> “In San Francisco, demand is reflected in increased prices,” she says. “In Charlotte, demand is reflected in increased quantities.”
> “A big takeaway is that cities are in control of a big portion of their supply sensitivity,” Gorback says. “It’s cities that control zoning. It’s cities that control permitting. The real keeper of the keys are the municipalities.”
I get that their Victorian houses are pretty, but they're only about a 100 years old and they are now crammed full of people and cars. It's too young of a city to be sycophantically in love with its past self.
So, it attracts the foreign investors looking for stores of value and encourages NIMBYism.
If the tax bill of properties in high value locations went up with land value then it would encourage people to stop hoarding and to sell up and have their properties redeveloped.
So, blame Howard Jarvis and his taxpayer's foundation.
This doesn't make a lot of sense for two reasons.
The first is that real estate is more the exception than the rule in being subject to property tax to begin with. If foreign investors want a store of value that minimizes "property tax" then they could just buy stocks or bonds etc. Which is why "foreign investors" are a red herring that pundits keep bringing up because it's clickbait or because they want a scapegoat to divert attention from the real problem (which is zoning).
The second is that if you have a place where taxes are lower than other places, that's the place people should be lobbying to build things. Who wants their lower taxes to be on a $1M single family home when they could be on a $100M skyscraper? The main reason this isn't happening is that the effective property tax rate in California is ~0.7% compared to the national average of ~0.9%, which isn't enough different to make a dramatic difference.
The real problem with prop 13 is that it resets on sale transactions or if you build anything, which does provide a major deterrent to construction because then existing property owners neither want to sell to a developer and use the money to buy something else nor build anything on their property themselves since either one would result in a huge tax hike.
This is exactly the point. If property taxes were higher that flow of capital wouldn't seek assets which deprive ordinary people of somewhere to live.
>foreign investors" are a red herring that pundits keep bringing up because it's clickbait or because they want a scapegoat
More like the reverse is ardent defense of the interests of the super wealthy.
They channel their media networks towards scapegoating immigrants instead. Or AI. Or selfish boomers. Or any number of other things which aren't really the problem and most importantly aren't them.
>The second is that if you have a place where taxes are lower than other places, that's the place people should be lobbying to build things
People want to build things because they are useful. People will NIMBY the fuck out of that if it affects the value of their property which it does, disproportionately if property taxes are low.
This is how San Francisco ruined itself - with precisely that attitude of "lower taxes = better"
It’s 2026, they’re more like 140 year old by now :)
> now crammed full of people and cars
Funnily enough, if you look at the 1950 census, in every single building I have lived in in San Francisco, there were more people than there are now :).
The city has so much underdeveloped land (come on, 2% of of the surface of of the second densest city in the US spent on the lowest density sport ever, golf???), tearing down our heritage does not make sense when we have so much usable space.
“”” We estimate price elasticities of housing supply for U.S. cities by examining the impact of foreign purchases on housing prices and quantities. After other countries introduced foreign-buyer taxes beginning in 2011, both house prices and quantities increased more in locations with high foreign-born populations. A 1% increase in global capital inflows, instrumented with tax policy changes scaled by immigrant exposure, increased prices and quantities by 3% and 0.5%, respectively, over 2011–2018. We combine these estimates to construct new local supply elasticities. Compared to prior estimates, our elasticities are more inelastic and change cities’ relative rankings. “””
So it would seem the focus of the research was very much foreign investment in housing.
https://www.pacificresearch.org/time-to-ask-why-so-many-san-...
The headline says there are not 40k vacant homes, but the table breaks down the reasons for vacancy of just a bit over 40k homes. So it sounds to me like there are in fact 40k vacant homes.
And it goes on to say:
> Yes, 40,458 units of housing in San Francisco were classified as “vacant” in the U.S. Census Bureau’s American Community Survey (ACS) for 2019.
However it also says:
> an occupied unit is actually classified as “vacant” for the purposes of the ACS if the person living in the unit is planning to move within two months of being surveyed
But this doesn't appear to match any of the categories that sum to 40458, so I am not sure if this is even applicable.
- this article is out of date. The market has changed a lot since the AI boom. - That's a 10%ish of all housing in the city. Right now, of available units SF has one of the smallest vacancy rates in the country right now. The difference is (as the article alludes), apartments that are undergoing renovations, not currently permitted, etc.
Strangely enough, if housing got built in response to price increases, there would likely be less unused housing, because it would be seen less as a way to store capital.
That doesn't make sense as stated, because every physical commodity is supply-constrained to some extent, even and especially the ones that are extremely bad stores of value. Picking on Fermium (it has a nice atomic number) - Fermium is supply constrained and it makes a horrible store of value because it rapidly morphs into something else.
Gold is a well-liked store of value because it is absurdly stable (about as close as we can practically get to indestructible) and roughly the easiest to physically store out of all the durable candidates.
This is because the store of value quickly becomes a millstone around the owner's neck if it isnt being used efficiently. That's a feature if you want a healthy city and a bug if you're one of the ultra wealthy.
The UK is a bit like San Francisco in this respect. There are no property taxes, just something called a council tax (which is basically a poll tax) and "stamp duty" which is levied only on property transactions.
The latter is particularly toxic because it actively encourages property hoarding.
This is why London is an alpha world+ city which can't build up to save its life.
When you add in an unstable environment at home, this mentality leads to foreign real estate being perceived as the ultimate asset. It's perception rather than reality because foreign real estate is not exactly a good investment, especially if non-resident: it's illiquid, highly taxed, requires insurance, is easy to confiscate, etc.
My own belief is that at national scale the % of foreign capital in housing stock for most western democratic states is low, and when it exists in scale its things like the Canadian teachers pension fund or .. Blackstone.
In America, I suspect it's Blackstone before foreigners.
"Anyone who’s lived in London as long as I have can’t fail to notice that over the last 30 years, the city’s become awash with money. From the mid-90s onwards (the last time property was affordable to anyone on an average salary) shops have got more designer, cars faster, and property commands ever more eye-watering sums. Knightsbridge and Belgravia have become the playground of oligarchs and at the centre of it all — that temple to Mammon — stands Canary Wharf, home to banks, insurance companies and lawyers, gleaming on the London skyline, its shiny windows hiding shady deals.
‘Londongrad’, ‘Moscow-on-Thames’… That Russian money has been given a warm welcome in London is no secret. Over the last two decades, swathes of prime real estate in London and its surroundings have been bought by wealthy Russians looking for a safe haven for their cash, with few or no questions asked. "
https://www.investigate-europe.eu/opinion/londongrad-a-citys...
Probably I am getting overly sensitive about what seems to be creeping casual xenophobia even in mainstream media. The way the story is presented, the sketchy “foreign” aspect of the money is apparently central to it having this undesirable outcome.
Meanwhile vs Canada (turn on your ad blocker): https://awealthofcommonsense.com/2023/09/the-u-s-housing-mar...
Most countries have residency by investment programs. Invest in real estate, prop up residential home pricing by injection wealthy foreigner/criminal money. Which imo is pretty idiotic.
https://newrepublic.com/article/211855/republicans-making-wo...
Everybody knows why, but people are desperately looking for scapegoats because the truth is too uncomfortable.
The people to blame can easily be found among your own family and friends. It might even be you yourself. It is probably your parents.
Everybody who works for a living has relatives who have become wealthy by real estate value appreciation. If they're your parents or grandparents, they most probably earn as much yearly from real estate appreciation doing nothing as you do by working full time and being fully taxed for your hard labour.
If they're your uncle and aunt who are still working, then they have a completely different life from a renter working full time, even if it's the same job. Your money as a renter is gone into a black hole, while their money goes into paying off their lucrative real estate or into a very comfortable life if it's already paid off. Unless they are ambitious, they will stay working for whatever salary, keeping salaries from growing. Because they need the stable income. They have no reason to put any effort into a career, since that same effort pays much more being put into real estate.
Outside of the USA any full time working expert in his field can never earn as much per hour in wages in any job as he will earn in real estate value increase by doing home renovations - even if he has no skills in home renovations. Even if he is the leading expert in his field in his nation.
People will look for scapegoats; billionaires, foreign investors, expats. There are dozens of countries with no billionaires, no foreign investments and no rich expats who have a housing crisis. You know that billionaires aren't the problem.
If you have a large percentage of your population who do not work, or who work pretend jobs, or who work real jobs but just at part of their capacity, then it's no surprise that the rest of the population has to work hard to compensate for them. Everything around us is the result of hard work, and if somebody is living comfortably without working that means somebody else is providing for them. Food on their plate doesn't come from the job they worked 30 years ago. It comes from somebody working today. The same for everything.
Until people start admitting what's going on, the problem won't be solved. It's a deliberately created problem by tying the money supply to housing as an effort to decrease the population. Now we're seeing population collapse and total destruction of the industrialized world for the limitless greed of the current old generation. The near future will be very different than what people now are used to. We're already seeing changes and should talk about them instead of pretending and telling lies.
This just in, water is wet.