It was within the last month that I first saw a Hacker News headline like this, only that time -- though I would not be surprised if on that occasion it was also a link to curbed.com -- it was making a similar claim about Los Angeles.
The mere headline reflects either the insanity or the anarchism of the far left. One might as well say: "The one hundred wealthiest San Franciscans have enough disposable income to buy a $10 million dollar house for every homeless person in the City."
How do you put up a headline like that with a straight face, unless you are willing to assert -- as I suppose curbed.com is -- that the cognoscenti proletariat should be empowered to confiscate all property and redistribute it as they wish?
I went to Berkeley (albeit a long time ago) and I've known many liberals. But I only believe the truly lunatic fringe of the left are going to get on board with this kind of thinking.
Their numbers look sound to me. Did you read the article?
>The ten most populous Bay Area cities listed above have a combined point-in-time homeless total of 63,527, and, margins of error notwithstanding, a census-estimated 92,800-plus homes vacant, a ratio of about three units for every two persons.
>The census’ annual American Communities Survey defines a home as vacant if there is either no occupant or a temporary occupant—temporary meaning “people who will be there for two months or less.”
>Vacancy rates are estimated by in-person visits to properties or by interviews via mail, email, or phone. The upcoming 2020 census will employ more exact methods and should result in housing and vacancy estimates with less room for error.
It doesn't seem they're questioning the data, they're questioning the motives of the title, and the implication that the housing should be redistributed to the homeless. I absolutely disagree with their position, but I can see their point of view.
Personally, my (rough) idea would be to increase property taxes dramatically for unoccupied residences, which would encourage them to be put on the market for rental at least, and drive prices down a bit.
That's definitely not what the implication of the article is. Many would read this and think, well, we should just put the homeless people into those vacant homes!
Maybe you're right, maybe they all just living in tents outside where they are completely ostracized from society and treated subhuman. Maybe they like not being able to do anything that requires an address to do. Maybe they like not having a consistent place to shower.
From whom? And who is doing the "taking", and how do you know where it is "taken" from? What is the relationship between the umbrella concept of all public policy and this specific issue?
When I lived in San Francisco, the newly built condo building across from me was fully empty (but fully sold) for all the years I lived there. This is a tower in SOMA. There was only one apartment which appeared to be a corporate one that was occasionally utilized.
The rise of foreign money parking money in real estate has screwed things up on a global level. San Francisco has felt the brunt of this due to their insanely restrictive development laws.
Frankly, for the 7+ years I was in San Francisco I was always saying they should pass laws to prevent foreign investment in real estate or at a minimum require people live there for X% of the year.
Why should different rules apply to foreigners in this context? An American billionaire buying a few condos and keeping them empty has the exact same effect as a Chinese billionaire doing so.
Rules around vacant homes are good, though, and I strongly support them.
At least an American billionaire pays some American taxes. If a foreign speculator makes a lot of money they aren't even paying any income or capital gains taxes here.
They are still paying plenty in property tax. From the city's perspective, you couldn't ask for a better resident. Somebody who pays full property tax and consumes almost no services (schools, police, etc).
But they also don’t participate in the local economy and can just blindly vote against anything that impacts their bottom line (e.g. tax increases) rather than having to interact with and see the impact on people who actually live and work there whose lives are impacted by local and regional politics.
They often pay very little property tax, thanks to California prop 13. Long-time property owners are incentivized to just ride the real estate boom with a vacant building that costs them nothing. The city gets almost no tax revenue, and the neighborhood is crippled in its development.
As a bonus those property owners are politically active and fight zoning reform and development/transit projects to protect aforementioned real estate boom.
Why is the city's perspective purely financial? Shouldn't it be driven by the needs of the residents? City residents need housing and the the local business need inhabitants. If you extend your "city" to the limit it would just be a giant physical investment with buildings no one lives in. The city, basically just an investment company would have a lot of money from the taxes and providing minimal services but until that happens the actual residents should drive the policies, in my opinion.
They drive artificial demands which increases the overall price.
At the end of the day, it's not good for the local residents.
It's not as simple as "they're not here thus they're not consuming any services". The resulting effect of sky-high property cost ripples to everything else below it (jobs, transportation, etc).
They do consume one thing: housing stock that would otherwise be available to residents. Whether or not that outweighs the benefits of paying taxes but not consuming city services is a different issue.
The roads, pipes, cables, buses, firefighters, and cops have to go past the empty house to reach the occupied houses on the other side of it.
Even if the empty home consumes no water, electricity, classroom capacity, bus seats, etc., it still consumes police and fire protection services. Someone else's empty home can be used for crime without worrying about civil forfeitures.
A better resident lives in their home, and cares about what is happening in its neighborhood.
Local life is naturally more important to me. I care more about the dying bird populations in my forest than “humanity” on the other side of the planet. You’re spreading your love too thin.
"God forbid we feel any natural affinity towards our fellow countrymen"
Such an affinity is not "natural" because no one is born with any sort of innate ability to distinguish among nationalities, much less feel any affinity towards certain nationalities.
Any such distinctions and feelings are taught through indoctrination such as nationalistic rituals, media, and the attitudes of those around you.
A nationality is a legal fiction which changes absolutely nothing about who a person really is or what they do.
Nationalism and group affiliation have been the causes of some of the worst atrocities in history, so we should be very wary of encouraging either.
Regardless of their nationality, I personally feel much more affinity with someone who is helping others over one who is hurting others.
I say national but I mean local as opposed to global. My town is more important than my county which is more important than my state, etc.
my philosophy also extends to animals and plants, meaning it’s not a human-centric view but biocentric. It’s doesn’t seem natural to care less about local Bird/insect populations and local ecosystems as much as human poverty on the other side of the planet.
There is a good and perfectly natural reason to favor people from our own country: they have to live under the same system as us. They have skin in the game on our team. Someone acting in our country but operating out of a different one can exploit the difference in rules to our detriment (e.g. a Chinese company competing in Western markets, but with the finger of state backing pushing on the scales). On a large enough scale it's a threat to democracy etc. if our group decides that groups no longer matter, and another group doesn't.
You can iteratively, conservatively try to approach an equilibrium where borders and divisions no longer matter and all of humanity joins together in enlightenment. That seems to be the general direction we're going and it's a good thing. What you can't do is unilaterally make a cooperative system out of a competitive one. If you go all at once by yourself you just get killed.
Nationality is a big (and in some cases literal) Chesterton's Fence. It is somewhat arbitrary, but that doesn't make it meaningless.
Everyone gets to feel good if they can blame "the wealthy foreigners" rather than look at their own crappy housing policies, such as the rampant NIMBYism and huge market distortion from Prop 13.
Faceless "wealthy foreigners" are easier to dislike than their own neighbors who show up at planning commission meetings to rant about someone adding an extra bedroom to their home (this is an actual thing I read about in San Francisco).
Where I live "wealthy homeowners" are the NIMBYs. They suddenly appear out of nowhere to argue in city council meetings against more housing, then leave their homes empty more than half the year (or all year). That most of them are also foreign is incidental: it'd be just as bad if it were Americans doing this.
Foreigners cannot vote, so it seems odd that the city council would pay that much attention to them.
My point is that there's a small but persistent current of thought regarding the housing crisis that wants to pin the blame on "wealthy foreigners buying up all our real estate", as sort of an 'out' for taking a good, hard look at local housing policies.
Thinking nationalism is about borders and not about loving your own people. We have a limited amount of love and attention to spread. Focusing that energy externally rather than internally causes neglect on your own people, like the homeless in the US. It’s like choosing where to put your skill points at the beginning of an RPG.
Even acting like it’s morally superior when it’s just an inefficient form of welfare. It’s a bunch of feel good.
I say “national” but I don’t really care about Florida or NY way over here in California.
> national borders are the greatest moral atrocity that exists today
I think this a fairly superficial claim. I agree that there are reasons to question the moral basis of national borders (why should someone be given additional rights based on where they were born?) but there are immense practical benefits that arise from having national borders. From a utilitarian perspective, these practical benefits likely outweigh the costs.
In the case of placing additional taxes and restrictions on foreign investment in real estate - yes, this may restrict the freedom of foreigners, but the overall benefit of these laws could be sufficient moral justification.
> An American billionaire buying a few condos and keeping them empty has the exact same effect as a Chinese billionaire doing so.
There are more nuances to this. Chinese millionaires and billionaires don't care about the sales price. They do it to diversify their portfolio to avoid CCP. Some of them did this to launder the dirty money as well.
Their numbers might be small but the chilling effect of outbidding everybody else outrageously will incentivized realtors to spread the "good news" to their customers/clients that "hey... that unit over there is sold $ x million dollars, would you be interested to sell yours as well?"
Suddenly before you know it, the market is f*cked.
I used to be instinctively against stuff like this, but I actually think it’s pretty reasonable now. People outside of a given city/country/etc. have no inherent right to participate in that place. Local residents should only allow outsiders to participate if they derive some benefit from it. Now, that said, there may be unintended consequences to eliminating foreign purchases of real estate.
Vancouver, BC passed something like this a few years ago - it’s a 20% tax on all non-resident home purchases. It has actually stopped house prices from rising so fast, but there are still a bunch of empty homes.
Sounds like the tax is too low then. If the vacancy tax is high enough, landlords will have no problems finding a tenant. This is vancouver and sf we are talking about, snap your fingers and you will find a tenant if the price is right. Too many greedy people.
Fuck at the very least yes. This is the most ignorant law I have ever seen. It blows my mind everytime to think that it not only applies to non-owner-occupied but also businesses.
Just do what Texas does and allow deferred property tax payments for when the owner dies or sells.
Why should we be giving tax breaks to people who have seen incredible appreciation of their homes. Those are the last people who should be getting tax breaks.
This. The original stated intent of Prop 13 was people not being able to afford to stay in their homes due to rising property taxes. OK fine, but when you sell your house for $2 million, you most definitely can afford it, and you should pay up, with interest.
This is what I've been saying for years. I didn't know anyone had implemented it.....looks like they have an 8% interest rate, that's crazy high for the situation.
There's a product called a reverse mortgage that accomplishes the same thing. Having the government offer this instead of foreclosure nullifies the "I lost my house because of high property taxes" argument, but there's no need for the interest rate to be especially competitive. If you can get a better deal on the private market, go get it.
Texas also has a value increase cap for owner-occupied residences, though not as generous (10% per assessment, since the state uses three-year assessment periods).
> Why should we be giving tax breaks to people who have seen incredible appreciation of their homes. Those are the last people who should be getting tax breaks.
It's about not forcing people to move because he area they live in appreciates suddenly. Basically, the same argument as rent control. That an owner gets to cash out some value is cold comfort when their life is uprooted against their will.
The end result is, if the owner chooses, they can continue paying the same property rate until they die or sell. The govt eventually collects the full tax from the equity of the house (or estate).
You solve the issue of people being forced from their homes while at the same time being more equitable in terms of tax burden.
Maybe your parents didn’t teach you empathy when you were growing up, as is so prevalent these days. There are millions of retired people on fixed incomes who bought their homes when they were normally priced. For example, my grandparents bought a house in Los Gatos for $30k in 1969 and now it’s priced at $1.4M. Is that their fault? Why should elderly people, who cannot take the stress of being uprooted and moving, be forced to sell their homes and lose their balance sheet savings in the process? If anything, discounts on capital gains and property taxes should be based on both income and balance sheet apart from real estate ownership. What if that were you?
If that were me I'd be smiling ear to ear paying 30k taxes on 1.4 million dollars. That's like the deal of a life time. You can't even find a 30k home in cleveland.
In your grandparents case, they could freeze their property taxes, but when the houses switches ownership, they’d need to pay all the back taxes they avoided with the cap.
Why shouldn’t your grandparents have to pay current property taxes? They just had a windfall increase in property value.
My preferred policy would be to repeal Prop 13 entirely and end the mortgage interest deduction. Couple that with a statewide ban on rent control, zoning reform, and greatly increased spending on affordable housing, and we'd be in a much better place.
Of course, none of that is going to happen anytime soon…
There are houses throughout the Bay Area sitting empty, just being used as a relatively safe store of value. That goal is already achieved without having to deal with the overhead of managing the property and tenants.
Seems strange. Surely a management company would happily handle all that hassle and provide a secondary income stream. Sign a couple forms and boost investment income by a few percent?
Surely that's not significantly more burdensome than the bureaucratic hassle of purchasing the property in the first place.
I guess there's some significant tax/regulatory difference between capital gains from holding property vs. an income stream from renting said property.
AFAIK, if you CAN rent a property for $X and it remains empty, you can take it as a loss. $X tracks inflation/value, which was a huge problem when I lived in Pittsburgh. Places that were empty for 40 years had ludicrously high rents (4X+ new places), so they just remained empty as tax write offs.
Landlords have insurance too. Plenty of people still rent. If a landlord is struggling to fill their apartment in sf, maybe they should try not asking 3000 a month. The demand is very much there.
SF has a lot more burdensome tenant protection laws than most places. Sometimes you can't kick out a tenant even if you want to move back in. That's why landlords sometimes pay tens of thousands of dollars to their tenants to get them agree to leave if they have a rent controlled unit. Even if the tenant stopped paying rent or broke some other part of the lease, an eviction can take over a year - and you're not getting paid for that time and you don't get to use your house.
> Seems strange. Surely a management company would happily handle all that hassle and provide a secondary income stream.
unfortunately management companies require managing themselves. even if you find a good one, they won't necessarily stay good, so you're firing them, getting new ones, etc.
and i've never heard of one that will let you hand them a property, and then eat all of the risk for you and provide a simple de-risked income stream. even if they'll do a good job of handling 100% of maintenance tasks, they're still going to send you the bills.
nothing about property management or property management in SF is "new".
anybody who can afford to de-risk a real estate income stream can afford to just buy real estate themselves, they don't need yours. there's no market here.
Surely a management company would happily handle all that hassle and provide a secondary income stream.
Sounds like an opportunity here! The Chinese market for "stores of value" is quite high! There are tons of largely empty high-rise condos in China for this very reason. What about a company that has the connections and know-how to smooth over the transactions, then puts management into place to get AirBNB/rental income?
Renting a home devalues it through normal wear and tear. We see this during housing price drops in our local housing market (Montana) as well. The investors would rather a house sit empty than rent it or sell it at a lower price.
> The rise of foreign money parking money in real estate has screwed things up on a global level.
If the property tax is paid and the maintenance is kept up what is the problem created solely by the fact some homes are empty? The only reason these properties have such high values is because there is a demand that is not being supplied. Supplying more housing makes this a non-issue.
> San Francisco has felt the brunt of this due to their insanely restrictive development laws.
This is the real issue. Governments restrict housing supply for whatever misguided reasons and prices go up, those prices make it a good place to park cash. Government should stop picking winners and losers.
If an injustice is one symptom of a deeper problem, is it a good idea to focus on treating the symptom? That approach helps minimize the visibility of the problem while diverting energy (public attention, political capital, financial resources) that could be used in solving the root issue.
Correlation doesn't equal causation. How would parking money in a depreciating asset benefit a foreign investor? They clearly aren't cashflow positive, so some other outside influence is causing this and it is limited to a few specific cities, so it has to be some localized effect.
Some look at the situation, question what's different about SF that might be causing this, and point to the highly restrictive development laws the city has. These prevent new comers from entering the market leaving only those who are primarily playing the long game and looking to build wide moats. If investors who required a much shorter return could compete, it's assumed the situation would normalize
If this isn't the case, then what is the underlying issue? Simply attacking wealthy people for doing something that is a) completely legal and b) obviously providing them some sort of benefit doesn't solve the underlying problem. To look at it another way, SF has clearly been trying to "solve" this problem through increased regulation for many decades now. Where are the success stories we can point to that show the direct approach is working?
38000 empty homes is problematic in a city the size of SF with population size 900k. This isn’t just a problem of supply shortage (regardless of the reason for the shortage).
The problem is that the prices are kept artificially high. You say the demand is there... But the homes are empty. That means the demand obviously does not exist.
> This is the real issue. Governments restrict housing supply for whatever misguided reasons and prices go up, those prices make it a good place to park cash. Government should stop picking winners and losers.
Restriction of housing is not limited to Government, housing developers also do it:
"[Kate] Barker reached a similar conclusion in her interim report, where she noted that in order to maximize their profits, developers control the rate of production and ‘trickle out’ no more than 100–200 houses a year from a large development. ‘This may not be desirable from society’s point of view,’ she wrote." (from https://www.annaminton.com/bigcapital)
Personally, I trust the reasons that a Government would limit housing more than I would a for-profit company who are probably operating in the interests of investors who don't live in the affected areas.
Even more than Big Government control though, I would prefer the people that live in an area to have the biggest say into how things are run.
Corporations who collude with or otherwise use government/laws to manipulate markets in their favor are even worse in IMO.
The fact still remains though that the housing developers wouldn't be able to trickle out homes at their whim if the government enforced limits on housing weren't preventing other developers from competing.
Because they are a contraction on the housing supply in a city with too many jobs and not enough homes. It's an ouroboros; by taking more supply out of existence, prices go up, and the play becomes even more profitable.
(1) Repealing prop-13 is probably a non-starter but we could probably get away with repealing it for non-owner-occupied homes. Prop-13 was meant to prevent people from being driven from their homes by property tax increases, not to protect speculators from being taxed.
(2) Levy a substantial additional property tax on residential properties that are not currently occupied by either the owner or a renter (for more than e.g. 6 months). These should at the very least be on the rental market.
(3) Subject all real estate purchases and investments to KYC/AML and other rules. AFAIK one of the things driving this loony real estate speculation is that RE has become a preferred vehicle for money laundering after KYC/AML made other financial investments less attractive for that.
(4) Tax foreign (non-US-citizen) purchases of residential real estate. Yes they'd set up shells and recruit locals to be proxy buyers, but at least this would give them more hoops to jump through and would probably reduce the extent of the problem.
> (1) Repealing prop-13 is probably a non-starter but we could probably get away with repealing it for non-residents. Prop-13 was meant to prevent people from being driven from their homes by property tax increases, not to protect speculators from being taxed.
I have never lived in California, and Prop 13 passed before I was born anyway, so I don't know much about the political backstory. That said, if this was the purpose that got it passed, why is the exemption so broad? How does capping Safeway's property taxes keep people from being driven out of their homes?
The corporate protections are unintended consequences of the original proposition. They really weren't on people's radar. (This is why California residents should almost always vote against propositions, even if the idea and goals are good: Fixing the unintended consequences is extremely difficult. It would be better to find other ways to implement the idea.
But getting anyone to fix proposition 13--even in this very limited instance of not protecting corporations anymore--brings out all the apocalyptic messaging (from basically everyone, but especially the corporations) that the old folks who bought in 1970 and have lived their whole lives there will be out on the street when their property taxes go up 10x.
There is no nuance in these messaging battles. And quite frankly, what property owner wants to take any kind of risk with this?
If they went up 10x that means they are out on the street with north of 500k in their pocket. Should be plenty to pay rent at the senior center for the next dozen or two years.
There is an easy solution preventing empty homes in markets with a high rate of vacant homes combined with a high rate of involuntary homeless: a tax of 40% of the value as recorded at deed transfer per year of emptiness. Exceptions only given in case of reasonable vacancy (e.g. due to construction works or damages).
If the property ends up vacant for 2 years, government appoints random renters - for a maximum rent no higher than the rate the lowest 10% city-wide is. No possibility of eviction for ten years, except for willful/grossly negligent damage to property or unfit conduct (e.g. disturbing the peace, running drug dens or harassment of other renters). If an owner intentionally does not repair damages to claim the tax exception, government is authorized to do the repairs themselves and recoup costs from the owner.
That should be proper incentive for developers to build housing that is actually wanted and for speculation owners to rent out homes and to keep them intact/rentable.
Edit: for the downvoters, please explain why. This is a system that is the law in Berlin, only with a drastically higher tax rate and lower minimum rent.
I think this is the kernel of a great idea. Empty homes in urban areas especially ought to be relatively rare and we need to have ways to incentivize utilization--with both carrot and stick.
I think the main idea is what's known as a vacancy tax. If people want to park their money in SF property but not use it, that's fine, they'll just have to pay more.
You would have fared much better if you led with the fact that a similar system is already in place in Berlin.
The comment reads as an extreme solution that no one would ever implement. The fact that it is already implemented somewhere gives it a lot more credibility.
I call bullshit. Say what tower it was, and when it was built, and what time frame you are actually talking about so we can verify for ourselves whether it was actually empty or not, or even if it was empty whether it was empty for a good reason (e.g. not having it's habitability permit). Otherwise this is the worst kind of anecdata - not even enough detail to verify that the anecdote is true, nevermind whether it is actually a representative sample of a larger issue or just an odd case.
I'm all for backing up claims, but drive through Pac Heights and Cow Hollow at night - you won't see many lights on in those mansions. Drive by during the day and all you see is construction workers and gardeners tending to the properties there. It's pretty obvious people don't live there more than a couple months a year. These are the ultra rich with property in the most expensive cities all over the world.
> I'm all for backing up claims, but [...] you won't see many lights on in those mansions.
I'm with you 100%. I lived in SF from 1998-2006, then again for a few years in the 2010's, and when rental prices are high landlords seem to prefer holding out rather than lowering their rates. I assume this is to avoid locking a potentially valuable rental unit into a low, rent-controlled lease. (On a side note, this is why many economists believe rent control is bad overall for rental markets: http://freakonomics.com/podcast/rent-control/)
Mansions in Pacific Heights and condos in SOMA are very different. If mansions in Pacific Heights are indeed vacant (which, to be clear, I doubt they are) that would suggest that a better use of the space would be to split them up into new, more affordable, units.
Cannot speak for SF, but that was definitely the case with highrises in downtown Vancouver. Saw quite a few of those next to the waterfront that had 90% of the apartments (visible from the ground) completely empty or even have the plastic cover on the windows on the inside, with very few (i could count less than 5 of those out of about 30 being visible enough to judge) having anything on the inside.
Some countries in Asia have restrictions regarding ownership by non-citizens. If you’re not a citizen it basically has to belong to a local —could be a spouse.
On the other hand that can be detrimental to the economy depending on how something like that is implemented.
Counterpoint: I live in a newly-built condo building near Mission Bay and I don't know of any vacant units in the building. My neighbors very much exist.
These debates always turn into anecdotes that cover up the real reasons why people oppose or support housing—a preference for the suburban or urban lifestyle respectively. People who argue that newly-built condo buildings are mostly vacant always happen to prefer the suburban lifestyle; people who argue that newly-built condo buildings provide much-needed housing always happen to prefer the urban lifestyle (including me). It's all a facade.
The actual vacancy rate in San Francisco, as we expect, is relatively low for US cities.
> The census’ annual American Communities Survey defines a home as vacant if there is either no occupant or a temporary occupant—temporary meaning “people who will be there for two months or less.”
So this is counting AirBnBs and other short-term rental spaces as vacant.
> Vacancy rates are estimated by in-person visits to properties or by interviews via mail, email, or phone.
I clicked through to the definition from census.gov:
> Mail and computer-assisted telephone and personal-visit interviews. All group quarters responses are obtained by personal visit interview. Most vacant units are not identified until the third month of data collection (the first personal visit). In that month, a 1-in-3 subsample of all addresses for which responses have not been obtained are visited by field representatives.
I'm curious how well you can distinguish permanent residents not being home when field representatives happened to drop by from actually vacant. My house looks like it could be vacant when nobody is home.
> Vacant Housing Units. A housing unit is vacant if no one is living in it at the time of the interview, unless its occupants are only temporarily absent. In addition, a vacant unit may be one which is entirely occupied by persons who have a usual residence elsewhere. New units not yet occupied are classified as vacant housing units if construction has reached a point where all exterior windows and doors are installed and final usable floors are in place. Vacant units are
excluded if they are exposed to the elements, that is, if the roof, walls, windows, or doors no longer protect the interior from the elements, or if there is positive evidence (such as a sign on the house or block) that the unit is to be demolished or is condemned. Also excluded are quarters being used entirely for nonresidential purposes, such as a store or an office, or quarters used for the storage of business supplies or inventory, machinery, or agricultural products. Vacant sleeping rooms in lodging houses, transient accommodations, barracks, and other quarters not defined as housing units are not included in the statistics in this report. (See section on "Housing
Unit.")
The survey also distinguishes different types of vacancies. See pages 4-6 of the linked document. The overall vacancy number could be misleading without seeing the breakdown.
> Obviously you don’t include hotels because those were never intended as housing in the traditional sense.
Low-end residential hotels (i.e., the ones not catering primarily to extended white-collar business travel) are, in major function, very hard to distinguish from traditional housing. And what stops any other hotel (particularly higher-end residential / extended-stay hotels) from selling into that market is the expectation that doing so (even with units that are otherwise vacant) would sacrifice the opportunity for more rent from richer people, so it very much is a continuous market.
Maybe they should build something other than luxury condos. But that would require SF to change their insane zoning laws. And SF cares more about zoning laws than they do about people.
> “The census’ annual American Communities Survey defines a home as vacant if there is either no occupant or a temporary occupant—temporary meaning “people who will be there for two months or less.”
I wonder why they didn’t mention one simple explanation - many of these are Airbnbs or other short term rentals.
You can't build yourself out of the housing crisis when the problem is one of distribution, not one of supply. The idea that housing should be treated as an investment is, itself, the problem. How can you want housing to be affordable while also wanting housing to gain in value, i.e. increase in cost? These are completely contradictory aims.
Zoom out for a second and consider how wild it is that we turned a life necessity (shelter) into a speculative plaything.
Lots of homeowners in SF who have made huge gains from their property investment pay lip service to their liberal worldview by insisting that any new construction must meet the most stringent review and have a very high percentage of units set aside for affordable housing. This way they are able to stop new construction, exacerbating the housing crisis and making their investment more valuable, while claiming they are fighting for affordable housing.
One of the most frustrating things about the hostility that "native" Bay Area residents show toward new transplants is that in many cases, "native" Bay Area residents are ones getting rich off of the high rents.
It is (mostly) one of supply, though. California has massively underbuilt over the past decade.
If an empty condo were an asset that didn't appreciate in value because of the scarcity of housing, maybe those wealthy people would sell them and invest in the market or companies or something else.
> Zoom out for a second and consider how wild it is that we turned a life necessity (shelter) into a speculative plaything.
Every necessity is a speculative plaything. There are futures and commodities markets for every consumable you could imagine. That's the beauty and cruelty of a (relatively) free market.
The premise isn’t that housing is treated as an investment. The premise is that housing is personal property. (Just like bread, etc., and many other things necessary for life.)
It’s cities that are turning housing into an investment through laws turning it into a scarce resource. (Not just laws against building, but laws against short term rentals, boarding houses, tenements, etc.). It’s unsurprising that homelessness is actually decreasing in the US as a whole, whole increasing in wealthy cities: https://www.economist.com/united-states/2019/10/19/homelessn....
But this is mostly a San Francisco and New York problem. In 2015, about 10,000 people in San Francisco experienced homelessness at any time in the past year. That’s 112 per 10,000 people. (This is a different, and better, measure than the “homeless on a given night” instantaneous measure.) That same figure in Iowa is about 9 per 10,000. The national average is around 20-25 per 10,000.
San Francisco also has survivable winter temperatures, many shelters and other infrastructure to help the homeless, etc.
I remember being in Penn Station in NYC on many nights when homeless people slept in the waiting rooms. Police would routinely come by and kick them out. When this happened during the winters in sub-zero temperatures this meant a very real risk of death for the homeless who were forced to sleep outside.
I wonder if it's the same in other parts of the nation, and if the reason there are only 25 homeless per 10,000 nationwide is that the rest have died of exposure during their winters (or from other types of neglect).
More homeless die of hypothermia on the streets of Los Angeles than they do in NYC. You can die of exposure when it's 50*, especially if you are wet from rain or sweat.
> (Just like bread, etc., and many other things necessary for life.)
Yes, this is a very good point. You don't see people vilifying farmers for making profits on food, even though some people go hungry. But for some reason people hate developers for making a profit on housing. (In my opinion, all of the NIMBY arguments, very much including the vacancy one in the article, are just attempts to mask the real reason for opposing housing—a preference for the suburban lifestyle.)
> But this is mostly a San Francisco and New York problem.
It's not just a San Francisco and New York problem. Add Seattle, Los Angeles, San Diego, Portland, Austin, Miami, and Boston/Cambridge to that list, just to name a few. That's not even counting non-US cities like Vancouver, London, Paris, etc.
I agree that housing shortages are unevenly distributed, of course.
> the housing crisis when the problem is one of distribution, not one of supply.
What’s your thesis for this? If the supply suddenly quintupled in the Bay Area and the population halved, I doubt we’d be calling it a “housing crisis”. Prices would fall dramatically because of supply.
The constricted supply is very much related to the treatment of primary residences as an investment. Quintupling the supply would definitely cause prices to fall, but any homeowner in their right mind opposes that development because they might lose $500k+ of property value.
If this were true, then it would be true for every city everywhere. Which we know it’s not. For example, look at cities with much friendlier building regulations such as Dallas.
I think there's truth there, but housing distribution solutions never seem to be very elegant.
The way it tends to boil down in my mind is more general philosophical concepts. Starting with the price and cost of housing to me isn't very interesting because market dynamics are what got you here. You want a different city. I want to learn more about what people think that city looks like, and then think about solutions from there.
How do you decide who gets to live in SF (or insert city here)?
Prioritize people who were born there? Whose family has history?
People who have jobs there? What about self-employed people?
People with kids? A lottery system?
You can't build yourself out of the housing crisis when the problem is one of distribution, not one of supply.
This is wrong. There is no distribution problem with housing. It's not that people can't find a house to live in, or a house has to be shipped across the country and the rail line is broken.
The problem is that people can't afford housing. And they can't afford it because demand has increased dramatically while supply has been artificially constrained by government.
The solution is to remove the government constraints on supply which will lower prices. Now obviously the trick is that existing owners don't want to do this, and they have a lot of political power. So I don't really see this happening, but if it somehow could happen that would be the path to the answer.
I think you misunderstand what I mean by "distribution" - there is already enough housing for everybody (see article), it is just not distributed in an equitable way among people who need it. Nothing to do with shipping houses.
This is not true because you aren't counting the vast number of people who want to relocate to the Bay Area.
The article also ignores the fact that you will always have some % of empty homes. People move out and it takes time to find new tenants. People want to remodel. New buildings take time to fill up. People have second homes. Overall vacancy rates in SF and the Bay Area in general are TINY.
There obviously isn't enough housing for everybody. How many people do you think want to live in San Francisco (including those displaced by housing prices), but can't, and therefore live out of town, out of state, etc.?
The statistic about vacancies is only meaningful if you assume that the only demand for housing in SF comes from the homeless, which is clearly absurd.
How much extra housing would have to be built to reduce housing costs to the point that all people experiencing homelessness can afford them? Thinking you can build your way out of this housing crisis is the definition of insanity. So long as homes are commodities, people will be homeless and wealthy people will own a multiple of the number of houses that they need.
In a society with decommodified housing, some amount of housing will need to be built to keep up with local immigration. That is massively below the amount that would need to be built to try to prod second-order market effects to do what we want.
> How much extra housing would have to be built to reduce housing costs to the point that all people experiencing homelessness can afford them?
We don't need all people experiencing homelessness to be able to afford market-rate housing. That's what subsidized affordable housing is for. If market rate housing were much cheaper, though, many people who are homeless would be able to afford market-rate housing, and then the scarce affordable housing dollars that we have would be sufficient to cover the rest.
> Thinking you can build your way out of this housing crisis is the definition of insanity.
No, it's what cities that don't have housing crises like Houston do. Objectively, Houston is doing everything better than San Francisco when it comes to housing. What do they do? Allow a lot more building, with less red tape and restrictive zoning.
San Franciscans need to take a long hard look at what cities like Chicago and Dallas are doing when it comes to housing, and have the humility to recognize that their policies have failed and that they must change. I say this as a San Franciscan who's proud of his city in a lot of other ways.
> In a society with decommodified housing, some amount of housing will need to be built to keep up with local immigration. That is massively below the amount that would need to be built to try to prod second-order market effects to do what we want.
That doesn't make sense to me. Demand is demand; you need a lot of housing no matter what. Unless you try to curb that demand by instituting a hukou system (which a lot of Californians seem to want to do).
as some of the comments on the article note, you've got natural churn in residency, uninhabitable structures, renovations, etc.
also it's not like you can let someone live in a house for free and just call it a wash. anyone who has ever rented a home to folks knows that tenants can be _extremely_ hard on a rental property.
This is the expected result of prop-13. It's true all over california.
You can make money on capital gains without any continuing investment/income or significant tax... why bother with tenants. Just sell out to the developer who wants to put in another high-rise apartment complex when the price is higher. In the mean time... screw the neighborhood.
In Denmark this would be impossible as we have “bopælspligt”. It means if you buy a home or apartment in an area like this, you are required by law to live in it.
Not free enough for America, maybe?
Also, most of the politically active residents own homes here that they are counting on to continue dramatically appreciating in value, having investors buy up new property supports this goal.
There are several condo buildings in Portland (OR, US) that do this as well. I don't think it's city or government regulated, but it's required by certain buildings. I don't know if SF has anything like this, but I imagine it's easy to get around it.
In Denmark its hard to get around, as you have to register your official postal adress for the government using your CPR nr (kinda like social security numner).
Does Europe (more or less as whole) have a philosophy that rental properties are a regulated enterprise that is solely to be managed by a established company?
I mean I really do like the idea but I've heard of incredibly long waiting lists for apartments in places like Germany simply because there just isn't enough supply to meet demand.
No no, you can buy an apartment, and rent it out, and then the renter registers the apartment as official address etc. So the apartment isnt empty. There are some laws you have to follow, but its pretty easy to do. I dont know the details of Germany, but mostly what i have seen here is not enough supply, and big demand.
> The ten most populous Bay Area cities listed above have a combined point-in-time homeless total of 63,527
If you add up all the homeless numbers listed for each city in the article this number is actually 23,528.
What is considered a healthy occupancy rate for a city? 100% occupancy would obviously not be ideal since there would be no places for people to move to.
Are there any direct stats on vacant home ownership as a means to hold money?
As I understand it typical occupancy rate is 95%. Looks like there are ~400K housing units in SF (not total bay area).
That would imply there are 20K vacant units just for frictional reasons. I expect the number of these type of vacancies exceeds the number of homeless in almost every city in the US
I can see why somebody might view that as a counter argument intuitively, but as somebody who cares about the problem in a real, practical sense, it's immediately obvious to me that the point isn't to criticise the city's vacancy rate in a void, but to compare it to the potential waste. In a city where prices are disgustingly high and homelessness is appallingly common, the vacancy rate becomes much more sensitive to pragmatic criticism. Simply pointing out that other cities have a higher rate doesn't affect the criticism. Perhaps those other cities wouldn't benefit as much from lowering the vacancy rate. Perhaps those other cities would benefit a comparable amount, and we should hold them to the same criticism rather than declaring the criticism invalid.
It's basically impossible to increase housing utilization to 100%. It's pointless to even try. 10% is a healthy vacancy rate. Build 110% of the housing your city needs.
A vacancy rate of 10% is an occupancy rate of 90%. To house everyone with a 90% occupancy rate, you need to have 100 / 90 in available housing stock, which is 111.1% of occupation requirements.
If you only build 110% of what is needed, and no one is homeless, the vacancy rate would be 9.1%, or ( 1 - 100/110 ) .
The point still stands. Cities need more housing than strictly required for residents.
Thank you. Could you box up my discounted dopamine hit for carry-out, please? I might need some smug satisfaction later, possibly while driving, when it's not so easy to go online.
> Simply pointing out that other cities have a higher rate doesn't affect the criticism.
Sure it does. Houston has a higher vacancy rate, and much more affordable housing than San Francisco. This strongly suggests that the vacancy rate is a red herring.
Yea, exactly. Housing price increases and low vacancy rates "should" be correlated (eg, not enough supply in the market) and in fact are, which the original article's argument completely ignores and instead implies that the right vacancy rate is 0. If those circumstances ever happen, good luck finding a place to live.
housing is a market so low vacancy == price increases. That's the actual story. This is the case in markets more generally (eg, wage increases tend to be higher when unemployment is low).
Mail and computer-assisted telephone and personal-visit interviews. All group quarters responses are obtained by personal visit interview.
Okay, so if you don't answer spam calls, or you aren't home when some random person knocks on your door, your house might be considered to be vacant. This data seems pretty worthless.
That seems like an extremely obvious shortcoming of this survey methodology. I'm willing to give the authors the benefit of the doubt and assume they aren't completely incompetent and that they've attempted to account for this occurrence.
are you sure you're interpreting that correctly? I think they don't count a no-answer in the data. More like someone answers and then provides responses about their own home and their neighbors. I know exactly which homes are occupied in my neighborhood, so I could accurately answer for them if someone asked me.
Many of these homes probably aren’t “empty” in the sense that someone’s just holding on to them long term. This article is citing the vacancy rate, which includes rentals where someone left and the landlord is trying to find a new tenant.
Any city will have some % of empty rentals, if it didn’t, no one would ever move around.
According to the US Census, [1] San Francisco’s vacancy rate is 5.4%, New York’s is 4.5%, and Seattle is 4.8%. But many cities have 10%+ or higher.
It’s pretty disingenuous to say these homes are truly empty or that they’re a sign that “we don’t have a housing crisis” as the Moms 4 Housing group suggested in the article. It’s just a misunderstood statistic being weaponized against building more housing.
If you want to help homeless folks, build more housing and put them in it. If you want your rent to go down, build more housing. If you want your cost of living to go down, build more housing.
Isn't like 90% of the homeless population people with a significant mental illness that they cannot provide for themselves? That's because the normal competent people don't remain homeless long and just need short term temporary assistant. Whereas the large portion of homeless actually are not competent enough to support themselves.
It sounds like by "it" you mean the percentage of homeless with a significant mental illness..."that they cannot provide for themselves" (whatever the sentence was meant to mean). But the only 26% on that page is this:
"Over one-quarter (26%) of respondents identified job loss as the primary cause of their homelessness. "
Only 8% of the currently homeless population became homeless because of mental illness. People with mental illnesses are by far the most visible of the homeless, because they are crazy. But they make up a minority of the population.
18% became homeless because of drug, or alcohol abuse. 42% report drug, or alcohol usage, even if that might not be the cause of their homelessness. 39% report psychiatric issues, even if that might not be the cause of their homelessness.
Thank you for your post. I think there is often a skewed perception of people experiencing homelessness because more often than not they only see the people who have the greatest issues with mental health and addiction.
No, not even close. The nationwide rate of mental illness among homeless people is about one in four, or quadruple the rate of all people. But in the Bay Area where housing pressure is more severe the rate of mental illness among the homeless is actually lower, because there are just more “normal people” among them.
This is exactly what they want. Their contention is that SB50 doesn't place enough emphasis on affordability, so developers will mostly build market-rate housing. If you build enough market rate housing, the prices do eventually come down, but that takes a while to happen. During that time, a lot of people can lose their homes, especially since lower-income areas can be the most profitable ones to build new housing in. So the people who need it most never end up seeing the benefits of lower prices from market-rate housing, because they get kicked out of the city before those benefits kick in.
Agreed that SB50 will not fix the immediate homelessness problem; though I disagree with their belief you can't pass SB50 until it also has affordable housing units.
You can have multiple bills, we shouldn't shoot ourselves in the foot just because we have only a solution to one part of the problem.
In principle I agree with you, but in practice what often happens is that it takes a herculean effort to pass any bill at all, and politicians are more inclined to declare victory than to pass a follow-up bill. Even if they pass a follow-up bill, it may take until the next legislative session, which could mean a huge delay. This creates incentives to get the bill modified before passage.
I disagree. The more you put into a single bill, the more natural enemies of that legislation you create. Pass what you can piece by piece. Hold the line, sure, by not letting up on the pressure after the first . . . and second . . . and third . . . bill is passed, etc.. Politicians only give up and rest on their laurels when the public loses interest.
However this is an issue of our elected officials being obtuse. California is beyond a democratic supermajority and still can’t seem to walk and chew bubble gum.
The Democratic Party is a mess of conflicting patronage. Sadly, there is still a voting constituency who does not think the wealthy should control every aspect of the lives of the working poor.
> Any city will have some % of empty rentals, if it didn’t, no one would ever move around.
You do understand that people advertise apartments available for rent before the previous tenant has moved out...
In Québec, the majority of leases end on July 1st and you have a number of people moving on that day which is quite greater than the vacancy rate. You can sign a lease for a new apartment months ahead of time.
> You do understand that people advertise apartments available for rent before the previous tenant has moved out...
True, but sometimes people just leave without giving warning, or the next person can't move in immediately. Sometimes, in a limited supply market, the landlord will wait for someone willing to pay a specific price since they know there's no other options.
In San Francisco, that's the case for roughly 5% of the units at any given time.
As a renter who has been casually looking for a bigger place in San Francisco for about a year (I am really picky and have a really nice place), it is my experience that decent units stay listed for at most 2 weeks and unoccupied for about 1 month.
What you describe is not the way the US rental markets I have been in worked. Even the past three properties I bought had been vacant for at least a couple months before I even looked at them, let alone closed the deal. Our current house met the Census definition of vacant for six months after we closed on it so I could do work on it before getting all our stuff in.
If the previous tenant had been there a while the landlord is often going to fix it up some--repainting walls, new carpet, new appliances. This takes some time.
Landlords will tell you that lining one tenant up after the other is ideal, but always possible.
It’s similar to the unemployment rate, we call ~4% unemployment “full employment” since it would be impossible for every single person to have a job in a fluid job market.
Maybe adding an extra municipal taxes (or increased yearly tax rate) for homes that are owned but left empty would be a way to curb those who buy homes solely as an investment?
Maybe I'm forgetting an unintended negative consequences, please do share of that is the case.
Offer property tax incentives to real estate owners who have empty homes if they lease them to tenants that have issues with housing stability at rates they can realistically afford.
The owner gets tax benefits. People in need get a home to live in. The city has fewer homeless. All lease income could go towards upkeep.
Who gets to decide what is or isn't a misuse of resources? People like you would rather use force to bend others to your worldview than actually execute on realistic solutions.
Vacancy taxes are hardly authoritarian. If government has any purpose it is to address the irreconcilable conflicts of individual self-interest vs the benefit of all.
And your 'realistic solutions' leads to exploitive loopholes for people who already benefit enough without additional tax incentives, like communities that go in on luxury senior developments to meet their low-income/transient housing obligations.
This is a bad-faith argument advanced by the opponents of construction (landowners, essentially). The facts are that San Francisco vacancy rate is among the lowest in the nation, stands near the all-time low for that city, and is way below the level required for a healthy housing market. You need liquidity for a functioning market, and liquidity means vacancy.
Is this comparison (homeless vs vacancy) a headline thing or is there actually a healthy metric to compare the two? Isn't the number much higher in places with less homeless, such as Oklahoma City?
"Healthy" vacancy rates (according to citylab) are approximately 7-8% (people moving in, people moving out, remodeling, etc). With SF's vacancy rate at 6%[2], shouldn't the vacancy rate be higher?
There's no real attempt here to explain what all the empty houses are about. Second homes? Pied-à-terre's for the rich that live elsewhere?
In nearby British Columbia, recently as property values were spiking there was increased scrutiny of "empty homes" amongst the fact that many new condo developments were luxury developments being explicitly marketed in international magazines and foreign cities.
Drilling down to the individual neighbourhood level, some places were more than 20% 'empty'.
When the government shifted to the social democratic NDP, the new government brought in a "Speculation Tax" which was really more of a vacancy tax. The tax essentially makes it substantially more expensive to have a secondary, empty, home in certain parts of the province. Places that are obvious tourism towns like Whistler are exempt.
> Introduced Dec. 31, 2018, the tax targets homes in the most populated areas of B.C. that are not declared as a primary residence or are not rented out for at least three months a year. More than 99 per cent of British Columbians are exempt.
Tenant rights are so strong in CA that I prefer to leave my home vacant when I travel for half the year, despite having locals asking if their friends can rent it for that duration.
It would only take a single deadbeat choosing to not pay rent, trash the place, and refuse to leave to make it all not worth my trouble.
In another state where tenant rights are weaker I'd collect rent and kick the tenant out on their ass the same month they stop paying rent.
CA is a great state to be a tenant, not so great for being a landlord.
Developments like Airbnb also change the game drastically. Now you can get rental income without even taking the risks of tenants rights by keeping the terms short enough.
Are Airbnb rentals considered "empty" by these metrics?
It's so troubling to see a statistic misused like this. The vacancy rate includes all 'frictional' vacancies, such as the period between someone moving out of an apartment and the owner finding a new tenant, or the period between a new unit being built and a tenant moving in. Because of this, though the vacancy rate can be stable, it's not the same units that are vacant from month to month, and in fact, San Francisco's vacancy rate is extremely low compared to less problematic housing markets.
I don't understand why this statistic matters... its private property and you have no say how they use their homes... if you want to help people get homes lower the regulations so the barrier to entry lower... oh ya and repeal dumb zoning laws :)
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[ 2.6 ms ] story [ 236 ms ] threadThe mere headline reflects either the insanity or the anarchism of the far left. One might as well say: "The one hundred wealthiest San Franciscans have enough disposable income to buy a $10 million dollar house for every homeless person in the City."
How do you put up a headline like that with a straight face, unless you are willing to assert -- as I suppose curbed.com is -- that the cognoscenti proletariat should be empowered to confiscate all property and redistribute it as they wish?
I went to Berkeley (albeit a long time ago) and I've known many liberals. But I only believe the truly lunatic fringe of the left are going to get on board with this kind of thinking.
>The ten most populous Bay Area cities listed above have a combined point-in-time homeless total of 63,527, and, margins of error notwithstanding, a census-estimated 92,800-plus homes vacant, a ratio of about three units for every two persons.
>The census’ annual American Communities Survey defines a home as vacant if there is either no occupant or a temporary occupant—temporary meaning “people who will be there for two months or less.”
>Vacancy rates are estimated by in-person visits to properties or by interviews via mail, email, or phone. The upcoming 2020 census will employ more exact methods and should result in housing and vacancy estimates with less room for error.
Personally, my (rough) idea would be to increase property taxes dramatically for unoccupied residences, which would encourage them to be put on the market for rental at least, and drive prices down a bit.
Or we could, you know, build some cheap housing.
Decommodifying housing sounds like a good idea. People in the streets sounds like a bad idea
It's a ridiculous thing you've said.
The rise of foreign money parking money in real estate has screwed things up on a global level. San Francisco has felt the brunt of this due to their insanely restrictive development laws.
Frankly, for the 7+ years I was in San Francisco I was always saying they should pass laws to prevent foreign investment in real estate or at a minimum require people live there for X% of the year.
Rules around vacant homes are good, though, and I strongly support them.
As a bonus those property owners are politically active and fight zoning reform and development/transit projects to protect aforementioned real estate boom.
At the end of the day, it's not good for the local residents.
It's not as simple as "they're not here thus they're not consuming any services". The resulting effect of sky-high property cost ripples to everything else below it (jobs, transportation, etc).
Even if the empty home consumes no water, electricity, classroom capacity, bus seats, etc., it still consumes police and fire protection services. Someone else's empty home can be used for crime without worrying about civil forfeitures.
A better resident lives in their home, and cares about what is happening in its neighborhood.
The solution to this is to fix the tax code, not retreat further into nationalism.
God forbid we feel any natural affinity towards our fellow countrymen. Any alternative is so artificial and forced.
* people you love, care about, or otherwise know socially
* groups that are oppressed along some axis
* all of humanity
Local life is naturally more important to me. I care more about the dying bird populations in my forest than “humanity” on the other side of the planet. You’re spreading your love too thin.
Yeah, that's gross.
Such an affinity is not "natural" because no one is born with any sort of innate ability to distinguish among nationalities, much less feel any affinity towards certain nationalities.
Any such distinctions and feelings are taught through indoctrination such as nationalistic rituals, media, and the attitudes of those around you.
A nationality is a legal fiction which changes absolutely nothing about who a person really is or what they do.
Nationalism and group affiliation have been the causes of some of the worst atrocities in history, so we should be very wary of encouraging either.
Regardless of their nationality, I personally feel much more affinity with someone who is helping others over one who is hurting others.
You can iteratively, conservatively try to approach an equilibrium where borders and divisions no longer matter and all of humanity joins together in enlightenment. That seems to be the general direction we're going and it's a good thing. What you can't do is unilaterally make a cooperative system out of a competitive one. If you go all at once by yourself you just get killed.
Nationality is a big (and in some cases literal) Chesterton's Fence. It is somewhat arbitrary, but that doesn't make it meaningless.
False, even if you're not US resident, you still have to file non-resident tax returns and pay taxes on all US sourced income.
https://www.irs.gov/individuals/international-taxpayers/nonr...
> A nonresident alien (NRA) usually is subject to U.S. income tax only on U.S. source income.
Faceless "wealthy foreigners" are easier to dislike than their own neighbors who show up at planning commission meetings to rant about someone adding an extra bedroom to their home (this is an actual thing I read about in San Francisco).
My point is that there's a small but persistent current of thought regarding the housing crisis that wants to pin the blame on "wealthy foreigners buying up all our real estate", as sort of an 'out' for taking a good, hard look at local housing policies.
If it makes no difference to you, why not favor your own country?
Even acting like it’s morally superior when it’s just an inefficient form of welfare. It’s a bunch of feel good.
I say “national” but I don’t really care about Florida or NY way over here in California.
I think this a fairly superficial claim. I agree that there are reasons to question the moral basis of national borders (why should someone be given additional rights based on where they were born?) but there are immense practical benefits that arise from having national borders. From a utilitarian perspective, these practical benefits likely outweigh the costs.
In the case of placing additional taxes and restrictions on foreign investment in real estate - yes, this may restrict the freedom of foreigners, but the overall benefit of these laws could be sufficient moral justification.
the homes are sold for profit, which does leave the country. but more importantly, there is a housing shortage. plus, the costs are kept high.
There are more nuances to this. Chinese millionaires and billionaires don't care about the sales price. They do it to diversify their portfolio to avoid CCP. Some of them did this to launder the dirty money as well.
Their numbers might be small but the chilling effect of outbidding everybody else outrageously will incentivized realtors to spread the "good news" to their customers/clients that "hey... that unit over there is sold $ x million dollars, would you be interested to sell yours as well?"
Suddenly before you know it, the market is f*cked.
edit: forgot to add non-primary home.
Just do what Texas does and allow deferred property tax payments for when the owner dies or sells.
Why should we be giving tax breaks to people who have seen incredible appreciation of their homes. Those are the last people who should be getting tax breaks.
> Why should we be giving tax breaks to people who have seen incredible appreciation of their homes. Those are the last people who should be getting tax breaks.
It's about not forcing people to move because he area they live in appreciates suddenly. Basically, the same argument as rent control. That an owner gets to cash out some value is cold comfort when their life is uprooted against their will.
The end result is, if the owner chooses, they can continue paying the same property rate until they die or sell. The govt eventually collects the full tax from the equity of the house (or estate).
You solve the issue of people being forced from their homes while at the same time being more equitable in terms of tax burden.
In your grandparents case, they could freeze their property taxes, but when the houses switches ownership, they’d need to pay all the back taxes they avoided with the cap.
Why shouldn’t your grandparents have to pay current property taxes? They just had a windfall increase in property value.
Prop 50: pass your current tax rate on to your children.
Prop 68: pass your current tax rate on to your grandchildren.
Of course, none of that is going to happen anytime soon…
So the homes just sit... empty.
Surely that's not significantly more burdensome than the bureaucratic hassle of purchasing the property in the first place.
I guess there's some significant tax/regulatory difference between capital gains from holding property vs. an income stream from renting said property.
And in the Bay Area people invest more for appreciation than rent. The rent/price ratio is much higher elsewhere.
unfortunately management companies require managing themselves. even if you find a good one, they won't necessarily stay good, so you're firing them, getting new ones, etc.
and i've never heard of one that will let you hand them a property, and then eat all of the risk for you and provide a simple de-risked income stream. even if they'll do a good job of handling 100% of maintenance tasks, they're still going to send you the bills.
anybody who can afford to de-risk a real estate income stream can afford to just buy real estate themselves, they don't need yours. there's no market here.
Sounds like an opportunity here! The Chinese market for "stores of value" is quite high! There are tons of largely empty high-rise condos in China for this very reason. What about a company that has the connections and know-how to smooth over the transactions, then puts management into place to get AirBNB/rental income?
If the property tax is paid and the maintenance is kept up what is the problem created solely by the fact some homes are empty? The only reason these properties have such high values is because there is a demand that is not being supplied. Supplying more housing makes this a non-issue.
> San Francisco has felt the brunt of this due to their insanely restrictive development laws.
This is the real issue. Governments restrict housing supply for whatever misguided reasons and prices go up, those prices make it a good place to park cash. Government should stop picking winners and losers.
Some look at the situation, question what's different about SF that might be causing this, and point to the highly restrictive development laws the city has. These prevent new comers from entering the market leaving only those who are primarily playing the long game and looking to build wide moats. If investors who required a much shorter return could compete, it's assumed the situation would normalize
If this isn't the case, then what is the underlying issue? Simply attacking wealthy people for doing something that is a) completely legal and b) obviously providing them some sort of benefit doesn't solve the underlying problem. To look at it another way, SF has clearly been trying to "solve" this problem through increased regulation for many decades now. Where are the success stories we can point to that show the direct approach is working?
Restriction of housing is not limited to Government, housing developers also do it:
"[Kate] Barker reached a similar conclusion in her interim report, where she noted that in order to maximize their profits, developers control the rate of production and ‘trickle out’ no more than 100–200 houses a year from a large development. ‘This may not be desirable from society’s point of view,’ she wrote." (from https://www.annaminton.com/bigcapital)
Personally, I trust the reasons that a Government would limit housing more than I would a for-profit company who are probably operating in the interests of investors who don't live in the affected areas.
Even more than Big Government control though, I would prefer the people that live in an area to have the biggest say into how things are run.
The fact still remains though that the housing developers wouldn't be able to trickle out homes at their whim if the government enforced limits on housing weren't preventing other developers from competing.
(1) Repealing prop-13 is probably a non-starter but we could probably get away with repealing it for non-owner-occupied homes. Prop-13 was meant to prevent people from being driven from their homes by property tax increases, not to protect speculators from being taxed.
(2) Levy a substantial additional property tax on residential properties that are not currently occupied by either the owner or a renter (for more than e.g. 6 months). These should at the very least be on the rental market.
(3) Subject all real estate purchases and investments to KYC/AML and other rules. AFAIK one of the things driving this loony real estate speculation is that RE has become a preferred vehicle for money laundering after KYC/AML made other financial investments less attractive for that.
(4) Tax foreign (non-US-citizen) purchases of residential real estate. Yes they'd set up shells and recruit locals to be proxy buyers, but at least this would give them more hoops to jump through and would probably reduce the extent of the problem.
I have never lived in California, and Prop 13 passed before I was born anyway, so I don't know much about the political backstory. That said, if this was the purpose that got it passed, why is the exemption so broad? How does capping Safeway's property taxes keep people from being driven out of their homes?
But getting anyone to fix proposition 13--even in this very limited instance of not protecting corporations anymore--brings out all the apocalyptic messaging (from basically everyone, but especially the corporations) that the old folks who bought in 1970 and have lived their whole lives there will be out on the street when their property taxes go up 10x.
There is no nuance in these messaging battles. And quite frankly, what property owner wants to take any kind of risk with this?
So permanent residents and visa holders cannot buy property and are instead forced to rent? What a terrible idea.
If the property ends up vacant for 2 years, government appoints random renters - for a maximum rent no higher than the rate the lowest 10% city-wide is. No possibility of eviction for ten years, except for willful/grossly negligent damage to property or unfit conduct (e.g. disturbing the peace, running drug dens or harassment of other renters). If an owner intentionally does not repair damages to claim the tax exception, government is authorized to do the repairs themselves and recoup costs from the owner.
That should be proper incentive for developers to build housing that is actually wanted and for speculation owners to rent out homes and to keep them intact/rentable.
Edit: for the downvoters, please explain why. This is a system that is the law in Berlin, only with a drastically higher tax rate and lower minimum rent.
The comment reads as an extreme solution that no one would ever implement. The fact that it is already implemented somewhere gives it a lot more credibility.
Was this system intended for the homeless?
Were there many vacants before?
How has the offer responded to such measures?
How difficult is to evict a grossly negligent or misbehaved tenant?
I'm with you 100%. I lived in SF from 1998-2006, then again for a few years in the 2010's, and when rental prices are high landlords seem to prefer holding out rather than lowering their rates. I assume this is to avoid locking a potentially valuable rental unit into a low, rent-controlled lease. (On a side note, this is why many economists believe rent control is bad overall for rental markets: http://freakonomics.com/podcast/rent-control/)
On the other hand that can be detrimental to the economy depending on how something like that is implemented.
These debates always turn into anecdotes that cover up the real reasons why people oppose or support housing—a preference for the suburban or urban lifestyle respectively. People who argue that newly-built condo buildings are mostly vacant always happen to prefer the suburban lifestyle; people who argue that newly-built condo buildings provide much-needed housing always happen to prefer the urban lifestyle (including me). It's all a facade.
The actual vacancy rate in San Francisco, as we expect, is relatively low for US cities.
So this is counting AirBnBs and other short-term rental spaces as vacant.
> Vacancy rates are estimated by in-person visits to properties or by interviews via mail, email, or phone.
I clicked through to the definition from census.gov:
> Mail and computer-assisted telephone and personal-visit interviews. All group quarters responses are obtained by personal visit interview. Most vacant units are not identified until the third month of data collection (the first personal visit). In that month, a 1-in-3 subsample of all addresses for which responses have not been obtained are visited by field representatives.
I'm curious how well you can distinguish permanent residents not being home when field representatives happened to drop by from actually vacant. My house looks like it could be vacant when nobody is home.
> Vacant Housing Units. A housing unit is vacant if no one is living in it at the time of the interview, unless its occupants are only temporarily absent. In addition, a vacant unit may be one which is entirely occupied by persons who have a usual residence elsewhere. New units not yet occupied are classified as vacant housing units if construction has reached a point where all exterior windows and doors are installed and final usable floors are in place. Vacant units are excluded if they are exposed to the elements, that is, if the roof, walls, windows, or doors no longer protect the interior from the elements, or if there is positive evidence (such as a sign on the house or block) that the unit is to be demolished or is condemned. Also excluded are quarters being used entirely for nonresidential purposes, such as a store or an office, or quarters used for the storage of business supplies or inventory, machinery, or agricultural products. Vacant sleeping rooms in lodging houses, transient accommodations, barracks, and other quarters not defined as housing units are not included in the statistics in this report. (See section on "Housing Unit.")
The survey also distinguishes different types of vacancies. See pages 4-6 of the linked document. The overall vacancy number could be misleading without seeing the breakdown.
by definition tourist or transient, so correctly so. Unless you want to call every room at the hilton an apartment...
Obviously you don’t include hotels because those were never intended as housing in the traditional sense.
Low-end residential hotels (i.e., the ones not catering primarily to extended white-collar business travel) are, in major function, very hard to distinguish from traditional housing. And what stops any other hotel (particularly higher-end residential / extended-stay hotels) from selling into that market is the expectation that doing so (even with units that are otherwise vacant) would sacrifice the opportunity for more rent from richer people, so it very much is a continuous market.
Exactly. Particularly during a housing crisis, people shouldn't transform apartments into illegal hotels.
I wonder why they didn’t mention one simple explanation - many of these are Airbnbs or other short term rentals.
Zoom out for a second and consider how wild it is that we turned a life necessity (shelter) into a speculative plaything.
It is (mostly) one of supply, though. California has massively underbuilt over the past decade.
If an empty condo were an asset that didn't appreciate in value because of the scarcity of housing, maybe those wealthy people would sell them and invest in the market or companies or something else.
https://www.sfchronicle.com/opinion/openforum/article/How-th...
Every necessity is a speculative plaything. There are futures and commodities markets for every consumable you could imagine. That's the beauty and cruelty of a (relatively) free market.
It’s cities that are turning housing into an investment through laws turning it into a scarce resource. (Not just laws against building, but laws against short term rentals, boarding houses, tenements, etc.). It’s unsurprising that homelessness is actually decreasing in the US as a whole, whole increasing in wealthy cities: https://www.economist.com/united-states/2019/10/19/homelessn....
But this is mostly a San Francisco and New York problem. In 2015, about 10,000 people in San Francisco experienced homelessness at any time in the past year. That’s 112 per 10,000 people. (This is a different, and better, measure than the “homeless on a given night” instantaneous measure.) That same figure in Iowa is about 9 per 10,000. The national average is around 20-25 per 10,000.
I remember being in Penn Station in NYC on many nights when homeless people slept in the waiting rooms. Police would routinely come by and kick them out. When this happened during the winters in sub-zero temperatures this meant a very real risk of death for the homeless who were forced to sleep outside.
I wonder if it's the same in other parts of the nation, and if the reason there are only 25 homeless per 10,000 nationwide is that the rest have died of exposure during their winters (or from other types of neglect).
Yes, this is a very good point. You don't see people vilifying farmers for making profits on food, even though some people go hungry. But for some reason people hate developers for making a profit on housing. (In my opinion, all of the NIMBY arguments, very much including the vacancy one in the article, are just attempts to mask the real reason for opposing housing—a preference for the suburban lifestyle.)
> But this is mostly a San Francisco and New York problem.
It's not just a San Francisco and New York problem. Add Seattle, Los Angeles, San Diego, Portland, Austin, Miami, and Boston/Cambridge to that list, just to name a few. That's not even counting non-US cities like Vancouver, London, Paris, etc.
I agree that housing shortages are unevenly distributed, of course.
What’s your thesis for this? If the supply suddenly quintupled in the Bay Area and the population halved, I doubt we’d be calling it a “housing crisis”. Prices would fall dramatically because of supply.
How do you decide who gets to live in SF (or insert city here)? Prioritize people who were born there? Whose family has history? People who have jobs there? What about self-employed people? People with kids? A lottery system?
This is wrong. There is no distribution problem with housing. It's not that people can't find a house to live in, or a house has to be shipped across the country and the rail line is broken.
The problem is that people can't afford housing. And they can't afford it because demand has increased dramatically while supply has been artificially constrained by government.
The solution is to remove the government constraints on supply which will lower prices. Now obviously the trick is that existing owners don't want to do this, and they have a lot of political power. So I don't really see this happening, but if it somehow could happen that would be the path to the answer.
This is not true because you aren't counting the vast number of people who want to relocate to the Bay Area.
The article also ignores the fact that you will always have some % of empty homes. People move out and it takes time to find new tenants. People want to remodel. New buildings take time to fill up. People have second homes. Overall vacancy rates in SF and the Bay Area in general are TINY.
https://sf.curbed.com/2019/3/21/18276227/vacancy-rate-san-jo...
The idea that 0% vacancy is achievable (or even desirable) is wrong.
The statistic about vacancies is only meaningful if you assume that the only demand for housing in SF comes from the homeless, which is clearly absurd.
In a society with decommodified housing, some amount of housing will need to be built to keep up with local immigration. That is massively below the amount that would need to be built to try to prod second-order market effects to do what we want.
We don't need all people experiencing homelessness to be able to afford market-rate housing. That's what subsidized affordable housing is for. If market rate housing were much cheaper, though, many people who are homeless would be able to afford market-rate housing, and then the scarce affordable housing dollars that we have would be sufficient to cover the rest.
> Thinking you can build your way out of this housing crisis is the definition of insanity.
No, it's what cities that don't have housing crises like Houston do. Objectively, Houston is doing everything better than San Francisco when it comes to housing. What do they do? Allow a lot more building, with less red tape and restrictive zoning.
San Franciscans need to take a long hard look at what cities like Chicago and Dallas are doing when it comes to housing, and have the humility to recognize that their policies have failed and that they must change. I say this as a San Franciscan who's proud of his city in a lot of other ways.
> In a society with decommodified housing, some amount of housing will need to be built to keep up with local immigration. That is massively below the amount that would need to be built to try to prod second-order market effects to do what we want.
That doesn't make sense to me. Demand is demand; you need a lot of housing no matter what. Unless you try to curb that demand by instituting a hukou system (which a lot of Californians seem to want to do).
also it's not like you can let someone live in a house for free and just call it a wash. anyone who has ever rented a home to folks knows that tenants can be _extremely_ hard on a rental property.
You can make money on capital gains without any continuing investment/income or significant tax... why bother with tenants. Just sell out to the developer who wants to put in another high-rise apartment complex when the price is higher. In the mean time... screw the neighborhood.
https://www.theguardian.com/commentisfree/2020/jan/09/san-fr...
I mean I really do like the idea but I've heard of incredibly long waiting lists for apartments in places like Germany simply because there just isn't enough supply to meet demand.
If you add up all the homeless numbers listed for each city in the article this number is actually 23,528.
What is considered a healthy occupancy rate for a city? 100% occupancy would obviously not be ideal since there would be no places for people to move to.
Are there any direct stats on vacant home ownership as a means to hold money?
That would imply there are 20K vacant units just for frictional reasons. I expect the number of these type of vacancies exceeds the number of homeless in almost every city in the US
A vacancy rate of 10% is an occupancy rate of 90%. To house everyone with a 90% occupancy rate, you need to have 100 / 90 in available housing stock, which is 111.1% of occupation requirements.
If you only build 110% of what is needed, and no one is homeless, the vacancy rate would be 9.1%, or ( 1 - 100/110 ) .
The point still stands. Cities need more housing than strictly required for residents.
Sure it does. Houston has a higher vacancy rate, and much more affordable housing than San Francisco. This strongly suggests that the vacancy rate is a red herring.
Mail and computer-assisted telephone and personal-visit interviews. All group quarters responses are obtained by personal visit interview.
Okay, so if you don't answer spam calls, or you aren't home when some random person knocks on your door, your house might be considered to be vacant. This data seems pretty worthless.
Any city will have some % of empty rentals, if it didn’t, no one would ever move around.
According to the US Census, [1] San Francisco’s vacancy rate is 5.4%, New York’s is 4.5%, and Seattle is 4.8%. But many cities have 10%+ or higher.
It’s pretty disingenuous to say these homes are truly empty or that they’re a sign that “we don’t have a housing crisis” as the Moms 4 Housing group suggested in the article. It’s just a misunderstood statistic being weaponized against building more housing.
If you want to help homeless folks, build more housing and put them in it. If you want your rent to go down, build more housing. If you want your cost of living to go down, build more housing.
[1] https://www.census.gov/housing/hvs/data/ann18ind.html
Source (pg 22, Mental Illness + Alcohol / Drug Use): http://hsh.sfgov.org/wp-content/uploads/FINAL-PIT-Report-201...
"Over one-quarter (26%) of respondents identified job loss as the primary cause of their homelessness. "
Only 8% of the currently homeless population became homeless because of mental illness. People with mental illnesses are by far the most visible of the homeless, because they are crazy. But they make up a minority of the population.
18% became homeless because of drug, or alcohol abuse. 42% report drug, or alcohol usage, even if that might not be the cause of their homelessness. 39% report psychiatric issues, even if that might not be the cause of their homelessness.
[1] http://hsh.sfgov.org/wp-content/uploads/FINAL-PIT-Report-201...
This is exactly what they want. Their contention is that SB50 doesn't place enough emphasis on affordability, so developers will mostly build market-rate housing. If you build enough market rate housing, the prices do eventually come down, but that takes a while to happen. During that time, a lot of people can lose their homes, especially since lower-income areas can be the most profitable ones to build new housing in. So the people who need it most never end up seeing the benefits of lower prices from market-rate housing, because they get kicked out of the city before those benefits kick in.
You can have multiple bills, we shouldn't shoot ourselves in the foot just because we have only a solution to one part of the problem.
You do understand that people advertise apartments available for rent before the previous tenant has moved out...
In Québec, the majority of leases end on July 1st and you have a number of people moving on that day which is quite greater than the vacancy rate. You can sign a lease for a new apartment months ahead of time.
True, but sometimes people just leave without giving warning, or the next person can't move in immediately. Sometimes, in a limited supply market, the landlord will wait for someone willing to pay a specific price since they know there's no other options.
In San Francisco, that's the case for roughly 5% of the units at any given time.
It’s similar to the unemployment rate, we call ~4% unemployment “full employment” since it would be impossible for every single person to have a job in a fluid job market.
Do those cities have twice as much homeless people? (or probably half as much)
Maybe I'm forgetting an unintended negative consequences, please do share of that is the case.
The owner gets tax benefits. People in need get a home to live in. The city has fewer homeless. All lease income could go towards upkeep.
Owners incentivized to utilize land, more real estate available, foreign investment squatting suffers.
And your 'realistic solutions' leads to exploitive loopholes for people who already benefit enough without additional tax incentives, like communities that go in on luxury senior developments to meet their low-income/transient housing obligations.
The NIMBY groups who advanced this exact narrative in Los Angeles had to retract their "study" because it was BS. https://thehill.com/changing-america/respect/poverty/471675-...
"Healthy" vacancy rates (according to citylab) are approximately 7-8% (people moving in, people moving out, remodeling, etc). With SF's vacancy rate at 6%[2], shouldn't the vacancy rate be higher?
1. https://www.citylab.com/equity/2018/07/vacancy-americas-othe... 2. https://www.statista.com/statistics/430104/office-vacancy-ra...
In nearby British Columbia, recently as property values were spiking there was increased scrutiny of "empty homes" amongst the fact that many new condo developments were luxury developments being explicitly marketed in international magazines and foreign cities.
Drilling down to the individual neighbourhood level, some places were more than 20% 'empty'.
When the government shifted to the social democratic NDP, the new government brought in a "Speculation Tax" which was really more of a vacancy tax. The tax essentially makes it substantially more expensive to have a secondary, empty, home in certain parts of the province. Places that are obvious tourism towns like Whistler are exempt.
https://www.cbc.ca/news/canada/british-columbia/b-c-s-specul...
> Introduced Dec. 31, 2018, the tax targets homes in the most populated areas of B.C. that are not declared as a primary residence or are not rented out for at least three months a year. More than 99 per cent of British Columbians are exempt.
It would only take a single deadbeat choosing to not pay rent, trash the place, and refuse to leave to make it all not worth my trouble.
In another state where tenant rights are weaker I'd collect rent and kick the tenant out on their ass the same month they stop paying rent.
CA is a great state to be a tenant, not so great for being a landlord.
Developments like Airbnb also change the game drastically. Now you can get rental income without even taking the risks of tenants rights by keeping the terms short enough.
Are Airbnb rentals considered "empty" by these metrics?