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This is great (although it's not enough) and more cities should do it. It's an effective use of public policy and a powerful statement and I'm thrilled to see i

• raldi 10y ago
  And even the libertarians should be on board with this tax, because it's correcting a huge negative externality: empty units are bad for a neighborhood. Occupied units support local merchants, reduce crime, and generally make a neighborhood more fun and interesting to live in.
  • nostromo 10y ago
    Libertarians would argue that this is a problem created by onerous zoning requirements to begin with.
    • andkon 10y ago
      Zoning doesn't make empty units. If you took away all zoning strictures, you'd still be left with the fact that people who buy just as an investment aren't doing much good for a neighbourhood and a city.
      • yummyfajitas 10y ago
        Zoning is what causes Vancouver to have 1/3 the density of Brooklyn. Based on this doc, I believe Vancouver (or "Vancouver A", as distinguished from the greater metro area) has about 200k units. http://www.metrovancouver.org/services/regional-planning/PlanningPublications/MV_Housing_Data_Book.pdf http://www.metrovancouver.org/services/regional-planning/Pla... It appears zoning rules, which prevent Vancouver from building up to Brooklyn levels of density (approx 3x as high), is keeping 400k units off the market. In contrast, unoccupied housing is keeping only 10k units off the market. But I'm sure the rich Chinese people are secretly to blame for this too.
        • raldi 10y ago
          You're focusing on yet another externality of vacant units, that they increase the price of housing. I agree with you that this is minor compared to the way that restrictive zoning drives up the price of housing, but what about all the other negative externalities I mentioned in my comment?
        • andkon 10y ago
          No, the fact that the whole lower mainland has 30% the population of NYC is why Vancouver proper has 1/3 the density of Brooklyn. Increasing density in response to rising populations is great. Increasing density in response to rising investor demand is what we've done already, and it's why we have incredibly lonely, dead neighbourhoods like Coal Harbour.
        • Tiktaalik 10y ago
          Zoning for higher density doesn't necessarily solve this problem. Creating more supply results in more units that can potentially be purchased as an investment and left empty.
          • yummyfajitas 10y ago
            Housing is a good investment because it's illegal to make more of it. This makes the price of existing stock go up. If you legalized the production of housing that would no longer be true.
          • Moshe_Silnorin 10y ago
            You're arguing that vastly increasing supply will not lower house prices?
            • Tiktaalik 10y ago
              Not at all. Adding more supply is definitely part of the solution. The problem is that adding supply takes time, there are physical limits to the rate at which supply can be added, and the level of demand is unknown. This means it's hard to know when a supply only solution will result in decreased prices and it can take a long time. (Vancouver is not SF, it adds plenty of supply and yet there is still housing shortages and high prices) If you want to fix the problem quickly, policies that increase supply and limit speculative demand will achieve results faster.
      • snrplfth 10y ago
        The logic is that zoning makes for a housing shortage, which means it's profitable simply to hold on to properties without renting them, because the rent would be such a small portion of the investment gains. If supply increased, and moderated the price increases, then people would rent out more because they wouldn't be seeing huge year-on-year home value increases.
        • andkon 10y ago
          That's definitely an alternative response. Here, we've decided that we should instead cut investors' demand of housing, rather than increasing supply proportionately in response to investor demand. Like raldi says above, it's an approach that's a little more sensitive to the fact that we have to live in the hollow feeling city that an investor class can make.
          • snrplfth 10y ago
            I understand the response, certainly. But I don't think it's going to make housing (rental or ownership) substantially more available or cheaper in Vancouver - it'll just shuffle a few people around. And rich people don't just evaporate because you limit housing supply; they can arbitrage their way around most of these limits pretty easily.
      • gravypod 10y ago
        Zoning is the cause of high housing prices. This is only an issue because there aren't enough houses to meet the demand. Zoning laws are artificial restriction to prevent deflation of home values. They also prevent people from building what has been dubbed as "tiny homes" that would allow poorer people to provide a substantial improvement to their living conditions. That is where this issue stems from. The inability to a) provide for yourself reasonable living accommodations, and b) the surprisingly huge spike in prices of homes due to the lack of homes that are required. This is what a libertarian believes (disclosure: I'm a libertarian).
        • linkregister 10y ago
          I think in the absence of zoning, the affected neighborhoods would have HOAs by contract limiting building freedom. What's the difference as to whether the contract is imposed by the local government or a private council that is attached to the property?
          • snrplfth 10y ago
            The problem is that there's no effective way with (currently constituted) zoning law to 'trade' the externalities of density. You can't compensate your neighbours for shadows or traffic or other impacts in exchange for being able to build larger. So the choice faced by most residents is: 1) Acquiesce to high-density development, and receive zero compensation, or 2) Fight high-density development, and probably get zoning laws imposed at minimal personal cost. You can see why this setup incentivizes people to push hard for "static neighbourhood" zoning law.
            • mjevans 10y ago
              Being near a city core you should EXPECT high density development. Being near a satellite nexus area of such a city, you should expect medium density development around the nexus of civic infrastructure. Japan got how to do urban planning correct.
              • 10y ago
  • dmix 10y ago
    None of those sound like particularly libertarian-centric issues. A government fine regarding how a persons decide to use their private property sounds quite anti-libertarian to me.
    • civilian 10y ago
      If you're a principles-first libertarian, then yes it's anti-libertarian. But if you're a "let's use the market and data to solve problems efficiently" kind of libertarian, then this is a nice solution.
      • billions 10y ago
        Libertarian means do what you want as long as you're not hurting others. Gary Johnson ran on the platform of 'keep the government out of our pocketbook and out of our bedroom'. Not sure how taxing home use aligns with that.
        • fucking_tragedy 10y ago
          > Libertarian means do what you want as long as you're not hurting others. People are doing what they want and it's being argued that it's hurting others. That said, I've never seen a libertarian push for anything other than leaving it up to the market, even in the face of negative externalities.
      • ryanwaggoner 10y ago
        Umm, I don't see a market here. I see the government charging a fine for behavior they find objectionable. If the government decides that you shouldn't drive more than 55 mph and they catch you doing that and write you a $100 ticket, you haven't participated in a market transaction in any way.
  • DINKDINK 10y ago
    >even the libertarians should be on board with this tax No, Libertarians would not support this. The reason why there are empty properties is that there are capital controls so severe that it's more lucrative to buy a house (and not rent it) as a store of value than a currency/stock/precious asset (gold,bitcoin etc). A law -- which didn't account for the second-order detriments -- created this perversion in the market. Adding another law -- which again won't account for the second-order detriments -- is not going to fix it. Less is more, when it comes to economic law.
    • ubernostrum 10y ago
      OK, so how can the voters of Vancouver change the laws of China?
      • ecopoesis 10y ago
        Tanks and bombs.
        • ubernostrum 10y ago
          So... the libertarian option is to initiate the use of force?
      • mjevans 10y ago
        Trade relations treaties.
      • orthecreedence 10y ago
        Just abolish all laws and government and let the market, you know, figure it out.
      • kspaans 10y ago
        Enact a Land Value Tax. In a squeezed market like Vancouver most of the value in houses is the plot of land underneath them, not the "bricks & mortar". By taxing the value of the land rather than the property on top of it you won't penalize people for renovating or knocking down an old building and replacing it with a newer one. Hopefully the tax is high enough to put off speculators and bring prices to a more reasonable level (because massive swings in land value of 20% per year will increase the tax burden).
  • MichaelBurge 10y ago
    If the picture is accurate, it looks like they're mostly worried about single-family homes. The investment market mostly values properties based on how much money they can make, so it's far more rational. Single-family homes aren't part of the investment market, and only exist in a housing supply shortage due to restrictive zoning laws. I don't know enough about Canada to say why they have restrictive zoning laws. In the US, it's mostly government-backed mortgage programs and covert racism. I don't care how rich the Chinese are; those properties would be demolished, rebuilt as apartments, and rented if it were allowed. Because the value of the property is directly proportional to its expected profit. It's only when the government disconnects the two that you ignore the rental profit. The Chinese government's currency controls probably don't help, either: The Chinese are willing to lose money as long as it's free from their government's currency controls. Does Canada offer government-backed loans that are available to foreigners?
    • andkon 10y ago
      I personally am worried not about single family homes, but about maybe one day getting to own a condo. That'd be cool. But new tiny units start at $600,000. But what happens if you just chop down SFH and rebuild with higher density, and you don't also put restrictions on investing in the new units? You just end up with the problem we have now. We're building tons. Our local GDP is largely based around real estate. Not that we don't have a NIMBY problem — but there's only so much building you can do before you look around and feel like you just built more empty houses for people who don't live here.
      • MichaelBurge 10y ago
        You should always ask for a copy of the HOA bylaws before buying a condo. You might prefer to pay extra to discourage empty investors, and that could certainly be written in. Even without that, you might also ask how many of the other buyers are pure investors or otherwise ask people how they like it there. Though, it seems like a condominium complex that is 50% empty would give you a greater density of neighbors than a SFH suburb that is 50% empty. And you can get the Chinese to pay for your new roof, to boot. Somehow I doubt even the Chinese have enough money to turn a high-density city into a scene from 28 Days Later, though.
  • pashapiro 10y ago
    I'll allow that ignoring or abandoning private property is generally the measuring stick that libertarians use to justify seizing it, but as others have said, if the real estate market in Vancouver were less regulated, this wouldn't have happened in the first place.
  • mahyarm 10y ago
    If somewhere like SF will adopt it although, they will have to make their rent control at least follow inflation. Sub inflation %0.5 rental limit increases are a bit crazy. Even %2/yr is relatively low.
• yummyfajitas 10y ago
  The global elite are not the cause of high housing costs. Housing prices have risen globally - NYC, Mumbai, Vancouver, London, etc. There just aren't enough wealthy people to take much housing out of circulation. http://marketurbanism.com/2016/06/27/do-the-rich-cause-high-rents/ http://marketurbanism.com/2016/06/27/do-the-rich-cause-high-... I did some calculations a few months ago; if every wealthy person in NYC bought 10 homes, that would have the same (negligible) impact on the housing supply as building another NYU. https://news.ycombinator.com/item?id=12022235#12022920 https://news.ycombinator.com/item?id=12022235#12022920 This is not an effective use of public policy. It's just an attempt to find a scapegoat while ignoring the real problems - exclusionary zoning, low density and bad local regulations.
  • andkon 10y ago
    Vancouver has an annual average income of around $70,000. At current benchmark prices of ~$1mm, we're paying 14x our average salaries for homes. That's roughly as unaffordable as Hong Kong — the world's most unaffordable housing market. Whether or not zoning and high density would bring housing prices down (it almost certainly would), you gotta ask: if Vancouverites can't afford these places right now, who can? People who have a lot of money. http://business.financialpost.com/personal-finance/mortgages-real-estate/vancouver-ranked-third-most-unaffordable-housing-market-in-world-worse-than-new-york-and-london http://business.financialpost.com/personal-finance/mortgages...
    • Moshe_Silnorin 10y ago
      A government passes a law limiting the number of cars that can be sold. Manufacturers switch to exclusively luxury cars as they have much higher margins. Rich people buy them because they can afford them and need them. Everyone gets mad at the manufacturers and the rich people instead of the idiotic legislation. If we killed zoning laws, allowed modular housing and dorm housing, rents would drop very quickly.
      • snrplfth 10y ago
        Yeah, it's hard to get this across to people who live in a city where it feels like supply is increasing fast (because it's in huge, highly visible towers), but as a percentage of the total stock, is growing quite slowly. I lived in Vancouver for a while, and though people were totally on board with the idea that increases in demand for housing would push up prices, they were highly skeptical of the idea that increased supply could decrease prices.
• grey-area 10y ago
  I agree about this measure - it's a good way to raise income for infrastructure from those who can most afford it and discourage leaving property unused. But when did the global elite become our new scapegoat? Must we always blame difficulties on an ill-defined enemy who shifts conveniently with the speaker until everyone or no-one is to blame? To me this global elite sounds just like all those other labels you claim this shadowy cabal are trying to fool us with (no doubt they plot to raise house prices once a year at Davos or Bilderberg or wherever). It's a cheap trick we invent to fool ourselves into thinking someone other than us is to blame for our messy predicament.
  • nitrogen 10y ago
    Blaming oneself for the actions of others is no solution, either.
    • grey-area 10y ago
      To be clear, I'm not blaming myself, or you, I'm saying it is a collective problem with collective solutions (like this law, like reforming zoning or planning rules, building more housing etc). Find solutions, not a scapegoat.
  • krschultz 10y ago
    I'd say a more specific definition in this case is "people that are using real estate as a place to park money rather than as housing". In many cities like Vancouver, New York, and Miami, the money often is coming from foreign countries. With housing so limited, that has a real impact on people that live in these cities, and the benefit is provided to people that don't even live here.
    • zaroth 10y ago
      If people want to park money in funds tied to housing (that have returns tracking real estate) then there are funds like IYR that can do that much cheaper than actually owning a house and paying property taxes! If someone is buying real estate and leaving the property empty just to park funds... It makes me wonder if these are funds that can't be straight up invested in an ETF and are actually being laundered in some way.
• xrange 10y ago
  >This is the good kind of nationalism, the kind where people band together to defeat the global elite and the upper class/0.1% We'll believe it or not, that's what Trump supporters think they were doing: https://www.google.com/#q=draintheswamp https://www.google.com/#q=draintheswamp https://www.google.com/#q=globalism+vs+nationalism https://www.google.com/#q=globalism+vs+nationalism
• murbard2 10y ago
  Have you considered that these people payed for their house fair and square and that it's profoundly unfair to charge them just because you and others don't like what they chose to do with it?
  • 20andup 10y ago
    I am on the same boat as these people that can't afford a home with these property prices. But, I don't blame other people for having more than me. The concept of private property is that anyone can do whatever they want with their property.
    • 1_2__3 10y ago
      That is not even a little bit true.
      • murbard2 10y ago
        Usus, fructus, and abusus have been recognized as pillars of private property since the antiquity. "Abusus" is the right to destroy or dispose of a property. Certainly that would include not using it.
        • will_hughes 10y ago
          But there are reasonable limits on those private property rights that are commonly accepted. For instance, I don't have the right to set up a nightclub without permission from the city, and (if I'm not being an asshole) neighbours and other nearby residents/businesses that would be affected. These limits come into existence because there was a problem that residents of the city felt needed action on. Leaving large numbers of properties empty is the extreme opposite end of everyone running nightclubs.
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• Moshe_Silnorin 10y ago
  Zoning laws, zoning laws, zoning laws.
• secfirstmd 10y ago
  Based on Dublin's experience. I think that a tax on unused but already zoned residential land would be more effective than one on "empty" homes. Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes.
  • kareemm 10y ago
    > a tax on unused but already zoned residential land would be more effective than one on "empty" homes. Don't know how much you know about Vancouver's geography, but there's not much of this kind of land. > Though in both cities it is bad planning laws, outwards not upwards growth, NIMBYism and other problems that are more of an issue than the fairly limited supply of empty homes. An influx of foreign capital (excess demand) and zoning (not enough supply fast enough) are the biggest drivers of this in Vancouver.
• matwood 10y ago
  > This is great (although it's not enough) and more cities should do it. Something similar is common in the US, and is typically framed as a homestead exemption. Basically, set a high property tax rate and if people prove their house is owner occupied give them a rather large discount. My property taxes are ~$1500/year because I live in my house. People who rent out or do not live there pay $6000-$8000/year in my neighborhood.
  • rhino369 10y ago
    Homestead exemptions punish renters, which there isn't a compelling policy reason for.
    • nickff 10y ago
      British Columbia punishes renters, as it taxes 'passive income' (i.e. rent), which discourages owners from renting out existing properties or building-to-rent.
      • snrplfth 10y ago
        Which is one reason why condo ownership is so ubiquitous there.
        • nickff 10y ago
          Yes, the tax on 'passive income' discourages apartment buildings.
      • will_hughes 10y ago
        Maybe I misunderstand the taxation that BC is applying, but why should 'passive income' be taxed or treated any different to regular income for taxation purposes. i.e if I earn $100 by working at a job, and $100 through renting out a property, shouldn't I be taxed the same as if I earn $200 through my job instead?
        • 10y ago
• zaroth 10y ago
  I didn't read the bill, but if it's literally what's on the tin and reported in TFA then I think this is a horrible over-reach. A property is by far the most expensive asset most people own. Usually "own" in this case means paying a small percentage of the total cost each year and financing the rest. Now there are a million reasons why you might need to leave your house for 6 months or longer where you cannot afford the cost and risk of moving out all your belongings and renting the place to a stranger. Vancouver is saying that they will fine you 1% the value of your house because of this? Someone commented on the AirBnb thread about how "owning" a home in SF was really just a long-term lease you are very likely but not guaranteed to be able to renew. Policies like this make it crystal clear; you own nothing, even owners are renters, and circumstances be damned they will tell you what to do with your house, and heck probably even have a say in who you rent it to, before the day is done. Many single family houses cannot realistically be rented for a true net profit if you really account for all depreciation and wear and tear. Oh, and remember, it's illegal in many jurisdictions to even dip into a security deposit based on "normal wear and tear". Now if any given property had a vacancy budget of, let's say, 3 years, before this kicked in, then I could at least accept this isn't going to screw over legitimate vacancies. But the idea of an "illegitimate vacancy" on a house I own that I'm paying property tax on... That is truly bizarre. A city should be happy to have the tax revenue with none of the burden.
  • andkon 10y ago
    Here's some math that should make this make sense to non-Vancouverites: A 1200sqft bungalow across the street from me sold for $2.8mm four months ago; it's now back on the market for $3.2mm. If you put 20% down, that'd be a monthly mortgage payment of $11,500. That's 1/6th of the average Vancouver family's annual income, per month! I have a feeling that if you're paying $11,500 a month on your mortgage, you're not worried about 1% of the value of your house, and you're definitely not worried about renting it out at a profit. You're just hoping it keeps appreciating enough to pay for interest and this new piddly 1% tax. That's who this tax is targeting. And I welcome it wholeheartedly.
    • quickben 10y ago
      Just thinking about this in a detached, mathematical sort of way. The increase or 400,000 over 4 months, is more than 1% of the value. Depending on how crazy the market it, prices may jump even higher short term to accommodate the added speculation loss. In any case, hopefully Toronto doesn't reach that level of insanity.
• dclowd9901 10y ago
  You say it's not enough, but doesn't it just need to be enough to make real estate underperforming compared to other asset investement opportunities? Even during good times, home appreciation isn't much more than 3-5%. Taxing that by a percent makes even money market accounts look palatable.
  • nemo44x 10y ago
    A home is more than an investment. You live in it. Homes aren't competing with other investments, they're competing with renting or being homeless in some form.
    • Scoundreller 10y ago
      Sure they are. If homes are cheap, you buy a big home and save little. If homes are expensive, you invest in a car and commute or buy a "cute and cozy" home, and invest the rest.
    • aianus 10y ago
      > Homes aren't competing with other investments, they're competing with renting or being homeless in some form. If you have $1 million, you can buy a house and live in it "for free" or you can buy stocks/bonds/ETFs, maybe earn $50k a year in dividends and capital gains, rent a place for $30k a year, and pocket the difference. So yes, buying a home does compete with a combination of (other investments + renting).
      • nemo44x 10y ago
        And after taxes on your gains you can pay your rent and live for free. Sounds similar but I guess that's the market at work.
  • jorblumesea 10y ago
    3% is better than 0%, which is your appreciation on renting, no? Not to mention building equity, which will eventually pay you back some
• jcoffland 10y ago
  Don't forget us genXers.
• ryanwaggoner 10y ago
  the kind where people band together to defeat the global elite and the upper class / 0.1%, instead of letting them divide-and-conquer us (Red States vs. Blue, white vs. black, immigrant vs. native, Boomers vs. Millennials). Why is this kind of us vs them against "the wealthy" acceptable to you? The upper class / 0.1% constitutes millions of people, some bad, most good. Just like every other group. Would you be comfortable putting any other words in your sentence above instead of upper class? Like men, women, the elderly, the poor, minorities, etc? Why is bigotry against the wealthy ok?
  • LBXrRkxx 10y ago
    Not all wealthy are greedy. But enough of them are, like not all blacks are criminals and not all Hispanics are illegal, and actually to a greater extent. Language is imprecise and trying to police it belies a fundamental lack of respect or empathy.
    • ryanwaggoner 10y ago
      But enough of them are, like not all blacks are criminals and not all Hispanics are illegal, and actually to a greater extent. You're making my point. Presumably you wouldn't generalize "blacks as criminals", even though some are, but it's OK to generalize wealthy as greedy, even though not all are? Not saying you've generalized that way, but OP did. Thanks for the lecture on respect and empathy, but I'm not trying to police language. I'm trying to understand why some people who are otherwise quite empathetic and respectful think it's OK to generalize and stereotype other groups of people.
      • orthecreedence 10y ago
        In this case the wealthy, good or bad, man or woman, black, white, brown, or otherwise are using their resources to artificially drive up prices in a marketplace where they do not have to live with the consequences of their actions. Essentially, they are using a place where people are trying to live as a giant real-estate pump and dump scheme and completely screwing up the local economy in the process. Individually, each of these wealthy persons are just looking out for their own interests, as they should, but as a group they are causing harm, and as such are garnering ill-will from the locals. So the GP's words could have been better chosen as "defeat the global elite who are using our town as a get rich quick scheme" instead of using a blanket statement, but I honestly think that was kind of implied here. Also, I don't really think an us vs them mentality is extraordinarily harmful at a time when wealth disparities are so astronomically high. In fact, I think ignoring the issue is what's causing us (and not "them") great harm.
• zizzles 10y ago
  Good nationalism would have been forbidding rich Chinese investors from pricing-out average everyday Canadians from their own housing market, in the very first place. Drastic, calculated measures; that "disgusting kind" of nationalism is what ends up making the real difference. The nationalism you are proposing is just spinning the wheels.