My understanding is that rent control backfired pretty spectacularly in the long term.
The better plan here would be to stop companies from buying residential properties, to incentivized the conversion of commercial properties into apartments, to penalize banks and individuals who are sitting on unused residential properties.
Oh, and wipe out all student loan debt so that younger generations have a prayer of buying a house someday.
There’s also an underlying layer to this problem with a specific type of home owner: the foreign investor. These individuals use American properties to hide their wealth from their home countries. Tax evasion, high ROI, and increased scarcity in every purchase. Homes often go months and years without occupancy, sometimes with minimal furnishings so as not to appear vacant.
I’m not saying foreigners shouldn’t buy homes in America. However, if they do buy a home they should be required to occupy each individual property for a minimum of 6-9 months every year. Otherwise, a heavy tax that exceeds the property’s/ies annual appreciation to encourage occupancy or selling would be ideal.
Which sounds nice, but how do we prove they are or are not actually living there?
I mean, if they lie about their primary residency, that’s a whole set of legal problems they’ve got themselves in
Even if they lie requiring X months would at least put a cap on how many they could own since there are only 12 months in the year.
Iirc primary residency is already living in a single home more than 6 months out of a year, or where you lived the majority of the time
Technically true but want to guess how many realtors buy a house , homestead the place for a couple of years then sell it?
Hint: the number is a lot higher then people might think.
There are a lot of ways to get around problems just by thinking outside of the box. Might it slow down the problem? Maybe.
So they’re buying a new house every few years and selling the old one? If they have only one house at a time, I don’t really care much. The issue is when billion dollar corporations buy up single family homes to rent out, not an individual buying a house to live in and sell it in a few years
Utility usage? Pull up the last 6 months of, like, water use (since you need to have water so it’s a solid metric).
Georgia had this problem decades ago and fixed it by lowering adverse possession requirements down to 13 months of occupation. It’s back to over a decade now but I liked that approach.
My understanding is that rent control backfired pretty spectacularly in the long term.
Yeah, the basic problem with rent control is that it creates the opposite long-term incentive from what you want.
Rentable housing is like any other good – it costs more when the supply is constrained relative to demand, costs less when supply is abundant relative to demand.
If rent is high, what you want is to see more housing built.
What rent control does is to cut the return on rents, which makes it less desirable to buy property to rent, which makes it less desirable to build property, which constrains the supply of housing, which exacerbates the original problem of not having as much housing as one would want in the market.
I would not advocate for it myself, but if someone is a big fan of subsidizing housing the poor, what they realistically want is to subsidize housing for the poor out of taxes or something. They don’t want to disincentivize purchase of housing for rent, which is what rent control does.
If you subsidize housing you create increased demand for housing, ultimately leading to rent going up for all.
Zoning reform is the solution. Cities are no place for single-family exclusionary zoning and height limits on housing
If you subsidize housing you create increased demand for housing, ultimately leading to rent going up for all.
So, as I said, I’m not an advocate of subsidizing housing out of taxes. I’m just saying that people who are arguing for rent control are arguing for a policy that tends to exacerbate the problem in the long run.
Subsidizing housing doesn’t normally run into that, because it’s normally possible to build more housing.
It is true that that’s not always the case, and one very real way in which that can not be the case is where there have been restrictions placed on constructing more housing. If housing prices are high, the first thing I would look at is “why can’t developers build more housing, and are there regulatory restrictions preventing them from doing so”. It is quite common to place height restrictions on new constructions, which prevents developers from building property to meet that demand, which drives up housing prices (and rents). In London, there are restrictions placed that disallow building upwards such that a building would be in line-of-sight between several landmarks. That restricts construction in London and makes housing prices artificially rise. Getting planning permission may also be a bottleneck. I agree with you that that sort of thing is the thing that I would tend to look at first as well: removing restrictions on housing construction is the preferable way to solve a housing problem.
I remember an article from Edward Glaeser some time back talking about how much restrictions on construction – he particularly objected to the expanding number of protected older buildings – have led to cost of housing going up.
How Skyscrapers Can Save the City
Besides making cities more affordable and architecturally interesting, tall buildings are greener than sprawl, and they foster social capital and creativity. Yet some urban planners and preservationists seem to have a misplaced fear of heights that yields damaging restrictions on how tall a building can be. From New York to Paris to Mumbai, there’s a powerful case for building up, not out.
By Edward Glaeser
It looks like it’s paywalled, so here:
Ah if you meant subsidizing housing construction I’m 100% with you
Where’s all this housing being built as a result of sky-high rents? If they are being built, they’re being snatched up immediately by “investor” parasites.
New construction is happening. Just not as fast as we need it. And the cost of materials isn’t helping.
What are you referring to? I don’t see all this new housing being built. I only know about three active sites in my city. I also know that our local zoning board has been rejecting applications because of neighborhood character.
I would run to serve but it’s an appointed position. Which yeah not great.
I also know that our local zoning board has been rejecting applications because of neighborhood character.
Sounds like you already know what one of the biggest issues is.
It’s so bad in California that the state legislature has been passing laws directly addressing city zoning boards that won’t approve housing.
Part of the problem with rent control is that it doesn’t subsidize the building of new housing. The times in which housing prices dropped in the USA were typically when a government either opened up land to development, subsidized the building of housing, or built the housing themselves.
My understanding is that rent control backfired pretty spectacularly in the long term.
There are critiques against rent control that have persisted for decades that are now seeing a growing body of counter-evidence that it maybe isn’t that bad after all. Hence the resurgence of rent control being suggested as a policy tool. It makes sense that the myth that rent control is bad has persisted for so long - high earning economists (yes, they’re very high earners) who are thus more likely to own rental units have an incentive to publish research showing that policies that harm their rental income are bad, and have less incentive to publish research that shows policies like these benefit the renter over the landlord.
Here’s a great article by J. W. Mason, who has a PhD in economics, who goes over more recent research around rent control. He shows that it’s far more nuanced and less clearly “bad” than right wing economists have been trying to push us to believe.
https://jwmason.org/slackwire/considerations-on-rent-control/
This better matches my understanding than OP’s take. It’s not necessarily that certain folks were being disingenuous (though of course with financial matters that’s also common), but more so that rent control is designed to help people closer to the bottom of the financial ladder, and those people are also disenfranchised in other ways, including their results bring unreported or thrown under the rug.
The difference now is that the housing system is so screwed and skewed overall, rent control would likely benefit far more folks than those at the absolute bottom of the financial ladder – that, or the wealth gap is just so large that there’s a huge number of people at the bottom, all roughly equivalent to each other given how rich the rich have become.
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I’m not really worried about commercial landlords. Most of them are okay. A few are great, a few are slumlords.
What I’d really like to see is more and denser housing being built, period. And investment in infrastructure like public transit so that places are more accessible, more livable.
Who told you rent control backfired? Cause that’s a lie. It was just never adopted as widely as it should have been, and rich owners always have the ear of lawmakers … the same can’t be said of poor/working poor people.
Capitalist/free market* economists.
Rent control works just fine in a more socialist model, especially when the government is a prime builder of housing without seeking profit, as almost every European country was during the 50s-70s. It’s only when government gets out of house building and everything gets privatisated and for-profit that rent control fails.
Can you name some countries/policies where it’s a continuing success?
Depends on your definition of “success.” Countries such as Holland, France, Canada, Germany, and China all have caps on the amount by which a landlord can increase rent in any given year, usually by law it’s less than 5%, or indexed to inflation (but with 5% as the max). These laws are incredibly popular with renters and have been around for decades.
Berlin implemented a hard rent freeze in 2020 which was extremely popular with renters, but not with landlords, naturally.
However, rent control isn’t just a hard price cap like back during the war, there are many nuanced aspects, see here for information: https://www.theguardian.com/commentisfree/2021/apr/23/berlin-rent-cap-defeated-landlords-empty
Don’t know if you’ve noticed this yet, but the United States has a capitalist economy.
And it’s failing
The US has lots of socialized losses but privatized profits. To call it a capitalist economy is a gross oversimplification which glosses over the fact that no corporation is actually competing in a free market at this point.
Semi. It’s got bits and pieces of all systems, which is a hint that the “-ism” powering any country’s economy doesn’t have as big an impact as its leaders.
Unfortunately, capitalism tends to reward corruption, it’s much easier and profitable to be corrupt than to do the right thing™.
Libraries are socialist. Otherwise every person in a fully capitalist system would be expected to buy their personal copy of a book.
Libraries are not socialist. Socialism is not, in fact, when the government does things.
What you’re referring to is called a “mixed economy” https://en.wikipedia.org/wiki/Mixed_economy
And you’re right - there are scales with capitalism and socialism weighing against each other in basically every economy. Finland, Norway, France are examples where it’s tipped a bit more in favour of the “socialism” side. But the US has plenty of elements of socialism, from housing coops in the Bronx, to utility coops in the midwest (that helped pave the way for the electrification of rural America), to credit unions, to welfare policies, to the Alaska social wealth fund, and I could keep going.
The author of that article is Megan McArdle. A quick look at her other articles:
- An article that attempts to shift blame away from media execs and onto consumers, in response to the writers/actors’ protests
- “Higher minimum wages may increase homelessness” (literal article title)
- Says we shouldn’t expect to keep taxing wealthy people
- Wants to reduce medicaid but conveniently doesn’t mention the amount of death poor people will experience as a result of that, using the same austerity justifications we’ve heard in Europe already (that turned out to be bullshit)
I’m sure she has no right wing economics bias lol
Putting all your faith in economists whose sole purpose is to back the current capitalist shitshow that rapes the land and kills the poor is a strange take.
But you do you I guess.
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Don’t allow companies to own residential properties… it’s that simple…
And non US citizens.
As a US citizen living in another country and trying to buy a house, you want me to have to change my citizenship to do this? 0.o I’ve lived in Japan for the better part of a decade and am trying to buy a property where, hopefully, my wife and I can live for the rest of our lives. Having to become a citizen in Japan (which does not allow other citizenships except in some very specific cases) is a non-starter for me. I need to be able to freely enter and leave the US in case my family have any issues. Why should I be fucked like this?
They probably mean non-residents instead of non-citizens. Would make more sense that way at least.
And you could make that non-local residents and it would still work out well. Stop letting foreign and domestic “investors” buy up all the housing in cities they don’t live in.
Yeah, that would be reasonable.
I mean, housing issues and challenges in Japan are likely different than in the US.
If Japanese law required you to be a Japanese citizen in order to buy a home, then yeah, I’d expect you to become a citizen to get a home.
I just happen to live in Japan, but you can reverse the countries in my example if it helps. If I were a Japanese citizen living in the US almost 10 years and wanting to just buy a home for my family, I think it’s unreasonable to have to give up Japanese citizenship just to get a house in the US. Using my example, I would not give up JP citizenship because I have aging family I need to have unlimited access to in Japan.
I’ll be honest, I don’t think it’s unreasonable to need to go through some form of certification to purchase residential housing.
To use US terms, as those are what I’m familiar with, a greencard would be sufficient, since it would allow you to legally live and work in the country.
I would say “valid status of residence/visa” (greencard/permanent residence can be super long processes of over a decade), but yeah that makes sense to me.
Just a visa would be too low of a bar, imo. Show you’re a permanent resident and planning to stay here.
Non-residents, not non-citizens.
That simply results in shitloads of homeless people
Good thing our current system doesn’t.
Good thing our current system doesn’t.
By comparison it does not
That is a bad idea as owning a house isn’t right for everyone.
While that may be, companies should not be able to have a stronghold on what should be considered a basic human need. Housing is already in pretty short supply, and it’s worsened by the fact that these companies buy a considerable chunk of this short supply and then turn the purchased properties into rentals.
The idea being proposed here doesn’t outlaw renting, only corporate ownership of residential property. It means that the people you’re renting from are human beings who will eventually die and either be estate taxed or the house will be sold, rather than a corporation who owns your property until they go bankrupt or until the sun explodes.
Bingo. A lot of current problems get better by:
A) 100% death tax on all money over 100,000,000.00 at time of death.
B) Closing loopholes that allow hiding that kind of money in unnecessary corporate assets or non-charitable trusts.
C) Cracking down on what qualifies as a charitable trust. Want to leave that money to trust that makes the world better, better have numbers to prove it or it gets disolved automatically into other more effective charities.
D) Automatically splitting every corpportation the moment it crosses a reasonable value threshold.
So corps pay higher taxes on property vs sole owners?
Fuck you you shouldn’t own a goddamn thing with that mentality.
You bootlickers are the reason shit is bad and was always bad.
Solid intelligence response there
Parse their response, instead of just the tone. That person’s mad and sad both at how tough living has become.
We’ve all had that one lazy piece of shit roomate that never cleans up after himself and I bet it’s him.
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Lol no one gets forced to buy one just because prices become realistic, wth
There’s a supply shortage.
You can’t sprawl your way out of this problem, despite Texas’ best efforts. All you do there is create traffic.
The answer is simple. Legalize housing. More triplexes, more quadplexes, more ADUs, 5 over 1s, more of everything. Developers want to fill this demand. They can’t. They’re hamstrung by city ordnances and state laws that often only allow apartments or single family housing. Not everyone wants or needs a separate house. Make rent boring again and the corporations will lose interest.
Eh, I mean there is a record number of vacant homes at the moment. The investor class owns a fuck load of housing that could be actually be used to ya know, house people. I’d bet If a large tax was placed on 2nd homes /income property, there’d be no supply shortage. So many people bought homes for AirBNB, and rent seeking in the last decade that in years past would be being bought by families. I know in my town they’ve been putting up high rise after high rise. Rent still goes up because of (imo) artificial scarcity. Landlords are using software to fix price on rent, banks intentionally trickle out foreclosures to not flood the market, companies with vacant units are not allowed to drop price of rent and keep pricing high because of financing agreements made when the building was built. Most of the luxury apartments that have been built are maybe 30% full. No one wants to live in a duplex/ triplex /multiplex. People want houses, and there are none because companies like Blackstone backed Invitation homes and Chinese companies/ citizens buy them all to rent seek.
The ripple effect from these rate hikes might help drop rents because a lot of commercial loans are ARMs, and when that rate adjusts, landlords are going to feel pain, but they may just pass it on to their tenants and make housing affordability even worse. We’ve allowed too many people to commodify what was once viewed as a necessity, and the single family home is now an investment vehicle for big business.
The real estate market as a whole feels like a giant game of hot potato at the moment. Something has got to give. The America of today is so much worse than the one I grew up in as a result of all the BS we’ve allowed the investor class to do. It needs to get reigned in somehow because imo the American dream is dead as a result.
A vacant home doesn’t mean affordable or accessible. Single family homes are stupidly inefficient and expensive or in middle of nowhere. Dense cities are the only solution.
there is a record number of vacant homes at the moment.
We’re currently close to the record for all time lowest vacancy rates. We’re at 6.3%. The highest (over the past 70 years) was in 2009, at 11.1%. It got down as far as 5% a few times. I downloaded the raw data and it says the average is 7.28%
https://fred.stlouisfed.org/series/RRVRUSQ156N
There’s a popular image of a bunch of Scrooge McDucks sitting on giant inventories of housing but the evidence doesn’t support that. Someone saying, “I saw a bunch of empty houses.” is exactly as logical an argument as a climate denier saying, “It’s been cold all week.” That’s just an anecdote.
The data is very clear on the matter. We don’t have enough housing.
Vacant does not always mean available.
Exactly! We need the missing middle housing.
The core problem, which causes that shortage, is that we have conflicting views on what housing is for.
On one hand, we want housing to be a right. On the other hand we want our houses to be good investments.
Those are conflicting goals. We need to pick one and be ready to sacrifice the other.
If you want your house to be a good investment, it needs to appreciate in value at a rate higher than inflation. The only way for that to happen is if housing keeps getting more expensive on a real money basis. That’s a fancy way of saying that housing will be a bigger and bigger chunk of income.
Every single policy that reduces the cost of housing also degrades its effectiveness as an investment. If people can get housing any time they want, they have no incentive to pay somebody a bunch of money to someone hoping to fund their retirement by downsizing.
Your suggesting to legalize more housing will destroy the ability of homeowners to make a profit off their homes. Even though I stand to earn huge amounts of money from the appreciation of my own house I would support that, but I’m afraid I’m in the minority. The US has a 65.9% home ownership rate and for most people their home is their single biggest asset. If we address the housing shortage those people will all see their single biggest investment asset drop in value.
On the other hand we want our houses to be good investments.
I don’t.
I understand you’re speaking in general terms here but no, i think having housing being tied to investments at all is a terrible idea we’ve just normalized.
The flip side of course we’ve experienced, like 2008 when the market went sour, putting people out of home and destroying retirement funds
I don’t think it’s a good idea either but we live in a society that effectively decided that we do want houses to be investments decades ago. That’s entrenched now and many people bet their life savings on the promise that their house would be a good investment.
If we change that without taking those people into account they’re all screwed. While some rich people would get screwed in that process a whole lot of poor people would get screwed too.
As someone who worked on multi family property development for fifteen years–for the love of God, force the developers to build to a standard. Simply requiring that the landlords pay all utilities would go a long way toward this, since it would incentavise building a better structure.
more ADUs
This. I own my home and could probably fit at least two ADUs on my property but the permitting fees alone exceed the cost of construction. Not to mention the cost and hassle of obtaining a permit.
2015 - rent was $1200
2017 - rent was $1600.
2021 - rent was $2100 average. I was paying $2400.
2023 - rent was $2500 average. I’m paying nearly $3000.
These are all two bedroom, two bathroom apartments in the same city.
I’ve asked college age tenants who lived here how they can do it. They split it with roommates (2bd/2bath - like four ppl living there)
My city has been even more dramatic.
2016 - $680
2022 - $2200
Over 300% increase in six years.
That’s crazy. I’m in a decent sized city and the average rent for a 2/2 is ~$1800. Hell my mortgage is less than $3k/month.
My PITI for my mortgage is $3350/month. Mortgage is $28xx something. It’ll be nice whenever I can get that mortgage insurance off. I was renting an admittedly very nice 2 bed 2 bath apartment for the same before I bought. Now I have a 3x2 1000sqft rambler and know that, while the mortgage is high, it will be lower than rent in the next 5 years.
that many people in the house has to be breaking fire code…
Your city badly needs zoning reform, not to exacerbate this problem with rent control (further stifling new building)
Rents are out of control, especially in big cities, but come on. Rent control, by all measures and by all historical policies, are terrible.
We don’t need rent control. We need them to stop allowing single family dwellings to be owned by huge conglomerates, and particularly foreign interests. It’s insanity.
I don’t know enough about corporate and foreign home ownership, is it that big of a problem?
What I do know, is government preventing building houses is causing a housing shortage.
Investors buy on the order of 25% of all residential real estate available. Big money uses its leverage to do this in order to raise the prices (due to the scarcity that they are helping create), which they then use to drive up rents or flip properties at a profit. This cycle has been on repeat for several years now. This is why you see people doubling and tripling up living together and it won’t stop until they can’t do it anymore or our legislators decide to do something about it which I don’t even know why I bother saying it like there’s any chance they will.
Foreign ownership of US property is certainly a significant percentage of that equation, but there are other reasons why its important to pay better attention to foreign ownership. Allowing foreign interests unrestricted access to property in the States ends up giving us stupidity like Saudi Arabia feeding its cattle alfalfa grown in Arizona. One of the most water-intensive crops in existence that its own government won’t allow it to grow itself, is grown instead in our desert, while our own citizens get their water cut off.
Edit: it may technically be “supply and demand” when 25% of everything available is bought with the intention of making a profit on it rather than providing a place to live - but it isn’t beneficial to the citizens of this country when the whole world and all its big business interests can compete with individuals to buy housing.
Yes, lack of housing is the bigger issue. Here in the Boston area, it’s pure supply and demand. Neighborhoods are full of triple-deckers just off the city center that could be denser apartment buildings. Landlords can charge whatever they want, because they know that anyone who wants to live in the area will have a hard time finding another place.
There’s also the question of transit infrastructure. Even with less dense housing, if there were easy ways to get around other than cars, proximity would be less of an issue.
because they know that anyone who wants to live in the area will have a hard time finding another place.
I mean, you’re just saying supply and demand still. They’re charging that because that’s what someone is willing to pay.
Even with less dense housing, if there were easy ways to get around other than cars, proximity would be less of an issue.
Agreed, the U.S. as a whole has had incredible incompetence with government officials regarding public transit. If we had reliable train and bus systems, we’d be in a much better position.
Terrible for who?
More than 30 U.S. economists have signed a letter expressing support for strong federal tenant protections and rent control as housing costs remain sky-high, even amid broadly cooling inflation.
The economists note in their letter, released Thursday, that the median rent in the U.S. “has surpassed $2,000 for the first time, and there is not a single state where a worker earning a full-time minimum wage salary can afford a modest two-bedroom apartment.”
“We have seen corporate landlords—who own a larger share of the rental market than ever before—use inflation as an excuse to hike rents and reap excess profits beyond what should be considered fair and reasonable,” the letter continues. “Renters are struggling as a result.”
The letter’s signatories—including Mark Paul of Rutgers University, James K. Galbraith of the University of Texas at Austin, and Isabella Weber of the University of Massachusetts Amherst—call on the Federal Housing Finance Agency (FHFA) to require rent regulations as a condition for federally-backed mortgages and reject the “economics 101 model that predicts rent regulations will have negative effects on the housing sector,” likening it to typical arguments against raising the minimum wage.
“Empirical research on local rent control policies in San Francisco, CA and New York, NY found that rent regulations lower housing costs for households living in regulated units,” the economists wrote. “In Cambridge, MA, empirical research showed that the repeal of rent stabilization laws resulted in an average rent increase of $131 for tenants.”
Given that “Fannie Mae and Freddie Mac mortgages on the secondary market support nearly half of rental units in the U.S.,” they argued, “Government Sponsored Entities (GSEs) have the influence needed to meaningfully change the trajectory of the housing crisis.”
The economists’ letter is part of a broader push by tenant rights groups and housing justice organizations to secure federal protections against egregious rent hikes and wrongful evictions.
Earlier this week, 17 U.S. senators wrote in a letter to the FHFA that “renters also have too few protections, making them vulnerable to steep rent increases and deteriorating housing conditions—factors that are out of their control.”
“Tenant protections vary drastically from state to state and even sometimes from county to county, often leaving renters without recourse,” the senators added. “There have been repeated reports of investors using low-cost financing from Enterprise-backed loans to buy properties and then sharply raising rents, mistreating tenants, and allowing buildings to fall into disrepair.”
More than 140 academics, over 70 climate researchers, and dozens of local elected officials have also joined the call for nationwide rent regulations.
Tara Raghuveer, director of the Homes Guarantee campaign at People’s Action, said in a statement Thursday that “tenants are coming for rent regulations, and everyone from senators to economists agree: tenant protections are common sense.”
“Due to lack of regulation, affordable housing is lost quicker than it can be built,” said Raghuveer. “Corporate landlords call the shots with federal financing through Fannie Mae and Freddie Mac. That’s why tenants spent this summer organizing to win what we need: federal tenant protections like caps on annual rent increases.”
In late May, the FHFA issued a request for public input on tenant protections at multifamily properties with mortgages backed by GSEs.
Tenants with the Homes Guarantee campaign responded by knocking on more than 4,000 doors at GSE-backed properties and organizing more than 2,000 comments in support of tenant protections and rent regulations.
“The system as we know it today has failed everyday people, many of whom make impossible choices between rent and food, their homes or their medications,” said Raghuveer. “The status quo is not working for the people, it is only working for the profiteers, and it is time for change. It is time for the federal government to make changes to that system, to correct the imbalance of power between landlords and tenants, to protect tenants, and to stabilize the American economy.”
“We have seen corporate landlords—who own a larger share of the rental market than ever before—use inflation as an excuse to hike rents and reap excess profits beyond what should be considered fair and reasonable,” the letter continues. “Renters are struggling as a result.”
Literal rent-seeking.
Either they fix the rents or we start eating the landlords. Either fucking way we are gonna eat.
Word. What’s the saying, “a revolution is only 3 missed meals away”?
I love that phrase because it’s so true.
I heard landlord tastes like pork. Long pig…
It’s not landlords faults that governments have insane restrictions on building houses. Why the hate towards them?
I agree zoning sucks but so does my landlord. He inherited 17 houses and has never worked, every time I ask for something to be fixed he hires someone else out to do it, at one point he was saving up all my checks so I had to switch to money orders, he tried hitting on my wife, and he talks to me like I am not his fucking customer who pays for his mother fucking stable.
So fuck him and everyone like him. Inherited everything while the rest of us have to work.
He inherited 17 houses and has never worked
Why is that relevant?
every time I ask for something to be fixed he hires someone else out to do it
So he sucks because he gets a professional to help fix problems you have? That’s what a landlord is supposed to do…
at one point he was saving up all my checks so I had to switch to money orders
You still paid rent with checks?
everyone like him
I agree, he sounds sleezy, but just because you have a bad landlord doesn’t make all landlords bad.
Inherited everything while the rest of us have to work.
See, this is somewhere you and I differ completely. You hate someone because they have something you don’t, I put 0 weight on it. Why should I hate someone for getting a gift from a relative or friend? Why should I hate someone because they’re blessed differently than I?
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Housing should NEVER have been part of determining ones worth or wealth etc. People need places to live…fuck this shit. Idgaf about people that boohoo about selling their home later in life when soooooo many of us can barely afford a rental in shitty areas these days. I have zero sympathy for any owners concerns as I can’t even own and I make more money than I ever have in my life. Can’t win vs the rich bastards that swoop in and pay 100k above asking price and just destroy any chances many of us have at just having a home and a life. Fuck your “starter home” boomer mentality. I want a home to die in someday and it can be the first home I buy if I ever get to
Yet another negative side effect of supply side economics. More money in the investor class than there are good investments. So they dump money in real estate which drives up the price.
We have to wait for the people that love Reagan out of nostalgia to die off. Then we can tax the bloated investor class and have a healthier economy.
There is no way the corporate-loving leaders of our country will agree to this, but I wish them luck anyway.
We should make owning residential, single family real estate for commercial purposes illegal. You own it, you live in it, don’t live in it, don’t own it. That would make gobbling up houses and renting them out unprofitable and force cities to open up multifamily development
How about instead of banning it we heavily disincentivize it? After 2 properties you pay 50% in property tax. This allows people to rent out homes to college kids and people saving for a home, without allowing vultures to pick at the bones of the middle class
I live in a rented house, and I’ve rented out a house I owned because I wanted to move and I was underwater on my mortgage. I get where you’re coming from but I do think there should be exceptions. Maybe just capping the rent at 110% of the mortgage payment or 0.5% of the appraised value would be enough to allow some rentals while discouraging people to buy houses just to rent them out.
That sounds nice in theory but what happens when you want to sell your house?
The only potential buyers would be people who either currently rent or are ready to sell their old house as soon as they buy yours.
What if someone wants to fix it up first? Nope, they can’t do it. It will cut out the flippers but we’ve also just cut out all the renovators and restorers.
We could do something like this (and it may not be a terrible idea) but there will definitely be a cost. If we add that law, all the people who currently own homes (that includes both investors and owner occupiers) will see the value of their real estate holdings drop. In the US, over 65% of people own their homes and for most of them, their home is their single biggest asset. Richer people can diversify more so while this law wouldn’t hurt the 35% who don’t currently own homes, it will disproportionately affect the poorer end of the 65% homeowners (who have proportionately more of their savings tied up in their home).
If we don’t also address that problem at the same time we’ll create a cohort of people who can’t afford to retire because we killed their plan of downsizing when their kids move out and living off the difference.
What about rental companies? Who can you rent from? If you can only lose money or break even this would destroy any reason to maintain a home.
I’m assuming OP intends to specifically exclude rental companies. As near as I can tell this plan would also exclude individual renters. Not sure how that would play out if someone wanted to defray the cost of their home by renting out a room or subdividing their home.
Do you not maintain the things that you own just because there will never be a day where it is worth 10x what you paid for it?
Btw I really want to meet these flippers and landlords who are maintaining their homes. Every time I have dealt with one they are obsessed with making it look like the house is great, not actually maintaining it. Oh wow you sprayed cookie dough smell before showing it, hey check out that black mold in the basement that stupidly has fucking sheetrock.
The only potential buyers would be people who either currently rent or are ready to sell their old house as soon as they buy yours.
What if someone wants to fix it up first? Nope, they can’t do it. It will cut out the flippers but we’ve also just cut out all the renovators and restorers.
Not at all. They can buy and renovate all they want. They just have to sell it afterwards rather than rent it out.
Then you end up with a lot of properties on the market for millions while no one lives in them.
Why would anyone renovate a property if it’s just gonna sit on the market out of reach of potential customers? I would hope that investors would be smarter than that. Like we’re saying, homes should be for living, not for investing. If there’s no pressing need to renovate, then great. Don’t. Whoever wants to buy it as is now can. And if they want to they can renovate what they want at their own pace.
Like now
Fair point. So we cap profit at 10% above purchase price, and hit the renovators with 90% taxes if the home hasn’t sold in, say, six months.
What if the market collapses?
Then the speculators eat it. This doesn’t make me sad.
We could. Why would anyone want to make those investments once we’ve cut off all their profit potential?
Investors chase profits. We can cut off their profits but when we do that 2 things happen; some of them just leave the industry and some of them break the law to try to get around the regulations. Almost nobody just eats the loss and continues investing.
We didn’t cut off all their profit potential. It’s just limited.
I don’t really see the problem with this hypothetical. Small time flippers are unaffected. 10% or whatever profit is still profit. If it disincentivizes big commercial flippers or investors because they can no longer make “enough” profit, good, that’s the point.
The problem we see when we try to implement price controls is that they inevitably lead to shortages. The oil caps in the 70s are a famous example but the NYC rent controls were just as bad. The standard practice if you wanted an apartment was to look in the newspaper for open house listings that day. You would show up before the open house starts with at least 1 months rent plus first and last months rent as security deposit, in cash. If you liked the place you signed within the first half hour. If you waited someone else took the apartment.
Part of the challenge is that it’s not as simple as a 10% profit cap. What if someone owns a house for 2 years? Do we cap it at 20% profit? Do we index the allowable profit to inflation and then add a “reasonable” offset? Do we want to allow different profit caps for different renovations? (maybe we don’t want to treat swimming pools and solar panels the same way?) How long do you need to live in a house to consider it owner occupied?
As those regulations get more and more complicated you end up with a ton of loopholes. The more you do that the more profitable regulatory arbitrage becomes as a business model.
In general, tight margins favor large companies over small firms. They can operate at such a large scale where they can thrive off of profit margins that would starve small businesses. That’s the general issue with mega-retailers. They operate on single digit margins. Mom and pop can’t streamline their operations enough to survive on those margins.
Our housing stock needs both growth and maintenance. That comes from investment. If we push the private sector out of those investments without replacing them we’ll just end up with a crumbling housing infrastructure. If we cut large businesses out of it government would likely need to take up the slack. And to be clear that government intervention would need to be massive. The real estate market is huge and if we cut out the private sector we will definitely need to raise taxes, by a large amount, to cover it. That’s not off the table but we should walk into a decision like that with eyes wide open.
Exactly.
But if they already own a home they can’t do this because they will own two
No one ha said that they can’t own more than one. They just can’t rent one while living in the other. The vacant one stays vacant.
This is the most beautiful strawman I’ve ever seen. Well done!
And cut into profits!? How very un-American of you. String’em up boys!!
Rent control doesn’t fix the problem of inequitable ownership of housing or the bad incentives that prevent the building of more housing or the lack of support for public housing. Rent control is a bad bandaid
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There are very few things almost every academic economist agrees on. One of the things that almost everyone agrees on is that rent control does not work. Im shocked they got 30 economists to sign on.
The following is apropos as it even addresses the specific policies of SF and NYC mentioned here. If you need to see a progressive voice go look at Emmanuel Saez as his work is what Sanders and Warren based their tax plans on.
https://www.kentclarkcenter.org/surveys/rent-control/
Rent control is a horrific idea. Over the long term is disincentivizes the construction of housing. If you want to bring the costs of housing down then you need to build more housing ideally multi family units not kore luxury housing which is what rent control creates incentives to build.
OK but we have more empty houses than homeless people. We don’t need more houses. We need to stop wasting resources for the sake of capitalism and stop letting people die for it as well. There is going to be a point where people start setting fire to vacant houses in protest. It is amazing what millions of desperate people will do when their screams of frustration go unheard long enough.
This is the chaos that our leaders secretly want. Otherwise they would have to be abysmally stupid. There is no excuse for ignorance in the information age.
we have more empty houses than homeless people
This is true, but very few of those houses exist where homelessness is a major problem. Location plays a huge role in someone’s life and we can’t just ship everyone that’s homeless or struggling to a dying small town in the US.
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No we have more vacant homes which is not the same thing as available or usable. A house that no one lives in and is being sold is counted as vacant. An unrented apartment listed for rent is vacant
Your premise is based on a flawed concept if what vacant housing means.
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There are very few things almost every academic economist agrees on. One of the things that almost everyone agrees on is that rent control does not work.
Economists work for banks not for us. Their models have no connection to the real world. They support bailouts but not student loan debt reduction. Says all you really need to know about them.
Using SF and NYC as the main examples kinda distorts things as these are both some of the most expensive, developed, and dense parts of the country where development costs are staggeringly high. Something not working there doesn’t mean it doesn’t work anywhere else. The rate of increase in property/rental costs is unsustainable.
They are perfect examples as rent control did NOTHING to impact the costs of housing there.
Are you an economist?
Or did you just see a supply and demand curve and think that’s all there is to it?
If you studied economics beyond the 101 level, you’d know the supply and demand curve is a theoretical concept that doesn’t actually exist in the real world because the requirements for it are impossible. Supply and demand most definitely exist, but it’s more of a fuzzy force kind of thing not clean lines on a graph. Realistically, it’s more like fuzzy splotches on the graph instead of clean lines.
And there are multiple levels to it as well. Cities have to compete with other cities to attract businesses and businesses would prefer to be in a city where they don’t have to pay someone $100K per year to sweep the floors. Which might happen if that’s the pay level required to live in a city. You could get into a yo-yo situation where a city becomes unaffordable, people and businesses leave, causing the rent prices to drop, attracting people an businesses back, causing it to by unaffordable again, etc, etc. This instability comes at an economic cost that’s greater than the inefficiencies caused by rent control.
You see an economy isn’t just one simple supply and demand curve. You might want to consider that economists might be aware of some factors you aren’t aware of.
No, I did not just see asupply curve nor did the dozens of economists polled. The fact is it has failed to make housing more available or decreased the cost of housing when implemented.
Arguing for rent control is the economic equivalent if arguing against climate change. Pretty much everyone is in agreement on the issue.
an economy isn’t just one simple supply and demand curve.
Aggregate supply and aggregate demand.
Boom. Roasted.
This instability comes at an economic cost that’s greater than the inefficiencies caused by rent control.
It’s extremely difficult to get someone who only understands Econ 101 to grasp the idea of competing economic inefficiencies. Conservative think tanks have been on a rather successful crusade to ensure that de-regulation is only good. So, it’s difficult to convince someone that higher taxes on “job creators” leads to a better, less expensive life for everybody else.
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Rent is inherently predatory
No it’s not. Just because you don’t like it doesn’t mean it’s inherently predatory.
I have to move to a city for 6 months, should I have to buy a house and sell it during that time? I need to rent, it gives me the flexibility without having to shell out capital or get in debt to live.
As with everything, it can be bad, especially when the government restricts building of houses so much, but my buddy buying a house, fixing it up and renting it out isn’t malicious.
What’s your alternative to renting? Government owns all houses and gives them out for people to live in for free?
My biggest head scratcher now that I’ve bought a house is “huh, my mortgage is locked in now, no matter what the market does… Why did rent keep going up if my landlord’s mortgages were locked in?”
I honestly don’t have a good answer, I could be looking at something perfectly explainable. But to me it seemed like they raised rent not because costs went up, but because they could. Why not. Everybody else is doing it.
Mortgages are locked in. Taxes, insurance, utilities, maintenance/upkeep are not. All of those things have increased since I bought my house a year ago. Rental properties experience the same thing.
My landlord’s taxes went down, I pay for utilities, not sure about insurance, as for upkeep I will let you know when I see that happening.
Property taxes went down? I doubt that. As far as upkeep, if the furnace goes out, who pays for that? The property owner. That’s what I meant.
My biggest head scratcher now that I’ve bought a house is “huh, my mortgage is locked in now, no matter what the market does… Why did rent keep going up if my landlord’s mortgages were locked in?”
Property taxes, market rate, costs to repair and maintain, interest rates increasing. How much money, beyond your mortgage, have you spend on your house since you moved in?
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That’s not really reflective of the market in reality. Rent in a competitive market (I.E. anywhere people want to live) tends to hover around the cost to own, buying with 20% down, plus property tax and mandatory homeowners insurance required by the mortgage holder.
In fact, usually it’s cheaper to rent than it is to buy with only 20% down and good credit.
This is because people do this calculation, come to the conclusion “it will cost us a little more, but we get to own our dwelling, our payments eventually go to principal (though this is rigged by the banks too), and hopefully the market goes up and we get equity”
Yes, the market fluctuates, particularly in economic crisis. But it teeters back and forth based on the costs to buy and rent. Because if rent exceeds the cost to buy, investors snap up property just to rent it out, and that raises demand on real estate to the cost goes up.
The rates going up as fast as they have when prices are still high have killed buying as an alternative to renting in my city.
I feel for people who weren’t “smart enough” to buy during the pandemic, because unless prices, rates, or both drop dramatically, it looks like they may have been permanently priced out of buying and renting is only getting less affordable.
Time to organize
Rent has been high for a LONG time… and yet somehow it keeps going up. I’m very fortunate in my rental situation… but I do see the other side of the crunch, which is LIFE is fucking expensive. Every last thing we do these days is expensive. When you are getting squeezed in every single direction…
