I.e the kind of stuff everyone wants to do but can't justify flying so close to the sun on because they don't have a legal army say "we are in compliance and here's why" on their behalf when the municipal government comes looking for fine money or the slip and fall lawyer tries to make something their fault.
In "reasonable" (note for the bottom feeders, I did not say "free", I said "reasonable") markets the big guy has to do things to higher standards because his big pot of money will attract vultures looking for a quick buck if he does even slightly wrong.
MFW I now live in capitalism and can't afford to own anything.
It does not refer to all ownership by individuals of real and personal property, restrictions on other personally-held property are separate concerns from the abolition of private property, and socialists regimes, including those in the Soviet bloc, frequently have retained private home ownership, which is not fundamentally inconsistent with socialist theory.
But it also means that the people who can’t compete in this type of Darwinism only survive because of the empathy of others who do (whether that be family/friends, politics, or charities).
I’m worried about the breadth of industries that PE has infected in the US.
Notwithstanding that, the populist fantasy is that developers won't build more "because they are greedy", as though that math works out. If developers don't leave money on the table, then they'd want to build where the demand exists and it does. They face a number of constraints and bottlenecks, not just for materials/labor, but managing risk. Risk makes loans expensive, everything is built on credit. Some of that risk is compounded by the threat of litigation by NIMBYs, or regulatory requirements, or environmental review, etc.
I think you're right. A lot of people confuse capitalism for working for a living - because that's what capitalists want the middle class to think it is. Capitalism is really about getting capital to work for you so you don't have to. Building and selling homes is a form of working. Holding homes for rent is capitalism.
nothing in the real world is in its pure form, and some business are able to provide value which they cannot charge for because they can rent-seek on other areas, so there is always nuance.
but an economy where rent-seeking is the main path to wealth is an economy in really poor shape.
I don't think this is contingent at all on the capacity to buy and hold, but on policies that limit building and financial instruments related to housing. The 30-year mortgage even. So now similar to the case with Social Security and public pensions abroad, politicians are playing a game of hot-potato not wanting to be the ones to have to make changes and upset the large aging voting bloc. Similar, too, because it's a generational wealth transfer.
Many items through market exchange have gone down in price over time owing to increases in efficiency (see: coffee makers). This can't be blamed on markets qua markets. It's adversarial policy that harms young workers.
If you ban private equity, it's going to be mom&pop redevelopment companies doing the same. I give you an example of Vancouver. It banned foreign purchases: https://www.kelownarealestate.com/blog-posts/canadas-ban-on-...
The impact was literally non-existing. The prices continued to grow as Vancouver 's housing density keeps increasing.
If you can afford to have one, or multiple, $2M+ condos that you just "park" your wealth in to leave them vacant, the presence of a $10K or $20K fee/tax a year is in the "chump change" category.
The government should also build massive amounts of housing. Everywhere of all types - apartments, townhouses, single family. After built transferred to the residents as coops.
I think that's why they're buying residential - there aren't any other traditional investments that aren't in a bubble or just have low returns. If you anticipate economic collapse or hyper inflation or whatever, physical assets make sense - when you measure wealth in houses you don't care what the dollar does. Gold people can do without, housing not so much. Whatever happens next, people will need a place to live. OTOH the population collapse is also coming so housing doesn't make much sense beyond 2030 or so.
Many/most corporate owners are individuals (as per the linked report). See my comment here:
https://news.ycombinator.com/item?id=46208561
> Cap how many rentals an individual can own.
Yes. Cap to 0. Until we get data on the breakdown (what percentage of rental homes are by owners who own 1, 2, 3, etc), we don't really know. It won't be easy to determine because a lot of RE investors create a new LLC for each property they own.
Yes build more. Also regulate the oligarchs until they no longer exist.
These investments are a bet on continuing to under-build and under-densify.
You either go the liberal+regulated free market way, which will get lobbied, then overregulated, or you go the socialized way, where you allow local government and associations/unions to compete in the market... with the exact same rights as the companies, and no weird rules that prevent them to truly compete.
And if you have a natural monopoly (energy distribution is the worst offender), you have to go the central planning way I guess, until we find something better.
There is some tax tricks you can play, but in general homes for primary residence is lower then secondary/rent, which is a big proportion of cost.
I wonder: if you added it all up, would a flat tax (which is nominally regressive) actually be more progressive than the regressive taxes we have?
> but the ability of corporate owners to use depreciation on a new purchase to offset profits from previous purchases is more significant.
If you're referring to cost segregation, this is probably less true now than in the past. It used to cost a lot of money to do a cost segregation analysis, and made sense only for apartment complexes (i.e. the cost to do the analysis vastly exceeded whatever savings you'd get on a single house). So only rich investors who owned 20+ unit complexes would do it.
I've heard that in the last few years, many accounting firms are providing it for relatively cheap, so ordinary investors can do it now.
RE people make a big deal about depreciation as a tax benefit, but it's minor in my experience. You're effectively reducing the cost basis, so when you ultimately sell, you have to pay a larger tax on the capital gains. Overall you gain, but not by a lot.
Perhaps if you combine with a 1031 exchange, you may get a greater benefit.
> Last month, the Lincoln Institute of Land Policy and the Center for Geospatial Solutions published a report showing that corporations now own a remarkable one in 11 residential real-estate parcels in the 500 urban counties with data robust enough to analyze. In some communities, they control more than 20 percent of properties.
They're invoking a false dichotomy. Small scale landlords (i.e. the guy who owns a second home and rents it out) are part of the corporations. From the linked report:
> A corporate investor, also referred to as a nonindividual investor, is a business entity that owns residential property, usually for the purpose of generating income. This broad category ranges from small entities such as family trusts and limited liability corporations (LLCs) to larger outfits like real estate investment trusts (REITs), endowments, and pension funds.
Many/most "ordinary" folks who buy a house to rent fall in this category - they form an LLC or something similar. Many reasons for this. Percentage-wise, my guess is that institutional investors (not just individuals who formed an LLC) are still a relatively small minority, but I don't have the data.
There is a common misconception on HN that it's rich people who mostly buy houses/units to rent out. In my experience, that's just not the case. Everyone is doing it across the board, and just by virtue of there being more non-rich people, they are likely the majority.
Also, higher income folks don't feel a great need to make more money. Median or lower income want to make a lot more, and real estate is actually one of the fewest options available to them (and also really easy to learn/understand). A lot less work than a second job (although some get a second job just to bootstrap the RE purchase process).
Just 3 days ago I spoke to a friend. Engineer (not software). Decent income, but not FAANG level. Non-working spouse and multiple kids. Rents out two houses, and is buying 2 more.
I took an AirBnB course from a guy who has lots of listings on AirBnB. He got there with almost no money down (most of his money was spent on furnishing the place). He was educated, but fairly low income ($50-60K in California). When I took the course he was making over $300K/year net from his AirBnBs.
When I used to listen to the Bigger Pockets podcast, the majority of people who owned 10+ homes to rent had very average incomes (less than a typical non-FAANG engineer).
I've been in the real estate space for a few years now. I don't own other units, but I do invest in them, and am moderately active in a local real estate club. I know how these things work.
If you want to solve this problem, stop pointing fingers at "rich people", and stop allowing multiple ownership for a decade or two.
Tax break on single home ownership, but significantly increased tax on multi-home-ownership?
It would be interesting to see comparisons between PE ownership in markets with property tax vs markets without.
For example, unsold stock that I bought 15 years ago; and then got a loan against. I'm wealthy... kinda? But I didn't sell the stock; I have unrealized gains, and you shouldn't tax me beyond income tax on borrowed money? Okay, tax me on my unrealized gains then - but then 2008 repeats itself, stock goes down 40%, do I get a refund? Of course not, I only pay when stock goes up and never down, which is not exactly a fair incentive.
Now imagine artwork I bought 15 years ago from Banksy. Or imagine my video game collection I bought on eBay that contains some rare titles. Or what about my wine collection? Now imagine I'm Elon Musk, on paper worth $400B, but if I sold even 20% of my stock, that paper valuation would be shredded from an excess of liquidity driving the share price down, so you can't tax me on what is physically impossible to realize.
This has the finance equivalent of feeling like cookie banners will actually do anything.
Political power will advocate for it's power, you have to go one level higher and interact at that level, not on tax law tweaks.
To give an example of where this has gone wrong already, look at the entire interaction between startup stock, ISOs and AMT and how it creates a horrible trap for startup employees, but not for founders and investors who get a lot of very nice tax benefits like QSBS, no AMT, so on. Because startup employees are diffuse, usually have unstable employment and are usually younger, this hasn't been fixed to this day.
While other countries like Israel have this fixed in a very elegant way, where you can exercise without tax bombs and only actually have tax liability when you actually can and do practically realize or liquidate the stock gains.
I don't have a good solution for private investment, but for offshore public investment, you can have the same principle.
> Sell stock that previously wasn't on the market, you exhibit permanent downward pressure.
Which is a very, very good thing, to be clear. Because it lowers expectations of future returns, and make stock valuations not based on "i predict pension funds will automatically put their contributor money into those stocks", but on actual business information.
We already do this for property taxes.
So let me propose: a wealth tax on land! ("Georgism"). But not a tax on the "value of improvements," i.e, buildings. This disincentivizes single-family homes near train stations (widespread in the town I grew up in) and is very low-cost to collect.
I don't know where you're writing from. But here in California, the source of all evil (Prop 13) originated with single-family homeowners trying to *escape the property taxes that result from their opposing new development.
Given how spectacularly CA housing policy has failed, perhaps it's time to try the opposite: Let's abolish all income taxes and exclusively tax land instead! (Land taxes have the property of being extremely progressive wealth taxes that are dead simple to administer.)
If the burden is lessened to have your own place, hopefully we could see less homeless on the street or living in cars when times are tough.
However if you have more than one, then you pay significant property tax on all of them. I would hope that could free up more places for more people getting a home.
But of course if you earn more than $180k a year, I guess you could afford some property tax.
I am also thinking foreign ownership of property should be taxed heavily. I know that is not popular, but honestly if you not living full time in the country then you are effectively taking up a spot for someone who needs a place to live.
Or - what if I own a 5-bedroom house, and rent the other 4 bedrooms to roommates?
The number cited links to here:
https://upforgrowth.org/apply-the-vision/2023-housing-underp...
Which has this as the report:
https://upforgrowth.org/wp-content/uploads/2023/10/2023_Hous...
The number is driven by this definition:
> Missing Households. Households that may not have formed due to lack of availability and affordability, e.g. households with children over 18 years of age still living with their parents or individuals or couples living together as roommates at levels exceeding historical norms.
It would be nice to see that again, the new housing market is ridiculous now.
I don't see why the seller would care. They're getting a check at closing, that's all they care about.
I mean, if there's a question about whether the buyer will actually be able to get financing, that could be a concern. But most buyers are pre-qualified (at least if they're working with an agent). The main reason they would not get financing is if the appraisal came in lower than the sale price.
Here’s a novel and brazen idea: if a domicile has been vacant inside a metropolitan area for more than thirty days, it’s up for grabs. Be it an apartment, a condo, a house, whatever, but if someone isn’t living in that space for more than thirty days, let folks claim it as abandoned property.
Watch rents and values plummet real fucking fast as folks seek to claim their “winnings” before their shit gets taken. That’ll at least jumpstart the real discussion of making sure housing is accessible to those who need it rather than constant finger pointing.
Because sometimes you just need a bigger fire to create the necessary action to solve the underlying problems.
EDIT: I am honestly so sick of the current housing crisis and seeing a swath of vacant apartments and condos as “investment properties” here in New England that yes, I am serious, and I’ve got a mental map of about a dozen large starter units that have been vacant for a year or so that I’d rush to claim one of.
Your investment is irrelevant when humans lack basic necessities like shelter, and I’m tired of being civil or polite about this so your ego doesn’t get bruised.
Like, don't arrest people for sleeping under bridges unless they are sleeping in the middle of a footpath under a bridge. And don't go building footpaths under all the bridges to prevent them, either. Also tear down all the hostile architecture or at least don't arrest people for taking to it with angle grinders.
The free market is supposed to work by everyone solving all their own problems and then exchanging solutions with each other. If you claim to have a market but then arrest people for solving problems, no wonder you get a dysfunctional society.
Not saying that people living in tents on public land is a good long-term solution, but it's a step up from being completely shelterless, and since price changes happen at the margins, if it's even remotely viable, it may cause a market crash.
I'm not convinced that commercial ownership is the problem. Or if it is, it's not a new problem. Slumlords have been around forever.
The main problem is we just don't have enough housing supply. Investor-owners can only hold units vacant to support higher rents up to a point. If there are enough vacant units available and enough supply that property values are not appreciating like crazy, someone will crack and cut the rent or sell out so they can get a better return on their money.
toomuchtodo•1h ago