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 this comes from the mindset of real estate as an appreciating asset. That drives the desire to buy and hold, because it only ever goes up.
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.
Historically, I think, housing is less volatile than the stock market. So there’s a risk mitigation strategy there that may partly be in play with companies that are purchasing single-family homes and just squatting on them.
This may also be exacerbated by rising interest rates. So companies/individuals that purchased a historically low rates are/may be reticent to sell because they can’t secure a loan with the same rates they currently have. Even IF the housing isn’t actively generating income, it could be losing LESS just due to the rates.
This is all entirely speculation on my part. I’ll freely admit I don’t know.
Can confirm, the interest rates have been a huge deterrent to me for selling my home and moving. My current interest rate is 2.75%, back when I was looking around I was being quoted around 7%, which would have had a significant effect on my monthly payments.
It’s easier to wait out the storm and move when the interest rates (hopefully) recover. They seem to be improved since I last was looking at places, but I don’t think I’ll be abke to get a rate close to what I have anytime soon :(
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.