Boston councilor would tax property flippers and other housing speculators

Edwards

Councilor Lydia Edwards (Charlestown, East Boston, North End) today proposed taxes on property speculation as a way to keep Boston from becoming another Manhattan.

Councilors agreed to schedule a hearing on Edwards's proposal, which she made in her first formal speech to the council as a newly elected member - in November, she replaced Sal LaMattina, who retired.

Edwards said she doesn't buy the idea that all the new housing development going on in Boston now is going to do anything for the people who cannot afford even the "affordable" units developers are required to include, because it's based on the "area median income," which keeps increasing as more well off people move into the city.

"I do not believe we can build our way out this problem," especially in an era when growing numbers of units are being rented out by concerns such as Airbnb rather than being rented or sold to actual residents, she said.

Her proposed ordinance would levy fees on property flipping and units bought by foreign speculators and would limit home-share units to just one unit in owner-occupied buildings.

The funds from the fees would go to buy or build units actually affordable to Boston residents not in the market for luxury space.

"We need to play defense," as well have some "frank discussions" with developers about how Boston needs to remain affordable for all Bostonians. She said they need to adjust to the fact that they have to adjust to Boston, rather than Boston adjusting to them.

She cited her own district, where at one end a developer has proposed turning Suffolk Downs into a massive mixed-use development and where at another end the BHA is looking to let a private developer rebuild and expand the Bunker Hill project into a large mixed-income development.

"Boston is not for sale," she said. "Our future is at stake, and we have work to do. But Boston knows how to work and we will rise to this situation."

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Comments

All speculators should be taxed

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Speculation in any type of property or commodity never creates wealth; it redistributes it, typically making rich people, who can afford this sort of thing, richer at everyone else's expense.

By all means tax the flippers.

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housing costs

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Tito laid the groundwork. Edwards is putting the word 'bullshit' to Walsh theory we can build our way to affordable housing by building 80% luxury housing.

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Those "dumpy properties" used

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Those "dumpy properties" used to be called "fixer uppers" and used to be the only feasible entry point to home ownership for many people.

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Yep. My 2-family in Eastie

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Yep. My 2-family in Eastie cost less 6 years ago than a 900sqft condo on the same block today... but it needed as much money as the sale price in repairs and updates.

I've had to be patient and space some more cosmetic things out. In the meantime I've had a place to live and an anchor in the community.

And since I actually live here, I'm motivated to do real repairs that should last 30+ years (like an extensive drainage system, not just a patch on a cracked walkway; new efficient circulated hot water heating, not just a cheap replacement boiler).

Unlike flippers, who just blither about "curb appeal" and do the bare minimum before running away, so it fails all over again in under 5 years.

Tax the flippers.

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Speculation Means You Don't Live In A Cave

I made enough money off selling my first house (which my wife and I saved and scratched years to put a down payment for) that I actually got the house I wanted.

North Korea and certain states in India have communist governments. Please avail yourself of all that Logan Airport has to offer to get yourself there if you believe that speculation is bad. Jeder nach seinen Fähigkeiten, jedem nach seinen Bedürfnissen - Karl Marx, if that thing is for you.

Hate to say it, Greed Is Good. It means I have good plumbing, a roof over my head, a decent kitchen and I don't have to do Co-Housing with somebody who has parents that are letting them do the "socialism" thing for a few years until they inherit the beach house.

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In India (at least until a

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In India (at least until a few years ago) there was a strong legal doctrine against "idle property". Basically if you occupied a piece of land or housing for longer than a year, you'd gain squatter rights. Property rights essentially transfer from the owner to you. If you want to rent out your house, you have to move back in after a year, otherwise you forfeit it.

To the American mind this sounds insane. But if you really think about it, squatter right is less insane than the "deed" system, where an old piece of paper dictates what land belongs to whom.

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India?

That's nice.

On the upside there is far less cholera and arsenic filled water in my neighborhood owing to greed, but you know Squatters Rights! Power to the People.

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You're right! Squatter

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You're right! Squatter Rights causes cholera!!

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You're right, of course.

You're right, of course. There's no middle path between unregulated, rapacious capitalism and communism. I mean, If you don't like the Arctic circle, it's only natural that you should move to the Sahara Desert. Sounds perfectly reasonable to me.

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Unregulated?

Zoning, Building Permits, NIMBYism, Too Much Traffic!, Environmental Regulations, Development Impact Fees.

You have obviously never built anything except with Legos.

Unregulated me arse.

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Nice try. I am arguing for

Nice try. I am arguing for reasonable regulations, not suggesting that the current environment for would-be builders is totally unregulated.

I hope you're not in the construction business yourself because that straw man you just put together ought to be condemned.

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I made enough money off

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I made enough money off selling my first house (which my wife and I saved and scratched years to put a down payment for) that I actually got the house I wanted.

It sounds like this would be targeted at foreign flippers, not owner-occupants who buy a fixer upper and put in sweat labor on their own property.

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Plumbing and roofs are great.

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Plumbing and roofs are great. So are schools, fire departments, etc that are paid for by taxes such as the one suggested in this article.

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Taxes

Yes, rising property prices, lead by speculation, causes increased property values, which in turn means more property taxes to pay for things like bike lanes. Those taxes now pay for the great BFD and BPD along with mediocre schools.

A cap on speculation means longer holding time for investors, meaning lower return, meaning lower house prices, meaning less revenue for government, which means more cars because the city can't afford to create bike lanes and less money for police, fire, and schools.

Vermont has a type of period holding tax to decrease speculation. It is also a place of good beer and beautiful vistas. It is also a place that I like to visit but would not want to live since the guv'rmint is telling me what I can and cannot do with my money more than other states. It is also a place that has a ridiculous amount of rural poverty. You can't eat a view when you can't make a living owing to too much, and not just the right amount of regulation.

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A cap on speculation means

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A cap on speculation means longer holding time for investors, meaning lower return, meaning lower house prices, meaning less revenue for government, which means more cars because the city can't afford to create bike lanes and less money for police, fire, and schools.

You're right! Less housing speculation will bankrupt the city!!

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Um, property taxes have not

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Um, property taxes have not been assessed at the value paid for the properties in Boston.
nope......

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Notice all the "I" in your

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Notice all the "I" in your statement? Why would we make laws that affect everybody based around your personal needs?

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Not *all* speculation is bad.

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Not *all* speculation is bad. Speculation at the expense of residents is bad. Flipping properties, jacking up the price, and having zero investment in the neighborhood is bad. I know families, seniors, low-income folks who are being pushed out to neighborhoods that they don't know and struggle to get around in because profit is the ONLY thing developers and flippers care about. That destroys neighborhoods.

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We have seen housing do up

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We have seen housing do up 100% in less than 4 years, a three decker that was 475K in 2014 is now easily 1m in some neighborhoods, wherenot much else has changed. Well maybe the tenants have been evicted and moved to brocton or Lynn.... how is this good?

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Flippers ad value

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They are often local people with seasonal construction jobs who renovate and sell homes as their winter work income.

Most are not wealthy - they team up with other relatives in the trades and buy a junked out barely habitable place and turn it into something livable by working during their slow time.

I don't think you know what you are talking about here.

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Oh what a blessing!

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Thank all the gods and saints that we have local people (and their unemployed relatives) willing to spend their winters installing slightly dented vanities, granite remnants, and stainless appliances then making all this available to us lowly peons for only an additional 20%.

Surely we mere mortals couldn't possibly stumble into Home Depot and buy the cheapest appliances on the floor ourselves. Surely we couldn't have imagined pointless recessed lights in weird places, enclosed fixtures that cause LED bulbs to overhead, and the obligatory breakfast bar sticking out into the living room. Thank them all so much for deciding to shit "subway tile" all over the place, because nothing makes a home cozier than surfaces from mass transit.

Princes among men and women. May they all live to be 1000 years old. We are fortunate to bask in their presence in our neighborhoods. My space saver is theirs.

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You can do any and all of that

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Just buy the house first. Do your own permits. Do your own work.

Go for it. It is called sweat equity.

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Are you living under a rock?

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Are you living under a rock? How many years has it been since an average resident could buy a house in our city? Are you suggesting we walk up to the bank with our median income and say "I know I'm not qualified for the mortgage but I have sweat equity!"

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We did it

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Bought the first house in late 2008 when the market was crashing all around us and everyone told us we were nuts. Used an FHA low down rehab loan and got the place livable, then continued to slowly sink more into it as we could. We were underwater in the place until maybe 2014. With the recent boom, we were able to cash out refinance and turn that one into a rental. We rolled the sweat equity we'd gained into another, larger fixer upper right around the corner. As before, we got a rehab loan but this time it was at 20% down and no FHA help. As before, we did what we could with the loan and we'll spend the next few years doing the remaining projects as we have time and available cash.

As someone who's done it twice and who watches the market pretty closely, I'd say that while the recent boom has certainly made things more competitive, it's still possible to buy a fixer upper if you're willing to live outside of the prime locations. It was easier up until about 3 years ago. But like all bubbles, this one will eventually end, likely in about 2 years and hopefully less dramatically than the last one.

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Agreed. Real estate is

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Agreed. Real estate is cyclical. Right now we are at or near the top of the market. This bubble will burst, the shift will turn the market into a buyers market again and the process will start over. Rinse, repeat...

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(SLOW CLAP)

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this is poetry

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I'm sorry that you don't understand sweat equity

There is nothing stopping you from doing any/all those things - or the things that you want like damaged shag rug and nicotine stained paneling - to the fixer upper of your choice.

So very sad that you are prevented from bidding on trashy houses and using sweat equity to make them your own. That you are relegated to bitching about the people who do to make a living.

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Speaking of not understanding...

There is nothing stopping you from doing any/all those things - or the things that you want like damaged shag rug and nicotine stained paneling - to the fixer upper of your choice.

Unless it's already been bought by a housing speculator. Or unless comparable property has been made unaffordable because of housing speculators.

So very sad that you are prevented from bidding on trashy houses and using sweat equity to make them your own.

What part of "making it your own" are these people doing if all they're gonna do it sell it as soon as they can? Meanwhile, they're bidding against people who would use sweat equity for a place to live in.

Sorry, Swirly, I usually agree with you on things, but not on this time. House flippers are parasites.

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You're all missing the point

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Including the councilor.

You want to fix this? Fix Boston's zoning.

Why do we complain about affirdable housing when vast swaths of the city are occupied by one story retail and single family houses. Rezone to allow double the densityy and the buulders will come (but prices will come down whivh is why they won't do it).

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Like New York City's prices

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Like New York City's prices went down? How does that make the prices go down? Are you going to disallow new people from moving into Boston?

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Ummm

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If you read the papers there are numerous reporrs that new York s prices are declining. Overbuilt, especially high end. As they come down it starts to pulll everything else down.

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New York is a prime example

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New York is a prime example of what happens if you refuse to re-zone short neighborhoods (like Queens or Greenwich Village) into taller ones: It becomes astronomically expensive. Tokyo (where people are truly allowed to build any height and density that they want), is a much better example.

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I think you are not paying attention

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The point: BUY IT YOURSELF AND FIX IT UP if you want cheap housing.

Nobody is stopping you.

Don't bitch about the people who BUY IT THEMSELVES and FIX IT UP just because they SELL IT.

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There aren't cheap houses anymore...

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Plenty is stopping people. People making FAR above the median wage here can no longer afford to buy even the worst fixer uppers available on the market.

Why?

They can't afford them because speculators as a whole have driven up market values and flippers can purchase any fixer upper with cash as opposed to the rest of us who are relying on trying to get a mortgage.

What happens when a flipper can continue to buy every fixer upper with cash? More centralization of wealth and the ability to buy even MORE fixer uppers while the rest of us regular folks watch prices increase even HIGHER with no ability to join in to develop that "sweat equity" you speak of.

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It is increasingly difficult

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It is increasingly difficult for normal people to compete against speculators who can make an upfront cash offer.

You are telling people that the solution is to be born rich. Helpful!

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Sounds like

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you either make SO much money that spending $150-250k IN CASH to buy a distressed property is no big deal to you, or you actually have no idea what it entails to buy such a property.
Your average blue collar worker can not afford, nor get a loan, to buy a burned out husk of a house in the Boston area. Nor would they have the time, without quitting their job, to do all the work required to make such a property livable, all while paying rent to live somewhere else in the meantime, and purchasing the materials and paying subcontractors for work they couldn't perform.
No these types of building refurbishments are almost exclusively carried out by flippers or developers. Folks with CAPITAL. I'm not knocking it, they are building housing after all, I just would like an invite to the high society fantasy world you live in where a janitor can just buy a boarded up building in cash and spend 6 months to a year fixing it up to live in.

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Who has the capital?

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It isn't who you think. It is often trades people who work together - form a small business, pool their money, work on it together, and make a profit.

Show some data that it is multinational corporations doing this flipping. I sincerely doubt it. My experience is that it is groups of tradespeople - often extended families - who are taking the risks and doing the work.

In other words - BLUE COLLAR PEOPLE

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I live in one of those properties

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My landlord was a 20 year old plumber when he bought it. Not to live in - to rent so he could afford to live there one day. He hit up relatives for the capital and put them on the deed. Then he worked on it in his off hours.

I don't think that you know any trades people.

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Ah, be born in a family with

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Ah, be born in a family with capital to loan. The Mitt Romney business model. Very helpful.

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Or maybe he had saved enough

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Or maybe he had saved enough for a down payment, some rehab finances or a loan, put in some sweat equity and is waiting for about 10 years when the place will start to turn a profit.

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Ah to be willing to compromise

I know some young tradespeople who are doing the same thing. Only they aren't getting money from their parents, they are living with their parents while they save for a fixer upper, then getting a mortgage to buy it and fix it up. Then moving in with housemates to help carry the mortgage.

They don't expect to buy in high cost neighborhoods. Starting in Everett or Malden or Chelsea. Sorry, but most people don't get what they want in terms of space and in terms of location and never have when it comes to buying a first home and building equity.

II wanted to live in Cambridge, but I moved to Medford because I couldn't even afford Arlington anymore. Oh horrors - I had to compromise!

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Rehab loans

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They're a real thing. I've used them twice now. First time was an FHA loan with 3% down. Second time was a conventional mortgage with 20% down of the total price of purchase and repairs.

I know lots of people who do 1-4 family residential real estate rehabs and rentals. None of them are hugely wealthy. Residential real estate is a pain in the butt. Those who are lucky (or good) enough to make significant money quickly move into larger properties where the rewards are bigger and the people who you deal with aren't small time players or nervous homeowners.

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Control of free people

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Fees on property flipping is literally punishment for investing and improving a property. Owners who sell/ flip a property already pay the state of Massachusetts a Stamp Tax when they sell and Capital gains taxes on any profits. Ms Edwards wants to tell owner-occupants who can or can't live in their homes. I want to know her proposed penalty for those who don't comply, because in political circles there has been a lot of political rhetoric about the threat of Fascists and Authoritarians controlling people's lives. Often, the most heavy-handed attempts to control free people come from Lydia Edwards' end of the political spectrum.

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Team up and buy? Most people

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Team up and buy? Most people in the trades do not have 500k cash on hand to beat out an LLC or overseas money to secure a property to renovate. I do not think you know what you are talking about.

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Familiarize yourself with a

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Familiarize yourself with a term called liquidity.

Increasing liquidity does indeed create wealth.

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It's hard to reduce risk without speculators

Let's say I know I"m going to need 10,000 gallons of diesel next October to run the delivery trucks I operate. The price I charge for delivery is already fixed. So if the price of diesel goes up, I'm screwed; if the price of diesel goes down, I get a windfall.

But I'm in the business of running trucks, not of gambling in the commodities markets. So I'd like to remove that particular uncertainty from the equation. So I buy a forward contract, paying a small premium which guarantees me 10,000 gallons of diesel in October at a known price.

Now who would sell me such a contract? Someone who, unlike me, *is* in the business of speculating in the commodities markets. He or she takes on the risks of a price increase and the rewards of a price decrease. In other words, a speculator.

Without speculators in the market, I wouldn't be able get myself *out* of the business of gambling on oil prices.

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House flipping in East Boston

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House flipping in East Boston was the rage 5 years ago, today it’s permanent buyers buying homes fixing them up and living in them, or renting them.

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What planet

are you living on? Take a walk down Sumner, Everett, Lamson, or Maverick between Lamson and Jeffries.

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Bravo, Councilwoman Edwards

This is the type of leadership the city needs right now, and I'm thrilled to see someone following through on their campaign promises out of the gate. Not to mention calling it like they see it–many of us realized years ago that the fauxury housing boom may help improve neighborhoods in the visual sense, but often at the expense of their actual communities.

This is just the start of what will undoubtedly be a long uphill battle, here's hoping we actually see some change.

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So

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You think the government should be in the business of developing housing?

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They Are

They have very nicely built, crime free developments with plenty of parking with names like Old Colony, Old Harbor, Lenox Street, Cathedral (excellent access to The Buttery!), Archdale, and Franklin Field. That's not even the full list!

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Nope

Never said, or even insinuated that. But I do think the government should address what many Bostonians feel to be a serious issue.

By targeting commercial home-sharing and foreign speculation in particular, you’re freeing up more units for actual residents, while also bringing housing costs down. And maybe this would lead to a decrease in developers artificially inflating surrounding property values and taxes, while making it possible for individuals to buy homes in the city.

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Singapore

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Check out the successful nation of Singapore...it works wonders there. I'm not going to claim that their situation is analogous, however, the idea isn't ridiculous.

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She's right and those are

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She's right and those are both overdue policies. Kudos to the new councilor. But she also needs to support robust building as well at all levels to keep the supply growing. They all need to happen.

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I may be wrong, but aren't

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I may be wrong, but aren't flippers usually buying extremely distressed properties? I understand the desire to not have the few remaining cheap houses bought up and turned into expensive houses, but at the same time, seeing the kind of properties that have "CONTRACTOR SPECIAL" on redfin, they're not... livable places. If you're a resident of boston who's too poor to pay for affordable housing, you're likely too poor (and busy, working 3 part time jobs, taking care of elderly parents, whatever) to rehab some condemned shack with foundation problems that's been sitting empty for three years, because nobody else wants to buy it:

https://www.redfin.com/MA/Boston/151-Hebron-St-02126/home/9159267

https://www.redfin.com/MA/Boston/427-Walnut-Ave-02119/home/9297918

I'm just not imagining this is the kind of affordable housing we should really be saving for the working poor??

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Alas, You're Wrong

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Most house flippers are buying decent - albeit outdated - properties, evicting long-standing tenants, doing the aforementioned Home Depot stainless/granite 'rehab', and then throwing the empty unit back onto the market ASAP for a 20-30% ROI. So yeah, they got rid of the 1980s appliances and that dreadful kitchen that actually had 4 walls. And maybe replaced that old baby blue vinyl siding with new charcoal grey vinyl siding . . And helped clear out the community in the process.

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Not quite

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It's a lot more difficult than you make it sound. And even distressed properties are going for big money. The profit margins are slim. Try looking at the prices of distressed properties. They're out of the affordable range as is. Boston is not an affordable city. The housing market is very competitive. It's a sellers market right now, even for distressed properties. Which would you prefer in your neighborhood, a distressed property or a rehabbed property?

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the distressed properties are so expensive...

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The distressed properties are so expensive because of speculation of flippers purchasing them. If people didn't see that there was a sweet cash deal from a flipper coming down the road, the price on these might decrease a bit. Then these houses could be purchased and renovated by middle class owner-occupiers rather than flippers who strip the soul out of these homes.

They are plenty of people making real, middle class salaries who can't afford renovated $700k triple decker floors in Dorchester but could afford the $200k for a unit needing serious renovation if the prices weren't so inflated by speculators.

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Developers are not flipping

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Developers are not flipping individual condo floors and the sellers of triple deckers to developers typically can't sell them as condos. Do you have any idea how much it costs just to paper convert a triple decker to condos? Most of the sellers are older and are ready to move on to retirement and can't afford to $10k-$15k just to convert, upgrade the smoke detectors and deal with home inspection issues that may come up when selling each unit piecemeal.

Very few renovated condos in multi-families are selling for $700k+ Most are in the $450-$650k range with $650k being in the prime areas of Polish Triangle, Jones Hill and Savin HIll and being high-end renovations. Nearly all of the units selling for $700k+ are brand new construction where a developer took vacant land and commercial buildings and tore them down and added housing units to the neighborhood vs. displacing tenants in a triple decker. Right now there are several brand new renovated units for less than $500k all over Dorchester either on the market or about to come on the market, most of them in walking distance to the Redline too!

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Have you priced a mortgage on

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Have you priced a mortgage on that? 500k with taxes, insurance and condo fees can be close to 2700.00+ a month. This is a condo, in a three decker, no FHA ? The entire building could be had for 500k in 2014. Add the cost of living. You want a car, you want a decent school for your child, how about no gunplay or drug dealing on your block? You cannot have that and afford this. This is the result of speculation. this is sustainable?

Half of Bostonians make 35k a year, where are they supposed to live? Oh the LLC have bought up multi's and use them as " cash cows". High rent creates high subsidies. One can rent that newly renovated condo to a mom on a voucher, until you flip it for another 100k, creating another cycle of homelessness for her children. Who needs stable communities and owner investement?

Kudos to the Councilor first real move I have ever seen by City Councilors.

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Plus

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The distressed properties at fire sale pruces are mostly gone. I know severalnpeople in different ends of this biz and it's gotten very hard to make money. Here and there, yes, but not like 6-8 years ago.

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"I do not believe we can build our way out this problem"

I hope this woman is not nearly as stupid as this comment indicates. If I owned 10 houses, at some point, I would start selling the ones I don't need, because I need to make back the money I spent building them.

Now, when the cost of acquiring the land under them is taxed at insanely high rates, what, pray tell, would you think happens to the cost of paying rent to live in the subsequently built domicile?

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There are plenty of people

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There are plenty of people letting property sit idle for various reasons. These are very rich people and they should be taxed. They profit on Boston being a great and desirable city. Boston is a great and desirable city because of the people who live here and pay taxes, not from speculators and trust fund brats.

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The are taxed

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They pay property tax on said "unused property". Where is all this property the "very rich" own and are letting sit idle?

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Do you know why they let that

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Do you know why they let that property sit? Because it is so difficult to get zoning variances, capital and a market that will support the prices they need to sell at to make a profit all at the same time. Developers don't want to sit on property at all. But for most, it is a long play they need to make in order to not lose their shirt in this city with the rampant NIMBYism that blocks someone from even taking a huge 7000 sq ft lot and putting three units on it. Then if your lucky enough to have land in a NDOD, you have to get "design review" from the neighbors and BPDA. I invite you to actually look at the process and tell me that developers are making money risk free.

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There's a city tax break if

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There's a city tax break if you live in the unit you own. There's precedent for the city using tiered property tax to encourage behavior (people living and owning in units, encouraging investment in neighborhoods) Can we put a tax specifically on vacant property? Or, if not, what if we raised the overall tax rate, but kept the owner-occupant abatement, and also added a renter-occupied abatement, so landlords dollar costs don't move either?

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Obviously you are right.

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Obviously you are right. Higher taxes will simply be passed onto the renters in the form of higher rents. This is a problem all major cities face and no one has come up with a good solution. The best we can do is improve public transportation so that those pushed out can get back in to work.

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Councilor Lydia Edwards

Councilor Lydia Edwards (Charlestown, East Boston, North End) today proposed taxes on property speculation as a way to keep Boston from becoming another Manhattan.

Was the Manhattan reference from her, or did you add that, Adam?

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Let's see...

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Buy a shabby house, fix it up for a pretty penny, sell it for a prettier penny, pay capital gains tax. Isn't that enough of a tax? Or should we depress housing redevelopment to keep our neighborhoods gritty? I mean, I liked Boston in the 70's but today its much better. JMHO

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No it's not enough

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If you buy property with any intent other than to be an owner occupant, whether you intend to rent or flip the property, you are contributing to the over-inflation of housing prices that prevents normal, non-rich people from being owner occupants.

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You're right.

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You're right. I'd rather the dump with the junkies living in it than some speculator renovating the property and selling it to a nice family, or anyone else who wants to buy a move in property and not have to endure a renovation process.

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who says...

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Who says it is an either/or situation? What about regular middle class folk who can not purchase the over-inflated post-renovation units and want to get into the market and renovate themselves? Do we really only want the upper-upper-middle class and above to be able to afford to live here? Because that is what happens when regular people can't buy houses here that they can fix up, especially when they have to compete with flippers armed with cash.

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Renovation is VERY expensive,

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Renovation is VERY expensive, even if you're a homeowner hiring somebody else to do the work. I just signed for a bathroom renovation, a 5' x 9' room, not moving anything around, and just the labor is gonna be 20k, plus costs of materials. Sure there's DYI, but considering the reason I have to renovate is shoddy DYI pipework leaking everywhere, I'm doubtful that's the solution to all our problems.

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Oh really

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So where do you live? A condemned building?

Flippers are usually small fish who are returning housing stock to the market by making it habitable.

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It's amazing how many people seem to have missed all the ads

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Yes, there are people who buy rundown units and rebuild them into their former glory and sell them and wow, the neighborhoods is all the better (except when it happens all at once and then all the people who used to live there are priced out).

But that's not what we're talking about here.

Have you really missed all the commercials and ads for seminars on how to buy perfectly fine units, make modest improvements and then PROFIT? I suspect that's what Edwards is talking about - investors who buy large numbers of units, then flip them.

Or maybe you missed all the news of all the people who were indicted - and convicted - for doing this in Dorchester during the Great Recession?

We're not talking gritty urban pioneers rolling up their sleeves and turning a condemned house into a jewel. We're talking rentiers seeking to game the system at the expense of the shrinking number of low- and middle-class people struggling to stay in the city.

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Maybe On Some HGTV Show

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However in Boston, Massachusetts and its immediate suburbs, house-flippers are buying fully tenanted buildings, evicting all of the residents from their homes, for the purpose of reselling them to much wealthier people. (Often singles and couples who will take over a unit that previously housed a family of 3-6.)

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This.

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It's particularly acute in places such as East Boston and JP.

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I can't speak for Eastie, but

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I can't speak for Eastie, but I can tell you that in JP, the unit generally does have to be renovated first before people are willing to pay more for it. It's not complicated: Why would someone want to pay a bunch more money to live in a unit that hasn't been improved at all when, presumably, they could just buy the crappy unit themselves to begin with? The improvements may just be cosmetic but the buyer is actually taking a risk with the building and that risk is born out in the sale price. If you added a tax to that, some flippers would presumably decide it was not worth the risk and not bother buying it in the first place.

The problem is it doesn't stop there: The rich kids who were looking for housing are, well, still in need of housing, so the shortage continues until eventually the distressed properties will fetch so much money after rehabilitation that it becomes worth it even with the speculation tax. Meanwhile, anyone who's looking for a place that's not on the verge of being condemned AND not $700k for a 1br is SOL.

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Yes and the #1 reason is

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Yes and the #1 reason is NIMBY. Neighbors won't allow new construction to a density that makes it affordable to build and the city and neighbors drag out the process so it takes a year just to get permits. So what's a developer to do?

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Unconstitutional

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A tax directed at foreign investors would be an unconstitutional tariff. Only Congress can levy such taxes / tariffs.

And it feels kinda Trumpian, too. MakeBostonGreatAgain, keep them foreigners out

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Taxing rich people to help

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Taxing rich people to help out the middle and lower class is the complete opposite of Trumpian, though.

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You realize

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Taxes aren't intended to "help out" on subset of citizens at the expense of others, right?

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The trouble is that it doesn

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The trouble is that it doesn't discriminate between rich and poor, it discriminates between foreign and domestic. That is, fundamentally, a tariff and may also run afoul of many of our international trade agreements which generally don't allow governments to favor local companies over foreign ones (lest it lead to a trade war).

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Leave them alone

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There's palace in he'll for flippers and speculators.

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As always, the devil is in the details

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I too applaud her for taking on a serious topic with wide-ranging ramifications.

Many of the comments here assume huge new taxes or communism or worse. Some reasonable taxation on home flipping would not stop people from doing it, it would just change the economics. The key is finding a sweet spot where the flipping fee is generating a meaningful stream of revenue to fund affordable housing, without making it too expensive to bother fixing up tired properties in the first place.

(She should also merge this discussion with Walsh's plan to charge a fee to Airbnb owners. Getting short-term rentals under control is closely linked with speculation and flipping.)

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We already are becoming

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We already are becoming another Manhattan. In Boston you're either wealthy or homeless or borderline homeless. The housing being built is way too expensive. By the way, has the annual census for the homeless population in Boston come out from City Hall yet??

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No , Boston does not have the

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No , Boston does not have the vibe or diversity of Manahattan. You can still buy a nice condo in Upper Manhattam for 350K near the subway, near open space, near amenities, access to world class cultural institutions and it is MUCH safer, more tolerant and there is more opportunity than Boston. There are millions of middle and lower middle class people on Manhattan, there is NYCHA, HUD, mixed income, rent stabilization, a few rent controlled units and right to remain. Sorry Manhattan has Boston beat despite there own housing crisis. However the retail is getting pushed out due to speculative rents.....which already happened here...

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You need to broaden your horizons a bit

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There is more to Boston than downtown and the Back Bay.

I'm not disputing your overall defense of New York, but let's not get carried away. For starters, Manhattan does not have "millions of middle and lower middle class people" - the entire island has a population of about 1.6 million people and, sorry, there really isn't that much room for the middle class there anymore.

If you want to look for large numbers of middle-class people, you need to go into the outer boroughs, and really, the outer parts of those - like away from Williamsburg. You know, like leaving the Back Bay for, oh, Dorchester or Hyde Park.

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Then if she decides to flip

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Then if she decides to flip property of her own she better pay up on taxes!

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She's an owner-occupant of a

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She's an owner-occupant of a small multifamily and has been for years. I'm sure the definition of "flipping" would involve some time horizon - If you occupy the property for a reasonable 3-5 years or something, That's just normal life.

People who never occupy the property or do so for a matter of months and never intended to make it their home? Sorry, my tiny violin must have slipped between the floorboards. The ones I restored so I could walk on them, instead of ripping them out to replace with the cheapest linoleum on the market.

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Definition please

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I wonder if she even tried to define who would be considered a "flipper"?

If I buy a condo in East Boston with a plan to live there for many year but then in 2 years my job transfers to Springfield so I have to sell and move - am I now a flipper?

What if my wife gives birth to triplets and we need to sell and move to a bigger home 1 year after buying it, are we now flippers?

So yes, in the grand scheme of things it seems like a "flip tax" might curtail something but pray tell, how would the city manage it? They can't even manage the city's current affordable housing program. (My neighbor, a banker, bought an affordable unit 3 years ago then moved to NYC 2 years ago and has been renting out the 3 bedroom unit at market rate.)

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Given the history of the area

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Given the history of the area, what's up with the zealousness for taxes in Boston/Massachusetts.

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Yeah, I know, right?

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It's almost like people here have collectively realized that government is capable of doing good things, and we're willing to pay money in exchange for roads, schools, fire departments, and law enforcement ¯\_(ツ)_/¯

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