investopedia.com/terms/s/stepupinbasis.asp
> so the private sector simply can't manipulate hte market
They are not 'manipulating' the market, they simply have assets that are valuable because of high demand. You can only restrict supply if some other private developer can not simply buy land and build, and take that advantage away from you. If there was actually enough places to build, then the profit maximizing strategy is to build as many high value houses as fast as you can. And that's exactly how street car subburbs were built on mass. All these theories about how nothing is possible without defeating 'landlords' are just not true. Its the currently existing laws and regulation that set the board and people just play that game.
The reality is that we know the solution. We know that those places that build enough housing of the type demand by the market have lower rates, this has been proven over and over again.
In Britain Labor basically created a laws that made private house building much, much harder. They of course did this because they believed they would build lots of social housing. Of course because of money issues and their political downfall this didn't continue. But also off course, the laws restricting supply were not changed. So Labor and Tory both have a hand in the problem.
The problem are perfectly clear. Build more houses in places people want to live. It doesn't even matter if its social housing or private. I believe the market is perfectly capable of building the right kind of housing. But of course you can also do it with social housing. There are many ways to entourage more building. We need to stop making this about some political fight and simply look at the market basics.
In Houston Texas, the market did build many houses, and prices were comparatively low. But of course because of the type of regulation that still existed, this resulted mostly US style subburban sprawl. But I guess better then simply increasing prices. There is tons of other data that shows corroboration between house building and rents.
We don't have to totally re-imagine property rights law, we aren't gone abolish private property and renting isn't inherently bad. We simply need to create rules that make actual sense and provide the necessary infrastructure.
I'm not necessarily against some of the rules against landlords that you suggest, but we simply can't pretend that it is a solution by itself. The notion that all private ownership and renting is inherently hurtful is one of the biggest myths that's preventing any progress on this issue.
We know what to do, land-value tax, right-to-build, proper land-use planning, densification, take the space away from cars, transport oriented development. And this can be done entirely by the government if that your political bend.
> All this does is simply steal money from the next generation.
It actually enriches the next generation. We still have houses from the 16th century, still providing value for our community to this day.
He says Britain doesn’t have a housing shortage because the ratio of homes to households hasn’t changed even as prices have gone up—but treating Britain as one big housing market is ridiculous, there have been massive shifts in economic geography over the last 5 decades. There is a housing shortage in the areas with well paying jobs and a housing surplus in the areas with no jobs. People should get to choose to move to a place where they can make a living!
He also says London’s population hasn’t changed in the last 50 years as prices have gone up without new housing being built—uhh no shit! If very little new housing was built in that period, how could the area’s population go up significantly? What happened instead is that, because demand rose and supply didn’t, the population stayed the same and the static supply went to the highest bidder. This is just mind-numbing economic illiteracy. Where does he think a population increase would go in London if London doesn’t increase housing supply?? The static supply is WHY the population didn’t grow! Literally exact same issue as NYC and the expensive parts of California.
He says developers would never build enough housing because it would drive down the price they can command—has this guy ever heard of the tragedy of the commons?? This is literally how markets work when there’s adequate competition. Econ 101. (And I’m not talking about fringy free-market-absolutist econ; Marx understood perfectly well that market competition drives down prices.) For a couple examples, Austin and Minneapolis have generated enough new supply to tank the price of rent. And imagine how ridiculous this argument sounds about anything but housing. “TV companies would never produce more TVs because that would bring down the price they can charge.” Oh wait…
It’s also totally left out (because there is no answer) how overall affordability would get better by getting rid of renting and only having owner-occupied housing. It’s the same amount of demand for the same amount of supply!
Finally, please just don’t take away my ability to rent! At my current place in life I don’t want to lock up a ton of money in real estate and be stuck in one place (much harder to move frequently due to transaction costs). Maybe later in life I’ll buy, but right now I want to rent (and invest my money in other things instead of a home). We need both kinds.
Ughhh. This author’s way of thinking is exactly why many of the most productive and ostensibly progressive cities (London, SF, NYC…) are prohibitively expensive, denying everyone but the rich the ability to live there. It’s easy to understand the right’s desire to send property values to the stratosphere (“fuck the poor, and fuck you too, I got mine”). But the left ties itself in these crazy knots to bring about the same result, hurting the working class we claim to care about, and it’s baffling.
Don’t overthink it, just build a fuckton of housing where there’s the most economic opportunity, both private sector (because central planning is notoriously not the best at creating enough supply) and social housing (because the market never works for literally everyone, and also because why not, more housing is good).