[threadbear]

$this->bbcode_second_pass_quote('gg3', 'I')'ll wade right into this by saying in no uncertain terms that home-flippers, defined as those who earn all or a substantial part of their income or profits by buying & selling houses to make money on short-term speculative increases in value (not including developers, builders, and real estate agents acting at the behest of ordinary buyers and sellers, all of which are separate cases), are scum.

For emphasis, home-flippers as defined above, are scum.

If anyone wants to raise a controversy over this I'll be more than glad to expand on the point later tonight.

[FossilFool]

Considering that housing accounts for a huge chunk of the US economy, it's not good for the economy. I forget what fraction of it that it is, does anyone know? Kunstler says it I think in the End of Suburbia. Your satisfaction of stopping a development will be considerably lessened by other effects of this on you.

[emersonbiggins]

$this->bbcode_second_pass_quote('threadbear', 'I')f they wanted to buy the same property, with minimum down, their payments would double.

[threadbear]

$this->bbcode_second_pass_quote('emersonbiggins', '')$this->bbcode_second_pass_quote('threadbear', 'I')f they wanted to buy the same property, with minimum down, their payments would double.

[Kooka]

$this->bbcode_second_pass_quote('gg3', '
')For emphasis, home-flippers as defined above, are scum.

If anyone wants to raise a controversy over this I'll be more than glad to expand on the point later tonight.

[MD]

$this->bbcode_second_pass_quote('Kooka', '')$this->bbcode_second_pass_quote('gg3', '
')For emphasis, home-flippers as defined above, are scum.

If anyone wants to raise a controversy over this I'll be more than glad to expand on the point later tonight.

[rogerhb]

$this->bbcode_second_pass_quote('MD', 'T')his is a deadly combination that along with an over-extended military and growing liquid fuels crisis will doom the united States economy to thrid world status.

[gg3]

Here's why house-flippers (as I defined them above) are scum.

In the human social ecosystem, like any other ecosystem, are the following set of dynamics: cooperation (voluntarily pooling resources toward a common goal), competition (vying for resources or a goal within an agreed rule-set such as the law or business ethics), symbiosis (cooperation for complementary rather than identical goals), predation (taking another's resources in such a manner as to cause the death -physical, economic, or legal- of the victim), and parasitism (taking another's resources while adding little or nothing of value, draining the victim without causing physical, economic, or legal death).

Of these dynamics, cooperation, competition, and symbiosis are constructive: they add value, they do not have a goal of destroying others. Any of those dynamics may destroy one or more parties as a side-effect (e.g. cooperators or symbionts plan poorly and fail, or one competitor gains market share and another competitor folds up as an un-intentional side effect, etc.) but not as a direct goal.

Predation and parasitism are destructive by design. The predator's behavior is directed toward killing and/or eating the prey (for example serious fraud, monopolism, etc.); the parasite's goal is to suck the prey as dry as possible without killing it ("milking" someone or something, e.g. welfare cheats, borderline-fraudulent scams that skirt the edges of the law, etc.).

Builders and developers create value by building houses where there were not houses before (or by substantially improving the housing stock in an area over time). We may argue that certain types of development are destructive and nonsustainable, but that's a different arguement. Real estate agents create value by enabling transactions among individuals who might not otherwise have the skill set needed to conduct those transactions. Property managers provide professional skill sets needed to manage rental properties for owners who may not otherwise have needed skills (and we'll duck the debate over landlord/tenant issues for the moment).

However, now let's look at house-flippers. They buy into an "undervalued" market, i.e. a market where homes are mundanely affordable. When they flock into such a market, they bid up the prices of homes, making them unaffordable to some buyers who could previously afford them. (One locust by itself is a curiosity; many together are a plague.)

If they choose to rent the properties until they decide to sell, they cause two direct problems. One, the tenancies are necessarily short-term, leading to increased turnover (decreased stability) in a neighborhood. Two, the rental rates are partially subsidized by the intention to profit on speculative increases. In the short run this undercuts the rental rates for properties that are intended as long-term rentals, forcing legitimate rental property owners to operate at losses or go out of business. This is a form of predatory pricing, similar to a chain store selling at a loss until competing local stores are driven into bankruptcy, and then raising prices. In the longer run, when the flipped properties are sold at higher prices, the opposite effect occurs: increased real estate values drive up rents beyond the level of the pre-existing market, making rentals unaffordable to some who could previously afford them. These factors destabilize what would otherwise be a stable market, causing externalized costs to others (externalities are a violation of the libertarian principle of voluntary transactions among consenting adults) in exchange for a one-time gain.

Flipping a house adds no value to the house. An increase in price, in and of itself, adds no utility to a product.

House-flipping creates an impression of a market shortage of supply, driving up prices in a self-fulfilling prophesy: prices increase market-wide but no value is added. This, simply put, is inflation. House-flipping causes inflation in the price of an essential product, thereby driving inflation generally.

In short, profit is extracted in exchange for nothing of value, the market is destabilized, and inflation is created. This is a paradigm case of parasitic activity: "milking it."

Therefore house-flippers are parasites; parasites are generally colloquialized as "scum," and so, house-flippers are scum.

And while I suppose etiquette suggests I should make mannerly exceptions or apologies toward anyone here whose activities (or whose friends' or families' activities) fall across this rather unpleasant threshold, perhaps because they are "otherwise nice people," the fact remains that most welfare cheats, borderline-scammers, and other societal freeloaders, are nice people too, or at least "charming." The fact that it's legal does not make it ethical, any more than playing the nearside of the law makes ethical the more common forms of usury.

[MD]

Well said gg3. To summarize, parasites are scum, and there are fewer "added value" activities in the United States every day. The only question that remains is:

How long can the leeching go on before the host collapses from anemia?

[untothislast]

$this->bbcode_second_pass_quote('gg3', '
')Of these dynamics, cooperation, competition, and symbiosis are constructive: they add value, they do not have a goal of destroying others. Any of those dynamics may destroy one or more parties as a side-effect (e.g. cooperators or symbionts plan poorly and fail, or one competitor gains market share and another competitor folds up as an un-intentional side effect, etc.) but not as a direct goal.

[Kooka]

$this->bbcode_second_pass_quote('gg3', 'B')uilders and developers create value by building houses where there were not houses before (or by substantially improving the housing stock in an area over time).

[threadbear]

When I was cleaning up after the last tenant, I happened to bump into an elderly gent on the elevator. I asked him in a predatory (but charming) way how he felt the building was being managed and if he noticed any changes in the last couple of years. He was able to verify my own ideas about tenant deterioration, and in a very colourful, entertaining, crabby old man type of way--I might add. He assumed that I was moving into the building, so I just let him go on. He said the main problem were those "yuppies" who couldn't get a large enough return on the stock market or from bank interest ,who decided to take advantage of the rental condo market. Boy did he hit the nail on the head. I felt like asking him if he'd do the same thing, if he was in that position. Of course he would.

People tend to follow the money and for every moral argument against that principal, one can be created for it.

I do however think tenants deserve all the protections they have and more and am apalled at the idea of speculation that displaces renters. That IS unethical. People who go in, rent out, knowing or suspecting they will have to hand someone their walking papers, truly suck.

[rogerhb]

What has capitalism got to do with ethics? The idea is that greed is good and can be harnessed. As a capitalist who wants maximum return I should turn people out of rental accomodation to put in their place people who will pay higher rent. No magic there.

The only limitation on capitalism is what is defined in law, so in this case it would be the signed tenancy agreement and law surrounding that.

If you are poor the best way to get by is to lower your expectations.

[threadbear]

$this->bbcode_second_pass_quote('rogerhb', 'W')hat has capitalism got to do with ethics? The idea is that greed is good and can be harnessed. As a capitalist who wants maximum return I should turn people out of rental accomodation to put in their place people who will pay higher rent. No magic there.

The only limitation on capitalism is what is defined in law, so in this case it would be the signed tenancy agreement and law surrounding that.

If you are poor the best way to get by is to lower your expectations.

[rogerhb]

$this->bbcode_second_pass_quote('threadbear', 'T')here is room for ethics in capitalism

[MicroHydro]

Getting back to the housing bubble...

Many parts of the Waikato have seen DOUBLING of house prices in the past 3 years WTF??? The bubble hasn't popped here yet.

[gg3]

MD, re. "How long can the leeching go on before the host collapses from anemia?"

Good point. Speculation of any kind represents an extraction of value rather than an addition of value. It can exist where there is the surplus to accommodate it. However it necessarily uses up surplus, surplus that could instead be devoted to truly productive activity. Once the level of surplus drops below some threshold, something has to break. The energy market in California in 2001 was an example of something that broke, with fraudulent activity driving both price increases and shortages to the point of revolving outages.

We will see more of this in our lifetime until it reaches the point where citizens rise up and prohibit it. Or if it continues, we will see more things break. If I could be more specific about those two predictions, I suppose one could "take it to the bank," preferably as an investment in a productive and sustainable future.

---

Untothislast, re. government, cooperation, anarchy, and competition: But too much of anything is an imbalance. Too much competition leads to anarchy, but one is not identical with the other. Conversely, too much government leads to over-regulation, micromanagement from outside, and stifles innovation.

Progressives tend to see the harm in unrestrained market forces; conservatives tend to see the harm in unrestrained government. This eternal debate provides a mutual check and balance (i.e. a fine-tuned system of feedback) as long as it's conducted on a basis of mutual respect and solution-seeking, rather than the divisiveness and polarization that has characterized recent politics in the US. I want to believe that there is a kind of wisdom inherent in the electorate, that will correct for recent excesses and bring about a return to more moderate and thoughtful public debate. The next two elections will be interesting test-cases.

---

Kooka, re. "...for profit." Yes, and business has to profit to live, just as humans have to eat to live. But living only to eat is Koyaanisqatsi, "life-out-of-balance," a state of disease. This is a viable distinction to be made in business ethics. The branch of law that enables the establishment of corporations specifies that the first goal of a publicly-traded company is to increase shareholder value. Accepting that as a given, there come the questions of how to do that, and what else to do alongside that.

As far as "anyone willing can purchase a home," apparently you haven't visited the Bay Area or other similar markets.

As for the difference between flippers and other types of speculators, see my point above (in this posting, responding to MD) about speculation in general. Most forms of speculation are parasitic, if one wishes to generalize: they add nothing of value, they are playtime for people with no original ideas, and they impose externalized costs on others.

---

Threadbear, I agree, there are some truly lousy tenants out there. One of the typical lousy-tenant games is what I call "dump and run," where they move out and leave a large pile of refuse for "someone else" to deal with, rather than disposing of it properly themselves. And personally, every place I've ever rented, I've taken care to return it in better shape than I got it, out of simple respect for the owners.

People do tend to follow the money; after all, fish follow the plankton and lions follow the gazelles. The questions of ethics and morals come about in relation to what is gained vs. what is lost vs. what are the impacts on others.

---

Rogerhb: What capitalism has to do with ethics is that both are subsets of the human social ecosystem; and in any ecosystem an imbalance between positive and negative feedback systems is fatal. We are riding a capitalist economy toward overshoot-and-collapse; had the Cold War come out in the opposite way, we might well have been riding a communist economy toward overshoot-and-collapse instead.

Saturday 26 February was the day at which the human population reached 6.5 billion.

Humans have the rest of this century to get it right, perhaps less time than that. This century is the final exam, and it will determine the outcome for our course of evolution.

And as for "the only limitation on capitalism is what is defined in law," that is one of the key issues we face today: how to preserve a free enterprise economy in a world of hard and absolute limits.

As for "poor... lower expectations," I will hope you mean that descriptively rather than proscriptively, and I'll say only that in the future we are facing, *everyone*, the wealthy included, is going to have to lower their material expectations and raise their expectations of themselves and their fellow humans.

As for "that chap called Jesus," his exhortations toward love and compassion are why even non-Christians recognize him as one of the great moral leaders of all time.


---

Easy choices are not the place where morals and ethics are tested, forged, and evolved. For that we have hard choices. Limited resources such as land and houses, and now oil and energy, and soon food and water, are the test cases and training ground for morals and ethics. Some humans will pass, and some will fail.

[threadbear]

$this->bbcode_second_pass_quote('rogerhb', 'W')hat has capitalism got to do with ethics? The idea is that greed is good and can be harnessed. As a capitalist who wants maximum return I should turn people out of rental accomodation to put in their place people who will pay higher rent. No magic there.

The only limitation on capitalism is what is defined in law, so in this case it would be the signed tenancy agreement and law surrounding that.

If you are poor the best way to get by is to lower your expectations.

[threadbear]

But wait...this is about a housing bubble, right? Okay, in the Victoria, Gulf islands area of B.C, things appear to be levelling off, but it's hard to tell at this time of year. Most people have adjustable rate mortgages and the bank of Canada is signalling rate hikes. The Globe and Mail is signalling no substantial interest rate hikes, (despite what the BOC says) as it would hurt exports. We have a tremendous amount of immigration into Canada from Europe, some from the US and that keeps the market solid, but I would love to see a drop of 50% to enable more people on lower incomes in to the market. The bank of Canada has done a huge disservice to so many on lower incomes by continuing big talk of rate hikes and then not following through. First time home buyers have been paying a waiting game, waiting for prices to drop as a consequence and now they may never get in.