I dont know about Palo Alto, but this is a big problem where I live in Brooklyn, and in NYC in general. When there is gray money coming into the market, prices go up. Honest earners get pushed down, and the push-down happens all the way down the chain. See the article below for more details. Of course in the Bay Area, there is an additional dynamic of restrained building which might be the bigger problem.
https://www.nytimes.com/news-event/shell-company-towers-of-s... "From Manhattan condominiums to California mansions to gentrifying neighborhoods in Brooklyn, shell companies are increasingly pervasive in the world of real estate. These articles explore the people behind the opaque deals."
NYC has quite restrained building also, almost comparable to SF. The tall stuff was mostly built long ago, and the newer stuff (E.g. Long Island City) is opposed by local politicians (Van Bramer for instance).
Otherwise why on Vernon Blvd in LIC next to high rises are there 2 story rowhouses?
LES, West Village, parts of Park Slope, LIC have historic districts (I'm forgetting many of them)
Opposed by local politicians or not, new buildings have and are going up on both sides of the east river. NYC could do a lot better, but credit where credit is do. It is doing significantly better on this front than SF.
Is this really the case? Or are there a lot of occupied (as in, rentals) houses owned by overseas investors? Why would it make any sense to leave a property in the bay area empty if you can add rent to the benefits of your investment?
"Why would it make any sense to leave a property in the bay area empty if you can add rent to the benefits of your investment?"
A lot of these people are really rich. They don't think like us poor people.
For many of them, the houses they buy and leave empty aren't investments. They already did their investing and made money. This is a key difference in the thinking; for many poor people, houses are considered an investment. These rich people aren't investing; they're spending or parking some of the money they made elsewhere. Buying a single apartment to rent out as an investment? How quaint. How small.
For some, this is something they buy to park their money in such a way that it can't be simply taken away (bank accounts can be frozen, gold or other such small items can be confiscated, but it's awfully difficult to simply take someone's house when that house is in a foreign country with strong property laws) and is unlikely to vanish overnight.
Secondly, it's my house, for me to live in if I feel like being in the area for a while. It's just nice to have my own place with my own personal belongings that I can leave there, and drop in or let family and friends use whenever I want. Sometimes, hotels just feel impersonal, and they're more public than I'd like, and I'd have to bring with me everything I needed.
What they are not doing is getting into the landlord business. As a very wealthy person with houses all over the world, I wouldn't want strangers living in my house. I wouldn't be able to keep my things there. I wouldn't be able to just use it or offer it to friends whenever I wanted. I could make a tiny bit of extra income by being a landlord? That extra income is worth less to me than having the house empty, available for me to use or dispose of however and whenever I feel like it.
Sure leaving a SV house on Marina Dr. empty is nice just in case I want to use it, but we ought not condone or enable this self-serving behavior. It's disrespectful. Why do so many in this country still admire these types of wealthy people?
> we ought not condone or enable this self-serving behavior.
so what do you suggest? make it illegal to not live in your house ? Have a city inspector drive by once a week and see if lights are on and cars are parked nearby ? Every homeowner has to show up every 90 days to get their property ownership license stamped ?
sure, having vacant houses is a waste of resources. but having wealthy people actually use their money - even in a wasteful manner - can be a good thing. more money moving through the economy is better than less money moving through the economy.
You say that that like it's a crazy idea, but Vancouver's done just that, and enacted an empty house tax[1]. It took effect at the beginning of this year, and it's not a huge amount (~$7.5k) compared to the price of a house. What's interesting is the penalty for lying - $7.5k/day. How this works out remains to be see though.
did you read the comments yesterday about the traffic-ticket guy ? top comment was someone who was ticketed after he sold the car and SFO absolutely would not accept his indisputable proof of innocence. If SFO can't even apply a rule fairly with a $200 penalty, what do you think would happen if they were entrusted with meting out $7500/day penalties?
I also have huge issues with the government deciding what you can do with your property after you've bought and paid for it. If they can change the terms of your contract, worth 6 and 7 figures, that not only erodes faith in the real estate market but it effectively means you never own it in the first place (inb4 the tax-protester argument of "you never owned it anyway because tax". yes I know that).
It's only your property in so far as the government/society surrounding you says it is, unless you plan on defending it yourself, but that didn't work out so well for a certain group in Waco, TX.
I'd be for 99-year or lifetime leases. Just so that you can own your property for as long as you're alive, but not long enough to establish mini-dynasties where the only people who can own property are extremely wealthy (family becomes wealthy because they inherited a house and have no mortgage, supply of houses goes down, prices go up, gradually the only people who own them are those who inherited them).
I'd suggest applying a tax proportional to the market increase in value on secondary homes. In other words, if you really want that second home, go for it, but you won't be making any money off it. Think a million dollars tax for some years on a pricey home. I'd also be sympathetic to people who would like to take it further and look at the negative externalities, so those could be included into the tax.
All this happens when you go to fill out your taxes and declare your properties and primary residence. I don't want to tell people they can't do it, but they ought to pay the price for disallowing others to enjoy our most beautiful locations.
How about keeping the capital gains tax I suggested on secondary homes, thus keeping out one class of people, those who are actually making handsome profits on this behavior.
Renting out to people during the 6 months of the year is already an incentive, you get a check each month. You might also get to talk to a few people, learn a few things and make some new friends. Not sure if there is renter insurance, but that might be nice in case you get a tenant that damages the place. A service like that might give property owners some peace of mind.
Harsh as it sounds, and without wishing to be personal (but of course, everything is personal to someone) that's good news. It should discourage you from doing more landlording. Maybe even encourage you to stop making this loss.
I also want to discourage anyone else from doing more landlording, and a tax break for you and others like you would work against that.
How do poor people get a roof over their heads if there aren't any landlords? It's ridiculous to expect everyone to have $10,000s in cash to get a mortgage before they're allowed to have a place to live.
I said more landlording. Some landlording is necessary. There comes a point where it's creating a new rentier class and a new permanent underclass. I'm against rich people taking advantage of a very unfree market to get a permanent low-risk income from poor people, while ensuring that prices are so high those poor people will be kept like that forever.
I've rented the same flat myself for ten years and barring any huge changes, it's in my financial interests to do so forever, rather than buy a house. That should be the common state, but it's more expensive in many places at the moment to rent than to buy. Which suggests, to my mind, that something should push that balance back the other way.
I just think it shouldn't be very profitable. There are some things a well run state or region can be very good at (and in a number of places around the world, is very good at); maintaining a rental housing stock or other such housing programme is one of them.
not only that, but buying isn't for everyone. Not everyone plans to stay in one spot for a long time. If you cut out all renting, there aren't many more options than forcing everyone to buy a home every time they move somewhere.
point taken. I bought my house in the wake of the 2008 crises (bought in 2011 when prices were rock-bottom). One point of view is that I did a good thing by buying when the market was at a free-fall (even though I did it strictly for investment purposes, I'm a single guy with no need for a 4bd house). I helped create a bottom, I helped create a demand where there was none.
People have made your argument but with short-selling in the stock market: "short selling should be banned, there shouldn't be incentivized pessimism in the market", but those people overlook the fact that short-sellers are obligated to buy back, and they can create a bottom in the market when there otherwise wouldn't be one. (if XYZ corp just went up in flames, who the hell would want to buy them (thus allowing more people to unload their shares)? Why, short-sellers of course - because they have to )
I don't agree that my argument is akin to wanting to ban short-selling. I don't see the link. You've brought up an argument about creating bottoms in the market, but my argument has nothing to do with those.
the similarity is that you want to ban something ("landlording") that doesn't have a positive, feel-good reputation (poor people getting cheaper houses/rents), but which has positive effects such as creating a bottom and increasing market efficiency.
People have been conditioned to do so. There's no intrinsic reason why property rights should be protected to a greater degree than workers' rights, but libertarianism promotes awareness of one and not the other. It's kind of a circular reasoning, but useful as an observation.
That's an overly broad and inaccurate depiction of libertarianism on the issue. A considerable segment of libertarianism advocates such measures as land value taxation, which places it directly at odds with the land owning class.
Often investors in Australia leave houses empty as there are different laws around capital gains taxes for investment properties (rentals) vs primary residence (which you don't have to actually live in all the time). It's often cheaper to not rent a property out and to get the lower CGT rate than to receive rent but have a 30% CGT when it's sold.
Because they are so rich that renting is a hassle. They don't need the extra money. The exact same thing happens in Vancouver, BC and their is a new law that fines people that leave their house empty.
Have you ever been a landlord? It's a huge hassle (it's impossible to do property management remotely, let alone in a foreign country), and if you have the wrong tenants (an easy mistake to make if you aren't experienced enough), things can end up going pretty badly!
Of course, there are property management companies that will market the property, screen tenants, handle rent collection, and perform maintenance for you.
PMs often take 8% (+/- 2%) of the gross rent receipts for their services. In many places, that is about the same amount as the profitability of renting the place out, meaning that if I am financially able to hold the place empty, taking on the risk, time, and aggravation of finding a PM and having them rent it out doesn't leave me meaningfully better off. So, I'd rather leave it empty.
Yes, it's a huge injustice. Foreign nationals should not be allowed to own property in the US, period. They're turning our housing markets into private casinos, to the detriment of American citizens.
No, we should just keep building more housing to sell to them so there's enough to go around.
Not my metaphor but I like it: imagine if there were laws restricting GM from making more than a million cars a year and we sat around complaining the Chinese were buying all the cars and there were none left for Americans. Would you get rid of the stupid law or ban the Chinese from buying our cars?
Whichever is the path of least resistance -- in the case of housing (unlike cars), it's actually the latter, given that you have more people with domestic political power opposed to the former.
The analogy also breaks down in that housing is a bit of an exceptional issue here, unlike cars. You literally need shelter to survive, but you can always take public transit or use Uber. Remember, the article we're commenting about shows service workers without homes because they can't afford to pay rent.
Also, it's worth noting that, unlike some other users, I've never said anything about specific nationalities.
