Tangentially: Vancouver has has an empty home tax for almost 5 years, this year the cities director of finance published a fairly long report that gives some insight on how it's going, including an EY report attached at the end. It's a long but pretty interesting read:
(two things I pulled out, they've put $115MM toward affordable housing directly from the tax, and, empty properties fell 20% 2020-2021 and the same again 2021-2022 - worth reading the report)
A little insight on Vancouver: PRC investment firms decided that the steady growth of the North American real estate market looked to provide great returns on investment. So, these firms started buying up large numbers of single-family homes in Vancouver. I've heard a few reasons for why they chose Vancouver: (1) the large amount of PRC nationals in Vancouver, (2) geographic proximity to the PRC (relative to other North American metropolitan areas), and (3) the closer relationship with the Canadian government (relative to the US).
Now, the investment firms took a different approach. Many ordinary people and even real estate firms will try to rent out their secondary properties, particularly if the property is in a major metropolitan area. Here, the firms didn't rent out the properties for any reason. Their investment strategy decreased the total available housing supply (for anyone, including renters) while demand kept increasing, so the home prices naturally skyrocketed. They sat on the properties and rode the tide.
The issue that Vancouver started encountering was that single-family homes on a regular residential block may be only 50% occupied. The end effect is you'd have families living on a regular ol' city block but with half the properties vacant, which destroys the development of community in that neighborhood. Also, because the Vancouver housing market pricing exploded, property taxes blew up, yet many residents' neighborhoods became a worse place to live. The housing market wasn't growing because of newfound desirability (e.g. Austin) or fresh industry (e.g. Atlanta and entertainment); in those cases, the new economic activity will provide benefit to the community in a variety of ways. The Vancouver situation only benefited the investment firms with no tangible benefit to the community.
Residents became understandably upset. Hence, the empty home tax was passed to disincentivize the investment firms' predatory investment strategy.
Seems like there could be an opportunity for renters to approach vacant property owners and offer to stay in their homes for amounts, say, half of the vacancy tax.
> looked at census data on the nation’s 50 largest metropolitan areas and found there are 5.47 million vacant housing units, with an average vacancy rate of 7.22 percent.
This feels sensational. Imagine a common scenario: a unit is rented for 2 years (24 months), and then is vacant for 1 month while the owner repaints, performs maintenance, and relists the property for rental. That is 1/(24+1) = 4% vacancy. Given you can easily get to 4% vacancy with simple turnover, you can see why very low vacancy rates are bad for renters: they indicate it is extremely competitive to find housing. You can see this anecdotally in extremely tight housing markets like NYC where renters looking for apartments often report they need to move extremely quickly to secure rentals and some people even ofter to pay more than the listing price for desirable apartments.
I believe they accounted for this in the lending tree article. Looks like the main cause is units for rent at 26%, and units undergoing repair are at 6%.
I’ll say from personal experience it is somewhat rare to have this one month gap period between renters. I tend to see the super (manager) paint the unit in 1-2 days or even overnight. Then repairs can happen as the tenant reports them while living in the unit, barring any severe damage.
That example hit 4%, but that’s a long way from 7.22 percent. It’s common for rental properties to be occupied by the same tenants for 10 years or longer, 7.22% of that is 8.7+ months which suggests the 7.22% is further concentrated around shorter rental periods.
It’s the same deal with unemployment, 7% is much worse than 4% even though the numbers aren’t that far apart because it’s a composite of a baseline and issues.
One issue is with how the census/fed defines vacancy.
>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.
If a builder is building a house and it has a roof/windows/doors/floors but no occupancy permit, utilities are not hooked up, and there are no appliances/furniture that is counted as 'vacant' even though you technically can't live there.
If I left an apartment today (12th) and my lease ends the 30th. Even if a lease is in place at the start of the next month that still counts as a vacancy.
If I have a 2nd home I share with family/friends/short term lease that is generally occupied, it's still "vacant".
This is the true math right here. An apartment that is occupied for a year, then takes a month to lease out again, results in an 8% vacancy rate. That’s just one of the reasons. People who think we can drive the vacancy rate down, even though it already stands at a record low, are crazy.
I hear such conflicting information. For a normal looking new development, I hear that developers are looking to offload asap to recoup the investment. Certain markets in America make it almost seem as if these investors are willing to wait years for rates to come back up.
I don't think Powell gives two fucks about the inflation or unemployment rate. Think he's very interested in cost of living and rent more than anything else. Housing prices barely have moved down at we're on the wrong side over 5%. If housing just thinks its going to wait this wait out and emerge from all of this with this inflated money house has left in tact, while the rest of get slammed by the waves, well ... well I guess I've seen dumber stuff.
Housing needs to get hit for any of this to be worthing anything.
There’s no conflict. Developers are building and selling as soon as they can. That’s their job and that’s their business model.
The people withholding units from the market are your normal landlords and speculators who can stomach reduced rents in the income. They need to be taxed out of existence. LVT continues to be the right answer here, both for incentivizing development and disincentivizing speculation/holdouts.
Developers are not investors. They borrow money to build and hope to sell at a profit. It’s just like a new car dealership. The “inventory” isn’t owned by the builder or lot, it’s owned by the bank. The builder pays interest, taxes, insurance, every day a home sits unsold. They are motivated to sell and due to market factors they are starting to offer steep discounts. Now existing homes are a bit of a different story. There is a mix of owners and investors and they are likely locked in at a comparably low rate. If they bought in the last 2 years they may even be underwater. And if looking to move they may need to get a certain price to be able to get into their next home.
The investors keeping a building empty don't care about return on investment like most investors do they want to hide assests from their local government and possible have a place to flee to if things get even worse locally.
Investors looking for a return on investment want to rent everything. They leave property empty when remodeling, or when between tenants.
In high demand metropolitan areas, I don't see how housing prices are ever going to take a hit. There are plenty of young, well-paid professionals interested in good real estate who are capable of and willing to pay high prices. Demand is severely constrained because interest rates are high. I can't see how the needle is going to move unless rates drop.
For the purpose of understanding how housing markets work, I don’t think homes that the owners use part of the year and aren’t offered for rent should count. It doesn’t seem like there’s any mystery about that? They own it for their own use. Some places have very seasonal demand.
But the article also talks about some cities where there is housing for rent, but not at prices where anyone will rent it. That’s curious. It would be interesting to find out more about what’s going on there.
in sleepy seacoast new hampshire I overheard a local with a sharp quip about the rich owners of vacant autumn luxury waterfront apartments: "it's not your presence we despise, it's your absence"
Probably should be careful what they wish for. It seems to me that unused vacation properties are optimal for the residents: they pay much higher taxes as a secondary residence and they don't cause traffic or consume any resources.
There's a really nice solution that works well in Switzerland - you either pay tax from the actual rent or a tax on a virtual rent, if the property stays unoccupied.
1% is insanely dysfunctionaly low. It doesn’t allow for units to stay vacant between tenants for repairs and cleaning. At 1% the unit is vacant for 3 days every year on average. That’s not enough time for basic things to be done and indicates an incredibly tight rental market
Helpful, I guess. But it feels like a case where aggregated data makes for a better narrative.
For example, the article says, "About 26.6 percent of the nation’s vacant housing units are actively available for rent." Does that mean the landlords are having trouble finding qualified tenants? If so, then the real issue is the disconnect between inventory and what those seeking shelter can afford.
A $5000 p/m unit being held back if 99% of those needing a place to live can't afford it.
Housing availablity is like jobs creation. X new jobs? Ok. Whatever. But at what rate of pay? With what benefits? A job is not a transparent unit of measure. The devil in these things is in the details.
How is your market for an essential commodity working if we need to have more than 6% of all inventory sitting around doing nothing, or else it's unaffordable?
There is only one solution, for a virtual market, storing its value in a real world comodity, that real people can no longer afford. Create virtual people, who earn better and let them move in, with the poor real world citizens.
Of course, the other solution would be increasing tax and just build massive oversupply of social housing- but that can not happen, as it would devalue the poker-chips, that are the stacks we life in.
Something about this doesn't really make sense. I mean how often do we hear that there is a housing shortage? Either we are being lied to that there is a shortage or these numbers are not what they seem?
It bothers me that in this article that in the same paragraph it mentions housing "deteriorating conditions" it gives percentages for housing in rent and being renovated, but ignores the percent for this important aspect? How much of this housing is actually in a livable state?
Maybe the original report actually gives these numbers so I will need to look at this closer.
But something about this really isn't adding up for me given what has been said time and time again over the last few years.
Edit: Ok so it seems like the reason this article doesn't mention this percent is because the lending tree one doesn't either. If I am reading this correctly it is only explaining about 52% (26.61 + 17.04 + 7.98) of this number. So what is the reason for the other roughly 50%? That is a huge percent to be seemingly ignoring but still taking into account for an attention grabbing headline.
In our state, there's a lot of people who got burned during covid by people not paying rent and refusing to leave, and no realistic way to evict. There are still covid related restrictions on evictions in place. An acquaintance of mine has a kind heart and took in a homeless person. He's done this before on occasion. This time, the person is causing all kinds of problems and is unwilling to leave. He now has to live with this person in his house for a minimum of 6 months to get them evicted, even though no rent was ever paid or asked for.
He's never going to take in people again. Nor will he ever rent out to anyone again.
California Insider (channel killed by Youtube) documented how thousands of former rental units are sitting vacant in San Francisco because of issues like this.
Increasing the risk to landlords even more than it already is will only reduce available rentals even more.
This is also why you have to leave after x number of nights at a hotel in the US, where x is less than the number of nights it takes to qualify as a “permanent resident” in the hotel which would cause the hotel to have to go to court to evict them. It is usually 30 nights, but some states are up to 90 nights.
The court system being unreliable and backed up for months is a travesty of its own that has myriad downstream effects in society, including incentivizing discrimination.
> Because home-building became more expensive during the pandemic as a result of supply chain problems, developers tried to pass those prices off to renters to pay off loans.
This seems to be completely ignoring inflation and hinting at a greed narrative.
I think it's just equating the two, which probably isn't wrong, considering the record profits made even as inflation has skyrocketed.[1] Making less profit is not an option for all of these businesses (because of greed), so they pass 100% of the inflation on to the consumer, and then some.
This is housing trutherism - yes, there's a lot of vacant housing. These units are being renovated, are uninhabitable, are in areas that aren't really livable (a ton are in rural Upstate New York, and don't have heat for example).
It's also still too small a % of total housing to create a proper liquid market. I've seen a liquid housing market, in KC - it's amazing. In NYC, it's fucking miserable to convince a landlord to let you suck them off to the tune of 6k a month.
This is Flat Earth but for housing policy. Look at places that win the housing price war - they just build a shitload of housing. Houston, Dallas, increasingly MSP.
With Canada’s land to population ratio, each resident should have at least a private airfield and 100acre farm, and yet, people spend their whole lives paying mortgages for 1000 square feet sardines boxes called houses, and before they realize it, they gauge up the already abysmal prices so they can compensate their loss to milk the tenants, a never ending process to keep people busy when the land is empty and vacant all around us..
More suburban sprawl is not the answer. We're already seeing what happens when you build into fire areas, doing more of that is insanity. We should just fix our cities to meet the bare minimum of peer countries like Canada.
Mexico is significantly better at cities than CA. Fucking Guatemala has better urbanism.
It's crazy to me that housing is calculated as part of GDP - there's just something wrong about attaching a capitalistic value to someone having a roof above their head.
I've seen an uptick of reporting on 'vacant homes' like the journalists are hinting at a confiscation of private property to house homeless people or something. This isn't Stalinist USSR - you can't seize peoples farms or property for collective use. Being a dreg on society does not entitle you to others earthly possessions. I disagree with an empty home tax as well - property taxes are already being paid. Ban foreign investors from buying homes/property, ban corporations from hording property, encourage housing development and curb commercial/retail expansion.
[+] [-] neom|2 years ago|reply
https://council.vancouver.ca/20230510/documents/cfsc2.pdf
(two things I pulled out, they've put $115MM toward affordable housing directly from the tax, and, empty properties fell 20% 2020-2021 and the same again 2021-2022 - worth reading the report)
[+] [-] waterheater|2 years ago|reply
Now, the investment firms took a different approach. Many ordinary people and even real estate firms will try to rent out their secondary properties, particularly if the property is in a major metropolitan area. Here, the firms didn't rent out the properties for any reason. Their investment strategy decreased the total available housing supply (for anyone, including renters) while demand kept increasing, so the home prices naturally skyrocketed. They sat on the properties and rode the tide.
The issue that Vancouver started encountering was that single-family homes on a regular residential block may be only 50% occupied. The end effect is you'd have families living on a regular ol' city block but with half the properties vacant, which destroys the development of community in that neighborhood. Also, because the Vancouver housing market pricing exploded, property taxes blew up, yet many residents' neighborhoods became a worse place to live. The housing market wasn't growing because of newfound desirability (e.g. Austin) or fresh industry (e.g. Atlanta and entertainment); in those cases, the new economic activity will provide benefit to the community in a variety of ways. The Vancouver situation only benefited the investment firms with no tangible benefit to the community.
Residents became understandably upset. Hence, the empty home tax was passed to disincentivize the investment firms' predatory investment strategy.
[+] [-] jeromegv|2 years ago|reply
[+] [-] hnreport|2 years ago|reply
[+] [-] matt-attack|2 years ago|reply
[+] [-] belligeront|2 years ago|reply
This feels sensational. Imagine a common scenario: a unit is rented for 2 years (24 months), and then is vacant for 1 month while the owner repaints, performs maintenance, and relists the property for rental. That is 1/(24+1) = 4% vacancy. Given you can easily get to 4% vacancy with simple turnover, you can see why very low vacancy rates are bad for renters: they indicate it is extremely competitive to find housing. You can see this anecdotally in extremely tight housing markets like NYC where renters looking for apartments often report they need to move extremely quickly to secure rentals and some people even ofter to pay more than the listing price for desirable apartments.
[+] [-] generaljargon|2 years ago|reply
I’ll say from personal experience it is somewhat rare to have this one month gap period between renters. I tend to see the super (manager) paint the unit in 1-2 days or even overnight. Then repairs can happen as the tenant reports them while living in the unit, barring any severe damage.
[+] [-] Retric|2 years ago|reply
It’s the same deal with unemployment, 7% is much worse than 4% even though the numbers aren’t that far apart because it’s a composite of a baseline and issues.
[+] [-] faet|2 years ago|reply
>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.
If a builder is building a house and it has a roof/windows/doors/floors but no occupancy permit, utilities are not hooked up, and there are no appliances/furniture that is counted as 'vacant' even though you technically can't live there.
If I left an apartment today (12th) and my lease ends the 30th. Even if a lease is in place at the start of the next month that still counts as a vacancy.
If I have a 2nd home I share with family/friends/short term lease that is generally occupied, it's still "vacant".
[+] [-] jeffbee|2 years ago|reply
[+] [-] lsmeducation|2 years ago|reply
I don't think Powell gives two fucks about the inflation or unemployment rate. Think he's very interested in cost of living and rent more than anything else. Housing prices barely have moved down at we're on the wrong side over 5%. If housing just thinks its going to wait this wait out and emerge from all of this with this inflated money house has left in tact, while the rest of get slammed by the waves, well ... well I guess I've seen dumber stuff.
Housing needs to get hit for any of this to be worthing anything.
[+] [-] ethanbond|2 years ago|reply
The people withholding units from the market are your normal landlords and speculators who can stomach reduced rents in the income. They need to be taxed out of existence. LVT continues to be the right answer here, both for incentivizing development and disincentivizing speculation/holdouts.
[+] [-] willcipriano|2 years ago|reply
The feds actions show they want high asset prices relative to wages.
The plan is exactly as you describe. "Asset inflation good, wage inflation bad" is government policy at this point.
[+] [-] mberning|2 years ago|reply
[+] [-] bluGill|2 years ago|reply
Investors looking for a return on investment want to rent everything. They leave property empty when remodeling, or when between tenants.
[+] [-] BaculumMeumEst|2 years ago|reply
[+] [-] xwdv|2 years ago|reply
Endure, they will cave eventually. They always cave.
[+] [-] skybrian|2 years ago|reply
But the article also talks about some cities where there is housing for rent, but not at prices where anyone will rent it. That’s curious. It would be interesting to find out more about what’s going on there.
[+] [-] digitalsushi|2 years ago|reply
[+] [-] briHass|2 years ago|reply
[+] [-] michpoch|2 years ago|reply
Vacant properties are around 1% here.
[+] [-] userinanother|2 years ago|reply
[+] [-] jeffbee|2 years ago|reply
[+] [-] HDThoreaun|2 years ago|reply
[+] [-] is_true|2 years ago|reply
[+] [-] chiefalchemist|2 years ago|reply
For example, the article says, "About 26.6 percent of the nation’s vacant housing units are actively available for rent." Does that mean the landlords are having trouble finding qualified tenants? If so, then the real issue is the disconnect between inventory and what those seeking shelter can afford.
A $5000 p/m unit being held back if 99% of those needing a place to live can't afford it.
Housing availablity is like jobs creation. X new jobs? Ok. Whatever. But at what rate of pay? With what benefits? A job is not a transparent unit of measure. The devil in these things is in the details.
[+] [-] frankbreetz|2 years ago|reply
[+] [-] dilawar|2 years ago|reply
[+] [-] thfuran|2 years ago|reply
2. We have multistory buildings.
[+] [-] peteradio|2 years ago|reply
[+] [-] anovikov|2 years ago|reply
[+] [-] cool_dude85|2 years ago|reply
[+] [-] picadores|2 years ago|reply
Of course, the other solution would be increasing tax and just build massive oversupply of social housing- but that can not happen, as it would devalue the poker-chips, that are the stacks we life in.
[+] [-] nerdjon|2 years ago|reply
It bothers me that in this article that in the same paragraph it mentions housing "deteriorating conditions" it gives percentages for housing in rent and being renovated, but ignores the percent for this important aspect? How much of this housing is actually in a livable state?
Maybe the original report actually gives these numbers so I will need to look at this closer.
But something about this really isn't adding up for me given what has been said time and time again over the last few years.
Edit: Ok so it seems like the reason this article doesn't mention this percent is because the lending tree one doesn't either. If I am reading this correctly it is only explaining about 52% (26.61 + 17.04 + 7.98) of this number. So what is the reason for the other roughly 50%? That is a huge percent to be seemingly ignoring but still taking into account for an attention grabbing headline.
[+] [-] tomohawk|2 years ago|reply
He's never going to take in people again. Nor will he ever rent out to anyone again.
California Insider (channel killed by Youtube) documented how thousands of former rental units are sitting vacant in San Francisco because of issues like this.
Increasing the risk to landlords even more than it already is will only reduce available rentals even more.
[+] [-] lotsofpulp|2 years ago|reply
The court system being unreliable and backed up for months is a travesty of its own that has myriad downstream effects in society, including incentivizing discrimination.
[+] [-] whywhywhywhy|2 years ago|reply
This seems to be completely ignoring inflation and hinting at a greed narrative.
[+] [-] EGG_CREAM|2 years ago|reply
[1] https://www.npr.org/2022/02/13/1080494838/economist-explains...
[+] [-] local_crmdgeon|2 years ago|reply
It's also still too small a % of total housing to create a proper liquid market. I've seen a liquid housing market, in KC - it's amazing. In NYC, it's fucking miserable to convince a landlord to let you suck them off to the tune of 6k a month.
This is Flat Earth but for housing policy. Look at places that win the housing price war - they just build a shitload of housing. Houston, Dallas, increasingly MSP.
[+] [-] tamimio|2 years ago|reply
[+] [-] local_crmdgeon|2 years ago|reply
Mexico is significantly better at cities than CA. Fucking Guatemala has better urbanism.
[+] [-] mupuff1234|2 years ago|reply
[+] [-] Eumenes|2 years ago|reply