The Daily episode on the housing crisis

[Anonymous]

Anonymous wrote:Solutions to "crisis":

-- Ban foreign ownership of real estate
-- Eliminate all federal tax deductions on homes that aren't people's primary residences

Once you realize that our country is set up to benefit corporations and the wealthy, you'll realize that the "crisis" is intentional and works to their benefit.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Solutions to "crisis":

-- Ban foreign ownership of real estate
-- Eliminate all federal tax deductions on homes that aren't people's primary residences

Once you realize that our country is set up to benefit corporations and the wealthy, you'll realize that the "crisis" is intentional and works to their benefit.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Solutions to "crisis":

-- Ban foreign ownership of real estate
-- Eliminate all federal tax deductions on homes that aren't people's primary residences

Once you realize that our country is set up to benefit corporations and the wealthy, you'll realize that the "crisis" is intentional and works to their benefit.

You probably couldn’t ban it, but you can impose crippling tax and you can ban ownership by certain countries on national security grounds

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Solutions to "crisis":

-- Ban foreign ownership of real estate
-- Eliminate all federal tax deductions on homes that aren't people's primary residences

Once you realize that our country is set up to benefit corporations and the wealthy, you'll realize that the "crisis" is intentional and works to their benefit.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

At the federal level the mechanism will always be taxes. Creating onerous taxes on foreign-owned residential investment properties would effectively kill this market -- many foreign investors are buying these properties explicitly for the tax benefits (a lot of write-offs available to landlords).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Did they bother to address the fact that housing has become commoditized thanks to corporations, hedge funds, and regular people like you and me buying multiple homes and renting them out (whether as airbnbs or more traditional rental properties)? Because that’s the real culprit. Hedge funds and corporations own entire neighborhoods in certain areas. They literally come in a buy up nearly an entire new development and then have the power to set the new fair market value.

What about immigration?

What about foreign nationals who live abroad but buy homes in the US for investment purposes? ICYMI: Canada realized this was ruining their housing market and has taken steps to address it. Too little too late once people and corporations own property, but at least they got the memo.

Building more affordable housing is important, but it’s an exercise in futility unless there are strict restrictions on who can buy the housing and who must actually live there. The MoCo MPDU approach is one example (not perfect, but better than nothing).

They touched on the commoditization issue but it wasn't the focus. I agree I would have liked to hear more on this. Especially because their focus was on markets that recently had very affordable housing (they do a deep dive into Kalamazoo) but have recently seen a huge run up in housing costs as people from other places have started entering those housing markets. The show makes it sound like it's mostly people moving to these markets but as someone who knows a lot of people who work in real estate development I'm pretty confident that a lot of the people buying up housing in this market are investors who do not and will never live there.

Like they interview a couple in Kalamazoo who were displaced when the duplex where they were renting a unit was sold. They ultimately find housing but it is more than double what they'd been paying because they are forced into a new build rental (modular home I think) and they can't find anything like the older rental they'd been living in. This was a dual-income couple with decent working class jobs and now most of their income is going to housing and they can't save and have to watch every penny. It's depressing.

But they don't talk about who bought the duplex. Sure it might have been a family moving from Detroit who bought it to live in and rent the extra unit. But I think odds are good it's a real estate investor who bought it and will do a cheap flip with "luxury look" finishes and then rent it out for 3-4x the prior rent. Or turn it into an Airbnb. Because you see that a lot.

I think most people are aware that speculators and investors started buying up properties in the Dallas metro area before it became hot. They bought multiple SFHs and practically entire neighborhoods @$200k and now thanks to their “investments” they drove the housing market to a frenzy where you must be an all cash buyer prepared to pay $600-800k+ for the basic 3 bdrm sfh. Entire neighborhoods have been flipped to rentals mostly owned by corporations, hedge funds, and foreign investors (mostly Asian).

Once the system has been commoditized, it’s broken and nearly impossible to fix. Building more housing won’t fix the problem since the same investors are best positioned to pay cash immediately.

The pp who said we need to ban foreign investors and dump the tax credits isn’t going far enough. It won’t work. The foreigners will set up shell companies and the reality is the tax credits aren’t fueling the individual investors—it’s quite lucrative to generate income from rentals and periodic flips or sales.

Switching gears: plopping duplexes into established neighborhoods like MoCo is proposing won’t fix the problem either.

The Feds are perhaps the only employer equipped to move the needle by shifting offices to lower-density cities/states to attract people away from the major metro areas. Better yet: force the Amazon’s of the world to plant roots in Kalamazoo instead of NoVA.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Solutions to "crisis":

-- Ban foreign ownership of real estate
-- Eliminate all federal tax deductions on homes that aren't people's primary residences

Once you realize that our country is set up to benefit corporations and the wealthy, you'll realize that the "crisis" is intentional and works to their benefit.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

At the federal level the mechanism will always be taxes. Creating onerous taxes on foreign-owned residential investment properties would effectively kill this market -- many foreign investors are buying these properties explicitly for the tax benefits (a lot of write-offs available to landlords).

What percentage of real estate in the US do you think is foreign owned?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Did they bother to address the fact that housing has become commoditized thanks to corporations, hedge funds, and regular people like you and me buying multiple homes and renting them out (whether as airbnbs or more traditional rental properties)? Because that’s the real culprit. Hedge funds and corporations own entire neighborhoods in certain areas. They literally come in a buy up nearly an entire new development and then have the power to set the new fair market value.

What about immigration?

What about foreign nationals who live abroad but buy homes in the US for investment purposes? ICYMI: Canada realized this was ruining their housing market and has taken steps to address it. Too little too late once people and corporations own property, but at least they got the memo.

Building more affordable housing is important, but it’s an exercise in futility unless there are strict restrictions on who can buy the housing and who must actually live there. The MoCo MPDU approach is one example (not perfect, but better than nothing).

They touched on the commoditization issue but it wasn't the focus. I agree I would have liked to hear more on this. Especially because their focus was on markets that recently had very affordable housing (they do a deep dive into Kalamazoo) but have recently seen a huge run up in housing costs as people from other places have started entering those housing markets. The show makes it sound like it's mostly people moving to these markets but as someone who knows a lot of people who work in real estate development I'm pretty confident that a lot of the people buying up housing in this market are investors who do not and will never live there.

Like they interview a couple in Kalamazoo who were displaced when the duplex where they were renting a unit was sold. They ultimately find housing but it is more than double what they'd been paying because they are forced into a new build rental (modular home I think) and they can't find anything like the older rental they'd been living in. This was a dual-income couple with decent working class jobs and now most of their income is going to housing and they can't save and have to watch every penny. It's depressing.

But they don't talk about who bought the duplex. Sure it might have been a family moving from Detroit who bought it to live in and rent the extra unit. But I think odds are good it's a real estate investor who bought it and will do a cheap flip with "luxury look" finishes and then rent it out for 3-4x the prior rent. Or turn it into an Airbnb. Because you see that a lot.

I think most people are aware that speculators and investors started buying up properties in the Dallas metro area before it became hot. They bought multiple SFHs and practically entire neighborhoods @$200k and now thanks to their “investments” they drove the housing market to a frenzy where you must be an all cash buyer prepared to pay $600-800k+ for the basic 3 bdrm sfh. Entire neighborhoods have been flipped to rentals mostly owned by corporations, hedge funds, and foreign investors (mostly Asian).

Once the system has been commoditized, it’s broken and nearly impossible to fix. Building more housing won’t fix the problem since the same investors are best positioned to pay cash immediately.

The pp who said we need to ban foreign investors and dump the tax credits isn’t going far enough. It won’t work. The foreigners will set up shell companies and the reality is the tax credits aren’t fueling the individual investors—it’s quite lucrative to generate income from rentals and periodic flips or sales.

Switching gears: plopping duplexes into established neighborhoods like MoCo is proposing won’t fix the problem either.

The Feds are perhaps the only employer equipped to move the needle by shifting offices to lower-density cities/states to attract people away from the major metro areas. Better yet: force the Amazon’s of the world to plant roots in Kalamazoo instead of NoVA.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

Yes, and realize that companies make decisions on where to locate based almost entirely on the available qualified work force in that area. That's why Amazon would never move to Kalamazoo- they would burn through the local software programming work force in about a month of hiring. And that's why they moved to Arlington- because of the agglomeration effect from the regional tech workforce that has been building for 40+ years. Amazon was offered billions by multiple cities to move there- and they never considered it because of work force availability.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Solutions to "crisis":

-- Ban foreign ownership of real estate
-- Eliminate all federal tax deductions on homes that aren't people's primary residences

Once you realize that our country is set up to benefit corporations and the wealthy, you'll realize that the "crisis" is intentional and works to their benefit.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

At the federal level the mechanism will always be taxes. Creating onerous taxes on foreign-owned residential investment properties would effectively kill this market -- many foreign investors are buying these properties explicitly for the tax benefits (a lot of write-offs available to landlords).

What percentage of real estate in the US do you think is foreign owned?

Supposedly it is between 2-3% and clustered in cities like NYC, LA, SFO.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Did they bother to address the fact that housing has become commoditized thanks to corporations, hedge funds, and regular people like you and me buying multiple homes and renting them out (whether as airbnbs or more traditional rental properties)? Because that’s the real culprit. Hedge funds and corporations own entire neighborhoods in certain areas. They literally come in a buy up nearly an entire new development and then have the power to set the new fair market value.

What about immigration?

What about foreign nationals who live abroad but buy homes in the US for investment purposes? ICYMI: Canada realized this was ruining their housing market and has taken steps to address it. Too little too late once people and corporations own property, but at least they got the memo.

Building more affordable housing is important, but it’s an exercise in futility unless there are strict restrictions on who can buy the housing and who must actually live there. The MoCo MPDU approach is one example (not perfect, but better than nothing).

They touched on the commoditization issue but it wasn't the focus. I agree I would have liked to hear more on this. Especially because their focus was on markets that recently had very affordable housing (they do a deep dive into Kalamazoo) but have recently seen a huge run up in housing costs as people from other places have started entering those housing markets. The show makes it sound like it's mostly people moving to these markets but as someone who knows a lot of people who work in real estate development I'm pretty confident that a lot of the people buying up housing in this market are investors who do not and will never live there.

Like they interview a couple in Kalamazoo who were displaced when the duplex where they were renting a unit was sold. They ultimately find housing but it is more than double what they'd been paying because they are forced into a new build rental (modular home I think) and they can't find anything like the older rental they'd been living in. This was a dual-income couple with decent working class jobs and now most of their income is going to housing and they can't save and have to watch every penny. It's depressing.

But they don't talk about who bought the duplex. Sure it might have been a family moving from Detroit who bought it to live in and rent the extra unit. But I think odds are good it's a real estate investor who bought it and will do a cheap flip with "luxury look" finishes and then rent it out for 3-4x the prior rent. Or turn it into an Airbnb. Because you see that a lot.

I think most people are aware that speculators and investors started buying up properties in the Dallas metro area before it became hot. They bought multiple SFHs and practically entire neighborhoods @$200k and now thanks to their “investments” they drove the housing market to a frenzy where you must be an all cash buyer prepared to pay $600-800k+ for the basic 3 bdrm sfh. Entire neighborhoods have been flipped to rentals mostly owned by corporations, hedge funds, and foreign investors (mostly Asian).

Once the system has been commoditized, it’s broken and nearly impossible to fix. Building more housing won’t fix the problem since the same investors are best positioned to pay cash immediately.

The pp who said we need to ban foreign investors and dump the tax credits isn’t going far enough. It won’t work. The foreigners will set up shell companies and the reality is the tax credits aren’t fueling the individual investors—it’s quite lucrative to generate income from rentals and periodic flips or sales.

Switching gears: plopping duplexes into established neighborhoods like MoCo is proposing won’t fix the problem either.

The Feds are perhaps the only employer equipped to move the needle by shifting offices to lower-density cities/states to attract people away from the major metro areas. Better yet: force the Amazon’s of the world to plant roots in Kalamazoo instead of NoVA.

Agree with many of the points made here but strong disagree with the conclusion. There is a long literature in economics demonstrating that agglomeration happens because people are more productive when they are in proximity to each other. The evidence also suggests that, on net, they prefer the amenities of large high cost metro areas. For example, some of the latest research shows not only that educated workers are more productive in cities, but also that the increase in housing costs more than swallows up their wage gains. This is another way of saying "even with lower salaries in <lower cost smaller city>, I could buy a nicer house there, but I choose to live in <high cost city> because I like _____." Lots of ways people fill in that blank: things to do, places to eat, hobbies, professional networks, larger dating pools, etc.

Pushing firms and industries to de-agglomerate would be very costly, because we would lose the productivity gains from clustering people together. And, even if de-agglomerating successfully reduced housing costs as a % of income, many people would be worse off, because they would lose all the things that they were filling in the blank above with before.

We need to build more housing in our high-wage metro areas, and that's only going to happen when we either find better ways to incentivize municipalities to pull their weight in the housing market, or when we take some amount of control from them altogether.

Yes, and realize that companies make decisions on where to locate based almost entirely on the available qualified work force in that area. That's why Amazon would never move to Kalamazoo- they would burn through the local software programming work force in about a month of hiring. And that's why they moved to Arlington- because of the agglomeration effect from the regional tech workforce that has been building for 40+ years. Amazon was offered billions by multiple cities to move there- and they never considered it because of work force availability.

https://slate.com/technology/2018/11/amazon-hq2-incredible-incentives-losing-cities-offered.html

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Solutions to "crisis":

-- Ban foreign ownership of real estate
-- Eliminate all federal tax deductions on homes that aren't people's primary residences

Once you realize that our country is set up to benefit corporations and the wealthy, you'll realize that the "crisis" is intentional and works to their benefit.

Even just banning all foreign-owned rentals and limiting the amount of rentals any owner/company can own (except for apartment buildings) would be a great start.

What is the mechanism to pass laws such as these, when land ownership in the US is generally regulated at the city/county level?

At the federal level the mechanism will always be taxes. Creating onerous taxes on foreign-owned residential investment properties would effectively kill this market -- many foreign investors are buying these properties explicitly for the tax benefits (a lot of write-offs available to landlords).

What percentage of real estate in the US do you think is foreign owned?

Supposedly it is between 2-3% and clustered in cities like NYC, LA, SFO.

Right, so marginal. People want to believe there are magic bullets other than "build a lot of new housing", for various reasons. Beyond pure NIMBYism, I think it's the long time frames involved. One thing to note- rents in DC have not gone up that much the last 5 years because of the number of new buildings that have come on line and added to supply. Problem is that there will be a donut hole in a couple of years as all the deals stopped from 2022-2024 because of financing and construction costs don't keep filling the supply.

[Anonymous]

Anonymous wrote:

Anonymous wrote:There are plenty of affordable areas of the country to live.

I think you are missing the point. There was an article recently about some random town in Michigan…probably an affordable area in your eyes.

Well, the median price has doubled in just the last 5 years because of people selling from high cost area and moving there. Great for them, but now the locals are priced out.

Now they have a homeless problem…mainly due to local jobs not paying enough and rents increasing as much as owning.

It cascades.

Then these priced-out people need to move to an even cheaper town/city/zip code /state. Their inertia and lack of hustle is not a “crisis.”

There are vast, vast swaths of the United States that have plenty of homes and these do overlap with adequate jobs.

Domestic migration is a tradition in the US, or it used to be.

If your rent goes up to the point you can’t afford it, and you have no specialized skills keeping you tied to, say, semi-coastal Maine, then you need to move inland. Or to upstate NY. Or Iowa.

All of these places are looking for certified nursing assistants and have low rent options. You’re not entitled to Camden or Knoxville.

[Anonymous]

So do we really think there would be no encampments in DC if there were multiple homes that costs under $250,000? $150,000? $75,000?

[Anonymous]

Has anyone looked at the impact of all of the boomers passing on in the next 10-20 years. Won't that free up a ton of housing?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:There are plenty of affordable areas of the country to live.

I think you are missing the point. There was an article recently about some random town in Michigan…probably an affordable area in your eyes.

Well, the median price has doubled in just the last 5 years because of people selling from high cost area and moving there. Great for them, but now the locals are priced out.

Now they have a homeless problem…mainly due to local jobs not paying enough and rents increasing as much as owning.

It cascades.

Then these priced-out people need to move to an even cheaper town/city/zip code /state. Their inertia and lack of hustle is not a “crisis.”

There are vast, vast swaths of the United States that have plenty of homes and these do overlap with adequate jobs.

Domestic migration is a tradition in the US, or it used to be.

If your rent goes up to the point you can’t afford it, and you have no specialized skills keeping you tied to, say, semi-coastal Maine, then you need to move inland. Or to upstate NY. Or Iowa.

All of these places are looking for certified nursing assistants and have low rent options. You’re not entitled to Camden or Knoxville.

Great...list 5 of them for us. The adequate jobs part needs to support your locations.

[Anonymous]

Anonymous wrote:Has anyone looked at the impact of all of the boomers passing on in the next 10-20 years. Won't that free up a ton of housing?

In theory...if you remember Meredith Whitney who made a good call on the housing crisis, worse call on a municipal bond crisis...she actually believes the passing of the boomers will cause the housing market to significantly rebalance. However, a bunch of that requires the boomers to sell their homes and move into assisted living and other care facilities, in addition to dying.