Foreign funds help make housing unaffordable: research
news.mccombs.utexas.edu55 points by hhs 8 hours ago
55 points by hhs 8 hours ago
Awful headline and I doubt it's what the author would have chosen, given that her comments are much more to do with supply:
> “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.”
It's kind of insane that you look at a city like San Francisco that's on a tiny bit of land in a desirable location and they absolutely refuse to build up.
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.
Some 10-15% of San Francisco housing is unoccupied. The exact why and how to fix it are arguable, but I'm doubtful the investment is actually helping.
https://www.pacificresearch.org/time-to-ask-why-so-many-san-...
The table in the article seems to contradict its own headline.
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.
2 things:
- this article is out of date.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.
When a good's supply is constrained, it becomes a store of value. See: gold.
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.
> When a good's supply is constrained, it becomes a store of value. See: gold.
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.
Taxing empty housing seems like the obvious answer. Make it more expensive and more work to keep it empty than it is to fill it.
True or not, there is little doubt demagogues play on foreign capital when arguing about house ownership costs to the mostly young renting classes.
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.
The US is special insofar as the US stock market is extraordinarily safe with many options for value investing. In much of the rest of the world it's the reverse: domestic stocks are risky and it's real estate, land and gold that are the safe, prestige assets.
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.
All kinds of money:
"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...
The US also drastically stopped constructing new houses after 2008
Because they got cheaper for quite a while.
Meanwhile vs Canada (turn on your ad blocker): https://awealthofcommonsense.com/2023/09/the-u-s-housing-mar...
Housings (US) greatest feature is money laundering: https://globalwitness.org/en/campaigns/corruption-and-money-...
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.
> An influx of foreign money during the 2010s drove up housing costs in the areas with the greatest concentrations of purchasers from outside the U.S., finds Caitlin Gorback, assistant professor of finance.
This just in, water is wet.