gtyellowjacket
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She wouldn't be here every other week if she didn't agree with you.
Housing Issues (f/k/a Harris Economic Agenda Speech)
- Thread starter nycfan
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She wouldn't be here every other week if she didn't agree with you.
gtyellowjacket
Esteemed Member
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If there wasn't profit, there'd be a whole lot less basic necessities like housing and food.
superrific
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I think we might be talking past each other. First, the original statement was that mortgage + repairs (plus landscaping, lawnmowing, etc) + insurance should be more than rent. Obviously rent has repairs included in the costs and repairs aren't in the mortgage, so they have to be added back in.
More importantly, I just don't think that principal repayments should be included in rent, not in a competitive market.
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Profit and profiteering are not equivalent.
Profiteering: noun. The practice of making our seeking to make an excessive or unfair Profit, especially illegally or in a black market.
gtyellowjacket
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Yeah. I'm a little conflicted about profiteering. Outsized profits encourage more supply. Eliminate those profits are going to limit supply.
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I'm not saying eliminate profits.
I believe there should be some constrain.
There's a point between no profit and so much profit that people end up homeless. I'm not sure how to determine that point, but I believe we should be able to have a housing industry where people can afford rent and landlords can make money off of there investments.
CarolinaFever
Iconic Member
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This. There are also nonprofits where the board members still get paid well. The inflation problem today got worse not because of actual inflation, but because companies used it as an excuse to jack up prices for more profit.
gtyellowjacket
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I completely agree with you, but I'm not sure if that's the real issue. If the profits are there, why isn't supply increasing? Is it regulatory like slow building permit approvals, immigration problems for builders, or tariffs on building supplies? Or maybe it's effectively a monopoly in certain locales and the the Federal trade commission isn't set up to address that. Maybe it's lack of land.
My gut says it's not the high profits that are causing these issues although I don't know. If anything, the high profits should lead to a solution.
superrific
Inconceivable Member
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Yeah, determining that point is the big problem.
I once had a conversation with a guy who claimed that the solution to global warming was to coat Mercury with solar panels and have the power beamed to Earth in the form of EM radiation. He said all we would need is a solar powered machine that could fabricate copies of itself, and since we could already get things to travel to Mercury, we were halfway there. I responded that, by the same token, we were also halfway to creating a satellite that could communicate with God.
Point is: sometimes an abstract characterization of a problem masks all the profound difficulties.
Rent control is an attempt to do exactly what you say. Historically, it has largely worked in NYC -- the evidence being that NYC is now so prosperous that rent control is largely irrelevant (at least in Manhattan). NYC was never hollowed out by the centrifugal forces that decimated so many other cities (Detroit and Cleveland being but two prominent examples). In my view, rent control is part of the explanation for that success. It just cost too much to flee to the burbs for people with a rent controlled place.
But rent control has largely not worked elsewhere. That's perhaps because NYC has one major advantage in terms of real estate, which is often a disadvantage in other respects: it's centered on a small island, buffered by large areas still within the city limits. The difference between living in Manhattan versus Long Island or Westchester is much more significant than the difference between, say, NW DC and Bethesda. So the regulatory arbitrage that exists elsewhere doesn't exist in NY, and thus there weren't nearly the alternatives to avoid rent control by moving to another locality.
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Agree.
I've read a couple of articles that price fixing actually hurts the rental market.
Also, read that NIMBY and building codes really slow progress.
It's definitely not a simple equation.
Maybe we are talking past each other, but in no real estate investment I've ever heard of would the rent being charged be less than mortgage plus operating costs, taxes and insurance. When I buy a house as an investor I obtain a mortgage the same as a homeowner would, I pay the same upkeep expenses as the homeowner would and pay the same taxes and insurance as the homeowner would. The rent covers all of that plus a profit, otherwise I'd be losing money in the cash flow. A homeowner can buy that same exact house and pay the same exact bills without the profit to the landlord.
Ddseddse
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Also, to state the blisteringly obvious, just because renting and home ownership aren't the identical exact same thing, it doesn't mean they aren't intimately interrelated.
Every family housed in abundant and affordable rentals means less families fighting over buying whatever home inventory is on the market. Viola, more affordable homes. The beauty of this dynamic is that it primarily targets the "starter home" category, which is the sector the most in need of relief.
Purple Nurple
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Do X and invest the difference hardly ever works due to a lack of discipline. Home ownership is the largest driver of wealth in the us. Goodness, if you didn’t own a house in 2021, you have missed out on a great deal of capital appreciation.
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Somebody linked a really good video on NIMBYism on the ZZLP a few months back that talked about how much of the inflated real state costs were caused by the people who already owned their homes preventing high density real estate development to protect the inflated value of their personal real estate investment. That's all I recall, though.
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I think this was it...
I can speak a little bit to these issues (rent control and obstacles to building more housing).
My wife and I met when we were in grad school and law school respectively - she in City Planning, me in what was to lead me to Eviction Defense for low income tenants. We have talked a lot about both of these issues for many years. Caveat - we live in the Bay Area which has some unique characteristics on both of these issues.
As far as housing goes - in the Bay Area, there have been tremendous barriers to building new housing over the last many decades. The NIMBY movement (not in my backyard) has been a big part of this. There are lots of folks that "Got theirs" and then want to pull the ladder up behind them. Some don't want their neighborhood to change by getting more dense (there are some reasonable things not to like - more traffic, harder to park on the street). In the City of Alameda, it was illegal to build multifamily housing (ie - apartment buildings) for decades - this only ended in the last ten years. The Bay Area is also pretty land constrained. We can't just sprawl out like some places on the East Coast or in the middle. We are so far under-built that building tons more housing will not have an immediate effect of decreasing housing prices (either purchase costs or rents). But we still need to build. Also, we need to finance affordable housing. Right now, labor and material costs are through the roof which means that there is a strong incentive to build lots of "luxury" housing and not so much housing for people with lower incomes. There are also substantial climate change issues here, too - if San Francisco (and increasingly Berkeley, Oakland, and points south) get too expensive for low income folks to rent, much less buy, they still need to work here. So they live farther and farther out (beyond our mass transit system) which means hideously long commutes that generate pollution/greenhouse gases and increased traffic. I will also say that in the aftermath of the foreclosure crisis 2008-2010, a lot of single family homes were bought up by investors (this has gone on to some crazy large investment groups like BlackRock and the like). On the one hand there are a lot of single family homes that can be rented, but the stock of "starter homes" has been seriously diminished, locking a lot of people out of homeownership, which has substantial effects on accumulating inter-generational wealth (this kind of "wealth" being a very very relative term).
Which brings us to rent control. A very controversial issue in California. I think there are a number of strong arguments in favor of rent control here that may largely apply to other areas of the country as well, but for now I will just talk about the Bay Area. If we take as a given that it is good for a variety of folks on the economic strata to live in the areas where they work (think teachers, firefighters, waiters, police officers, etc), then there has to be a way to make it possible for them to live here when their wages don't rise as fast as rents. Rent control in California works like this: you move into a new place and the landlord sets the initial rent at whatever the market will bear. Each year, the amount of rent they are allowed to increase is pegged to the inflation rate (sometimes less than inflation - ie Oakland this year is allowing 2.3% rent increases, state law for areas without strong local protections allows something like 8%. (There is also a California Supreme Court decision that says that a landlord is entitled to a "fair return" on their investment, so if the limits on rent increases mean that a landlord is losing money, they can get a bigger increase). Landlords can also pass on capital improvements. And once a tenant moves out, there is no "vacancy decontrol," meaning that a landlord can set the new rent at whatever level they want. Unfortunately, this creates a perverse incentive for a landlord to try to find a way to evict long term tenants, because the rent that they pay can be below what a landlord could charge if they could set the initial rent at whatever level they want.
What rent control does is protect long term tenants (IE long term members of the community) by allowing them to stay in place, since wages (especially on the low end) have not been keeping up with average rents. The longer you stay in place, the relatively lower your rent remains, given inflation. Obviously, this is a trick balance to maintain. We want landlords to make a decent gain to incentivize people to be landlords but we also want to keep people in their communities. (teachers, grocery store workers, nannies, and any low income residents who are an important part of the community can stay there.)
We also have eviction controls in California - commonly known as "Just Cause for Eviction" ordinances, This means that a landlord can only evict a tenant for certain specific reasons (for most of California these include- nonpayment of rent, violating the lease, causing a nuisance, damaging the property, if the owner wants to move in (or move in a relative) if the landlord wants to go out of the rental business, among other reasons. These laws allow a landlord to get rid of a bad tenant, but prevents them from arbitrarily evicting someone hasn't done anything wrong. I think this a valuable social good. Stability in housing is a vital interest in family stability and thus social stability, so I am willing to say we can place limits on property rights - similar to the way the utilities (water, electric, etc) are more strictly regulated than other economic endeavors (selling widgets). I recognize that some may disagree with this.
If there were no rent control, then any landlord could get around these eviction protections by increase someones' rent to $50,000 a month. So, in my mind the two main reasons for rent control are (1) prevent the loophole to eviction protections and (2) maintain community stability (which has both social and environmental benefits.
If you read this far, thank you for coming to my long-winded TED talk. I have been practicing eviction defense for over ten years now (and following issues around housing production for even longer) and it is both the most rewarding and the most heartbreaking thing I have ever done. The Matthew Desmond book "Evicted" does a good job of highlighting a lot of the important issues in this arena.
My wife and I met when we were in grad school and law school respectively - she in City Planning, me in what was to lead me to Eviction Defense for low income tenants. We have talked a lot about both of these issues for many years. Caveat - we live in the Bay Area which has some unique characteristics on both of these issues.
As far as housing goes - in the Bay Area, there have been tremendous barriers to building new housing over the last many decades. The NIMBY movement (not in my backyard) has been a big part of this. There are lots of folks that "Got theirs" and then want to pull the ladder up behind them. Some don't want their neighborhood to change by getting more dense (there are some reasonable things not to like - more traffic, harder to park on the street). In the City of Alameda, it was illegal to build multifamily housing (ie - apartment buildings) for decades - this only ended in the last ten years. The Bay Area is also pretty land constrained. We can't just sprawl out like some places on the East Coast or in the middle. We are so far under-built that building tons more housing will not have an immediate effect of decreasing housing prices (either purchase costs or rents). But we still need to build. Also, we need to finance affordable housing. Right now, labor and material costs are through the roof which means that there is a strong incentive to build lots of "luxury" housing and not so much housing for people with lower incomes. There are also substantial climate change issues here, too - if San Francisco (and increasingly Berkeley, Oakland, and points south) get too expensive for low income folks to rent, much less buy, they still need to work here. So they live farther and farther out (beyond our mass transit system) which means hideously long commutes that generate pollution/greenhouse gases and increased traffic. I will also say that in the aftermath of the foreclosure crisis 2008-2010, a lot of single family homes were bought up by investors (this has gone on to some crazy large investment groups like BlackRock and the like). On the one hand there are a lot of single family homes that can be rented, but the stock of "starter homes" has been seriously diminished, locking a lot of people out of homeownership, which has substantial effects on accumulating inter-generational wealth (this kind of "wealth" being a very very relative term).
Which brings us to rent control. A very controversial issue in California. I think there are a number of strong arguments in favor of rent control here that may largely apply to other areas of the country as well, but for now I will just talk about the Bay Area. If we take as a given that it is good for a variety of folks on the economic strata to live in the areas where they work (think teachers, firefighters, waiters, police officers, etc), then there has to be a way to make it possible for them to live here when their wages don't rise as fast as rents. Rent control in California works like this: you move into a new place and the landlord sets the initial rent at whatever the market will bear. Each year, the amount of rent they are allowed to increase is pegged to the inflation rate (sometimes less than inflation - ie Oakland this year is allowing 2.3% rent increases, state law for areas without strong local protections allows something like 8%. (There is also a California Supreme Court decision that says that a landlord is entitled to a "fair return" on their investment, so if the limits on rent increases mean that a landlord is losing money, they can get a bigger increase). Landlords can also pass on capital improvements. And once a tenant moves out, there is no "vacancy decontrol," meaning that a landlord can set the new rent at whatever level they want. Unfortunately, this creates a perverse incentive for a landlord to try to find a way to evict long term tenants, because the rent that they pay can be below what a landlord could charge if they could set the initial rent at whatever level they want.
What rent control does is protect long term tenants (IE long term members of the community) by allowing them to stay in place, since wages (especially on the low end) have not been keeping up with average rents. The longer you stay in place, the relatively lower your rent remains, given inflation. Obviously, this is a trick balance to maintain. We want landlords to make a decent gain to incentivize people to be landlords but we also want to keep people in their communities. (teachers, grocery store workers, nannies, and any low income residents who are an important part of the community can stay there.)
We also have eviction controls in California - commonly known as "Just Cause for Eviction" ordinances, This means that a landlord can only evict a tenant for certain specific reasons (for most of California these include- nonpayment of rent, violating the lease, causing a nuisance, damaging the property, if the owner wants to move in (or move in a relative) if the landlord wants to go out of the rental business, among other reasons. These laws allow a landlord to get rid of a bad tenant, but prevents them from arbitrarily evicting someone hasn't done anything wrong. I think this a valuable social good. Stability in housing is a vital interest in family stability and thus social stability, so I am willing to say we can place limits on property rights - similar to the way the utilities (water, electric, etc) are more strictly regulated than other economic endeavors (selling widgets). I recognize that some may disagree with this.
If there were no rent control, then any landlord could get around these eviction protections by increase someones' rent to $50,000 a month. So, in my mind the two main reasons for rent control are (1) prevent the loophole to eviction protections and (2) maintain community stability (which has both social and environmental benefits.
If you read this far, thank you for coming to my long-winded TED talk. I have been practicing eviction defense for over ten years now (and following issues around housing production for even longer) and it is both the most rewarding and the most heartbreaking thing I have ever done. The Matthew Desmond book "Evicted" does a good job of highlighting a lot of the important issues in this arena.
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