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Ask HN: Anyone else feels the commoditization of real estate is unethical?
488 points by newbie578 on Aug 13, 2022 | hide | past | favorite | 731 comments
I am reading more and more about startups which are focusing on investments in real estate [1].

Doesn't anyone feel uneasy about it, that more and more people are looking at real estate as a financial tool, not a basic human right to have a roof over one's head?

Aren't startups like this just adding oil to the fire which is the real estate market?

I do not understand how will someone expect for future generations to achieve their own personal freedom and living inside their own four walls.

[1] - https://techcrunch.com/2022/05/17/backed-by-forerunner-and-bezos-back-arrived-a-startup-that-lets-you-buy-into-single-family-rentals-for-as-little-as-100/




I definitely do. It's something that turns a basic necessity into a speculative asset, with a price distorted by the money poured into it. Airbnb is also a deeply harmful influence on housing prices.

Imagine if we did the same thing with, say, water: privatized it and then "democratized" ownership of it.

It's easy to get retail investors to buy things at inflated, speculative prices, so the price of water would go up. People would say, "Why are so many people dying due to lack of access to water?" And we would blame these startups, laws would be passed, and we would fix it.

Unfortunately the necessity of housing is not as direct and clear, and we have a long history of denying housing to people who are unlucky, sick, or the children of such people.


> Imagine if we did the same thing with, say, water: privatized it and then "democratized" ownership of it.

We're watching this happen before our eyes.


In most of the UK (England and Wales), water was privitised in 1989

General consensus even amongst the right-wing media and the media that aims to appeal to conservative voters [1-4] seems to be is that we have drought and hosepipe bans while the private companies pay out £1b dividends and it's not right.

[1] https://www.thetimes.co.uk/article/54e5542a-1a6b-11ed-b1f4-6...

[2] https://www.guardian-series.co.uk/news/20604864.privatisatio...

[3] https://www.thetimes.co.uk/article/37ddb10c-157e-11ed-a669-5...

[4] https://www.telegraph.co.uk/environment/2022/08/09/water-fir...


Showing my age, but back in 1976, where I lived, water was being brought in by tanker day and night during the hottest summer on record.

I'm not saying privatisation has been a glowing success but supply issues were much worse in the days of nationalisation, especially when you factor in the population growth over the past few decades.


There is the huge confounder that everywhere in the developed world - and even in the less developed world like East Germany, where I grew up, a lot of infrastructure was added and improved over the decades after WWII and it has nothing whatsoever to do with private vs. government (or, in the case of Germany mostly, for water and energy) municipal ownership. Many houses had coal stoves and privies a few decades ago, that is simply how it was, not a question of "we need to privatize water and heating".

Here in Germany especially water is usually operated and owned by local municipally owned enterprises, and I'd say it's a huge success. Even my home district in East Germany (GDR) build a huge water infrastructure project with a dam, many kilometers of large pipes, and one or more (don't know exactly how many) water processing plants, definitely nothing privately owned there. People including those in power just put a very high value on having enough and reliable supply of water in Germany, and it has nothing to do with private vs. government, given what we have now with mostly local and state governments providing. In recent years a lot more private companies entered the picture, but I'm not sure about ownership (municipalities also operate their own companies), in the end it's an attitude question more so than blaming it of "private better". You can have success or failure with either model.


There are still houses in the US being built right now that have zero water and all must be delivered by tanker.

No wells to be dug, no neighbors to beg from, and now that the Colorado River is dangerously low they are stopping the delivery trucks.

This means people will have to move eventually, and good luck selling your 1.5 million dollar home with no water access.

Lol, California has 'severe drought conserve water' as all the businesses keep watering their 100% unnecessary grass, Nestle bottles it up and sells it back to us, we have almonds being grown to make fucking almond milk, and we have strained power grids warning of high power consumption while every fucking business leaves their signage and parking lots lit up like fucking Christmas.

But it's we the people taking showers and running the AC that is the problem.

None of this makes any sense!


There have been precisely zero new reservoirs brought into service in England over the last 30 years while the population has as you say grown considerably. There has been relatively little infrastructure maintenance, leading to high-levels of leakage, and over-extraction from once healthy rivers. I'd agree that things weren't perfect in 1976 but privatization has failed to noticeably improve things either while totally failing to prepare for the changes required by a growing population and worsening climate.


Water leakage is not a problem. The water goes back into the aquifer, where it should be anyway. It's a minor waste of energy and treatment chemicals, since it's drinkable water, but the water itself is not lost.


Nestlé is at the forefront of taking over a water supply and selling it back to the locals to enrich the corporation at the expense of the humans who live there


If you don't like that, the logical thing is to support water commiditization so that nestle doesn't get it for free.


Water commodification is exactly what Nestlé is doing

What we need is regulation to stop them from doing that, not a different company selling and capturing the water. That's just more of the same thing which solves nothing.


Nestle gets all the water they want for a $200 permit. That's not water commodification. They sell bottled water, but that's also not commodification of water. Almost 0% of US water consumption comes from a plastic bottle, and you can't commodify a market with ~0% market share.


Your statement is false, what Nestlé does is literally the definition of commodification

Commodification definition:

the act or fact of turning something into an item that can be bought and sold: The commodification of water means that access is available only to those who can pay.

>https://www.dictionary.com/browse/commodification

Nobody mentioned the US. Nestlé does this in various other countries.

>https://www.theguardian.com/global/2018/oct/04/ontario-six-n...


Nestle sells portable bottles. That's what differentiates their product from the tap.


They sell bottles filled with water, not everyone has access to tap water and Nestlé captures so much of a water source that locals don't have access to the freely available water that they did before.

Are you not aware that fresh water from wells depletes sources? The water table is limited.

You seem to be intentionally twisting the scenario in a disingenuous manner. Nestlé is selling water that was once free to a populace.


If they didn't have access to freely available water, it cannot be true that Nestle is selling water that was once free to the populace. Your assertions are contradictory.


>they didn't have access to freely available water

Please quote my comment where I stated this.

I don't believe you have attempted to comprehend my statements, nor have you read the article I posted and are just making baseless assertions to be contradictory.


You won't have to imagine for long.


>I definitely do. It's something that turns a basic necessity into a speculative asset, with a price distorted by the money poured into it

The 30 year mortgage is one of the greatest inventions in the history of mankind. Being able to swing hundreds of thousands of dollars of margin on a near-zero-down investment that requires nothing more than proof of income and has a manageable monthly payment is the single most powerful financial tool available to the vast majority of people.

That kind of leverage is only possible with the commodification and securitization of real estate. It’s not a perfect system, but it has led to intergenerational family wealth accumulation among the common population more than anything else before.


I disagree somewhat. I think the 30 year mortgage has pushed prices up much higher than they would have been, because of the leverage, and people only look at the monthly repayment. The fact that it has led to intergenerational wealth (among the rich who can afford houses) is a direct side effect of the fact that houses are so expensive. It seems like saying it has generated wealth is begging the question.


Canada has shorter mortgage terms that require multiple mortgages to pay off a house at different times, transferring interest rate risk to the buyer. Canada also has higher house prices than the US. Mortgage term length may contribute to price growth to some extent, but I think the supply of and demand for housing swamp any effects of financing.

Being able to lock in a low interest rate for thirty years, the probable lifetime of the amortization period, is very advantageous. Combine this with a lack of a prepayment penalty and American mortgage holders get a great deal.


>people only look at the monthly repayment

That's somewhat understandable given that the alternative is pretty much writing a monthly rent check. In that respect, it's a bit different to my mind than an auto loan. (Maybe if you compare it to a lease.)

If you didn't have 30 year fixed mortgages in the US, property values might indeed drop somewhat. But it would mostly advantage people who had access to other capital. People who can't afford houses in expensive areas now mostly still wouldn't be able to.


> Airbnb is also a deeply harmful influence on housing prices.

It's simply unimaginable what it's done in cities across Europe too. I lived in a few places like Barcelona, Dublin and Berlin, and it's pretty much destroyed any rental opportunities for young people and artists. I'm all for regulation, including taxing them to make longer term rentals more profitable for owners.


> It's something that turns a basic necessity into a speculative asset

I see some broad parallels in this line of rhetoric to "Zeus brings misfortune because people are impious vs good fortune when they are worthy". It presumes a difference and a drive that is not there. All assets are both speculative and non-speculative at all times. There are no assets that cannot be bought speculatively and a house is always going to be an asset because it represents a big investment of capital.

If people are speculating on real estate, all that says is that the policy of an area is going to make housing rare vs the number of people who need housing. If people thought housing was going to be abundant they would not speculate.

There are problems in the housing market, but they are not to be found by worrying about people acting speculatively. People are responding to the real problem, whatever it is.


> There are problems in the housing market, but they are not to be found by worrying about people acting speculatively. People are responding to the real problem, whatever it is

We should do both. Build more housing and crack down on speculators.


Shooting the messenger has a bad record for making things better. Speculators don't drive markets, they just signal how the situation will develop as early as it is possible for predictions to be made.

Cracking down on speculators won't help people get roofs over their heads. Nor will calling them unethical. Speculators are the signal for whether there is going to be a housing problem in a few years time.

We should want a system that allows speculators and encourages them if there is going to be a housing problem so there is plenty of warning. Targeting speculators in particular is the old once-a-metric-becomes-the-target-it-becomes-a-bad-metric problem in a new guise.


This works for most goods that people have to constantly buy new, but does not work in the housing market. The people that decide the zoning are the residents of the city. The residents of the city don't need to buy, so they don't care about the speculation price effect. In actuality, through price increases of the speculation, they are better off! So they vote for SFH zoning[0]. The warning is ignored.

If you introduce a land value tax equal to the value of the unimproved land, this will kill speculation, but also make it instantly impactful to the citizens that there is not enough supply. This will mean that the people able to change the zoning of the city will instantly see a reason to change the zoning, as better zoning means more supply means lower taxes.

We don't need no speculation.

[0]: https://news.ycombinator.com/item?id=32350657


In my opinion you're overlooking that a speculator could "engineer" a situation faster than say a local council is able to act / realize what is happening.

For example, a speculator moves into a nice small village, sees potential and brings in a lot of foreign capital in a short amount of time. Buying up houses and outbidding potential new citizens. The price of land is also driven up from this, even if it's only a short term thing.

The damage has been done there and it had little to do with the number of houses. It was just a hostile takeover of a community.


This assumes that the speculators are correct. That is not a good assumption to make.


If the speculators are wrong the price goes down and people tend not to complain about them. People only start bringing up speculators when they are correct.


That's why bitcoin is such a good investment: the speculators are right about the price going up.

/s


They were right. The speculators from 2010-2020 were right that cryptocurrencies are going to be a reality from now on. Like it or not, it is clear that there is a market here that is measured in billions of dollars and it is going to stay with us.


Speculation is making crypto impossible to use as currency.

When the speculators run out of bigger fools the bubble will pop.

Crypto can at least just be purely speculative without really hurting anybody but it's not good for housing.


no, you should crack down on government making housing rare, which is who is at fault in pretty much all of North America. Zoning is mismatched to the task of housing the people who want to live in many areas and local governments need to drastically increase the higher density zoned areas and that is pretty much the extent of the problem and the solution.


> We should do both. Build more housing and crack down on speculators.

No, just building more housing will make housing less useful to speculative investment, and so speculators won't invest. Just reverse the messing with normal supply and demand. Don't apply ever more patches on top of patches to fix a situation that wouldn't exist without the messing in the first place.

Sadly, it is very hard for politicians to a) want to decentralise control, because it's much easier to declare a new controlling initiative than to say "actually, we're just getting in your way" and b) get to decentalise control, because it's much harder to argue strong economic principles than appeal to special interest groups who might vote for someone else.


> We should do both. Build more housing and crack down on speculators.

By this reasoning nobody could own multi-family properties because that would be considered speculation.

Because the only difference is this involves single family homes which are going to be rented out, an act that I’ve never heard called speculation. Of all the predatory tactics Silicon Valley gets up to (hello Uber) this isn’t one of them IMHO.

I’m not sure where people think the houses that get rented out come from but I can guarantee that it isn’t people who are running a charity to provide housing to needy families. They invest capital in real estate with the sole intention of seeking a return on said investment.


I have long supported the privatization and commiditization of water. It should be sold on the basis of supply and demand with markets, futures, and so forth.

Don't like almond farms, bottled water companies pumping millions of gallons for the price of a $200 permit, and golf courses watering their courses during a drought? Then you should too.


One thing you can absolutely guarantee when it comes to a necessity of life commodity, a black swan event will occur and people will die because they are priced out of the market.

Imagine, if you will, when the Texas grid went all wonky and those people who choose to buy power at open market rates had to prepay for their $13,000 kw/hr electricity because the power company had a limit on how much credit they will give you. Now imagine a drought where there is a disruption in the water supply because a pump burned out due to record setting high temperatures.

I’m no cheerleader for big government but if people insist on having one there are valid activities that they should engage in to protect the citizens from getting bitch slapped by the invisible hand of the market. This being one of them considering how capital intensive it is to provide a reliable water supply.


Black swan events can cause shortages no matter if it's a state controlled supply situation or decentralized market.


What if water were public for individual consumers but private for corporations?


Why?


Apparently so those water hoarding companies have to pay the full rate, instead of some subsidized rate. I.e. stop privatizing profits with socializing the costs


So that water supply becomes a workable business model, increasing supply, and so that uneconomic water usage is discouraged. Such as almond farming in Southern California during the summer


> Imagine if we did the same thing with, say, water: privatized it and then "democratized" ownership of it.

Lol we did that in England!


> It's something that turns a basic necessity into a speculative asset

The solution to that is the same as the housing problem - build more housing.

And it's fine if the new housing is "luxury" housing - then yesterday's luxury housing becomes today's not-so-luxurious, etc.


In theory. What we see in practice (here in SF) is a glut of vacant luxury homes next to people living in RVs and tents. Belvedere Island (where Captain Kirk will one day live) is mostly empty. The fancy homes there are almost all investments, few people actually live there.


So build more housing.

Keep doing it until the problem goes away. It will eventually.


And what are we doing about CORPORATIONS buying up our neighborhoods?

As far as I know, NOTHING.


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


No; it implies that WE own it.

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

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

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


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

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

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


You can float strawmen and invalid analogies all day, if that's how you get your jollies.


One needs a place to live.


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Textbook NIMBYism. Just because you bought a place does not entitle you to having the surrounding vicinity stay in stasis until you leave.


This is why nations as a whole are being done away with by the market controllers who have the capital.


You live here but you don’t own your neighbors homes and you have no right to tell them what they can do with them. Who cares what “reason” you bought your home for, that is literally no one else’s problem but yours. You’re no different from the HOA tyrants who scream at their neighbors for painting their house the wrong color.


> Imagine if we did the same thing with, say, water

Hm, maybe we can do the same thing with Air. We can even keep the same name, Airbnb, but this time people are paying for the best air.


I have recently paid literally for that. In the mountain village where I was spending my holidays they charged me tax because of the air I was breathing. They called it 'climate tax' but the better translation is 'environmental tax'. And fun fact, unfortunately the air was not that clean neither because the place is very popular..


It's a natural first impulse, but it's wrong. What is the correct impulse is to be concerned about how lopsided most cities zoning is towards single family, as that is what is driving the market power that makes real estate profitable as a financial asset. If most of a city was zoned to allow up to multi residential highrises rather than most of a city being zoned for single family it would cut the appreciation ability of the scarce and valuable land zoned for higher density already and would allow more people to live closer to where they want to live (i.e. close to work/wherever they daily commute).

The market isn't failing to function because someone realized they could buy up current stock and make a large profit over time, people noticed they could make a large profit over time because city governments zoned everything wrong for the actual demand.


> because city governments zoned everything wrong for the actual demand

This is the core problem. Commoditization, or rather, people cornering the market is secondary.

City government is doing this because it is elected by those who own single family units. This is self-stabilizing.

If the majority would live in multi residential highrises, there wouldn't be an incentive to artificially create scarcity. Instead, there would be an incentive to drop housing costs even further by increasing supply.

The problem is that nobody wants to invest in a city with a falling housing market. There needs to be some profit sharing between those who build the housing and those who own the real estate in the city center whose value increases when the city grows.


Some people invest in cities with falling house prices. They could be long-term speculators or more likely are landlords who expect the property to cash flow more than a property in an in-demand city. Generally the slower the asset price growth of a property the larger the margins on rent. You trade cash in the future upon sale for cash now from rent.

The thing that can really crater a housing market is a departure of jobs from an area.


Your last statement is not correct. People like to invest where they can make money and multi residential rent is profitable in most places and we have REITs and other financial instruments ready to grow and invest lots and lots into multi residential rentals to generate a decent cash flow to send back to investors. The problem for them now is that there is so little land zoned that way that these guys are often outbid by people building luxury apartment condos (because that's the most profitable up front thing to build and it is relatively low risk because of constrained land supply). In a land abundance situation it shifts profitability from scarce luxury apartments (because they no longer have to be scarce) to rental units, plus it allows buildings to age out into rental units rather than age out into being renovated or torn down to make higher value luxury apartment condos. All we need to do is force cities to zone land this way rather than allowing them to cave to nimby's trying to push up the value of their single family home.


Regarding my last statement: People like to invest into multi residentials now, but are those investments still profitable when the zoning changes?

How do you protect your investment when there is innovative pressure and housing units compete on price? Say you have a building and you try to monetize your investment over 20 years but after ten years, due to innovation, competing units can be built for half your costs. Then your tenants will move if you don't halve your rent which destroys your profits.

In a city with nimby's, that's never a problem because rent remains high, even if costs are reduced.

>All we need to do is force cities to zone land this way

This requires the vote of the nimby's which means that you need other options.


regarding your last point first: no, it doesn't require the vote of the nimbys. The state and/or province could force this very easily and that group of politicians is beholden to a group of people with more varied interests so are less under nimby pressure.

regarding your first point:The loss from rezoning will happen at the time of rezoning and will primarily affect the currently zoned high density land. With newly repriced lower, non scarce multi unit residential land it is unlikely to end up in a large downward risk situation because the sophisticated reits will be pricing what they will pay now for land off of what they think will happen over the next twenty years and will likely be pricing in a rent drop (which is what drives the drop in land prices for high density). You also aren't really at risk of technological disruption because the total turnover/increase in units is low relative to total housing stock even if we ented a building boom. If it suddenly costs half as much to build a high density residential building, it's still going to take decades for that to erode rental costs by half because you don't suddenly have enough supply of that cheaper to build stock to house everyone.


> If most of a city was zoned to allow up to multi residential highrises rather than most of a city being zoned for single family

The problem with this is the only entities with the financial power to build such buildings are large developers and corporate landlords. That leads to either high rents or high HOA fees. We need some way to pool prospective homeowners together to build this kind of high-density housing. Because otherwise we’re trading one problem for another and still failing to make home ownership affordable.


It still does mean more supply, so is beneficial for prices over a situation with less supply.

> We need some way to pool

That's e.g. a co-op, not exactly unusual concept to pay for housing construction at different scales.


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


If people want to have families they should have to move out to the country side and build a family home. Apartments and single person residencies should be the only units allowed to be built in cities where young people have to work and try to build wealth.


Thats just wrong. Land should be zoned for much higher density but if someone wants to buy land and build a single family home that should be fine too. The problem isnt the single family home, the problem is so many cities have 70% or more of their residential zoned single family.


The zoning argument is such a myopic perspective on the problem. The issue with housing affordability is across many communities, most of which have no issues with shortages of buildable land nor even shortages of housing. The primary impact on prices is from the demand side due to cheap credit from artificially low interest rates and speculation by large investors and small time speculators moving into real estate.


Do you have an example city? I'm curious because when there is lots of supply to meet demand why would prices go up?


Virtually every city other than a few that are essentially islands or peninsulas that are fully built out like San Francisco and New York City. Some examples of cities with plenty of residential buildable land to expand into in the United States are Houston, Dallas, Austin, San Antonio, Tulsa, Atlanta, Charlotte, Orlando, Tampa (ex Saint Pete which is a peninsula), Jacksonville, Fort Meyers, San Diego, Los Angeles, Bakersfield, Sacramento, Las Vegas, Phoenix, Baltimore, Richmond, Greenville, Nashville, Knoxville, Chattanooga, and a myriad of other cities.

I already explained why prices go up when there is sufficient supply: hyper-fueled demand from essentially free money and new entrants like hedge funds looking for ways to invest the loads of cash they can borrow for nothing and money from their investors as well. In many cities, more than 30% of all home purchases were from investors.


Because real estate works somewhat similar to ponzi scheme because of low liquidity and lag in the transaction settlement. Everyone wants higher return one over the other on each sale and it ends up in speculation loop.

The price rises without new increase in the supply, because you would not lock-in to a particular house on just your first visit. So, each of these visits from each person constitutes each time to total demand. And demand gets a bit inflated. Speculative nature of real estate on top of that, encourages the sellers to hoard with higher prices (like a synthetic monopoly mindset).

Even if one buyer locks into a higher price, the effective market rate goes up because every seller in that area expects much higher price than that.

Price based on Supply and Demand only work properly in a Open Market with High Liquidity.


"I'm not doing any harm," you say. "I just want to keep what I own, that's all." You own! You are like someone who sits down in a theater and keeps everyone else away, saying that what is there for everyone's use is your own...If everyone took only what they needed and gave the rest to those in need, there would be no such thing as rich and poor. After all, didn't you come into life naked, and won't you return naked to the earth?

Ambrose, c. 350


It’s cute, but not a very practical philosophy though. Most valued resources are physically finite. Who decides how beachfront properties are allocated? Who decides who should clean the toilets?


We give the beachfront properties to the people who clean the toilets?


Maybe we should all take turns cleaning the toilets. Like jury duty.


The rich would find a way out of it.


If someone is willing to do it for money and I'm willing to pay them for it, why should I do it?


Money is a superpower, one of mankind's most potent inventions, and just like with anything of great power it is learning to restrain yourself, to recognize when it is and is not appropriate. Self-restraint in the use of great power is what makes the difference between good and evil.

With money, all actions take on a dimension of moral hazard. You pay for a thing, but you do not do the work, so you don't know how it is done and what effect the work has on the worker or on the world at large.

If the altruistic angle doesn't appeal, consider the selfish angle: money divorces you from the reality of an act, making you less able to do for yourself.

Like the Amish, I suggest that you carefully consider what you pay for and why, rather than just decide based on whether you can pay for it.


Your question presupposes that the arrangement where certain people have to do shit jobs to survive, and others don't, is desirable. It works out fine for you individually, but the more charitable and humane arrangement is to spread the shit jobs around so no one bears the full brunt.

https://en.wikipedia.org/wiki/Tragedy_of_the_commons


arguing against owning your home is arguing in favor of rent-seeking


Actually, in most of the world, owning your home (really the land underneath it that is zoned as residential) is a form of rent-seeking, which is why 'land value tax' taxes that economic rent (money earned without providing anything in return).

Unfortunately, people have somehow been convinced that house price inflation is good because their house has more and more value, like a wheelbarrow of inflated currency and that the only fix is for everyone to buy their own house/land, which only worsens the problem.


The parable is very explicitly contrasting taking what you need / taking one seat at the theatre / owning a home to live in, with taking everything and depriving others of the use of what should be common / taking all the seats at the theatre / hoarding homes to extract economic rent, respectively. I'm 99% sure you understood the point too.


"Taking one seat at the theater" is something any single family owner-occupier could learn from:

- Houses are way bigger than they need to be

- Their footprints are enlarged further by useless setbacks and lawns

- A single household monopolizes this footprint for the entire vertical dimension


I’m not sure there’s a practical or fair way to quantify what someone needs, how can that be measured? Or worse, enforced?


In general i think its not about enforcement, but incentives e.g. designing a tax system that penalises owning many homes.


but what if you have a valid plan in the work for the many homes? I think it is a huge violation of privacy for the government to need to vet you on the reasons for your private property


The implication of the ancient Roman theatre is that the person is trying to make a public space (theatre) private (their own use / enjoyment).

The implication being that the only rent seeker will be the state i assume


That is an argument against greedy hoarding, not home ownership.


>> "If everyone took only what they needed and gave the rest to those in need, there would be no such thing as rich and poor"

This theory is called communism and it is one of the deadliest ideas known to man.

That said, there's an element of truth to the statement. There would be no such thing as rich and poor, there would only be poor.


I think you read too much between the lines! To me it says that you should only get as much as you need, not more, not less, and leave the rest for the others..


Isn’t the “should” there what communism tries to enforce?


that’s an extremely anachronistic reading.


You're quoting an author from the 300's in a comment thread about today's housing market. That's an actual anachronism.


No, because governments' ability to procure it for the needy is a very separable problem. But let me play Devil's Advocate: agriculture, the foundation of the food supply, is one of the most commoditized markets that exist. Does this bother you too? Why not? If it's because food is generally a smaller part of income, highly responsive to market pressure to keep prices low in addition to some stabilizing subsidies from governments, why can't real estate work the same way?


> why can't real estate work the same way?

So I'll tackle this...

Food is highly responsive to market pressure because it is nearly entirely fungible. I'll throw this here for the sake of making sure we're on the same page when I say that

---

Fungible: able to replace or be replaced by another identical item; mutually interchangeable.

---

So food markets are sensitive to pressure because there is hardly ever anything special about the food any one entity produces. Someone charging too much for corn? Go buy identical corn, that fills exactly the same need from any one of the thousands of their competitors. "Organic" was, in large parts, an effort to make food that is less easily replaced, and is mostly marketing rather than quality or health related (seriously, go google some of the chemicals that we allow to be added to organic food).

In contrast to food - Real estate is very rarely fungible. A specific plot of land has characteristics that often make it very hard to replace. Whether that's proximity to people or locations or features themselves such as soil, water, grade (slope, slant), existing structures, mineral presence ,etc. Non of those are consistent between different plots of land (there's a reason "Location, Location, Location" is a saying).

So no - Personally, I don't believe that real estate will ever be able to be treated in a similar way as the food market. Desire for it is predicated too much on aspects other than mere "acres" of it that you can get.

Imagine if just finding the right steak to eat was enough to make you rich for life, or if that ear of corn was where your family has been buried for centuries, or if that lima bean reduced your commute from a 2 hour drive to a 5 minute walk. I think we'd see pretty insane food prices then as well.


> I think we'd see pretty insane food prices then as well.

All you are saying is "imagine if food supply was more constrained" with more words. Commodification and constrained supply are orthogonal concepts -- the argument here is that increased commodification may lead to increased supply, so long as the market is allowed to act freely.

> that ear of corn was where your family has been buried for centuries,

This argument of "what if your family lived there before" in housing discussions annoys me to no end. We don't live in a feudal society where the right to a particular village is passed down through bloodlines. The fact that your family lived somewhere in the past doesn't entitle you to anything; you're not a Hapsburg monarch.


> This argument of "what if your family lived there before" in housing discussions annoys me to no end.

It's NOT about right - it's about demand. It's not relevant at all if it annoys you, the issue is that people can and do form sentimental attachments to the places where they live, and those attachments influence their willingness to pay (or hinder their willingness to sell).

And no - I'm not saying "imagine if the food supply was more constrained". I'm very clearly saying that food is fungible (you know - the thing I actually said...).

The housing supply is both constrained and non-fungible. The food supply can be constrained or not, but it's fungible as all get out - For the purposes of not starving, a calorie is a calorie, and where it comes from is irrelevant in a broad sense.


> It's NOT about right - it's about demand.

Sure, that's fair. I'm really reacting to arguments about gentrification, where people do talk about "rights" to stay in a particular neighborhood that apparently get passed via genetic material.

> I'm very clearly saying that food is fungible

My point is that the reason "fungibility" is important is actually because it impacts supply: there aren't just 100k houses vs 100k households, there are actually 10k houses with some desirable property (close to where most people work, sufficiently large to raise children, whatever) vs 50k households willing to pay a premium for that desirable property. Your point about fungibility doesn't change the conversation about supply and demand, it's just a partial explanation of the mismatch.


So outside of the context of most of the previous discussion:

> I'm really reacting to arguments about gentrification, where people do talk about "rights" to stay in a particular neighborhood that apparently get passed via genetic material.

What is it that bothers you about this? Basically - my counter argument is: If a person has been living in an area for decades, and that area is now gentrifying, can't it be reasonably expected that person (or their family) were fundamentally a part of driving that gentrification?

It means that person was putting in their labor and money into that location for decades, and that labor and money was key for creating the conditions that are allowing for gentrification (even if the final catalyst was something else - like a company using the stable area for new expansion)

Simplifying - My counter argument is that forcing this person out is robbing them of the fruit of their labor: A nice neighborhood. They were there when it wasn't nice. They worked in making it nice. Now you kick them out because they were working with a lower income to do it (usually meaning they put in considerably more "sweat equity"). Seems pretty unfair to me.


Land has these properties, yes. We will never see mass affordable ownership of desirable land. Fortunately, that is almost irrelevant to housing issues. Legalize building vertically.


There are thousands of homes/apartments around where I live that are about equally attractive for me to live at. Most sold by different sellers. Housing is fungible.


It's fungible for you, since apparently few dimensions of housing are salient to you. In my experience, this is not the case for most people. Units on the same floor can differ vastly; buildings on the same block can differ vastly; the neighbors you have, the direction a unit faces, square footage, street noise are all examples of factors that matter to many people and which can vary dramatically on a geographic scale measured in feet. Many people don't consider housing fungible to the extent that produce is.


And I bet those apartments and homes carry roughly the same value/sqft...

The claim that housing is fungible is absolute non-sense, though.

If it were, we wouldn't see such drastic market variations, even within relatively close geographic markets (in some cases, literally blocks away)

We also wouldn't see such an intense pressure on evaluating real estate before purchasing (because if it was fungible - it's all the same, right?).

I basically don't know where to go in the conversation if you can't actually acknowledge the argument in front of you, and just say "No".


But that’s the problem. The housing market is becoming what the food production market would be without the pressure and government involvement.

Right now the supply of those two good and their general dynamics are totally different. Landlords can effectively extract maximum profit from a property without doing anything to improve it or remain competitive thanks to zoning restrictions and other things that make increasing supply difficult. Thanks to this set up, landlords effectively wind up capturing the capital gains that arise out of public improvements (like adding a new neighborhood park) as well since it makes the area more desirable without increasing supply.

In the most desirable areas you can literally do nothing as a landlord and raise rents almost perpetually.

Worse once these landlords raise rents it causes negative effects downstream. Producers of other goods that rent their land need to start charging more to pay the landlords.

The number of people that try to justify some kind of late pseudo-feudalist system like this is legitimately insane.


A land value tax would solve this - you want to use that acre of American Land, you pay the American People for the priviliege.


Ah sure. Old lady living in the house she bought 50 years ago will have to pay insanely high land tax because now it's red hot city location, what 50 years ago used to be suburbs.

Very clever idea.

Taxation was never a solution to any problem. It was a way to mask the problem in a very populist way. Taxation purpose was a redistribution from 'evil crooks' to poor, unlucky people.

The problem with Taxation always was that the middle class was paying this because the rich ones had plenty of solutions not to pay including with moving to an another country


> Very clever idea.

Yes. yes it is. She's made millions for doing nothing useful.

> the rich ones had plenty of solutions not to pay including with moving to an another country

How does a rich land owner avoid paying a land tax? Or a tax on the value of his copyrights (which would be land)

Yes the middle class get shafted on things like income and capital gains based taxes, that's the great thing about a land value tax, it taxes the immovable land, not the movable person.


No she doesn't make millions. It's not her fault that now her house is 10x more valuable ( on the paper ). As long as she doesn't sell, rent somebody else she has no income. No income, no tax.

Simple as fuck logic. She bought the property, not a license there for living up to her ends.

The thing you are here presenting is a tax of not realized potential income. It's diabolical insane idea.

If we can do it for real estate, why not for cars, and any idea property?

You basically want people buy a license for living in their flats.

About basically nor useful, she earned the money, paid multiple taxes for this and she bought this from the real property dealer / construction company which hired many people for this.

Isn't this tangible contribution for society?

All because people like you flocked to her location for work what used to be peaceful, quite suburbs


She's a millionaire. She bought it for $20k, it's now worth $2.5m. She's made $2.48m for doing nothing.

For someone else to live in that house they would have to make a fortune to pay it in rent. She could choose to move somewhere cheaper and have a massive income from either selling it or renting it out, but she doesn't, she's become rich because other people are making the area valuable.


>In the most desirable areas you can literally do nothing as a landlord and raise rents almost perpetually.

You can also do literally nothing even if you want to because of zoning. Remove all the market distortions and watch rental prices drop.

Call a contractor and see how much they charge for permitted work.


> agriculture, the foundation of the food supply, is one of the most commoditized markets that exist.

And one of the most regulated and subsidized markets...


The US housing market is regulated and subsidised…the American dream of owning a home is socialist…US mortgages are guaranteed by federal government.. this doesn’t happen in most other countries..


It's not about regulation, it's about replace-ability. Food prices stay low because corn is corn, regardless of who grew it - it fills the same need. In many cases, even food that's not a direct match is still a perfectly valid replacement (ex: I need to eat 2000 calories, but it doesn't matter all too much what food is providing them).

This is utterly untrue for real estate, which is about as non-fungible as you can get.


You raise an interesting point regarding fungibility…I wonder that with growing insitutional involvement, whether housing may move down the spectrum and may become more fungible… probably not by much tho


Yeah, I think that's an interesting point - if the goal is just to have a roof over your head close to where you work, institutional involvement may be able to help there (large apartment complexes and high rises are the old school methods of creating housing units that are mostly the same as each other).

I think the issue is that housing is intrinsically tied to real estate, and real estate (at large) likely won't become much more fungible. Land is just really complicated, and the uses for it aren't all that exchangeable.


>the American dream of owning a home is socialist…US mortgages are guaranteed by federal government..

"socialism" =/= government intervention.


The government created the programs that gave massive tax breaks to the boomers who bought homes.


Quite reductionist…

Having one element of a nation state being characterised as socialist doesn’t not equate to socialism… the world is not black and white..


It’s not really socialist at all. It’s in the governments best interest to have owners of properties. This leads to improvements making the capitalization of the country larger. It also develops more property tax capability.

A governments 2 main assets are its people and its land. Ensuring that people have ownership of the land ensures the people will continue to support the government as there’s mutual interest. So subsidizing loans via guarantees isn’t socializing so much as the government investing in itself and protecting its assets.


The response, above, lists pros but no rebuttal to why government-guaranteed mortgages are not socialist.

In a free, capitalist market, private providers would price and provide mortgages. This is not happening here..

For some Americans this may be difficult to digest since there may be cognitive dissonance…how can an American ideal be characterised as socialist.


Right but it isn’t due to charity. It’s in the governments best interests to do this. It is acting rational.

A socialist government would either ensure everyone qualifies or it wound instead build large dehumanizing concrete towers to stuff thousands of people in, block after block.


The subtext, from the statement above, is socialist government decision making is irrational while capitalist governments are rational.

Having traveled across many countries in Europe, I have seen governments with socialist traits make rational, sensible decisions. Again, while I agree that a capitalist government is probably more effective than most communist governments, the world is not black and white.


Because you can make more food but god ain't making any more land.


We have plenty of land.

When I moved to Manhattan, I was shocked to see how many apartment buildings that are only a couple floors tall and don't have elevators. I assumed every building in Midtown would be at least 50 floors and house thousands of people.

Counting the office space, which is completely unnecessary when people can work from home, even the densest neighborhood of America's most populated city has tons of room. I would bet that we can fit 20 times more people in Manhattan if we got rid of the height limitation laws and converted all the offices to apartments.

On the other hand, when we consider the average suburb there is a ridiculous surplus of land. We could fit the entire world population into Texas if we used it more efficiently.


There are many reasons why not every building in Manhattan is 50 storeys. The most obvious one is that each neighborhood's infrastructure imposes limits on the density of the block. Other considerations are public transit, water main, and school capacity. So the effective amount of "land" today, is closer to what exists today, relative to a block of residential 50-storey skyscrapers.


Infrastructure scales with development, q.e.f.


Cramming people together more tightly does not create more land.


But they flock to NYC. No one is "cramming" them there.


Not sure I follow your point. NYC is not affordable. Are you implying the New York real estate market is in a desirable state because people still want to live there despite exorbitant rents and never being able to buy a home?


Well, why can't real estate work the same way?


I'll try, because the incentives are totally different. Food will perish if hoarded and you need a constant supply of it. Housing and real estate is the opposite, it's in almost everyone's interest that land values and property go up over time, especially the people who currently own it which includes politicians and probably around 50% of people. There is also price competition in the food market, which property developer out there competes on value? They all compete on perceived quality, the square footage and where they can buy land.


The counter example to the OP's point about housing is agriculture? When we just had a story about how Bill Gates is now the US's largest land owner? When Farm AID was started to assist local farmers from corporate encroachment 40 years ago?! This whole thread points out how people who claim that the US has free markets are really deluding themselves. The FEDERAL government is heavily involved in EVERY non-trivial aspect of our PERSONAL lives, and they pick the winners and losers. It truly, truly sucks, but this trend of investment banks getting involved in buying up real estate, and driving up prices of home ownership is NOT going to go away. Owning a home will become so expensive that only corporations will be able to do so, and rent/lease it back to you. We truly are becoming a capitalistic country, and either you'll have "capital," or you won't. It's modern feudalism.


It should. The slow erosion of diversity of food production has put the nation at risk.

How much grain is watered with depleted groundwater? How much produce is dependent on the Colorado river?


> agriculture, the foundation of the food supply, is one of the most commoditized markets that exist. Does this bother you too?

Yes? Most people who have ever lived have always produced their own food. That most of us in the developed world have lost the ability to do so—and that access to the physical essence of our being is dependent on monetary transactions with faceless entities that value profit above human life—seems deeply alienating.


> agriculture, the foundation of the food supply, is one of the most commoditized markets that exist. Does this bother you too? Why not?

It does bother me


Markets and capitalism are a social hallucination.

Biology does not care about our philosophy; it allows emotional bonds between officials and elites that are leveraged against the masses.

Write on paper all the rules you want, collusion will happen.

Your defense of this system that’s also screwing you is bizarre; conviction to spoken traditions versus actual analysis. Very brain dead following orders of you. Very religious missionary of you. Human biology is easily convinced it’s spoken words of power are what rule the world.

I mean so it is; if you get burned by it, oh well. Remember; if this system takes your life from you, none of us have an obligation to you.


Yes, but I don't think this is just a recent trend.

In Hong Kong, we spent over half of our income for rent [1]. Median per capita floor area for accomodation of 15 square metres, with some people living in subdivided flats with per capita floor area of 5.3 square metres [2]. The average waiting time for public housing is 6.1 years [3], note that public housing are government provided housing available with lower rent for low-income households, which are much cheaper and larger than subdivided housing mentioned previously. The median house price is about 20 times the median family income [4].

Yes, we know that this is a problem. But the government officials don't have incentives to tackle this problem. In fact, about 1/5 of the government income comes from selling land [5], so they probably can't fix this problem and keep the same spending without increasing tax. Let alone many officials are related to this sector or hold many properties.

[1]: https://www.thestandard.com.hk/breaking-news/section/4/17694...

[2]: https://www.bycensus2016.gov.hk/en/Snapshot-09.html

[3]: https://www.scmp.com/news/hong-kong/society/article/3177511/...

[4]: https://www.chinadailyhk.com/article/119131

[5]: https://www.budget.gov.hk/2019/eng/io.html


But how would you tackle it without making the problem worse?


In Hong Kong, it's not a problem of over-densification. There's loads of unused land, but the government is incentivised to keep it empty and not zone it for high-density residential. When they do sell off a small parcel of land for new development, they auction it off leading to obscene land prices.

That's what OP means about there not being an incentive for the government to lower cost of living. The high cost of living is subsidising HK's notoriously low taxes.

There's a pretty good YouTube video about it: https://www.youtube.com/watch?v=hLrFyjGZ9NU

Oh and to answer the question, the solution is to zone lots more high-density residential, sell a lot of land for less money, and stop subversively taxing the poorest citizens via high CoL. Tax businesses and the wealthy to make up for it. But they're not going to do that, because low taxes on businesses and the wealthy is their USP.

Turns out when you optimise a city for business wellbeing at the expense of citizen wellbeing, then it impacts citizen wellbeing...


Fair points. Didn't know about the gov land sales. Honestly I presumed I was going to hear "rent controls!"


No, I don't know. I major in computer science, not economics or public policy. I just think that it is ludicrous that despite every chief executive said that they will tackle this problem, the price just keep rising and statistics keep worsening. They propose some absurd plans like massive 10+ year land reclamation plan [1] to build more houses, despite that there are actually quite a lot of unutilized land in the New Territories.

[1]: https://en.wikipedia.org/wiki/Lantau_Tomorrow_Vision


A high land value tax moves the problem around (instead of young people not being able to buy a house, older folk can't afford to keep the large one they spent their lives in).

In the process, it makes land completely unappealing to rent-seekers while incentivizing high-density development of desirable locations.


> older folk can't afford to keep the large one they spent their lives in

This is only a problem if you believe older folks should continue to live in big luxury houses for a pittance (read: gain the benefits of luxury without having the detriments of luxury), or the country does not have enough smaller housing for them to move.

In situations where housing is severely constrained at the cost of younger people, leaving old people in their large houses should be the last of your concerns. Doubly so for any social structures where older generations are extremely reliant on younger generations (almost every democratic, socialist or communist country).


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


"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds"

— Thomas Paine, Agrarian Justice, 1797


This is of course why Smith argued for a tax on the undeveloped value of the land. Sadly not easy to work out, but much harder to avoid and much fairer in the sense that the undeveloped value of your land is that part which benefits most from the services provided by the state.


Not just the services provided by the state. The unimproved value of your land also depends on the value of the properties / land around your land. Which is even more of a reason to implement a land-value tax.


People consume state services. Not land.


And people who own more valuable land benefit proportionally more from state services.


Sure, and you can say the same for sports cars, stocks, cell phones, yachts, and basically anything that can be bought and sold.


You aren't permanently consuming a portion of the most important finite resource in a state (the land) by buying a cell phone or a sports car. You're certainly taking advantage of public resources and services on a global scale with those other purchases, which I also think is worth addressing. But in the case of land ownership the correlation is very local and easy to draw.


But it's not easy to draw the correlation between land usage and state resource usage. There is basically none because land doesn't use resources. People do.

Your argument confuses cause and effect. People that gain large benefits from the state do so because they are rich. And because they are rich they can afford expensive land.


The "land doesn't use resources" argument seems a bit out of nowhere, because we've been talking about people the whole time here - people's ownership of land. That's also why I mentioned valuable land and not large land. Land derives its value from proximity to other valuable things, and will be developed more densely the more desirable it is in that regard, putting proportional strain on public services and resources like utilities, roads, policing, etc. There's a clear cause and effect here in terms of land value and incentive to develop, and it's an advantageous route for taxation because it would be difficult to game.


And they pay more property tax.


Yeah, that's correct.

But property tax also taxes improvements that the owner made themselves. This disincentivises improving land too much.

The whole thing with Georgists and a land value tax is that it's specifically unearned wealth due to increases in unimproved land value that are taxed more.


The idea is the more and better improvements your property has the more you can afford to pay. I figure 50% of the reason they want a permit for any little thing is to ensure the tax assessor has a fresh view of the current state of improvements!


In the United States, we call that “property tax”.


Not really, property tax is based on the current value, which in theory includes all development.

"In theory" because in California there are strategies for doing renovations without triggering a reassessment.


Yes, really. The property tax is a privilege tax paid in exchange for exclusive use of the land. That it is calculated on a basis that includes improvements is a truly meaningless distinction.


So property taxes are even higher than land value taxes? Because they included land plus development.


Property taxes dissuade development, because the higher the value of that specific property the higher the tax.

Land value taxes encourage development because the tax is levied on the _unimproved_ value of the land, so you're incentivised to maximize the value of the improvements of the property.

At least that's the theory.


I think a lot of people, especially lifetime renters, don’t understand that. Between property tax and maintenance/improvements, land ownership is a burden in many ways.


There's no basic human right to have a roof over your head, for the simple reason that someone has to make the roof. Saying "I have a right to have it [without building it yourself]" is saying "I have a right to force someone to build it for me". I dunno about you, I'm uneasy about forced labor.

Even beyond that, there's certainly no right to have the roof over your head wherever you want - there is simply not enough space for everyone to have it. Commoditization of housing basically lets the scarcity be managed via market mechanism, the best we have - what creates the problems, like making scarcity worse, is /absence/ of commoditization - where someone decides that things should be a certain way, e.g. via zoning, design reviews, environmental rules, etc. If we could commoditize more in these areas (e.g. something like carbon tax for congestion/sewer use/... instead of a committee deciding; removing free public parking and letting the market resolve that and probably save space and reduce car use; etc.), there'd be more housing. If we commoditize less, scarcity would just be managed via different means - like corruption, connections, etc.


> I'm uneasy about forced labor.

I'm with you! But what I'm not okay with is gatekeeping of the resource that REALLY makes real estate valuable -- LAND. Nobody made the land.

I'm okay with paying for the labor and capital that goes into housing construction. I'm not okay with somebody extracting massive amounts of value out of the economy just because they own title to the land.

If you want to look at the stats for why real estate has become such a huge asset class, read this: http://gameofrent.com/content/is-land-a-big-deal


I agree with that, I am actually georgist. Of course, again, human right to land won't satisfy people calling for "housing as a human right". There's tons of cheap land everywhere, including close to cities, and in major cities. It's really "housing with amenities near where I like the weather, jobs and culture is a human right"


Okay but what's your solution? The reason land is valuable is because many people want it in specific areas. I genuinely don't have an answer to the question.


This characterization of rights seems somewhat melodramatic. A government is capable of providing its citizens with rights without forcing individuals at gunpoint to provide them. The way this happens is that the government creates an organization that is dedicated to the provision of these rights, and then individuals can voluntarily join it. The government can set the wage, or produce summery marketing material, or issue medals to encourage participation in civic practices.


Where does the government get the money? It still checks out to forced labor, once or N times removed. Not that I'm saying it's never acceptable - it's a trade-off, but we should call it as what it is, if used - a gift from others, a privilege. Not a human right. And, we should be strongly biased against it by default, not trivialize it.


> There's no basic human right to have a roof over your head, for the simple reason that someone has to make the roof.

I guess someone has to provide food and security too. Would you say that these also are not basic human rights?


"Right to security" thinking got us mass incarceration. Most progressive places are backing off of that one now. Perhaps 25 years ago.

Food is an excellent model for what I'd like to see around housing: extremely mature and sophisticated commodity market, government thumb on the scale of abundant and stable supply at low prices, subsidies for people whose incomes are genuinely below the cost of efficient production.

To the extent that food is a human right, it is incredibly important that we have GMOs, large-scale factory farms, global supply chain, etc. Food being a human right would make it all the worse to insist on only socially-optimal production: everything local, everything organic, everything vegan, community meetings to argue about who deserves to eat. But that's exactly what the "housing is a human right" crowd fights to preserve and entrench for housing.


While I agree (in the abstract) policies that make that roof unaffordably so that others might realize wealth without working seem a bit shortsighted.

A lot of people without roofs over their head is a recipe for social instability which affects everyone.


Maybe; it's different than saying it's a "human right" though.


Good point. A roof might not be a human right. But a piece of earth might be.


Yeah, I agree with that. I think the best answer to that is georgist; one could argue that an average piece of land is extremely cheap, so there's no problem, everyone can get one; but if people want a specific piece of land, and many people want the same ones, a distribution mechanism is needed.


Well when you say "human right" and a government insists that home ownership is something they will focus on as a human right in their program, to a finance person what you are really saying is "this asset has a free put option attached to it". And having a backstop like that is a very sought after feature for speculators. It isn't the only area where speculators take advantage of it( for example energy generation is another area with a built in backstop), but it is the biggest one.

What would be your proposed solution to this problem, as in how would you remake the real estate market in the US? And perhaps more importantly, how coherent is your solution with the US as it is today?


The poster above you (whittingtonaaon) proposed raising taxes on secondary, tertiary, etc. homes. That makes sense to me but "investors" looking for easy prey would surely hate on such solution. It's not like no one could have thought of this until now.

I do not say this with the US in mind.


How do you propose we would — systematically — provide housing to people who, for whatever reason, are not in a position to buy? Should housing be bifurcated into government-provided housing for renters and privately-owned housing for those fortunate enough to have the money and stability to buy? Would you like to live in government housing, or would you prefer to keep the investor-owned rental option, but have them pass a bunch of new taxes onto their customers? Or maybe, just maybe, realize that property rentals are a necessary service that is handled pretty well by the private markets and that landlords are no more or less deserving of earning a profit for the service they provide and risk they take on?


>How do you propose we would — systematically — provide housing to people who, for whatever reason, are not in a position to buy? Should housing be bifurcated into government-provided housing for renters and privately-owned housing for those fortunate enough to have the money and stability to buy?

So...council estates? Subsidized housing is a thing we have.

>realize that property rentals are a necessary service that is handled pretty well by the private markets and that landlords are no more or less deserving of earning a profit for the service they provide and risk they take on?

Landlords don't create added value. I'm skeptical that it is a necessary service; housing is necessary, but is renting housing necessary? Why would that be?


> Landlords don't create added value. I'm skeptical that it is a necessary service; housing is necessary, but is renting housing necessary? Why would that be?

There are many cases where this isn’t true. Many (most) residents in urban areas are transient. They stay for a couple of years, get married, then move to the suburbs or another city to start a family.

There are a bunch of other reasons why someone wouldn’t want to stay in a location for a long period of time.

Rentals absolutely make sense in this situation.


A house costs more than some people have. Without a rental market, those people become homeless or completely dependant on government. Neither is desirable.

Without the profit incentive, what developer would build a multi unit apartment building to achieve higher density living in cities?


I'd say a house costs more than almost anyone has; it's why people need to take out loans to purchase them. That said, without a rental market the price of houses goes way down. As a result, the people that cannot afford houses then are mostly the same people that cannot currently afford rent. This is because the mortgage payment and insurance for a home is actually lower than the monthly rent. If the top value were lower, it would be a safer risk for a bank but because it's so high, people don't have that access to credit.

A developer still has a profit incentive; mostly the same one they have now, actually. They sell the apartments.


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


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


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

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

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


>Landlords don't create added value. I'm skeptical that it is a necessary service

Subdividing your land and making it available to others is valuable. The world without that is all single family homes.


Landlords do not provide a service.

They take otherwise-purchasable properties off the market, then make money off preventing other people from owning them in perpetuity.

Some landlords also offer property management services, but that is a separate field entirely. It would be fairly easy for an apartment building to consist of entirely owner-occupied units, who could then join together in a co-op to either put individual local contractors on retainer for things like plumbing, electrical, and miscellaneous repair services, or find a one-stop-shop company to hire for it.


> How do you propose we would — systematically — provide housing to people who, for whatever reason, are not in a position to buy? Should housing be bifurcated into government-provided housing for renters and privately-owned housing for those fortunate enough to have the money and stability to buy?

Without speculators leeching off of them, 20 year old two bedroom units would cost less than they currently rent for each year.

Make property investors actually invest something by only allowing profit or rent on land that has been recently improved.


Why would landlords hate such a system. They can trivially pass on any tax to renters and have the incentives to figure out the loopholes in the tax code. It’s already common for single unit corporations to own rental properties.

Instead of taxing based on who owns the land, tax how it’s used. That way more units will be built increasing supply.

But then you’ll run into the real problem, not landlords, regular home owners who largely have a revealed preference to live on giant plots of land, in big houses far from multi unit dwellings. They’ll continue to use restrictive zoning to limit supply and keep prices up.


If it's taxed at least 100% of its land value +100% of its rental value they'll sell pretty quick.


Why not just pass a law saying only individuals can own property and they can only own one?


Because that means apartment buildings become illegal?

Homeownership is all well and good, but sometimes you really do just need a place to live for a year or two, and having to do a full-fledged real estate transaction at each end of that period is a lot of friction.


The tax the poster proposed was a de facto ban which was my point. But even then it wouldn’t work because some land is more desirable than others and by encumbering land ownership you encourage those that own the more desirable land to extract as much value as possible.

The thing we are dancing around in this thread is do landlords largely determine the housing prices. I think not. I think it’s supply constraints and government subsidized mortgages. These are largely issues driven by regular home owners not landlords.


How so? It's a fairly common model for each individual apartment to have their own owner, and a body corporate run by the owners manage common areas.


I like a system whereby individuals can own between one and a bit and three somewhere (including provision for commercial property where large facilities need to rent many people's fungible extra-property rights in some way). Mentioning 100% tax is just to head off idiotic straw men about passing the tax on to renters.

Also allowing benefiting from or even rent seeking on only the increased value of very recent property improvements (like taxing at the value it held 5 years ago with some buy-or-sell challenge type provision to prevent undervaluing).


Most money in real estate isn't made on selling people 2nd homes. Unless I misunderstood your comment and you think corporations and investors shouldn't be able to own more than a single home at once(so landlord abolishment)?


Raising taxes doesn't "abolish" anything, it may make it less lucrative, but that's a far cry from "abolishment"


Depends to what level they are raised, of course. Making something prohibitively expensive and then saying "hey look you can still technically do it, it's just not worth your time and you have to really execute everything perfectly" is not super different from just saying you can't do it.


Right, but unless somebody states that is the type of tax they are looking for, it is not appropriate to presume that is what they mean without further information. It seems pretty clear that a primary residence, one secondary home that is used for family vacations at least some of the time, one building/ piece of land that is actively used for a personally operated business, and all other real estate are each distinct categories that should receive different incentives and disincentives from the state - unless you are against governance, but that is another conversation altogether.

I personally think that primary residences should have a 100% homestead exemption, because I don't think you should have to rent your home from the State. And to make up that percentage of income, other real estate should be taxed a little higher. At the same time, there should be intelligent programs in place to make it easier to reach the point where you can own that first home. This last point would undoubtedly work best if there were either financial and/or statutory restrictions on ownership of residential real estate for investment purposes. So, in principle, it makes perfect sense as part of a larger goal of promoting home ownership. The conversation of how to best do this is of course more complex and there are many factors that need to be balanced - more than anything because high taxes raise rents, which would point towards regulation as an important part of the best way of dealing with this.


What possible justification is there for landlording? No-one can make new space and all owned land was stolen from the commons.


Implement a Land-Value Tax, as per Henry George's vision. All of the rent from land speculation will be returned to communities. Relatively easier to implement than other solutions (we already have assessors to determine the value of land + property) and should be an easy sell to most Americans, as most would see their tax burden drop dramatically.


> What would be your proposed solution to this problem, as in how would you remake the real estate market in the US?

Higher capital gains tax for investment properties to discourage speculation.

The rationale being that it’s perfectly fine to own investment real estate as long as it’s being occupied. Short term speculation incentivizes unrented property (look at any city in East Asia). Incentivizing longer holding periods makes it more likely that the property will be used to extract rents (that is, actually house people, which is what you want).


Very simple.

Any residence you don't live in as your only exempt residence for at least 2 years out of 5 is taxed at 100% pa. Any land with above median value is taxed at a progressive rate if you do live on it.

Any commercial building you don't work in for a similar period is taxed at 20%

You want to develop? Fine. Just have to make sure someone else owns or will own the land/strata before you start and charge them for the development.

You want to rent out a building? Fine. Put it on someone else's land and if they don't renew the lease you have to remove it or give up claim to it.


Most developers would not accept those terms. That's a proposal for predictable project losses. It's far less risk to own the project and land, seek institutional and similarly deep pocketed financing, then to suffer the fickle stinginess of a multitude of strata members. The developers who accept those terms will be looking to cut corners.


There are plenty of projects that are sold before they are started, and no reason the transaction would have to go the way you're claiming.

As long as at least one person is willing to assign their land claim to the project it could continue without that portion taxed, and acquiring or renting the claims would not have to be coupled to funding.

Modelling land as a fungible commodity that you're allowed to have as much as you want of is stupid and is just gifting a large portion of the productive output of society to those privileged enough to take on debt and those with the magic loan wand. There are plenty of other systems historically and currently that aren't as insane.


Pre-sales always include broad sweeping allowances for variances in final cost; for instance, folks who pre-bought condos two or three years ago are just starting to get sticker shock now that the final price has hit them, thanks to skyrocketing materials cost. The price they agreed to pay, with those variances they agreed to.

Without the assurance that someone else would shoulder the risk the builders would have walked away. Like they do in China, and where they have to demolish half finished towers because the builders dropped out and none will take it on.


IMHO the land belongs to all of us, like the air, and the water. ie '(wo)man is born free' rather than 'born to pay rent to a private owner until such time as they can buy a freehold and pass on the condition'.

That doesn't mean you can't have exclusive use of some part of it, how else would we encourage people to take care of the land and develop it. But you should continuously pay everyone else for it's exclusive use. Inherited, and corporate (basically immortal) land outright ownership is immoral IMHO.


Do you believe this expands globally or only within sociopolitical boundaries as they mutate?


A very good question. People should be able to choose where they live (that does require a more equal world though), but on the other hand, communities should have some say in who their members are and what their rules are. I do see current fixed national boundaries as problematic.


>but you should continuously pay everyone else for it's exclusive use.

So pay rent to the state instead of a private landholder?

I found your first paragraph very agreeable and convincing, but this feels like it's just passing the problem on up to the state. Would you just be suggesting that any ownership of land outside of a a single home or apartment be heavily rented/taxed to the government, or literally all use of space used exclusively (e.g. a private bedroom)?


> So pay rent to the state instead of a private landholder?

You pay rent to the people (via the state, which acts as a layer of indirection) who no longer get to use the piece of naturally occurring land that you're monopolizing.

Think of it like finite natural resources. Who really owns that? It's a gift of nature. Nobody made it. So if one person wants to dig those up and sell them, part of the proceeds should be shared with everyone. Because it's not even their property, so they have no moral right to privatize 100% of the gains in the first place.

Now if someone puts effort into transforming those resources into something more useful, then they should own the fruits of that labor. The distinction is labor (the fruits of which I should own) versus naturally occuring thing I had no role in making (which I should not own).


I think the logical consequence of the first paragraph is the second.

If the land belongs to everyone, but you want to occupy some part of it exclusively, you need to pay everyone else for the privilege. Not just one individual who happens to 'own' it through various historical doings. I'm not sure how you can 'pay eveyone else' except through some kind of 'state' mechanism.


Assuming OP is taking a Georgist perspective, the idea is that the land rent would be distributed equally among the community as a basic dividend.


Unethical? Should be disallowed period. I do strongly believe that once a propery is yours what you do with it is your concern and nobody else's. However, the business practice of purchasing properties to profit from selling it again in the future should not be allowed. So, what should happen is the government should not allow the transfer of ownership when the seller has a) multiple properties and b) is selling a propery for more than 3% (inflation adjusted) of the intial purchase value. I am all for living in a house and selling it at a ridiculous profit though so long as that is your only property.

With the exception of employee housing, any non-individual entity including agents of corporations should not be allowed to purchase even one residential property.

With the exception of diplomats, foreign citizens should not be allowed to purchase more than one property.

These laws should be applied in any developed country.

This is one of the reasons they wanted corporations to have rights as a person, because in regular reasoning a corporation owning houses, making speeches and donating to parties makes no sense as their activity and existence is entirely in the sphere of privileges not rights.


If companies can't own houses, and people can't own more than their primary residence, where should renters live?


People can own multiple residencies, they just can't sell them at more than 3-5% profit. Corporations can't own residencial buildings if they are single family units but for multi-family properties, so long as it is being offered as rent/lease/purchase that should of course be allowed. I was focusing more on single family units but you are right to highlight that.


That would seriously restrict supply because once people bought a house with the intention of renting it out they would never sell due to the price control. Just like an entailment, this property can never leave the family line.


Supply should come from new housing right? People selling their house to move to another house is a transfer of propery not generating supply.


Plenty of people rent single family units.


Yes, and that should be allowed so long as the landlord is an individual.


You've got this wrong because you're thinking about stable states, not state transitions.

1) "Multiple" here is wrong. What is the time when you own two houses? Well, when you're moving! You buy one, then you sell the other. During that time, you own two houses. That's multiple. Study the hermit crab.

2) Your three percent cap means that property renovation, repair, expansion, and so on is completely doomed. Why didn't you think of that?

This stuff is complex. It requires some careful, thoughtful approaches.


Like i said in other comments renovation and flipping can be done without owning as a service. It would be just like it is now with flippers paying the seller but not getting ownership at all.

You want to sell your house and it has 200k valuation? A flipper will give you 200k so you can buy another house, renovate without owning it and then at sell for say 250k and the benefit to the seller would be splitting the 50k with the renovator with whatever percentage they agree on. The key difference being the flipper now has an incentive to sell soon instead of wait years until the house costs say 500k because the original seller wants his cut soon so they can move on.

Flippers will not be doomed but flipping will be less profitable than it is now unless you do it at scale of course.

For your first point is it not obvious I meant at the time you place the house on market you if you owned multiple houses?


> This stuff is complex. It requires some careful, thoughtful approaches.

Is this comment allowed on the internet?


>I do strongly believe that once a propery is yours what you do with it is your concern and nobody else's

Not enough. That's how you get a voter base which pushes for plans which make properties more expensive, deprioritizes building and depending on other variables, causes population growth while telling the next generations to just deal with the smaller piece of the pie they have to share with a bigger population than before. That mentality effectively means you're dependent on home owners as a whole to care enough about others to prioritize their needs. Historically, this hasn't been true for almost a century in the majority of the developed world.

That's also why this problem is so difficult to tackle. We don't have a critical mass of individuals democratically yet, nor a critical mass willing to cause enough damage to make voters care. And the majority of politicians do not care enough about the long term consequences (or alternatively, realize caring about the long term consequences won't win them votes).


>b) is selling a propery for more than 3% (inflation adjusted) of the intial purchase value

This makes it more profitable to sit and collect rent than to sell. Property will never change hands. I hope the current owner knows how to build.


Except for new homes right? So what if property never changes hands so long as new housing can accomodate population growth? Also, people sell when they move so there is that


You are all for the things that can profit you i guess would be the gist of it. Let me guess you're a family man with spawn as well and these are all you care about.


I make ~4x my country's generous minimum wage and I'm struggling to find a decent flat I can afford - I'm not talking of something like a detached house, just a good flat in a non crappy urban area. I often wonder how people with an average job can stand the fact all they'll ever be able to own is a small flat in the middle of nowhere or in a run down area. The state of real estate is defeating.


I'm 95th percentile of my country's income according to government data, but struggling in the same way. Most of my friends who have houses have gotten them by inheritance or massive help from their parents.

"Why aren't people having kids? Why is no one marrying and starting families anymore?" Like dude, if I can't afford to buy a small property for myself as a single occupant, I'm not going to dive straight in to having children and renting for the rest of my life. I need financial stability.


Exactly, stability is the most important. I don't even care about large paycheck (like you said, 95th p.) if I still need to take a bad loan for 20 years in a country that has recently seen doubling in mortgage payments.

I just want to know it's going to be ok, for me and my family. After that requirement is satisfied we can talk about having kids, creating innovative companies, having breakthrough research. We can't achieve great things without this sort of stability.


>a basic human right

You do not have a basic human right to the labor of the people who build and maintain these houses.

This is where this entire discussion collapses for me. Yes, I agree there needs to be more access to housing. And it’s frustrating to me that our government is too inept to simply provide it. For instance: we have committed to about 45 Billion to Ukraine.

At a cost of $100k/unit (achievable at scale), that’s around 450,000 single family homes.

The “inflation reduction” act, at about $600 Billion, represents about 6 MILLION single family homes.

The “build back better” money, which appears to do approximately no building back of anything whatsoever would build about 40 MILLION single family homes all in.

This entire discussion is absurd to me. You’ve got politicians burning money, some people talking about housing as if they have a “right” to a house (that is: a right to force people like me to build them a house at gunpoint), and still surging homelessness.

Nobody seems to actually want to have a real discussion about any of this. When our elections come up, the “housing is a human right” group votes against any policies which would lead to people actually owning a home, and for the politicians looting the treasury. It’s all just absurd.


> You do not have a basic human right to the labor of the people who build and maintain these houses.

Correct! However, a significant portion of housing costs is not due to the stuff that's built on them -- something produced by labor -- but by the LAND that lies underneath it. Nobody built the land, it was already there. Someone just acquired it one day, and as it exchanges hands the prices have been progressively bid up, sucking money out of the productive economy and redirecting it towards those that own land.

Land is a really big deal, and we need to stop conflating land with capital if we want to fix the problems with the housing market:

http://gameofrent.com/content/is-land-a-big-deal


In other parts of this thread people are arguing that a land value tax wouldn't increase rental prices because landlords are price takers. How does land trading hands drive up rents if landlords are price takers?


I have a sense of overdramatization here. Nobody is holding anyone at gunpoint, we just want to have a safer future with regards to our basic needs.

Let's agree that there is a cost to building a house and someone has to pay for it, that's fair. What's not fair is making more and more, larger and larger luxury homes, turning other into AirBnBs and even keeping some empty (since it's "an investment") effectively making it harder for common people to have a place to live.

I don't want to be scared that if I get sick for a week I won't be able to pay my rent and will have to move... who knows where. I know there are people living in such fear while a multitude of homes stay empty.

In principle this boils down to private property rights and conservative way of thinking about society vs. making policies that would drive the standard of living up starting from the ones most in need. Both approaches are valid, they differ in the amount of suffering for the bottom 50%.


Remove zoning restrictions. I will build multi unit housing in my lifetime. I would do it sooner but it is expensive and permitting is hard. There are so many barriers that protect single family homes.


The actual cost of construction/materials of the house itself makes a negligible part of real estate speculation. A huge chunk of properties are bought with the expectation that they will not last more than a few decades.

We already face the scenario where people have to commute for over an hour each way to work in a city where they cannot afford to live. Let's not pretend that cost of constructing that shitty house a hundred years ago factors into the conversation. Should rich people be able to buy up land (and mineral rights underneath it) all over the country? What happens when there is none of it left?


> Should rich people be able to buy up land (and mineral rights underneath it) all over the country?

TFA is literally about giving people who don’t have the capital to outright buy a house the ability to invest in real estate. Like, you think real estate is a good place to put your money but you only have $5000 you can afford to invest. Or you want to spread out your investment across different markets but can’t afford to buy 20 homes.

I think if TFA was posted without the highly biased editorializing this discussion would be a lot different.


"The actual cost of construction/materials of the house itself makes a negligible part of real estate speculation"

We may have different definitions of "negligible"...


>The actual cost of construction/materials of the house itself makes a negligible part of real estate speculation.

$250/sqft, want to loan me 3 million? It will last more than a few decades.


Do you think humans have a right to own a peace of land on planet earth? (Not the labor just the land)

I find it very unjust being forced to buy land from someone else that the only thing they did was being born before.


Being born earlier is not nearly the only thing they did. They also (almost always) bought that land, (almost always) paid continual rent to the local government for the use of that land, improved and maintained that land, and finally, reached a decision that they needed to sell that land and improvements to someone else.


How do you feel about rent control? That gives someone who was there earlier a market distorting deal just because they were there first.


> You do not have a basic human right to the labor of the people who build and maintain these houses.

But you should have the right to live under a government who provide this for you.

It's like saying that you don't have a basic human right to have that doctor help you – no you don't, but you do have a right to have a doctor help you.

Safe housing is a human right, as is healthcare, as is food and water, because these things are essential for life.


Why do you have a right to having a doctor help you? What if he doesn’t want to help you? Can the government force him to?


You clearly didn't read my answer. No individual is forced to help you, you don't know their situation, but you have a right to have society in general help you.

Also using "he" to refer to a hypothetical doctor is somewhat exclusionary, I suggest "they" instead to be more neutral.


Society is composed of individuals. There is no such thing as societal help sans individual help.

You also forget, that society has rarely been consistent in who deserves help and on what terms.


If you don't want to treat all the sorts of people in a population, don't go into a field of public service. Period.

I don't care if you don't want to help someone because you think being trans is wrong. You still have to treat them if you are working in an ER, if you are a dermatologist, if you are basically any doctor. In a few cases, you might be able to refer the person to another doctor, if it is reasonable (as readily understood by laypeople), not urgent, and you (personally) pay any additional costs the patient might incur, including lost wages if they need to take another day off work, differences in insurance cost, and travel costs.

If you don't want to treat everyone, find another line of work. And yes, I think the same about other folks in public facing jobs. If you cannot help folks that are different than you, don't work retail. Don't be an accountant or lawyer the general public can hire. Policework, firefighting, and government jobs that deal with the general public would be off limits.

And yes, I think the government should force you to do this. They already do this in a lesser manner, though fair housing laws and fair labour acts and things like this. No, these aren't perfect, but nothing is - an imperfect fix that improves things is better than none at all, after all.


Doctors voluntarily take an oath to that effect. No government needed. Perhaps we need a, “Hestian” oath for home builders.


> > You do not have a basic human right to the labor of the people who build and maintain these houses.

> But you should have the right to live under a government who provide this for you.

Um... how do you think the government is going to do that? They're going to have to spend money to do it, that's how. And how are they going to get the money? They're either going to get it by raising taxes, or by borrowing it. The effect is the same, but with taxes it's more directly obvious. The government is providing you a house by taking taxes from the rest of us.

So... where do you get this "should"? And how should the government provide housing, without it giving you a right to the labor of the rest of us? (Not just those who build and maintain houses, but those who pay taxes to pay for it.)


> This entire discussion is absurd to me. You’ve got politicians burning money, some people talking about housing as if they have a “right” to a house (that is: a right to force people like me to build them a house at gunpoint), and still surging homelessness.

Isn't US homelessness mostly an issue of drug addiction and lack of mental health care? What percentage of US homeless do not fall into one of those categories?


For the visible homeless the percentage is high, but there are a lot of people living in their cars or on a friend's couch who just can't afford housing.


> You do not have a basic human right to the labor of the people who build and maintain these houses.

Food and security also require other peoples labour.


And are also not basic human rights.

A basic human right that is a corollary to security is the right to self-defense. You cannot obligate other's labor to provide your security, but you can provide your own security and that is your right.


> This entire discussion is absurd to me.

I wonder why that is.

> some people talking about housing as if they have a “right” to a house (that is: a right to force people like me to build them a house at gunpoint)

This must be the reason you think it's absurd, you've concocted a bizarre strawman that approximately nobody is advocating for.


Well inflation will go up even more thanks to that bill. Incomes will go down. So housing will become even more unaffordable


We need to accelerate this problem. Make it impossible to rent or get a mortgage in any city. Millions on the streets. Most of the cities kids eating from trash cans. Only then will we see change i think.


Oh no! Who will we turn to to solve this problem for us?


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