[raldi]

And even the libertarians should be on board with this tax, because it's correcting a huge negative externality: empty units are bad for a neighborhood. Occupied units support local merchants, reduce crime, and generally make a neighborhood more fun and interesting to live in.

[dmix]

None of those sound like particularly libertarian-centric issues. A government fine regarding how a persons decide to use their private property sounds quite anti-libertarian to me.

[civilian]

If you're a principles-first libertarian, then yes it's anti-libertarian.

But if you're a "let's use the market and data to solve problems efficiently" kind of libertarian, then this is a nice solution.

[ryanwaggoner]

Umm, I don't see a market here. I see the government charging a fine for behavior they find objectionable. If the government decides that you shouldn't drive more than 55 mph and they catch you doing that and write you a $100 ticket, you haven't participated in a market transaction in any way.

[billions]

Libertarian means do what you want as long as you're not hurting others. Gary Johnson ran on the platform of 'keep the government out of our pocketbook and out of our bedroom'. Not sure how taxing home use aligns with that.

[fucking_tragedy]

> Libertarian means do what you want as long as you're not hurting others.

People are doing what they want and it's being argued that it's hurting others.

That said, I've never seen a libertarian push for anything other than leaving it up to the market, even in the face of negative externalities.

[DINKDINK]

>even the libertarians should be on board with this tax

No, Libertarians would not support this. The reason why there are empty properties is that there are capital controls so severe that it's more lucrative to buy a house (and not rent it) as a store of value than a currency/stock/precious asset (gold,bitcoin etc). A law -- which didn't account for the second-order detriments -- created this perversion in the market. Adding another law -- which again won't account for the second-order detriments -- is not going to fix it. Less is more, when it comes to economic law.

[ubernostrum]

OK, so how can the voters of Vancouver change the laws of China?

[kspaans]

Enact a Land Value Tax. In a squeezed market like Vancouver most of the value in houses is the plot of land underneath them, not the "bricks & mortar". By taxing the value of the land rather than the property on top of it you won't penalize people for renovating or knocking down an old building and replacing it with a newer one. Hopefully the tax is high enough to put off speculators and bring prices to a more reasonable level (because massive swings in land value of 20% per year will increase the tax burden).

[orthecreedence]

Just abolish all laws and government and let the market, you know, figure it out.

[mjevans]

Trade relations treaties.

[ecopoesis]

Tanks and bombs.

[ubernostrum]

So... the libertarian option is to initiate the use of force?

[krschultz]

You're making a huge assumption that capital controls are the cause. It's more likely that people believe real estate is a better investment than currency, stocks, precious assets. Or perhaps they just want to diversify their holdings. I'm considering buying some investment real estate, and it has nothing to do with capital controls.

[zaroth]

I think DD must be right, because there are funds like IYR (I don't know about Canadian equivalents) that would be a much less expensive way to get the same real estate market exposure, so the question is why isn't the money going there?

[aianus]

The Canadian government subsidizes home-ownership by not taxing the capital gains on a primary residence.

I know the article is about empty properties, but it's actually a lot more common to send your 18-year-old kid to study in Canada and wire him $1 million to buy a primary residence in his own name.

[zaroth]

So what you're saying is... the rich will aptly avoid this tax just like they do all the others, and the hapless hoi palloi who might have to leave their home vacant for 6 months (e.g. to care for a dying relative) would be stuck paying the fine. Sounds about right :-(

[krschultz]

You can get a mortgage on a physical residence but not a fund. You can buy insurance on a physical place but not a fund.

[aianus]

You can certainly get a "mortgage" on a stock portfolio. It's called trading on margin and the interest rates are even better.

But it's true you can't get quite as much leverage and the dividends and capital gains are not tax deductible like they are for your primary residence.

[kspaans]

Probably VRE. (Disclaimer: I own shares of VRE.)

[nostromo]

Libertarians would argue that this is a problem created by onerous zoning requirements to begin with.

[andkon]

Zoning doesn't make empty units. If you took away all zoning strictures, you'd still be left with the fact that people who buy just as an investment aren't doing much good for a neighbourhood and a city.

[gravypod]

Zoning is the cause of high housing prices. This is only an issue because there aren't enough houses to meet the demand. Zoning laws are artificial restriction to prevent deflation of home values. They also prevent people from building what has been dubbed as "tiny homes" that would allow poorer people to provide a substantial improvement to their living conditions. That is where this issue stems from.

The inability to a) provide for yourself reasonable living accommodations, and b) the surprisingly huge spike in prices of homes due to the lack of homes that are required.

This is what a libertarian believes (disclosure: I'm a libertarian).

[stephen_g]

I don't think that's true in most places though. In Australia we have crazy unaffordable house prices, and economists and politicians often say the problem is supply, but a group called LF economics did a study recently and found that our fastest growing markets were in oversupply for more than half the time the price has been rapidly rising.

As far as I can tell, the idea that it is a supply problem is just an assumption, assumed simply because neither neoclassical nor Austrian economics appear to have an understanding of credit and money creation by banks (through lending, which creates deposits) that lines up with how modern banks and the real-world monetary system works.

Some of the post-Keynesian models seem to match the real-world situation a lot more. The house prices seem to be so strongly distorted by speculation based on easy access to credit that the price statistics don't correlate almost at all with the supply surveys, but does strongly correlate to the amount of money created by lending. This explains pretty well what we're seeing, including how lowering interest rates will inflate asset prices instead of stimulating the real economy. But many people refuse to believe the data and the conclusions it leads to just on principal, because the idea of market prices not being set by supply and demand is blasphemy!

[gravypod]

Australia is a different case due to the lack of many urban areas. If development where allowed to continue at a faster pace with no red tape most of Australia could no doubt be turned into an economic super power much like Japan. The country is huge, has an extremely smart population, and is already known for engineering prowess. The heel that is Australia's weakness is high import tariffs on pretty much anything, poor ISP quality due to monopolies, and a select few urban areas.

This is also coupled with how great of a place Australia is to live to create a pretty high bar in housing prices. To be honest, if some things where changed about Australia I'd move there. It's got low crime, great politics so far, and a lot of things I like. It's just too focused on a select few areas and too pricey.

[andkon]

Zoning is just one cause of high housing prices. If zoning allowed for greater supply, we'd have lower housing prices. No argument from me there. But if we believe that housing isn't meant to be an empty investment that pushes out local residents, we should regulate uses of housing that don't actually put roofs over heads.

Honestly, if you take your (a) point seriously seriously, I think you have a moral prerogative to regulate the market in that way. It decreases demand and absolute prices, sure, but trying to accommodate both investment and residency is exactly what Vancouver's been doing for the last 20 years, and it's why we're where we are now. Our local GDP is largely based on real estate. It's not great.

[gravypod]

> But if we believe that housing isn't meant to be an empty investment that pushes out local residents

As a libertarian I feel that protections of any free trade are the cause of most of these problems so no, I do feel that housing is meant to be an "empty investment" as you put it. I don't believe in government protectionism.

To me it looks like you are saying "I want more people to be able to afford houses" then following up with "oh that person? No they're too poor, they don't deserve a house" as that is where this sort of "necessities-as-an-investment" thinking leads. A house should only be worth what a house is worth, nothing inflated by a restriction on the homes created.

> we should regulate uses of housing that don't actually put roofs over heads

Do you think that anyone would buy a home that doesn't have a roof? I could actually see a few situations for doing this (installing your own roof after purchasing is one). I don't think government should mandate safety scissors. This is again another protectionist mentality that ruins freedoms of decisions.

In my ideal world I'd go to a reputable inspector, have them inspect one of the thousands of new homes in a development, then based on their comments buy or not buy the home. No one should tell me I have to live in this home. What if I want to use it as an office for a doctors clinic that's built in the center of the town? No one should be able to tell me that isn't allowed other then the person selling me the home. Government involvement in this is a) just to increase price and b) just red tape that keeps "those people" out of "my" neighborhood.

> Honestly, if you take your (a) point seriously seriously, I think you have a moral prerogative to regulate the market in that way

I don't see how wanting someone to be allowed to build a home for themselves, or allow someone to build homes for the poor/homeless as a charitable prospect, on land that isn't currently developed requires government regulation.

> but trying to accommodate both investment and residency is exactly what Vancouver's been doing for the last 20 years, and it's why we're where we are now.

Again, I don't think a property is an investment. Then again I also don't believe in bailouts or other protectionist viewpoints. It would be beneficial to you to read up on libertarian viewpoints as your characterizations aren't correct in these cases. I don't believe any investment should be protected as every investment is to be a compensation for the risk that was taken in making it.

To a libertarian this looks like a ruling elite class oppressing the poor minority in an attempt to make themselves rich.

> Our local GDP is largely based on real estate. It's not great.

I don't see why property sale being a large percent of GDP is bad. If a country was made of 90% diamonds selling the land to diamond mines would be very profitable and as such a large percentage of the GDP would be from land sales. This isn't a necessarily bad thing. It just depends on who it's benefiting. Currently this benefits the ultra-rich and the government and that's just doesn't fit in my world view.

[andkon]

I know a lot about libertarian viewpoints. I think they largely ignore reality in favour of positing stronger property rights as an unfalsifiable solution to what have proven to be systemic and intractable problems. You don't appear to live here, so you get the benefit of being able to idly perform that sort of theorizing. There's a lot you could learn by engaging with the situation Vancouver has built itself into, but I haven't learned a lot from being told (many times before now, too) that libertarianism will solve every issue we have.

The thing, too, is that I agree that zoning is usually the problem with housing prices. San Francisco and the Bay Area have decided to opt out of building enough places for many decades, to the point where some communities there prefer to push jobs and businesses out and away in favour of getting higher housing prices.

But we aren't San Francisco, because we have no underlying economic engine that's driving in-migration and pushing up housing prices. We're just chilling here, broke as ever, wondering how on earth even a small condo could have gotten so out of reach.

[linkregister]

I think in the absence of zoning, the affected neighborhoods would have HOAs by contract limiting building freedom. What's the difference as to whether the contract is imposed by the local government or a private council that is attached to the property?

[snrplfth]

The problem is that there's no effective way with (currently constituted) zoning law to 'trade' the externalities of density. You can't compensate your neighbours for shadows or traffic or other impacts in exchange for being able to build larger. So the choice faced by most residents is:

1) Acquiesce to high-density development, and receive zero compensation, or

2) Fight high-density development, and probably get zoning laws imposed at minimal personal cost.

You can see why this setup incentivizes people to push hard for "static neighbourhood" zoning law.

[mjevans]

Being near a city core you should EXPECT high density development.

Being near a satellite nexus area of such a city, you should expect medium density development around the nexus of civic infrastructure.

Japan got how to do urban planning correct.

[aianus]

Or:

3) Agree to high-density rezoning, endure the construction noises and shadows and whatnot for a couple of years, then sell your house to a condo developer for a massive profit and never have to work again.

This isn't a hypothetical, I saw it happen on the street I lived on in college. The detached houses fell like dominos and were all replaced by high-rises until there were none left.

[linkregister]

I disagree; being in a neighborhood with high density zoning allows property value to rise precipitously.

There are plenty of exceptions, I'm only talking about the most probable outcome.

This also doesn't address industrial building or other nuisance construction.

[MichaelBurge]

If the HOA is a corporation with the residents as shareholders, then Walmart or whoever can go to the council and offer to buy out the area or make an exception. The local neighborhood can vote on whether to allow it to go through, or ask Walmart for money to compensate them for the disruption. There's very little friction if Walmart is willing to come to an agreement with the neighborhood. The worst case is that Walmart buys the HOA corporation, and there's always some amount of money that will buy people off.

If the local city manages it, then it's a long drawn-out process of lobbying for zoning controls that apply city-wide. And offering the citizens money to vote for it might be illegal in some jurisdictions. Even if Walmart and the local citizens are okay with it, a couple hold-outs or people from other neighborhoods can delay the entire process by complaining to the zoning board.

[gravypod]

> the affected neighborhoods would have HOAs by contract limiting building freedom

Then I wouldn't sign those contracts or I would not move into their properties. I'd move to the outskirts of their neighborhood and build there.

Governments have a perceives authority to enforce their regulations on everyone. No one perceives Joe-blow as having the same power. It is because of this that society can keep people in check when these situations arise but no one can control the government as they are presumed to have abilities ordained allowing them to (unfairly) arbitrate these situations.

[yummyfajitas]

Zoning is what causes Vancouver to have 1/3 the density of Brooklyn.

Based on this doc, I believe Vancouver (or "Vancouver A", as distinguished from the greater metro area) has about 200k units.

http://www.metrovancouver.org/services/regional-planning/Pla...

It appears zoning rules, which prevent Vancouver from building up to Brooklyn levels of density (approx 3x as high), is keeping 400k units off the market.

In contrast, unoccupied housing is keeping only 10k units off the market.

But I'm sure the rich Chinese people are secretly to blame for this too.

[raldi]

You're focusing on yet another externality of vacant units, that they increase the price of housing. I agree with you that this is minor compared to the way that restrictive zoning drives up the price of housing, but what about all the other negative externalities I mentioned in my comment?

[Tiktaalik]

Zoning for higher density doesn't necessarily solve this problem.

Creating more supply results in more units that can potentially be purchased as an investment and left empty.

[Moshe_Silnorin]

You're arguing that vastly increasing supply will not lower house prices?

[Tiktaalik]

Not at all. Adding more supply is definitely part of the solution.

The problem is that adding supply takes time, there are physical limits to the rate at which supply can be added, and the level of demand is unknown.

This means it's hard to know when a supply only solution will result in decreased prices and it can take a long time. (Vancouver is not SF, it adds plenty of supply and yet there is still housing shortages and high prices)

If you want to fix the problem quickly, policies that increase supply and limit speculative demand will achieve results faster.

[yummyfajitas]

Housing is a good investment because it's illegal to make more of it. This makes the price of existing stock go up.

If you legalized the production of housing that would no longer be true.

[andkon]

No, the fact that the whole lower mainland has 30% the population of NYC is why Vancouver proper has 1/3 the density of Brooklyn.

Increasing density in response to rising populations is great. Increasing density in response to rising investor demand is what we've done already, and it's why we have incredibly lonely, dead neighbourhoods like Coal Harbour.

[snrplfth]

The logic is that zoning makes for a housing shortage, which means it's profitable simply to hold on to properties without renting them, because the rent would be such a small portion of the investment gains. If supply increased, and moderated the price increases, then people would rent out more because they wouldn't be seeing huge year-on-year home value increases.

[andkon]

That's definitely an alternative response. Here, we've decided that we should instead cut investors' demand of housing, rather than increasing supply proportionately in response to investor demand. Like raldi says above, it's an approach that's a little more sensitive to the fact that we have to live in the hollow feeling city that an investor class can make.

[snrplfth]

I understand the response, certainly. But I don't think it's going to make housing (rental or ownership) substantially more available or cheaper in Vancouver - it'll just shuffle a few people around. And rich people don't just evaporate because you limit housing supply; they can arbitrage their way around most of these limits pretty easily.

[pashapiro]

I'll allow that ignoring or abandoning private property is generally the measuring stick that libertarians use to justify seizing it, but as others have said, if the real estate market in Vancouver were less regulated, this wouldn't have happened in the first place.

[mahyarm]

If somewhere like SF will adopt it although, they will have to make their rent control at least follow inflation. Sub inflation %0.5 rental limit increases are a bit crazy. Even %2/yr is relatively low.

[MichaelBurge]

If the picture is accurate, it looks like they're mostly worried about single-family homes. The investment market mostly values properties based on how much money they can make, so it's far more rational. Single-family homes aren't part of the investment market, and only exist in a housing supply shortage due to restrictive zoning laws.

I don't know enough about Canada to say why they have restrictive zoning laws. In the US, it's mostly government-backed mortgage programs and covert racism.

I don't care how rich the Chinese are; those properties would be demolished, rebuilt as apartments, and rented if it were allowed. Because the value of the property is directly proportional to its expected profit. It's only when the government disconnects the two that you ignore the rental profit. The Chinese government's currency controls probably don't help, either: The Chinese are willing to lose money as long as it's free from their government's currency controls.

Does Canada offer government-backed loans that are available to foreigners?

[andkon]

I personally am worried not about single family homes, but about maybe one day getting to own a condo. That'd be cool. But new tiny units start at $600,000.

But what happens if you just chop down SFH and rebuild with higher density, and you don't also put restrictions on investing in the new units? You just end up with the problem we have now. We're building tons. Our local GDP is largely based around real estate. Not that we don't have a NIMBY problem — but there's only so much building you can do before you look around and feel like you just built more empty houses for people who don't live here.

[MichaelBurge]

You should always ask for a copy of the HOA bylaws before buying a condo. You might prefer to pay extra to discourage empty investors, and that could certainly be written in. Even without that, you might also ask how many of the other buyers are pure investors or otherwise ask people how they like it there.

Though, it seems like a condominium complex that is 50% empty would give you a greater density of neighbors than a SFH suburb that is 50% empty. And you can get the Chinese to pay for your new roof, to boot.

Somehow I doubt even the Chinese have enough money to turn a high-density city into a scene from 28 Days Later, though.

[andkon]

Anecdotally, I lived in Coal Harbour in Vancouver when I first moved here. The newest waterfront condos were ~30 stories tall, and on average, you'd see three lights on at night in them. It's not like that everywhere here, but it is really strange.