The shortage has its roots in the financial crisis, and was exacerbated by the pandemic.
We’re also seeing a rapid increase in commercial vacancies with WFH. But there are big challenges and costs to turning commercial properties into residential.
I’ve heard a lot about the problems. Surely there’s some good ideas for a solution out there?
I mean, one good long term solution is either ban or heavily, heavily tax corporate ownership of single family homes. And heavily tax short term vacation rentals. Basically force all the companies that are buying up blocks and blocks of single family housing to sell.
Then, take a look at zoning laws. I have no experience with this side, but they're probably often a barrier to creating medium or high density housing. Which we're gonna need a lot of in the near future.
Apparently foreign home ownership is a big issue in Canada, so I have to assume it's also a (smaller) issue in the US.
Basically, the issue I see is not that there isn't enough housing. It's that corporate greed is pricing people out of their neighborhoods and then the houses are sitting empty because they're barely worth $150k, but the "market" says they can be listed at $400k, and not many people can afford that.
A lot of people here in the US have bought into this as their retirement strategy. The value needs to go up, so they can downsize and ride the leftover cash for the rest of their life. If the number doesn't go up, they can't retire. This forces otherwise normal people to become very, very, invested in ensuring real estate is an asset with value that outpaces what people can afford. It's a ponzi scheme.
Why do you think opportunity cost isn't coming into play? If you've got a house only as an appreciating asset that's not generating income, you're losing money compared to just throwing it in the stock market. If they're just holding it because the value always goes up, that sounds exactly like 08, and the price would have to come down once the bubble pops.
With inflation causing rents to go through the roof, houses being bought to be rented is just going to increase even more. I've had several houses in my neighborhood sold in the last few months be bought and immediately have "Available for Lease" signs put out.
We need to have something done to de-incentivize the idea of real estate as an investment and treat it like the necessity it is.
Capping rental rates to mortgages is the best solution. Whatever the mortgage is, you can't charge a penny more than that.
Any tax burden will be passed to the renter without a cap on rental rates.
A use it or lose it policy would also be effective. Rent or sell an unoccupied house or it is turned over to the city council at half tax assessment value.
You need to have teeth, actual losses to encourage them to move.
capping rents to the mortgage means you can only rent out a property at a loss, because you can’t recoup repairs, maintenance, utilities, vacancy, or administrative fees through rent. this effectively makes being a landlord illegal, which you’d might as well do outright if that’s the objective.
The thing that bothers me is the shortage is completely artificial. There are approximately 28 vacant homes in America for every unhoused person. I live next to a housing development with an ungodly number of 4 bed 2.5 bath McMansions, most of which have, as far as I can tell, sat empty for the last two years. Not for sale, not for rent, just parked as an investment.
This 100%. There is no shortage of physical houses. There is a shortage of AFFORDABLE houses.
I just went through the buying process. I don't make any crazy money, but a totally fine amount, more then a lot of people (65k/year)
That meant even with a sizable down payment that I was rather lucky to have, my MAX was 200k. That meant I could afford like.... 1/10 of the places for sale where I live.
and we're soon going to find out if Biden's student loan forgiveness is going to be canned by fascist ideologues or if the midterms spooked them well enough to handle it correctly. If they decide to pull some shenanigans, there's a real possibility that we're staring down the barrel of a 3rd once in a lifetime economic crash from yet another bubble.
Yes, same. I considered buying but given the 3% increase in the interest rate we saw, I'm just going to keep renting and hoping that things come back down before I'm 100 years old.
I deal with a lot of small business owners and it's amazing how many of them have second homes. These guys are well-off but not what you think of as ultra wealthy. I think housing has been such a high-return investment that both corporations and individuals have been buying up houses they don't need.
Most states in the US I believe have homestead exemptions for property tax on your primary residence. Maybe if they just jacked the prop tax way up on anyone or entity that owns more than one single family property that would make it a less enticing investment.
Honestly I'd scale it. There's a lot of people who don't sell their first home when they move into their second and it's helping them financially to rent it out. I don't want to go after these people...
Raise the tax per every house you're doing it with. Make it prohibitive at scale.
Just let people build more housing. In most American cities it's either totally impossible or so expensive only millionaires and big real estate companies can afford it. There's no reason for a permitting process that takes 5 years or for single family zoning, other than homeowners self interest and racism.
Corporations buying them up to rent out is my speculation, between that, people attempting to flip them, and just regular home buyers, it's making for a very low amount available which causes prices to be high, and new houses aren't being built fast enough to keep up.
To a degree, construction costs. We tried to build a house a couple of years ago. Got pretty far down the road, having reserved a plot, picked out a floorplan, paint, etc. When it came time to appraise, it appraised $60k under cost and the plans fell through - we'd have had to give up everything that was motivating us to build in the first place and pay twice what out current home costs for essentially a side-grade.
We'll try again once the kids move out and we're looking for a "forever home" without stairs and stuff that we can grow old in.
Well there are big costs in any home building project, and something has to be done. Some buildings will never make viable homes, but a good portion still could - and given their prime locations it might be worth it.