There is a simple solution to this, which doesn't require any tracking of people's nationalities at all.

1) Tax homes and condos that are occupied less than 50% of the year at 10%/year
2) Tax homes and condos that avoid tax #1, but are occupied less than 50% of the year by their OWNERS at 1%/year

Exact percentages are just an example, actual percentages should be worked out.

The point is to heavily penalize homes bought as investment properties, by owners who don't even rent them, and to lightly penalize homes used as investment properties, but where the owner does contribute to housing supply by renting.

Nationality need not play a role, yet it would discourage foreign investment that would take housing stock off the market.

That (@1) sounds like a good start, though like anything involving a tax, the cost of administration is high. The way I think I'd go is like #2, but higher penalty and applying only for the first couple years. A lot of homes get rented out; that's generally a good thing. If you bought a house and lived in it for 20 years, and now you're renting it, that isn't hurting anyone. I think we're looking for the people who buy a house with no real intention of living in it.

The linked BC story, to me, clearly shows that their market inflation really is due to speculation that could, and should, be addressed by policy. They tried, the market slumped as it should have, and he explains that it perked back up when buyers decided it wasn't going to have any effect. If buyers were people looking for a house to live in, they wouldn't care about that - that's speculation pure and simple.

By the way, this is the best article I've seen on the subject so far. The Seattle Times gave way too much uncritical ink to Wilson's deliberately false portrayal of the issue.

Exactly. What defines speculation, money parking, or money laundering is that nobody moves in. It makes no difference who the owner is. So what if a foreign buyer uses a shell company to buy a property? If they get a tenant in there, then that's one less person looking for a home, and that unit has gone to work meeting demand for housing. Which is how prices stabilize.

Even for non-speculators, a tax on unoccupied housing is pressure on the landlords to get somebody in there, by lowering rents or offering perks or doing whatever to keep their tenants happy. Maybe it won't affect prices much, but it's worth a try and it doesn't do any harm.

Rather than try to track what percentage of a year the unit is occupied, its probably easier to collect and easier for the owner to pay if it's a very simple 0.0X% of assessed value per full month unoccupied. Simple to calculate for everybody, and it gets right to the heart of why this is even an issue: We want what housing inventory we have, and any new units that get built, to have people in them to meet housing demand.

Ed Murray ran a smear campaign littered with bullshit against Mike McGinn in 2013, while pretending to be above the political fray..."PROGRESSIVE VALUES!"..."THE SEATTLE WAY!". If you want four more years of Murray-style disingenuous, petulant garbage, by all means vote Jenny Durkan.

How many houses owned by foreigners (or by anyone else, for that matter) are actually sitting vacant in Seattle? Is that even a thing we need to worry about? I'd be very surprised if many people from anywhere are interested in letting expensive assets sit without getting an return.

The only way that taxing houses that ARE occupied makes any sense is if you want to penalize landlords. But that won't work. What will happen is that the tax (1% or whatever) will get added to the rent and renters will actually end up paying artificially more.

If the goal is to make owning rental housing less attractive, then you would have to put a high tax on it. But I fail to see how that is going to help anyone.

These sound like good suggestions to me. A tax for non-occupancy, Ph'nglui @3's suggestion sounds reasonably operable, and neutral across the board. Maybe even give a 2-consecutive month tax amnesty if a place needs to be temporarily vacant for serious cleaning or necessary upgrades. Friendly amendment.

Seattle can't afford to have unoccupied housing stock, neither should owners of said housing stock.

I think people bandying about suggestions of 'racism' are putting up largely artificial roadblocks, and the stakes are already pretty high (E.g. house price bubbles & crashes, unoccupied places). Let's have an "economically stratified list." Ethnicity doesn't even enter into it.

Our state schools have resident vs non resident tuition. Why are we so against the same for housing?

Foreign investors buying expensive houses and leaving them vacant ARE getting a return: increase in value when eventually sold. It's a good place to park money.

@1, @3, @7

OK, but when we go to implement that kind of law, how do we determine which homes are occupied, and which ones aren't? Does your method account for caretakers? For AirBnB or other short-term rentals?

These occupancy-based proposals might sound good (they certainly feel good) but how the hell do you actually do that?

And just anecdotally, I am aware of exactly zero houses or condos in my neighborhood that have been recently sold, but haven't had anyone move in. I've brought up the topic with my friends and family and co-workers, and they haven't seen or heard of this in their neighborhoods, either. I know the unoccupied-luxury-home problem is a real thing in the world's financial capitals, but is there any evidence at all, even anecdotal, that it's happening in Seattle?

@6 On the vacancy issue, as I read Charles Mudede's prior writing, he believes that numerous Chinese investors buy residential real estate here, and then, for reasons that are unclear, elect to let it sit vacant, despite the fact that Seattle has one of the hottest rental markets in the country.

I know that sounds completely illogical, but that is apparently the working theory of the folks supporting this tax. I guess the mysterious Chinese investors want to make money on speculative investments, but are not interested in the steady, dependable cash flow of rental income?

@1 Tracking occupancy strikes me as way more invasive than tracking nationality of buyers. How is that going to work? Is Seattle going to create a new city agency responsible for going door to door, asking if anyone is home?

@6) you have not read me on this subject at all. So fuck off until you have fucking read me.

Sorry, I mean @11. Yes, you just fucking get lost you fucking waste of time.

@13 Murky and mysterious? If you want to know who is buying residential real estate in Seattle, here you go: http://www.kingcounty.gov/depts/records-…

It's not complicated. I just checked excise tax affidavits filed yesterday and today. There are no buyers that are business entities, but there is one buyer with an apparent Chinese surname. Her address is listed on the tax affidavit, why don't you get in touch with her and find out if she made this purchase as an investment property?

@14

Hmm, that doesn't do a very good job of clarifying your argument, though, does it?

You've brought up foreign buyers of local real estate in many, many blog posts.

Do you believe these foreign buyers are leaving the local properties they buy vacant?

If you do not believe that, if you instead believe that foreign buyers are renting out the local properties they buy, then by what mechanism do you believe this foreign ownership is exacerbating the scarcity of housing in Seattle?

@14-15 Charles, I try to engage you in the comment section of every single one of your pieces on this issue. I challenge your theories, but I have always been respectful. I am really disappointed that your response is name calling and profanity, but I guess I am not really all that surprised.

If you want to have a discussion, I'm here.

@9, At the least, lets get "the skim, from that investor, regardless of whether it's a foreign or a non resident American, in the form of a non-occupied buyers tax, and fund our infrastructure needs in the city. There's oodles of money in this city that we are not utilizing to the greater good of its residents.

How would you even determine if a household is physically occupied or not? Is the city going to employ an army of hundreds of workers to go around day and night and monitor who is physically coming and going from every household? Monitoring the house's utilities won't work, as both can be easily faked with automatic timers.

@15 why so pissed off? You do seem to have argued that part of the problem is free-floating capital buying housing for non-housing purposes, with vacancy being an issue (e.g. see-through buildings in False Creek, Vancouver). For example in this piece:

http://www.thestranger.com/slog/2016/08/…

So you could say that yes, False Creek does demonstrate that hot-money investors will leave housing vacant if the market is hot enough. But I see why people are suspicious of some Smart Person thinking up a Smart Analysis of the problem which sidesteps inconvenient tradeoffs and sacrifices (at least by locals). Even funnier because Moon is sitting on a pile of homegrown capital while pointing the finger at foreign capital.

There are several elephants in the room also. The Times just pointed out that Amazon is now the biggest prime real estate tenant (both in absolute terms and as a percentage) among the 20 largest US cities. Plus there's all the single-family zoning we have. But addressing these would require engagement beyond "I'm smart and I have figured out how to deal with this without anyone having to give up anything".

Link to Times discussing the impact of Amazon: http://www.seattletimes.com/life/food-dr…

@18 -- Charles used a curse word four times out of 33 words, achieving a 12% Vulgarity Index. That is within the normal range for a Stranger writer's product.

@22 A more apt example of Charles' prior writing on the the vacancy issue might be "A City of Empty Towers": http://www.thestranger.com/features/2016…

In that piece, Charles wrote:

"Vancouver has always been a city of immigrants. That is not new. What is new is the wealth of the immigrants. It's huge and not really associated with local economic activity," he says. "Also what is new is a lot of money is entering the city without people. This has caused many problems. For example, a set of condominiums I recently studied were found to be 50 to 60 percent unoccupied. No one lives in them. They are just investor-owned."

Indeed, two weeks before, when Brown and I had lunch on the patio of a downtown hotel, we noticed that the street was empty but for one car—a roaring and going-nowhere-fast black Maserati. The condos on the street appeared to be empty. The sun was setting, and no lights appeared to be visible in any of the hundreds of units.

Yan's research on empty condos used electric bills; another study that was conducted by the City of Vancouver in 2014 and used data from water bills found nearly 11,000 homes in the city are vacant (90 percent of which were condos). These are places occupied only by money.

@20

With a plan like that, you'd end up disproportionately investigating (or preemptively billing) the very poor (and the very thrifty, I suppose). And @21 is right-- the rich can afford timers, so imposing a tax on low utility usage encourages waste, and discourages conservation. Ugh.

Yeah, it's impossible to know if a house is occupied. That's why "owner occupied loans" don't exist. Shucks.

You could still cheat on a tax on unoccupied housing. But hold on to your hat: people cheat on their taxes! They do! It totally happens. I hope nobody feels like I've stolen their innocence today.

Often they get away with it. In the long run, it's usually not worth it. Who the hell would waste their efforts on any kind of shenanigans to make a property look occupied and invent fake residents, to save on a little tax? So they can park some investment cash. If you have to spend your time on schemes and subterfuge, it's not parking. It's work. If you are willing to do work, just rent the fucker out. Problem solved.

In fact, if all you want is to park cash, and you aren't trying to bring in income, then the easiest thing is to have a management company find you a tenant at the absolute minimum rent to offset any extra wear and tear on the property, with no concern for making profit. It just needs to be occupied every month. Which means cut rate housing on the market, if the ones parking money are still interested in Seattle at all. If they all leave, then somebody else will find tenants or owner-occupants.

Or maybe there's next to no unoccupied housing and this is all a fantasy. Great. Then nobody has to pay the tax, nothing much even happens, and nobody has to do anything. No harm done.

Yes, there's a little more to collecting taxes and making policy than this, but we have structures in place that already do this stuff. It's not uncharted territory, so there's no reason for all this drama and controversy.

The whole kerffule is over is this anti-foreign, anti-Chinese strawman.

@26

For owner-occupied loans, the homes are owned by the bank, and represent a small fraction of all the mortgages on the books of the bank, and the bank has employees who can investigate occupancy, and funds to hire private investigators, and lawyers to take the matter to court to prove with a preponderance of the evidence that the borrower has defrauded the bank.

Figuring out how the government is going to determine occupancy for all the homes within its borders, and how to fund it and fairly enforce it, is an entirely different animal. And it lives in a different universe, too.

Yeah, like they send Inspector Clouseau to investigate every single building, room, vehicle, and light socket in the entire city limits to make sure every single one complies with every rule, and code, and regulation, and tax, all the time. No exceptions. In a universe where every person is at war with society, and tries to cheat every tax, every fee, every code, you might as well not have a government.

How do you think the city collects their local sales tax on every pack of gum sold? Do they have investigators with eyes on every single one? Is the entire city run like a maximum security prison?

Obviously not. The oldest reactionary canard in the book is to spin tales about all the ways you could flout any new proposed law. How impractical! Some people will no pay! Let's stick only with the taxes we have, which nobody ever evades.

It's just another whatabout fallacy. People get away with cheating on their property tax. People get away with speeding. People run red lights. People get around sales tax. These things happen. Yet somehow, the system keeps working.

If this kind of criticism were valid for this proposed tax, it would be just as valid for every other tax. Every other law. So we should repeal them all. That would be stupid.

Keep in mind you are the one who is "aware of exactly zero houses or condos" that are unoccupied. Were you lying about that? Or do you believe it? If you believe that, then who exactly do you think is going to cheat on this tax? Which is it?

But I see why people are suspicious of some Smart Person thinking up a Smart Analysis of the problem which sidesteps inconvenient tradeoffs and sacrifices (at least by locals).

It's also suspicion of a politician looking for a feel-good study instead of a solution:

As mayor, Moon says she would order the city to collect the "number of housing units bought by corporations, cash buyers, shell companies and private equity firms, and the number of homes not purchased as a primary residence so we can get a clear picture of the impact speculation is having on the market."

How to tell the difference between those owners and speculators is not given or clear, considering that any owner in any of those categories can be a real landlord with real tenants.

There's also the issue of making Seattle appear to be hostile to foreign capital, which is currently hard at work employing local engineering firms and local construction contractors to build more housing units here.

@17, I think that's a good question and while I can't channel Charles Mudede to answer it, I will say we're talking about speculation. Speculation doesn't increase or decrease the number of available or occupied units, it's about property value only. If the world's spare money comes to Seattle looking to buy real estate property, the "value" of that property will go up.

That obviously takes money out of the pockets of people who just want to buy a place so they can live in it. That likely cascades to market effects on rents as would-be buyers are priced out. As the value of a rental property like an apartment building escalates due to speculation, the buyers are going to plan to recover a reasonable fraction of the cost from rents, so those rents go up.

None of that is particularly about empty units. Where we're talking about a single family property (including condos etc.), then it's pretty simply about whether the purchaser will be that resident. When it's a property with multiple tenants, then I guess that could still be an interesting though eccentric approach - if you buy an apartment building, you live in it - but I hope someone has a better idea.

Empty apartments are a separate issue, that may need to be addressed if it turns out that there are many of them.

@28

The question at hand isn't how to determine occupancy perfectly, it's how to determine it at all. I don't see your answer to this question anywhere in that hodge-podge of other things you want to talk about ("whataboutism," indeed) but you're going to have to come up with one eventually if you have any real interest in passing legislation.

We don't live in the kind of society where you establish a new tax without telling anyone how you're going to decide who has to pay it.

@27 ... "homes are owned by the bank"

Banks don't own the property they use as collateral for a loan.

... "investigate occupancy", "private investigators", "fraud"

Why would a bank be upset to learn their borrower was secretly a foreign billionaire? The reason they ask and *attempt* to care about whether or not you'll occupy your home is because they're forced to: Freddie Mac and Fannie Mae and HUD impose that requirement on banks as part of their federal home-loan guarantee agreements. The idea is this will prevent American taxes from bailing out the purchase of second and third homes. (These self-disclosure requirements were proven to be pretty ineffective in 2007-2008.)

@30

"That obviously takes money out of the pockets of people who just want to buy a place so they can live in it"

Er, no, this isn't obvious. If a person simply wants a place to live, and all of the speculators are renting their speculative properties, then there will be more rentals available as speculators buy up stock. The buy/rent calculation will move in favor of renting. More people who "simply want a place to live" will use the money in their pockets to rent instead of buy.

I see the argument you're trying to make, but you're not accounting for new rental units created when speculators buy homes from owner-occupants. The ad absurdum end state is speculators selling properties exclusively to other speculators, and buying only from speculators or developers, with all residents renting at more or less the same market rates you started with. Which would be a pretty crappy world, but not one with a tighter housing supply, all else being equal.

@32

You are correct, the banks do not own the properties, the banks have contractual claims on the properties. And the fact that they rarely if ever bother to check owner occupancy does not suggest that "whatabout owner-occupants loans" is a particularly good way for a government to determine which properties should be levied a non-occupant-owner tax.

@31 ...that said, I agree with you here. Imagine the bureaucratic nightmare of trying to politically negotiate and clearly explain what made a particular residence "occupied enough" to avoid taxes -- much less monitor it and meet any legal standard of proof in order to enforce it!

Nobody lives there? I work odd hours, or maybe I was visiting family. Oh you might monitor my utility bills? Great, let me go crack a few windows, turn on the AC, and leave a faucet going next time.

@34 Agreed. I just enjoy nit-picking.

Can't a person get some privacy in this town? The city doesn't trust its residents to make decisions and a large swath of folks want know everyone's financial business to see if it offends their sensibilities. We are all about the diversity unless it's a non resident from China with money? Seattle is progressive protectionist Trumpland.

@37: Just like a Trumper to support foreign powers' profits over local Americans. Good god are you ignorant over the basics of why people are distressed by this bubble. My house is worth 1/3 more than I paid for it within the last few years, but the context of why and how difficult it is for friends who don't work for the tech giants to be able to afford any home is a serious concern.

When a resource is scarce (especially housing), foreign hoarding does affect us locals greatly. You're not rich enough to own multiple investment homes if you're shitposting online, so this doesn't even affect you.

@38. Nailed it! Ru du du tu du.

@10 water and electric bills.

Of course there's ways around this. In ontario the new thing is making an large offer on the house with an agreement to allow the person to live there rent free fo x numbers of years.

@Charles - your writings have been really good on this subject. Please keep em coming:)

Tl:dr
Reasonable person- i would like to collect data to test this theory.

Screaming masses - shut up your wrong! Theres no data to prove your theory, shut up!!!!!!!

@33 -- No, I'm not accounting for new rental units that become available when speculators rent out their properties, because I'm not talking about availability! Just as you say, speculation does not change the number of available units - and therefore we understand that the problem we're looking at is not the number of available units. It's the price. You can't have a Vancouver style speculation party that drives ordinary single family homes up past $2 million, without negative effects on affordability. I don't care whether they're empty or full.

@43

I understand your argument, but I don't think you understand my criticism of it.

With all else being equal, When a speculator buys a unit at speculative prices (i.e. a price a housing-seeker is not willing to pay), a rental unit is created, an owner-occupied unit is subtracted, one owner-occupant is subtracted, and one renter is created. The net change in demand for and supply of housing is zero, and thus the net change in average housing price (across both renting and owner-occupying) is zero.

Property prices increase, of course, but housing costs do not. The net end result is equivalent to a town (with a fixed population) comprised entirely of rental apartment buildings (with a constant vacancy rate, no depreciation, add other simplifying assumptions as needed) owned by speculators, who are feverishly buying and selling the town's apartments to each other at ever-increasing prices, but unable to raise rents due to competition for tenants.

I suppose you might argue that rental pricing is inelastic relative to demand, but that isn't the argument you've presented, and if we survey a broad sample of markets I think we'll find that rents do rise when lots of new people move into town, and fall when they leave.

Or you might be assuming that owner-occupier demand is price insensitive-- that people who want to buy housing today will never opt to rent instead, regardless of cost differences. But there's nice recent data from the inflationary phase of the last housing bubble to suggest otherwise (many potential buyers compared rents to mortgage payments for comparable homes, and decided to rent).

I don't care what your nationality is. It could be Chinese, Californian or Texan. If Seattle is not your primary residence, you are part of the problem. If you are a resident of Seattle (and contribute to Seattle's economy) then you are *not* part of the problem.... or at least you are not part of the housing problem if you aren't buying up property and leaving it vacant.

I don't think there is any racist intent in either Lisa Herbold's or Cary Moon's positions. Just an understanding of the problem as seen in both Vancouver, BC and Silicon Valley, where there are too many vacant properties and not enough housing.

@45 The effect of speculation on rents is certainly less clear to me, than the effect on property values. I'm not necessarily convinced that your strictly supply/demand basis is correct, or that it adds up to no effect -- note that the families excluded from the ownership market will be more affluent, and that's going to change the balance in the rental market. On the economic mechanics of it, I'd guess that inflated purchase prices affect the elasticity of rents - is the market perfectly responsive to an increase in vacancies, or do rents tend to stay up where landlords have spent a lot for their properties?

But ... if you're right about that, there's still those property values, and that's what the big stink has been about in Vancouver. Whether rents are affected or not, people who want to buy a home are screwed, either with a huge and possibly later under-water mortgage, or just SOL. That's bad, and it's sufficient cause for taking action.