Won’t that just increase rents on those houses? If someone wants to rent a house, they get fucked?
No. Landlords are already charging the maximum the market will bear. Tenants won’t magically pay more because a greater portion of the rent is covering the landlords property tax.
1 Like
Well, right now none of the other homes for rent have a higher tax to pay, so they have to be competitive. Once they’re all taxed, then the rents for all of them should increase.
No, the market rate will still determine rents. All this would do is lower profit margins for investors, putting downward pressure on prices and eliminating some of the more marginally profitable homes from investor consideration.
1 Like
We as a society have been bombarded with “they’ll just pass it along” propaganda for 2 generations now, but it just isn’t true.
I don’t know about this. You can’t talk about “market rate” without considering the factors that affect the market. If you place a tax on, investment single-family homes, for example, that will affect the supply of such homes for rent and create a new market rate.
The market rate is not static. It is determined by factors that affect the market.
1 Like
Close to nobody is making a “build or not” decision in desirable areas based on property taxes. These areas are already fully built out and the barrier to supply is NIMBY bullshit.
can any of you produce a cite that the market rate isn’t affected by tax increases? Seems weird to say that the market rate is totally divorced from a cost.
If we limit it to “desirable areas” that are “fully built”, that changes things a bit.
But if we return to cuse’s proposal, which is what I was responding to
It would seem that people who build would be incentivized to build more apartments and fewer single-family homes. That may be desirable for a variety for reasons, but if you happen to be someone who wants to rent a house, then you would be hurt by this tax in the form of higher rents.
It’s more than weird. It’s not possible.
I’ll buy that the cost is not 100% passed down. But I can’t accept that 0% is.
1 Like
With property, as with every other product, price has little to do with cost. All a higher cost does is decrease profit margin. Any competent business should be charging the most profitable price regardless of cost. Demand drives everything, all cost does is constrain what can be supplied. Which, yeah, can indirectly affect price. But taxes aren’t a constraint on supply, we’re not even talking about new construction here, we’re talking about investor owned sfh.
this… is not true.
Yeah, having fewer houses for rent would likely create a bigger gap between apartment and house rents. More people who want to rent a house would rent apartments instead. And more of them would be able to buy houses instead of rent.
I’m not an economist, but this can’t be right. I just can’t get past this premise. Sure there are factors other than cost involved. But a lot of the time cost has a lot to do with the price.
No, people who want to rent are already getting fucked. Rent payments are as high if not higher than mortgage payments, and it’s basically impossible for most people to save up down payments like that. Essentially the idea is to make it too expensive to be a landlord and thus make it harder/impossible for them to do what they’re doing (attempting to corner housing markets).
Like I know a lot of people here already own a home, but for those of us trying who can’t, let me be clear: the wealthy are trying to take us back to a form of a feudal system, wherein it’s virtually impossible to buy a house in an area near where the jobs are, and wherein rent increases chew up almost all of any wage increases.
Take it a step farther. Renters are already stretched to the hilt, so when it increases, poof, no more people who can rent it… Now they’re sitting on a mortgage payment, a higher property tax payment, and no income. Now what happens?
How many people actually want to rent a house for any reason other than, “Well, we can’t afford to buy one, so…”
There are some, mostly young people who aren’t settled yet, but the way things are trending two generations, if not more, are going to have a sizable chunk of people trapped as renters for life and subjected to constant rent increases every time wages go up.
It clearly is - the only question is by how much. There are tons of studies on this. I took a taxation course in college that covered this and I’m pretty sure every study found that landlords can and do pass on part of property tax increases to tenants - the main question being how much they can pass on.
Just a quick google finds these two fairly recent studies:
- MIT study showing that for commercial properties 80-90% is passed on to tenants:
“Without getting into detail about the actual econometrics of this research, the results showed conclusively that rents rise after tax changes sufficiently to fully absorb 80-90% of the change in landlord tax payments! This estimate is highly significant statistically.”
- Study for residential properties (can only get abstract) that “We find that a one standard deviation increase in the property tax rate raises residential rents by roughly $400 annually.”
4 Likes
Yeah, and that is one of the “variety of reasons” I was alluding to that such a policy may be desirable. But if you are someone who doesn’t want to buy (e.g., you know you’re going to relocate in a few years) and you want to rent a house, then this is bad for you. That was my point and I don’t see how that’s debatable.
I addressed this in my response to olink, which I was probably typing while you were typing your post.
This should be plenty convincing to those who aren’t convinced by logic alone.
It does if the business is being run by incompetent people or kind people who don’t want to maximize profits.
At the end of the day, look where rents are now. There’s just not much room for them to go up, if any. I just looked for the cheapest 1br apartment in the cheapest Philly suburb I know of, and the lowest was a 647 sqft 1 bedroom for $1,149 a month. You’ve got to make about $45K a year to afford that, and that’s the cheapest right now in a suburb that’s not great. The median income there is $32K a year.