- The US is special insofar as the US stock market is extraordinarily safe with many options for value investing. In much of the rest of the world it's the reverse: domestic stocks are risky and it's real estate, land and gold that are the safe, prestige assets.
When you add in an unstable environment at home, this mentality leads to foreign real estate being perceived as the ultimate asset. It's perception rather than reality because foreign real estate is not exactly a good investment, especially if non-resident: it's illiquid, highly taxed, requires insurance, is easy to confiscate, etc.
- A finding that could be twisted by the current administration to support their claim that immigration increases the cost of housing...except its not the type of immigration they want to limit!
- Awful headline and I doubt it's what the author would have chosen, given that her comments are much more to do with supply:
> “In San Francisco, demand is reflected in increased prices,” she says. “In Charlotte, demand is reflected in increased quantities.”
> “A big takeaway is that cities are in control of a big portion of their supply sensitivity,” Gorback says. “It’s cities that control zoning. It’s cities that control permitting. The real keeper of the keys are the municipalities.”
- It's kind of insane that you look at a city like San Francisco that's on a tiny bit of land in a desirable location and they absolutely refuse to build up.
I get that their Victorian houses are pretty, but they're only about a 100 years old and they are now crammed full of people and cars. It's too young of a city to be sycophantically in love with its past self.
- That's partly the effect of prop 13. When land (or its proxy, property) is detaxed then property becomes a valuable commodity to hoard and guard the value of jealously.
So, it attracts the foreign investors looking for stores of value and encourages NIMBYism.
If the tax bill of properties in high value locations went up with land value then it would encourage people to stop hoarding and to sell up and have their properties redeveloped.
So, blame Howard Jarvis and his taxpayer's foundation.
- > So, it attracts the foreign investors looking for stores of value and encourages NIMBYism.
This doesn't make a lot of sense for two reasons.
The first is that real estate is more the exception than the rule in being subject to property tax to begin with. If foreign investors want a store of value that minimizes "property tax" then they could just buy stocks or bonds etc. Which is why "foreign investors" are a red herring that pundits keep bringing up because it's clickbait or because they want a scapegoat to divert attention from the real problem (which is zoning).
The second is that if you have a place where taxes are lower than other places, that's the place people should be lobbying to build things. Who wants their lower taxes to be on a $1M single family home when they could be on a $100M skyscraper? The main reason this isn't happening is that the effective property tax rate in California is ~0.7% compared to the national average of ~0.9%, which isn't enough different to make a dramatic difference.
The real problem with prop 13 is that it resets on sale transactions or if you build anything, which does provide a major deterrent to construction because then existing property owners neither want to sell to a developer and use the money to buy something else nor build anything on their property themselves since either one would result in a huge tax hike.
- >The first is that real estate is more the exception than the rule in being subject to property tax to begin with. If foreign investors want a store of value that minimizes "property tax" then they could just buy stocks or bonds etc
This is exactly the point. If property taxes were higher that flow of capital wouldn't seek store-of-value assets which monopolize valuable land and deprive ordinary people of somewhere to live.
>foreign investors" are a red herring that pundits keep bringing up because it's clickbait or because they want a scapegoat
More like the reverse is ardent defense of the interests of the super wealthy.
They channel their media networks towards scapegoating immigrants instead. Or AI. Or selfish boomers. Or any number of other things which aren't really the problem and most importantly aren't them.
>The second is that if you have a place where taxes are lower than other places, that's the place people should be lobbying to build things
People want to build things because they are useful. People will NIMBY the fuck out of that if it affects the value of their property which it does, disproportionately if property taxes are low.
This is how San Francisco ruined itself - with precisely that attitude of "lower taxes = better"
- > If property taxes were higher that flow of capital wouldn't seek store-of-value assets which monopolize valuable land and deprive ordinary people of somewhere to live.
Only they still would, because the higher property taxes would deter new construction until scarcity increases rents to the level that investment gets back over the threshold of profitability. And then investors are still there and what you've really done is cause rents to increase to the level that allows landlords to use it to pay the higher property tax.
> They channel their media networks towards scapegoating immigrants instead. Or AI. Or selfish boomers. Or any number of other things which aren't really the problem and most importantly aren't them.
Are "selfish boomers" not the problem in this case? Who are the ones lobbying for NIMBY zoning rules?
> This is how San Francisco ruined itself - with precisely that attitude of "lower taxes = better"
The big problem with prop 13 isn't that it lowers taxes, it's that it disproportionately raises them if you build anything new on your land or sell it to anyone who wants to.
- Yeah, I had dinner with a REIT exec a few years ago, they explicitly called out how they loved how Prop 13 kept the CA property market inflated and NIMBYism strong. Absolutely worth trying to tear it down if you care about housing affordability.
- This is an issue in other cities that don’t have prop 13 fwiw, the United States just does not do redevelopment barring a few poor inner neighborhoods getting gentrified by foreclosures in like Houston or Dallas. That’s the natural consequence of individual ownership of houses.
- This.
- > 100 years old
It’s 2026, they’re more like 140 year old by now :)
> now crammed full of people and cars
Funnily enough, if you look at the 1950 census, in every single building I have lived in in San Francisco, there were more people than there are now :).
The city has so much underdeveloped land (come on, 2% of of the surface of of the second densest city in the US spent on the lowest density sport ever, golf???), tearing down our heritage does not make sense when we have so much usable space.
- Good luck finding anyone in SF who wants to replace open space with more density. SF is amazingly lucky that it has so much green space and it's a big reason the city is so desirable. Increasing sprawl into our open spaces seems like a really bad idea to me (and I assume most people who live in SF). You could argue we should replace golfing with other green-space uses, and I'm sure you'd find takers, but for more sprawl? I doubt it.
Also I never understood this obsession with "heritage". Why not promote the next generation of SF architecture instead? Modernize the victorian into increased density, create something new and creative. Over time blend the new-ness with the old. This ideology of stasis seems at-odds with SF's image as an innovation hub, both technologically and culturally. Why should our architecture be stagnant when our ethos is to constantly push forward?
This is one of the big loses we've had to NIMBYism / prop 13 / regressive zoning. We could have such cool, interesting architectural advances, but ironically our perverse urban development incentive structure discourages those kinds of innovations.
- Did they change how the census worked? Is any bureaucracy required to claim that you're in a building? Do census forms get forwarded to ICE?
- Where do you draw a line? 100 years? 200? 500? Especially if buildings age nicely and they’re still considered good-looking.
I’m in Europe and here if people suggested to tear down some art noveau buildings because they’re just 100-150 years old… I’d be absolutely furious. Don’t get me started on buildings from 200 or 300 years ago.
With US having much less old buildings, I totally get why people want to preserve such buildings.
- Ultimately, variety is key. Let's keep a sample of them to remember the past, and build everywhere else? A city with a mix of building types is much more interesting than a monoculture.
- Jane Jacobs approves of this comment
- I'm pretty sure paris looked looked nothing like now 100 years ago. Some other buildings had to come down to put up that art noveau building. I'm pretty sure someone would have been complaining about how that changes the character of the city they grew up in.
To directly answer your question about where to draw the line a simple heuristic is to leave public buildings alone. This can even include a privately owned shop that is accessible to the public. They are part of the cities culture. Private homes in the other hand shouldn't be protected.
- Paris looked different 200 years ago. The most of rebuilt happened about 170 years ago. And people are in love with Montmartre which survived the rebuild ended up vastly older than the rest of the city. I’d even dare to say many people think of Montmartre style Paris rather than the rebuild.
Exemptions like you suggest would just open the gates for fancy corruption schemes. Here the public is okay-ish about historical buildings changes hands specifically because of strict rules.
A lot of public institutions are now moving from historical buildings to new buildings in outskirts because old buildings are expensive to maintain and not flexible enough for modern office working. And those historical buildings frequently get renovated (or, sometimes, reverted to) apartments. And the public is fine in general.
Excuse me if I’m wrong, but most of business activity is already not in SF. But people love living in SF for it’s charm. If you destroy the charm for the sake of lowering prices… why would people pick SF-proper instead of same boring buildings outside of the peninsula?
- Here is the abstract of the paper this article is about(Global Capital and Local Assets: House Prices, Quantities, and Elasticities):
“”” We estimate price elasticities of housing supply for U.S. cities by examining the impact of foreign purchases on housing prices and quantities. After other countries introduced foreign-buyer taxes beginning in 2011, both house prices and quantities increased more in locations with high foreign-born populations. A 1% increase in global capital inflows, instrumented with tax policy changes scaled by immigrant exposure, increased prices and quantities by 3% and 0.5%, respectively, over 2011–2018. We combine these estimates to construct new local supply elasticities. Compared to prior estimates, our elasticities are more inelastic and change cities’ relative rankings. “””
So it would seem the focus of the research was very much foreign investment in housing.
- Some 10-15% of San Francisco housing is unoccupied. The exact why and how to fix it are arguable, but I'm doubtful the investment is actually helping.
https://www.pacificresearch.org/time-to-ask-why-so-many-san-...
- The table in the article seems to contradict its own headline.
The headline says there are not 40k vacant homes, but the table breaks down the reasons for vacancy of just a bit over 40k homes. So it sounds to me like there are in fact 40k vacant homes.
And it goes on to say:
> Yes, 40,458 units of housing in San Francisco were classified as “vacant” in the U.S. Census Bureau’s American Community Survey (ACS) for 2019.
However it also says:
> an occupied unit is actually classified as “vacant” for the purposes of the ACS if the person living in the unit is planning to move within two months of being surveyed
But this doesn't appear to match any of the categories that sum to 40458, so I am not sure if this is even applicable.
- 2 things:
- this article is out of date. The market has changed a lot since the AI boom. - That's a 10%ish of all housing in the city. Right now, of available units SF has one of the smallest vacancy rates in the country right now. The difference is (as the article alludes), apartments that are undergoing renovations, not currently permitted, etc.
- When a good's supply is constrained, it becomes a store of value. See: gold.
Strangely enough, if housing got built in response to price increases, there would likely be less unused housing, because it would be seen less as a way to store capital.
- > When a good's supply is constrained, it becomes a store of value. See: gold.
That doesn't make sense as stated, because every physical commodity is supply-constrained to some extent, even and especially the ones that are extremely bad stores of value. Picking on Fermium (it has a nice atomic number) - Fermium is supply constrained and it makes a horrible store of value because it rapidly morphs into something else.
Gold is a well-liked store of value because it is absurdly stable (about as close as we can practically get to indestructible) and roughly the easiest to physically store out of all the durable candidates.
- While houses depreciate, both they and the ground they are built on tend to have a very low chance of experiencing spontaneous transmutation, so I'm not sure how good of an example fermium is.
- What if we added some kind of artificial spontaneous transmutation to housing? Maybe (this is really dumb but bear with me) every year 200 randomly chosen houses become the property of whoever is living in them at a random moment. What would happen?
- When property taxes are higher housing is built more densely.
This is because the store of value quickly becomes a millstone around the owner's neck if it isnt being used efficiently. That's a feature if you want a healthy city and a bug if you're one of the ultra wealthy.
The UK is a bit like San Francisco in this respect. There are no property taxes, just something called a council tax (which is basically a poll tax) and "stamp duty" which is levied only on property transactions.
The latter is particularly toxic because it actively encourages property hoarding.
This is why London is an alpha world+ city which can't build up to save its life.
- Competition was supposed to save this though. You have to use it effectively otherwise your neighboring competitor takes all your customers.
- Taxing empty housing seems like the obvious answer. Make it more expensive and more work to keep it empty than it is to fill it.
- Which form do I file to claim that my empty house is not actually empty?
- Maybe demand the electricity bill? How do insurance companies deal with this kind of misrepresentation?
- True or not, there is little doubt demagogues play on foreign capital when arguing about house ownership costs to the mostly young renting classes.
My own belief is that at national scale the % of foreign capital in housing stock for most western democratic states is low, and when it exists in scale its things like the Canadian teachers pension fund or .. Blackstone.
In America, I suspect it's Blackstone before foreigners.
- All kinds of money:
"Anyone who’s lived in London as long as I have can’t fail to notice that over the last 30 years, the city’s become awash with money. From the mid-90s onwards (the last time property was affordable to anyone on an average salary) shops have got more designer, cars faster, and property commands ever more eye-watering sums. Knightsbridge and Belgravia have become the playground of oligarchs and at the centre of it all — that temple to Mammon — stands Canary Wharf, home to banks, insurance companies and lawyers, gleaming on the London skyline, its shiny windows hiding shady deals.
‘Londongrad’, ‘Moscow-on-Thames’… That Russian money has been given a warm welcome in London is no secret. Over the last two decades, swathes of prime real estate in London and its surroundings have been bought by wealthy Russians looking for a safe haven for their cash, with few or no questions asked. "
https://www.investigate-europe.eu/opinion/londongrad-a-citys...
- This. And it's not just the Russian oligarchs.
In 2024 a corrupt government was toppled in Bangladesh. In subsequent investigations it was revealed that just one member of the cabinet had bought more than 200 luxury properties across US, UK, and UAE.
The fact that the West welcomes black money from anybody and everybody causes both inflation to go up in the West and exploitation to prevail in less developed countries of the world.
- The US also drastically stopped constructing new houses after 2008
- Because they got cheaper for quite a while.
Meanwhile vs Canada (turn on your ad blocker): https://awealthofcommonsense.com/2023/09/the-u-s-housing-mar...
- I would have imagined that an influx of any type of money - not just foreign money - into a market with limited supply growth would push up prices.
Probably I am getting overly sensitive about what seems to be creeping casual xenophobia even in mainstream media. The way the story is presented, the sketchy “foreign” aspect of the money is apparently central to it having this undesirable outcome.
- Housings (US) greatest feature is money laundering: https://globalwitness.org/en/campaigns/corruption-and-money-...
Most countries have residency by investment programs. Invest in real estate, prop up residential home pricing by injection wealthy foreigner/criminal money. Which imo is pretty idiotic.
- Congress did improve the situation with the Corporate Transparency Act in 2020, but then Trump became president again and simply announced that the law will no longer be enforced, and now what is left of the Republican party wants to repeal it altogether.
https://newrepublic.com/article/211855/republicans-making-wo...
- esp in the Caribbean.If the FBI wants to find criminals, their short list of suspects should include Caribbean CBI applicants.
- > An influx of foreign money during the 2010s drove up housing costs in the areas with the greatest concentrations of purchasers from outside the U.S., finds Caitlin Gorback, assistant professor of finance.
This just in, water is wet.
- A friend of mine got a PhD in economics with "building a bridge across the fjord increased property prices on the other side of the fjord".
- Housing is globally unaffordable in the entire industrialized world.
Everybody knows why, but people are desperately looking for scapegoats because the truth is too uncomfortable.
The people to blame can easily be found among your own family and friends. It might even be you yourself. It is probably your parents.
Everybody who works for a living has relatives who have become wealthy by real estate value appreciation. If they're your parents or grandparents, they most probably earn as much yearly from real estate appreciation doing nothing as you do by working full time and being fully taxed for your hard labour.
If they're your uncle and aunt who are still working, then they have a completely different life from a renter working full time, even if it's the same job. Your money as a renter is gone into a black hole, while their money goes into paying off their lucrative real estate or into a very comfortable life if it's already paid off. Unless they are ambitious, they will stay working for whatever salary, keeping salaries from growing. Because they need the stable income. They have no reason to put any effort into a career, since that same effort pays much more being put into real estate.
Outside of the USA any full time working expert in his field can never earn as much per hour in wages in any job as he will earn in real estate value increase by doing home renovations - even if he has no skills in home renovations. Even if he is the leading expert in his field in his nation.
People will look for scapegoats; billionaires, foreign investors, expats. There are dozens of countries with no billionaires, no foreign investments and no rich expats who have a housing crisis. You know that billionaires aren't the problem.
If you have a large percentage of your population who do not work, or who work pretend jobs, or who work real jobs but just at part of their capacity, then it's no surprise that the rest of the population has to work hard to compensate for them. Everything around us is the result of hard work, and if somebody is living comfortably without working that means somebody else is providing for them. Food on their plate doesn't come from the job they worked 30 years ago. It comes from somebody working today. The same for everything.
Until people start admitting what's going on, the problem won't be solved. It's a deliberately created problem by tying the money supply to housing as an effort to decrease the population. Now we're seeing population collapse and total destruction of the industrialized world for the limitless greed of the current old generation. The near future will be very different than what people now are used to. We're already seeing changes and should talk about them instead of pretending and telling lies.
- Am I the only one who barely knows people who think of making money by buying a house? In my circles, everyone buys a house to live in it and that's it. Same goes with NIMBYS, never met someone saying: "Don't build here because the value of my apartment/house goes down." What I've usually met, it's people who just been lucky because grandpa, grandma, and/or other very old relatives, usually after WW2, bought large plots of land and they build there something and now their younglings are asking incredible sums of money for rent or selling.
- Having grown up in Australia I agree with everything you say. The percentage of property parasites as a % of the working population is staggering.
Agree with all except maybe this:
> It's a deliberately created problem by tying the money supply to housing as an effort to decrease the population.
I don’t think there’s a grand evil plan. it’s just people acting selfishly, on selfish incentives. It looks similar around the world because property rights and local planning controls look similar around the world, a huge number of such systems derived from common old Europe roots
122 points by hhs 18 hours ago | 49 comments