How about this: crank up the taxes on houses people don't live in. Make owning empty real estate so unprofitable that it's better to rent it out cheap than to try to screw renters.
Make it a crime to own an empty house.
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How about this: crank up the taxes on houses people don't live in. Make owning empty real estate so unprofitable that it's better to rent it out cheap than to try to screw renters.
Make it a crime to own an empty house.
Fwiw in Florida we have what's called a homestead exemption. You get a big slice of your property value axed for taxation purposes if you live in the home. You have to pay full tax on any other properties. I believe tax rate increases are capped for homes with the exemption as well, but that might be for all homes. I don't remember exactly.
I want to see an exponential property tax so you could have a house and something like a small cabin somewhere but anything more and then your tax multiplier is based on how many properties you own, you'd have to control for businesses trying to own property in an employee's name, this might even help with large chain businesses not becoming a monopoly but hard to say if that's a huge benefit or a monkey paw type thing
That's a terrible idea. The real life effect is that prices will simply go up. You need to force down real estate prices in general, and offer very low interest rates for first time buyers.
They did this in 2008-09 with an 8k payment to homebuyers that wasn't a loan and didn't have to be repaid. This enabled me to but a foreclosed house and make it livable, and I've been living in it since then. It didn't raise prices in my area, because no one was buying houses anyway because regular possible couldn't afford it.
I don't know if I would have been able to get so financially situated if that payment wasn't there. I could've bought the house, but I would not have been able to fix it enough to ever stay on top of the maintenance and bills.
Would this be exactly the same situation? I dunno. But I know a similar push sure worked in the past.
Different situation, as that was after the market crash.
It does rather sound like proposing an immediate 25k hike in house prices, yeah.
The fact that it's limited to first-time house buyers will at least help mitigate some of the advantage that commercial real estate buyers have over ordinary folks that are just trying to get a roof over their heads.
At worst, youre partially right. Maybe they'd go up 10K, but certainly not 25K. That's just not how markets work. It's the same argument as saying UBI will increase prices - yes, it will, but not by more than or as much as the UBI is. If everybody else sells their home at $25K more, you can sell yours in a month by going down to $15K more than before.
I agree, and i didn't say it will increase prices by 25k. Still think this can be tackled in better ways. Low interest rates over a 20-25 year loan can save you much more than 25k. Edit: let's ban corporate from buying up blocks of residential areas. It won't cost you any tax money and will immediately drop the prices
Yeah a similar policy in the UK (from 10ish years ago) is one of the biggest reasons for hugely inflated prices among small properties.
Obviously, the only real solution is to work to lower real-estate prices, but that would be unpopular with most home owners (who are a majority in the US).
Having experienced this kind of policy in Australia; it’s great in theory - but the issue is that builders/sellers just ended up jacking up the prices of their homes to absorb the grant.
It's the reason colleges here are stupid expensive as well. Greed.
It still shifts the balance of power in favour of first time home buyers. Landlord fucks have to pay extra.
Watched the same thing happen on a smaller scale back when analog TV broadcasting was phased out and we got vouchers for digital TV tuners in America. They all cost around $25 or less. As soon as the vouchers were given out, the prices doubled to $50
Surely this is a well studied phenomenon with a name, right?
can't wait for all homes to go up 25k in response. Without purchase control this is useless
I don't think this will happen so literally but to your point this is a supply issue. All this does is increase effective demand (i.e. the number of people able to purchase a home). This is a band-aid over a hole in a sinking ship.
Well, its only for first time buyers, so that will temper things. I predict homes will only go up about $23k.
This would be great but you know centrists will fuck it up and it’ll be like, “You can get up to $25,000 as a tax credit if you’re a veteran who owns a small business in an opportunity zone and have a low income but also somehow have a spouse who is a lawyer and can spend 30h finding and filling out the paperwork and tracking down bank statements from when you both were 19.”
On top of that just pumping support money into real estate doesn't fix either of the core problems: people aren't being paid enough to afford homes and we're not building enough homes to keep prices reasonable. The end result of this is that home prices inflate even further. If we treated houses as housing rather than investment vehicles we could actually do something about our housing crisis.
We had a help to buy scheme in the UK similar to what Harris is proposing. Spoiler warning: it didn't help.
Only thing that will stem the demand is a massive house construction scheme and outright building new cities.
Only thing that will stem the demand is a massive house construction scheme and outright building new cities.
Even this won’t work, because we already have more houses than people. The issue is that corporations bought up all the houses, and are intentionally letting them sit vacant. The end goal is artificially reducing the supply, so they can sell fewer homes at exorbitant rates.
Basically, imagine there are 1000 homes, for 1000 people. Each home goes for an even $100k at fair market value. Big Corporation buys 250 of them, (for a grand total of $25M) and lets 200 sit vacant. Now the remaining vacant homes are going for more than $100k, because the supply has been artificially reduced. Now when they sell those 50 homes, they can do so at $300k each, making a total of $10M (that’s $15M from their 50 sales, minus the $5M they paid for the 50 originally) off of just 50 houses. If they just bought and flipped all the houses, they’d only be making small profits per house. But by sitting on a bunch of them, they’re able to make more per house.
In short, they made absolute bank on those 50 houses, and can now buy more houses to repeat the process. They haven’t made all of their money back (yet) but they don’t care about the short term because they can just repeat the process again and continue driving rates up.
So when they eventually sell those 200 homes they’ve been sitting on, they can do so at those exorbitant prices that the market has come to expect. And when it causes the market to crash (because they’re no longer letting houses sit vacant) it’s the homeowners who are all underwater on their mortgages. So the company is able to get away scot-free by ditching their supply, while the homeowners get fucked.
Landlords are also doing the same thing, where they’ll own 1000 units but only rent 200 of them, so they can charge higher rent on those 200, while the rest sit empty.
What they need to do is implement a scaling tax for vacant homes. The more vacant homes you own, the higher the property tax is on each one. So the upper-middle class people can still own a summer and winter home without getting fucked. But make it unprofitable to buy and sit on hundreds of vacant properties, just to artificially reduce the supply. If a home or apartment is vacant for more than one calendar month in the year, it counts towards your vacant property tax. Incentivize the sale and rental of homes, instead of allowing them to quietly buy up and sit on properties.
I'd argue we don't necessarily need more homes. I think what most cities need is really to end zoning.
There is more than enough commercial and industrial vacant properties over the US that could very feasibly be turned into residential housing to house every person ten times over.
Zoning really is the problem because developers are essentially being forced to build unwalkable communities. You're just not allowed in many cities to buy old warehouse space and develop it into housing or to build small businesses (groceries, shops, etc) in areas zoned residential.
Ending/reforming zoning would solve so many issues... (I say /reforming because there are limits, most people don't want to live 10ft from a factory). But I hardly hear anyone talking about it whether on Lemmy or in the media... but it seems like it would fix so many issues.
I remember when I went to Germany and saw apartments with stores on the ground floor, blew my child mind at the time but it's so obvious it hurts.
Unfortunately in Germany this is only in the older city centers. It's far less common in newer "suburban" developments.
Incentivizing new construction for homes people actually live in is another facet of her plan.
They should give lower interest rates to those with less means instead of the other way around.
Helping with a down payment makes it easier for a homeowner to assume debt, but that doesn't make the houses cheaper.
This can absolutely change people's lives. Paying rent can make it impossible to save for a down payment. A 30k windfall (inheritance) helped my wife and I make the down payment on our first house. And then our mortgage payments were cheaper than our rent was. Even if the overall "sticker price" of a home is higher, it's a negligible difference over the lifetime of a loan.
Yeah. Throw more money instead of punishing predatory lenders and speculators. Jesus.
The plan to make housing affordable has been known for years, decades even.
You don't cut prices, because it means cash-rich buyers will buy up the stock as investment in the long-term.
You don't (only) give people money to buy, because you're giving money to people that own property as a portfolio piece.
You:
This gives those that own multiple houses the means to sell property with a one-time tax benefit. You'll lose money initially, but in the long term people can afford houses and the market will move on from property as an investment piece. The reason no one wants to do this is because it'll take years to come to fruition, and most leadership terms aren't that long.
You're right this won't help - all it will do is push up the average house price by 25k. Freezing prices won't do anything except drive shortage and lower quality property. Everything you mentioned will work once until people realize they can take advantage of it. We've seen it before - price freezes don't help.
It is well known what we need to do.
make property a bad investment. Heavily tax vacant properties and ownership of multiple, improve renters rights, increase interest rates for investment purchases. The goal is to drive down Qd quickly, reducing the value of other owned properties.
significantly drive up quality housing stock - Increase of Qs. Tax breaks for new builds, government rent to own, density and infrastructure increases. No tax on new builds owned for 10 years. Longer plan that solves long term.
Haha, I realised that I forgot the last point!
You're right, freezing won't stop it, because it's still a stable place to keep your money. What needs to happen once frozen is that prices need to be continually dropped over a long period.
Obviously, more housing is key, and helps push current owners towards selling sooner rather than later. The problem with housing stock, which we've seen in the UK and Ireland, is that the quality of "affordable" housing stock is often hilariously bad. Corners are cut, homes are too hot/cold to be considered safe, and issues like cladding that breaks the law is pushed back to the owner to fix instead of those that broke the law. That's why it needs to be gradual and methodological.
I'd rather have a fix for our broken credit system. Denying someone a loan that will be a 2200$ house payment in an area where they will be lucky to get a 3k apartment is insane.
This will just add to the house price inflation.
This is a band-aid that does nothing to fix the problem. This kind of "solution" was implemented in my country as well. The direct result was an increase in housing prices across the board.
The problem isn't that people are lacking the money for a downpayment. The problem is that volatility in the job market combined with ever increasing prices means you can't commit to buy a place of your own and pay it for the next 30 years, because the first time you lose your job you'll have lost all progress towards owning your home.
The fix you want is government-built housing. Make a neighborhood with government money. Sell the apartment for 1/3 of the price if the buyer is a teacher/fireman/doctor/other high-demand jobs in governmental employ. That way you fill the positions, the housing prices stop going up, and young people get to securely purchase a house before they're 50.
But of course, that's not the end-goal, is it? No the objective is to make more money for those who already own all the land and houses. And there's no need to spend time thinking about it, just make some fucking vouchers. We all know who'll end up cashing them in.
This is a band aid size solution on the gaping wound problem of housing shortage. She should really be putting her time into coming up with an answer to increasing housing supply
Increasing housing supply is explicitly part of her announced plan. Are you under the impression that this was the entirety of her announced economic plan?
Probably.
It's like how Biden's Student Loan plan was longer than the headline of "forgive x% of them" and people wrote paragraphs about how it also needed to do XYZ, without reading enough to see it did.
Mannnnn I just want a home but it'll take more than this
Won't help with high property values, high taxes, and unaffordable home insurance.
It will absolutely help with high property values. It will help them go higher. Same with student debt forgiveness.
For the record, I’m in favor of both
I'd rather they raise the cap on deductions (mortgage interest, state and local taxes) back to how it used to be Pre-Trump and give additional tax rebates to first time home buyers. His tax bill raised my effective tax rate a shitload. I would never have been able to buy my first house without those provisions.
Just build more houses. Costs are out of control. I'm in my 40s, and have a good down payment saved up, but prices and interest rates mean I'm still priced out of buying a home.
She wants to build 3 million more houses too. but that's not exactly as good of a headline as "Hey first time home buyers! Vote for her and you'll get 25k"
The real solution is probably to build unfathomable quantities of publically owned housing and rent them out at affordable prices. I suspect this won't meaningfully move the needle on the issue.
How long would it take for the sellers to price in those extra 25k they can wring out of buyers?