There should be similar laws all over. In a global economy, if "regular people" have to compete with multi-millionaires and billionaires who can move capital wherever, whenever they want, housing where any decent paying jobs are located will continue to become more and more unaffordable.
Please note: I'm fully aware this isn't the ONLY reason for ridiculous housing prices.
So you should have the ability to force other people how to use the house they paid for? Should I be able to tell you how to use your computer, phone, or car?
They should consider becoming citizens if they want to get the same treatment as citizens in the country. Most countries have significant limitations on what non-citizens can purchase, try buying land in China.
Try becoming a citizen of China. And even if you manage to on paper, try becoming a culturally accepted citizen of China. China is a terrible example of what it should be like.
We do have laws that do tell you how you can and cannot use your house, computer, phone, and car.
Pedantic examples:
- You cannot imprison another adult human within your house.
- You cannot access a secured computer system with your computer.
- You cannot (could not?) use your phone during certain parts of airplane takeoff and landing, and they may not be allowed in certain buildings.
- You cannot park your car wherever you want; only on the side of the street and not in the middle of the street.
Furthermore, transience discourages communities, regardless of the transient's income level.
> So you should have the ability to force other people how to use the house they paid for?
This already happens.
In much of the US you can't use your house as a storefront for a retail business or for heavy manufacturing, for instance.
Housing/communities should reflect the principles of the people that live there and benefit the local community as a whole, not just serve as a wealth store for people in economically unstable countries.
> Should I be able to tell you how to use your computer, phone, or car?
Yeah you already do (by proxy).
Automobiles are among the most regulated property in existence, and its a crime for instance to use a computer to illegally obtain access to someone else's computer.
I should and do have the ability to force how you use your radio transmission equipment, such that you don't broadcast noise on all channels.
I should and do have the ability to force you to drive on the street and not the sidewalk and obey traffic signals.
I should and do have the ability to take some of your money to put toward the general welfare (road maintenance, public libraries, a police force) in the community we share.
I should and do have the ability to force you not to burn garbage in your back yard, blast music at all hours out of your garage, and so on.
That's kinda society in a nutshell, and it's a little surprising you're asking the question. It's rules that we generally mostly agree on--not all of us will agree on every rule, of course--that govern how we live our lives and do things with our stuff.
Should I be able to tell you how to use your computer, phone, or car?
No. Land is different from all of those other things. We can always make millions more cars, phones, and computers. We can't make millions of additional housing units in economically important cities like San Francisco, New York, Vancouver, Toronto, etc. So it behooves us to make sure that housing in those places is being used efficiently instead of sitting vacant. That's all there is to it.
Let's use your house more efficiently. If you live in the United States, I bet you have a house that could fit at least two more families in it. Do you mind if I move in some of my relatives? Or, more specifically do you mind if your neighbors passed such a law?
It works pretty well in theory, not so well in practice. Too many issues with neighbourhood associations, land values, zoning, infrastructure, etc. It actually turns out to be very hard to increase the housing stock in a lot of major cities.
I'd say it's overwhelmingly due to the regulatory straightjacket these cities are caught in. Municipal and regional governments have made it extremely difficult to add new housing through increased density, and then they find that prices are climbing sharply, and wonder "how did this happen?!" Well, supply was choked off.
The broadest solution is very high property taxes - ideally a land value tax - in order to encourage productive use of property and limit speculative bubbles.
Well by those terms, the more tax you owe on a property the more productive either it and/or you have to be to maintain it - as the taxes increase, so do the incentives for you to put the property to work (as a rental), so that it helps to cover the cost of its own existence. It's similar to the incentives around NIT in Europe - if you have to pay money to the bank for them to store your Euros, you have more of an incentive to find productive capital investments instead.
So the more expensive a property I have, the more pressure should be put on on me to rent it out? If I own a hovel I get to keep it to myself but if it's George Clooney's villa on Lake Como or Zuck's house in Palo Alto society should lean on them to make these places "productive" by renting them out?
Yes, I think there should be pressure to either use it yourself (if you decide your personal utility is worth the cost) or to rent it out. You can still leave it empty, of course, but people do respond to incentives; the more the maintenance costs, the more incentive they will have to either use it themselves, or rent it, or sell it. One of the major problems is that many of these properties currently sit empty as a store of wealth - like a safety deposit box - for overseas owners, which causes problems for the community.
It's a little different as land is finite, I could own 100 phones, it would not change your option to buy one, if I bought 100 houses in your town, you might have to move. Here in the UK for example, crucial support staff, teachers, nurses, policeman, are paid by the state, they are having to move further from their place of work to find affordable housing, so they commute further and its hard for organisations to be reactive as staff need to be on site, not on call, which costs all of us more taxes, so I think if you buy a house, you 'rent' a piece of the land from the sovereign entity that protects residents, if you are not utilising it you are a burden.
FCC, computer fraud and abuse act, DMV. You should have thrown in plane to come up the most regulated industries where you are HIGHLY restricted in what you can do with your device.
Because that would ultimately discourage new construction. If you're an investor and you want to invest in a house to hopefully rent out (not keep empty just-in-case for yourself), then you have to factor in the risk of not being able to rent out the property. Having a tax if you fail to rent the house only increases the risk of failing to rent, and thus, makes investing in real estate more risky. Pro-development policies need investment to be less risky, not more risky.
On top of Seattle's already high property taxes? Should owners of vacant properties get a rebate because they aren't using the infrastructure they are paying for? Should I be able to tax you for not using your car at least 16 hours a day?
Seattle is a city built by it's people, they have created ideal conditions for home ownership by participating in building a peaceful, prosperous economy which respects individual rights. By having foreigners coming in and buying this 'society' up - beyond the first generation of land owners - they are penalised for having built their own country up, as they end up unable to afford to live in it, burning up valuable income into paying high rents and house prices. A tax is one of the best way to correct this imbalance, by charging the cost of enforcing individual rights to those who benefit from it.
From the article, 50% of homes sold in Seattle and its suburbs are foreign investments. That's absolutely insane - totally disincentivising people from actually living there from trying to buy a home. Guess it's time to find another city.
> From the article, 50% of homes sold in Seattle and its suburbs are foreign investments.
The article does say that, but as a Seattle resident, that really does not sound right to me. As a counterpoint, this article[1] in the Seattle Times says:
Chinese money now accounts for about 55 percent of all homes purchased by foreigners in Washington, the Realtors association says.
and
“It’s definitely helped in driving prices up,” Riley said. In some parts of the Eastside, in particular, she said “we’ve had a large influx of international buyers coming in. They’re the buyer about 50 percent of the time right now.”
That's 50 or 55% in some parts of the market, not the Seattle metro market as a whole. That's a lot more believable.
> About half of the homes sold in Seattle’s suburbs are going to Chinese buyers
I suspect this is supposed to read "sold in some of Seattle's suburbs" and probably refers to Bellevue (and possibly Medina) which already has a strong Chinese community and is heavily favored by Chinese investors.
When Amazon and Microsoft go through the next inevitable downturn and housing prices take a hit then all of these investors will learn a painful lesson. I know a lot of young software developers who have moved to Seattle for job opportunities but not many of them want to stay long-term and are happy to explore jobs elsewhere. The there attitude seems very distinct from the Bay Area where people would love to stay - and tend to hang on as long as possible before grudgingly realizing they should move away.
I've spent a fair amount of time pulling together King County Recorder's office data, and I don't believe that number unless they're all doing business as... strings that look an awful lot like names.
The tax in question was enacted by the government of British Columbia. You may be confusing this with the "vacant homes tax" which the City of Vancouver enacted recently?
Foriegn ownership is only a small part of why Vancouver real estate is so high. The last stats I saw said foriegn sales amounted to 10-15%. It's mostly Canadian citizens, coupled with low interest rates that are causing this bubble.
I saw a stat that said 40% of condos purchased in Toronto (another crazy market) were bought by speculators. Foriegn sales are even lower (sub 10%) than in Vancouver.
These laws focused on foriegners are good for scoring political points, but they don't really address the issue.
It's strange that there is so much push back against foreign investment.
Rather than enact a bunch of projectionist policies, wouldn't it be better to just adapt to the investment in a way that benefits natives? After all, when foreign people want to buy something you have, that is called an export, and most people agree those are good for the economy.
If foreigners are investing in housing, local governments will receive a huge influx of tax income from property taxes. If there is no property tax, then now is the perfect time to add it (or the similar but more progressive land value tax) or increase it. The income from these taxes can be used to fund infrastructure, education, and reduce other taxes like consumption taxes.
The other thing to when demand for housing in your city is high, is to increase supply. Seattle is not full. The Seattle metropolitan area is 15,000 sq. km with a population of 3.7 million. To compare, the Tokyo metropolitan area is 13,500 sq km, with a population of 37 million. No idea about the accuracy, but this site showed that rents were more reasonable in Tokyo (which matches my own impressions): https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
If we are going to take legislative action anyway, instead of a bunch of protectionist policies that will create long lasting opportunities for arbitrage and market inefficiencies, why not just make taxes to help the people benefit from the foreign investment and let development happen to help reduce costs long term?
>An unusually high number of Vancouver homeowners living in multi-million dollar neighbourhoods but reporting poverty-level incomes is a red flag that needs immediate government action, says NDP MLA David Eby.
>“The focus should be quite straightforward: are you paying your worldwide taxes inside British Columbia, or not?” Eby, who represents Vancouver-Point Grey, told reporters during a July 15 press conference.
>“If you’re not you should have to pay extra in order to pay for the public services that make this real estate so valuable: the environmental controls, the policing, the court system, the schools and the healthcare.”
>Documents obtained by Eby also show 29 of those homeowners have also been able to take out a mortgage. “There’s a waitress that bought a $2.3 million property. And there was a casino dealer and a cashier who bought a $1.2 million property as well. Students, homemakers and waitresses, by definition, have very low or no incomes. Is this why MacKenzie Heights and other neighbourhoods throughout the Lower Mainland are reporting incredibly low incomes, despite real estate values being so high? Are the people purchasing these $1 million homes reporting poverty level incomes for tax purposes?”
It still seems like a property tax assessment on the house, which doesn't take into consideration the owners tax bracket, Would benefit the community the local governments?
Property tax on residences isn't they only place municipalities get revenue, they also get taxes from commercial (shops & companies) property. If the foreign owners never move into the house and don't rent[0] it there is no additional revenue in the form of purchasing things or working at an employer in the city.
I said that if we are making legislative changes anyway (i.e. adding in anti-foreign buyer laws), why not just fix the underlying problem, sans-xenophobia, by adding or increasing property taxes?
If people aren't paying a sufficient amount in taxes now, I suggest adding land value taxes.
I think the push back comes from the fact that in many of these places, Government policies are very favorable to owners and investors. In California, for example, property taxes are extremely low, while sales and income taxes are the highest in the entire country. As domestic home ownership decreases, the domestic political support for such favorable policies will decrease as well. As California's home ownership rate decreases (and fiscal pressures increase), there's no doubt in my mind that proposition 13 will eventually come under attack and eventually be repealed. If property taxes were 3%, like in Texas, I don't think as many people would complain about absentee ownership since so much of the value flows back to the community each year.
> The other thing to when demand for housing in your city is high, is to increase supply.
This statement assumes that cities aren't already increasing supply. The fact is that Vancouver is building more supply than at any other time in recent memory.
There are real physical limits to creating supply. There are limits in tradespersons available. There are limits in being able to review and approve buildings and it all takes time. The city of Vancouver has already increased development fees in order to be able to hire more people to review development applications faster and build faster.
In contrast to the real and known limits of supply creation, the scope of foreign speculative demand is unknown.
What happens when you increase supply and you don't meet demand? What happens if foreign demand increases to meet the new supply?
I'd be fine with foreign buyers buying up all of the real estate if we taxed unoccupied residences heavily. As long as they're renting it to the local market, it's ok.
The problem is that that comparison is misleading: while a Seattle 1BDR is 61% more expensive than a Tokyo one, it's also much bigger.
Note that the Buy comparison is by square meter, which is much more reasonable. Price per Square Meter to Buy Apartment in City Centre is -60% in Seattle i.e. Seattle_price = .4*Tokyo_price.
It's not like there's such a huge disparity in rent prices vs. buy prices in either city. The main reason that Rent for Apartment (1 bedroom) in City Centre comes out 61% more expensive in Seattle is that their average 1BDR is more than double the size of a Tokyo 1BDR.
> It's strange that there is so much push back against foreign investment.
You say "foreign investment" as if they're looking to develop or improve the local economy and in the process make a profit. Many Chinese buyers have been targeting foreign real estate as a way to combat the fluctuations of their local currency, which is under suspicion of government manipulation. They're "investing" because there's nothing of long-term value in local areas, so they buy foreign properties in more stable markets. Without any consideration of the effect on the people living in that market.
> when foreign people want to buy something you have, that is called an export
Local goods that are shipped to foreign locations are called exports, and they're subject to significant extra taxation. Local resources such as land, water, food and energy that are bought and taken off the market to create shortages, thus increasing the cost of living for locals (thus increasing the value of your investment at the expense of others) aren't called exports. They're called market manipulation (or market speculation, if you're being generous).
> [Various comments about housing density]
Many of these properties lay vacant, which further drives up the cost of housing in already expensive locales. These buyers often aren't targeting areas for building commercial or high-density housing. They're buying multiple houses at the middle-class level, which contributes to an already vanishing middle class. The cost of houses and apartments in these areas has multiplied by 1.5x-3.5x the original value in a very short period of time. Unbalanced inflation like this perennial issue in the US given the lack of sufficient corporate oversight. Artificial inflation (beyond currency inflation) of the cost of living should be the prime issue for any major city.
Allowing them to buy and sit on valuable land that could be developed when they have no intention of development actually prevents us from increasing housing density in these high-demand areas. That's the whole reason they're introducing this tax. As long as there's some sort of time-limited exemption for actual construction and development that will cover people building new commercial and high-density housing structures, it's exactly the sort of thing we should be doing with our rate of population increase.
> rents were more reasonable in Tokyo
It's also perniciously difficult to rent in Tokyo as a foreigner. And when moving into a new apartment, locals will often pay a move-in gift of 3x the monthly rent as a tradition from post-war shortages. Japan also has a much more advanced public transit system, allowing for longer commute times and more stable pricing. China also doesn't allow foreigners to buy land or open businesses. In any case, Vancouver's and Seattle's current unreasonable rents are a factor from external manipulation, so once we curb the foreign investors who don't develop or use property, it should become much more competitive.
I am beginning to think there is another housing bubble, but this time I am not exactly sure how it would play out if it burst assuming there is one forming. Would it affect the Chinese economy? The economy in each US city? The larger US economy? The global economy?
Not quite correct. The CS20 home price index is...
- 7% lower than the 2006 peak in nominal terms.
- 22.6% lower than the 2006 peak in inflation-adjusted terms (adjusted by the BLS's US CPI-urban NSA)
- 27.3% lower than the 2006 peak as a percentage of wages (adjusted by the BLS's average hourly earnings paid to private-sector employees)
Together with massively lower mortgage rates (3.9% rather than 6.2% for a 30yr fix), the situation is nowhere near as bubblicious as 2006. We are maybe around 2003 levels - easily sustainable.
The article is pretty lazy with describing the tax. The municipal government of Vancouver doesn't have any of these taxing powers, and the tax comes from the Provincial government. It only applies to the Metro Vancouver area however, so some are already stating that there has been a spillover effect in other areas of the Province, such as Victoria.
The foreigner tax is provincial (applying only to Metro Van). The vacancy tax is municipal, applying to CoV. The city requested special taxing powers from the province for this tax and received it.
thanks for the reply @Tiktaalik, I couldn't work out if this is a top down or bottom up response. So it's Provincial (State in my country). Interesting.
Please note: I'm fully aware this isn't the ONLY reason for ridiculous housing prices.