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This appears to be what happens when rich people that don’t need houses buy them anyway as investments. There should be laws preventing a person from owning mor

• itake 3y ago
  Or when empty nesters refuse to downsize their 4 bedroom house 15 minutes drive to downtown offices.
• lifestyleguru 3y ago
  This is a valid point all over EU as well.
• delish 3y ago
  I'll try to invoke Cunningham's Law by saying: Housing is close to a perfectly-competitive market. I think the above is true, but I'd welcome counterexamples. So, the way to depress housing prices is to build more houses. _Most_ housing regulations, including making it illegal for people to own four houses, reshuffle the ownership of existing houses, and don't depress their prices. As regards that regulation: if the super-rich aren't able to own $many houses, the merely-rich will buy more, and thus housing prices would be the same.
  • Buttons840 3y ago
    This makes sense to me, if 10 families want a place to live and there are 8 places to live, housing prices will trend towards infinity, until people give up and multiple families live together. We need more places to live, at the end of the day there's no way around that. Regulation might help though. If we regulate it so that it's harder to profit from real estate, then people will find other investments instead. This is good, because as long as real estate is a favorite investment for the wealthy, there will be a "mysterious" resistance to any efforts to lower the prices by building more houses. I'm not an expert here, but this makes sense to me. Did I miss anything?
    • aaomidi 3y ago
      Yes you did miss something. You missed that it’s 10 families, with 20 houses. With one family owning 18 of them.
      • Jensson 3y ago
        So you are saying 80% of homes aren't lived in? I don't believe you, there is no way those numbers are anywhere close to accurate.
        • aaomidi 3y ago
          No a good portion of them are turned into rentals controlled by a few. The demand will not go down. The supply always lags behind, and can face hurdles to build, for example - renters are generally not present in city politics. The supply then use price controlling algorithms to slowly increase and extract the wealth and income of the renters.
  • amluto 3y ago
    > Housing is close to a perfectly-competitive market. Pick any US jurisdiction (with the possible exception of Puerto Rico? I’m not very familiar with how taxation works there) and contemplate the tax implications of selling an appreciated property. Further contemplate how those implications are different for different potential buyers and sellers of that same property at the same price. Then say again that it’s perfectly competitive. Hint: there are all manner of effects here. Capital gains. The basis step up at death. 1031 exchanges and their associated rules. Transfer fees, title fees (which is pretty close to being a tax). (I’m not the one who downvoted you.)
    • delish 3y ago
      Transfer fees and title fees equally affect any buyer and any seller in the long run, don't they? >Further contemplate how those implications are different for different potential buyers and sellers of that same property at the same price. Sure -- this is why I was asking for examples. "Rich people having more options than poor people" (which is what I think 1031 exchanges and your nod to capital gains refers to) is true across all domains without exception. It's true that I tend to discount that, acknowledging its unfairness. My point was prices are public(!), and historic sale-prices are public(!). A _particular_ (rich) buyer may have individual reasons for buying a house, but the market is almost perfectly competitive, because prices are public.
      • amluto 3y ago
        > "Rich people having more options than poor people" (which is what I think 1031 exchanges and your nod to capital gains refers to) Not really. They affect buyers and sellers in ways that are, for the most part, quite arbitrary. In expensive markets, capital gains taxes can hit homeowners harder than landlords, which has all manner of weird effects. (And homeowners are not necessarily poorer.) Look around any old-ish city with heavily appreciated property values, especially in California, and you’ll see older people in oversized houses who can’t really afford to downsize. This, IMO, seriously corrupts the market and hurts people who want cheaper housing.
  • Auracle 3y ago
    The other way that everyone outside of Canada seems to ignore is get a handle on the demand side of things.
    • lostinroutine 3y ago
      Could you elaborate on Canada's approach? Are you referring to adjustable rate mortgages?
      • Auracle 3y ago
        No, although that also would help (though I don't think the downside is worth it). I'm talking about people up north realizing that massive amounts of immigration isn't exactly great for home/rental pricing. "Build more homes" is easy to say but hard to do - you need skilled workers, there's only so much land in specific areas, NIMBYism, etc. "Reduce immigration" for some is hard to say but in practice is easy to do, and it has the exact same effect.
        • supertrope 3y ago
          If the electorate wants to restrict immigration so be it. But it won't solve housing shortages caused by restrictive zoning. When apartments, duplex, townhomes, condos, etc. are literally illegal this will cause a shortage. Parking minimums mandates, setback requirements, floor area ratio rules, may issue permitting processes push down supply and push up cost. Just imagine if we banned building new grocery stores or expanding existing ones. Lines would get longer and longer and produce would quickly go out of stock. And then instead of fixing the root of the problem, we banned people from moving to the area due to grocery shortages.
          • Auracle 2y ago
            The thing is I think you city people can't see the forest for the trees. Yes, on a city level zoning/permitting can be an issue. However, I live in the middle of nowhere. The nearest town to me has a population of 600. Homes that were $300k pre-pandemic are now $500-$600k. Zoning is no issue here. There aren't many places in our country where home prices have gone down or stayed the same.
• paulddraper 3y ago
  So..... Now they have to permanently "rent" them (maybe from a company they have ownership in)? Maybe we should just build more houses.
  • idiotsecant 3y ago
    Any suggestions on how to make that happen? People are already free to build as many houses as they want. They don't because building houses is expensive and there are easier ways to make more money with that capital
    • mullingitover 3y ago
      Permitting and lawsuits by NIMBYs are a giant blocker for development. Pass a regulation saying any building permit application that isn't reviewed in 10 days is default approved. Then defund the permit offices. In tandem, gut the ability for anyone to file suits (I'm looking at you, CEQA) that block development.
    • KingMachiavelli 3y ago
      > People are already free to build as many houses as they want. At (inflation adjusted) price X in location Y + regulator time/cost Z, the number of housing units that can be legally built has decreased considerably. Part of this is we've exhausted undeveloped/raw land and haven't upzoned in most locations. The fixed costs and regulatory hurdles for building housing units can certainly be reduced - if the political challenges can be overcome. Even some relatively sane regulations like insulation and safety standards could be re-evaluated. The issue is we are not doing any cost-benefit analysis of these regulations; even a 10% increase in the average home price should logically have a large impact on overall quality of life; that extra 10% spent on housing (~$50,000) in young adulthood reduces retirement savings >$300,000 assuming 8% returns, 30-40 years of investment, etc.
    • mistrial9 3y ago
      this is strident ignorance of the highest magnitude source: two years in a professional US urban planning office
• Auracle 3y ago
  They’re only good investments because supply and demand being off balance, and those houses are still supplying housing (and rent needs to compete with mortgages).
• dragontamer 3y ago
  Just build houses, which naturally will cause the price of houses to decline. Investors are allowed to speculate. But speculation must be risk, sometimes you win and sometimes you lose.
  • aodntkem 3y ago
    this sounds alright in textbooks, but in reality housebuilders realise they make more money when house prices rise as they build..
    • s1artibartfast 3y ago
      This artificial scarcity rationale is more of a conspiracy theory than realistic possibility. It would require hundreds of thousands or even millions of construction workers to coordinate, and also have a way to prevent new builders from competing. If you really think it is true, you should go into construction, undercut the competition, and get rich quick. The real answer is much more boring. High costs of land, labor, and regulation. If you ignore these three things, you can build your own livable starter home for ~100k in materials.
      • aodntkem 3y ago
        I can only speak for the UK market where land with permission to build upon is scarce. Land in desirable areas is always scarce and I would imagine that includes many US cities. In the U.K. there are only a few housebuilders that operate at any scale, and they have the best links into gaining owrmission and buying land to develop. ‘Landbanking’ is the keyword for the phenomenon in the UK, but ultimately the housebuilders slow building when prices aren’t rising to maximise their return. It’s economically rational. My view is that government should step in and build competing social developments to house those that can’t afford market rent. The first order effect — less homeless, greater security — is nice, the second order effect is even more powerful in my opinion. Anchoring prices towards cost of production. The UK housing market is now, since we privatised social housing, another asset class and logically the operators of that asset only consider financial returns — not social ones. As I understand it planning permission doesn’t exist in many parts of the US and so ‘building your own’ is feasible. The only problem is that mass transit into desirable cities also doesn’t exist and so urban sprawl and you have to commute even more insane distances to leverage that land that can be built upon. This is the area where fundamentalist market thinkers miss the key role government can play because they’re that far down the ‘government is the problem’ rabbit hole they can’t imagine positive market intervention because the market itself is the holy arbiter of creation
• maxerickson 3y ago
  Much of the change from 4 years ago would just be interest rates. The supply of housing was unhealthy then also.
• pfannkuchen 3y ago
  More like the Fed playing chicken with prospective sellers. Prices haven’t fallen much due to limited inventory, but eventually the inventory will come. A property is only worth as much as it would sell for today, no matter how rich the current owner is.