In 2012 I was looking at investing in REITs. One REIT's pitch was that they owned such a large percentage of the rental housing in Tampa Florida, that even though vacancy rates were high, and rents were going down throughout the nation and other areas in the state of Florida, they were able to keep rents high in Tampa.
Disgusted, I realized the harm that REITs and private equity are doing to housing markets, and wanted nothing to do with it.
We need legislation that discourages housing as investment if we are to maintain housing as shelter. Unlikely, as wealthy folks who make money with the status quo run things.
We have spent decades telling American families that homeownership is the safest investment. We then spent decades enacting policies to ensure this is true. Do we think investors were going to just sit that out and ignore a safe and government protected investment?
Of course the more attractive we make home ownership as an investment, the more investors will flock to the market. We need policies specifically benefiting owner occupied homes or we need to stop treating the basic human need for shelter as an avenue for investment.
Neither seems likely to happen because we have already waited so long that the moneyed interests now have too much to lose and won't allow what needs to be done to happen.
> The role of institutional investors is still being studied, but the popularity of the narrative strikes at something dangerous: People want a convenient boogeyman and when they get it, they often ignore the structural problems that are harder to combat. Housing undersupply is the result of decades of locals opposing new home building. It’s not something that can be blamed on Wall Street greed and the nefarious tinkering of a private equity firm. And that’s a much harder truth to stomach.
I'm involved with a local YIMBY group, and what I see over and over again is my neighbors stopping homes from being built. No wonder investors think it's a great place to put some money - other people do the dirty work for them!
Yes, the investors are the symptom and not the cause. They are going where the money leads them. However a big problem with institutional investors is that they also institutionalize NIMBYism. They won't just block housing in a select neighborhood, they will block housing everywhere and they put more pressure on the federal government to ensure that housing is protected as an investment class. Both will contribute to worsening the issue.
Plus even at low levels NIMBYism is often about investment. Sure, many object to new housing for reasons like "it will change the character of the neighborhood". But many others object because they are worried about the value of their own home going down. They are treating their home primarily as an investment because that is what they have been told to do their whole life. If I could snap my fingers and magically realign our political goals to maintaining stable home values instead of having them ever-increasing, many NIMBY objections would fade away.
Investors do not at all have the votes or weight at a local city level in most cases, especially large ones from out of town.
Go to a planning meeting about some housing that people are pissed off about because reasons ( https://news.ycombinator.com/item?id=32569768 ) and you'll find a whole bunch of your neighbors. It's not institutional investors blocking this stuff, by and large.
> they are worried about the value of their own home going down. They are treating their home primarily as an investment because that is what they have been told to do their whole lives
Yes, that's much closer to what I've observed in person fighting these fights.
>Investors do not at all have the votes or weight at a local city level in most cases, especially large ones from out of town.
Yes, the institutional investors aren't going to be in your local council meeting. They will be meeting with your state assembly members. They will be meeting with your Congresspeople. They won't be literal NIMBYs focusing on anyone's "backyard". However they will be working towards the same goals at NIMBYs, just at a larger scale.
It's amazing the power those subjects have to turn "YIMBY" into "regulate me harder daddy".
The cognitive dissonance required to enable this about face is a bad thing and seems to be becoming more and more prevalent and accepted in all sorts of public policy contexts.
It's because it's "regulate my neighbor" and it doesn't currently apply to them, until they need to remodel or whatever years down the road. Most people don't realize the full impact of the legislation they support.
How would they vote at all? I’m not aware of any local council that grants votes based upon tax dollars paid or acreage. It’s one person one vote for actual residents.
Now lobby dollars are another story. But renters can fix that by actually voting.
>How would they vote at all? I’m not aware of any local council that grants votes based upon tax dollars paid or acreage. It’s one person one vote for actual residents.
I don't know of any local councils that grant local votes to anyone -- they vote themselves. This should spark an idea of how rich people's dollars outweigh poor people's input. They only have to convince half of the council to vote one way. This can be done through wining and dining, sending "experts" to make presentations, making promises, and so on.
They can run/fund NIMBY groups that encourage people to vote their way.
Local to me, we've had a few causes pop up with surprisingly well-run NIMBY efforts opposing them in recent years. The amount of money raised and the signs and slogans are way too good to be the product of the actual locals who speak out on behalf of these groups - somebody else is clearly funding them and doing some marketing.
"They are treating their home primarily as an investment because that is what they have been told to do their whole life."
It's not some psyop that has duped an entire nation, it's people accurately recognizing that their home is the biggest purchase they will ever make in their life, it's almost completely done with debt, and most don't want to end up underwater.
> it's people accurately recognizing that their home is the biggest purchase they will ever make in their life, it's almost completely done with debt, and most don't want to end up underwater.
What is those people's second biggest purchase which is also usually done with debt? Does anyone believe that the government should enact policies to ensure that car prices always increase so they would be a better investment? Houses obviously have a longer lifespan than cars, so I'm not suggesting they should necessarily depreciate the same way, but there is also no reason housing should always be appreciating.
We have this idea that the price you sell your home for should always be higher than the price you bought it for. There is no reason for us to preserve that idea beyond the fact that people have now internalized that idea and plan their financial lives around it. The longer we allow that to continue, the harder it becomes to change, but the idea itself is not some fundamental requirement of society.
The goal should probably be something close to price stability. If prices bounce all around, up and down, people pay more attention than if they were just kind of 'there', and you could buy or sell whenever the need arose in order to move into housing that better suits you at a given point in your life.
Exactly. True stability is likely unattainable, but I would love if it was a governmental goal like a steady small positive rate of inflation is a goal. There will be temporary changes like the last year with inflation. But for the prior 30 years there has been a very steady roughly 2-4% rate of inflation. Could you imagine if the federal, state, and local government fully committed to steadying housing costs? It would be amazing. It just seems politically impossible to get to there from here because of the people who would be hurt by that transition.
I'm not sure exactly what the "this" is in your comment. The government has largely accomplished their inflation goal as that has been roughly what inflation was for 30+ years, but they aren't all powerful and can fail that goal like they have in the past year.
The government could put the same energy to keeping housing costs in pace with inflation. They don't. Instead, the government tries to keep housing costs rising faster than inflation because housing is viewed as an investment. They have been successful in that goal as housing is greatly outpacing inflation.
In order to get inflation up to 2% the extreme measures of the last 15 years which drove up the cost of housing to such extreme heights in the first place were taken.
> The government could put the same energy to keeping housing costs in pace with inflation. They don't
That's exactly what they did. Not just housing, but also food, cars, ... It's just that housing costs respond a lot better to credit availability than most other things. And yes, generally it's things that are seen as an investment that respond to credit availability.
The government has no direct control over any kind of pricing except the price of money. Also known as credit availability. They raise house prices 5% per year, so that when food and fuel refuse to adjust to inflation, it averages out to 2% per year. This caused larger price rises on everything that is seen as an investment (houses, education, cars, ...) than on things that are not.
>In order to get inflation up to 2% the extreme measures of the last 15 years which drove up the cost of housing to such extreme heights in the first place were taken.
Housing costs greatly outpacing inflation is not a recent phenomena of the last 15 years. In fact, home prices increased faster in the prior 15 years than the last 15 years.
>The government has no direct control over any kind of pricing except the price of money.
I'm not interested in debating the meaning of "direct control", but one rather direct control they have is the federal government could repeal the mortgage interest deduction. That would immediately decrease the financial incentive to buy a home therefore decrease demand and lower prices.
> ... home prices increased faster in the prior 15 years ...
Only because the averages get pulled down in places where people don't want to live. Plus effective inflation going up (you know, the inflation including housing and education, not the made up government inflation number)
> I'm not interested in debating the meaning of "direct control", but one rather direct control they have is the federal government could repeal the mortgage interest deduction. That would immediately decrease the financial incentive to buy a home therefore decrease demand and lower prices.
Repealing it would create a big advantage for investing in homes rather than buying them to live in them. This sounds to me like the opposite of what you want. But maybe I'm an idiot.
Reality: for any resource there is supply X and demand Y, in specific markets.
X > Y: it matters a lot less what the exact policy is.
Y > X: someone will be very, very unhappy.
Rent prices, what we really care about, are not determined by who owns a house. They are determined by the amount of houses.
No one expects that resale value to go up. No one suggests that the government creates programs to prop up that resale value. People understand that owning a car gives them value and they are fine paying the difference between the purchase price and the resale price for that value. Why should homeownership be different? Why should homeownership not just be free but profitable? It makes no sense other than homeowners were told it was true, demand it be true into the future, and they (now joined by institutional investors) are a powerful voting block.
Look at what people actually do, not what they say for cheap virtue points online.
Reliability is way, way down the wish-list. People don't really consider it until all the other key features they want are very solidly satisfied. And even then the take rate is maybe 50%. For every jerk in a 4Runner or Pilot there's an equal and opposite jerk in a Landrover or Tiguan.
The people in Landrovers care less about losing money than the people in Honda Pilots, because they have a lot more of it to spare. I'm not sure they're comparable consumers for this reason.
There's two groups of people I can think of that do this:
- People who like to frequently change cars, not so frequent as to lease but still prefers to let it go between 50-100KMi. (Contrast folks who sell past 100k or drive cars into the ground, they care more about long term repair cost.)
- People who are using resale value as a proxy for reliability.
I suppose 'lease-e' may fall into this category, also by proxy (as high resale value means lower depreciation, lower lease cost.)
Yeah, it's further not psyops because of the simple monetary incentives, namely mortgage tax deduction, and primary home owner capital tax excluding the first 250/500 of profit on a sale. Investment purchases have a few incentives as well.
There's an over reliance on 'ideas' in this message thread, and an under reliance on simply trusting people to reason their own self-interest.
>Yes, the investors are the symptom and not the cause.
absolutely. If anything investors provide for liquidity of the market.
The real issue is that investors, ie. the rich, are getting more and more ability to buy real estate while the middle and the low class are getting less and less capable of doing so. The reason is the huge sloshing amounts of money being given to the top, and thus those money causing a strong push for the price rise of the assets (back at the beginning of pandemic i said that it will result in the biggest redistribution of wealth https://news.ycombinator.com/item?id=23924777 toward the rich and large ones)
> absolutely. If anything investors provide for liquidity of the market.
No, no, no. "providing liquidity" is not a good thing unless liquidity is actually a problem almost everywhere people talk about this.
The "liquidity" provided by high-frequency traders in the stock market does not benefit anyone but themselves. For everyone else the difference between trading in minutes and hours (or even days) is near-meaningless. And they don't provide liquidity for seldom traded stocks.
And on the housing market they are not providing liquidity for the market in general. They are buying and then renting those properties out. Since they are all-cash offers they often trump "regular" buyers out of the market, even when offering the same price. Again, the only ones who benefit by this are those investors themselves.
These investors are one of the major forces pushing up the prices, the are part of the problem, not the solution.
Liquidity is a huge problem in real estate. Right now, every single person forfeits 5-6% of their home value every time they exchange homes. That's $20k on average. Reducing the spread on homes by providing liquidity would be a huge financial boon to all classes except realtors.
Is that true if you sell your home yourself? I've never bought a home, but I know I can transfer a title to a vehicle without forfeiting anything beyond the sales tax and the $50 title fee. Is there no way to sell/buy real estate directly like that using cash transactions direct between parties?
No, I misspoke by saying “every single person.” It’s true that direct off-market sales can avoid paying realtors and two parties agree amongst themselves. Depending on jurisdiction it’s around $2k for all the title transfer, notary, and other fees. But this is quite uncommon.
It’s only uncommon because people know they can get higher bids in the open market, and use a broker to facilitate deals. If housing prices weren’t always going up, that could change.
> The "liquidity" provided by high-frequency traders in the stock market does not benefit anyone but themselves. For everyone else the difference between trading in minutes and hours (or even days) is near-meaningless.
That liquidity is also what's driving the price of executing a retail trade to or below zero. You used to have to pay fees whenever you bought or sold stock.
Can you explain why that's true? I understand why it would be true if the broker provides that liquidity for you and settles the trade immediately, while taking the risk that on his end it may settle at a different time and place. But If I just put an order directly on the exchange book using full collateralized cash in my trading account, why would that cost my broker more? Wouldn't this liquidity thesis mean that brokers should charge more for stock trades that have less liquidity?
To be honest, I just figured they were able to eliminate fees by front running and/or selling my trading information.
The broker isn't selling your trading information. He is selling the opportunity to trade with you, and quantitative traders will pay him for that, because you are -- in all likelihood -- really bad at trading stocks. The professionals are so convinced that you have no idea what you're doing that they're happy to give you better-than-market prices, because the market is going to move against you anyway. (And of course, on average they are correct.)
You could make an argument of the form "HFTs have made trading so cheap that people are hurting themselves more than they used to, and we need to bring the price of trading back up so that people won't be tempted". But that is a pretty different argument than "HFTs don't provide any value". They clearly do. When you place an order to buy or sell stock, you pay lower fees and you get better prices than you otherwise would, because you look just like a million idiots.
Weird ... if you look at statistics investors are not “the rich”, they’re pensioners and people saving up for pensions. This is done by proxy, through state-run pension funds.
Yes there’s a few rich in there and it’s not like they’re egalitarian, but it isn’t Jeff Bezos either.
"Sure, many object to new housing for reasons like "it will change the character of the neighborhood". But many others object because they are worried about the value of their own home going down."
At least in my area, it's all about people wanting the area to remain semi-rural. They generally aren't opposing low density SFH in independent builds. The people in my area are against many development and medium density homes.
That feels like a pretty cheap and dishonest dismissal to me, since in my extremely-homogenous neighborhood, all the "low quality tenants" do look just like me.
The two tenants within a few houses of us in either direction would fit my definition (and likely that of many other folks) of "low quality tenant": don't bother picking up the beer can out of their yard, don't mow (at all), loud-ass exhaust on their shitty cars, etc. More of an eyesore than a contribution to the local community, and causing me to realize why HOAs come about.
But, yeah, it's all because they have brown skin. Oh, wait, the tenants in question are whiter than I am.
As a renter I've found the neighbors dump the beer cans, their shitty trailers, and whatever other bad habits they have in my yard because they know the landlord is off in another state and everybody who lives here for 2 years and then moves on has no rapport with the authorities so it can only hurt us if we try and do something about it. The landlord is an old man who basically does 0 maintenance to the house, so the house is slowly turning into a pile of garbage that an unmown lawn actually look more fitting with.
If you want to know why we don't bother, it's because the owners of the surrounding houses use our place as dumping grounds and the owners have been there for decades and know all the housing inspectors and police. It seems pointless to even bother when the landlord wants the house to fall into disrepair and the neighbors will use their connections to authorities to dump on our grounds again as soon as we clean it up. On one occasion I was sent a notice that I would be imprisoned because of trash my neighbor put somewhere not even on our property and before I even moved in. I dutifully cleaned it up because it was clear I was going to be framed, but as that took the entire weekend I had little energy leftover afterwards to do yard work around my own place after being exhausted dealing with the neighbor owners.
Meanwhile the neighbors' house indeed did look spotless because they dumped all their trash on the renters' yards.
The examples I list look just like me: white, male, and a little on the scraggly side. And at least one household member in each example works at Microsoft. So I am a loss at what you're driving at in reference to class.
We know how people treat rental cars. I don't know why it's a big shock that people will treat rental properties in the same manner, and why other folks would rather not live next to that. Blame race and class if you like, but to not allow at least a little more nuance to the discussion is silly.
If people are going to do restrictions about who lives where, HOA's are probably better than zoning. They're more localized, and the costs of administering them are born by those who perceive them to be beneficial.
I'd never live in one, but to each their own. I'd rather have someone choose one of those in a free market than get involved to zone the entire city one way.
I think that's less of a concern right near me. This is basically farm land or woods being turned into medium and low density developments. I think that comes into play with cheaper or higher density housing (either the legitimate low quality or the racist low quality version).
It seems so clear that the way forward is not to try to convince people to sacrifice the foundation of their financial security but is rather to compensate them.
Make it so neighbors are competing to host whatever they are NIMBYing about currently because it comes with a package of goodies that will offset the problems. It doesn't have to include much new spending, rebalancing or reprioritization of existing resources to ensure fairness can be part of it.
Is this the norm? I feel like I haven't heard it often during debates over unpopular new developments.
I've moved from Toronto downtown(ish) to a commuting/satellite community (for love - my wife and her family all live there:).
It astonishes me how many people in that town are complaining how it used to be small and full of farm fields, and now there are all these new people and houses and neighbourhoods, and we need to stop the expansion.
Every.Single.One. of them moved there within their lifetime. NONE of them were born there. THey did the exact same thing they are now complaining and trying to stop others. None of them, when asked, are even remotely willing to move to a high density downtown condo, if they are so committed and passionate to preserving the fields and small community.
It absolutely astonishes me, the utter lack of self-awareness: why are you expecting others to be different than yourself?
---
(it's like when you're stuck in traffic, and somebody in your car gets frustrated "Why are all these people here? Where are they going??". It's not like everybody else has conspired to harm us - we are in this traffic, going somewhere else, contributing to it and making everybody else slower. It is US, not "them" )
So that's only one side of the equation. The other side is distribution. Perhaps we could have policies that create jobs in areas with shrinking populations or abundant cheap land and lax zoning. Nobody seems to talk about this.
You can lead a horse to water but you can‘t make it drink. Job poor areas in the US have no shortage of incentives or policies designed to lure companies there, but have had little success over the past few decades.
I'm wondering why that is. I would think that with the growing movement against NIMBYism that there would be enough people fed up with those sorts of policies to start moving out of the areas they don't agree with.
* people find the stability of the known more compelling than the danger of the hypothetical. Employers want to be where their clients and employees will be, residents want to be in a place with decent shops and services. This kind of chicken/egg problem is usually the failure of most planned towns, and the only successful ones are usually a new capital or something because the government doesn‘t care as much. And even then that isn‘t guaranteed; Sejong is supposed to be the capital of South Korea but employees still hate it because even with cost of living issues and long commutes Seoul is more compelling.
* cheap land is usually cheap for a reason. Land in the middle of the desert West probably doesn‘t have the required water rights to support habitation. Land in the middle of nowhere in general has few services and high logistics costs. Former industrial land requires environmental remediation. Foreclosed land may require paying outstanding tax bills. And those are the relatively straightforward problems, to say nothing of places with high crime, bad schools or other complex societal issues.
* a lot of these places are going to turn NIMBY if a bunch of outsiders come, buy up housing and export their cost of living crisis to their community. It doesn‘t take that many people to tighten up the housing market in a town of 10,000.
"And those are the relatively straightforward problems, to say nothing of places with high crime, bad schools or other complex societal issues."
It seems every city has areas within it with these issues. So this shouldn't affect the possibility of moving to areas that have decent schools. And there are solutions to many, like private schools can be a good option especially if the yearly cost is less than the property tax in a HCOL area.
"It doesn‘t take that many people to tighten up the housing market in a town of 10,000."
It doesn't have to be a huge influx, nor all at once. The point is that zoning is less restrictive and land is cheaper, so people can build. The depressed areas have relatively high vacancies anyways.
"Employers want to be where their clients and employees will be, residents want to be in a place with decent shops and services."
Some people want nature. Shops aren't as much of a concern today with internet delivery. I find it highly suspect that people all want exactly the same thing. It might be more likely that the people in one group are just being left behind.
> So this shouldn't affect the possibility of moving to areas that have decent schools.
It doesn't, but how much cheap land in Goldilocks-type areas really exists? The housing price problem is already becoming national in scale.
> It doesn't have to be a huge influx, nor all at once.
That ship sailed a long time ago. It already is. It turns out 1% of Californians leaving annually is still half a million people swarming other places. You cannot run into a town in the Mountain West or PNW where locals aren't complaining about Californians driving up prices. Encouraging more people to do this is going to exacerbate the problem.
> Shops aren't as much of a concern today with internet delivery.
There's still a baseline. To use your example of Appalachia in a different comment chain, consider that people in 40 counties in West Virginia today are food deserts without easy access to fresh food. Instacart is more expensive and not available everywhere.
"It doesn't, but how much cheap land in Goldilocks-type areas really exists?"
That's my point - it doesn't have to be perfect. Otherwise nothing will solve it.
"Encouraging more people to do this is going to exacerbate the problem."
They should be moving to places that are shrinking. That's what I'm suggesting.
That food desert thing is a joke. They're talking about supermarkets, yet there are other sources like farm stands. 10 rural miles is nothing. That might be a 10-15 minute trip if you've ever driven in WV and seen the speeds people drive.
As someone who has wanted to desperately build on "goldilocks" land for a long time, the thing that has held me up is not zoning but the uniform building code. I simply only have enough money to build a shack. There are plenty of these out in the West, but at some point someone said "nah fuck them kids" and decided great-grandaddies shack is fine for somebodies grandkid to live in but if I build new property of literally the same thing I've committed a cardinal sin of safety. This means even though a shack would still be cheap to build, their supply is artificially limited (indeed irreplaceable) to the point a shack is practically as expensive to buy "used" as a fully up to code newer construction. And thus again I am cast aside, doomed to rent some overbuilt up-to-code construction.
There's the option of a tiny home on wheels. Most states have low sqft requirements for permanent structures, like 650 sqft. If you do the work yourself using professionally created plans, it's possible to do it cheaply and in stages. Once the shell of the house is complete, finishing the inside can be done cheaply by buying discount materials whenever they are available. This is stuff like returned paint and carpet or vinyl remnants (perfect for a small house with small rooms). You can even make a list and ask the local Lowes manager to give you a call if stuff is available. Then there's stuff like Craigslist for free or cheap sinks, counters, furniture, etc.
The biggest issue/cost isn't the actual building codes, as those are easy to meet in most places. It's the sanitation requirements. Those old shacks were allowed to have outhouses, or at least septic systems that would no longer pass. Septic systems are a pain to put in and are quite expensive.
It's a good point. The other idea I had was creating multiple <200 sq ft structures, so that none of them met the minimum area required for a permit and then using an outdoor hallway to join them.
> That's my point - it doesn't have to be perfect. Otherwise nothing will solve it.
> They should be moving to places that are shrinking. That's what I'm suggesting.
And we're back to "you can lead a horse to water but you can't make it drink."
> That food desert thing is a joke. They're talking about supermarkets, yet there are other sources like farm stands. 10 rural miles is nothing. That might be a 10-15 minute trip if you've ever driven in WV and seen the speeds people drive.
* Supermarkets in the US provide all kinds of out-of-season produce throughout the year. This is what consumers have come to expect, and is an inherent limitation of farm stands.
* Those most struggling with COL also struggle with the cost of transportation in the US, so driving a dozen miles is a non-starter.
And move where? Most of the cities that are growing have a housing crisis. Most of the cities that are shrinking can have major safety issues - see @pontifier's misadventure in Pine Bluff, AR[1] for a particularly extreme anecdote.
There can be a vicious cycle driving safety concerns. If people being jobs to the area (pontifier didn’t) then things can get better. There are countless other towns and cities and they don't all have a safety problem. There are plenty of smaller cities in Appalachia that could be good candidates.
I’ve spent time in Western, PA and while it’s definitely a lot safer than Pine Bluff, feels like there’s lots of issues with pollution, blight, and opiates even with fracking jobs and money coming into the area.
Opiates are literally everywhere, even in affluent areas (Chester County's main line area has issues, but they look different since they have money). Blight (assuming this is houses that don't look great) is going to occur anywhere there's a lack of money. The reason jobs don't fully fix the blight is that many of those people are on a fixed income and retired (elderly are an outsized portion of the population since the kids had to move away for work). The people who do have jobs tend to have well kept properties. I'm not sure about the pollution problem aside from some sulfur creeks in the region.
I'm sure there are plenty of candidate cities throughout the overall region, and it would likely depend on what the industry is. Someplace around Indiana PA would be good if you need semi close access to a commercial airport, a larger city, or a college. Erie could be similar. Johnstown PA area is good if you have government contracts, defense work, or need a regional or shipping airport. Bedford or Breezewood PA can be good for warehouses and shipping with the highways. Medium to small companies would be well served to position themselves between two medium/small towns for cheap land and larger workforce pool without being near the larger cities, like Millville and Stillwater as an example.
Workers don't want to move to sparsely populated areas because there aren't many jobs, and companies don't want to do it because there aren't any workers.
E.g. I wouldn't mind working in a sparsely populated area, but there's a good chance my employer would be the only one I could work for (without giving up and working retail or something). My employer doesn't want to relocate there because good luck convincing people to relocate there given the above.
There are infrastructure problems, too. Good luck getting a business class 40Gbps Internet connection in Nowhere, Wyoming.
It would go a long way if remote work was normalized (or legislated), and the FCC actually forced ISPs to run reasonable Internet connections outside of major metropolitan areas.
The notion that housing prices are being driven up by restrictive zoning ordinances is true for expensive coastal cities like New York and San Francisco, which represent a huge minority of the housing in the United States.
The above linked Vox article refers to another Vox article to back up its general claim that "Housing undersupply is the result of decades of locals opposing new home building."
Then, this referenced Vox article references the following study as if it applies to all housing in general:
"In 2017, Yale Law professor David Schleicher wrote a paper called “Stuck! The Law and Economics of Residential Stagnation.” In it, he documents local restrictions on housing development, arguing they have become so overbearing that the increase in the cost of housing and rents has made moving to a better place impossible for millions of Americans. Local zoning regulations are strangling opportunity."
This study however is clear that the impact of restrictive zoning policies is localized particularly to coastal metro regions beginning in the 1970's:
"Something dramatic happened to land-use regulation in the 1970s and 1980s: it became much, much stricter. Importantly, while this phenomenon affected all types of municipalities—from urban downtowns to inner-ring suburbs to exurbs—it only occurred in particular regions of the country. In particular, coastal metropolitan regions like San Francisco, New York, and Boston restricted construction in cities, suburbs, and exurbs. Because these popular regions restricted new housing, demand for living space outpaced supply. Housing prices soared, but population growth did not.
In contrast to these coastal regions, Southern and Southwestern metropolitan areas like Houston, Phoenix, and Atlanta continued to impose minimal land-use restrictions. Though demand to live in these regions grew as well, this demand led to increased housing construction and population, rather than substantially higher housing prices."
Most of the recent growth and migration in population has been occurring in these Southern belt areas, which have limited restrictions on building. Housing prices is a demand driven problem, not a supply problem throughout most of the United States.
Granted...this particular situation was unique as the development was market-rate units, not low-income, in a communal living layout. There were other concerns on part of neighbors (some real, some silly, and others just simply obstructive). This, along with CEQA in California have been constantly used by existing members of a town/city/neighborhood/etc to reduce additional development of any kind, not just low-income.
This is at a point where NIMBY isn't even the only acronym anymore, BANANAs is the new one the kids use these days - Build Absolutely Nothing Anywhere Near Anything.
Thanks for introducing a new (to me) term, i.e BANANAS. Upon searching i discovered a few others:
NIABY: Opposition to certain developments as inappropriate anywhere in the world is characterised by the acronym NIABY ("Not In Anyone's Backyard"). The building of nuclear power plants, for example, is often subject to NIABY concerns.
NAMBI: ("Not Against My Business or Industry") is used as a label for any business concern that expresses umbrage with actions or policy that threaten that business, whereby they are believed to be complaining about the principle of the action or policy only for their interests alone and not for all similar business concerns who would equally suffer from the actions or policies.
BANANA: is an acronym for "Build Absolutely Nothing Anywhere Near Anything" (or "Anyone").The term is most often used to criticize the ongoing opposition of certain advocacy groups to land development. The apparent opposition of some activists to every instance of proposed development suggests that they seek a complete absence of new growth.
NOPE: (Not On Planet Earth)To leave an uncomfortable situation, usually quickly.
LULU: Locally Unwanted/Undesirable Land Use planning.
NOTE: Not Over There Either (meaning is same NIMBY)
SF real estate is just bitcoin HODLing with real life homeless camp attached. The entire property value is propped up by artificially voted on rules greatly raising the mining difficulty to entrants and it's getting exponentially more difficult with time.
There are reasons for that, but they are generally bad ones involving people not wanting to live near other people who look like the author of the article, even if they won't say that part out loud.
Higher density housing is a massive component of building lower carbon footprint cities, as well as making our cities more financially resilient. It's also something that can increase equity a lot by giving people with lower incomes access to nicer areas and schools.
In the UK social housing has a bad reputation because poor people are far more likely to just be nightmares to live nearby.
I lived in one throughout my entire childhood. Around half of people were OK, the other half just generally dickheads.
That has 0 to do with racism. Many UK towns have trivial populations of non-"White British".
The problem is mostly that over time (years or generations) poverty gradually turns people into a shell of what a well adjusted human could otherwise be.
You can make a decent argument that concentrated poverty does cause some problems. Which is why you should do your best to spread all kinds of housing throughout a city, including plenty of upzoning in wealthier areas.
And then what, you expect rich people to move in? They won't. Poor people are going to move in. And the rich people who made that area nice in the first place are going to flee, because it will turn into a not-nice area.
And your nice, quiet suburb is unlikely to get many high-rises if it’s actually far enough away from the nearest city center, because it doesn’t particularly make sense to build towers in the middle of nowhere.
By contrast if your suburb is nice and quiet despite being right next to a city because decades of policy have locked it in place and it’s pricing people out… too bad? Other people need housing too and outward from an already dense city is where it makes the most sense to build them.
Stay in your concrete hellhole, and stop acting like you know what's best for everyone else. If I wanted to live like you, I'd live where you do. And no matter how much you want my area to change (because you clearly can't stand for people to live in ways you don't agree with) it's not going to.
> Stay in your concrete hellhole, and stop acting like you know what's best for everyone else.
So the side advocating for upzoning (allowing people to build what they want on their own properties) is "acting like they know what's best for everyone else" while you, advocating for strict limits on what others can do on their own properties according to your desires, aren't?
I guess we can make this consistent if you admit you're doing something you know isn't best for everyone else, and aren't even trying to. Which would be fine if you weren't using the state to support your aims.
If we don't do that, and both sides are trying to do what they think is best for everyone, this is a difference in degree not kind. There obviously need to be limits on any zoning.
> because you clearly can't stand for people to live in ways you don't agree with
You are in support of using the coercive power of government to restrict your neighbors from living in ways you disagree with, if those ways include building more housing!
We should stop pretending it's a choice between single-family houses and 30 story high-rises. There are lots of seattle neighborhoods, for example, where people bought single family houses 20, 30, 40 years ago because of the character of the neighborhood and now suddenly the yimbys have changed the zoning to accept seven story buildings. A good friend of mine has lived in and cared for his home for 25 years and now the houses bordering him directly to the south have been sold and a 7 story apartment building is going up 5 feet from his property. Once it's built, he will literally never get direct sunlight again. That's pretty significant.
What your friend has observed is what happens when you keep it bottled up for years and years.
Instead of gradually moving to 4-plexes and 3 story apartments and narrow townhomes, when all that demand finally gets unleashed, it's a larger change.
Change can be disturbing, so we should aim for more frequent gradual changes than 'quantum leap' type stuff. That said, at least your friend has options in that their land is probably worth a ton of money now and they do have the possibility to get out and go somewhere more to their liking.
Tons of people in high cost cities like Seattle have no home at all due to housing costs.
The fact that the change is “sudden” is a direct result of the fact that the ability to build has been restricted for so long. If building densely had been allowed all along, things would get built out whenever it made financial sense to do so, and you’d be able to see the trend coming gradually from a mile away. But now you’ve got all these low-density areas right next to (or in!) cities that have had artificial limitations on building for so long that when you do upzone a part of it it’s like letting out pressure all at once. The demand has grown with the population all this time but it hasn’t been met.
It’s more important to me that people have places to live than that existing homeowners everywhere can have a neighborhood that never changes. The two are incompatible. It would be preferable for that change to be gradual, but given the current state of things I don’t see how that’s possible.
The public transit infrastructure will make a huge difference, in my opinion. The light rail heading north into suburbs where there's tons of space to build will make living outside the city itself much more bearable for people who work in the city. A modest single family home may still cost $1.5 million in the city, but at least people will have better options that don't mean a two hour commute.
Good idea. We'll start with where you live. You get to put up with the noise at all hours, the high crime, and the generally shit condition lazy people keep their neighborhoods in. After living in it for a few years, you can come back and tell us how great it is.
"You can make a decent argument that concentrated poverty does cause some problems."
What differs between it being concentrated or spread out? I see you're making the argument that it should be spread out, but I don't see any explaination of the benefits.
You're never going to win anyone over with the tired "if you disagree with me, you're a racist" BS.
Low-income, high-density housing attracts problems. It has literally nothing to do with race. You could guarantee that the high-rise apartment building you want to construct down the street from me would be 100% filled with people who look like me, and I'd still oppose it.
Please don't take HN threads into flamewar hell. Your comment was a noticeable step hellward. You can make your substantive points without swipes, name-calling, and flamebait, so please do that instead.
Americans spend zillions of dollars every year visiting Europe, which is full of high density housing. And come home raving about how much they love it. It does not 'cause problems'.
There's a correlation between crime / neighborhood blight and low income residents.
That correlation may be because of historic and current structural racism, lack of access to mental health services and a social safety net, or a myriad of other socio-economic issues, but it doesn't change the fact that it exists.
Insinuating that anyone who brings up those issues is racist isn't helpful.
It would be more productive to say "Yes, I understand why neighborhoods might be resistant to denser, low-income tolerant development, and here are some ways we could incorporate that fact into a productive plan..." E.g. building more mixed-income developments.
Of course, they love visiting and perhaps the idea of it. Then they realize they can't have their larger houses, cars, etc that they want. And that government will be more involved in their lives (zoning, policies, prohibitions), which is fairly reasonable given the track record in many places in the US.
This always strikes me as an unsatisfying response. What about America is so fundamentally different than Europe that would make the same policies that work there not work here?
Every time I’ve seen this type of argument brought up, it’s fallen flat when the same infrastructure is built here because it does end up working. We’re really not so unique.
> What about America is so fundamentally different than Europe that would make the same policies that work there not work here?
And yet, if I suggested that the US do something a lot of (all?) European countries do, like having to present ID when voting, I’d get an endless stream of replies about why that’s fundamentally impossible in the US (and racist, naturally). And that’s a FAR easier problem to solve than pie-in-the-sky “make everything more dense and have high speed rail everywhere and European-style public transit in every city” daydreams that are so popular.
Maybe some things really aren’t that easy to do in the US.
Complaints about this usually revolve around the fact that voter ID laws aren't accompanied with increased funding for and availability of voter ID services. Show me a law where they added Saturday and late-evening DMV services, or pop-up voter ID registration services at grocery stores, pharmacies, post offices, churches, community recreation centers, and schools.
The purpose behind these laws is quite clear. It's fundamentally unfair to add voter ID laws to depress turnout under the guise of "election security".
Well Sweden has a lower population density than the US and there is still plenty high density housing, so your argument is?
I think it would be good to do away with these simplistic this or that doesn't work here because... The US society was remodelled quite dramatically to be very car centred over a very short time and now people say that it can't be any other way because of the geography? The US was literally different 70-80 years ago.
Which doesn’t mean much as a comparison point in the US because much of that land has zero or approximately zero residents, and nobody’s talking about building high-density housing in the middle of nowhere anyway. Upwards of 80% of the US population lives in urban areas and those places certainly are comparable to much of Europe.
>Upwards of 80% of the US population lives in urban areas
Look up the US Census definition of "urban." In the town where I live, three houses around me are on 100 acres collectively--not to mention even more adjacent conservation land and that's classified as urban because it's near a smaller old mill town and only about 50 miles from a major city.
Yes. Most people see urban and imagine at least a 2nd or 3rd tier city in terms of population. Not a 5K person town that may or may not be within a not too long a drive of some sort of population center.
Urban in the sense of "don't need to own a car" is a much smaller slice--especially if you aren't adjusting your expectations.
Yeah the census counts urban as “a cop or ambulance will show up in decent time” and rural as “you could detonate a cow and nobody would be around to notice”.
Without knowing exactly which town you’re talking about, I would posit that that’s likely still dense enough to have some pretty direct comparison points somewhere in Western Europe. It’s not like all of Western Europe is a city.
Which doesn’t mean that the same infrastructure you’d see in a dense European city would make sense in your town, mind you. I just think that Europe and America aren’t as incomparable as some people seem to think.
Well, it's a typical more rural New England town. There is zero public transit of any sort. Essentially no businesses in town except barely when they merge with an adjacent small old mill city. So even in the town center where there are some sidewalks basically nowhere to walk to other than the library or post office. About 7K population total.
About an hour drive from a major city.
Though not that different really from small English countryside towns I've walked through.
That's one thing that fascinated me about CT when I was up there.
It seemed bizarre that even "one strip mall" towns didn't have certain categories of business. Down in the south, you can't measure a mile without hitting two serviceable Tex-Mex restaurants.
Up north? The nearest Tex-Mex is often 30 minutes away, and the nearest pizza place (which often isn't great) is 20 minutes.
I'm not sure how much decent Tex-Mex I've seen in the Northeast generally. I do have a few decent pizza places around where I live west of Boston. But generally speaking I find I'm on my own with respect to food. Which is a reasonable tradeoff I make.
Even if you ignore the racist roots mentioned in a sibling thread (and I maintain that you shouldn’t), we will need low-income housing as long as there are people with low incomes! And it’s best for everyone involved if that housing is commingled in every community rather than being concentrated in one place. It’s well documented that the neighborhood you grow up in has a huge impact on how upwardly mobile you’ll be if you’re in a low-income family.
Look to Vienna’s social housing program for an example of this done very well. That doesn’t look like it attracts problems, now does it?
I don't know what to tell you. I just don't want to be surrounded by high-rise apartment buildings. I didn't buy a nice house in a nice suburb to stare at giant cement buildings. It's that simple.
The reality is that in a suburb far from infrastructure, investors won't want to build a 30 stories building.
But they might want to build a 3-4 units building, something 2-3 stories maximum. But this is currently ILLEGAL. Only a single house is possible and ANY densification is impossible.
You go to the downtown of older cities and you don't see giant cement buildings. But you do see livable neighbourhood with buildings that are just slightly higher than the norm and can house multiple families.
I'm not building a strawman at all. Let me make my position even more clear: I don't want to live near multi-family housing. I want it to remain illegal for it to be built near me.
Leave the suburbs alone. Every single place you people infect with your ideas turns to hell.
Maybe Im naive, but whats wrong with building entirely bew towns and cities? Last time I flew across the US, I saw vast wilderness with a few tiny populated places here and there.
There’s nothing broadly wrong with building entirely new cities, but it’s incredibly difficult to do for a variety of reasons. Most attempts to do this fail. Expecting new cities to absorb all of the increase in population is unrealistic.
If you’re talking new suburbs of existing cities, well, that’s basically the only expansion we’ve done in many places. Some problems with that:
- It leads to more driving needed to get to the city (and thus more emissions, exactly what we need to avoid right now).
- If the implication is that you’re building outward because the inner suburbs are getting more expensive to live in (which will happen if they don’t densify at all and the population grows), then you’re basically forcing most kids to move far away from their parents/grandparents/etc. Some people won’t want to live near their family but many do, and being able to maintain those close family ties feels important.
if you run electricity, water, sewage, fiber optics, and roads to it, absolutely! The problem with suburbs is that they demand the same utilities as dense areas without paying the increased cost of that infrastructure.
Who builds the roads and power grids for suburbia? Is it city dwellers or rural folks? Where do they get raw materials and construction equipment? Who produces food? Who makes furniture, cars and all other stuff? So what do city dwellers actually do to subsidise suburbia and rural country?
Where I live, the hospital is struggling to hire nurses due to the lack of housing options. That's not even the 'low income' bracket. Teachers struggle to find housing as well. Those are both things that high income people need, especially the former.
Restaurants are shutting down for want of workers. Because they can't afford it.
Low income workers provide valuable services in our communities. Telling them they can't live where they work creates all kinds of problems, both social and environmental - they often drive in to do those jobs, creating more pollution and traffic.
Especially along the restaurant line, it seems the rich people would rather be stingy than pay people enough to perform those services and live in the same community. It seems that being able to pay the lowest possible is still a benefit to the rich, even if it's detrimental to society.
That's good for society. I doubt that many of the moderately wealthy would really be a cause of this. It seems the ultrawealthy are the main cause in the downfall of empires, as they hold the most influence and become leeches off the people working. And now we democratize those negative decisions via things like REITs, so everyone's 401k is part of the problem.
It promotes empathy with and reduces bias against those of different racial and economic backgrounds, for one. It’s easier for stereotypes to take hold in highly segregated environments because you don’t get much interaction with those outside your own groups.
When there's no more food to eat, the poor will always turn to eating the rich, if we want to take this to the extreme (or, well, when there's nowhere left to live, they'll live inside the rich, I guess?).
I don't want higher density for the same reason I don't go on vacations on cruise ships and don't use public transportation. People are gross and assholes. The more people the more chance of tragedy of the commons, and once it sets in it is hard to stop. Most college educated Americans lived in college dorms, and went on to NOT want to live in shared building environments. It's not about racism, it's about not wanting to live in high density areas, hence buying homes with ZONING LAWS that guarantee me I can live how I choose. If I want high density, that is what cities are for. Stop trying to TAKE my (property) rights away(that is what zoning laws are, guarantee of my RIGHTS as they related to THE LARGEST INVESTMENT I WILL EVER MAKE IN MY LIFE). It's great to have an opinion, but to project onto others in order to make yourself feel superior and manipulate power dynamics is why this country is falling apart. Every action you take should BUILD and add value, not simply tear some 'other' down. But that would be hard, and BUILDING society is hard, and you would have to endure others having a right to their opinion. To quote Julius Caesar “It is easier to find men who will volunteer to die, than to find those who are willing to endure pain with patience.”. You are a fine soldier for your cause, but your argument shows signs of a poor citizen.
Actually, zoning laws are not part of your property rights. Zoning restriction dictate what you can build on your property, but ownership interest in your property does not entitle you to 'buy' zoning laws. This is easily seen as you cannot sell zoning laws.
Zoning laws ultimately restrict your property rights as you lose the right to do what you wish with your property. They ought to be abolished to protect property rights.
Most societies did just fine without zoning laws for the entirety of human history.
Note, that I don't approach this from the YIMBY or woke side of things. Rather, as a pretty staunch free market advocate, it is painfully obvious to me that we should not restrict people's rights to do with their property as they see fit.
As an example, I was recently going to buy land to develop into a business. However, zoning laws in this area of the county (in the middle of nowhere mind you) meant I would have to jump through endless permit and red tape. Any so-called supporter of property rights should be livid that this goes on in this country. Buying the land should be enough to give me rights to do what I wish with it. Environmental laws should deal with actual human health hazards, not how much shadow I'm spilling onto a neighboring property or how much view I'm blocking.
A lot of the issues with zoning is people attempting to own that which they don't. You don't own your neighbor's property.
Nobody is talking about buying or selling zoning laws. However, the value of property and the taxes paid on it are very much impacted by zoning laws. So people absolutely do make decisions on buying property based on zoning laws.
The value of my house would be decimated if there were a pawn shop next door to it. I wouldn't have bought my house if that were even a remote possibility.
Zoning laws are meant to protect ownership interest in your property (not that they're always perfect).
A totally free-market approach allows one party to reduce the use or value of another party's property. E.g. in the above, the high-rise blocks the sunlight, which will could kill any plants on the property and preclude a backyard. That combined with the lack of sunlight could dramatically diminish the value of the property. Meanwhile, the highrise increases in value because they got X extra floors that get sun.
There is absolutely utility in the sun; in the most obvious form, it can be used with solar panels to generate electricity which can be sold for cash. My neighbor shouldn't be able to build a solar array that blocks all the light that would hit my property.
Zoning laws, to me, are just a shortcut to avoid having to enumerate and manage those rights individually, per property. There's a lot of things that can contribute to the value of a property, and it would be a mess to manage them individually.
Um.. the qualifier is very broad. I would posit that the owner of the house ( and therefore part of a given community ) is in a very good position to judge whether or not a given project is, or is not, beneficial to that community. There is nothing to be quiet about. Neighborhoods that house predominantly black population tend to have houses with lower dollar value. As a result, chances to transform the owner's local habitat to one that that does not benefit the owner is highly irrational, regardless of current political winds.
<< It's also something that can increase equity a lot by giving people with lower incomes access to nicer areas and schools.
They are not nicer as a matter of fact. Part of that niceness is being funded with higher prices ( and taxes ). You take that away by adding some things NIMBYs are fighting about and the result is a neighborhood whites will flee. And cries of racism will continue.
That's not it though, really. People with a bit of cash - the kind who show up to planning commission hearings at 2 in the afternoon on weekdays - can very easily go buy some land in a remote place and do just that. They like city amenities though.
Maybe? Some of us have significant others, who believe staying close to family and whatnot is of some importance. I don't, but I am biased since I left mine thousands of miles away and have not looked back much.
If it was up to me, I would already have moved somewhere with lower taxes, but "kids, school and so on" currently takes priority over my selfish needs.
<<They like city amenities though.
Yes. I pay for them. I better like them. Otherwise, I will be the one complaining during next board meeting.
Also, inevitably, more fingers per square foot, more calories consumed per acre, higher water usage, and more conversations per minute in the neighborhood.
things that people do increase when there are more people. really unclear what your point is here, and the way you said it really makes you look mean.
In my middle- to upper-middle-class mill town there's a proposal to turn a disused historic mill building into luxury apartments and residents are fighting hard against it. The main stated reason is traffic, although it's unclear to me if having a bunch of apartments will generate noticeably more rush-hour traffic than when the mill was operational. I think some folks are also put off by the term "luxury apartment" too, as this area is becoming less affordable than it once was. So they counter-productively fight against increasing the housing supply, which would actually create downward pressure on rent, even for non-luxury places, as folks in more modest apartments might be tempted to move to these fancy new places, creating vacancies for others.
I think a lot of people just don't like change, so they fight it - they want their town/neighborhood/whatever to be just the way it was in the "good ol' days", which just isn't realistic. The mill jobs aren't coming back, but we do have white collar workers willing to pay for attractive places to live. Why not re-use the damn mill building?
Traffic from housing is generally fairly minimal. Traffic and parking are the big NIMBY fears and are generally unfounded.
"Luxury" apartments are, 9 times out of 10, just brand new apartments that happen to be in an expensive location.
It's kind of like cars - a brand new Toyota Corolla is not the cheapest car out there. A 20 year old used one is going to be a lot more affordable. But you don't get old ones unless you build and sell the new ones to people who have the money to buy new cars. If there are not enough new cars, those people will drive up the price of the used cars.
Indeed, this is exactly what happened during the pandemic.
As someone who lives in a former mill town myself, feel free to write if you're curious about organizing in favor of housing. It's a lot of fun!
> I think a lot of people just don't like change, so they fight it
This is it, hilariously. Locally the railroad started building a rail yard, and everyone got up in arms and the city and county was howling and a meeting was called and the rail company politely explained that they're regulated federally and are building a nice berm around the rail yard, but there's nothing you can do to stop it.
And everyone stopped complaining, the yard got built, and nobody cares.
We need more of the straight bribery that used to happen around nuke plants - if the plant is approved, everyone gets $1k off their property taxes for X years or whatever.
Mid and high density housing for the high-income earners get opposed across the entire economic spectrum. On one hand, you have NIMBYs that place strict zoning restrictions and mandate bullshit environmental reviews to stall the development that does occur. On the other, you have affordable housing advocates opposing gentrification by blocking cement trucks and refusing to be leave their apartment that got bought out unless if they get paid $1 million. At the end of the day, developers can pull through by simply throwing enough money and time at the problem, but that's a cost that ends up being passed to the future renters.
LOL that is total bullshit. In SF, they oppose high-density high-income housing too. It's total motte and bailey shit. Here's the real algorithm:
if density == low:
return "This won't solve the problem"
if income == low:
return "This ruins the neighbourhood character"
if density == mid and income == high:
return "This is gentrification and soulless coffee shops!"
if density == high and income == high:
return "This is for Arab/Chinese/local-xenophobe-target-du-jour investors only"
return "This ruins the neighbourhood character"
The absolute bullshittery around this nonsense is really something.
This pretty much nails it. The way I saw it put which feels fitting is, “Everybody who moves into San Francisco wants to be the last person to move into San Francisco”. Of course this isn’t a practical desire in any city, but that doesn’t stop people from trying to make it happen anyway.
>> “Everybody who moves into San Francisco wants to be the last person to move into San Francisco”.
Person moves to SF and puts down life savings as down-payment on 1:4 leveraged home...not a surprise they want to ensure they arent wiped out. A 20% decrease in value wipes out the life savings. The whole system is designed to perpetuate itsself.
I disagree, I've seen plenty of people outraged about high-density high-income housing saying that it doesn't have enough low-income options (unsurprisingly, these people are not fans of the low-income housing either). In general, I think people just don't like change- there's likely a reason they moved to that neighborhood and don't want it to be disrupted.
What about a good person who was born poor, grew up poor, worked from the age of 16 supporting their family, and remains poor? There are many such people in the USA, and very few seem to support policies that would make housing more affordable to them.
What makes them good reasons? Plenty of things are real without being good.
There is no ethical framework in which "I don't want to live next to the poors" is an ethical sentiment - even though it is understandable in some ways. Well, maybe in Objectivism, or "Fuck You, Got Mine". Though even an Objectivist would be hard pressed to argue against someone else's right to build whatever they want on their own property.
Right, it's harsh - pointlessly so. If your ethical system values the right of rich people to not interact with poor people over the right of everyone to have a roof over their head, that ethical system is evil.
> We have spent decades telling American families that homeownership is the safest investment. We then spent decades enacting policies to ensure this is true. Do we think investors were going to just sit that out and ignore a safe and government protected investment?
So one group wants to maintain a financial investment that was sold to them as a sure-fire way to make money with little work and little risk, and another group wants...shelter. If it truly is the case that the desires of these two groups are butting up against each other and are mutually exclusive, is it really hard to decide which group should get what they want?
Show up at any kind of planning commission or city council meeting and you will hear people absolutely UP IN ARMS that building some, say, apartments or townhomes or whatever will "destroy their property values". Even in markets when said property has like doubled in price over the last 10 years with no work from the owner-occupants.
Yes, I understand the desires of that group and the desires of the other group. I’m suggesting that, if we truly must choose only one group to satisfy, it’s not very difficult to decide.
Doing some of this work locally is one of the more rewarding things I've ever done. "DC level politics" tend to be long, drawn out fights, but a few people can make a big difference locally. I've seen homes get built that I showed up to say 'yes!' to. These are both great groups:
This is entirely possible and worthwhile; few people who are happy with how things are going bother to show up at all, so the only people who do are the people with a gripe or a grudge.
Even just a note to the city council saying "thanks" when you notice a new development is way more than most will ever do.
No, it's not hard: investment = getting paid to take risks. That's the whole point. Profits come with responsibility.
Of course, if responsibility suddenly means losses instead of effort-free gains, investors will try to squirm out of their responsibilities. Morally, though, the situation is crystal clear.
Well, kinda? It's more like getting paid to know the risks better than the market, or getting paid to be able to predict the future better than the market.
I sold my houses in a booming market for a $70,000 loss intentionally. It has a nice effect of lowering the value of all my neighbors homes and housed a deserving family.
Little did I know when I went to claim the loss on my taxes: I could not claim the loss at all. Since it was an owner occupied house and not a house owned by a corporation, it did not count as a loss I could deduct from my income nor from my capital gains.
Houses are meant to trap and enslave common people. It decreases their mobility and roots them in areas they otherwise would want to leave. When you gain money from a house, there are all kinds of benefits. When you lose money as an owner, there are no protections for you.
The system is a racket designed to continuously inflate home prices.
Everyone participating in it should be ashamed for making their children serfs & homeless while they live in castles.
I.e, did you buy for $200k and sell for $130, or had you bought for $200k and sold for $330 which was $70k under the current market value?
The latter isn't a loss; and likely wouldn't be even for a corporation. You'd have to sell at full value and donate the $70k or something to get it to "work".
Amusingly enough, if one of the 87k IRS agents hears about it, they could go after the deserving family for taxes on the $70k windfall they got (though this one is really hard to prove, they will do it on forgiven loans).
> Little did I know when I went to claim the loss on my taxes: I could not claim the loss at all. Since it was an owner occupied house and not a house owned by a corporation, it did not count as a loss I could deduct from my income nor from my capital gains.
It cuts both ways. Had you had a gain, you would not have had to pay taxes on the gains. If you had it as an investment, you would.
> Houses are meant to trap and enslave common people. It decreases their mobility and roots them in areas they otherwise would want to leave. When you gain money from a house, there are all kinds of benefits. When you lose money as an owner, there are no protections for you.
Hyperbole. For the majority of folks, home ownership outweighs the costs. Often significantly.
Land/housing is the one asset worth owning outright. Nothing else compares in utility and as a safe (assuming you didn't buy in the last year) store of wealth.
I would like to think that we are still able to take things back onto our own hands by making better choices and educating ourselves and shunning for-profit companies.
I, for one, would find it better to not spend my final days at the most profitable nursing home.
Answering your last paragraph: Worst case scenario, it'll probably take a couple of generations of literally living at our parent's house, waiting for the investor class to die out clenching the deeds to all houses and then finally being able to take back the world and start responsibly owning stuff. The cynic in me says that living at one's parents would be outlawed by political cronies.
>> We have spent decades telling American families that homeownership is the safest investment.
Home ownership is a key part of retirement, as reducing monthly bills is critical and rent is a big one. It has been a fairly profitable investment for 30 years of decreasing interest rates, but it is no longer so.
There's a huge amount of capital available and borrowing is still cheap.
I don't know in the US but in many European locations building of new housing has drastically slowed down over the past decades, which naturally puts am upward pressure on the market.
There is no need to demonise investing in property, which not the root of the problem (and frankly is often an ideological stance).
If anything, there should be more investment in new buildings to boost supply but very often the problem is planning restrictions.
> We need legislation that discourages housing as investment if we are to maintain housing as shelter.
I'm looking forward to hearing how Vancouver's vacant house tax affects their market the next few years. It sounds like a good idea and I'm glad they're running that experiment. It's hard to predict how these things go over time.
That does sound like a correct solution. It gives investors an incentive to make sure the houses are not vacant, which drives the rent down. Others should not be affected much by it, so that's a great solution.
Edit: assuming the situation is where there are vacant homes and people willing (but not able to afford) to live in them.
You made me go look and I think you're wrong. It wasn't a silver bullet (shocker!) but it did add 18,000 units to the rental market in 2019 and 2020 and raised $231 million in tax revenue that was used to support affordable housing developments.
By what metric? I'm not sure that's accurate [0]. It looks like the vacancy rate has seen a steady decline and the money raised ($86.6m) helped Community Housing Incentive
Program (CHIP) and Land Acquisition/Development opportunities.
That's from 2019-2020. If you look at the data since this program has been implemented it looks like this more successful (1096 + 706 + 21). It's somewhat expected for this program to have a reduces effect over time as people start making their decision with this policy in mind.
This policy doesn't intend to address real estate affordability but the supply of rental housing in Vancouver. From the document I linked:
> Vancouver continues to experience the lowest rental vacancy rates and highest rents among Canada’s major cities, making rental housing affordability and availability a significant challenge for those who live and work in Vancouver, and those who would like to in the future. In an effort to address this and increase the supply of rental housing in Vancouver, in 2017, the City of Vancouver introduced the Empty Homes Tax (EHT), also
known as the Vacancy Tax.
We just need to remember that banning housing investment means banning rentals which is problematic for people who don't have good credit and a down payment.
There are ways to disincentivize toxic forms of investment (especially speculation) without banning it. A high land value tax, for example, would simultaneously increase investment and decrease speculation.
I don't see how a high land value tax increase investment & decrease speculation? If your talking about flipping homes that's one thing but REIT ownership isn't home flipping for the most part...
High LVT means you pay a high tax on the land itself and little or no tax on what you do on top of that land. It encourages highly efficient land development which means increased supply of commercial and residential units (thus reducing rents), and it makes lots of speculation prohibitively expensive. Since holding undeveloped land is just as expensive as holding developed land, you’re going to want to put it to productive use sooner rather than later.
Thats sounds a solution for undeveloped land in urban areas though REITs are buying up the housing stock which is different.
If I understand your solution correctly it also puts a higher burden on the rest of the population who then have to pay higher land taxes each year (politically unpalatable) and I would argue that REITs probably have more capital to be able to pay off higher taxes where cranking up land taxes on the population makes home ownership more challenging.
They are fundamentally the same problem -- profiting off of owning something fundamentally scarce that you did not produce, i.e. rent-seeking. When the taxes are proportional to the most productive use of the land you own it is less profitable or sustainable to manipulate the housing market.
The strictest Georgist philosophy would hold if you happened to homestead in the heart of Manhattan your family will eventually have to choose between paying the price for holding that piece of land hostage from the rest of society or letting someone else make use of it.
In practice, places like Denmark and Estonia make exemptions for owner-occupied dwellings.
I never understood this argument. People are not priced out of their homes. Their homes are rising in prices so they actually have assets to match the price increase. Yes they might not be able to afford the tax, but they have a million dollar asset that they could use. The whole point of the tax is to disencent a single person living in a huge house all by themselves.
The argument is that you shouldn't be forcing people out of their homes. The reason you don't get the argument is that you view people's property as something you should optimize for others, while the people making the argument are believers in strong property rights, especially that they want to be left alone without oppressive government actions. The other half of the argument is that your terms are vague. Not every million dollar house is huge. It could be used to price people out of normal SFH just because the land is zoned in a way that allows higher density housing.
You're literally proposing a scheme that views removing people from their homes as beneficial. Your values don't match with others. That's the disconnect.
And by the way, that increase in value over the years is because other people want to live in that area. Perhaps we should disincentivize that instead of punishing the people who made it a nice area to live in.
This would only work if the assessed value was the actual price i.e. if the agency making the assessment had been bound to buy the property at the price it has assessed. Of course, if such an obligation existed, the land would not have high value in the first place.
The whole argument is how to make housing more affordable to live in. Your argument is ... pay more for land tax to avoid speculation however if you live somewhere in order to pay for it you need to consistently be more productive than the speculators (who would just charge the land tax to the renters anyways). Which doesn't solve the problem in any way shape or form.
It does because taxes don't disappear. Say we tax land at 4% and the value of all the land in the US is 100k per person. That means the average person pays an extra 4k and each person receives a $4,000 check. If you own an average amount of land you aren't any worse off.
But what is considered average can change. This is especially true since the land value is not uniform like your hypothetical example. Any system like this can be manipulated for one group to use against a minority group.
That might be how it starts, but history shows rates balloon over time. We already have senior being kicked out because of property tax. Your definition of "tons" of land is vague and may be used against people who have moderate amounts of land (.5-1ac).
At the levels where an LVT is effectively coercive, it’s functionally indistinguishable from rent paid to the government for land you don’t actually own.
I expect most citizens would recognize this and any effective LVT would be politically DOA.
The fact that property taxes exist at all, combined with the fact that failure to pay property taxes means the government takes "your" land means you are in fact renting the land from the government. The size of these taxes is irrelevant.
I invite you to make that sale to the American voter.
My point is that Americans who own one or more plots of land definitely do NOT believe they are renting that land from the government. Ownership is, of course, a degree of control and everything is a matter of degree. Meaningful LVT would be a qualitative change in a home- or farm- or business-owner’s degree of control over what they heretofore considered their property, and they’d recognize that.
To be clear, my position is that property taxes should not exist at all. An LVT would be doubling down on an already immoral tax. Whether it's pennies or 50% of the land's value, that still makes it the King's land, which I find abhorrent.
> At the levels where an LVT is effectively coercive, it’s functionally indistinguishable from rent paid to the government for land you don’t actually own.
I don't see how this follows. Would you mind explaining?
Property tax is rent like a condo fee is rent: It at least approximates a (progressively, in most tax schemes) assessed user fee for community services. The size of the fee is proportional to services rendered.
The LVT as envisioned by its advocates isn’t like that. It’s a fee—largely determined by market forces—to continue to occupy and make use of “your” land. If the government can insist you pay some market-set cost to remain on a plot of land, you don’t own it in the way we classically think about land title ownership. You’re not the market participant, the government is.
Land value tax means you don’t pay any extra tax for developing your property, but you do pay extra tax if the neighborhoods get more expensive. Ergo, incentive for investment and disincentive for speculation.
Suppose you do a “buy and hold” strategy on a neighborhood that is gentrifying. The increased taxes you pay each your will eat into your profits. If you sell, the buyer will have have to pay those taxes too, so the value will be lower.
That won't fix the current problem. That would only potentially prevent it from reoccurring to the current levels. Landlords pass tax onto renters. Renters may seek to buy a home, but if supply is locked up by landlords, they may just be stuck.
You can crowd out usury private investment (which this specifically is an example of) with government investment. Have the Fed buy treasuries, use federal funds to build and manage affordable housing.
Capital is make believe, a fiction, rows in a database. Physical laws are mandatory, everything else is a shared delusion or a suggestion. The rules can change at anytime with enough will.
Broad strokes, if Capital is primarily serving a small minority while the majority suffers for it, the tool (capital allocation) is broken and it is time to reevaluate the implementation.
Getting the federal government to manage all rental properties sounds awful. I sent a request the IRS last September and they still haven't replied yet with anything but letters saying they're backed up.
This is not very imaginative. Think how federal dollars are going to small jurisdictions to deploy municipal fiber, not HUD being your landlord. The federal gov is the VC, local government are the startups, sort of, if you want to twist the startup ecosystem analogy. You’re provided funds with strings and milestones; if you don’t perform, your funding is pulled (or something similar).
With regards to the IRS, even though there are occasional delays, I’ve always had a top notch experience even when my own mistakes would have incurred thousands of dollars in penalties (which were waived more than once). If you want effective delivery of government services, you must fund them at the necessary levels. Effective government is not free.
You realize that we are already running trillions of dollars in deficit for the programs we already have in place? The first step, should be to lower the deficit and actually fund the programs we have in place. We cannot just keep printing money without worsening the deficit and worsening the inflation. Yes, consumer sentiment is all hopes and dreams, but monetary policy is not. There are real world implications.
We’re going to inflate that debt away, like all developed nations with a declining fertility rate will do (Japan leads the way for us). Extend and pretend. Again, it’s not real! It’s just numbers in a database.
For those concerned about sovereign debt, that should’ve been thought about before running it up on unnecessary conflicts (which there have been many!) and other unproductive efforts (tax cuts for the wealthy). Real needs coming up, and no excuses because of previously suboptimal governance. Lots of assets and wealth in the US to tax for those who really want the debt line go down, but if debt line doesn’t go down, nbd.
Taxes and debt, while on the surface appearing to be similar obligations, have drastically different recourse options and enforcement mechanisms. Debt creates money, and if you subscribe to modern monetary theory, taxes destroy money.
That money (or some portion of it) is currently flowing into the housing market via Freddie and Fannie and the loan guarantees provided for 30 year fixed.
You could imagine other programs that could encourage renting, for example (no thought has been given to this, just an example/idea) - federal guarantee that you would pay NO capital gains tax if you could prove that you continued to rent out the property and never increased rent more than 1%, say.
IMHO cities need to limit how many large multi-national conglomerates are allowed to build huge rental complexes.
A large % of the high density housing being built around Seattle is rental only, all that does is funnel money out of the city. Residents don't get to build equity, and rental prices keep going up year over year, vs mortgage payments that, except for the property tax portion, stay the same over 30 years.
Also large rental complexes don't build communities.
Someone who bought a small 2 bedroom house 10 years ago and who now rents it out, those people aren't the problem. Heck odds are they are renting that 2 bedroom out for less than what a large corporation would charge.
When they don't come in and build out those large rental complexes those very well paid engineers rent/buy every SFH for miles causing the absolutely insane gentrification we've seen in San Francisco that pushes everyone out.
> those very well paid engineers rent/buy every SFH for miles causing the absolutely insane gentrification we've seen in San Francisco that pushes everyone out.
I used to live in a large, over 100 unit, town home complex.
Central to the complex was a very large open green space, larger than most suburban yards.
Over the years, about 50% of the units are now rented out, typically at a price lower than in the nearby built for rental apartment complexes. Individual landlords prize stability in tenants more than maximizing short term value, also if a person is only renting out 1 unit, that unit being vacant for a month or two is a lot of lost income, raising rent by $200 and then losing out on 4k of rental income due to having to lose then find a new tenant is not something a smart landlord does on a yearly basis.
Prior to that I lived in a luxury condo complex in a very nice area that was again, lots of rental units. From what I gather, soon to be retirees had bought in and were renting the units out until they they needed to move into them. They also prized stability and boring tenants over maximizing monthly income.
The point here is, within reason, today's fancy high end condos are tomorrows reasonably prized housing.
Will the 50 story skyscraper condos ever be reasonably prized? No, of course not, but if someone dropped 150,000 units of medium density housing into Seattle, I bet that in about 5-10 years housing prices would start to come down.
The other issue I have is the absurd number of 4 story town homes being built, which should instead be 4 story condo complexes. Insane square footage is wasted on stairs, and no one over 35 can live in those places, and raising a family in them is either impractical or horribly annoying. (Good for baby gate sales though...)
If it were up to me I'd remove elevator requirements for 4 and 5 story condo complexes in return for having the bottom floors requiring ADA units.
Most small landlords don't do the accounting properly and are losing money; this is disguised by the favorable depreciation and the rapid property price appreciation.
For example, many small-time landlords would have been better off just buying a much more valuable property to live in themselves, than buying one to live in and one to rent. Eg, buy a $400k house instead of two $200k houses and renting one.
As someone that happily rents (I enjoy the increased optionality that comes with this option), the constant push to get everyone to own a house seems weird to me. Yes, we should make it possible to own a home, but it doesn't need to be the only option.
Also, rentals tend to be higher density than houses that are owned. If there is a housing crisis, this seems like a desirable thing. Ex: roommates (yes, possible with a house, but less likely), etc.
same. i rent largely because i haven't prioritized buying. (i.e. the money i could have saved for the down payment went to accelerated student loan payoff, cars and fun stuff)
aside from the federal tax breaks and very high amount of leverage ($40k to get a loan on a $200k unit that you _might_ be able to resell at $300k to get into a larger $400k unit that you _might_ be able to resell at $500k to get into a larger $600k unit...), I never saw, and still don't see, the benefit of home ownership.
actually, that's not true. for people with families who need (or "need") stability, home ownership makes a lot of sense. you're going to be in the same town until the children reach maturity...might as well get a loan on a house since you're going to stay put for a while. cheaper than hoping that your landlord doesn't bump the rent up.
however, we are not having children, have moved three times in the last six years, and spend a lot of time traveling. i very much like emailing my landlord "hey, weird noise" and they bring in their contractor friends to look into it on their dime
i do hate how there is this sense that you should feel "bad" for not owning, i.e. renters are always pictured as troubled people in financial distress who don't have a choice but to rent.
My mortgage + insurance + taxes is a lower monthly payment than what my rent was at the time I bought my house. Compared to that same unit renting today, its several hundred dollars a month cheaper. It has over twice the square footage and a private garage. This is in a pretty big metro area, not the middle of nowhere.
One of the biggest benefit of owning is a hedge against housing inflation. Its not a perfect hedge, I do acknowledge. As property values increase my taxes go up, as housing materials increase in cost the cost to repair it goes up. But the amount my taxes will go up in a year is far less than how much I've been seeing rents shoot up.
You're also shouldering maintenance which is often not calculated well; the depreciation allowance the IRS allows for rental properties is a rough estimate but it's not perfect - it estimates that the property (house, not land) will be worthless in 27.5/30/40 years, depending on if you take GDS, ADS, or it was placed in service before 2018 - you usually want the fastest depreciation possible but there are reasons not to choose such, involving capital gains on sale, etc.
They're "small" expenses but if you track out the various things and divide them over the ownership period, they do add up.
E.g. - current house, here 5 years, so far: furnace and A/C, $9k, fence, $14k, landscaping and misc, $2k, tools and supplies, $3k, plumber and window repairs, $2k. So about $6k a year, double my taxes and half my mortgage again. And I haven't even hit the big ones (and didn't count appliances as those were "optional" purchases).
Owning is still a good idea for many, and has benefits, and renting will almost by definition be more overall, but it's not a given. You note the main advantage - stability. If you're on a fixed loan (whether it be 5, 10, 20 or 30 years) your payments are calculable years in advance and you get to pay much with tomorrow dollars, which are almost always worth less than today dollars.
But you do have to want to stay in the area for years.
Did you account for the opportunity cost of your down payment? If you chose to continue to rent, you could have invested your $100k or whatever down payment in the stock market for ~7% a year.
On the other hand, you have to count the mortgage interest as a cost but not the mortgage principal repayment.
The increase in valuation in my house far exceeds 7% annualized. Compared to index funds and other investments over the few years I've owned it's far outperformed any other "investment".
Obviously, this won't hold true for all time-frames, and I'm not even necessarily a fan of thinking of primary residences as investment vehicles, but if you're going to compare it for opportunity cost it's still not necessarily a home run comparison.
Due to house values rising considerably in the years we've owned, it's actually pretty high considering we're only a few years in. We only put 10% down but we were able to get rid of PMI in only a year because of home prices skyrocketing.
I have good news for you! How many rentals are available is closely controlled in most parts of the US. This is one of the things zoning accomplishes. It's possible that the outcome may differ slightly from what you want, however.
Rent controls are unfortunately very similar in key ways. They've been tried, and the results may not quite line up with what you might be hoping for.
> How many rentals are available is closely controlled in most parts of the US.
Technically true, but practically false. Yes, zoning exists in most of the US. And yes, most people have no trouble converting a region to residential zoning. I've known people on both sides, and most of the problems are the opposite - people who want to run businesses in a residential zone. I've yet to meet a single person who couldn't go the other direction.
There's a process to getting approval to build a house/apartment complex. You simply follow the process and get approval. Most of the US is not the Bay Area, Seattle or NYC.
The point I was attempting to make is that we have and use the tools to control the quantity of rental housing available. Using those tools has not made renting as cheap as owning. Those tools generally help accomplish the opposite. With that in mind, there's perhaps cause to question if "controls over how many" that yardstick suggested will accomplish their aim.
So yes, you're absolutely right, technically true. In practice, they fundamentally don't do what the user wants them to do because that's not what caps are capable of doing. The tools don't work that way.
When I bought my home 4 years ago my mortgage was ~10% more per month than the apartment I was renting. Looking at the apartment complex's website, it looks like the same apartment is now about 60% more per month than my mortgage.
In much of the US (read, in the Midwest where I am right now).. mortage monthly payment is indeed cheaper, sometimes a lot. And this is after taxes / repair issues.
Renting is very much a poverty trap where the poor with bad credit get poorer and worse credit.
Depends on where you live - this "renting is a poverty trap" only applies to certain places and depends on home values constantly increasing. If home values crash where you live then you spent years putting money towards a worthless asset.
> If home values crash where you live then you spent years putting money towards a worthless asset.
It's still a roof over my head regardless of how much it's worth. And more importantly, how much it's worth is completely irrelevant unless/until you want to sell. And if you do want to sell, and home values have crashed, then the next house you buy will also be cheap!
Yes, but are we splitting the payments between principle and interest? In most cases, after a number of years, the rental cost easily exceeds interest + insurance + tax for the same size property.
Yes, it often seems the rental cost will be less than your monthly payments, but do realize that you lose all the rental cost, but not all your monthly payment.
Its simple to demonstrate scenarios where a loss in property value ends up being more expensive for the homeowners than renters in the long run. We had a crisis in 2008 because of this.
There are online rent vs buy calculators that you can use to generate these scenarios.
* It guarantees you do not lose money if the home values around you drop
* It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you.
* If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying.
Look, buying is mostly great. It's one of the biggest builders of wealth for most Americans. But from a purely numbers game, it's not so clear "rent is just losing money".
1. True, but housing prices rarely drop in desirable areas (usually where good jobs and schools are). If, for some reason, you decide to stay in a town with a dying industry, then yes, this is true.
2. So does a fixed-rate mortgage. Even better, refinancing a mortgage during a low-rate period (e.g. 2012, 2020) actually lets you reduce your payment, while contributing more to equity. How often do you have an opportunity to reduce your rent?
3. Saving 50% of what exactly? You can put the down payment into an index fund, yes, but remember than the house is an asset that gives you 5x leverage initially, assuming 20% down. You can't get 5x leverage at your broker, and even if you could, playing with 5x leverage on the stock market is insanely risky compared to real estate.
> But from a purely numbers game, it's not so clear "rent is just losing money"
It's pretty clear actually. They've compared retirees who rented all their life vs home-buyers. The difference in wealth was striking, a factor of 6x-7x if not more.
What's not clear is whether that trend will continue in perpetuity under the conditions of declining population.
So say global warming continues. Huge chunks of Cali aren't fit to live in. Salt Lake dries up. What happens to all of those home values?
Home values rising historically is good, but I don't think a clear win through all time. There is no instrinsic reason a house value should rise faster than inflation. You can always build a new house for cost X. Buying existing means that new house supply is too low or too costly.
I don't look at a house as an appreciating asset, that would be stupid. Market forces control the price, and those are predominantly out of your control.
But for what I've paid in rent over the years, I could have paid for entire dwellings. And had the freedom to fix and alter things per my desire.
Renting is the opposite of a fixed monthly cost, since rents go up all the time. If you rent, you can't tell me what your rent will be in ten years. I can tell you what my mortgage will be, exactly the same as today.
> No "10k new roof" or "1k new stove" suprises hit you.
If these bother you, you can sign up for house maintenance insurance programs to give you a fixed monthly cost. I'd recommend against that since they make a profit off you, you're better off putting that money into an investment account and withdraw from there when you neeed it.
> No "10k new roof" or "1k new stove" suprises hit you.
New roof costs are pretty much never a surprise. You should know when you buy the house how much life is left in the roof and plan accordingly. If a natural disaster occurs that destroys your roof, insurance will cover it.
Appliance costs? Yeah, they are often surprises. Hard to find reliable appliances any more.
Oh, and it's hard to get a $10K roof these day :-)
> If you are say, saving 50% vs buying, you can put this difference in an index fund. This would over 10 or 20 years potentially give you a LOT of money over buying.
Yeah, I always wondered if I should do this analysis for my house, and I'd be curious on studies on how this would play out in most cases. For me, right from the get go the rent on a comparable house exceeded the monthly interest + tax + insurance (excluding principle). The tax benefits more than paid for all the maintenance costs. So the main questions would be:
1. How much would the down payment be worth in an index fund?
2. How much would the principle payments monthly in an index fund be worth?
I suspect that I'm ahead of the market significantly, what with all the crazy house appreciation (that alone is about 8x my down payment), and rents are quite high - easily increased by over 70% since I bought the house.
The real wealth building doesn't come within a generation from asset appreciation. That's just speculation, the market can screw you.
But once it's paid for, it's paid for. Now you just need maintenance and taxes, easier on a fixed income. And it's easier to build intergenerational wealth if one of your children doesn't need to blow money at all on rent or home purchase.
> * It gives you a fixed monthly houseing cost. No "10k new roof" or "1k new stove" suprises hit you.
When the new roof goes in, what happens to you as a renter? I'm pretty sure you still have to pull together 4k for moving/security deposit/first several months
It guarantees that you can be forced to move at a whim. Twice I've had to move, once during the school year, because the landlord died. And they'll steal from your security deposit. Good landlords are young great people. Corporations are scum.
Negative equity with a roof over your head is better than on the street. Your equity going to zero is still cheaper than raising a family to adulthood in a rented place.
I agree there are lots of upsides to having a house. I definitely get some used car salesman vibes whenever someone tries to sell up the upsides of negative equity, though. Having no chance to have negative equity is pretty much unequivocally one of the few absolute advantages of renting. The other being (typically) lower transactional costs for short term occupancy.
I mean, in San Francisco or the Bay Area in general, renting is a ton cheaper than owning at current prices. People still buy, because it’s nice knowing your landlord won’t get the cheapest contractor that’ll drill into asbestos in your kid’s room when something happens.
That's never going to be the case because of equity. Of course government-owned housing can be sold for use rights only with no equity, but that's 'socialism' which Americans have been viscerally conditioned against.
The concept of credit score isn't something that has always existed in humanity. It's something that we can go on without, even more so given the ridiculous profitability of banks
Credit scores are probably the most useful metric for a person in general. The reason isn't because it's an assessment of creditworthiness, but it saves the time interviewing each person for each loan, asking for quite literally thousands of pages of documentation proving they are creditworthy, etc.
If you recall how these things were done before credit scores it was not pretty. Without them lending would virtually cease to all but the most obviously creditworthy people.
I generally agree the system for credit scores needs to change. In particular it should not be controlled by a veritable monopoly. But this does not discount the utility of it in general.
IMO they need to change their model. If someone has been affording rent at 2k for many years, then they can afford a mortgage at 1.5k, that's not the case nowadays.
Credit score is hilarious. Until I was like 30 I paid for literally everything with cash. Everything. Never missed a bill. My credit report/score came back "unreportable." Not a shred of data to go off of. I was unable to obtain any credit card. I ultimately had to go to a bank and place $1500 in what was basically a 0% CD for the duration of my credit card, with the agreement my bank would just take it if I didn't pay. After a couple of years of paying that religiously they allowed me to unsecure the funds, but I still had shitty credit afterwards.
Every new immigrant has that problem. I deposited $500 in a credit union and took a secured loan of $500 for 2 years. Did the same at another bank. Also took a secured credit card, as parent comment described. That bumped my credit score up pretty quickly.
The IQ test does not have egalitarian roots, it was simply a tool designed to diagnose people with severe learning disabilities and was later abused to give a metric to people to feel smug about themselves. It doesn't have significant correlation with any meaningful success metric as soon as we disregard the people with learning disabilities.
Apartment complexes are for more economically efficient compared to single family homes. We need to incentivize these instead of letting them buy up homes meant for a single family.
Apparently some of these operations have become pretty sophisticated in being able to quickly sort and evaluate listings. Individual buyers don't stand much of a chance against buyers who can write a check as soon as a property hits the market.
They mean skilled professionals who make boatloads of money spotting and leaping on every decent property that hits the market, or is about to, while the rest of us - those seeking a home to actually live in - get to fight over the remains.
There are so many housing incentives (tax-breaks, etc.) designed to encourage home ownership a very simple solve would be to ensure those only apply to owner-occupied housing and limited to a single home per household.
As another commenter pointed out - most tax incentives for living in a home you own do not apply to investors. Investors get those benefits "for free" because they are a business and all the costs of running a business are deductible. The incentives you speak of actually puts regular folks on a more even footing as corporate folks.
Stuff like bonus depreciation - yeah, let's get rid of that. Or 1031 exchanges. Regular folks cannot benefit from it.
Companies are charged taxes on their profits. The interest on money borrowed in furtherance of a business is just like any other business expense: deductible.
The owner-occupied mortgage interest deduction serves to put owner-occupants onto the same footing as businesses; it’s not an incentive that gives them preference, but rather (closer to) equal footing.
> they owned such a large percentage of the rental housing in Tampa Florida, that even though vacancy rates were high, and rents were going down throughout the nation and other areas in the state of Florida, they were able to keep rents high in Tampa
A related anecdote. 15 years ago, an investment advisor was pitching us on investing in water funds. Yes, the move to privatize water was well underway a quarter decade ago because the people with money KNEW we would have a world where rivers in multiple continents running out of water in the future.
That it's come sooner than most predicted is likely making those ghouls salivate even more.
Needless to say, we turned him down and just plunked our money into index and sustainable funds and chose handpicked stocks instead.
What discourages owning housing as an investment is repealing legislation that inhibits construction. Nothing else (besides laws affecting population growth) changes the fundamental supply/demand meeting point, in the long run.
Other laws which discourage investment will also discourage construction.
People in ivory towers whipping black-box abstractions of businesses into needing to produce more profits through wage theft, cost-cutting by skirting regulations, or outsourcing to unregulated places.
There's little oversight throughout the process, and filled with the kind of people that want to turn everything into a business... and that have proposed "treating but not curing cancer" [1].
I agree, and I feel like limiting the mortgage interest deduction to owner-occupied homes would get us most of the way there at the stroke of a pen. It's a huge subsidy and I can't think of any good reason to extend it to rentals and investment properties.
In fact, we should probably repeal it altogether - in theory it subsidizes home ownership for the poor and middle class, but in practice the only people who take it are those who itemize deductions, which the poor generally don't.
Not sure if you are aware, but all forms of interest expense is tax deductible for corporate income tax purposes in the United States, not just mortgage interest. This conforms to codes in other countries. There is no subsidy that is specific enough to rentals or investment properties. And since most of corporate bank lending is secured by all assets (including real estate), mortgage debt is somewhat fungible with other secured corporate debt, so it would be pointless to try to tax one but not the other.
I believe there is a specific subsidy, but in the "other direction" - that's why you can deduct the mortgage interest on your vacation home despite not being a human and not a business.
I'm aware that interest is generally deductible for businesses, and I'm suggesting that houses should be an exception to that. We subsidize most business borrowing because we want businesses to borrow and invest in stuff, and we should have exceptions for things we want to discourage investment in. Sure, it's difficult to imagine how to keep a giant corporation from finding a way around this, but we have difficulty getting giant corporations to pay taxes generally. It would still make sense to narrow or end the subsidy to discourage individuals and small businesses from investing in RE so heavily, and consider other approaches to discouraging larger corps.
Fake edit to add: my only source is other comments in this thread, but I believe it's true that the vast majority of rental properties are owned by individuals or relatively small businesses (LLCs and such) via regular old mortgages, where the bank knows what property is being mortgaged and the debt isn't realistically fungible with other debt.
> that discourages housing as investment if we are to maintain housing as shelter.
There’s a difference between owning two properties and owning a fund of thousands of homes (PE and REITs). The former is fine, the latter should be banished
the worst aspect of this is that these landlord corporations are of course going to be paying off politicians to create laws, regs etc that will further restrict and make more costly the building of new housing... it's a vicious circle
But housing is an investment, and a shelter. Discouraging housing as an investment discourages investment in housing.
What I think you are trying to say is that it is preferable that the investment in housing be made by the people who are going to live in the house (or by the government) and not by entrepreneurs.
I have considerable experience in the Real Estate backend software industry, and so am occasionally contacted by headhunters hiring for Real Estate Investment startups. Here's a typical reply that I give to them:
I am philosophically opposed to "investing" in real estate, as your industry exists entirely to snatch up affordable housing from actual homeowners as a get-rich-quick scheme, benefiting those who are already rich at the expense of those who would otherwise be rising up out of their own financial situation.
Nothing personal, but I wish you - and everyone in your predatory industry - swift failure in your endeavor, for the benefit of the average homeowner.
Have a good day!
Same, By this definition you shouldn't invest anywhere where the supply is low and demand is high, which by very consequence rules out all investments.
I'm sure OP would be OK investing in a company who focused on building equitable housing solutions. That is way different than what they are talking about and I feel like you're just being obtuse.
What is equitable? and to whom? This argument is moot.
Why do you think you should get to decide how much profit somebody should make. Would you agree with the same if somebody decided to cap your salary, to make some end service/product affordable?
I probably shouldnt even reply to such a poor attitude, but I never said I should decide anything or that I agreed with OP. Just clarified their position, which seems to be the same as saying "I like to invest in companies who I believe are morally sound" etc.. which is not something that is crazy.
I believe the unsaid prerequisite here is the investment subject being a human necessity (whether or not owning a home is a human necessity is another argument)
Unfortunately yes. Even the pie fallacy argument is subject to certain conditions which are often false. For economy to work beyond pie fallacy you need situations where most of the economy is driven by people who make wealth by creating things out of nothing. That is purely knowledge work jobs. Almost any where, where you need a raw material as an input to make a thing, the supply of that is limited, and therefore subject to these demand-supply issues(predatory behaviour/rent seeking). This extends to things like buying a plumber's service. If the number of plumbers are limited, and their time is limited(which it is), and there more people who need their services than plumbers going around. Plumbers are going to charge a premium for putting you up their priority queue. That is what you are ready to pay to buy their services before others could get a chance. This doesn't mean its predatory. Its what you are willing to pay to buy their time. Any other way of settling this is bonkers, If the price is fixed and the queue if FIFO, why should you be given a special exception and moved up the queue. And more importantly why should the plumber settle for lower pay when clearly there is a demand for his services.
But on the short run, everything even in knowledge economy work, money is made literally by moving it from person A to person B. Hence A wins at the expense of B.
Even on the longer run most people lack the resources, patience and overall life situations to make decision over such long periods of time.
I had trouble parsing this argument. You lost me way at the beginning:
> For economy to work beyond pie fallacy you need situations where most of the economy is driven by people who make wealth by creating things out of nothing.
It's unclear whether you're trying to propose an alternative model here ("beyond?") or are expanding upon something you call a fallacy but still use as the basis of your argument.
> Almost any where, where you need a raw material as an input to make a thing, the supply of that is limited, and therefore subject to these demand-supply issues(predatory behaviour/rent seeking).
I don't see how rent-seeking fits into that, so I'm going to assume you're talking about predatory investments here. Why we are fixating on goods and specifically on acquiring them for some process I don't know either.
> But on the short run, everything even in knowledge economy work, money is made literally by moving it from person A to person B. Hence A wins at the expense of B.
The other way around maybe? Does either make sense? If I invest in your company, I am giving you money: Am I winning or am I losing? Am I behaving predatory? Are you?
To most people the answer can be found by looking at the transaction in a broader context, you don't seem to even care.
I get that predatory is ill-defined in economics, but your interpretation of it seems to be useless at best. If "predatory investment" means the same as "investment" to you, then predatory is not a useful qualifier in this context. You'll have to come up with a new word to describe what others simply call predatory.
The only way for your construction to make any sense would have been to show that all investments must be made with the goal of rent-seeking and/or be predatory, while both terms each would describe only a subset of investments.
There is no point to having this conversation if we don't even share the same useful terminology.
But even if we sorted that out, the argument likely would still be incomprehensible to me. I wouldn't know where to add the words "Therefore all forms of investment are either predatory or rent-seeking." if you held a gun to my head.
When it concerns basic necessities it certainly is. It would be sensible if nations restrict access to these markets and heavily tax people not using their real estate themselves with a progressive tax that increases quickly with additional objects. It could be fixed quickly if there was political will to do so.
You seem to have contacted me even though I explicitly told Amazon that I'm not interested in pursuing opportunities at this time. It's been very bothersome the number of mails I get (2+ on certain weeks). I've patiently requested earlier to be removed from your reach-out list, but alas here we are again!
Sent from an auto-drafted template that I've set up for specifically Amazon Recruiters.
I worked for several years at a small company whose primary products/services involved aggregating/normalizing/warehousing/publishing listing data, which grew to handle a large percentage of all listings in the country. I knew every quirk and metadata mis-feature of every MLS software in use, and was on the technical standards board of the National Association of Relators. Our company was bought out by one of the big user-facing Real Estate websites, and our team was responsible for the listing collection/normalization pipeline.
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
So the mega investors only make up 3% of that 25%. I'd love to see data on what the remaining 22% are, but my guess is:
* flippers
* middle class individuals buying a second property as an investment
* small time property management firms run by local businesses
Also the Inside Economics podcast's recent episode Cooling Inflation and Confounding Housing Riddles[0] adds even more interesting color to the dialog. They explain that a lot of this is driven by demand for single-family home rentals. Roughly half of Americans will want/need to rent a single-family home at some point in their lives! Many people want to live in a home on a short-term basis, like when a family with kids moves to a new city and wants to familiarize with the area before committing to a full mortgage. And COVID combined with the changing demographics has caused a huge surge in demand, so surprise prices have also gone up.
Don't forget the "kilo" investors, who may only own a few dozen or hundreds of homes ;)
Being curious about what those numbers actually look like, I found a CoreLogic report[1] from earlier this year which states:
> Figure 3 shows different investor classes have maintained their shares through Q1 2022. Small investors (those who own fewer than 10 properties) were responsible for nearly half (48%) of all investor purchases during the first quarter of the year. Medium investors (those with 11 – 100 properties) purchased 31% of investor properties, large investors (those with 101 – 1,000 properties) accounted for 9% of home purchases and mega investors (those with over 1,000 properties) represented 12% of all purchases.
So it sounds like roughly half of investor purchases (not quite that) are from those owning at most 10 properties. Would be interesting to see how well these numbers extrapolate out over time; from this limited Q1 perspective it sounds like the majority of purchases are by medium/large/mega investors.
The 1/4 of houses being bought by investors makes this sound like way more than it truly is... I bet 90% of those "investors" are flippers.
Flippers are a necessary part of the market... lots of old people stop maintaining their home as they age. When they finally die, their homes are in extremely bad shape and no one would want to live there. A flipper makes the home habitable again.
This is true, similar to what's going on in Australia.
It used to be that you could move into a decent but affordable suburb, 2-3 hours from a major city. That's not really happening anymore for under 1M AUD.
So even just "getting your foot in the door" is sort of out of reach for most people. Interesting times.
What's nuts is not just that investors get to buy homes, but that its tax advantaged to do so. Between prop 13 in California, to 1031 exchanges, there are plenty of reasons to invest in RE over even say the stock market. I don't get to do a 1031 exchange for my Meta stock into AAPL or something...
You forgot the biggest one – cheap mortgages backed by unlimited money printing. Ever since 2008 loading up on as much <3% housing debt as you can afford has been a no-brainer investing strategy.
Of the two additional properties I own, marked as investment and vacation, they are 3.5% and 3%, refinanced, and bought during the pandemic. The former, five years prior, was marked as non warrantable, as in no bank would even give a loan for it.
So, while investors don’t get the same rates as homeowners, they still got very good rates. If I had had capital, I would have bought a dozen more units at that time.
This is what I find concerning though, we're now seeing the damage of the endless money printing, through inflation.
Inflation causes living costs to go up, which means people have less money for rent, which means people who have borrowed to service mortgages don't get money, which has a knock on effect...meltdown.
Edit: Will guess I got a downvote for using the world meltdown, which was almost sarcasm because the powers that be will never let this happen.
In fact, the previous president signed a law removing 1031 exchange for everything except real estate. Coincidentally, the previous president is in the real estate business.
That's bad, but not as bad as when the commercial real estate lobby asked for a straight up bail out back in '08.
> In a letter to U.S. Treasury Secretary Henry Paulson, industry organizations have asked that the $200 billion Term Asset-Backed Securities Loan Facility (TALF) provide guarantees or financing, or purchase highly rated asset-backed securities collateralized by new or recently originated mortgages.
Hilarious sure, but also sad and concerning. I'm tentatively alright with the idea of renting forever and never owning property... but with rent increasing and investors buying up more and more property, it looks like things will get uglier and uglier.
the insane mortgage rates we saw in the last few years really are going to be a generational redistribution of wealth that we'll talk about for the next century, I think. That might have been the last train out of town for the middle class to widely own housing in a lot of cases.
No idea about if it’s the last train out of town but home ownership in the US is extremely high[0] (it ought to be we subsidize it like crazy).
If you go back to 1900 you see home ownership rates in the US at less than half of households[1]
The interesting thing to me is how conflated home ownership has become with housing affordability. As we’ve doubled the numbers of home owners we’ve dramatically removed the options for housing.
Housing prices exploded to compensate for the negative real interest rates. The people who got the handouts were rich people who owned multiple houses and sold them off. For the most part others didn't get that hot of a deal. In effect it was a regressive tax that the poor paid for the rich by paying in inflation the cost to make multi-home owners rich.
If your payment is massively lower than your rent would be - you won.
Someone else is allowed to win, too.
It's a zero sum game, and the only losers have been renters.
That can change if there's a massive, sustained housing crash. But I won't hold my breath for that.
I'm willing to bet, like always, house prices won't decline. The value of the dollar will decline instead (because the Fed can just easily QE until the only people that lose are renters).
> The 30-year fixed rate mortgage at negative real rates is the biggest handout the world has ever seen.
Agree. I bought a house around a decade ago. Refied into a sub 3% rate. The house next door now rents for 2.5x my mortgage. That's 10s of thousands of dollars/year extra I have in my pocket.
Being able to afford 20% down on a mortgage is something affordable to less people every year. With rates increasingly quickly, it's not going to be much cheaper if prices fall too.
Maybe, in the back of peoples minds, we all know "The Fed" isn't magic and crisis do happen. So if this "guaranteed 2%" falls apart, it's going to freaking suck for a lot of people.
Can you elaborate on your last sentence a bit more? Just trying to get a more thorough explanation. I just got my first 30 year mortgage so, trying to make myself feel better I guess.
If you just bought, you don't have a negative real interest rate.
Your interest rate is probably 5% or so?
The real interest rate is probably 3% or so. That means your REAL interest rate is 2%.
When you inevitably get the chance to refinance at below 3% - your REAL interest rate will be negative.
The 30-year fixed mortgage is a product that would not exist without a government guarantee on Fannie & Freddie's debt. Even if you have a jumbo loan - it's only because of the MBS market created by Fannie & Freddie.
In essence, the tax payer is paying you for you to have a mortgage on your house - regardless of whether Fannie securitized your mortgage.
My interest rate is 2.7% - We've been in the house for close to a year now. Renting was going to be 700 more MINUMUM. I couldn't justify not buying but also feel..unsure about everything for obvious reasons.
I'll take a whack at it. You have your mortgage, and let's say the hypothetical payment is $1000/month. That is all you'll ever be obligated to pay each month in order to live in your house (we'll ignore property taxes for the moment). Whereas your neighbor rents her house for $1000/month. But next year her rent is $1050/month, and so on. In ten years, she'll pay on the order of 50% more to stay in that house. But you'll still be paying $1000/month, and will continue to do so for 30 more years.
But that's just how mortgages work, right? Lock into a rate, and have that for 30 years? Only in the U. S., AFAICT. Canadians will correct my details, but as one example in Canada one gets a mortgage for, say, five years at x%. After five years, go renegotiate? (Help me out here, Canucks; as soon as I went to write it out, I knew I had it wrong.) Anyway, point is, the "lock it in at 2.5% for 30 years" seems to be unique to the U. S., and assuming that your wages increase, after a period of years you will keep more money in your pocket than the neighbor that rents.
Yep Millennials, Gen X and Boomers have all been handed a once in a lifetime gift here. Each of those generations made out like bandits with low housing prices until the last few years and low interest rates.
Gen Z and the generations to come have a real reason to be pissed at the rest of us.
What gift would that be? Genuine question - I don't see what gift I received that is comparible to my in-laws purchasing their first home for 30k and flipping it for 100k not long after. I haven't had a gift close to that.
> purchasing their first home for 30k and flipping it for 100k not long after
In a lot of markets here (I’m Canadian) average people who bought average homes in the mid 2010’s (millennials) have already made over a million dollars. Most home owners make way more money from their home than their job. This will never happen to my generation.
In Australia at least there's a substantial gap between affordability for millennials and us Gen X'ers, reflected in homeownership rates. The trend only seemed to have been getting worse throughout covid (governments threw a lot of money into economic recovery, combined with super low interest rates, driving up house prices despite near zero immigration and absence of foreign students etc., though they're coming down now). Was that not true in the US? Gen Z are just coming into house- buying age now, though my own son is likely 8-10 years off from being a good position to afford anything at all, and without my help (or a lottery win), it's not going to be a house or even apartment anywhere close to where I live. But a lot could change in that time.
No idea about the US, I'm in Canada and housing has only gone off the rails in the past 4-5 years. So those 3 generations all had legit chances to buy a home at a reasonable price.
I'd assume every country is its own special mess:)
In Canada last year we had a stat released that said 1 in 5 Millennials that own property own more than one. This was inline with both GenX and Boomer stats.
Millennials are just as much a part of the problem as any other generation, assuming you think speculators are part of the problem.
"Speculators" sure, but most people who own multiple properties I wouldn't think fall into that category. We own a rental property - it's very much a long term investment, and we charge rent below market rate (it's still positively geared!). I don't believe our purchase locked out any first home buyers, it's a tiny 1BR flat, and priced at a point those just getting onto the property ladder could've afforded it (and outbid us).
If we do sell the property it'll be to help my Gen-Z son buy a house. Having had assistance from my own parents (a smallish interest free loan that I paid back within 5 years) that seems fair enough.
I would if I thought I was one! A speculator I'd see as the sort of person who regularly buys and sells property hoping to make quick cash. While there is some tax regulation to discourage that here (you pay a lot more in CGT if you sell quickly etc.), I still don't think we have the settings right, it's too easy to make money if you already have it, at the expense of houses not being available to people who actually want to buy a house they can live in (who are stereotypically couples thinking of starting families etc.)
Renting for life isn't the same thing as being indebted for life. You can move out at any time and the landlord doesn't have any hold over you. Doesn't sound much like peonage to me.
Yes...usually you sign an agreement for the year in Apartment Complexes for instance. They also raise the price each year and make you sign. I do not miss apartment living
Not a native speaker so I'm not sure what you call an apartment complex, but I've lived in apartments that were in complexes of multiple buildings and never heard of paying per year. That sure seems to suck.
Currently I'm unsure where I will/want to settle down.
I also manage to save some money monthly, which I invest in diverse markets. So my thinking is that at there isn't (or "shouldn't be") any rush for me to buy property.
But news like this obviously goes against that and will have me revisit the idea.
Other people are playing the "enrich themselves at the expensive of the collective" game, so you should too. The move in this situation is to seek out rent control. That will cap rent increases for you at like 5% a year in most places. If you are able to swing a few promotions at work while staying in this same place, you might come out well ahead of any potential rent increases and manage to start actually saving and investing money. This is the route to property ownership a lot of people I know in southern california are taking.
Well, the idea that owner will be saddled with serious repair and maintenance whereas renter on virtue of being a renter will just move out to house on next street risk free seems unsustainable to me.
Increasing rents are a kind of distributing risks of costly maintenance that renters doesn't want to care about.
I have no data for this but I'd imagine rents have increased substantially to make up for the eviction moratoriums. Several friends of mine who own an extra house (usually their parents) ran into the problem of being unable to evict a tenant, and also having the tenant refuse to pay (because the government told them it was ok). The only solution here is to raise rents to compensate and unfortunately this drives out would-be good tenants.
But yeah in general rents being more expensive than mortgages is a function of risk. Renting is generally less risky for renters are more and more risky for the owners, so it's only fair that the owners be compensated for the risk. The question is where do you draw the line on fair risk compensation vs outright usury. In states like California and New York it's getting to be insane. Even in the low CoL area I am in I have no idea how people pay $1000 for a shoebox studio.
Not all renters are renting because they want to. For some of us it’s the only option. I would have bought a home years earlier than I did if house prices were more affordable.
I mean you make fair point. But that's in general story of life. I also do not want expensive day care, expensive home therapies for my sick kid that insurance does not pay for, or exhausting commute to work with no option to work remote. Still here I am doing things I do not want to.
If I leave this apartment in a worse state (besides fair wear and tear) than it was when I started renting it, the cost of repair will be on me via a portion of my rental deposit that I won't get back.
Sure fair wear and tear does cost something to service/repair over time, but generally things seem to last.
I'd love to buy a house and take care of annoying/costly maintenance myself, but the cost of entry is 7 figures for a garbage home in my area. Sometimes I dream of fixing a fucked up pipe or replacing drywall, y'know?
In a competitive market (I'd say even the biggest investors own <10% of the markets they operate in), rents are bounded by competition. The bigger reason rents are going up is there is not enough supply for people to live in. Things like environmental reviews, zoning policy, mandatory low income units, and "historical" buildings make it very unappealing or impossible to develop new housing.
At the very least, replacing all SFH with townhouses would give 2x density increase. Removing the height limit on new construction and allowing rebuilds of old apartment buildings without excessive permitting would probably give another 3x increase.
LA for example is built into the 90% range of its zoned capacity today of 4.3 million people with a population of just under 4 million by official counts (higher in actually no doubt). Meanwhile, in the 1960s when homes in LA were actually affordable, the population was 2.5 million, with a zoned capacity of 10 million. That means if we want to make LA as affordable as it was in the 1960s, then we should zone the city for at least 16 million people, instead of 4.3 million people as it is zoned today.
That's insane. More fun LA facts. LA produced ~60k housing units out of a goal of ~80k over the last 8 years. Their goal for the next 8 years is 450k. They are starting at least 1 year late due to the COVID eviction moratorium. Right now you still cannot Ellis Act an occupied property to demolish it. I would wager that they will not meet their goal.
There's a lot of low hanging fruit in LA for redevelopment that won't even require a tenant to leave. For example on most arteries you have single story commercial buildings with no one living on the property. There's also a lot of generally derelict property I've noticed for a number of years in very prominent locations that are not being redeveloped for whatever reason. For example, this building has seen a few structure fires recently. If you go back to 2007, the oldest date on google street view, it looks exactly the same, so its been in this state of disuse for at least 15 years. This is not a bad location to build an apartment; you are immediately adjacent to a red line station and other buildings nearby along Vermont Ave have been converted in recent years to new 5 over 1 style apartments.
Ha, I know that building. There is always graffiti along the top. Didn't know it was empty. That's a 10/10, next to a metro stop and freeway entrance. I'd buy that in a heartbeat. Looks like it changed hands for 2.8m in 2019. Someone must just be sitting on it.
There is low hanging fruit but people with smaller pockets need to go after what is available. I looked at every multi family listing for months in LA until I found something that wasn't bleeding cash and was zoned for more units. Most listings were just unrealistic and had some hold out tenants. It turned out to be bleeding cash, but still a good buy.
Don't forget the surface parking lots too. Plenty of great locations in downtown LA or Hollywood and elsewhere are squandered. This includes a corner lot on Hollywood and Vine, which seems pretty prime.
These are just bandaid solutions that do little to solve the underlaying problem and well established fact that we simply haven't been building enough homes over the last 50 years. Proposals that don't address this, or remove capital from the market should be met with skepticism imo.
The high rate of rentals owned by individual investors is bad too if our goal is to maximize the number of home owners. I know a lot of people in my cohort who bought and moved into a new home, but kept their previous home as a rental. IMO this option is only accessible to large amount of people during this unique time because of government policy, ultra low interests rates, and societal trends. I think a large part of it is a government incentivized system that rewards incumbents in a disproportional manner. I think this disparity is contributing to overall feelings of resentment and will contribute to social issues and political turmoil.
It will be interesting to see how that plays out now that interest rates are rising. Honestly it feels a lot like 08 all over again. Somebody decided to go and get another home as an investment property, they leveraged themselves but took advantage of the low interest rates and a 20 year mortgage, it was a smart idea at the time, prices kept going up, they could just keep bumping rent because where would anyone else go, everywhere was getting more expensive.
Interest rates go up, there are problems with people affording the rent, suddenly their unit is sitting vacant for a month, or two, or three. They drop prices to increase interest, it isn't enough. Suddenly they need to flip the house, but because interest rates have gone up demand has gone down, everyone who was getting on the rental property gravy train suddenly isn't so interested when they're paying 8% instead of 2%, so the house is underwater. The bank forecloses and sells the property for cheap they don't want houses they want money, this means demand for other houses that are now overpriced becomes even lower, the dominoes keep falling. Suddenly tons of people that looked to the RE gravy train find themselves in over their head for taking out debts that seemed like a good idea at the time.
The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
1000 is too high a threshold. I wonder what it would look like if you dropped to 50 or 100.
I hang out in RE circles. Anecdotally it seems that probably most of these are bought by people who have just 1-20 properties - regular folks who have regular jobs but are looking for ways to supplement their income and hopefully quit their jobs. Owning merely 5 extra homes is not enough to replace income, and in some markets owning even 20 is not enough.
But without a good study that breaks it down, I have no idea if my anecdotal experience is reflective of the nationwide trend.
IMO extra properties should be heavily taxed. Say you have more than 3, it should basically not be profitable anymore. No one wins if people are hoarding houses
Would a duplex count as one property or two? How about a 4-plex?
Would this apply to apartment complexes as well? As in, it won't be profitable to own more than 3 complexes? Would that result in most capital going into megacomplexes and fewer people wanting to buy small apartment complexes with only, say, 10 units?
Not disagreeing with you, but there are nuances involved.
Totally agreed. Petite landlordism is causing is a LOT of economic damage to Gen Z and even younger millenials. It's a much larger problem than REITs, IMO.
They're "regular" in that their income is not high - significantly less than me, and I earn significantly less than SV folks. Nurses, journalists, people working at the bank, etc. Many don't have a degree. None come with money.[2]
My wife would bug me often to "look into real estate", and a cursory look always seemed insane - no way is it outperforming the S&P long term! Finally I decided to look at it in depth, and although I personally did not get involved in RE investing, I did see how it works.
Owning 5 extra home sounds like a wealthy person, but the reality is most of these people aim to earn about $200/mo net profit on each of these homes. The rest of the money goes into paying off the loan, repairs, saving for vacancies, property management, etc. You can make a lot if the property/rent appreciates significantly, but most of these folks do not rely on it. And then on top of that there are some tax benefits.
The trick is finding ways to finance it, and finding good deals. The typical house for sale on the MLS will not earn you money and will likely be a loss unless it happens to appreciate. So most of these folks are looking for deals: Properties that banks will not approve loans to purchase because they are in such bad condition. Say a house, if in good condition, would sell for $300K. However, it's in very poor shape and the owner needs money. His balance on the loan is $100K. You pay him $150K or $200K in cash, spend $50K to get the property up to code, and rent it out.
But who has $150K cash lying around? Not these guys. So they find rich people who'll lend it to them (including the $50K to repair) at 12% interest rates. The idea is that it will take 3-6 months to bring the property up to code, so even though the rates seem high, the absolute amount you pay on that interest is not that high. Once it's up to code, the house is worth the market rate of $300K. You refinance, pay the original lender his balance, and can either sell the house (flip), or rent it. You often get some extra cash this way to help finance the next deal.
The beauty of it all? It's low risk. These are non-recourse loans. If you miscalculated and the deal isn't going to be profitable (e.g. the cost to repair is a lot more than estimated), the lender cannot come after your home, car, bank account, etc. They only get to keep the property you bought. You get no hit to your credit.
Of course, because of this, most such lenders will want you to put in some money (e.g. $20K). And they'll want to see how you made the repair estimates, etc. They'll lend you money only if they agree with your analysis.
Real estate is really one of the few options accessible to most - as opposed to, say, a 401K that requires an employer to offer it. It's a lot safer and simpler than most other investments. If you compare it with trying to understand the stock market, you begin to wonder why people invest in the stock market at all. Within a few months of reading and studying, you'll know all you need to know to start making money. So yes, that's why so many "regular" people are in it: It's simple[1], and they don't have access to other ways of making money. Few will lend you $150K to put into the stock market. But many will lend you that amount for real estate investing.
[1] "It's simple. Buy low, sell high. It's so simple even Donald Trump can do it!" (Common refrain you'll hear).
[2] Now above I'm talking about traditional real estate/rentals. If you go into AirBnB, the profit margins can be much higher. Over $1000/mo net profit per unit. I know one guy who was probably earning less than $70K/year in California study how to do STRs, and he's doing very well now. 2 years in made over $350K net/year, and growth is rapid - he expects to hit $1M/year soon. Obviously, he's an outlier, and he did have to work hard at it (quit his real job) but everything he did is very accessible to regular folks.
If your mortgage is 1000 and you charge 3 Students 700 a head, you now have 1100 left over. Put 500 away for repairs and pocket the 600. 600x5 = 3000 USD Straight Profit. If you don't put anything away for repairs: 2100 - 1000 = 1100 x5 = 5,500 a month = 66,000 a year for 5 homes
That is shockingly bad. I was going to make a comment about how ridiculous your comment is..until I did the math! Kudos
It would be interesting to see the "investors" segmented by assets under management (AUM). I'm sure some "investors" are mom and pop rental situations while other institutions, such as BlackRock, are purchasing single-family homes at scale.
I'll also be curious to see what happens when remodels need to happen. Many trade labor markets are hyper localized and difficult to scale across a property portfolio, this is where RedFin and Zillow struggled to "flip" effectively.
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
Re: Zillow, it actually did well in the flipping business when relying on its models to make the buy decision. It got into trouble after tweaking the model to say "buy" on more (and more expensive) homes.
IIRC Zillow did "too well" to the point that they felt their model wasn't gauging the market correctly and was going to inevitably fail them spectacularly. The fact that it did well, better than it should have was just good luck... but also a bad sign because the model predicted a different outcome.
But there's been a general backlash on the internet the past few years about giant pools of money like Blackrock buying up housing supply. I don't think it's that different from your typical "mom and pop" real estate investor buying up homes to rent out. Ultimately, much of Blackrock's funds are held by regular mom-and-pop investors.
BlackRock, for all the flack it gets, ultimately is purchasing these homes on behalf of large institutional investors, like retirement plans, pensions, social security programs etc.
I fully support developing newer cheaper alternatives to housing and cut open the jugular vein of this rotten market. Let the investors and creditors burn.
Don’t forget also the anticipation of inflation - many use housing as a hedge of high inflationary environment.
If there is more damage the Fed could have done to GenZ since the bailout, that was reckless Covid spending. I sincerely wish these agencies are shut down someday. But alas we are going the other way.
Except the problem isn't investors buying property.
Investors are buying up property for rental because it is profitable because there is huge demand for it because a lot of people simply are unable to own their own house and that is because housing is getting expensive faster than salaries.
The problem is government tied in stupid games while important problems like encouraging new, more affordable housing is set aside as some kind of communist agenda. A house does not need to cost the equivalent of your entire life's savings.
Also government sleeping on the job not including useful knowledge in school curriculum -- like basics of personal finances and economics.
> Also government sleeping on the job not including useful knowledge in school curriculum -- like basics of personal finances and economics.
Seems intentional at this point. Keep 99% of the population as useful, financially-illiterate workers who don't realize they are being exploited by the 1% ruling class to whom laws don't apply.
What constitutes an 'Investor' in this article? If I see a distressed home for sale in my neighborhood and decide to buy it, fix it up, and rent it out; this article seems to put me in the same category as institutional investors who come in and buy or build entire communities of homes.
> If I see a distressed home for sale in my neighborhood and decide to buy it, fix it up, and rent it out
Buying something to rent it out is clearly investing.
Buying something to fix it and re-sell it is usually also seen as investing.
Buying something to use it (live in it) could also be an investment but usually isn't seen as such because it's assumed that you only live in one place.
If its my primary residence, then it's a place to live.
If it appreciates, cool. I can make more money when I move somewhere else and use that to leverage my next house WHICH I LIVE IN.. If it goes down, bummer, but I can still use that to leverage my next house WHICH I LIVE IN.
I bought the house to live there, not as a financial instrument. The financial thing is secondary.
Did I not say that the primary thing should be TO LIVE IN?
If the market goes up or down, I cant do shit about that.
But you pick on the fact that I'm talking about a primary (and in my case, sole) residence, and this article is talking about parasites that buy hundreds or thousands of homes to then turn back around and gatekeep living spaces.
Id say tax those vultures out of a company. They do nothing good, and cause boundless suffering.
You're responding to a thread asking who is and who isn't an investor. Are you agreeing that you're an investor but that's ok because you also live in your house? Or are you saying your not an investor because you live in your house?
Seems everyone that bought a home for anything other than living in it. In the article they even mention:
> The CoreLogic data shows that what it calls “mega” investors, with a thousand or more homes, bought 3% of houses last year and in 2022, compared with about 1% in previous years, with the bulk of investor purchases made by smaller groups.
So most of the percentage increase is done by mom-and-pop investors rather than groups like Blackrock, Vanguard, etc. With that said the article definitely tries to paint the picture that all of these investors are institutional ones, and burying that important lede.
I get the hate against institutional investors going in and buying up entire neighborhoods. But the sentiment that we should just abolish landlords is rather dumb IMO. There's a massive gap between someone being able to afford $1200 in rent and being able to afford a home with all of the added costs.
>I get the hate against institutional investors going in and buying up entire neighborhoods. But the sentiment that we should just abolish landlords is rather dumb IMO. There's a massive gap between someone being able to afford $1200 in rent and being able to afford a home with all of the added costs.
As opposed to... being able to afford the rent with the same added costs? Take my area for example: rent in my neighborhood has increased to $2000/month. My mortgage remains at $1500/month (taxes, insurance, HOA included). What added costs amount to $500 extra/month? It's not water, sewage, trash, electricity, or gas! Those costs exist for renters just as much as owners. It's not basic maintenance... that has not cost me anywhere near $6000/year. So what are the added costs that landlords are "saving" renters from?
> So what are the added costs that landlords are "saving" renters from?
Utilities will generally cost a bit more. But the real killers with home ownership tend to be large expenses that come due all at once. Roof needs to be replaced, AC unit needs to be replaced, major appliance replacement, foundation problems, any number of expensive things can and will come up.
I already addressed this: all these costs are already factored into the monthly rent.
In my case I had to replace the dishwasher. I wanted a quiet one, so it ran about $1200. I bought it on credit and got 0% financing. So my housing price increases by $100 for the next year.
Now if I were renting? $2000/month. The landlord gets the absolute cheapest dishwasher they can find. It maybe runs them $300. So the landlord would be saving me ... $-475.
Paying $5700 extra a year to avoid a $300 added cost makes no sense. Paying $6000 a year in perpetuity for a one-time expense that lasts the next 20 years also makes no sense.
The point is that the tenant is not being protected from any added costs, they are paying way above market value for them.
> But the real killers with home ownership tend to be large expenses that come due all at once.
All these expenses (plus a profit margin) are built into the rent, of course.
Two ways the owner handles them: Either they have enough money saved that they can absorb the spikes in cost, or, they contract some maintenance plan they have to pay every month but smooths out the costs to avoid surprises.
Key phrase here being “recently bought.” Get back to us after you’ve had to replace the roof, had a water main burst, or something of that nature that requires you to cough up $10K+ all at once. The mortgage is the _minimum_ monthly payment, not the maximum.
> Get back to us after you’ve had to replace the roof, had a water main burst, or something of that nature that requires you to cough up $10K+ all at once.
Only $10k? I've planned for and budgeted for repairs and additions averaging 20% of the loan for the lifetime of the house. It's still cheaper to buy than to rent even with 20% on top of PITI.
It's cheaper because I'm paying myself when I pay my mortgage: if I decide to sell then a lot of that mortgage is now returned to me. You will never pay yourself the same way by renting.
If I don't sell then 20% on top of PITI is what I was paying in rent anyway.
So what? That person who wants it for themselves is competing against all the renters that would like to rent the home that OP fixes up, but who aren't privileged enough to be able to put together a down payment to buy a house. So that aspirational home buyer is driving up the price for renters. Should we be angry at the home buyer as well then?
It's not like OP is going to buy the home and let it sit vacant.
OP buying reduces the hosing supply for owners and raises the price to become an owner pushing more people out of the "privileged" owners bracket. At the same time doing it to the most accessible to own property and making money in the process.
Likewise, the person who buys the house and lives in it takes it off the market for renters, thereby increasing costs to the "unprivileged" renters bracket.
The details of what constitutes an investor are unclear. It's possible they made the mistake of labeling purchases by trusts as investor purposes when many individuals buy houses directly into their trusts for estate planning purposes. I've seen that error made in these analyses, either inadvertently or deliberately for purposes of embellishing the problem.
I think the concern is that rents are being controlled (and increased) by investors unfairly. There is always a market for rental properties (who wants to own when they know they will move in less than a couple years?); but there is concern that investors wield too much power.
I think this is only possible when large scale investors 'corner the market' by buying up a large percentage of homes in a given area. They can then control the rents because there is little competition.
On the other hand, if nearly every rental home is owned by a separate investor then each owner is competing with all the other small investors for tenants. They have competition and might be forced to keep the rents lower.
I disagree, landlords are price takers. There is not much I can do to drive my rents up if no one wants to pay it. If my rents are below market, I can get them up to market. But pushing it beyond that is competitive based on location and how nice the unit is.
Honesty the best thing I can do is to build more units on the land I own. That is challenging though so it takes time and capital.
You can thank single family home zoning and how difficult the city makes it to build for the rising rents. The landlords I know are very pro building. 14 units is more income than 4.
Imagine going one step further and having each home owned by a separate owner, not just each second home.
Rents are being affected by every investor, including those that own only two houses. Perhaps more explicitly by large companies with hundreds or thousands of properties, perhaps not. I've certainly spent enough time on threads in which people who own only a single rental property in addition to their own home compare notes on how to raise rents for more income in their pockets.
> rents are being controlled (and increased) by investors (unfairly).
With all of the regulations, risks, and high interest rates forced on landlords, I am wondering what you mean by "unfairly"? One bad tenant in Seattle, could mean months without income and even massive property damaged with no ability to recover damages.
As a small time landlord (I rent a few rooms in my primary residence), I feel that the rent I can charge is way below the risks of a bad tenant.
Small-scale investors are not necessarily local. It's anecdata, but I know quite a few Seattle-area folks who bought rental houses in LCOL/MCOL areas over the last several years because the local market was too expensive. They still pay property taxes, though, and most property managers are local-ish.
How are foreigners giving money to local construction companies and others in the community "extracting value"? Those foreign investors are capitalizing the community.
If the owner of the property lives in the community, the rent that is being paid to that owner is much more likely to be circulated locally. If the rent goes to a foreign company, it's removed entirely.
Upkeep and maintenance would also occur regardless of who the owner of the property is, so it's not like they're creating "new jobs" because it's foreignly owned.
If the extraction of rent over the long term is an issue, do you also consider the extraction of mortgage interest by out-of-state entities to be a similar problem? This is how investments work, people inject money in now, in the hopes of returns later; the hope is that in the meantime, the locals benefit, and are able to create the foundations of longer-term success.
There is huge value in subdividing land and building, creating housing for people who cannot afford to buy and build. You're stuck in a suburbia mindset.
Not everyone can afford a SFH, there isn't enough land. Not everyone can afford to build. Not everyone wants to have massive switching costs when they need to move.
I think most people who are against the rentier economy would agree that there is great value in all of those things, but that they shouldn't be a for-profit enterprise. One way to obtain that value without landlords is for the state to buy land, subdivide it, and build dense housing units available to citizens who live in them at a reasonable, or even subsidized, cost.
My issue with this solution is we do not even allow private entities to build dense housing. So we are breaking a market and then saying the state is the solution. I interact with the government regularly and I do not have faith in their capabilities to get anything done.
I disagree. Someone is funding the construction in the same way that someone is paying for the land and keeping it subdivided (rental units) and available.
Tenants are more than welcome to form LLCs and collectively purchase land and build or buy existing housing. This is called Tenant in Common. Maybe that is a business (non profit) idea for you, make TiC easier.
I rent an apartment, and am pretty happy with the arrangement. Obviously I wish I was paying less, but at the end of the day, I chose to live here, and enjoy the flexibility it allows me. (For a few thousand dollars and a moving truck, I can move across the country on a whim. I can go on vacation for months at a time by just locking my door and walking away. My landlord is responsible if any major repairs are necessary.)
My point here is that a blanket statement such as "landlords bad" doesn't match the experience of everyone out there.
"but many Republican lawmakers oppose such controls." — I'm not American and not in in the US, so I'm wondering, why in many articles I read, "Doing Good Things For People™" tend to be opposed by Republicans?
1. Are there a scheme to vilify them? Bcoz it's not even mentioned why they oppose (maybe they see Bad Things™ far ahead).
Paraphrasing Lawrence Lessig: “To even stand in the general election, you first have to win the ‘money election’.”
That's his take on how campaign finance influences which candidates run or are “taken seriously” by the media - presidential primaries or congressional candidates alike.
The republic is unfortunately not “dependent on the people alone” if money has a too tight grip on who gets to run for election.
Republican lawmakers by and large represent corporate business interests and the wealthy. They use social issues as their drumbeat to rally their base who won't benefit from these handouts to the wealthy. Many people don't understand economics but are happy to vote along social issues. Single issue voting is common for such issues.
Because republican lawmakers come from states where this is not a problem.
Perhaps many houses in red states are owned by corporate landlords but housing is way more affordable in those states.
So this is a case of lawmakers simply not seeing the problem amongst the people they represent and thus being unwilling to pass what they view as unnecessary regulation.
Ultimately housing affordability is a blue state problem.
Moreover for all the lip service democrats pay to housing, in my state of Oregon, where the democrats have supermajorities of both houses in the legislature and the governorship, they do nothing.
I think that if you spent time on American politics you'll find that the democrats rarely vote for actual regulation, they just promise it to you and then make excuses.
Home prices are already set to decrease (although arguably not by enough to make a difference)
Here is the home price futures market on the Chicago Mercantile Exchange. It's a thinly traded market, but it's in clear backwardation. Expected to hit -12.7% from current levels if you wait 2 years. Will take a while to get back to where it is now.
https://www.cmegroup.com/markets/real-estate/residential/San...
Because many spend so much time moral grandstanding and signaling their virtue they cannot conceive of anyone with a contrary opinion to them having any valid reason for disagreeing, and therefore the only reason for them doing what they are doing must be because they are morally deficient and evil.
This then gets reinforced by a media-industrial complex that is happy to continue to feed you points you agree with to get you to keep clicking.
Disclaimer: I am not saying I support the Republican party or that I agree with them, but that doesn't change that tons of people cannot possibly conceive of someone having a different viewpoint than them being anything other than morally deficient.
In Capital and Ideology, Piketty does a review of modern democracies, there's a two party system of left and right in every one except Poland where there was at the time of writing a far right and right wing party competing for dominance. Conservative parties typically rely on rural voting bloc, less educated and much older people, it's almost universal somehow, that doesn't make their opinion wrong off the bat, it's just demographics of voting. There's also actually a component of "harming these people I disagree with" that drives the vote for reactionary groups and is an active part of Murdoch sponsored media, there's not really a thoughtful process about how it could harm themselves.
For example, there was the irony of multiple cases of people voting for Trump because immigrants are bad, and then having their spouse deported for some visa violation. Or one can look at the people who have opposition to abortion voting for Republicans. Then someone who cannot consent is raped or someone has a non viable pregnancy and neither is eligible for an abortion, which has happened since Roe v Wade was re decided. In the USA, the Senate is decidedly unrepresentative of the people of the United States as a whole, the House less so with the limit to 435 members, but not as bad in some ways.
You can also look to Brexit post vote interviews where people who voted in favor of it said they didn't care if it hurt the UK, they wanted it to happen.
An older example in the USA, the Reagan administration characterized AIDs as the "gay plague" and played down the effects and had no official response to the health crisis other than to joke about it, delaying an effective national strategy. Today there is still a gay faction of the the GOP called the Log Cabin Republicans that is barred from some party events but still back the GOP, Peter Thiel has become a big GOP backer in spite of most state party platforms calling gay people abnormal and most subsequent federal GOP administrations sending and supporting people in Africa to criminalize gay sex.
On the topic of housing (the subject of this HN thread), the most NIMBY and unequal housing locations are in urban California where there hasn't been a Republican elected in 40 years. So maybe a bias by the writer, I'm not sure the full context or what was intended.
It tends to be that way because the Republican party line is to wring hands over how much any social program will cost, even if it's free school lunches for children who live in impoverished households, while over half of the government's yearly budget is a black box of untouchable military funds.
There are Billions of dollars in cash just sitting around at companies like Blackstone Group waiting for the housing market to crash - which of course it will.
References to the racialization of property in the united states. The issue is not simply who has a right to a own home, but who has a right to housing.
I will be perfectly ok if the high interest rates drive these companies bankrupt. They chose to speculate. Speculation comes with risk. Let them bear the burden.
For owner occupancy protections, the real answer was to never to give tax breaks to investors in the first place. Only owner occupants should have any tax breaks. But this is not going to happen.
They won't. They will get a bailout because they have intentionally woven themselves into the fabric of everything so that it's mutually assured destruction if they go under.
If they go bankrupt it will wipe out 401k, retirement plans, and cause massive layoffs due to businesses going under as their primary sources of funding (debt) dry up. They already did it in 2008 and called the governments bluff. Now that they know they can do it there's no way they're turning back.
Edit: bringing back the glass steagall act would be a good start. But it will take decades to unwind the standoff.
Now, it's about 25%. In the future it will be 50%, the 100% - the trend is going in that direction. Millennials and the generations after will look at era of home ownership like the "good old days" while coughing up 75% of their income for rent.
There is so much to be said for this problem, but...its exhausting. I give up.
We've inadvertently created substantial cost advantages for REITS:
* Assuming that they never sell, they never pay capital gains taxes. Meanwhile, if I move and sell, I get hit now.
* Ability to cross-collateralize a bunch of houses lets you tap into institutional capital. No pesky appraisal fees, no payoff for a mortgage broker, etc. Result is that their cost of capital is way below an individual's.
* Better management -- ability to hire a bunch of actual skilled handymen to work across multiple properties means that they have specialization/ gains from scale. Typical homeowner is a jack of all trades who has to hire specialized talent which is vastly more expensive.
* lots of pricing data with which to price as optimistically as possible.
* ability to write off expenses
So basically, tax regime changes have created the rise of the REIT.
In Denmark housing built before 1992 cannot be rented out for profit. The owner can only demand enough rent to cover for upkeep and maintenance. However it's still a lucrative business to invest in old housing in the bigger towns and cities because the price is only trending upwards.
Just make it illegal for a corporation to own residential property. Or heck, even just make it illegal for one to own > 5 properties or some number of acreage. That would put a damper on this shit.
I'm sure the percentage is much much higher in supply constrained cities, because those cities are where there's much more opportunity for speculative real estate growth, and the local political structures are dedicated to keeping the supply constrained, and the speculative real estate asset price growth unchecked.
At the core of a lot of this is the NIMBY behavior and downzoning that started in the 1970s. It's hyper-commodified housing, while decommoditizing out places to live. (Please note that the difference between commodify and commoditize, here.)
And it’s just as much the fault of people who demand we don’t build for SFHs, only high density housing that’s highly undesirable to a large fraction of the home buying population. You don’t get to just blame NIMBYism for constraining the supply of the most desirable homes.
In supply constrained areas, more SFHs are physically impossible. And the more people who are allowed to live in their preferred multi family units, the more SFHs available to those who prefer them.
We don't block SFHs anywhere, there's no minimum density. However we block higher densities nearly everywhere.
So blaming the people wanting higher density makes zero sense.
This isn't caused by investors, they simply see the value in owning and renting to those that aren't interested or capable of outright ownership.
The price increases seen in the market are driven by the rising cost of energy, materials, and the lowering value of the dollar through inflation.
If governments, state and local, were receptive to construction, you'd see the market compensate for higher prices with increased supply. With building heavily regulated in many areas you've got government driving prices up through their limits on supply.
Owning homes you can't live in is as perverse as claiming domain over a patch of the ocean or a chunk of the sky. The very concept ought to be attacked with every legal method.
Do you own the home you live in or are you renting? Renting is enabled by doing just that, someone owning a home they don't live in. So you want to outlaw renting?
> There is a large and growing number of people who support the idea of outlawing renting from anyone other than the government (public housing).
Yes I love the idea, the only thing that will be more efficient and effective than the mega corp, property management companies that cause most of the problems, due to size and bureaucracy will be the federal government. I love this idea, they are always a paragon of efficiency of virtue, they never succumb to politicians and bureaucrats selling out those they serve for political reasons, and of course who could object to the government having ownership of every non-occupied home in America, I see no problem with that. Especially giving the government the implicit right to then dictate all future housing that will be built.
I can see it now optimized for efficiency, compactness, and equality everyone lives in "the pod". Of course since you may move pods and it would be difficult to move your stuff you can't really have anything, but the American Housing Bureau would love to lease you everything you need for a much better price because they don't have to worry about "profit". It will be great we'll own nothing, we'll live in a pod, and of course at that point meat is going to be untenable so we can get protein from alternative sources like insects.
I can't wait for it, I'll live in a wonderful pod, I'll own absolutely nothing, I'll eat bugs and I am going to be so HAPPY!
Your sarcasm seems to rest primarily on the idea that the government is the least-efficient actor possible, which is a popular theory promoted by a group of people who tend to spend their time in control of the government ensuring it is the least-efficient actor possible.
Insert meme of Eric Andre shooting the government and then asking why the government would do such a thing.
In truth, governments around the world deliver a wide range of services at a wide level of efficiencies, and even here in the US, any reasonable comparison of government-provided services with their direct non-governmental equivalents reveals that the government does better than popular image suggests.
I mean, Fedex and UPS don't even deliver to many of the places the USPS does, and when they do, they charge more. Amazon relies heavily on USPS to deliver where they can't efficiently do so. And this is despite heavy-handed handicapping of the USPS in the form of onerous funding requirements by the same party who now tell you that the government is incapable of doing anything well.
There is public housing available in many countries around the world that doesn't carry the legacy of the USA's past efforts. Public housing that is desirable for more than just the economic reasons. Public housing doesn't have to mean total government control of housing. Really good public housing is possible if people want it to happen more than they want to score political points by strangling any efforts in that direction.
The biggest reason I don't support such a push in the USA is because I think there are too many people who think like the parent comment, and will not allow such efforts to succeed. That's not the only reason, though.
I own mine. The costs are significantly lower than the rent I was paying until last year.
So you want to outlaw renting?
You could make an argument against private renting. Personally I think the right step at this point in time is a relaxation of anti-construction laws such as zoning or parking requirements combined with charging sky-high taxes for unoccupied units. I also think owning single-family dwellings you don't spend at least three months a year in should be taxed so outrageously it's effectively illegal.
It's interesting to play armchair city planner and think what kind of tax structure to encourage more equitable housing. I imagine you'd want something like:
But I think you should also encourage density, like if you have a 5000 sqft house for two people, that should come with a sort of extra property tax than a 5000 sqft house for a large extended family or multifamily building.
These same people are the ones that will want bailed out when the economy crashes and their tenants can’t afford their ridiculously high rent. It’s greed. A buddy of mine wants to rent his home because then he can afford to buy a new home off what his renters are paying. Watch things crumble and he’s stuck with two mortgages.
I'm so frustrated by some of the conversations people get in around housing. They want to live in the most desirable places on planet earth, and seem to think that we should just abolish the concept of property ownership to accomplish this.
What do you guys think happens when you get what you want, and nobody can "own" property anymore? Do you think there is an unlimited amount of single family 3000 square foot homes in San Francisco and that you will all be able to live in them?
Go on zillow and look at cities you've never heard of in that awful "flyover" part of the country. There are scores of homes for less than $200k, and plenty of homes around $100k. Go look at Parkersberg, ~~OH~~ WV.
This is such a twisted framing of the issue. No one wants to "abolish property ownership". In fact housing proponents want the exact opposite – give everybody the opportunity to own a house rather than a select few large corporations and investors. Let me build my own house on a piece of land in or near the city, just like my grandparents did just a couple of generations ago. Remove years worth of excessive permits, reviews and other red tape. Remove restrictive zoning laws. Remove neighbors being able to veto my property because it would cast a shadow in their garden for 6 minutes a year.
And no, "too bad, go live in the middle of nowhere" isn't an acceptable answer.
>And no, "too bad, go live in the middle of nowhere" isn't an acceptable answer.
As someone who grew up in a small town, do you understand how condescending this is? People have homes there, have families there, work hard and live decent lives. Just because they live at a pace you're not accustomed to, doesn't make living there some kind of hellish existence. Many would say the same about a filthy, overcrowded, crime-ridden city, of which I've lived in several across the US.
I grew up in a very small town (under 5k pop) and did not find this condescending. There are very clear and obvious drawbacks to living there. It’s really not for everyone, evidenced by the fact that 80% of the US population lives in urban areas despite small towns being incredibly cheap.
It's not condescending for someone to imply "I live somewhere important, you live somewhere unimportant" ?
Phrased another way, if someone came in for an interview and said "I'm from Laketon, Indiana", do you think it would be appropriate for the interviewer to say "Oh, you're from the middle of nowhere." ? I don't think that would be appropriate at all.
You seem to want to get offended for no reason. If I forced everyone from your town to move to downtown New York would they be happy about it? Or could it be that different people have different lifestyle preferences?
I'm sure where you live is lovely, but I still don't want to move there myself.
Just because you don't want to live there, doesn't make them "middle of nowhere" is my point. That's an extremely common elitist attitude that I see among tech people who look down their noses at people in rural communities.
Sorry but with all due respect, "too bad, go live in the middle of nowhere" is absolutely an acceptable answer. You're acting like you're entitled to live where ever you want, but the simple reality is that this is not possible.
You need to come to grips with that objective fact.
This is a pretty silly response. Are people entitled to live wherever they want? No. But the situation is very obviously not that black and white. We allow many things in society that people aren't entitled to, largely because we believe it will build a better society.
Am I entitled to own my investment properties? No.
Am I entitled to block neighbouring housing from being built? No.
But society allows both of these things because they ostensibly should result in a better society. Of course, they may not, and if they don't result in a better society, we should probably turn the dial back on these factors, but not get rid of them altogether.
So should anyone be entitled to live anywhere? No. But should a middle-class person be able to build a life in places where there are opportunities for job growth (and like it or not, right now, that's the big cities)? Probably, if we think that will result in a better society. So we may need to turns some policy dials to ensure this will happen.
> But should a middle-class person be able to build a life in places where there are opportunities for job growth (and like it or not, right now, that's the big cities)?
No. You are not entitled to access to specific jobs or a specific area.
There's a giant gap between "you're entitled to live wherever you want" and "too bad, go live in the middle of nowhere."
My read is that the person you're responding to is in the middle of that gap; and your response frames them as being on one extreme edge and then says an acceptable answer is to go to the other extreme edge.
Why is it not possible? The only "objective fact" is that people in certain areas in this country have lobbied hard to make sure that no one else should be able to move in anywhere around them. These rules are all reversible.
It’s not possible because there is limited space. Someone loses, always. There is no version of reality where everyone who wants to live in San Francisco gets to.
You can disagree with how we divvy up SF but claiming you should get to live there is in direct contradiction with the idea that everyone should get to live there.
Someone, somehow, will get bumped. You’re just advocating for a system that would put you there at the expense of someone else.
You are acting like owning a home entitles you to dictate how other people get to live. It does not. Owning a home shouldn't allow you to dictate that someone cannot build a home near you. Unfortunately it does in some places, but this is fixable.
Thank you so much for this beautiful insight. I just purchased a 100 sqft plot of land in the Alaskan wilderness where I will hire 20 employees and start a manufacturing business... oh wait, that's ridiculous.
Your argument contributes nothing because it fails to address the real negative consequences of unaffordable housing. After a point (which we most certainly have crossed), it affects society in strongly negative ways.
I don't know what kind of society you want to live in, but I don't want any part of that.
What the heck is so wrong with the Midwest in your mind? Do you seriously think living in Ohio, a couple of hours from the Great Lakes, is equivalent to living on some remote parcel of land in rural Alaska?
You’re also missing the forest for the trees because you’re not seeing the real issue. What you’re describing is really just the core concept of any market.
The issue is that we’re seriously restricting growth and innovation in favor of using housing as a financial investment. Yes, it’s necessary to have some degree of inequality and nobody is entitled to to live in any exact spot, but it’s gotten out of hand at this point, it’s hurting our societies, and it’s unsustainable.
Clearly it is ethically problematic for the people of San Francisco to squirt out babies and then 18 years later tell them to go fuck off, go live in Gary, Indiana.
Don't give anyone any ideas or they might discover that they can buy a house like this [1] that is walking distance to the commuter train, walking distance to the beach, and walking distance to the trails in a National Park [2] [3] [4]
No one is forcing you to live in the city you do now. I am probably in a similar income range yet live a <3 miles from a major city that is known for high housing market.
People have such high expectations of housing, they are pricing themselves out. I do live in a 60+ year old, 1400 sf house, but that doesn't bother me.
I empathize for you, I do, but nothing you've said here means you deserve to live in San Francisco and a) not somewhere else or b) more than anyone else.
You do not deserve to live in San Francisco. Sorry.
What's probably a bit more toxic about your attitude is the implied belief that you deserve "better" than everywhere else in the US, that San Francisco is "yours* and not anyone else's.
And not for nothing, but I do have children (two) and am entirely capable of empathizing with others.
>just let me build a house where somebody else already owns the property where I want to build that house.
How does that work out in your mind without abolishing the concept of property ownership? What happens when somebody wants to build their house where you already have yours?
I'm not talking about building in someone's front yard. If you sell me a piece of land that you own, and it is now legally mine, should I be able to build a house on it? That itself is practically impossible to do in 99% of cases in most major cities in the US. A city like San Francisco approves like 7-10 shovel-ready housing projects a year, and fewer actually get completed.
I agree that in SF it has gotten out of hand. But the concept that communities can establish rules for what you can build in those communities seems acceptable?
If I moved to a a suburb because I wanted a smaller scale, and my neighbor wanted to build an apartment building next door, I'd probably push back against that. It feels like what is happening in SF is some extension of that.. projects getting caught up in community board reviews that happen slowly and unpredictably, and are staffed by old-timer SF residents who want to keep the city small. Frustrating for sure, but hard to fault them for that, if that's why they moved there pre-tech boom?
I personally live in NYC and appreciate that you can build whatever you want here!
I think the core of the problem is that we're losing the middle class of housing.
Obviously the nicest areas of the country, with the best weather, most opportunities, low crime, elite schools, etc. are going to be expensive. But it's getting to the point where it's prohibitively expensive for a middle class family just to live in a place without high crime/drug addiction/homelessness, reasonably good schools, reasonable healthcare options, and some measure of community/walkability (forget about weather and jobs).
You can live cheaply if you're willing to sacrifice in some of those areas, but they are major sacrifices that will have a negative influence on quality-of-life and the future prospects of kids who grow up there.
It wasn't always like this. I had a neighbor when I lived in North Berkeley (a beautiful neighborhood that checks every box you could want) who told me he bought his house in the late 90s for 150k. Now it's probably worth 2 million or more. I realized that everyone who bought on that block around that time had almost a six figure annual income for most of their adult lives solely from the appreciation of their homes.
I'm sure there are good deals out there that can still be found, but we really do have a problem if a table stakes decent family life is only affordable by the top 10% (or less).
Part of the problem is the middle of housing was often in towns anchored by one or two factories or other local businesses. With businesses being hyper-centralized today due to the internet and technology decoupling business from land, employees are now located much more centrally (we'll see how remote work changes this). For example, Google has hundreds of thousands of employees in the Bay Area alone. That's crazy. In the past, this would have formed several towns all across the country (because Google would need such a footprint to be able to deliver services nationally).
Now that anyone can start a large company without barely any land investment, it's no wonder people are increasingly concentrating in small portions of the country, while large portions are incredibly cheap, and in some places, depreciating.
Housing values in and around Silicon Valley have gone up extraordinarily since I was young for reasons that were not easily predictable. It's not a good model for housing costs in the rest of the US.
I grew up in uninteresting towns in Monterey County and San Bernardino County and both could check off points of 'acceptable places to live' which are affordable to the middle classes. No one talks about them because no one cares.
And even now these places are starting to become unaffordable for the middle class. I had an unsuccessful search last autumn for homes in Watsonville and northern Monterey County under $550,000 due to bidding wars that often resulted in homes selling for considerably more than asking. Prices are now starting to drop and inventory is rising, but interest rates are considerably higher than last fall when I started my search.
There’s been an explosion in home prices in the California Central Valley since the pandemic started. In 2019 it was possible to buy a brand new house in Los Banos and Merced for $280,000 and $250,000, respectively. Today you need around $450,000 and $400,000, respectively, to purchase similar new homes. And it’s not just the cost of materials that led to the massive price hikes; the cost of pre-existing homes also boomed in these towns.
I grew up in Sacramento and now rent an apartment in Santa Cruz County. Sacramento, once known for affordable housing with easy access to Bay Area and Tahoe amenities, is no longer affordable for many people. There are massive homeless encampments that I see whenever I visit the area these days. The housing situation is getting out of hand, and while this may not be indicative of a national crisis, in California the crisis has spread outside of the coast.
I'm with you friend. Posters throw out lines like "property shouldn't be an investment" as though the idea that property has intrinsic value is something invented in the last 50 years or so, not something that has been true for millennia.
I've been told that "housing is a right" which, if conceded, still runs into your point - housing may be a right, housing in the most expensive and populated areas in the US is not a right and there's no way to make it one.
An easy reply to these same people is to ask if they think they have a right to wood, brick, concrete, sewer pipes, electrical wire, all the other materials that go into making a livable house, and, on top of that, if they think they're freely entitled to the labor required to construct a house out of these properties.
> Every right requires infrastructure, investment, and labor to ensure. Life, liberty, and the pursuit of happiness aren’t free.
People had natural rights long before the concepts of infrastructure, investment, or labor were ever conceived.
> Whether or not housing should be a right, rights that are expensive to provide but are nonetheless provided anyway are nothing new.
My point wasn't about expense. It was about a perceived entitlement to resources and help outside oneself. Housing in itself is not a right as it depends on resources and labor that don't belong to you. Such resources and labor are not rights.
We all depend on labor and resources that don’t belong to us.
There’s no right to property, speech, or even life itself without institutions like the police, military, and courts. There’s no right to vote without a massive election bureaucracy. There’s no right to education without a school system.
Why are we given rights like the ones I mentioned, but not housing or healthcare or basic income? It’s simply because the we haven’t collectively decided that the state should provide them. But it could. There’s no fundamental difference between providing housing and providing police protection, roads, schools, parks, and elections.
You have a very odd definition of rights and their defense. Rights are something every person is born with. They don't originate from government instituions, resources, or labor. Rather these things, protect or enhance them. There is a right to speech because I have the ability to speak, not because government has the ability to defend it or to take it away. There is a right to vote because people are freely able to form relations and petition for their own interests. While there is a right to learn (i.e. seek and out obtain information), there is however no particular right to a school-based education, as one is not entitled to being taught by others.
Police protection exists because the state has a monopoly on violence. Even if the police were never present however, as in the case of very remote areas with small populations, one always has a right to self-defense.
Roads and schools are not rights. They're paid for by other people's money and built by the labor of others. Parks are pieces of land the government has almost always wrongfully taken by way of eminent domain.
Elections are a complicated case. Individuals have a right to vote, but state legislatures have wide berth to set the terms of voting within their respective jurisdictions. While I would say there is a right to vote, there isn't a right to an election on terms or rules one finds favorable for one's self.
You're just arbitrarily defining some things as rights, and others not. These things aren't etched into sacred tablets--they are decided collectively by a society and its government and are always evolving. There was no right to vote until enough people decided there should be one and made it so. Housing is no different.
No sacred tablets here. A right is an ability or activity one is able to purse without the intervention or interference of others. There were rights before government and society existed and if government and society collapsed tomorrow, you wouldn't lose your rights. It's a contradiction to says that society and government decide rights.
A right to vote is predicated on freedom of association among a nation's individual citizens. A person determines for himself whether he will or will not vote. It's not for society's sake that a vote is cast.
This is getting to only be about semantics. That’s your definition of ‘rights’ based on your specific set of political beliefs, but it doesn’t reflect common usage or what people are referring to when they call housing or healthcare a right. They mean that society, via the state, should provide those things to everyone.
And you absolutely would lose your right to safety without police or some other form of protection. The ‘right’ might exist in your own mind, but it won’t do anything to prevent someone else who doesn’t share that belief from killing you and taking all your stuff. Rights are only meaningful with power behind then.
> This is getting to only be about semantics. That’s your definition of ‘rights’ based on your specific set of political beliefs, but it doesn’t reflect common usage or what people are referring to when they call housing or healthcare a right. They mean that society, via the state, should provide those things to everyone.
Semantics matter. If we can't even agree on the meaning of our terms, then we're talking past each other. Political beliefs aren't necessary to define rights.
And I'm well aware of claimed "meaning" of rights. However, as I stated earlier, such a meaning is contradictory. If a provision must be received from others, then it's not a right. It is a privilege. What the state gives, it is able to take away. Housing that is provided, subsidized, or constructed by the state isn't a right as at any point in time as the state can withhold payments to, modify, take, or demolish such housing.
> And you absolutely would lose your right to safety without police or some other form of protection.
People defended themselves long before there were professional policeman. Additionally, police officers can steal from, maim, and kill people just the same. The badge doesn't inhibit them from choosing to violate the rights of individuals. I don't see how that disproves my point. Safety is product of exercising the right to defend or remove oneself from a dangerous situation. I don't need to seek permission or pay someone protection money to secure my safety.
> The ‘right’ might exist in your own mind, but it won’t do anything to prevent someone else who doesn’t share that belief from killing you and taking all your stuff. Rights are only meaningful with power behind then.
Nothing prevents the state from killing people and stealing their stuff too. Governments have done that before, and many still do it today. Every government is composed of people who are little better in a moral sense than the average individual.
However, If you truly think that power is what makes rights meaningful, then you contradict your earlier statement about housing being a right, even in the popular sense of the term. If power makes right, then no rights exist, as people are no different from resources. Resources don't have rights and the state has no obligation to resources.
If the land beneath the house isn't owned by anyone, then how does one build a house on it? A future homebuilder would have to take the land, or rent it from another owner to justify building upon it.
How about housing in the most expensive and populated ares in the US is a necessity? If there can't be housing available for all the workers in an area then there needs to be a change. Whether it be higher wages, changes in zoning, or public housing depends on the area, but doing nothing doesn't fix things. Having all the low paying workers commute 2 hours to work every day to make frappes and burgers for the rich locals is not a viable option.
Laketon, IN, population 606, had its post office closed in 2010 and, from a quick perusal of Google Maps, probably doesn't have a single traffic light. Doubt there's much public transit out that way. Only 30 miles to a town I might be able to get a job in, though...
Combo electrical engineer and embedded firmware engineer, who spent the previous ten years in production test engineering...nah, my job is pretty hands-on. I went into a pretty empty building during most of 2020 and 2021 five days a week.
I mean, I've got a few skills that might be sharp enough to get me a remote job but I really like the hardware world.
I've got a coworker who's looking into this and he seems to bounce around the idea of Rural New Mexico or Colorado, then another week he's got his eye on some 3K square foot house in Ohio for $125K or something like that, but just as rural. Every place he's looked at has fiber available.
> Doubt there's much public transit out that way. Only 30 miles to a town I might be able to get a job in, though...
Lots of people in the SF area and lots of other big cities have commutes of 30 miles or more. And I'd bet the traffic on those commutes is a lot worse, so 30 miles in the Laketon area is likely equivalent to maybe 10 miles in SF.
I'd expect entertainment and cultural events are limited in Laketon, but it's a 100 mile drive to Indianapolis and 140 mile drive to Chicago. With all that you'd be saving on housing compared to SF weekend getaways to those cities should be affordable.
It's absurd to frame this as some sort of luxury consumption decision. Sure, that might be true for like beach front properties but we're talking about virtually every major city in the country.
People grow up and have social connections in these places. There are jobs there. There are political reasons for moving. But most importantly these are cities, not suburbs. It's just wildly ridiculous to disallow dense housing which would allow more residents and lower housing prices.
Just to hammer home the point: NYC has rent stabilization, which applies to about 50 percent of the rental stock. The rent can't go up more than a certain amount, one must renew with the tenant with few exceptions, etc. Now, not surprisingly these units are offered by real estate brokers who demand steep fees, and guess who gets first dibs, but brokers and their friends/families.
On the basis of living in Manhattan and knowing a ton of people who have moved places over the last few years, including myself. Also, just go look at StreetEasy.
Every single time I've posted allowing newcomers to build houses the same way their great-great-grandaddy built a shack I've gotten an army of people up in arms complaining they're afraid the lack of safety regulations will result in their town burning down.
Where I live zoning laws are decent and land cost next to nothing. But you still have to contend with the universal housing codes, which means you're absolutely fucked because grand-daddy built a house that is basically irreplaceable (you can't permit that anymore) that grandson can live in, but fuck you if you want a house like that for yourself because that's all you can afford to build.
People just want homes to live in, in areas where there are good jobs, and get pissed when entire blocks of SFR housing are turned into Airbnbs or investment properties. You walk down the street and every house has an STR permit on it.
The current state of things are that most property rights are abolished. Why do all my neighbors get to decide if my property has 10 or 20 units on it?
The problem is market power. We want a free market in which supply and demand dictate price without manipulation.
But in any given region, there is a fixed supply of property that is slow to change to demand. And there is also a fixed demand- everyone needs a home. If one market participant buys up enough of it, they can choose to raise rents on that entire segment of the market. People need a place to live, and if their job, life, livelihoods are tied up in that specific area then leaving isn't a viable option.
The market participant literally is rent-seeking. They aren't improving these homes. They're raising prices by virtue of owning enough of them to be able to manipulate the market. They can charge more for the same service without providing anyone with more value.
Saying that anyone opposing this is some kind of communist against property ownership is a straw man argument. We just want to see a fair free market.
Ah sorry about that! I was just picking a random spot in Ohio that was kinda nearish the Great Lakes. I guess I moved to Far East. Did you like it there?
We moved when I was about two weeks old, but a lot of my family is in that area (on both sides of the river). The area is struggling economically, but it has some historical and scenic charm.
Same, I thought that 2019 prices were insane. Since then it's appreciated an additional $150k. My house made more money than I did one year. I'm expecting things to level out for awhile.
If this bothers you there is an extremely simple way to kick these guys in the teeth: approve new housing developments in your town! Housing investors fear nothing more greatly than they fear competition.
In an environment where they have a depreciating asset on their books and their rental incomes are falling, these REITs will fold suddenly. They aren't able to just throw money into an incinerator.
Every conversation about “NIMBYs” and “we don’t have enough affordable housing” needs to account for this. Building doesn’t lower prices, it creates a fat investment opportunity.
1. In most of the US it is quite literally illegal to build anything other than single-family homes ("SFHs"). This is a form of NIMBYism and reduces housing supply;
2. Part of (1) is that absolute necessity of car ownership in the US. This is by design to keep the riffraff (ie poor people) out;
3. We need robust public transit infrastructure to give people the option of living somewhere where they don't need a car to survive;
4. Pretty much anywhere you can build SFHs, you should be able to build multi-family dwellings ("MFDs"). Homeowners that own an extra unit or two on the same site as where they live is about the most ethical form of supply private rentals;
5. More states need to follow California's model of blocking a lot of NIMBYism at the state level. This requires towns to have an housing plan for affordable housing;
6. Ultra-luxury housing needs to be taxed punitively;
7. Cities and states need to be in the business in providing social housing as a significant supplier of housing. Americans in particularly have a kneejerk reaction against this as "socialism" or it'll be propagandized as slum housing. Vienna is about 60% social housing. Use that as a model;
8. Certain classes of housing should be illegal for corporations to buy. I'm fine with a corporation owning and running an apartment building with 200+ units with a management office onsite where they handle all the maintenance. I'm not OK with corporations constricting supply by buying up all the SFHs in a state.
9. We need to remove a lot of the tax benefits for investment property ownership (eg 1031 exchanges);
10. We need to remove a lot of beneficial tax treatment for home ownership period (eg Prop 13 in California caps property tax increases, inheriting property on a stepped up basis for CGT purposes);
11. AirBnB for anything other than a room in your house or a unit on your property (so you too have to live with the consequences) should be illegal.
This isn't a demand side problem. It's a supply side problem but we also need to restrict certain types of demand (eg REITs buying residential housing en masse).
> Homeowners that own an extra unit or two on the same site as where they live is about the most ethical form of supply private rentals
I'd never build or buy a MFD at least partly because I don't trust that the current vilification of landlords wouldn't eventually expand to MFD owners. MFD owners will still raise rents, they will still evict, they will still have disputes with tenants over maintenance and common-area rules.
The righteous anger will still bubble up. Only an idiot would risk it.
That's fine if you don't want to do that. Really. A lot of people (and, to be clear, I'm not saying you specifically here) fall into the trap when seeing things like this and they feel like it'll be forced on them like someone will come along and just build a second house on their hand and say "congrats, you're a landlord now".
But plenty of people will do that. They will want the extra income. The problem is currently that's literally illegal in most of the US.
As for evictions, these vary state by state but evictions are only really a huge problem with housing supply is so restricted. Yes there are some bad actors. But a lot of times eviction means homelessness for some people.
I'd personally be OK with making it relatively easy to evict someone who is living on your property (as opposed to say living in an apartment building).
But a very real problem with treating real estate as an investment is the owner profits by forcing negative externalities on their neighbours without having to suffer through them themselves (eg AirBnB). We need to clamp down on that.
Nearly impossible to regulate, and too rigid to boot.
Does a duplex count as two? If so that means triplexs higher MUDs are illegal, which will harm low income housing options.
Can companies own property? If so then the problem is easily escapable with a simple LLC. If not, then either existing ones have to be grandfathered, or the housing market is going to be flooded with corporate housing.
The better approach is to increase taxes for non-primary residences. Address the root of the problem rather than legislating it away - if mass-investment of housing is unprofitable, the problem addresses itself.
>Nearly impossible to regulate, and too rigid to boot.
No it isn't.
>Does a duplex count as two? If so that means triplexs higher MUDs are illegal..
Why would it count as more than one? You can own a duplex or triplex or whatever as your primary home, and then you have the option of renting out portions to generate additional income, or fully occupying the entire thing. If you have no plans to rent out units, it would make more sense to convert it.
>which will harm low income housing options.
It will harm landlords who depend on the current system. Low income housing won't be necessary when homes are affordable for everyone.
>Can companies own property?
Not homes.
>or the housing market is going to be flooded with corporate housing.
A large enough increase in supply could cause property values to level off while also increasing the vacancy rate for rental properties. I think the idea is that those circumstances would make real estate no longer attractive as an investment.
I'll take the supply position. So much of LA is zoned for SFHs. Now they can have an ADU but that doesn't do much. We need density. We need to make it easier to build. That slows down climbing rents. LA housing is at a massive deficit.
I really hope that battery technology, EV technology, and self-driving technology lead to a tremendous boom in full-time RV / vanlife popularity and make it a better quality of life than traditional fixed housing and all the people who bought up housing as an investment vehicle see their money go poof.
It's like using potable water or the air we breathe as an investment vehicle.
Living in a van is only possible if a small percentage of people do it. The infrastructure for sewage, parking, trash disposal, utilities, etc are all designed to handle a bunch of houses that stay in one place.
I think it’s a legitimate counterpoint that could force some changes, but other aspects would have to go into it like intentional communities around this technology such that kids can go to schools, taxes are tenable, etc.
interesting to consider. I think tax status assumptions and making van life work for a 2-child family are the main blockers. Starts sounding a lot like a high-end trailer park idea too.
The self-driving bit is what makes it tenable. All it takes is some people to offer parking a couple hours outside the city and for your home to drive itself out there when you go to sleep and drive you back to the city as you are getting close to waking up.
Government prevents parking like that? Then just have the vehicle drive around aimlessly while you sleep or hang out, like a limousine. If energy were cheap enough, there'd be almost nothin you could to do stop it.
> It's like using potable water or the air we breathe as an investment vehicle.
This is already a very profitable investment. Of course, it can be made more profitable through monopoly through the process of enclosure (conversion of commons to private ownership). The private water companies have even had legislation passed that gives them exclusive rights to the rain falling on your roof so you cannot collect rain water to avoid paying parasitic rents.
> ...a law was passed that appeared to give a monopoly to Aguas del Tunari over all water resources, including water used for irrigation, communal water systems and even rainwater collected on roofs.[68] Upon taking control the company raised water tariffs by 35%.
Would that really be a solution? We live in the "you will own nothing and be happy" timeline. I know I've read articles in the past that car manufacturers are considering turning to leasing agreements instead of purchases. That might be hard to get started in the US, but with the way every market turns to renterism, I would not be surprised if vehicles and RVs get swept up in the usury craze.
This is a thread about the wealthy investor class buying the literal land and shelter and hoarding it so they can profit off those they lease to. What was that you were saying about unsustainable and selfish?
Van life isn’t a scalable alternative to permanent housing. The reasons for this are many. One of the obvious ones is that if a wealthy investor class can buy up houses and extract rent they can certainly buy up vans and extract rent. So it isn’t even resistant to the very problem you suggest it can solve.
Take a look at how much a 1980s VW Westfalia is these days. It’s as absurd as house prices.
Land in desirable areas seems to me to be a much more scarce resource than the inputs and labor that go into a vehicle, especially if you add time - aka decades to make such things cheaper. Not sure how time and technology can do the same for land ownership.
How about we just make 20% down the minimum on home loans? That'll pull the price down pretty fast. We can slowly increase the minimum until we're at a reasonable point above 50%. And also reduce the maximum allowable term to below 30 years (should be 10-15). If done over a long enough time period, we can still give some appreciation to home owners (at least to match inflation), while also making the market saner in the long term. Otherwise, we're just encouraging rampant price growth and making homeownership exceedingly difficult for normal people.
Soon, banks will prefer to give a 100 year loan for $3 million for a modest home to an investor than the same loan to an individual (because who can pay a 100 year loan, or make the monthly payment on so high a principal).
Disgusted, I realized the harm that REITs and private equity are doing to housing markets, and wanted nothing to do with it.
We need legislation that discourages housing as investment if we are to maintain housing as shelter. Unlikely, as wealthy folks who make money with the status quo run things.