The richest neighborhoods in many cities are also the most vacant
August 22, 2017 12:11 PM Subscribe
"But the pushers of market-friendly solutions, and even most affordable housing activists, miss a central point in the housing debate: we already have enough housing in this country. The problem is not supply. It’s just that the supply is owned by the wrong people. From downtowns to suburbs, there’s a glut of vacant housing and land owned by the rich. The one neat trick to solving the housing crisis: give the things owned by the rich to the poor." - Evict The Rich, Peter Moskowitz, Outline.
It doesn't even need to be that drastic. How about just taxing housing at a high rate, and having high residential exemptions? If you live in the house, effectively low taxes, because you're using it for what it's supposed to be for. If you live elsewhere, you pay the community (via taxes) for the privilege of owning a house and not using it properly.
Make it clear that houses are to be lived in, not to be invested in.
posted by explosion at 12:26 PM on August 22, 2017 [96 favorites]
Make it clear that houses are to be lived in, not to be invested in.
posted by explosion at 12:26 PM on August 22, 2017 [96 favorites]
How about just taxing
Guess what the wealthy are super good at doing?
Guess.
posted by GuyZero at 12:28 PM on August 22, 2017 [64 favorites]
Guess what the wealthy are super good at doing?
Guess.
posted by GuyZero at 12:28 PM on August 22, 2017 [64 favorites]
Vancouver, [previously], has about 12 entire empty homes for each homeless person here. It is infuriating and disgusting.
posted by congen at 12:29 PM on August 22, 2017 [41 favorites]
posted by congen at 12:29 PM on August 22, 2017 [41 favorites]
you're using it for what it's supposed to be for
Air BnB, right?
posted by thelonius at 12:34 PM on August 22, 2017 [7 favorites]
Air BnB, right?
posted by thelonius at 12:34 PM on August 22, 2017 [7 favorites]
Vancouver has also instituted an empty homes tax, which may induce people to rent their homes out.
posted by Mr.Know-it-some at 12:35 PM on August 22, 2017 [13 favorites]
posted by Mr.Know-it-some at 12:35 PM on August 22, 2017 [13 favorites]
So glad this issue is being discussed! I hope this trend continues.
posted by Melismata at 12:35 PM on August 22, 2017
posted by Melismata at 12:35 PM on August 22, 2017
> Guess what the wealthy are super good at doing?
Guess.
using money power to gain control of nominally democratic governments, at every scale from the municipal level to the federal level?
posted by You Can't Tip a Buick at 12:35 PM on August 22, 2017 [61 favorites]
Guess.
using money power to gain control of nominally democratic governments, at every scale from the municipal level to the federal level?
posted by You Can't Tip a Buick at 12:35 PM on August 22, 2017 [61 favorites]
using money power to gain control of nominally democratic governments, at every scale from the municipal level to the federal level?
Yes, but not what I was going for here. But yes.
posted by GuyZero at 12:38 PM on August 22, 2017 [8 favorites]
Yes, but not what I was going for here. But yes.
posted by GuyZero at 12:38 PM on August 22, 2017 [8 favorites]
> > Guess what the wealthy are super good at doing?
Guess.
Quietly encouraging homeowners in markets with deeply inequitable housing distributions to go along with their schemes. Convincing them is easy, though, since the more housing the rich take off the market, the more valuable the housing owned by the middle class becomes.
and since middle class homeowners vote more often than renters do, this allows the middle and upper classes to team up to systematically strip money from the lower classes at a shockingly high rate.
also the rich are good at using White fear of POC and middle-class fear of homeless people to keep the classes under them fighting with each other.
and yeah also they dodge taxes, since they can have their pet governments write tax law such that it's easily dodged by people with their resources.
Rich people are great at lots of stuff.
posted by You Can't Tip a Buick at 12:39 PM on August 22, 2017 [30 favorites]
Guess.
Quietly encouraging homeowners in markets with deeply inequitable housing distributions to go along with their schemes. Convincing them is easy, though, since the more housing the rich take off the market, the more valuable the housing owned by the middle class becomes.
and since middle class homeowners vote more often than renters do, this allows the middle and upper classes to team up to systematically strip money from the lower classes at a shockingly high rate.
also the rich are good at using White fear of POC and middle-class fear of homeless people to keep the classes under them fighting with each other.
and yeah also they dodge taxes, since they can have their pet governments write tax law such that it's easily dodged by people with their resources.
Rich people are great at lots of stuff.
posted by You Can't Tip a Buick at 12:39 PM on August 22, 2017 [30 favorites]
If eminent domain could be used for a sports stadium, a good court case could be fought if it was used for public housing.
Key word: fought. Eminent domain in service of Our Capitalist Masters vs eminent domain in service of helping Those People.
posted by uncleozzy at 12:42 PM on August 22, 2017 [5 favorites]
Key word: fought. Eminent domain in service of Our Capitalist Masters vs eminent domain in service of helping Those People.
posted by uncleozzy at 12:42 PM on August 22, 2017 [5 favorites]
> Vancouver has also instituted an empty homes tax, which may induce people to rent their homes out.
Pied-a-terre taxes are good. Straightforwardly seizing and redistributing vacant property is better.
posted by You Can't Tip a Buick at 12:43 PM on August 22, 2017 [22 favorites]
Pied-a-terre taxes are good. Straightforwardly seizing and redistributing vacant property is better.
posted by You Can't Tip a Buick at 12:43 PM on August 22, 2017 [22 favorites]
Vancouver has also instituted an empty homes tax, which may induce people to rent their homes out.
This strikes me as being pretty sensible. It continues to be strange that people think that supply and demand doesn't apply to real estate. If people are "forced" to rent their houses, the supply of housing available at a given price is increased and the available and all else equal the cost of housing should go down. Now, maybe this just slows the increase in the cost of housing at the high end - there are plenty of reasons housing costs have gone up and rich people owning multiple homes is not the only one - but at the margin that makes some housing more affordable for someone (maybe upper-middle class families) and that moves things down the line; or if vacancy rates at high-end rentals are sufficiently high, perhaps developers will shift out of building only luxury housing. And if people end up paying the tax instead, well, whoops, the city's found a source of tax revenue and can redistribute it to pay for affordable housing or services or whatever.
It's not a panacea obviously - cities should think of it as part of a holistic strategy to make themselves more affordable (looking at zoning restrictions, the availability of public transportation, eminent domain, etc) - but it makes sense to me.
posted by dismas at 12:45 PM on August 22, 2017 [4 favorites]
This strikes me as being pretty sensible. It continues to be strange that people think that supply and demand doesn't apply to real estate. If people are "forced" to rent their houses, the supply of housing available at a given price is increased and the available and all else equal the cost of housing should go down. Now, maybe this just slows the increase in the cost of housing at the high end - there are plenty of reasons housing costs have gone up and rich people owning multiple homes is not the only one - but at the margin that makes some housing more affordable for someone (maybe upper-middle class families) and that moves things down the line; or if vacancy rates at high-end rentals are sufficiently high, perhaps developers will shift out of building only luxury housing. And if people end up paying the tax instead, well, whoops, the city's found a source of tax revenue and can redistribute it to pay for affordable housing or services or whatever.
It's not a panacea obviously - cities should think of it as part of a holistic strategy to make themselves more affordable (looking at zoning restrictions, the availability of public transportation, eminent domain, etc) - but it makes sense to me.
posted by dismas at 12:45 PM on August 22, 2017 [4 favorites]
we gladly feast upon those who would subdue us
posted by poffin boffin at 12:45 PM on August 22, 2017 [11 favorites]
posted by poffin boffin at 12:45 PM on August 22, 2017 [11 favorites]
Okay, but can we still eat them, too?
Yes, but most doctors recommend you limit your intake to one or two servings per week to limit exposure to toxic heavy metal bioaccumulation and cocaine addiction.
posted by loquacious at 12:48 PM on August 22, 2017 [14 favorites]
Yes, but most doctors recommend you limit your intake to one or two servings per week to limit exposure to toxic heavy metal bioaccumulation and cocaine addiction.
posted by loquacious at 12:48 PM on August 22, 2017 [14 favorites]
> It's not a panacea obviously - cities should think of it as part of a holistic strategy to make themselves more affordable (looking at zoning restrictions, the availability of public transportation, eminent domain, etc) - but it makes sense to me.
It makes sense to you because your class interests aren't wrapped up in maintaining tight limits on housing supply.
posted by You Can't Tip a Buick at 12:50 PM on August 22, 2017 [9 favorites]
It makes sense to you because your class interests aren't wrapped up in maintaining tight limits on housing supply.
posted by You Can't Tip a Buick at 12:50 PM on August 22, 2017 [9 favorites]
Vancouver, [previously], has about 12 entire empty homes for each homeless person here.
I was there for a visit this past June and the sheer number of 'For Sale' signs in certain neighborhoods was staggering.
I drove through several residential blocks where every single house on either side of the street had a sign out front.
posted by Atom Eyes at 12:51 PM on August 22, 2017 [1 favorite]
I was there for a visit this past June and the sheer number of 'For Sale' signs in certain neighborhoods was staggering.
I drove through several residential blocks where every single house on either side of the street had a sign out front.
posted by Atom Eyes at 12:51 PM on August 22, 2017 [1 favorite]
Peter Moskowitz got a blurb from Sarah Schulman for his book "How to Kill a City":
“A fascinating analysis of late-stage gentrification in which corporate control of cities renders them uninhabitable to most people. Showing how gentrifiers exploit ‘someone else’s loss’ as a consequence of long histories of racist policy, Peter Moskowitz calls for a global movement against this ‘new form of segregation,’ defining housing as a human right rooted in community instead of real-estate profit.” —Sarah Schulman, author of Gentrification of the Mind and The Cosmopolitans
posted by larrybob at 12:52 PM on August 22, 2017 [4 favorites]
“A fascinating analysis of late-stage gentrification in which corporate control of cities renders them uninhabitable to most people. Showing how gentrifiers exploit ‘someone else’s loss’ as a consequence of long histories of racist policy, Peter Moskowitz calls for a global movement against this ‘new form of segregation,’ defining housing as a human right rooted in community instead of real-estate profit.” —Sarah Schulman, author of Gentrification of the Mind and The Cosmopolitans
posted by larrybob at 12:52 PM on August 22, 2017 [4 favorites]
Another innovative housing strategy: Community Land Trusts. Basically, land is owned by the community (instead of private entities) and leased out at a low cost. There are strict requirements on how renters can use the space- varies by CLT, but they're usually required to live on the land, and while they can own the homes built on top of it, there are limits placed on what they can charge when selling. Interesting model, and maybe more politically palatable then "seize the property of the rich", much as I personally like that solution. There are already quite a few of them and I'm curious to see where they'll lead.
posted by perplexion at 12:52 PM on August 22, 2017 [13 favorites]
posted by perplexion at 12:52 PM on August 22, 2017 [13 favorites]
Can we start referring to areas impacted by this as "wealth-blighted"? Like I want politicians to be forced to answer questions about the 1%er land grab in terms of addressing blight. One, because it's true, two, because it's useful for common people to think of the rich as a blight on those around them.
posted by You Can't Tip a Buick at 1:03 PM on August 22, 2017 [70 favorites]
posted by You Can't Tip a Buick at 1:03 PM on August 22, 2017 [70 favorites]
There’s some good discussion of these options--steep luxury taxes, actual seizure of property, etc.--in Kim Stanley Robinson’s New York 2140, which I read on YCTAB’s recommendation and just finished. (Lots of good stuff in that book! Moderately terrifying for NYC dwellers.)
I also can’t help pointing out that the ad accompanying the article for me was for some fecking Rare Cask Whisky Event, which I assumed was going to be satire when I clicked through. Nope--just an ad for a £400 bottle of scotch. Which (probably unfairly) removes some urgency of the argument for me, making it more of a dabbling thinkpiece than the COME ON SQUATTERS LET’S GO START CHANGING THEIR LOCKS call I was expecting.
posted by miles per flower at 1:04 PM on August 22, 2017 [9 favorites]
I also can’t help pointing out that the ad accompanying the article for me was for some fecking Rare Cask Whisky Event, which I assumed was going to be satire when I clicked through. Nope--just an ad for a £400 bottle of scotch. Which (probably unfairly) removes some urgency of the argument for me, making it more of a dabbling thinkpiece than the COME ON SQUATTERS LET’S GO START CHANGING THEIR LOCKS call I was expecting.
posted by miles per flower at 1:04 PM on August 22, 2017 [9 favorites]
And we really do need to rethink housing as a speculative investment when we're building so much of it in growing cities like Seattle and Portland and our homeless and housing problem is just getting worse, while much of it remains unused and empty.
I am especially against unoccupied foreign speculation and investment. That kind of thing needs to stop and/or be taxed into oblivion right away.
Speculative and/or unoccupied real estate investment holdings of all kinds should be taxed heavily specifically for funding affordable and sustainable housing.
Short term rentals like AirBnB need to be taxed at hotel rates, too. There's way too many mostly vacant properties in my town with mainly or completely absentee owners doing the short term rental thing instead of the traditional month to month rental.
So they make essentially the same income with none of the legal responsibility nor community benefit, and I'm guessing a lot less tax burden.
posted by loquacious at 1:05 PM on August 22, 2017 [19 favorites]
I am especially against unoccupied foreign speculation and investment. That kind of thing needs to stop and/or be taxed into oblivion right away.
Speculative and/or unoccupied real estate investment holdings of all kinds should be taxed heavily specifically for funding affordable and sustainable housing.
Short term rentals like AirBnB need to be taxed at hotel rates, too. There's way too many mostly vacant properties in my town with mainly or completely absentee owners doing the short term rental thing instead of the traditional month to month rental.
So they make essentially the same income with none of the legal responsibility nor community benefit, and I'm guessing a lot less tax burden.
posted by loquacious at 1:05 PM on August 22, 2017 [19 favorites]
if vacancy rates at high-end rentals are sufficiently high, perhaps developers will shift out of building only luxury housing.
Not really, though? Local conditions will vary, of course, but here we have an admitted oversupply of "luxury" rentals that's driving one- and two-month concessions on many leases. But this has not inspired developers to start building middle-income rentals, much less low-.
Why? You have to understand that real estate development competes with other possible forms of investment for funding. This puts a high floor on estimated rates of return, which hinge directly on the rent roll. That is, to use an admittedly simplified model, the real estate developer is competing for the dollars of someone who may think they can get 6% in the stock market. In that world, 5% returns, especially in an illiquid investment like real estate, aren't going to cut it. In that world, the developer doesn't build a middle-income project instead. The money just goes elsewhere.
So even if developers were willing to settle for lower returns generally (and they're not), the money market is not.
posted by praemunire at 1:06 PM on August 22, 2017 [16 favorites]
Not really, though? Local conditions will vary, of course, but here we have an admitted oversupply of "luxury" rentals that's driving one- and two-month concessions on many leases. But this has not inspired developers to start building middle-income rentals, much less low-.
Why? You have to understand that real estate development competes with other possible forms of investment for funding. This puts a high floor on estimated rates of return, which hinge directly on the rent roll. That is, to use an admittedly simplified model, the real estate developer is competing for the dollars of someone who may think they can get 6% in the stock market. In that world, 5% returns, especially in an illiquid investment like real estate, aren't going to cut it. In that world, the developer doesn't build a middle-income project instead. The money just goes elsewhere.
So even if developers were willing to settle for lower returns generally (and they're not), the money market is not.
posted by praemunire at 1:06 PM on August 22, 2017 [16 favorites]
Can we start referring to areas impacted by this as "wealth-blighted"?
I don't see a lot on a quick google check but I have definitely been hearing the phrase "luxury blight" to describe the phenomenon of these under-occupied high-end buildings.
posted by miles per flower at 1:09 PM on August 22, 2017 [15 favorites]
I don't see a lot on a quick google check but I have definitely been hearing the phrase "luxury blight" to describe the phenomenon of these under-occupied high-end buildings.
posted by miles per flower at 1:09 PM on August 22, 2017 [15 favorites]
I am especially against unoccupied foreign speculation and investment. That kind of thing needs to stop and/or be taxed into oblivion right away.
So glad to hear someone else say this. But if I try to bring it up in the bleeding liberal area where I live, people say "But Diversity!!"
posted by Melismata at 1:09 PM on August 22, 2017 [7 favorites]
So glad to hear someone else say this. But if I try to bring it up in the bleeding liberal area where I live, people say "But Diversity!!"
posted by Melismata at 1:09 PM on August 22, 2017 [7 favorites]
Interesting - I wonder if this is happening in commercial real estate as well. Just this weekend I was in a part of Brooklyn where I could never afford to live and was struck by the number of vacant storefronts on the main street.
posted by Ragged Richard at 1:12 PM on August 22, 2017 [5 favorites]
posted by Ragged Richard at 1:12 PM on August 22, 2017 [5 favorites]
It is absolutely happening commercial real estate. No one has any incentive to ever lower rents so they sit around with empty lots until a bank can afford to move in - it's been spreading for years but reaching critical point cause people are losing access to delis and laundermats and pharmacies as the richest, most valuable areas succumb to rentier caused urban blight
posted by The Whelk at 1:14 PM on August 22, 2017 [31 favorites]
posted by The Whelk at 1:14 PM on August 22, 2017 [31 favorites]
>> if vacancy rates at high-end rentals are sufficiently high, perhaps developers will shift out of building only luxury housing.
> Why? You have to understand that real estate development competes with other possible forms of investment for funding.
What praemunire said. Developers are competing globally for global funds; those funds will go exclusively to where the highestrate of exploitation return on investment is available.
Pro-market urbanists (most of whom think of themselves as "liberal") and their developer friends deploy this line of reasoning to oppose (for example) set-asides for human-income housing associated with new luxury housing developments. As they argue, these set-asides serve to reduce profitability just enough for developer money to flee to other cities, cities which prioritize maximizing market rates on housing over being places where people can live.
The thing that made me more or less stop talking to liberal urbanists is that (against all evidence) they are steadfast in their faith that the market is capable of providing housing, and that the tendencies established by market rules bend over time toward full housing rather than toward some other arrangement.
As I see it, the market's role in housing must be minimized — the presence of some market housing may be acceptable, but only if competition from non-market forces (extensive public housing, state designation of unoccupied housing as blighted and subsequent conversion into public housing, widespread legalized squatting) work to drive down market prices.
posted by You Can't Tip a Buick at 1:15 PM on August 22, 2017 [8 favorites]
> Why? You have to understand that real estate development competes with other possible forms of investment for funding.
What praemunire said. Developers are competing globally for global funds; those funds will go exclusively to where the highest
Pro-market urbanists (most of whom think of themselves as "liberal") and their developer friends deploy this line of reasoning to oppose (for example) set-asides for human-income housing associated with new luxury housing developments. As they argue, these set-asides serve to reduce profitability just enough for developer money to flee to other cities, cities which prioritize maximizing market rates on housing over being places where people can live.
The thing that made me more or less stop talking to liberal urbanists is that (against all evidence) they are steadfast in their faith that the market is capable of providing housing, and that the tendencies established by market rules bend over time toward full housing rather than toward some other arrangement.
As I see it, the market's role in housing must be minimized — the presence of some market housing may be acceptable, but only if competition from non-market forces (extensive public housing, state designation of unoccupied housing as blighted and subsequent conversion into public housing, widespread legalized squatting) work to drive down market prices.
posted by You Can't Tip a Buick at 1:15 PM on August 22, 2017 [8 favorites]
Another innovative housing strategy: Community Land Trusts.
and maybe pair CLTs with district heating! (and energy-monitoring 'smart buildings' ;)
posted by kliuless at 1:16 PM on August 22, 2017 [2 favorites]
and maybe pair CLTs with district heating! (and energy-monitoring 'smart buildings' ;)
posted by kliuless at 1:16 PM on August 22, 2017 [2 favorites]
Speaking of luxury blight in commercial real estate: Bleecker Street’s Swerve From Luxe Shops to Vacant Stores
Bleecker Street, Mr. Moss said, is a prime example of high-rent blight, a symptom of late-stage gentrification. “[Luxury] stores open as billboards for the brand,” he said. “Then they leave because the rents become untenable. Landlords hold out. And you’re left with storefronts that will sit vacant for a year, two years, three years.”
...
While quirky independent stores couldn’t afford the new Bleecker, it became apparent over time that neither could the corporate brands that had remade the street. An open secret among retailers had it that Bleecker Street was a fancy Potemkin village, empty of customers. Celebrities shopped there because they wouldn’t be bothered. The “Sex and the City” fans lining up at Magnolia and snapping photos of Carrie’s stoop weren’t willing or able to fork over $2,000 for designer heels.
posted by perplexion at 1:19 PM on August 22, 2017 [11 favorites]
Bleecker Street, Mr. Moss said, is a prime example of high-rent blight, a symptom of late-stage gentrification. “[Luxury] stores open as billboards for the brand,” he said. “Then they leave because the rents become untenable. Landlords hold out. And you’re left with storefronts that will sit vacant for a year, two years, three years.”
...
While quirky independent stores couldn’t afford the new Bleecker, it became apparent over time that neither could the corporate brands that had remade the street. An open secret among retailers had it that Bleecker Street was a fancy Potemkin village, empty of customers. Celebrities shopped there because they wouldn’t be bothered. The “Sex and the City” fans lining up at Magnolia and snapping photos of Carrie’s stoop weren’t willing or able to fork over $2,000 for designer heels.
posted by perplexion at 1:19 PM on August 22, 2017 [11 favorites]
Great article, perplexion, I remember reading that when it came out. I was just in Manhattan five days ago, and I can attest that there are a lot of storefronts still vacant (though I wonder how much of it is high rent and how much of it is just the fact that people don't shop brick-and-mortar anymore).
posted by Melismata at 1:22 PM on August 22, 2017
posted by Melismata at 1:22 PM on August 22, 2017
Ragged Richard: I wonder if this is happening in commercial real estate as well. Just this weekend I was in a part of Brooklyn where I could never afford to live and was struck by the number of vacant storefronts on the main street.
I imagine there's something else happening in Brooklyn: over-inflated sense of value for store fronts, where the property owner might make enough from the occupied stores to pay for another dozen vacant properties. Otherwise, why not drop the rent until someone occupies the space and starts paying rent?
Because the residential side is an issue of people owning many homes, which does not translate to commercial properties. You own additional homes to have a comfortable place to live and you have an excessive amount of money, or you'd just pay for a suite for a month. Commercial real estate owners want to be paid for their properties, not have the option for a sudden pop-up establishment when the fancy strikes them.
The Whelk: Also from here
Yup:
posted by filthy light thief at 1:27 PM on August 22, 2017 [3 favorites]
I imagine there's something else happening in Brooklyn: over-inflated sense of value for store fronts, where the property owner might make enough from the occupied stores to pay for another dozen vacant properties. Otherwise, why not drop the rent until someone occupies the space and starts paying rent?
Because the residential side is an issue of people owning many homes, which does not translate to commercial properties. You own additional homes to have a comfortable place to live and you have an excessive amount of money, or you'd just pay for a suite for a month. Commercial real estate owners want to be paid for their properties, not have the option for a sudden pop-up establishment when the fancy strikes them.
The Whelk: Also from here
Yup:
Abandoned storefronts have long been a hallmark of economic depression and high crime rates, but the West Village doesn’t have either of those. Instead, what it has are extremely high commercial rents, which cause an effect that is not dissimilar. “High-rent blight” happens when rising property values, usually understood as a sign of prosperity, start to inflict damage on the city economics that Jane Jacobs wrote about.Over-inflation of rent due to increased home prices, likely to not understanding that high home prices doesn't mean that the local establishments will be flush with cash from local residents ... especially when the residential properties aren't actually full of local residents, but city-hoppers and casual visitors who have millions to toss into buying a few more homes.
posted by filthy light thief at 1:27 PM on August 22, 2017 [3 favorites]
> I imagine there's something else happening in Brooklyn: over-inflated sense of value for store fronts, where the property owner might make enough from the occupied stores to pay for another dozen vacant properties.
The thing is, this is absolutely a rational play for the property owner. They don't leave their property vacant because they're dumb or lazy or whatever; they leave their property vacant because having a bunch of vacant properties and a few exorbitantly expensive ones is more profitable long-term than having a bunch of occupied properties rented out at less sharply exploitative rates.
This is not a flaw in the operation of the market. This is the operation of the market. If we want a different outcome, we will have to move toward non-market allocation of real estate.
posted by You Can't Tip a Buick at 1:30 PM on August 22, 2017 [31 favorites]
The thing is, this is absolutely a rational play for the property owner. They don't leave their property vacant because they're dumb or lazy or whatever; they leave their property vacant because having a bunch of vacant properties and a few exorbitantly expensive ones is more profitable long-term than having a bunch of occupied properties rented out at less sharply exploitative rates.
This is not a flaw in the operation of the market. This is the operation of the market. If we want a different outcome, we will have to move toward non-market allocation of real estate.
posted by You Can't Tip a Buick at 1:30 PM on August 22, 2017 [31 favorites]
There's also a fear of missing out on the part of the landlords. Unlike residential leases which are 1 year, or even month-to-month, commercial leases tend to be 5 years, 10 years, or even longer. Waiting (an anticipated) 6 months to find someone who'll pay the higher rent is better than locking in a tenant at a lower rate.
It may end up being vacant for 18 months or more, but they didn't realize they'd be waiting so long when they first decided to hold out, and every month is another "surely this time..."
posted by explosion at 1:40 PM on August 22, 2017 [9 favorites]
It may end up being vacant for 18 months or more, but they didn't realize they'd be waiting so long when they first decided to hold out, and every month is another "surely this time..."
posted by explosion at 1:40 PM on August 22, 2017 [9 favorites]
If we want a different outcome, we will have to move toward non-market allocation of real estate.
Or remove the free externalities - a carbon tax for empty neighbourhoods if you will.
posted by GuyZero at 1:45 PM on August 22, 2017 [8 favorites]
Or remove the free externalities - a carbon tax for empty neighbourhoods if you will.
posted by GuyZero at 1:45 PM on August 22, 2017 [8 favorites]
The thing that made me more or less stop talking to liberal urbanists is that (against all evidence) they are steadfast in their faith that the market is capable of providing housing, and that the tendencies established by market rules bend over time toward full housing rather than toward some other arrangement.
[...]
This is not a flaw in the operation of the market. This is the operation of the market. If we want a different outcome, we will have to move toward non-market allocation of real estate.
Or change the regulation of the market. While it's ridiculous to think that an unregulated free market will solve all of our ills, it's no less ridiculous to think that the only two states of play are an unregulated free market and public ownership. If under the current market rules, it's rational to leave property vacant to maintain high rent or keep it as an investment, that could easily be a flaw with the current market rules rather than the market itself. If the tax for empty floorspace exceeded the value of the floorspace, then owners would come up with some way of occupying the floorspace.
Also, the article is fundamentally stupid. By the logic of the article: there's a famine in Yemen, and there's an uneaten tray of sandwiches in the break room. If I send the tray of sandwiches to Yemen, there won't be any more famine. Yes, there are places in major cities where property has low occupancy, and there are also people in these cities who have unaffordable housing. Do these two things balance? Is the unoccupied housing a visible drop in a very large bucket, the equivalent of sending a tray of sandwiches to Yemen - not that that won't help on the margins - is there a rough balance, or is the unoccupied housing so much it would crash the rental market? I don't know, you don't know, and I assume if the writer of the article knew, he would have provided any evidence one way or the other.
posted by Homeboy Trouble at 1:46 PM on August 22, 2017 [9 favorites]
[...]
This is not a flaw in the operation of the market. This is the operation of the market. If we want a different outcome, we will have to move toward non-market allocation of real estate.
Or change the regulation of the market. While it's ridiculous to think that an unregulated free market will solve all of our ills, it's no less ridiculous to think that the only two states of play are an unregulated free market and public ownership. If under the current market rules, it's rational to leave property vacant to maintain high rent or keep it as an investment, that could easily be a flaw with the current market rules rather than the market itself. If the tax for empty floorspace exceeded the value of the floorspace, then owners would come up with some way of occupying the floorspace.
Also, the article is fundamentally stupid. By the logic of the article: there's a famine in Yemen, and there's an uneaten tray of sandwiches in the break room. If I send the tray of sandwiches to Yemen, there won't be any more famine. Yes, there are places in major cities where property has low occupancy, and there are also people in these cities who have unaffordable housing. Do these two things balance? Is the unoccupied housing a visible drop in a very large bucket, the equivalent of sending a tray of sandwiches to Yemen - not that that won't help on the margins - is there a rough balance, or is the unoccupied housing so much it would crash the rental market? I don't know, you don't know, and I assume if the writer of the article knew, he would have provided any evidence one way or the other.
posted by Homeboy Trouble at 1:46 PM on August 22, 2017 [9 favorites]
In here, the problem is housing turned into AirBnBs and hostels. While at the beginning of the market boom there were plenty of long-abandoned buildings that actually could have used renovations, and I guess nobody opposes gentrifying rats out, after a few years the buildings left are too expensive or too derelict (let's be honest, they're not interested in long-term plans because everyone knows this is a bubble and it will burst eventually, so they need buildings that are just a coat a paint and a trip to Ikea to flip in AirBnB in a few months) or both, so foreign investors turned to buy occupied property from landlords, and I've seen an worrying increase in properties listed as "currently occupied, can be sold empty".
The end result is that rents have increased in Porto (as well as Lisbon, that is also being aggressively gentrified) to near-Barcelona levels, in a city that has near fuck-all to offer other than being cheap, and right now, downtown has lost any sort of character - what used to be stores with decades of history are now tourist traps of all sorts - selling fucking cork sardines or traditional tile fridge magnets or comically expensive bars selling tapas. Or empty, because locals are not rich and there's so much tourists can buy.
Personally, I'd legislate AirBnBs to present a long-term renting option for, say, 5% the cost of a full-month daily rent for the unit on half+1 of their listed properties. This way they can't ramp up their AirBnBs prices to throw people off long term renting without harming their own business far more.
posted by lmfsilva at 2:08 PM on August 22, 2017 [9 favorites]
The end result is that rents have increased in Porto (as well as Lisbon, that is also being aggressively gentrified) to near-Barcelona levels, in a city that has near fuck-all to offer other than being cheap, and right now, downtown has lost any sort of character - what used to be stores with decades of history are now tourist traps of all sorts - selling fucking cork sardines or traditional tile fridge magnets or comically expensive bars selling tapas. Or empty, because locals are not rich and there's so much tourists can buy.
Personally, I'd legislate AirBnBs to present a long-term renting option for, say, 5% the cost of a full-month daily rent for the unit on half+1 of their listed properties. This way they can't ramp up their AirBnBs prices to throw people off long term renting without harming their own business far more.
posted by lmfsilva at 2:08 PM on August 22, 2017 [9 favorites]
> Yes, there are places in major cities where property has low occupancy, and there are also people in these cities who have unaffordable housing. Do these two things balance? Is the unoccupied housing a visible drop in a very large bucket...
I mean serious question, why shouldn't I consider the ratio of unoccupied housing in a given market to the number of unhoused people in that market as significant? There's no market means by which the unoccupied housing could be delivered to the unhoused people... but that's only because the market isn't interested in providing ample housing.
> Or change the regulation of the market. While it's ridiculous to think that an unregulated free market will solve all of our ills, it's no less ridiculous to think that the only two states of play are an unregulated free market and public ownership.
I really am not convinced that any set of market regulations can yield a livable city; I doubt that it's possible to arrange market incentives such that the market is incentivized to provide housing (though I'd love to hear counterexamples). The success stories I most often hear (Amsterdam in the late 20th century, Vienna more recently) involve the use of non-market methods — widespread public housing, widespread legally tolerated squatting — to circumvent the market's preferences.
Pied-a-terre taxes to suppress the practice of leaving property vacant are absolutely a good start — but more aggressive anti-market measures will almost certainly be necessary if we want to approach a solution to the housing crisis.
posted by You Can't Tip a Buick at 2:09 PM on August 22, 2017 [17 favorites]
I mean serious question, why shouldn't I consider the ratio of unoccupied housing in a given market to the number of unhoused people in that market as significant? There's no market means by which the unoccupied housing could be delivered to the unhoused people... but that's only because the market isn't interested in providing ample housing.
> Or change the regulation of the market. While it's ridiculous to think that an unregulated free market will solve all of our ills, it's no less ridiculous to think that the only two states of play are an unregulated free market and public ownership.
I really am not convinced that any set of market regulations can yield a livable city; I doubt that it's possible to arrange market incentives such that the market is incentivized to provide housing (though I'd love to hear counterexamples). The success stories I most often hear (Amsterdam in the late 20th century, Vienna more recently) involve the use of non-market methods — widespread public housing, widespread legally tolerated squatting — to circumvent the market's preferences.
Pied-a-terre taxes to suppress the practice of leaving property vacant are absolutely a good start — but more aggressive anti-market measures will almost certainly be necessary if we want to approach a solution to the housing crisis.
posted by You Can't Tip a Buick at 2:09 PM on August 22, 2017 [17 favorites]
The thing is, this is absolutely a rational play for the property owner. They don't leave their property vacant because they're dumb or lazy or whatever; they leave their property vacant because having a bunch of vacant properties and a few exorbitantly expensive ones is more profitable long-term than having a bunch of occupied properties rented out at less sharply exploitative rates.
This has always baffled me-- I genuinely do not understand how this math works. And since I'm currently trying to find a commercial space to lease in the DC area, right now I'm baffled and angry.
posted by nonasuch at 2:11 PM on August 22, 2017 [3 favorites]
This has always baffled me-- I genuinely do not understand how this math works. And since I'm currently trying to find a commercial space to lease in the DC area, right now I'm baffled and angry.
posted by nonasuch at 2:11 PM on August 22, 2017 [3 favorites]
So glad to hear someone else say this. But if I try to bring it up in the bleeding liberal area where I live, people say "But Diversity!!"
Yeah, no. Diversity is the ID in Seattle or fighting the incredibly rapid displacement and gentrification of Capitol Hill and the Central District - not brand new unoccupied luxury condos in SLU and Belltown owned by holding companies as a relatively safe place to store untaxable accumulated wealth for new Chinese or Russian oligarchs.
And I really don't care if it's new Chinese and/or Russian money - it's just what's actually happening. I'd still be upset if it was very old and very white British money or even new or old New York City money doing the same thing - which is grossly inflating both property values and rental prices and causing artificial scarcity in the middle of the biggest residential building boom Seattle's seen since the Klondike rush.
I experienced this - and I was directly displaced and made homeless by this process - in Belltown when the rent in my officially low income, non-profit run apartment building built nearly 100 years ago doubled in less than five years due to "keeping up with market rates" which included zero upgrades to the building of any kind.
The market rates in my neighborhood (that also included a number of other older low income housing units) were directly influenced by the building of huge new luxury condo high rises with relatively astronomical prices, much of it fueled by Amazon and other tech industry proximity and their ability to place their employees in blocks in some of these buildings.
I watched with my own eyes what happened when some of these lower income buildings and the people in them were displaced by new high rise luxury apartments/condos. A whole lot of those people ended up homeless on the same streets where they lived.
And because someone in a new building across the street can afford to pay more rent, my rent has to rise at comically astronomical rates because of... why exactly? I get what value from having a new building blocking out the sun and increased traffic to my neighborhood? Do I get to hang out and use their gym and sauna or something? Free snacks in the lobby?
Yes, your little mandated sliver of public space and public art with the uncomfortable stone sculptural benches that smells like dog whiz and cigarettes and the colorful but institutional Ikea-like composite paneling and then hovered over by a security guard is a lovely and pleasant contribution to the neighborhood and totally worth my rent doubling and the drastic increase of human misery and homelessness in Seattle.
Oh, sure, I do realize you provide valuable housing to Amazon employees hard at work disrupting marketplaces with extreme value and convenience all over the world. They certainly would never, say, burn out in 2 years before they're vested and leave behind all of the valuable community contributions they've spent all their free time investing to make the neighborhood a better place to live for everyone.
Sorry, I'm a wee bit cynical and personally emotionally invested. This shit is fucked up shit, and I've been directly, profoundly and even painfully touched by whatever fucked up process that's been going on with housing in Seattle and much of the urban west coast.
Something to account for is that a huge part of the tangled knot of urban homelessness and urban housing is proximity to health care services, mental or otherwise. Less urban housing for this vulnerable segment of the population only works with extremely effective and affordable interurban transit.
Holy crap. I just had a glimpse of some older, wealthy and retired version of myself where I'm a gadfly and huge pain in the ass to the planning boards and commissions of Seattle or some other hip new place and I spend all my free time making things impossible and ridiculous for developers by mangling the shit out of their public space and art plans, and therefore I become a silent force for decent public art and places to quietly smoke a fatty without getting hassled by dog piss or overly anxious security guards.
posted by loquacious at 2:11 PM on August 22, 2017 [66 favorites]
Yeah, no. Diversity is the ID in Seattle or fighting the incredibly rapid displacement and gentrification of Capitol Hill and the Central District - not brand new unoccupied luxury condos in SLU and Belltown owned by holding companies as a relatively safe place to store untaxable accumulated wealth for new Chinese or Russian oligarchs.
And I really don't care if it's new Chinese and/or Russian money - it's just what's actually happening. I'd still be upset if it was very old and very white British money or even new or old New York City money doing the same thing - which is grossly inflating both property values and rental prices and causing artificial scarcity in the middle of the biggest residential building boom Seattle's seen since the Klondike rush.
I experienced this - and I was directly displaced and made homeless by this process - in Belltown when the rent in my officially low income, non-profit run apartment building built nearly 100 years ago doubled in less than five years due to "keeping up with market rates" which included zero upgrades to the building of any kind.
The market rates in my neighborhood (that also included a number of other older low income housing units) were directly influenced by the building of huge new luxury condo high rises with relatively astronomical prices, much of it fueled by Amazon and other tech industry proximity and their ability to place their employees in blocks in some of these buildings.
I watched with my own eyes what happened when some of these lower income buildings and the people in them were displaced by new high rise luxury apartments/condos. A whole lot of those people ended up homeless on the same streets where they lived.
And because someone in a new building across the street can afford to pay more rent, my rent has to rise at comically astronomical rates because of... why exactly? I get what value from having a new building blocking out the sun and increased traffic to my neighborhood? Do I get to hang out and use their gym and sauna or something? Free snacks in the lobby?
Yes, your little mandated sliver of public space and public art with the uncomfortable stone sculptural benches that smells like dog whiz and cigarettes and the colorful but institutional Ikea-like composite paneling and then hovered over by a security guard is a lovely and pleasant contribution to the neighborhood and totally worth my rent doubling and the drastic increase of human misery and homelessness in Seattle.
Oh, sure, I do realize you provide valuable housing to Amazon employees hard at work disrupting marketplaces with extreme value and convenience all over the world. They certainly would never, say, burn out in 2 years before they're vested and leave behind all of the valuable community contributions they've spent all their free time investing to make the neighborhood a better place to live for everyone.
Sorry, I'm a wee bit cynical and personally emotionally invested. This shit is fucked up shit, and I've been directly, profoundly and even painfully touched by whatever fucked up process that's been going on with housing in Seattle and much of the urban west coast.
Something to account for is that a huge part of the tangled knot of urban homelessness and urban housing is proximity to health care services, mental or otherwise. Less urban housing for this vulnerable segment of the population only works with extremely effective and affordable interurban transit.
Holy crap. I just had a glimpse of some older, wealthy and retired version of myself where I'm a gadfly and huge pain in the ass to the planning boards and commissions of Seattle or some other hip new place and I spend all my free time making things impossible and ridiculous for developers by mangling the shit out of their public space and art plans, and therefore I become a silent force for decent public art and places to quietly smoke a fatty without getting hassled by dog piss or overly anxious security guards.
posted by loquacious at 2:11 PM on August 22, 2017 [66 favorites]
> This has always baffled me-- I genuinely do not understand how this math works.
The more landlords keep their properties off the market in the hopes of making a huge profit a few years from now, the tighter supply gets and the more likely it becomes that landlords who keep their properties off the market will hit the jackpot. This further incentivizes landlords to keep their property off the market, which in turn further incentivizes landlords to keep their property off the market, which in turn... and so on.
It's a runaway feedback loop that the market has no intrinsic ability (or even real desire) to stop.
posted by You Can't Tip a Buick at 2:14 PM on August 22, 2017 [8 favorites]
The more landlords keep their properties off the market in the hopes of making a huge profit a few years from now, the tighter supply gets and the more likely it becomes that landlords who keep their properties off the market will hit the jackpot. This further incentivizes landlords to keep their property off the market, which in turn further incentivizes landlords to keep their property off the market, which in turn... and so on.
It's a runaway feedback loop that the market has no intrinsic ability (or even real desire) to stop.
posted by You Can't Tip a Buick at 2:14 PM on August 22, 2017 [8 favorites]
Not really, though? Local conditions will vary, of course, but here we have an admitted oversupply of "luxury" rentals that's driving one- and two-month concessions on many leases. But this has not inspired developers to start building middle-income rentals, much less low-.
Why? You have to understand that real estate development competes with other possible forms of investment for funding. This puts a high floor on estimated rates of return, which hinge directly on the rent roll. That is, to use an admittedly simplified model, the real estate developer is competing for the dollars of someone who may think they can get 6% in the stock market. In that world, 5% returns, especially in an illiquid investment like real estate, aren't going to cut it. In that world, the developer doesn't build a middle-income project instead. The money just goes elsewhere.
I sort of get the feeling that you, YCTaB and I aren't going to reach a consensus on whether it's impossible for real estate to ever function as anything other than a mostly state-run enterprise so I'll probably bow out after this (and on preview, the discussion may have moved on a bit). But first, too many words:
I don't think we disagree that the luxury developers and their creditors are responding to the perceived higher rate of return on luxury condos relative to more affordable housing. (And cities, who are deciding whether to allow certain kinds of developments, are also thinking about property values and tax revenue, at least as part of the calculus).
So to the extent that this is leading to a market failure - a glut of unoccupied luxury condos and storefronts in certain places - then it would improve things if policy addressed the issue. My point is that there are things you can do that reduce the return to building luxury housing, relative to non-luxury housing. One thing is to increase the price of purchasing luxury housing so that fewer people will want to do it. Taxing the owners of unoccupied homes is one way of doing this. That tax falls on developers if they haven't sold the homes yet, or the people who buy two or three homes in Vancouver and don't live in them. (Tax incidence is more complicated than that but I'm going to handwave around that because I'm not sure it's important to the point I'm making). Things like set-asides functionally lower the return for those luxury builders as well. Now, maybe that means they don't build a building, but that's kind of the point! You want to make it relatively less attractive to do that kind of development, and hence relatively more attractive to build stuff that people can afford to rent in. You want to lower the returns for those folks. Sure, maybe that means they go somewhere else, but then they're not driving up the price of land in your city and someone who wants to build affordable housing can use the land the way that you want.
More narrowly, my point is that if people who were sitting on unoccupied houses decide to rent them out, it does something to rental markets in the same way that increasing the supply of anything else is going to affect its price. And those prices are affecting the returns of the developers, which as you point out, are the things that are driving them to make the decisions they make.
Obviously, seizing the land out from under those developers also affects their returns; I'm not saying vacancy taxes are the only way to achieve your policy preferences, but I guess my feeling is that they are fairly low-hanging fruit legally and politically: Easy to explain to the public and we have models of how to implement it. The devil's in the details, but that's not unique to vacancy taxes. There's not an unrestricted free market in real estate and never has been. There have always been de jure or de facto restrictions on who can buy land, how they can buy it, what they can do with it, and I think the angle one should take on it is how those restrictions implicitly or explicitly subsidize luxury housing relative to more affordable housing. That's it, that's the point I'm making. I'm not saying the market is going to solve these problems on its own.
posted by dismas at 2:15 PM on August 22, 2017 [5 favorites]
Why? You have to understand that real estate development competes with other possible forms of investment for funding. This puts a high floor on estimated rates of return, which hinge directly on the rent roll. That is, to use an admittedly simplified model, the real estate developer is competing for the dollars of someone who may think they can get 6% in the stock market. In that world, 5% returns, especially in an illiquid investment like real estate, aren't going to cut it. In that world, the developer doesn't build a middle-income project instead. The money just goes elsewhere.
I sort of get the feeling that you, YCTaB and I aren't going to reach a consensus on whether it's impossible for real estate to ever function as anything other than a mostly state-run enterprise so I'll probably bow out after this (and on preview, the discussion may have moved on a bit). But first, too many words:
I don't think we disagree that the luxury developers and their creditors are responding to the perceived higher rate of return on luxury condos relative to more affordable housing. (And cities, who are deciding whether to allow certain kinds of developments, are also thinking about property values and tax revenue, at least as part of the calculus).
So to the extent that this is leading to a market failure - a glut of unoccupied luxury condos and storefronts in certain places - then it would improve things if policy addressed the issue. My point is that there are things you can do that reduce the return to building luxury housing, relative to non-luxury housing. One thing is to increase the price of purchasing luxury housing so that fewer people will want to do it. Taxing the owners of unoccupied homes is one way of doing this. That tax falls on developers if they haven't sold the homes yet, or the people who buy two or three homes in Vancouver and don't live in them. (Tax incidence is more complicated than that but I'm going to handwave around that because I'm not sure it's important to the point I'm making). Things like set-asides functionally lower the return for those luxury builders as well. Now, maybe that means they don't build a building, but that's kind of the point! You want to make it relatively less attractive to do that kind of development, and hence relatively more attractive to build stuff that people can afford to rent in. You want to lower the returns for those folks. Sure, maybe that means they go somewhere else, but then they're not driving up the price of land in your city and someone who wants to build affordable housing can use the land the way that you want.
More narrowly, my point is that if people who were sitting on unoccupied houses decide to rent them out, it does something to rental markets in the same way that increasing the supply of anything else is going to affect its price. And those prices are affecting the returns of the developers, which as you point out, are the things that are driving them to make the decisions they make.
Obviously, seizing the land out from under those developers also affects their returns; I'm not saying vacancy taxes are the only way to achieve your policy preferences, but I guess my feeling is that they are fairly low-hanging fruit legally and politically: Easy to explain to the public and we have models of how to implement it. The devil's in the details, but that's not unique to vacancy taxes. There's not an unrestricted free market in real estate and never has been. There have always been de jure or de facto restrictions on who can buy land, how they can buy it, what they can do with it, and I think the angle one should take on it is how those restrictions implicitly or explicitly subsidize luxury housing relative to more affordable housing. That's it, that's the point I'm making. I'm not saying the market is going to solve these problems on its own.
posted by dismas at 2:15 PM on August 22, 2017 [5 favorites]
There's a dirty secret about gentrification no one is willing to talk about: namely that in the 1990s, despite falling crime, no one moving to NYC was interested in moving to Brooklyn: it sucked and was far away. The housing available was run by slum lords. You know where people wanted to live? Lower Manhattan. The problem was that there was no new housing there, and any open units could have their rent bid up by well off professionals with money to burn. So in the absence of Lower Manhattan opportunities, hipsters went and gentrified Williamsburg, DUMBO, and Fort Greene. AirBnB wasn't going to be invented for another 15 years.
The situation is similar in SF. No one REALLY wants to move to Oakland, but in the absence of other available opportunities, that's where they're going to go, and they're going to buy the house you are currently renting.
I'm not one of those people who has an underpants-gnomes business model of affordable housing via luxury development, but if stopping any development helped keep housing affordable, the SF Bay Area and Greenwich Village would be the world's most affordable places.
posted by deanc at 2:15 PM on August 22, 2017 [13 favorites]
The situation is similar in SF. No one REALLY wants to move to Oakland, but in the absence of other available opportunities, that's where they're going to go, and they're going to buy the house you are currently renting.
I'm not one of those people who has an underpants-gnomes business model of affordable housing via luxury development, but if stopping any development helped keep housing affordable, the SF Bay Area and Greenwich Village would be the world's most affordable places.
posted by deanc at 2:15 PM on August 22, 2017 [13 favorites]
The issue in my neighborhood in Chicago is not empty houses. It is massive houses. 3 flats are being replaced with 6 bedroom 6 bath mansions for small rich families that have no need for 6 bedrooms. Basically, the most popular highest demand neighborhoods in Chicago are being downsized in terms of units and supersized in terms of single home wealth.
posted by srboisvert at 2:26 PM on August 22, 2017 [14 favorites]
posted by srboisvert at 2:26 PM on August 22, 2017 [14 favorites]
One other aspect of 'luxury blight' is that mansion owners do not shovel their sidewalks in the winter or arrange for someone to shovel their sidewalks because they are not there. They have skedaddled off to somewhere warm. Leaving us plebes to struggle, slip and slide through their neglect.
posted by srboisvert at 2:30 PM on August 22, 2017 [12 favorites]
posted by srboisvert at 2:30 PM on August 22, 2017 [12 favorites]
> No one REALLY wants to move to Oakland
citation needed.
posted by You Can't Tip a Buick at 2:54 PM on August 22, 2017 [15 favorites]
citation needed.
posted by You Can't Tip a Buick at 2:54 PM on August 22, 2017 [15 favorites]
then they're not driving up the price of land in your city and someone who wants to build affordable housing can use the land the way that you want.
...who would these entities be, who can afford to build significant-scale housing in expensive cities, but aren't traditional developers? I don't see how the market supplies them.
Local conditions do vary; I assume there can be meaningful possibilities in certain kinds of locations. But in the very places where real estate is most useful as a safe-deposit box, and on the scale you'd need it to be, Joe-Bob's Construction Co. isn't going to be out there scraping for modester profits.
More narrowly, my point is that if people who were sitting on unoccupied houses decide to rent them out, it does something to rental markets in the same way that increasing the supply of anything else is going to affect its price.
What it would do is dump in more housing at the high end of the market, as people are not buying and sitting on empty houses worth a piddling $400K that might possibly rent to even the mid-market. Which helps nobody. No, it doesn't. All those semi-occupied glass towers in Brooklyn have done doodly to restrain rent increases in the lower reaches of the NYC market. Maybe Anna Finance and Joey Biglaw get an extra month's rent off. Not really a result. The "naive" model that increasing supply at the upper end = increasing supply overall = easing of rent overall just has not played out in practice, for reasons that I doubt I fully understand.
posted by praemunire at 2:54 PM on August 22, 2017 [4 favorites]
...who would these entities be, who can afford to build significant-scale housing in expensive cities, but aren't traditional developers? I don't see how the market supplies them.
Local conditions do vary; I assume there can be meaningful possibilities in certain kinds of locations. But in the very places where real estate is most useful as a safe-deposit box, and on the scale you'd need it to be, Joe-Bob's Construction Co. isn't going to be out there scraping for modester profits.
More narrowly, my point is that if people who were sitting on unoccupied houses decide to rent them out, it does something to rental markets in the same way that increasing the supply of anything else is going to affect its price.
What it would do is dump in more housing at the high end of the market, as people are not buying and sitting on empty houses worth a piddling $400K that might possibly rent to even the mid-market. Which helps nobody. No, it doesn't. All those semi-occupied glass towers in Brooklyn have done doodly to restrain rent increases in the lower reaches of the NYC market. Maybe Anna Finance and Joey Biglaw get an extra month's rent off. Not really a result. The "naive" model that increasing supply at the upper end = increasing supply overall = easing of rent overall just has not played out in practice, for reasons that I doubt I fully understand.
posted by praemunire at 2:54 PM on August 22, 2017 [4 favorites]
Recommended further reading -- In Defense of Housing: The Politics of Crisis by David Madden and Peter Marcuse
The economist in my urban planning department simply asks, "if housing a human right? then it's too important and cannot be left to the market." She argues that tinkering with market development incentives (density bonuses etc) will never actually provide enough housing for low-income and even middle-income residents.
I would also caution against focusing on "outside" investors as the primary cause of real estate speculation. Yes, "safety deposit boxes in the sky" should be discouraged and the "giant pool of money" sloshing around the world has exacerbated speculation and real estate bubbles. But it's not just outsiders who are implicated in how housing-as-investment logics take precedence over the everyday need for housing as shelter. Much of the American economic and social order is predicated on housing as an investment. We are supposed to pay for college, retirement, etc via the increase in property values. This understanding of housing as investment also undergirds 20th century racist redlining practices and the racist covenants that excluded non-whites from suburban subdivisions -- all those developers and realtors and homebuyers argued for the necessity of segregation because of the need to protect property values.
I appreciate the straightforward assessment in Emily Molina's 2017 book Housing America: Issues and Debates
The economist in my urban planning department simply asks, "if housing a human right? then it's too important and cannot be left to the market." She argues that tinkering with market development incentives (density bonuses etc) will never actually provide enough housing for low-income and even middle-income residents.
I would also caution against focusing on "outside" investors as the primary cause of real estate speculation. Yes, "safety deposit boxes in the sky" should be discouraged and the "giant pool of money" sloshing around the world has exacerbated speculation and real estate bubbles. But it's not just outsiders who are implicated in how housing-as-investment logics take precedence over the everyday need for housing as shelter. Much of the American economic and social order is predicated on housing as an investment. We are supposed to pay for college, retirement, etc via the increase in property values. This understanding of housing as investment also undergirds 20th century racist redlining practices and the racist covenants that excluded non-whites from suburban subdivisions -- all those developers and realtors and homebuyers argued for the necessity of segregation because of the need to protect property values.
I appreciate the straightforward assessment in Emily Molina's 2017 book Housing America: Issues and Debates
The first radical approach to solving housing problems in the U.S. might focus on its status as a commodity. Every problem discussed in this book has at its root the commodification of housing in America. Housing is less affordable to the average American than it was in the past because relative housing prices have increased, largely due to speculation in the housing market and the increasing popularity of housing as a financial investment.posted by spamandkimchi at 2:59 PM on August 22, 2017 [22 favorites]
... Another approach to decommodifying the housing market is to reshape tax laws dramatically, so that there is little incentive to speculate in the housing market. U.S. tax policy fosters speculation in housing values: housing sales prices are exempt from capital gains taxes, encouraging speculative investment in real estate that can artificially inflate housing prices. Abolishing or limiting this exemption would remove one speculation incentive. In addition, abolishing the mortgage interest and property tax deductions in the tax code would force us to consider housing more of a social good than an opportunity for profit. In lieu of abolishing the tax deductions, they could be limited such that they do not continue to benefit high-income homeowners disproportionately.
> to reach a consensus on whether it's impossible for real estate to ever function as anything other than a mostly state-run enterprise
One of the reasons why I really do think it's important to include disorganized and semi-organized squatting as part of the remedy is that the presence of a bottom-up democratic method of real estate allocation, not planned by the state, is a useful tool to correct both the misallocation that inevitably occurs under market rules and also the misallocation that can occur in state-run operations.
Basically, fixing housing allocation will require a diversity of tactics — and yes, I am using that particular phrase deliberately.
posted by You Can't Tip a Buick at 3:01 PM on August 22, 2017 [13 favorites]
One of the reasons why I really do think it's important to include disorganized and semi-organized squatting as part of the remedy is that the presence of a bottom-up democratic method of real estate allocation, not planned by the state, is a useful tool to correct both the misallocation that inevitably occurs under market rules and also the misallocation that can occur in state-run operations.
Basically, fixing housing allocation will require a diversity of tactics — and yes, I am using that particular phrase deliberately.
posted by You Can't Tip a Buick at 3:01 PM on August 22, 2017 [13 favorites]
The more landlords keep their properties off the market in the hopes of making a huge profit a few years from now, the tighter supply gets and the more likely it becomes that landlords who keep their properties off the market will hit the jackpot. This further incentivizes landlords to keep their property off the market, which in turn further incentivizes landlords to keep their property off the market, which in turn... and so on.
And of course it never occurs to them that this will keep the 'up-and-coming' neighborhoods they're keeping half-vacant from ever, y'know, going anywhere. Ugh.
posted by nonasuch at 3:01 PM on August 22, 2017
And of course it never occurs to them that this will keep the 'up-and-coming' neighborhoods they're keeping half-vacant from ever, y'know, going anywhere. Ugh.
posted by nonasuch at 3:01 PM on August 22, 2017
As wealth is aggregated by the already wealthy, they want to use it to acquire more wealth. So they buy real estate, which is then in demand and the price goes up. I'll bet huge numbers of properties are in Real Estate Investment Trusts or some other investment mechanism. And why mess with the nuisance of renting when merely owning has a high return? Like many forms of investment, the owner is several degrees of separation away from the person who needs affordable housing; they don't experience the consequences of their investments.
Equalizing income and assets is the answer. All the housing plans and tax schemes are helpful but don't resolve the issue. Pay people fairly and tax people fairly. Index FICA to wages and raise the maximum by a lot. Tax capital gains as income. Return to a graduated income tax. When the highest tax rate was very high indeed, people still innovated, started businesses, competed, because people are innately competitive, creative, innovative and will strive to get ahead. Not that I see this happening any time soon. It's possibly stupid to have so thoroughly pushed gun ownership. At some point, people will get well and truly pissed. One hopes.
posted by theora55 at 3:04 PM on August 22, 2017 [2 favorites]
Equalizing income and assets is the answer. All the housing plans and tax schemes are helpful but don't resolve the issue. Pay people fairly and tax people fairly. Index FICA to wages and raise the maximum by a lot. Tax capital gains as income. Return to a graduated income tax. When the highest tax rate was very high indeed, people still innovated, started businesses, competed, because people are innately competitive, creative, innovative and will strive to get ahead. Not that I see this happening any time soon. It's possibly stupid to have so thoroughly pushed gun ownership. At some point, people will get well and truly pissed. One hopes.
posted by theora55 at 3:04 PM on August 22, 2017 [2 favorites]
No one REALLY wants to move to Oakland
I did. Memail me!
posted by sandettie light vessel automatic at 3:07 PM on August 22, 2017 [2 favorites]
I did. Memail me!
posted by sandettie light vessel automatic at 3:07 PM on August 22, 2017 [2 favorites]
> No one REALLY wants to move to Oakland
citation needed.
I wouldn't mind helping spread this rumor though.
posted by atoxyl at 3:15 PM on August 22, 2017 [9 favorites]
citation needed.
I wouldn't mind helping spread this rumor though.
posted by atoxyl at 3:15 PM on August 22, 2017 [9 favorites]
No one REALLY wants to move to Oakland
scuse me?
posted by burgerrr at 3:15 PM on August 22, 2017 [5 favorites]
scuse me?
posted by burgerrr at 3:15 PM on August 22, 2017 [5 favorites]
I would like to be able to afford to move to Oakland.
posted by theora55 at 3:16 PM on August 22, 2017 [15 favorites]
posted by theora55 at 3:16 PM on August 22, 2017 [15 favorites]
Radio stations and houses are two things that shouldn't be owned by people who don't live in the community.
posted by freecellwizard at 3:20 PM on August 22, 2017 [14 favorites]
posted by freecellwizard at 3:20 PM on August 22, 2017 [14 favorites]
> I'm not one of those people who has an underpants-gnomes business model of affordable housing via luxury development, but if stopping any development helped keep housing affordable, the SF Bay Area and Greenwich Village would be the world's most affordable places.
I don't think anyone here is arguing in favor of reduced development, though correct me if I'm wrong. As I see it, I'm arguing in favor of seizing developments by various means and by starting new public developments; others are arguing for pied-à-terre taxes in order to bust open rental market supply; others still are observing on the effects of the introduction of rich people money into a neighborhood.
That said, stopping particular luxury developments, by whatever means, really is an effective temporary emergency measure to maintain prices in neighborhood-scale geographical areas. This is because the presence of rich people's money in a neighborhood causes local blight, and luxury buildings attract rich people money. Again, though, this is a temporary measure, since if an area is attractive enough rich people will start to buy property and spread blight even if there's no luxury housing available — as we have seen across much of the Bay Area.
As such, the temporary strikes against wealth blight through the suppression of luxury housing must be followed by more permanent, positive measures to democratize housing supply. Some people think it's possible to do this indirectly through using taxes and regulation to change market incentives — and, hell, they may be right. For my part, I think it's only possible through non-market means. Fortunately, though, changing market incentives and producing non-market housing can be complementary strategies, rather than competing ones.
posted by You Can't Tip a Buick at 3:57 PM on August 22, 2017 [9 favorites]
I don't think anyone here is arguing in favor of reduced development, though correct me if I'm wrong. As I see it, I'm arguing in favor of seizing developments by various means and by starting new public developments; others are arguing for pied-à-terre taxes in order to bust open rental market supply; others still are observing on the effects of the introduction of rich people money into a neighborhood.
That said, stopping particular luxury developments, by whatever means, really is an effective temporary emergency measure to maintain prices in neighborhood-scale geographical areas. This is because the presence of rich people's money in a neighborhood causes local blight, and luxury buildings attract rich people money. Again, though, this is a temporary measure, since if an area is attractive enough rich people will start to buy property and spread blight even if there's no luxury housing available — as we have seen across much of the Bay Area.
As such, the temporary strikes against wealth blight through the suppression of luxury housing must be followed by more permanent, positive measures to democratize housing supply. Some people think it's possible to do this indirectly through using taxes and regulation to change market incentives — and, hell, they may be right. For my part, I think it's only possible through non-market means. Fortunately, though, changing market incentives and producing non-market housing can be complementary strategies, rather than competing ones.
posted by You Can't Tip a Buick at 3:57 PM on August 22, 2017 [9 favorites]
My neighborhood doesn't have empty houses but definitely lots of underpopulated ones. All these big victorian houses got auctioned off in the seventies for back taxes to young couples so now forty years later it's all retired couples and widows rattling around in these five and six bedroom houses.
posted by octothorpe at 4:05 PM on August 22, 2017 [3 favorites]
posted by octothorpe at 4:05 PM on August 22, 2017 [3 favorites]
So the other night at a party here, I overheard someone unironically referring to empty investment-grade flats as "sky bullion." (While I will admit she had a certain way with words, I had to leave the party soon thereafter on account of whole-body nausea.)
If we've reached the reductio ad absurdum of land-as-asset class — thousands of central-city housing units going empty, unweaving the neighborhood service ecologies that depend on the missing residents' traffic and custom, at the very moment an acute citywide affordable housing crisis means desperate others are buddying up six and ten to a room — some folks here seem not to know it. Like Louise Linton, they seem hellbent on pressing further ahead until the very moment the guillotines come out. Some kind soul should offer them a quick primer on catastrophe theory.
posted by adamgreenfield at 4:16 PM on August 22, 2017 [4 favorites]
If we've reached the reductio ad absurdum of land-as-asset class — thousands of central-city housing units going empty, unweaving the neighborhood service ecologies that depend on the missing residents' traffic and custom, at the very moment an acute citywide affordable housing crisis means desperate others are buddying up six and ten to a room — some folks here seem not to know it. Like Louise Linton, they seem hellbent on pressing further ahead until the very moment the guillotines come out. Some kind soul should offer them a quick primer on catastrophe theory.
posted by adamgreenfield at 4:16 PM on August 22, 2017 [4 favorites]
and maybe pair CLTs with district heating! (and energy-monitoring 'smart buildings' ;)
Oh, you had me right up until "smart" buildings. Or "smart" anything, really.
posted by adamgreenfield at 4:22 PM on August 22, 2017 [1 favorite]
Oh, you had me right up until "smart" buildings. Or "smart" anything, really.
posted by adamgreenfield at 4:22 PM on August 22, 2017 [1 favorite]
Regarding the Yemeni sandwich lift question:
Vancouver gives 22,000 un- or underoccupied houses at time of census, but that counts short-term leases, and it looks like that's 4,000 out of the 22,000--so maybe 18,000 actually sitting empty on the day of the census. In the same link, the city used another measure to determine that at least 10,000 units in 2014 used barely any electricity all year--seems like as good a proxy as any for the "sky bullion" category. The homeless population of Vancouver is 1847. That does look like a situation in which you literally could seize and reallocate empty units and solve homelessness overnight.
I looked at SF too, just because... local... (and hey, turns out homelessness in SF has stabilized for the first time since the recession, yay, but anyway): San Francisco had, in 2014, maybe 9,700 units totally unoccupied. San Francisco has 7,499 homeless people as of the latest census. That's tighter, but you could still rehome a significant number of the homeless using only empty units even assuming not all of those units are truly available/habitable.
But your original question wasn't about homelessness, it was about housing affordability, right? And I think you're completely right that it wouldn't do much about housing affordability. 45% of Vancouver renter households pay more than 30% of their income on housing costs; the most recent renter household fig from Vancouver is from 2011, and it's 136,135. 45% of that is more than 61,000. Even assuming that number hasn't gone up at all, 10,000 seized and reallocated units are a drop in that bucket. I can't find the number of renter households in SF, but as its population is a couple hundred thousand higher, I assume the ratio's worse.
posted by peppercorn at 5:38 PM on August 22, 2017 [9 favorites]
Vancouver gives 22,000 un- or underoccupied houses at time of census, but that counts short-term leases, and it looks like that's 4,000 out of the 22,000--so maybe 18,000 actually sitting empty on the day of the census. In the same link, the city used another measure to determine that at least 10,000 units in 2014 used barely any electricity all year--seems like as good a proxy as any for the "sky bullion" category. The homeless population of Vancouver is 1847. That does look like a situation in which you literally could seize and reallocate empty units and solve homelessness overnight.
I looked at SF too, just because... local... (and hey, turns out homelessness in SF has stabilized for the first time since the recession, yay, but anyway): San Francisco had, in 2014, maybe 9,700 units totally unoccupied. San Francisco has 7,499 homeless people as of the latest census. That's tighter, but you could still rehome a significant number of the homeless using only empty units even assuming not all of those units are truly available/habitable.
But your original question wasn't about homelessness, it was about housing affordability, right? And I think you're completely right that it wouldn't do much about housing affordability. 45% of Vancouver renter households pay more than 30% of their income on housing costs; the most recent renter household fig from Vancouver is from 2011, and it's 136,135. 45% of that is more than 61,000. Even assuming that number hasn't gone up at all, 10,000 seized and reallocated units are a drop in that bucket. I can't find the number of renter households in SF, but as its population is a couple hundred thousand higher, I assume the ratio's worse.
posted by peppercorn at 5:38 PM on August 22, 2017 [9 favorites]
I am especially against unoccupied foreign speculation and investment. That kind of thing needs to stop and/or be taxed into oblivion right away.
So glad to hear someone else say this. But if I try to bring it up in the bleeding liberal area where I live, people say "But Diversity!!"
posted by Melismata
In Vancouver and Toronto, foreign buyers are boogymen for actions that are being done also by Canadians: buying for investment. It's xenophobic to focus on the people -- foreign buyers, many of whom are not permanent residents but do live in their properties -- rather than the actions - leaving properties vacant.
posted by jb at 6:18 PM on August 22, 2017 [13 favorites]
So glad to hear someone else say this. But if I try to bring it up in the bleeding liberal area where I live, people say "But Diversity!!"
posted by Melismata
In Vancouver and Toronto, foreign buyers are boogymen for actions that are being done also by Canadians: buying for investment. It's xenophobic to focus on the people -- foreign buyers, many of whom are not permanent residents but do live in their properties -- rather than the actions - leaving properties vacant.
posted by jb at 6:18 PM on August 22, 2017 [13 favorites]
So, I keep moving farther and farther away from Dallas. Except, I chose to go east and north, and apparently, so did all the rich folks. The town where I live was about 5,000 people a decade ago. Now, we're up to 50,000, and all of the ranch land is being covered with zero lot mcmansions, about half of which are empty, with another 5000 houses planned in the next two years. It's tragic.
I was recently able to save a teeny sliver of old growth prarie, only because it has a live oak with a nesting pair of eagles, so they had to go around the land rather than through it. Dallas county came through on one side of us, and somehow used eminent domain to break an irrevocable land trust on a 700 acre preserve, and drove a (privately owned and operated) tollway right through the middle of it.
So, you'd think, with all this development, someone would be thinking about all the migrant workers who live here and used to work on the ranches. Many of them in tiny cottages, or clusters of mobile homes. You would be wrong to think that.
Instead, the city has passed an ordinance that no new housing can be built unless it is LARGER than 2000 square feet. They're condemning sharecropper shacks, but rather than help them build new buildings to code in the same footprint, they're I guess just hoping that these people will just go away? I don't know. I do know I have scheduled time to talk to the city council, I've gotten some attorneys to look at things pro bono, and by god, if I have to, I'll pull an Arthur Dent, and park my happy ass in front of a bulldozer, because this is some grade A bullshit, rightchere.
We have hundreds of empty houses, thousands being built, and yet, somehow, we can't find a way for the workers who built this goddamn place to live here? WTF?
At the same time, my house taxable value has more than doubled in five years. I'm now paying almost $10,000 a year in taxes on a house which cost me about $250k a decade ago. Most of my neighbors are being forced to put their houses up for sale because they can't afford the tax increases on fixed incomes. We would sell, but we can't afford anything else in the area any more, and I don't want to move my kid away from all the friends he's had since elementary school, but seriously, if I could move another 30 miles away from Dallas again, I would. But I know that bitch, and she'll just come eat crackers at me in the new spot too.
posted by SecretAgentSockpuppet at 6:24 PM on August 22, 2017 [19 favorites]
I was recently able to save a teeny sliver of old growth prarie, only because it has a live oak with a nesting pair of eagles, so they had to go around the land rather than through it. Dallas county came through on one side of us, and somehow used eminent domain to break an irrevocable land trust on a 700 acre preserve, and drove a (privately owned and operated) tollway right through the middle of it.
So, you'd think, with all this development, someone would be thinking about all the migrant workers who live here and used to work on the ranches. Many of them in tiny cottages, or clusters of mobile homes. You would be wrong to think that.
Instead, the city has passed an ordinance that no new housing can be built unless it is LARGER than 2000 square feet. They're condemning sharecropper shacks, but rather than help them build new buildings to code in the same footprint, they're I guess just hoping that these people will just go away? I don't know. I do know I have scheduled time to talk to the city council, I've gotten some attorneys to look at things pro bono, and by god, if I have to, I'll pull an Arthur Dent, and park my happy ass in front of a bulldozer, because this is some grade A bullshit, rightchere.
We have hundreds of empty houses, thousands being built, and yet, somehow, we can't find a way for the workers who built this goddamn place to live here? WTF?
At the same time, my house taxable value has more than doubled in five years. I'm now paying almost $10,000 a year in taxes on a house which cost me about $250k a decade ago. Most of my neighbors are being forced to put their houses up for sale because they can't afford the tax increases on fixed incomes. We would sell, but we can't afford anything else in the area any more, and I don't want to move my kid away from all the friends he's had since elementary school, but seriously, if I could move another 30 miles away from Dallas again, I would. But I know that bitch, and she'll just come eat crackers at me in the new spot too.
posted by SecretAgentSockpuppet at 6:24 PM on August 22, 2017 [19 favorites]
The writer of the article seems incredibly naive to me. Who does he think is in government in the first place? Are those homeless people sitting on city council? Right, so let's vote in our own set of good-thinking folks. It'll feel so good after all to tear down those fat cats. Except now your good-thinking folks start to get a little lip-smacky themselves. And before you know it there's new crew of fat bastards in town.
We need new and imaginative ideas to fix this mess, and this article doesn't even begin to address it. Nice whiskey ad though.
posted by storybored at 6:25 PM on August 22, 2017 [1 favorite]
We need new and imaginative ideas to fix this mess, and this article doesn't even begin to address it. Nice whiskey ad though.
posted by storybored at 6:25 PM on August 22, 2017 [1 favorite]
Well, the point of public housing is to provide non-exploitative housing for people who can get it, and also to drive down market rates by reducing demand for market-rate housing more broadly.
As a totally unreasonable commie, I also suspect that state/municipal action against wealth will by itself have a positive effect on market rates; property owners, terrified of a government that represents people rather than property, could be inspired to cash out and move on to more exploitable pastures, thereby increasing local supply while also driving down local market value.
The thing I'm really getting at here, though, is that any meaningful measure to solve the housing crisis will likely bring down property values. This is why the propertied classes — both the big money class and the upper-middle-works-at-microsoft-bought-a-house-in-Seattle-20-years-ago class — will tend to support measures to make the crisis worse and oppose measures to make the crisis better. This is why, if we're looking for positive action from municipal governments, we're basically looking for a slate of insurgent candidates running on a renter's rights / renter's power platform.
I absolutely support liberal efforts to establish pied-à-terre taxes and the like — but I strongly suspect that any pied-à-terre tax draconian enough to be effective would be opposed by liberal lawmakers.
posted by You Can't Tip a Buick at 6:26 PM on August 22, 2017 [18 favorites]
As a totally unreasonable commie, I also suspect that state/municipal action against wealth will by itself have a positive effect on market rates; property owners, terrified of a government that represents people rather than property, could be inspired to cash out and move on to more exploitable pastures, thereby increasing local supply while also driving down local market value.
The thing I'm really getting at here, though, is that any meaningful measure to solve the housing crisis will likely bring down property values. This is why the propertied classes — both the big money class and the upper-middle-works-at-microsoft-bought-a-house-in-Seattle-20-years-ago class — will tend to support measures to make the crisis worse and oppose measures to make the crisis better. This is why, if we're looking for positive action from municipal governments, we're basically looking for a slate of insurgent candidates running on a renter's rights / renter's power platform.
I absolutely support liberal efforts to establish pied-à-terre taxes and the like — but I strongly suspect that any pied-à-terre tax draconian enough to be effective would be opposed by liberal lawmakers.
posted by You Can't Tip a Buick at 6:26 PM on August 22, 2017 [18 favorites]
I see your point YCTaB, but I think people who understand taxation, and who bought a house for the long term, would be indifferent to the nominal property value. For example, if my house were valued at 50,000, I would be thrilled, because then I would be taxed a tenth of what I'm being taxed, and since I don't want to sell, I don't care what the nominal value is, except as it pertains to my tax liability.
So, long term buyers can be convinced that they are gaining actual value, if not nominal value, and first time buyers can afford to enter the marketplace. It's flippers, and short timers who would be the most harmed by those sorts of policies.
(She says confidently, as though she knows anything about urban planning or market forces.)
posted by SecretAgentSockpuppet at 6:36 PM on August 22, 2017 [2 favorites]
So, long term buyers can be convinced that they are gaining actual value, if not nominal value, and first time buyers can afford to enter the marketplace. It's flippers, and short timers who would be the most harmed by those sorts of policies.
(She says confidently, as though she knows anything about urban planning or market forces.)
posted by SecretAgentSockpuppet at 6:36 PM on August 22, 2017 [2 favorites]
people who understand taxation, and who bought a house for the long term, would be indifferent to the nominal property value. For example, if my house were valued at 50,000, I would be thrilled, because then I would be taxed a tenth of what I'm being taxed, and since I don't want to sell, I don't care what the nominal value is, except as it pertains to my tax liability.
Sure, but the market isn't driven by them; it's driven by speculators.
posted by Joseph Gurl at 6:38 PM on August 22, 2017 [2 favorites]
Sure, but the market isn't driven by them; it's driven by speculators.
posted by Joseph Gurl at 6:38 PM on August 22, 2017 [2 favorites]
> I see your point YCTaB, but I think people who understand taxation, and who bought a house for the long term, would be indifferent to the nominal property value. For example, if my house were valued at 50,000, I would be thrilled, because then I would be taxed a tenth of what I'm being taxed, and since I don't want to sell, I don't care what the nominal value is, except as it pertains to my tax liability.
That is absolutely a great point — I'm too given to coming up with schematic stuff and overlooking the real details, especially in this context. And I'm definitely speaking from a very California/Bay Area perspective — I sometimes forget that most states don't have this nonsense, which bases property tax rates on the assessed value of the property at the time of its last sale, rather than on its current value.
But yeah, effects that put small property owners invested in staying in a given area on the side of lowering property values are absolutely a useful wedge for pushing through reform; if you can peel off homeowners (who, as we know, tend to vote) from the pro-market consensus, you've got a chance to actually attack the market through electoral means.
posted by You Can't Tip a Buick at 6:49 PM on August 22, 2017 [5 favorites]
That is absolutely a great point — I'm too given to coming up with schematic stuff and overlooking the real details, especially in this context. And I'm definitely speaking from a very California/Bay Area perspective — I sometimes forget that most states don't have this nonsense, which bases property tax rates on the assessed value of the property at the time of its last sale, rather than on its current value.
But yeah, effects that put small property owners invested in staying in a given area on the side of lowering property values are absolutely a useful wedge for pushing through reform; if you can peel off homeowners (who, as we know, tend to vote) from the pro-market consensus, you've got a chance to actually attack the market through electoral means.
posted by You Can't Tip a Buick at 6:49 PM on August 22, 2017 [5 favorites]
also uhhh sorry for banging on all MARX MARX MARX SEIZE EXPROPRIATE SMASH in this thread. I have to admit that the thing that's most likely to bring out the white-hot class rage in me is the rental housing market (with a close second being wage theft).
basically there's a part of my lizard hindbrain that's all "landlords and thieving employers have tried to ruin everyone in my family's life for like centuries they must be smashed," and whenever my lizard hindbrain gets like that my prefrontal cortex is like "you know what? Ol' lizziebrain's not wrong. maybe it should steer the body for a little while."
posted by You Can't Tip a Buick at 7:13 PM on August 22, 2017 [15 favorites]
basically there's a part of my lizard hindbrain that's all "landlords and thieving employers have tried to ruin everyone in my family's life for like centuries they must be smashed," and whenever my lizard hindbrain gets like that my prefrontal cortex is like "you know what? Ol' lizziebrain's not wrong. maybe it should steer the body for a little while."
posted by You Can't Tip a Buick at 7:13 PM on August 22, 2017 [15 favorites]
I don't think anyone here is arguing in favor of reduced development
Maybe not in this thread, but the newest landowning-Boomer-left orthodoxy in SF seems to be that all development of both housing and jobs should be immediately halted, ideally accompanied by some type of hukou system to limit migration into the city. (I'm exaggerating like 3% on that last bit.)
posted by en forme de poire at 7:44 PM on August 22, 2017 [3 favorites]
Maybe not in this thread, but the newest landowning-Boomer-left orthodoxy in SF seems to be that all development of both housing and jobs should be immediately halted, ideally accompanied by some type of hukou system to limit migration into the city. (I'm exaggerating like 3% on that last bit.)
posted by en forme de poire at 7:44 PM on August 22, 2017 [3 favorites]
Never apologize for MARX SMASH
posted by The Whelk at 8:08 PM on August 22, 2017 [16 favorites]
posted by The Whelk at 8:08 PM on August 22, 2017 [16 favorites]
Sure, but the market isn't driven by them; it's driven by speculators.
I genuinely don't know if this is true. I looked it up and there appears to be some empirical evidence that this drove the boom in many cities prior to the crisis, but I can't shake the feeling that a most of the reason prices have gone up in places like San Francisco and Boston and DC is because they're nice places to live and have a lot of amenities that make people want to live there. I mean, that's part of why I lived in Boston for five years of grad school instead of Indiana. Speculation has real consequences and I'm not saying it's not important, but it was at most about 15% of the market at its peak during the house price bubble and was a much smaller fraction of the market in New York for instance.
posted by dismas at 8:41 PM on August 22, 2017 [3 favorites]
I genuinely don't know if this is true. I looked it up and there appears to be some empirical evidence that this drove the boom in many cities prior to the crisis, but I can't shake the feeling that a most of the reason prices have gone up in places like San Francisco and Boston and DC is because they're nice places to live and have a lot of amenities that make people want to live there. I mean, that's part of why I lived in Boston for five years of grad school instead of Indiana. Speculation has real consequences and I'm not saying it's not important, but it was at most about 15% of the market at its peak during the house price bubble and was a much smaller fraction of the market in New York for instance.
posted by dismas at 8:41 PM on August 22, 2017 [3 favorites]
I looked it up and there appears to be some empirical evidence that this drove the boom in many cities prior to the crisis, but I can't shake the feeling
You can go with feeling over empirical evidence, sure, why not
posted by Joseph Gurl at 9:06 PM on August 22, 2017
You can go with feeling over empirical evidence, sure, why not
posted by Joseph Gurl at 9:06 PM on August 22, 2017
You can go with feeling over empirical evidence, sure, why not
Prices being boosted by speculation in some cities prior to the financial crisis does not mean that all prices are increasing everywhere primarily due to speculation now. Or even then. That was not a good faith reading of my comment.
posted by dismas at 9:40 PM on August 22, 2017 [5 favorites]
Prices being boosted by speculation in some cities prior to the financial crisis does not mean that all prices are increasing everywhere primarily due to speculation now. Or even then. That was not a good faith reading of my comment.
posted by dismas at 9:40 PM on August 22, 2017 [5 favorites]
In many cities everyone is speculating.
Here's the Price to Rent Ratio in 76 cities. The average interest rate right now is about 4%. That means if the price to rent ratio is above 25, average rents don't even cover the mortgage interest on the property. That's the situation in San Francisco and New York of course, but also much less hot places like Long Beach and Jersey City.
The only way anyone can make money as a landlord in that situation is if prices rise, or rents rise, before you sell the property. If they fall, you're in deep trouble. That seems like speculation to me.
The crazy thing is that it's cheaper to borrow a house in these cities than to borrow money to buy a house. If it were legal, you could take advantage of the situation by renting a house, selling it, investing the money, and buying it back right before the lease is up to return to the landlord. It's a bizarre situation and something that doesn't persist in many markets for very long.
posted by miyabo at 10:22 PM on August 22, 2017 [6 favorites]
Here's the Price to Rent Ratio in 76 cities. The average interest rate right now is about 4%. That means if the price to rent ratio is above 25, average rents don't even cover the mortgage interest on the property. That's the situation in San Francisco and New York of course, but also much less hot places like Long Beach and Jersey City.
The only way anyone can make money as a landlord in that situation is if prices rise, or rents rise, before you sell the property. If they fall, you're in deep trouble. That seems like speculation to me.
The crazy thing is that it's cheaper to borrow a house in these cities than to borrow money to buy a house. If it were legal, you could take advantage of the situation by renting a house, selling it, investing the money, and buying it back right before the lease is up to return to the landlord. It's a bizarre situation and something that doesn't persist in many markets for very long.
posted by miyabo at 10:22 PM on August 22, 2017 [6 favorites]
all prices are increasing everywhere primarily due to speculation now.
I didn't say all.
But really, here's a paper about it. There are tons more. It shouldn't be controversial to state that speculation is a major driver of the real estate crisis, especially given the data about unoccupied housing in this thread.
posted by Joseph Gurl at 10:31 PM on August 22, 2017 [2 favorites]
I didn't say all.
But really, here's a paper about it. There are tons more. It shouldn't be controversial to state that speculation is a major driver of the real estate crisis, especially given the data about unoccupied housing in this thread.
posted by Joseph Gurl at 10:31 PM on August 22, 2017 [2 favorites]
The crazy thing is that it's cheaper to borrow a house in these cities than to borrow money to buy a house.
The problem is that it's more profitable to invest money in a house than it is in any liquid form, as well as houses having intrinsic value as a backstop against catastrophe. When you take capital growth into account, they're definitely the most profitable place to put retirement savings.
This is a complete failure of the financial system, because it should be able to provide slightly reduced returns on similar amounts of money with a corresponding increase in liquidity
posted by ambrosen at 12:31 AM on August 23, 2017 [2 favorites]
The problem is that it's more profitable to invest money in a house than it is in any liquid form, as well as houses having intrinsic value as a backstop against catastrophe. When you take capital growth into account, they're definitely the most profitable place to put retirement savings.
This is a complete failure of the financial system, because it should be able to provide slightly reduced returns on similar amounts of money with a corresponding increase in liquidity
posted by ambrosen at 12:31 AM on August 23, 2017 [2 favorites]
When it comes to savings versus shelter, I'll come down extremely hard on the side of people needing shelter. That might of course be related to the £500 I'm out of pocket this month because my landlord wanted to move house.
posted by ambrosen at 12:34 AM on August 23, 2017 [7 favorites]
posted by ambrosen at 12:34 AM on August 23, 2017 [7 favorites]
This subject fills me with searing rage and makes me want to smash capitalism, like, yesterday. It is so soul-crushing to live in a place as expensive as the Bay Area and watch as the life is squeezed out of everything here. This article and thread make me feel compelled to stress-buy a copy of the Little Red Songbook, join the DSA, and pray even harder that Uber stays the hell out of Oakland.
posted by shapes that haunt the dusk at 1:16 AM on August 23, 2017 [14 favorites]
posted by shapes that haunt the dusk at 1:16 AM on August 23, 2017 [14 favorites]
Here's the Price to Rent Ratio in 76 cities. The average interest rate right now is about 4%. That means if the price to rent ratio is above 25, average rents don't even cover the mortgage interest on the property. That's the situation in San Francisco and New York of course, but also much less hot places like Long Beach and Jersey City.
A ration of only 12 here in Pittsburgh which is what I'd expect. It's always been so much cheaper to buy a house than rent one here although the median home price for the city did go over $100k a few years ago.
posted by octothorpe at 4:35 AM on August 23, 2017
A ration of only 12 here in Pittsburgh which is what I'd expect. It's always been so much cheaper to buy a house than rent one here although the median home price for the city did go over $100k a few years ago.
posted by octothorpe at 4:35 AM on August 23, 2017
Richard Florida Is Sorry
The Welfare State Should Be More Than Just A Safety Net
it just monitors buildings' energy usage for power drains and equipment that might need to be replaced.
posted by kliuless at 6:19 AM on August 23, 2017 [5 favorites]
His latest book, The New Urban Crisis, represents the culmination of this long mea culpa. Though he stops just short of saying it, he all but admits that he was wrong. He argues that the creative classes have grabbed hold of many of the world’s great cities and choked them to death. As a result, the fifty largest metropolitan areas house just 7 percent of the world’s population but generate 40 percent of its growth. These “superstar” cities are becoming gated communities, their vibrancy replaced with deracinated streets full of Airbnbs and empty summer homes.also btw...
Meanwhile, drug addiction and gang violence have spread to the suburbs. “Much more than a crisis of cities,” he writes, “the New Urban Crisis is the central crisis of our time” — “a crisis of the suburbs, of urbanization itself and of contemporary capitalism writ large.”
The Welfare State Should Be More Than Just A Safety Net
A better metaphor, both in terms of accuracy and rhetoric, would be the foundation. The welfare foundation provides a universal set of services on top of which people can build their lives. It is a permanent support structure, not a temporary failsafe. The precise mix of welfare benefits individuals get will of course vary depending on what stage of life they are in, but the welfare state as a whole is there for them at all times, giving them the stability to do everything else they want to do with their lives.Oh, you had me right up until "smart" buildings. Or "smart" anything, really.
it just monitors buildings' energy usage for power drains and equipment that might need to be replaced.
posted by kliuless at 6:19 AM on August 23, 2017 [5 favorites]
Let's look at the pratical application of a "empty house tax" - In Italy.
Historically there was never a property tax in Italy, therefore a common strategy was to buy a home / flat and sit on it, leaving it empty, and selling it when in pension age. This caused prices to go up and up, specially in the big cities Milan and Rome.
Now one of the fallouts of the EU realizing that Italy is basically broke and with a not payable debt of some 1300 billions of so Euros was that Italy had to raise taxes. And so Mr Monti decided that it was time to make all this landlords (by definition any propert y that you own and is not your primary residency , so holiday homes, pied-a-terre etc) pay.
For a modest house in a peripheral city that was used a second residency taxes went up from 0 to staggering 3800 Euro a year (in a country where you are lucky if you make more than 1500 Euro a month). Basically the tax is a flat 1% of the house value.
While this did not bothered the rich (minor annoyance) the new tax did manage to put more empty houses on the market (prices went done and in some cases by 50-60%), and I do have friends that managed to finally buy a flat after years of renting.
But it fucked up completely one generation, basically everyone that used the house-as-investment scheme (and most of this people are old and cannot simply go back to work), wiped out billions in asset values from the middle class, financially destroyed millions of families (as their mortgage was now higher than the house values). Spending in general went down a lot has your money was now either used to pay a higher mortgage or the property tax.
Now - who profited the most of this move ? The very fews that where sitting in this particular spot "renting looking to buy" and that also had enough cash saved up (2 income families). And the rich that where more than happy to buy that nice villa for 1 millions instead of 2 (never mind the taxes, they spend more on prosecco or the mainteinance of their pool).
All the rest of the populations, the people renting (rents went up as landlords tried to recoup the tax), the landlords, business in general, the middle class that now are forced to work 2-3 jobs just to keep the house), they all are much worse off.
So no easy solution sadly.
posted by elcapitano at 6:57 AM on August 23, 2017 [9 favorites]
Historically there was never a property tax in Italy, therefore a common strategy was to buy a home / flat and sit on it, leaving it empty, and selling it when in pension age. This caused prices to go up and up, specially in the big cities Milan and Rome.
Now one of the fallouts of the EU realizing that Italy is basically broke and with a not payable debt of some 1300 billions of so Euros was that Italy had to raise taxes. And so Mr Monti decided that it was time to make all this landlords (by definition any propert y that you own and is not your primary residency , so holiday homes, pied-a-terre etc) pay.
For a modest house in a peripheral city that was used a second residency taxes went up from 0 to staggering 3800 Euro a year (in a country where you are lucky if you make more than 1500 Euro a month). Basically the tax is a flat 1% of the house value.
While this did not bothered the rich (minor annoyance) the new tax did manage to put more empty houses on the market (prices went done and in some cases by 50-60%), and I do have friends that managed to finally buy a flat after years of renting.
But it fucked up completely one generation, basically everyone that used the house-as-investment scheme (and most of this people are old and cannot simply go back to work), wiped out billions in asset values from the middle class, financially destroyed millions of families (as their mortgage was now higher than the house values). Spending in general went down a lot has your money was now either used to pay a higher mortgage or the property tax.
Now - who profited the most of this move ? The very fews that where sitting in this particular spot "renting looking to buy" and that also had enough cash saved up (2 income families). And the rich that where more than happy to buy that nice villa for 1 millions instead of 2 (never mind the taxes, they spend more on prosecco or the mainteinance of their pool).
All the rest of the populations, the people renting (rents went up as landlords tried to recoup the tax), the landlords, business in general, the middle class that now are forced to work 2-3 jobs just to keep the house), they all are much worse off.
So no easy solution sadly.
posted by elcapitano at 6:57 AM on August 23, 2017 [9 favorites]
Just a mention that cheaper housing won't eliminate homelessness. A lot of people are homeless due to a number of complicating factors - mental health, addictions, disabilities, unemployable, etc - and housing for many of them will to be in the form of managed facilities with in-house services and supervision, access to healthcare, etc. And then maybe some can transition to affordable independent living.
Otherwise - yeah I'm in favour of measures to ensure a reasonable supply of affordable housing, and to penalize vacancy. What if cities mandated percentages of the types of housing, and denied permits or required offsets to projects that would reduce the amount of affordable housing? A one to-one policy? if your luxury project removes X affordable units, you have to also create X affordable unit somewhere else? How about a licence or permit to own a residential unit that you don't live in? The mortgage interest deduction should be eliminated, or at least capped, so that people can't be deducting the mortgage interest on luxury property.
We just came back from a trip to Northern Michigan. One of our Michigan friends was telling us about how the vacant lot next to them came up for auction for back-taxes. They won the auction and got the lot for $1500. So, housing isn't unaffordable everywhere, and maybe the overall problem is simply just a sputtering US economy, where all the growth and activity are happening in just a relatively few coastal pockets.
posted by Artful Codger at 8:13 AM on August 23, 2017
Otherwise - yeah I'm in favour of measures to ensure a reasonable supply of affordable housing, and to penalize vacancy. What if cities mandated percentages of the types of housing, and denied permits or required offsets to projects that would reduce the amount of affordable housing? A one to-one policy? if your luxury project removes X affordable units, you have to also create X affordable unit somewhere else? How about a licence or permit to own a residential unit that you don't live in? The mortgage interest deduction should be eliminated, or at least capped, so that people can't be deducting the mortgage interest on luxury property.
We just came back from a trip to Northern Michigan. One of our Michigan friends was telling us about how the vacant lot next to them came up for auction for back-taxes. They won the auction and got the lot for $1500. So, housing isn't unaffordable everywhere, and maybe the overall problem is simply just a sputtering US economy, where all the growth and activity are happening in just a relatively few coastal pockets.
posted by Artful Codger at 8:13 AM on August 23, 2017
Just a mention that cheaper housing won't eliminate homelessness. A lot of people are homeless due to a number of complicating factors - mental health, addictions, disabilities, unemployable, etc - and housing for many of them will to be in the form of managed facilities with in-house services and supervision, access to healthcare, etc. And then maybe some can transition to affordable independent living.
My understanding is that this is actually kind of a myth: even homeless people with serious problems tend to stabilize faster if you find them permanent housing first.
posted by en forme de poire at 8:54 AM on August 23, 2017 [14 favorites]
My understanding is that this is actually kind of a myth: even homeless people with serious problems tend to stabilize faster if you find them permanent housing first.
posted by en forme de poire at 8:54 AM on August 23, 2017 [14 favorites]
One of our Michigan friends was telling us about how the vacant lot next to them came up for auction for back-taxes. They won the auction and got the lot for $1500. So, housing isn't unaffordable everywhere
I'm glad your friend was able to purchase a vacant lot for a price they found attractive, but that seems to not be particularly relevant to the cost of housing.
posted by melissasaurus at 9:00 AM on August 23, 2017 [5 favorites]
I'm glad your friend was able to purchase a vacant lot for a price they found attractive, but that seems to not be particularly relevant to the cost of housing.
posted by melissasaurus at 9:00 AM on August 23, 2017 [5 favorites]
My understanding is that this is actually kind of a myth: even homeless people with serious problems tend to stabilize faster if you find them permanent housing first.
My limited experience is just with Canada, so maybe our mix is a bit different. Do you think the same sort of housing program as described in Utah could be viable in NYC, SF Bay area and other overheated markets?
I'm glad your friend was able to purchase a vacant lot for a price they found attractive, but that seems to not be particularly relevant to the cost of housing.
The cost of housing in that area is also lower. My point is that there are many places where housing is more affordable, but the problem in those areas is finding work. Sorry if that wasn't clear.
posted by Artful Codger at 9:22 AM on August 23, 2017
My limited experience is just with Canada, so maybe our mix is a bit different. Do you think the same sort of housing program as described in Utah could be viable in NYC, SF Bay area and other overheated markets?
I'm glad your friend was able to purchase a vacant lot for a price they found attractive, but that seems to not be particularly relevant to the cost of housing.
The cost of housing in that area is also lower. My point is that there are many places where housing is more affordable, but the problem in those areas is finding work. Sorry if that wasn't clear.
posted by Artful Codger at 9:22 AM on August 23, 2017
The piece -- and a lot of comments -- are completely with obsessed with the short list of cities where land and building are especially dear, and the small handful of neighborhoods in those cities where there is any measurable amount of intentionally-vacant luxury housing. Land and construction costs are cheap in the places where the vast majority of the people in the US live, and housing units, luxury or not, are overwhelmingly occupied or for sale or lease to people who are extremely like to occupy them upon possession. Hugely distorting our tax and real estate investment system because some non-rich people can't get to live exactly where they want in San Francisco or DC is absurd.
The piece's error is badly compounded by its repeated reference to residential real estate developments in core business districts, like downtown San Francisco or midtown New York. Prevailing values-per-room for hotel development and prices-per-square foot for office developments means that it those uses, and not middle class housing, which are the alternative to hyper-luxury development on 57th Street between 8th Avenue and Park Avenue. Also, the costs of unionized demolition and high rise construction in those places makes any kind of middle-class housing on those lots money-losing even if the land were free.
There's also only passing mention to affordable housing offsets (which are a bit of a boondoggle but at least they're trying something) and no mention at all to the HUGE community benefit of these under-occupied luxury housing: tons of property tax revenue, plenty of job creation (and in SF / NY etc. many of the jobs at these buildings are head-of-household salary and benefit jobs great for blue collar people), and virtually no incremental consumption of public services or public schooling to net down the fiscal contribution.
posted by MattD at 9:42 AM on August 23, 2017 [4 favorites]
The piece's error is badly compounded by its repeated reference to residential real estate developments in core business districts, like downtown San Francisco or midtown New York. Prevailing values-per-room for hotel development and prices-per-square foot for office developments means that it those uses, and not middle class housing, which are the alternative to hyper-luxury development on 57th Street between 8th Avenue and Park Avenue. Also, the costs of unionized demolition and high rise construction in those places makes any kind of middle-class housing on those lots money-losing even if the land were free.
There's also only passing mention to affordable housing offsets (which are a bit of a boondoggle but at least they're trying something) and no mention at all to the HUGE community benefit of these under-occupied luxury housing: tons of property tax revenue, plenty of job creation (and in SF / NY etc. many of the jobs at these buildings are head-of-household salary and benefit jobs great for blue collar people), and virtually no incremental consumption of public services or public schooling to net down the fiscal contribution.
posted by MattD at 9:42 AM on August 23, 2017 [4 favorites]
no mention at all to the HUGE community benefit [of empty homes]
Much like the huge benefit stores experience from lots of nearby empty storefronts.
posted by zippy at 10:20 AM on August 23, 2017 [9 favorites]
Much like the huge benefit stores experience from lots of nearby empty storefronts.
posted by zippy at 10:20 AM on August 23, 2017 [9 favorites]
Hugely distorting our tax and real estate investment system...
Isn't the point though that a "real estate investment system" that tries to server dual purposes (living space for people, and a store of wealth) might end up doing a shitty job at one or both of them?
posted by ropeladder at 10:20 AM on August 23, 2017 [5 favorites]
Isn't the point though that a "real estate investment system" that tries to server dual purposes (living space for people, and a store of wealth) might end up doing a shitty job at one or both of them?
posted by ropeladder at 10:20 AM on August 23, 2017 [5 favorites]
This problem is at its extreme worst in a few coastal cities, but even if it were limited to those cities it would affect a nontrivial part of the US population. As of the 2010 census, if you add up the population of just the LA, NYC, and SF "urban areas" you get nearly 34,000,000 -- that means 1 in 10 US residents lives one of those three metros alone. If you add up the 10 metro areas with the highest populations, you get ~23% of the total US population, which is just a shitload of people even though the majority of folks live elsewhere (although even where I live in mid-Michigan there's a ton of housing stock sitting empty while developers inexplicably build luxury rentals). I am occasionally irritated when I start feeling like the conversation keeps looping back to those few coastal cities (NY! SF! DC! etc!) but it happens because those are genuinely huge places and a lot of people do live there.
posted by josyphine at 10:38 AM on August 23, 2017 [11 favorites]
posted by josyphine at 10:38 AM on August 23, 2017 [11 favorites]
Plus all the growth is very concentrated in cities:
the 20 counties that combined for half the country’s new business formation are almost entirely pillars of the innovation economy. They include the counties surrounding San Francisco, Los Angeles, New York, Miami, Austin, Dallas and Chicago.
Austin, Dallas and Chicago are less land-locked than SF & NYC but they're still becoming less affordable. The future lies very much in cities (as did the past honestly)
posted by GuyZero at 10:45 AM on August 23, 2017 [4 favorites]
the 20 counties that combined for half the country’s new business formation are almost entirely pillars of the innovation economy. They include the counties surrounding San Francisco, Los Angeles, New York, Miami, Austin, Dallas and Chicago.
Austin, Dallas and Chicago are less land-locked than SF & NYC but they're still becoming less affordable. The future lies very much in cities (as did the past honestly)
posted by GuyZero at 10:45 AM on August 23, 2017 [4 favorites]
Land and construction costs are cheap in the places where the vast majority of the people in the US live, and housing units, luxury or not, are overwhelmingly occupied or for sale or lease to people who are extremely like to occupy them upon possession.
It's cute the way you come into these threads to make sweeping statements about the way things are that are based entirely on your gut feelings (as informed by your fixed ideology), with nary a datum to be seen.
In actual non-made-up fact, a huge chunk of the 75 largest metropolitan areas in the US have year-round vacancy rates even higher than NYC's. This is not a coastal-city problem.
posted by enn at 11:02 AM on August 23, 2017 [12 favorites]
It's cute the way you come into these threads to make sweeping statements about the way things are that are based entirely on your gut feelings (as informed by your fixed ideology), with nary a datum to be seen.
In actual non-made-up fact, a huge chunk of the 75 largest metropolitan areas in the US have year-round vacancy rates even higher than NYC's. This is not a coastal-city problem.
posted by enn at 11:02 AM on August 23, 2017 [12 favorites]
The portions even of the Bay Area and New York where there is any meaningful amount of individually-owned luxury real estate intentionally held unoccupied are tiny. For example, in the entire NY metro area it is a phenomenon of condo buildings in midtown and downtown Manhattan and northeast Brooklyn -- and that's it. There's a far greater issue of new real estate development of it being occupied beyond the infrastructure of the neighborhoods – – overwhelming capacity for schools, transit, etc.
And enn -- the vacancy rate is the opposite of what we're talking about. That's property which is unoccupied but NOT possessed by a homeowner or renter, and almost always desperately in search of the same.
The "vertical store of absentee wealth" issue is interesting but is simply not, for those reasons and those in my original post, any sort of problem to housing availability or affordability that merits aggressive market intervention.
posted by MattD at 11:43 AM on August 23, 2017 [2 favorites]
And enn -- the vacancy rate is the opposite of what we're talking about. That's property which is unoccupied but NOT possessed by a homeowner or renter, and almost always desperately in search of the same.
The "vertical store of absentee wealth" issue is interesting but is simply not, for those reasons and those in my original post, any sort of problem to housing availability or affordability that merits aggressive market intervention.
posted by MattD at 11:43 AM on August 23, 2017 [2 favorites]
because some non-rich people can't get to live exactly where they want in San Francisco or DC is absurd.
Comments like this tick me off so much.
This is not about a few hipster kids not getting to live where they want, this is the wholesale economic displacement of millions of people from the places they grew up.
Look, there is nowhere within a one hour commute of any urban center in Western Washington that isn't at least 30% more expensive than my right on the bus line to down town apartment in a trendy midwest city. And there's no end in sight for price increases.
I don't even live in Seattle, my family lives in unincorporated suburbs a county over and we have a neighbor's kid sleeping on our couch. His mom had to move in with her sister once the house they were in stopped being rented. They couldn't find a place at current market rates within driving distance of their jobs. And that aunt literally had no more room in her house for more than just her sister because all the family in similar straits.
The only reason my brother can live near here is because his childhood friend's dad is a contractor and gets a just barely good enough deal living 5 people to a house that the guy built as a favor, and even then only because it's an oddly built house on a janky lot that he's had trouble selling thus far.
It's not just trendy neighborhoods in the city, it's further out, too. I frankly, don't see how anyone with an average paying job is going to even be able to live here any more without inherited housing or wealth.
And all this because "the market" has decided that the only people who deserve to live in rather large chunks of the country are people who make way more than the average person can aspire to.
posted by Zalzidrax at 11:55 AM on August 23, 2017 [21 favorites]
Comments like this tick me off so much.
This is not about a few hipster kids not getting to live where they want, this is the wholesale economic displacement of millions of people from the places they grew up.
Look, there is nowhere within a one hour commute of any urban center in Western Washington that isn't at least 30% more expensive than my right on the bus line to down town apartment in a trendy midwest city. And there's no end in sight for price increases.
I don't even live in Seattle, my family lives in unincorporated suburbs a county over and we have a neighbor's kid sleeping on our couch. His mom had to move in with her sister once the house they were in stopped being rented. They couldn't find a place at current market rates within driving distance of their jobs. And that aunt literally had no more room in her house for more than just her sister because all the family in similar straits.
The only reason my brother can live near here is because his childhood friend's dad is a contractor and gets a just barely good enough deal living 5 people to a house that the guy built as a favor, and even then only because it's an oddly built house on a janky lot that he's had trouble selling thus far.
It's not just trendy neighborhoods in the city, it's further out, too. I frankly, don't see how anyone with an average paying job is going to even be able to live here any more without inherited housing or wealth.
And all this because "the market" has decided that the only people who deserve to live in rather large chunks of the country are people who make way more than the average person can aspire to.
posted by Zalzidrax at 11:55 AM on August 23, 2017 [21 favorites]
because some non-rich people can't get to live exactly where they want in San Francisco or DC is absurd.
Comments like this tick me off so much.
Ugh, seriously. Like I said last night: searing rage. There are articles upon articles about the housing crisis in the Bay Area, and SF especially. There are tons of jobs (municipal jobs, BART, retail, etc.) that simply do not pay enough for anyone to live remotely near where they work. Haven't we talked about it on this site?
There is a huge, rapidly-growing homeless population here in Oakland, people who have been displaced by rapid changes in rent in neighborhoods that are by no means trendy. There has been a 37% increase in homelessness in the last two years.
This is most certainly not an issue of people kvetching because they can't live in the hippest neighborhood, and it is wildly offensive to imply otherwise.
posted by shapes that haunt the dusk at 1:16 PM on August 23, 2017 [14 favorites]
Comments like this tick me off so much.
Ugh, seriously. Like I said last night: searing rage. There are articles upon articles about the housing crisis in the Bay Area, and SF especially. There are tons of jobs (municipal jobs, BART, retail, etc.) that simply do not pay enough for anyone to live remotely near where they work. Haven't we talked about it on this site?
There is a huge, rapidly-growing homeless population here in Oakland, people who have been displaced by rapid changes in rent in neighborhoods that are by no means trendy. There has been a 37% increase in homelessness in the last two years.
This is most certainly not an issue of people kvetching because they can't live in the hippest neighborhood, and it is wildly offensive to imply otherwise.
posted by shapes that haunt the dusk at 1:16 PM on August 23, 2017 [14 favorites]
What about just taxing empty properties? Landlords have to list rent as income anyway, why not just increase taxes on residences that are empty for more than six months? The tenants list the address as their primary residence as well, so it's possible to cross-check during a tax audit. Landlords with vacant homes will need to set up either short (AirBNB) or long term rentals, bringing down the cost of rent. People with summer homes will pay taxes or try to rent out during the off-season. Those who are sitting on property as an investment will either have to rent or sell it. It wouldn't have as big an impression on housing prices, but it would definitely help keep rent low.
posted by domo at 2:05 PM on August 23, 2017 [1 favorite]
posted by domo at 2:05 PM on August 23, 2017 [1 favorite]
It is absolutely happening commercial real estate. No one has any incentive to ever lower rents so they sit around with empty lots until a bank can afford to move in - it's been spreading for years but reaching critical point cause people are losing access to delis and laundermats and pharmacies as the richest, most valuable areas succumb to rentier caused urban blight
Wow! Welcome to the South Loop neighborhood of Chicago! Nail salons and sports bars seem to be the only commerce immune.
posted by Chitownfats at 2:28 PM on August 23, 2017 [4 favorites]
Wow! Welcome to the South Loop neighborhood of Chicago! Nail salons and sports bars seem to be the only commerce immune.
posted by Chitownfats at 2:28 PM on August 23, 2017 [4 favorites]
In actual non-made-up fact, a huge chunk of the 75 largest metropolitan areas in the US have year-round vacancy rates even higher than NYC's. This is not a coastal-city problem.
For most of the metro area around here and lots of other Rust-Belt cities, properties are vacant because no one wants to live there, not because rich people are hoarding them. Houses sit empty for generations until the roofs cave in and the city finally has to spend the money to bulldoze. There are 50,000 abandoned houses in Allegheny County that no one can afford to fix.
posted by octothorpe at 5:08 PM on August 23, 2017 [1 favorite]
For most of the metro area around here and lots of other Rust-Belt cities, properties are vacant because no one wants to live there, not because rich people are hoarding them. Houses sit empty for generations until the roofs cave in and the city finally has to spend the money to bulldoze. There are 50,000 abandoned houses in Allegheny County that no one can afford to fix.
posted by octothorpe at 5:08 PM on August 23, 2017 [1 favorite]
My limited experience is just with Canada, so maybe our mix is a bit different. Do you think the same sort of housing program as described in Utah could be viable in NYC, SF Bay area and other overheated markets?
This general approach is apparently already being used in Canada in a limited way in expensive cities like Vancouver and Toronto, where it appears to have delivered benefits for the highest-need populations (a majority of whom had a psychotic disorder and substance use problems) while also delivering significant cost savings. So I don't see why not.
posted by en forme de poire at 5:20 PM on August 23, 2017 [1 favorite]
This general approach is apparently already being used in Canada in a limited way in expensive cities like Vancouver and Toronto, where it appears to have delivered benefits for the highest-need populations (a majority of whom had a psychotic disorder and substance use problems) while also delivering significant cost savings. So I don't see why not.
posted by en forme de poire at 5:20 PM on August 23, 2017 [1 favorite]
Every time the discussion of luxury blight or high price blight comes around I can't help but think of two properties in the down town of my city. One on a prime corner location was an old movie theatre that was renovated when the theatre closed, 20 years ago and has been sitting with a for lease sign ever since. The sign gets updated every once and a while but that is about it. Another was a bank that closed and sat empty for 15+ years before finally getting a lawyer firm for a tenant. It's just crazy.
posted by Mitheral at 8:59 PM on August 23, 2017 [2 favorites]
posted by Mitheral at 8:59 PM on August 23, 2017 [2 favorites]
"One other aspect of 'luxury blight' is that mansion owners do not shovel their sidewalks in the winter or arrange for someone to shovel their sidewalks because they are not there. They have skedaddled off to somewhere warm. Leaving us plebes to struggle, slip and slide through their neglect."
Fines for not clearing the sidewalk within 24 hours of the snow stopping. Exemptions tied to senior property tax exemptions (in lower-income neighborhoods), so old people who can't afford it don't get huge fines for not shoveling when they can't. And an amnesty program where you can pay the city $2/linear foot or something to clear your frontage ($150 for a 75-foot-wide lot) if you happen to be out of town when the snowmageddon happens and you failed to arrange a neighborhood teenager to shovel, go online and fill out a form, the city shovels it at above-market rate at its leisure and you don't get a fine. Fines start at $300, and escalate rapidly for each additional day your sidewalk goes unshoveled ... and continue to escalate through the entire winter season, resetting each year on July 1. You get a foot of snow that an absentee owner doesn't bother with for a week because they don't even know the weather in $ColdTown, they could be looking at $3,000 in fines for just that week. And then you get a big second snow storm later that winter, they could be facing $10,000 in fines for that winter for being absentee owners who fail to obey city sidewalk clearing ordinances.
"They're condemning sharecropper shacks, but rather than help them build new buildings to code in the same footprint, they're I guess just hoping that these people will just go away? I don't know."
That is literally exactly the scheme, and the reason for requiring dwellings over 2,000 square feet. "No poors allowed."
posted by Eyebrows McGee at 11:25 AM on August 24, 2017 [2 favorites]
Fines for not clearing the sidewalk within 24 hours of the snow stopping. Exemptions tied to senior property tax exemptions (in lower-income neighborhoods), so old people who can't afford it don't get huge fines for not shoveling when they can't. And an amnesty program where you can pay the city $2/linear foot or something to clear your frontage ($150 for a 75-foot-wide lot) if you happen to be out of town when the snowmageddon happens and you failed to arrange a neighborhood teenager to shovel, go online and fill out a form, the city shovels it at above-market rate at its leisure and you don't get a fine. Fines start at $300, and escalate rapidly for each additional day your sidewalk goes unshoveled ... and continue to escalate through the entire winter season, resetting each year on July 1. You get a foot of snow that an absentee owner doesn't bother with for a week because they don't even know the weather in $ColdTown, they could be looking at $3,000 in fines for just that week. And then you get a big second snow storm later that winter, they could be facing $10,000 in fines for that winter for being absentee owners who fail to obey city sidewalk clearing ordinances.
"They're condemning sharecropper shacks, but rather than help them build new buildings to code in the same footprint, they're I guess just hoping that these people will just go away? I don't know."
That is literally exactly the scheme, and the reason for requiring dwellings over 2,000 square feet. "No poors allowed."
posted by Eyebrows McGee at 11:25 AM on August 24, 2017 [2 favorites]
"also uhhh sorry for banging on all MARX MARX MARX SEIZE EXPROPRIATE SMASH in this thread. I have to admit that the thing that's most likely to bring out the white-hot class rage in me is the rental housing market (with a close second being wage theft). "
I award you the You Can't Tip a Buick Memorial Award and/or Punishment for Excellence in Whatever the Hell That Thing You're Doing Is.
posted by Eyebrows McGee at 11:27 AM on August 24, 2017 [7 favorites]
I award you the You Can't Tip a Buick Memorial Award and/or Punishment for Excellence in Whatever the Hell That Thing You're Doing Is.
posted by Eyebrows McGee at 11:27 AM on August 24, 2017 [7 favorites]
Fines for not clearing the sidewalk within 24 hours of the snow stopping. Exemptions tied to senior property tax exemptions (in lower-income neighborhoods), so old people who can't afford it don't get huge fines for not shoveling when they can't.
It kills me (sometimes nearly literally with a slip and fall) that so many places allow even commercial properties to slide by with no shoveling enforcement because of the "what about the elderly or disabled homeowners?" argument. As if we can't come up with good ways to exempt that population from fines and assist them in clearing walkways without just giving up on having usable pedestrian infrastructure. And as if the people who can't shovel aren't also the people who are most likely to be injured or isolated by uncleared paths.
It's similar to the "what about people with disabilities that prevent them from walking or bicycling?" argument against doing anything to improve infrastructure for anyone not driving a car, ignoring all the people with disabilities that prevent them from driving. Which is a total derail, sorry.
posted by asperity at 11:12 AM on August 25, 2017 [3 favorites]
It kills me (sometimes nearly literally with a slip and fall) that so many places allow even commercial properties to slide by with no shoveling enforcement because of the "what about the elderly or disabled homeowners?" argument. As if we can't come up with good ways to exempt that population from fines and assist them in clearing walkways without just giving up on having usable pedestrian infrastructure. And as if the people who can't shovel aren't also the people who are most likely to be injured or isolated by uncleared paths.
It's similar to the "what about people with disabilities that prevent them from walking or bicycling?" argument against doing anything to improve infrastructure for anyone not driving a car, ignoring all the people with disabilities that prevent them from driving. Which is a total derail, sorry.
posted by asperity at 11:12 AM on August 25, 2017 [3 favorites]
The problem is that it's more profitable to invest money in a house than it is in any liquid form, as well as houses having intrinsic value as a backstop against catastrophe.
If someone would lend me $1m to invest in stocks, at a 3-4% interest rate, with a 30 year term and no real recourse if I default, then of course I'd take it. Nine times out of 10, I'd make a ton of money; the other time I would only suffer a hit on my credit score a decade or two down the road. No bank in its right mind will ever give me that deal. But they will loan me $1m to buy a house, which historically is a much worse investment than stocks.
That's what home ownership is: you're making a big investment with somebody else's money. If the value goes up, you keep all the profit; if the value goes down, you can walk away with little damage. Of course people want in on that deal.
posted by miyabo at 10:28 PM on August 25, 2017 [3 favorites]
But they will loan me $1m to buy a house, which historically is a much worse investment than stocks.
The bank's POV: they own the house, you pay them for the privilege of owning it over a 30 year span, and you give them a ton of cash up front.
Wouldn't you love to buy something at a 20% discount and have someone pay you to use it and pay to maintain it?
posted by zippy at 12:39 PM on August 26, 2017
The bank's POV: they own the house, you pay them for the privilege of owning it over a 30 year span, and you give them a ton of cash up front.
Wouldn't you love to buy something at a 20% discount and have someone pay you to use it and pay to maintain it?
posted by zippy at 12:39 PM on August 26, 2017
Got empty homes? Got homeless people? Eminent Domain the shit! Not using it? We have a use. Don't want us to do that? We have a handy very high tax rate just for you.
This of course, is a lovely fantasy.
posted by evilDoug at 9:24 AM on August 27, 2017 [5 favorites]
This of course, is a lovely fantasy.
posted by evilDoug at 9:24 AM on August 27, 2017 [5 favorites]
I hadn't heard of the concept of luxury blight or high-rent blight before reading the link that Perplexion posted. The term hasn't been thrown around much here in San Francisco so far as I'm aware. One reason may be San Francisco's Formula Retail laws, which have been around since 2004 and are meant to cut down on chain stores in small business districts. We still have a lot of high-end retail in some of our more gentrified neighborhoods, but it tends to be locally-owned businesses or small chains (there's a threshold of 11 locations anywhere in the world before something is considered subject to the Formula Retail restrictions.)
posted by larrybob at 11:02 AM on September 11, 2017 [1 favorite]
posted by larrybob at 11:02 AM on September 11, 2017 [1 favorite]
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Okay, but can we still eat them, too?
posted by It's Raining Florence Henderson at 12:16 PM on August 22, 2017 [53 favorites]