> store all their net worth into their main tax free house

If you take speculation out of the housing market, storing net worth in your main house becomes a lot less attractive.

Why would someone want all their net worth in real estate properties rather than diversify with other investments, which if they wanted to could also still include the real estate sector?

> people to squat in gigantic houses that they don't need

In the Uk, at least, stamp duty is an obvious and infuriating driver of either buying big early or never downsizing. I did the former, parents do the latter.

Easy to solve the incentive problem yet we never will

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Lets say a transaction has 2 parties that want to extract value (builder, buyer) if there are 3 parties now everyone needs to make money. (builder, speculator, buyer) middle mans ALWAYS increase prices and add little to no value to the actual GDP of a country. They do offer financing, but a financing value of lets say 500k vs a construction value of 500k the construction value has more weight because it is fully finanical vlaue. the 500k investment might be part of a money multiplier which puts strain on the financial system. Speculators ALWAYS drive up prices. Just look at any field Private equity has touched.

When you ban "speculation" on an asset class, you're just telling owners (including creators) of that asset class that they will make less money if and when they sell.

Setting aside the "I know it when I see it" definition of speculation used by most people that changes as needed during a discussion and all the negative side effects that come with that, is telling people who produce a scarce asset that they will make less money when they sell it a good idea, or a bad idea?

Why do you assume that prices increasing faster than inflation is manipulation, and what is the definition of "normal changes in demand"?

Real estate historically hasn't appreciated faster than inflation over time. Supply constraints, historically low interest rates, and a couple other factors have changed that in a number of areas in the last couple decades, but not all. The Rust Belt is a prime example, yet for some reason that isn't relevant in these discussions.

> I see no reason why someone providing capital to build a building and then renting it out to cover cost of that capital, maintenance and building cost is unreasonable or bad thing.

The problem is the scale of investment. For example, 3 companies own 19,000 houses, or 11% of the rental market, in the Atlanta, GA area[0]. The market is being "manipulated" in that investors with vast amounts of cash are outbidding folks trying to buy a primary residence, and by owning tens of thousands of homes, you exert a measure of control over the housing supply (i.e. "manipulation").

I don't believe that companies should have the ability to own so many houses, and the easiest way to curb this is to progressively tax investment property to the point that isn't financially feasible to own tens, let alone thousands, of homes.

0: https://news.gsu.edu/2024/02/26/researchers-find-three-compa...

Which would favour people with fewer houses, which don't have to pay the increased taxes and so their rents could be lower.

So the 2nd, 3rd house taxes could be relatively low but for the 10th they would be ginormous.

Possibly but it would also create more private equity reits that would build and operate these multi-family units. There isn’t a clean solution without making it illegal for companies to own single-family homes.

Usually when something like that is proposed seriously it isn't supposed to start from the second home already, but a bit further as there's very little social benefit in excessively taxing a flat inherited from your grandma waiting for your children to grow up either.

Allow me to flip that around. Should people in places like Phoenix be priced out of the market because a significant amount of people have a winter home there?

I understand, but what if you establish a 10/20 year increasing taxation scheme. Plus some decreasing tax incentive to sell residential property.

You tell people: You have 20 years to sell your second/third residential properties, even at a good tax premium. But in 20 years you MUST have sold or you Will pay lots.of.taxes.

Edit: anyhow... I dont pretend to try to solve this complex issue in a couple of HN comments. It's just a general sentiment I have that the.only way to remove speculation from residential property is by government mandate.

I'm all for this. And I am "part of the problem " as I own 2 houses in 2 different states, and rent one at a freaking high rent price, because the market in that area is crazy.

Yes, and for any unit of gov't which is funded by property taxes, there's a second edge on that razor blade. Spiraling residential home values yield spiraling property tax revenues. And there are a whole lot of beneficiaries who feel entitled to their ever-growing cuts of the resulting gov't spending.

Or unoccupancy tax. Forcing landlords to let at the price renters are willing to give will probably do some to reduce rent levels.

Same goes for commercial, but in that case, I'd even suggest forefeiture if you are not reducing requested rent within a year of vacancy. Let someone else take over if you overspent.