Has your neighborhood felt empty, even before the pandemic? It's not just your hood. It's a global phenomenon.

I call it the vacant home epidemic.

Here's a quick thread on how on how the Great Recession resulted in a housing crisis that will last generations.

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2/ Paris had 107,000 vacant homes in 2017, about 7.5% of all houses. 40,000 weren't even connected to the electrical grid anymore.

New York City had 247,977 vacant or scarcely occupied homes in 2018, about 11% of the city's apartment supply.

This is just a start.

3/
Toronto: 99,000

Vancouver: 25,000

India: 11.09 million(!)

China: 50 million.

I know what you're thinking. Seriously? WTF is happening?

Well, after the Great Recession, central banks flooded the market with cheap credit. That cheap credit killed bonds.

4/ Bonds used to be the bread and butter of the super rich. They would lend some money, and get a fixed print to their wealth every payment.

When central banks flooded the system, they made lending so cheap you couldn't make much on bonds. So instead, they bought houses.

5/ See, the trade works like this. Developers sell the housing to bulk buyers overseas looking for a currency hedge. They buy one, two, or I've even seen 100 on a single deal.

You locate prime properties, and the most important part – make sure you don't rent them. Why?

6/ To exert demand pressure. Cities keep building supply, and not adding any new housing. The artificial scarcity forces prices to rise much faster than the cost basis.

Oh yeah, and the cost basis is what makes many of these cities a target.

7/ This happens in cities with relatively low property taxes for a reason. The lower the transaction costs, the lower your risk.

You don't want a vacant in Texas @ 3% a year. It's hard to break even.

You want one in Toronto where taxes are 0.6%. Inflation's almost guaranteed.

8/ Great. If you're rich, you're making a buttload.

If you're young though, you're now dedicating an astronomical percent of your wages to shelter.

This is problematic for a lot of reasons, but most immediate to this thread is young folks are incentivized to move.

9/ What happens when the young, the artists, the musicians, the cooks, the creatives in general move?

A city becomes less livable. This results in long-term damage to a city, ironically killing the city and the speculators together.

People migrate. Property values fall.

10/ The damage from this kind of speculation is likely to last generations.

All because most politicians think the success of a city is measured in the value of its real estate, and not the productivity of its residents.

11/ How do we fix this? Make it inefficient to hold vacant properties.

Raise property taxes, add vacancy taxes, and LOWER income taxes.

There shouldn't be a penalty on labor.

There needs to be a penalty on non-productive exploitation.

12/ Oh, look. In the news today.

Prices must be high because Manhattan needs more density. Build a few more towers. https://www.timeout.com/newyork/news/one-in-five-manhattan-apartments-may-now-be-vacant-112520?utm_medium=Social&utm_source=Twitter&cid=~newyork~natsoc~twitter~echobox#Echobox=1607120113