The megalandords are potentially a serious threat to democracy.
Property rights are, to many theorists, the foundation of liberty. The widespread ownership of property is arguably the foundation of democracy. Owning your home gives you rights and independence; your home is your castle. The landlord's home is their castle.
Now we are concentrating wealth and property back into the hands of a few, a corporate aristocracy. You can use property at their pleasure. What happens if you want to do something politically unpopular? Put a sign in your yard? Work someplace or say something on social media? What if you have a dispute with this landlord - can you compete in court with their lawyers? where else will you live? Will other megalandlords accept you?
They also will have enormous influence in local communities. Property owners, not renters, are the influential people in any community. These new megalandlords will concentrate that power in a large corporation which has enormous resources. Local government will not be able to compete.
How does this arrangement differ from feudalism, with the wealthy controlling the land and the rest reduced to renting it. Well past feudalism, the concentration of property ownership has been a serious obstacle to democracy in many countries trying to make that transition. Now we are going backward.
Do you think these wealthy, powerful people, who pride themselves on their naked aggression and disregard of others' welfare, who have a long history of buying government, will not use this power?
A crucial question is, is this part of the deliberate attack on democracy by the (unnamed) coalition of wealthy and corporations, or truly just an investment? Regardless, the power will be there for that coalition to utilize.
> What if you have a dispute with this landlord - can you compete in court with their lawyers?
Bold of you to assume that they wouldn't just cancel your lease, share your do-not-rent status with the other mega-landlords, and hope that homelessness makes you go away.
I moved into a house from From a mega rental. All the windows were open when we did The inspection. Had a massive chemical smell after we closed it up. Company kept making excuses about smell. Well in 3 months family suffered a whole series of strokes and other issues. Eventually found a gas leak. It didn’t have the rotten egg smell so took awhile to figure out.
Plus we just were gone mentally.
Doctors wouldn’t fill paperwork saying that high levels of toxic gas caused medical issues, so lawyers wouldn’t take the case.
This is often hard. Even if you find a new place and move, your landlord will come after you for the remaining rent on the lease. If you don't succeed, you'll have a ding on your credit report that makes it harder to get a home loan and may make it nearly impossible to find places to rent.
Yep. Basically couldn’t move again for 3 years because we broke lease. Eventually went on an online campaign telling my tail. Company contacted me. They Agreed to remove negative remarks. And send me my deposit.
They tried to get me to sign paper work saying I couldn’t talk about.
I refused. They still sent sent Money and removed neg marks. Its not justice, but at least I can get housing again.
Damn. I never tried that in the US so I assume it would be fine, but I guess that infamous credit score system really is preventing you from doing that. When I was in England I just stopped paying my rent when I had issues with my landlord and they just fixed the issues. In France it’s also pretty common to not pay the last month when you want to leave so they’re forced to use the deposit for that. Unfortunately a lot of landlords are quite shitty and that’s a good way to deal with them.
Natural gas. Some sort of butane. Leak was in attic.
Growing up gas had a rotten egg smell. So we didn’t realize.
Also when we called they kept insisting it was the carpet, the floors, the paint. They would come out and say nothing was wrong and that smell would go away.
There was also a carbon monoxide leak that the dector was going off on. That was what make us stupid as shit while dealing with it.
Sure, you technically have the right to file a lawsuit, possibly in small claims court. The question is whether exercising your rights leaves you better off as a practical matter. Like, there's a similar issue with most credit-card based disputes with merchants, where you technically can file a chargeback, but practically speaking you'd rather not get blacklisted from Amazon/Uber/whatever so that's off the table completely.
Let's not forget that plenty of landlords will outright refuse to rent to anyone who has been in legal proceedings with a prior landlord. So having a landlord try to evict you (wrongfully or not) can often have the effect of leaving a renter unable to secure housing anywhere else.
Small claims have dollar limits and most corporate landlords enforce arbitration agreements to prevent any possibility of a smaller court from damaging their interests.
Renters have abismal rights when it comes to property disputes. As a class, renters are more likely to be living paycheck to paycheck, they are less likely to be connected to government or local community, and are dependent on their current landlord/credit agencies to secure shelter in the future.
If you are paycheck to paycheck, a lawyer is a crazy expense at the outset. If suing your landlord means that you are out of a home… and their mention to the credit bureau or landlord friends kills your next lease. Then you probably aren’t going to be able to stay around long enough for the court case to play out.
More often I'd say they're on the side of all local landlords, not necessarily megalandlords specifically. But your point is correct and I have yet to see a city council that wasn't stacked with property investors.
I'm saying local government is generally heavily influenced by local property investors and will thus try to block all development.
You are right that NIMBYism isn't good for developing new housing, which is what JP Morgan is trying to do. How do they get past that initial hump? I don't know, but they obviously think they can.
But once that housing is built, there will be every incentive for JP Morgan to go ultra-NIMBY to protect their investment. Luckily, local government is very easy to push in that direction.
Agreed. Whether there is rent control, the local authority should be obliged to offer to let houses at the controlled rent to people wanting them, building new houses if necessary.
I don't think there is any way to get a voting system to stop favoring people who vote in the current election over people who can't or don't, but the OP was talking about something different: local governments favoring a slight minority of voters (landlords, some of whom are nonresidents and can't vote at all) over the larger number of tennants. I say "slight minority" because quite a few "landlords" are not the Victorian aristocrats our cultural legacies from Marx's time make them out to be but rather individual people who saved up and now let one property.
We do want majority decision making, but Democracy, outside a theoretically extreme sense, is self-determination for all, not just the majority.
That's the reason for rule of law, human rights, and limited government - to protect those without power. The people with power always have had self-determination.
Totally agreed; nevertheless, any voting system capable of expressing the desires of voters should result in an outcome that better meets their desires than the desires of non-voters. If it didn’t, why would anyone vote?
Local governments are controlled by property owners. Rent control harms landlords but they are still property owners and the lack of competition makes selling apartments more lucrative.
Prop 13 was a direct result of a California court decision.
I forget the 1960s case, but the gist of it was it instituted equalization in school budgets out from property taxes in the name of equity.
In other words, high property taxes in 1 town were forced to be transfered to the neighboring town with a lower budget, so much so that the transfer had to be make payments by pupil within a $100 band.
That was instituted blind to school performance of course.
This actually took hold in many states not just California, however CA was the o ly one that forced transfer payments within a $100 band. There are different flavors of this all accross the country
Of course, homeowners are not idiots. They dont want their tax dollars wasted. So soon after this case forced these transfer payments, there was a swell of home owners pushing for prop 13.
Makes sense. Local taxes to local benefit. If my taxes are going elsewhere, why should i pay more?
And so here we are. Almost 50 years later.
Prop 13 is here to stay and is the only restraint that communities have against out of control state spending.
Prop 13 also has the great benefit of keeping anyone new out of the neighborhood, as they’ll be paying potentially an order of magnitude higher tax on the same property. Meanwhile, folks living on the edge of poverty already can stay in their 7-figure homes, unable to afford anything locally as everything else has moved on price-wise, so we get underfunded schools surrounded by de-facto millionaires. Businesses benefit even more, just look up what Disney’s Prop13 benefits are like. This is a great idea too, as it ensures that land owners who have owned in a place for decades are untouchable in terms of investment performance due to the massive tax benefit, so they can charge market-rate rent while paying a small fraction of the tax that anyone else trying to do the same today would. /s
Worth noting is that this whole scam is arguably illegal under the Fair Housing Act.
Prop 13 rewards long time landowning families. Who's that? White people. Even if the law wasn't explicitly racist originally it's impact has been. And only impact matters in the law.
Focusing on the beneficiaries misses the whole issue. No one voting for the law at the time was looking To benefit "whit people". The court case Serrano v priest, which eventually led to prop13 getting momentum... That Serrano case simply enforced a law that , as usual, with good intentions, created unintended winners and losers. Its just this time the incentives ended up going the wrong way towards prop13.
People that passed the law, 2/3 of Californians, simply wanted to control how their money was spent. They wanted to do away with the Serrano vs priest decision.
Serrano vs Priest decision broke the link between housing taxes and local government. That court case was directly related to a law passed by the same proponents of aboliahing prop13 now.
In other words, it is the same people that created the perverse incentives of prop13 who now want to get rid of it
Prop 13 is arguably illegal under federal law. Of course with the current court I wouldn't want to press it. After all Clarence Thomas loves Prop 13 so much that he refused to sign the majority opinion in Nordlinger v Hahn because it didn't go far enough in empowering landowners.
> No one voting for the law at the time was looking To benefit "whit people".
Again, the Fair Housing Act cares about "disparate impact". Intention is irrelevant.
(Though given that the 70s was the era of school bussing battles it's a bit of a stretch to say that people weren't thinking about race wrt Serrano and school funding)
50%+ of california decided for this. Have you pondered why? First, are we really talking a massive tax benefit? Prop 13 is about tax increases to be limited ? Is that insane? Or is it maybe housing prices that are insane? Something does not add up.
I dont control the price of my home. Why should I pay ever incessant amounts over something I dont control and is effectively, paper gains?
But, I'll tell you what does control prices. Whose fault it is that there is no property being built in all the farmland along 280 between SF and Palo alto or Menlo Park.. Sure it looks nice, but its 40% of available land. Just farms.
Worse...some of farming is almonds... which take so much (subsidized) water. Again, why?
Why are there no municipalities created in those areas? Why is there no competition in the bay area's overpriced land ? Look into who controls the creation of new municipalities. Thats where a key problem for CA.
65% of California voted to overturn the 1963 Rumford Fair Housing Act, thereby allowing property sellers, landlords and their agents to openly discriminate on ethnic grounds when selling or letting accommodations.
Direct democracy is an objectively horrible way to govern. The US realized this hundreds of years ago and The Federalist Papers explicitly called out the "problem of faction" which is why we have a representative democracy instead of US citizens voting on federal law directly.
Children, immigrants, future transplants and prisoners can't vote. Should we be okay to grind them into dirt if it'll enrich voting demographics?
Yet switzerland has the oldest continuing government in the world.
Meanwhile, we had at least 1 close brush with failure (civil war). And counting.
You need to take care of factions and you need big, heated arguments at the local level. So they dont end up scaled up at the federal level.
Otherwise those scaled up "solutions" ends up massive problems, such as the sudden reversal of abortion, foreign interventions, and housing/ credit meltdowns due to federal subsidies of mortgage insurance.
> Prop 13 also has the great benefit of keeping anyone new out of the neighborhood, as they’ll be paying potentially an order of magnitude higher tax on the same property.
Prop 13 is around 45 years old, which is much longer than the median homeowner tenure in California. That suggests that new people are moving into neighborhoods.
They mortgage their houses for huge sums and then buy cheaper homes elsewhere and then fill it with multifamily amounts of people who trash the area (bc it wasn’t engineered for this many people) all while blocking it’s redevelopment. This is why San Francisco is a disgusting mess.
San Francisco is a disgusting mess because of govt policies that directly incentiviE and subsizide fentanyl outdoor homelessness, and act such programs are magnet for others in the same situation .
> And so here we are. Almost 50 years later. Prop 13 is here to stay and is the only restraint that communities have against out of control state spending
Nope, prop 13 (and the resulting income taxes) is somewhere between feudalism and class warfare, transferring money from the young who work to old people who pay nothing and spend their days at city hall making sure nothing ever gets better.
If you owned your home and someone made it easy for you to rent at high price, wouldn't you do the same?
Im a renter, not a homeowner.
But I didn't choose to move to SF as a settler when it was a polluted mess of a city with days you couldnt go out, and high crime.
I wanted to move to opportunity.. When incomes are high and the city was better (it is not anymore)
Id like for prices to go down but I dont blame those that benefitted from just being there. Instead I look at the enablers, there is plenty of blame to go around, and the homeowner is last in that list. Prices are not High due to just prop13.
Miami, NY, Boise, Nashville and a bunch of other cities have housing prices that are going for the moon relative to what its been. They have no prop 13
40% of land on 280, between SF and Palo Alto is undeveloped farmland.
There's a difference, as an individual you wouldn't own a large percentage of the local real estate, just a small part.
Investors who buy up 40% of the market, blacklist tenants, and price fix to set a price floor or remove supply by taking rentals off the market. Those are the main issues.
The state governments need to re-implement taxes such that deductions and write-offs do not apply beyond a certain number of properties that are not owner occupied.
As for prices, Prices are high because the banking sector has not been held to account for their unlawful actions, and politician's can't balance their budget.
They have used that to enrich themselves through various frauds, and kickback schemes. The land on 280 has little to no natural water, that's largely why its undeveloped, and job centers are scarce.
Property taxes don't work because you inevitably price locals out of homes and setting a maximum on the tax simply ensures local government increases to that max every year. Long term residents are left in the lurch.
I have parents who have a home up there and their property tax has increased 2% of the value every year for at least the last 10 years. They are paying almost a full salary ($40,000) to keep the home. That's just in property taxes each year and that is just for a single modest home with both having to continue working just to get by.
It’s hard to have a ton of sympathy for people paying very little tax on their 7-figure property. Sell it and move anywhere else…but the real pro move is to just rent it out and live somewhere else. We have neighbors in our Silicon Valley suburb who live in RVs in their driveway so they can rent the entire house and still “live” there. Great retirement plan / grift that will never be available to younger generations.
Since 1977 (before Prop 13) we've had the California Tax Postponement Program. Low income seniors, the disabled and the blind can defer taxes indefinitely. They have zero pressure from the state to move.
Meanwhile, anyone who didn’t buy a house or property for a business 20+ years ago is priced out of the market, so we have tons of low-quality stores and businesses that are insulated from competition. It’s interesting how many free market advocates will throw their values out the window when it benefits them to do so.
As I don't live in CA, explain to me how this would work? As an outsider, it sounds on the surface a lot like those people who advocate for a flat income tax, IE: you and I both own a half-acre, but I have a single-wide trailer and you have the Hearst Mansion, but we are both taxed the same amount.
The idea is to tax land as a percentage of its value (notably, not its size). This is because land is a necessary good which is exclusionary: because there is a fixed supply of land, it can only be owned at the expense of someone else.
So, let's take the scenario you gave: it depends very much where the mansion and the trailer are. Generally, people build mansions on high-value land and trailers are on low-value land, so the mansion will be taxed more than the trailer (a half acre in LA has a much higher value than a half-acre in rural Nevada where I live). If they are on the exact same lot, though, then yes they would pay the same tax. The idea is that taxing this way incentivizes the best use of land. Imagine that you have identical plots in New York, one is a big apartment complex, and the other a parking lot. With a property tax, you take a huge tax penalty for building, and so the housing complex pays a lot of taxes and the parking lot almost nothing. With a land value tax, however, the parking lot and the housing complex pay the same amount in tax, so it incentivizes the owner of the lot to build a more profitable housing complex there as well, and they take no tax penalty.
Prop 13 in CA is a law that freezes property tax assessments at sale, so you have people who are paying taxes on a home currently worth $2 million as if it were only worth the $150k they bought it for in 1980. This means it is always better just to rent the house out than sell it, since you have a huge tax benefit, making housing almost impossible to buy. Worse, you can pass the frozen assessment on in your will. So it is almost literally creating a quasi-landed gentry class.
It also means that the moment you buy land yourself in CA, you have a strong financial incentive to maintain the status quo. And thus the cycle continues.
> Prop 13 in CA is a law that freezes property tax assessments at sale, so you have people who are paying taxes on a home currently worth $2 million as if it were only worth the $150k they bought it for in 1980.
This is absolutely not true. What prop 13 does is that it limits the yearly base property tax increase to 2%. It's not frozen, it still goes up every year, but only 2%. Note that this means it still goes up 2% even in years when the market is down. It's basically a damping fuction to absorb the wild fluctuations in market value.
I’m having a hard time imagining how this would work in my real estate market, given that there are shacks less than a quarter mile from gated neighborhoods in vineyards… maybe this one works effectively in urban areas?
That’s the point. If you own a valuable piece of land, the government needs to incentivize you to density so that the community has cheap housing. Putting a single wide on a in demand spot is wasteful and should be punished.
More generally, land value tax returns land to its rightful owner, the people in the community. No one created land so it doesn’t make sense to allow people to profit off it.
> returns land to its rightful owner, the people in the community.
if that was the case, why does somebody currently own it, and who did this current owner buy it from (ala, go up the purchase chain back to the first buyer).
Mistakes were made. They obtained it from someone who had no right to give it to them in my opinion, although of course rights are a tricky subject and many believe “might makes right”
Eventually going up the chain brings us to the government, which again, had no right to give that land away when it belongs to the people. Whether they did it because of corruption or ineptitude is irrelevant.
The banks decide what your house is worth and the gov then tax you based on that. Seems like a way to force people into a never ending grind and kicking out seniors. No thanks.
Er, an LVT doesn't tax the house at all, that's precisely the point. It only taxes the land... It's literally just a property tax that doesn't tax the house.
So if I've got 10 acres that I'm keeping as an undeveloped wilderness to provide habitat for migratory birds to use during migrations and you've got 10 acres next to mine with a 200 unit apartment building on it we pay the same amount of tax?
That doesn't seem fair since your 10 acres is using way more of nearly every government service property taxes fund and requires more of nearly every government infrastructure that property taxes pay for.
In that case, I'd imagine the solution would be to ask for a zoning change to the land (changing it's value), or put it in a non-profit which could have special tax treatment - or transfer ownership back to give under specific conditions.
My understanding is that in most places taxes would go down for homes. They would go up massively for those with vacant lots or a lot of land in prime areas that is being underutilized, which is why LVT is great.
My understanding is that people try to live their life and than tech bros and yuppies move in and somehow the taxes go through the roof and you gotta leave.
I mean, you sell your house with a lot of lot for a lot to some Facebook manager and move to Florida, but the whole scheme seems sinister to me.
Somehow "not getting my neighborhood ruined" is labeled NIMBY:ism nowadays?
To clarify, it's not a flat dollar amount per square foot, it's a flat percentage of value. An acre of land in Wyoming is not taxed the same $/sqft as an acre of land in NYC.
That would be a terrible idea, frankly, because it will cause gradients of overbuilding/land abandonment and underuse. Think about it this way: you have a city where land is worth $30/sqft/yr in the center, $10 at the edge and $20 in between. If you set the tax at $20/sqft/yr, you will not incentivize people to build enough in the center of the city. It will be just fine in the middle, but it would be impossible to earn enough money from land to pay the tax on the outside of the city, so people would just abandon the land or try to build way more than you would actually want there (in which case the supposed land tax is actually cutting in and taxing labor and property as well)
I didn't mean there would only be a sqft / yr based on the value. I meant there would be a sqft / yr + value. So the city center would still be a higher tax than the edge.
The edge would still be worth more to build on because of the lower base-dominant tax.
But it does make the edge less accessible to lower incomes due to the base tax.
It should probably be a max value or max sqft on a given entity than try to indirectly force that with tax values. There's a reason we have anti-trust laws.
That's 10,000 $100,000 homes, or 5,000 $200,000 homes, or 2,500 $400,000 homes.
Is it just me, or when put like this it doesn't seem so many? The high rise where I live has, I estimate, 200 units. So at $400,000 per, they're buying roughly 12 high rises. Doesnt seem like a "threat to democracy". What am I missing? I would imagine that right now most of these high rises are owned by a few firms already.
The title has a made up word because it would never pass editorial to call it "fuedalism" as you rightly stated.
There is no discussion to be had here. It's the return of Europes peasant/aristocrat economy back in full swing. Only took a century to come back. Oh well...
> A crucial question is, is this part of the deliberate attack on democracy by the (unnamed) coalition of wealthy and corporations, or truly just an investment
These things are one and the same. There is nothing to do with billions of dollars outside of buying influence.
The less positive view is that when boomers begin to leave the housing market, it won't release housing pressure by putting more homes on the market, but rather create a wealth transfer to their children who may just rent out the homes for more than the equivalent sale.
Sounds about right.. we're seeing the first steps toward a return of Madame Guillotine already. Reddit is flooded with populist rage subs like AntiWork. Angry populist candidates (Trump and Bernie) dominated the 2016 election cycle
The article said JPMorgan. No politician is stepping in anytime soon.
They are all complicit. At least in the UK, our politicians have a rich relationships with companies like these (ex - exployees, advisors, donors) and no one bat's eye.
"Blaming the victim" - commonly used abusive manipulation tactic used to reverse victim and offender. And you just did it.
The other option to why "everything in today's america seems to be a serious threat to democracy" is, obviously, that maybe that's because America's democracy is under attack.
It’s 1% above what you make on the treasury. Less than mortgage rates for sure, and if interest rates drop it might become free money, of course if interest rates go up you are swimming naked.
Maybe the fact that someone can get 95% leverage to buy a fixed rate mortgage for _30 years_ is part of the problem. We should bright back 50% down, five year mortgages and cut the rest of the stuff out.
> We should bright back 50% down, five year mortgages and cut the rest of the stuff out.
Well, in that case, good luck convincing the majority of the population to adopt a policy that will catastrophically crash their net worth. Government involvement in mortgages is what keeps our society civil at this point.
How much of that profit is passed on to shareholders vs benefitting land owners directly? There’s also the matter of not being able to live in those shares, having to still pay rent, still pay massively inflated property taxes yourself…
That argument is way too theoretical. Some people want to own their home and others want to rent. The optimal amount of rental housing is not zero. Whether there is too much or not enough rental housing is an empirical question that depends on local conditions.
But does that mean there is too much rental housing available or not enough, versus owner-occupied housing? If you want rents to be lower, it’s strange to argue against an increase in rentable housing.
Depends entirely in the property they use to create those units doesn't it? If they demolish 10,000 low end rental properties to build 1,000 high end properties, the answer seems obvious. Equally obvious, if they could create property out of thin air then more supply lowers prices, but property is finite.
If they could buy 10K on-rental-market units at an average price enough under $100K each to leave room to build luxury housing there, it would make a hell of a lot more sense to just continue to rent them.
There should not be megalandlords that can control a significant portion of housing anywhere. "Some people want..." is a lot more theoretical argument than gp. There needs to be limits on the power of landlords. I am curious as to what other countries have done to avoid it. Monopolies are illegal in the US, but it seems difficult to bring anti-trust against landlords.
If Comcast isn’t a monopoly for many in this country, I don’t know what is. Serious question: what are some notable examples of the government taking actual action against monopolies in a meaningful way that made them no longer monopolies?
There are no examples in the past 40 or 50 years. The country is infested with illegal monopolies. At this point there really aren't any industries left that aren't completely dominated by 3 or 4 massive companies. This has even spread to industries which have been historically immune to monopolies for various reasons, such as local news, FM radio, primary care practicianers, hardware stores, textbook publishing, car/heavy equipment mechanics, etc.
That's a good point. There are regulated monopolies. But if a monopoly does not have specific legal endorsement to operate (eg NFL, power company for a region, etc) then it is illegal.
I've been on the internet a long time and this meme feels like it's appeared out of nowhere in the last couple years, it's really off-putting. We're talking about the USA. America! Democracy is their brand in every speech and bit of media. They've been been showboating how awesome democracy is and how the free world would prevail the entire cold war. And now suddenly it's "yeah no we aren't actually a democracy"? This meme is the biggest narrative retcon I've ever seen.
No, home ownership in America is ~65%.
You need to pay taxes to support the infrastructure and you need to pay the bank to service your mortgage, but both are proscribed by a clear and largely static legal framework that does not infringe upon your legal ownership of the property.
A steel man interpretation of GPs argument would be that payment mechanics of property tax and subscriber services are more alike than people want to admit. You own your Netflix movies and land alike as long as you pay the subscription cost. Both eventually will be revoked if payment is withheld. Why should we call one subscribing and one owning when the results are the same?
Yeah I'm not sure why their post is so heavily downvoted.
You pay property taxes or you lose your home. You also need to build your house to an exact specification that your local government came up with, of which you have no control over.
In other contexts this isn't classified as ownership. Ownership to me is if I spend $300 on a lawn mower, it's mine forever with no future costs associated to it beyond repairs. I can do whatever I want with it, including modifying how it works or smashing it into a thousand pieces. Both of which are true if you buy a lawn mower today.
With the house scenario there's also tons of things out of your control that could be classified as "well, you own your house but things are about to get drastically different for you". For example what happens if you build a house in a nice empty area of land but you don't own all of the land surrounding your property. Over the years a couple of new houses are built around you and things are fine. But then 5 years later the town decides to build a fire station across the street from your house. Your living conditions are now ruined. A deafening siren may go off at any hour of the day or night and there's going to be extremely loud fire trucks and sirens all around you.
I don't know what would happen in this scenario but something tells me it doesn't end well for you as the home owner? Something tells me the town isn't going to offer to buy every house near the fire station over the market's value then pay to re-locate you to a different part of town (because you don't want to leave a specific school district or move to a different town / state). It also kills the market value of your house for future sales. Maybe at best they'd offer you a relatively small lump sum of money which is no where near worth the noise pollution and future loss of value on the house.
> You also need to build your house to an exact specification that your local government came up with, of which you have no control over.
Things are much less dire than this. My city’s zoning doesn’t come anywhere near an exact specification for buildings. It sets certain minima and maxima, but to call those an “exact specification” is a gross exaggeration.
Further, even if you need a variance from elements of the zoning, those are generally easy to get if there’s good cause (or in practice in our city, merely a not entirely unreasonable reason).
> Ownership to me is if I spend $300 on a lawn mower, it's mine forever with no future costs associated to it beyond repairs. I can do whatever I want with it, including modifying how it works or smashing it into a thousand pieces. Both of which are true if you buy a lawn mower today.
This in old, tired theoretical argument. Your lawnmower won't have much impact on your neighbor, but there are things you can't do with it: (e.g., modify it to emit poisonous gas, make painfully loud noises, or fling objects at high speed through your neighbor's window).
The answer is simply, you are subject to the law. If that makes you not free and oppressed, then you are not free and oppressed.
There is a huge difference between being able to do basically whatever you want with your property pursuant to the law and being constrained by whatever a typical rental contract for that type of property is. To imply otherwise is lying just lying with some fluff on top.
The results do not seem equal if you take account for the actual costs and privileges. Owning property has more rights and renting has more costs.
Rights: If you do not pay your property taxes, you will probably have 6 months to several years before your home is taken. If you do not pay your rent, the eviction process will likely start immediately and the landlord will probably make your life more difficult until you leave, even if you live in a state with stronger tenant rights.
Costs: Taxes are somewhere between $500-$5000 per year for an average home, while rent is more like $500-$5000 per month. Rent is on par or greater than the mortgage cost for an equivalent space, I have only seen lower rents when the home was not still mortgaged.
So while owning and renting may both theoretically be a subscription or a service with regular costs, the costs and benefits are not the same.
No doubt. I was just pointing out that there is a very different dynamic than the colloquial definition of "ownership". Just like you don't "own" your digital Kindle library in the same way as if they were physical books. It's an entirely different framework of rights.
I will still have ownership of my car if I don't register it. I can still use it as long as it's not on public roads etc. This is entirely different than if I don't pay my property taxes. I don't maintain use (or even ownership) of the property. Just because this distinction is clearly spelled out in a legal framework doesn't negate the difference.
I currently live in a van because I can't afford rent or a home. The past few weeks at -10 degrees has been rough. So nice to see that corporations are buying the existing homes and governments are restricting the amount of homes that can be built so the corporations shareholders will have a safe place to park their money while inflation is at 10%.
Boy this version of government and capitalism is awesome. Let's do drinking water next!
"By 2020 the price of water had risen by 40% in real terms since privatisation and almost a quarter of households had difficulty paying their water bills."
Just wow. Also, English water is 70% foreign owned apparently. That sounds unsettling. Also, didn't Liz Truss's cabinet not have a single English man on it recently? Out of 22 spots not one English male. Also isn't London property like 40% foreign owned?
> Also, didn't Liz Truss's cabinet not have a single English man on it recently? Out of 22 spots not one English male.
Is there an exact definition of an "English man" you know that we aren't aware of? Most of them are born and brought up in England, they seem pretty English to me. And why do you specifically point out males, what about English females?
I mean multi generational English with family members who died in wars defending England, people who have shed blood for England. People whose homeland England is and has always been. People who have defined the uniqueness of English culture from other cultures for thousands of years. People who have made England a desirable place to be vs the places everyone else wants to leave.
Rather than people whose parents came to England because it has a good economy.
> who died in wars defending England, people who have shed blood for England
Boo fucking hoo. 1/6th of all British forces in WW2 were Indian, of course you don't count them. All this is ironic considering Britain murdered and raped the rest of the world to be where it is today. India was the cash cow of the empire without which Britain would not survive the war. And economic migration has been happening throughout human history, it is a fact of life. Immigrants today are actually saving the country by keeping the economy afloat and maintaining values of hard work which the "multi-generational English" people seem to have forgotten. Stop being a miserable old racist c*nt, go outside and actually talk to some brown people and fix your pitiful existence.
> Britain murdered and raped the rest of the world
Now you're just rationalizing what's going on in England today. Every country on the planet fought tooth and nail for all of our existence.
> 1/6th of all British forces in WW2 were Indian
I like how you make the distinction between Indian and Britain.
> values of hard work which the "multi-generational English" people seem to have forgotten
All that hard work only seems to matter in the context of European and North American and Australian countries for some reason.Why isn't India the greatest GDP country on the planet if what you're saying is true?
I'm a huge fan of brown people and all people in general. I'm just not a huge fan of the billions of a singular culture subsuming the world simply because they don't have ecologically responsible numbers of children. Indians are fleeing India but you can't flee the planet.
Wrong on every point. Luckily right now I have the patience to correct you.
> Every country on the planet fought tooth and nail for all of our existence
Ah yes. Killing hundreds of millions and siphoning off trillions over couple hundred years, only to "fight for your own existence". You even worship Churchill as a hero who was worse than Hitler. You are a joke.
> I like how you make the distinction between Indian and Britain.
Asians were considered as a different class/caste in your own English legal system and denied certain rights back then. So yeah.
> Why isn't India the greatest GDP country on the planet if what you're saying is true?
Yeah, and why can't we solve nuclear fusion already? Surely it only takes a few years...
> because they don't have ecologically responsible numbers of children
Poverty leads to high birth rates, not culture. If you had the slightest clue about anything you would understand that fundamental fact. Read up on demographic transition, and how it has been delayed in Asia/Africa because of European imperialism. I recommend the book Factfulness by Hans Rosling. Birth rates are falling everywhere and human population will hit the peak in a few decades. As for fucking the planet, read up on which countries have the highest cumulative emissions and continue to have high per-capita emissions because of their greedy lifestyles. There was a time when London had worse air than Delhi today. Things change, unlike your static worldview.
I'm really starting to question the quality of your education system, maybe that's why your country is failing. No worries, we're here to take the wheel. Signing off from London, UK.
You lost me at Churchill is worse than Hitler. He's a British hero and to be honest a European hero.
It's clear that some of the Indian people flooding into England have minimal respect for the British culture.
It's just something they have to memorize to get the immigration paper.
I wonder how many Indian people in power have the same views.
Its just sad to see an entire culture that gave the world so much...subsumed by a culture that has ecologically irresponsible amounts of children.
To be fair the British are opening the doors to let it happen.
For Indians*. It's not hard to understand, Churchill caused more harm than Hitler in India.
> people flooding into England have minimal respect for the British culture
Wrong. I respect rule of law, democratic institutions, scientific rigour, equality, secularism. That I believe is British culture. I will always root for these values, and indeed these are also the fundamental values of the Indian constitution. My problem is only with people like you who have forgotten these values. I consider myself more British than you. Well tbf I consider myself a global citizen.
What I do not respect is denial of your own history, weird unfounded superiority complex and meddling in other countries affairs. US and allies have a history of supporting non-democratic genocidal regimes in many parts of the world including the Indian subcontinent, all while claiming a moral high ground.
> subsumed by a culture that has ecologically irresponsible amounts of children.
You don't learn do you? Go read the book I mentioned in my previous comment.
> To be fair the British are opening the doors to let it happen.
There are many Brits smarter than you who see the bigger picture.
I'm actually not British but you're right the Brits can't even fight for their own country they kind of deserve it to become unrecognizable and run by people who think Hitler would have been better running things than Churchill.
Good for you Indians. Keep up the good work of turning Britain into your home literally.
They annoying thing is that it's not even privitsed in a sensible way. A reservoir company could pay a yearly rent to the taxpayer for the amount of water it could capture, and the space the resoviors use. They could then charge for water on demand per litre to a company that distributes that water, then that company would charge per litre to the consumer
Having to buy 1000l of water for £1 and sell it for £1.20 gives a major investment to not throw the stock away through leaks. Other company have incentives to do things like building more storage (to buy supply when it's cheap and sell when it's not), and the consumer gets to choose which supplier to use. Same with sewage.
The main problem is the last mile would have to remain in public ownership as you couldn't have multiple companies providing pipes to each premises, and that I believe is where most of the leaks go
Internet companies are a good example of how difficult it is to bring a utility to a giant metro area. I'm not sure if that's because of government barriers or because of actual physical logistics.
Even Google Fiber seems to have given up.
But then you look at places where internet is managed by the government like Fort Collins and you have extremely fast, extremely cheap community internet. But then again, that's a pretty small homogenous rural community.
I'm not too familiar with the ins and outs of utility distribution just sporadic data points so I can't hope to get close to the truth about this.
It does seem like if you have the government and industry working together on something, it's the worst of all worlds rather than just one or the other.
If the municipality provides the fibre to each house to a local data centre, then private companies can rent space in the data centre to provide services. You still get a choice between ISPs (some may want a proper internet provision, perhaps with BGP handling and no contention on the uplink, others may be happy with a company that provides a wifi access point that also irradiates a public SSID. Presumably the former will cost more, but that's fine)
Basically the local road (the fibre) is paid for by the local city and run on behalf of the residents, the local road transports people (packets) to the airport (municipal data centre), where the ISPs pay landing fees to take people where they need to go at different rates for different services, with competition between ISPs, and pretty easy entry costs, ensuring high standards, low prices, and plenty of choice.
Why does anyone? To capture market from people who don’t.
JPMorgan can squeeze as much profit as possible AND lower rents.
Companies will extract as much profit as possible. But this isn’t always a bad thing as it can be quite profitable to service customers in a mutually beneficial way.
I don’t think so. For an individual corporation that owns 4000 houses empty houses are really bad. Perhaps in the short term, they’ll try to hold a price, but will start discounting and adjusting down as homes stay empty.
This is pretty simple supply and demand and if you increase the supply, then prices will drop.
Rents aren’t chosen arbitrarily by the landlord. They can’t set to whatever they like, else they’d increase 100%.
This is different is a single landlord has a monopoly or there’s a cartel. But in a typical city there might be 500k units for rent. So if a landlord raises rent by 8% on their 4,000 units, then people will likely choose other units that didn’t go up.
Not to be dismissive, but this is basic econ101 and any intro text will have lots of examples and evidence of these principles at work.
I mean, you could write it as "better to have X% units empty instead of lowering rents by Y%, given Y >= X + Z, where Z is positive number determined by several factors" if you like
My point is that that's not the choice they're faced with. If they lower the rent for an unit just a bit below market rate for an equivalent unit, shouldn't we expect all of their units to sell? In other words, isn't Z usually negative?
> If they lower the rent for an unit just a bit below market rate for an equivalent unit, shouldn't we expect all of their units to sell?
No, clearly not. Housing isn't a commodity and moving is a pain. If I offered you $10/month in a rent reduction (or off the mortgage if you own) to move across the street to an identical home, would you? How about saving $10/month in return for increasing your commute by 10 minutes a day?
Obviously, both of those become worth it at some level of savings. And decreasing rent by 0.05% to double the units occupied is worth it (probably). But there's a huge overlap in the middle where it's not clear what the effects will be, and that's where the real world is.
It's not a question of whether someone who is already settled would up and move at the drop of a hat, but whether someone who is already in the market for an apartment would choose to rent a cheaper equivalent unit.
It's definitely true that things are more complicated in the real world, but that fact doesn't have-wave us into "Z is non-negative" territory.
If Z is negative, it's certainly not worth taking the deal. My point was it wasn't worth JPM taking the deal for positive Zs (up to some value). If Z is zero or negative, it obviously isn't worth taking the deal.
That is, not only is Y=X a bad deal, but Y=X+Z is a bad deal for a good deal of positive Zs. Up to Zmax which is a positive value. For all values of Z < Zmax (including negative Zs) it's bad for JPM
Landlords might not want to maximize income by lowering rents since they might have to write down their property values and thus prefer "temporary" vacancies.
Then building new homes means that people who were previously homeless now get to rent. At exorbitant prices, yes, but most would say that is better than homelessness.
I think the problem is they'll have a highly concentrated group of units and can essentially price fix them. They won't be competing with themselves. And landlords love to raise prices when others do under the guise of "market rate". If you have a captive audience (e.g., surrounding a college), there's nothing renters can do about it other than move farther away.
Being single-family homes complicates the issue, too. We're not talking about high-density units, so the growing housing supply is fairly constrained. I don't see it being enough competition to lead to a pricing war. Meanwhile, it's taking away land that could have been used for home ownership, which will likely raise the value of other single-family homes in the area, movin home ownership even further out of reach for many.
I get that not everyone wants to own a home, but it's nice to have the option. If you're laying down roots, you can lock in a fixed-rate mortgage and have an asset. When renting from a megalandlord you're subject to the whims of quarterly earnings and your one year lease might not afford much protection. I think you're also discounting the cost and hassle of having to move when JP Morgan raises prices above the competition. It's very unlikely people will exit en masse, causing the landlord to adjust the rental price back down.
You might be fine with all of that, but ridiculing people because they're uneasy with the situation is not helping the discussion at all.
They'll lower rents in order to maximize profit. Number of units goes up, demand stays constant, the price will need to come down or they're stuck with empty units that generate negative profit.
When demand is greater than supply, then the limited supply goes to the highest bidder. Nothing wrong with that.
JP Morgan is building more housing though, which is always a good thing because it increases supply. Governments need to ensure that building more housing remains an accessible and profitable venture.
Because demand outweighs supply that's what tends to happen. The more people get paid, the more housing prices increase to capture that.
If supply was able to grow to meet demand, then that would put downward pressure on prices, but it isn't allowed to grow, and everyone other than the lord of the land suffers.
Still a finite supply of land though in metro areas with good economies. So even wth unlimited growth you would hit a wall at some point in these metro areas where jobs are plentiful.
But would at least buy a hundred years or so for other cities around the country to develop solid economies so I'm all for it.
In most metro areas, zoning is the limiter, not land. You could quickly double the housing supply if you allow townhomes, duplexes, and small apartment buildings in areas currently captive to single family homes.
It's popular opinion expressed here that single family zoning is the only thing limiting supply. I'm not sure it's correct. There's a limited amount of construction capacity in every given area. Limited amount of construction labor (construction workers, engineers, managers), construction equipment and materials. It's not easy to scale it up. Upzoning is not a panacea.
Then normal market forces take over - as demand for extra construction equipment and materials increases, people realise they can make money there, so supply increases. It takes time and certainty, but there's nothing inherently stopping people building more cranes or training more electricians.
You can fit a hell of a lot of living space in 1 acre if you use it well. Decent mass transit also increases the effective space of the city from a job perspective
London density could easily be that of Westminster (the borough with large open areas such as Hyde Park, Green Park, St James Gardens, most of Regents Park etc -- imagine all London boroughs having that much public open space).
Westminster isn't even particularly dense, but that alone would allow an extra 6 million people to live in Greater London.
Go for Manhattan density and that's 3 times Westminster, allowing 45 million in Greater London.
If — and it's a big if because civil infrastructure is a lot more than just domiciles and a bit of tarmac to travel on — it were done right, the metro areas could expand. And many have, which is why we're increasingly urban as a species.
Sure, still technically finite, but even just at the Netherlands' population density, we could fit the world population into 1/10th of the world's land area, so it isn't a real constraint.
Edit: Agreed @cloverich, it's possible I did miss the point. At the same time, automotive price increases seem disproportionately higher compared to other fungible goods. It's possible the supply chain and labor issues have hit this sector harder than e.g. farming. It'd be interesting to quantify what the differential would be without the capacity from new factories.
Supply & demand are not some type of fundamental laws of the universe. They are always changing and based on greed.
If I produce 100 widgets and am perfectly happy selling them for $10 and barely think I'll sell 10 of them.. but then they are highly popular and everyone wants them, you might see me constantly increasing the price because people like them and want to buy them. But that is literally greed in action. I did the math that I would make a nice profit at $10. But now that rich people decide they will pay $50 for each one just because they have the money and don't care, the people that could only afford $10 are priced out. And now the price has been increased and only people with a lot of disposable income can afford it.
Yeah, look at that "supply & demand" in action. Greed and and an excuse of "but wut could I do, the curves I plotted forced me to increase my prices even though I could have left them alone!"
The above is exactly a ticketmaster type example. We let "the market" set the price because people are willing to pay more and more, but those are the small percentage with a lot of disposable income that then get to have all the fun while people sit back and say "no one has a right to go to the concert [except those that can afford to keep on paying more and more]".
Economics is literally based on the assumption and ACCEPTANCE that everyone is a greedy asshole like yourself.
You’re assuming there’s just one type of ‘widget.’
If you’ve cornered the market in ‘luxury’ widgets, someone else will make a ‘bargain’ widget and sell to those with less money.
Hotels are a good example. The luxury brands are competing for the wealthy. But, you don’t have to be a Ritz-Carlton to make money… indeed, you can often make more by selling rooms to the less wealthy (as there are more of them.) And, on it goes, all the way down to the Motel 6’s and the mom-and-pop motels.
The laws of supply and demand only says that an increase in supply will decrease price if everything else remains the same. Since that isn't the reality in housing markets there is nothing in the laws of supply and demand saying prices can't increase more by building more than they otherwise would have.
So, you are saying that increasing the supply of housing in this case actually would cause an increase in prices? How would that work?
I agree that there is no guarantee that building housing lowers prices, other causes (like increases in demand) may cause prices to go up (and the increased supply would lower the upward pressure). But I have a hard time to understand how increased supply would not have a downward effect on prices.
> But I have a hard time to understand how increased supply would not have a downward effect on prices.
It does, if that is the only thing that happens. If land owners or existing home owners willingness to sell, prospective renters or buyers willingness to buy, or any number of different things also change then those effects can overshadow an increase in supply. As they frequently do.
Starbucks keeps opening new locations but that doesn't say much to the effect that the price of a cup of coffee will decrease.
> But I have a hard time to understand how increased supply would not have a downward effect on prices.
We can build housing much more efficiently and cheaply than we could 60 years ago, yet it's never been harder to buy a house.
The law of supply and demand only works as expected when used in an extremely simplified model.
If you account for all the other real factors (corporate greed, governmental intervention, NIMBYsm) that are skimmed over by economists, it becomes clear that the law of supply and demand should never be used alone to forecast future economic conditions.
I don't think that you can build much cheaper than before, is like the cars, they have more or less the same price but have improved in many ways (efficiency for example). Anyway, the building cost is many times not the most important thing in the price of a house.
Would it be possible to crowdfund housing projects? I have seen some examples in europe where you buy into a housing with your savings. Development is complete done through collective desires of the fund.
Not to be glib, but isn't that the role of government? Society crowd-funds projects with taxes. I appreciate that a smaller group could have finer control over decisions, but that might be a hard sell.
Right, but thankfully most people aren't interested in raw land area and more interested in livable space. If you bulldozed a few dozen houses and built an apartment building on top, you still increased the amount of people that could be housed there.
Why would anyone think isolated acts of charity can solve endemic problems that are built in to a society? That's like saying the wealthy should send a check to the IRS if they want higher taxes. Toddler logic.
We're not talking about iphones here, people need housing to survive.
The housing price could keep rising forever but the demand will always be high, it's not like people can just "give up on housing for this year".
Being a mega-landlord will also allow JPMorgan to influence the general market price.
So no, it's not really as easy as "the laws of supply and demand".
Edit: lol, never ever touch the dogmas of neoclassical economics on HN. Running into a church during mess and shouting profanity would get you a better reception.
Almost everyone has taken an econ101 class but it will not reduce the cost of housing. At all. When large corporate interests control this many resources they keep the price pinned. Simultaneously the cost of building new property has gone up especially now that the materials and the demand for housing is collectively understood. Add in inflation. The price of housing will never be reduced.
Since I have taken Econ 101 and taught it, it’s worth pointing out that literally no one thinks this is how housing markets work.
You can draw a set of supply and demand curves which keep prices the same under a supply increase, but not bc “large corporate interests keep prices pinned.” More important is that that special case is not relevant to housing markets.
There is also relevant empirical work on this issue. Increase supply and prices will fall. I’d bet you a billion dollars on that outcome.
Not an expert here but one thing I've noticed is that large / corporate landlords prefer to let a property sit empty rather than reduce the rent as supply/demand theory would indicate. My understanding is that this is because there are special tax benefits like you can write off the loss to lower your tax burden. How does this factor in?
Corporate rental housing should not be allowed. Free markets are not fair enough to make sure everyone is properly housed, and once enough of it is owned they will price gouge. There are plenty of other places for companies to make money.
In my opinion, housing is the final frontier for this. If housing is bought up by corporates and rented back, we are both feet into corporate dystopia. Land should be between citizens and the states that write the titles.
Interfering in the market always makes the outcome worse because it increases costs for both buyers and sellers.
Crazy real estate prices are caused by NIMBYs blocking new builds - heavy interfering.
Check out this graph of new builds in the States. Zoom out to max. Note how it’s basically flat with some ups and downs. It should go up exponentially with the population. https://tradingeconomics.com/united-states/housing-starts
I don't disagree with your point about nimbyism, but I don't think that proves allowing corporations to buy those same finite assets up would be any better. Then you just have the same asset bubble but instead controlled by a corporation with even less interest in affordability or maintaining a community.
Corporations will deploy massed capital in pursuit of higher profit. If we stop all meddling in the housing market, this will result in much more new housing being built.
We need millions of new units. The capital for that can come from individuals or corporations, but corporations are just a way to pool capital and seems like a quicker and more effective approach.
No corporation in any industry has ever cared about community and affordability. And yet these things have emerged multiple times wherever sane, free markets exist.
A non-regulated market cannot be a free market on any decent time scale. Without ensuring fairness by government bad actors will capture the market, externalize costs, and work against the public interest.
Are you saying that regulation (market interference) is universally bad?
I live in an apartment unit in a 25 story tower. I rent it from a corporation that owns it. Would that still be allowed in your plan? Would the restrictions on who can own housing only apply to single family homes?
Apartments are an interesting example, but ultimately no different to individual homes. The unit being inside a larger building only changes your agreements with fellow apartment owners. As a renter you aren't really concerned with any of that. When a developer builds a tower, they sell all the units to individuals or companies. In my variant, companies couldn't own them and so only individuals could buy the apartments.
The dream would be that individual ownership is cheaper, but maybe if the prices were lower building towers wouldn't be lucrative to developers. I am sure there are a bunch of edge cases like that.
One of the reasons that I currently rent an apartment instead of owning a single family home is that I want someone else to handle maintenance. Maintenance issues involve more than just "agreements with fellow apartment owners". There are common areas, common equipment such as elevators, trash chute, pool, gym, and common services such as security guards, maintenance staff, and concierge. In condos, this is managed by the homeowners association. Proposing that apartment buildings such not be owned by corporations, but instead that only condominiums should exist, with associated homeowners associations, is to propose a less liquid housing market.
I have owned single family homes and condos and rented apartments and condos. There are good reasons for all of these choices. Those proposing to allow fewer choices are not convincing me that they have thought it through.
Perhaps that homeowners association stays as the developer, and we write laws and regulations that keep the developer beholden to certain standards of maintenance and safe living standards. Perhaps competition will arise between developers who advertise certain levels of amenities and service. The basic minimum can be run by a government housing corporation that sets the baseline standard of living for all other developers to measure themselves against.
The possibilities here are endless. We don't have to keep living the way we do in the USA.
We could structure taxes, regulatory fees, and the like to make it so that building + selling + maintaining towers > owning the tower + renting it out.
Large buildings require lots of maintenance and specialized management skills. Laws can be updated so that individual apartment owners have similar rights to SFH owners who own both land and structure (a 3D model of land ownership?) Developers could be compelled to provide maintenance service but allowed to collect a small fee in exchange.
Society is a construct, so we can really just construct this however which way we want. Only our imaginations limit us.
> In my opinion, housing is the final frontier for this. If housing is bought up by corporates and rented back, we are both feet into corporate dystopia. Land should be between citizens and the states that write the titles.
All land should be owned by the public. To use it you would rent it for the market value, that money would be distributed to the citizens as a basic income. As the land becomes more valuable (society shifts to urbanization and cities become more valued), the cost of that land increases, but so does the basic income.
That's what happens now, except the people benefiting from the cost of the land isn't the public, but the land owner.
On the other hand, if a new power plant is opened up, land value reduces, and the land occupier pays less. Currently they just lose out, hence the NIMBY problem.
My understanding is US property taxes are higher if you build property on them. a vacant 1000 square foot lot will attract less tax than the neighbouring 1000 square foot plot with a house on. Is that not right?
So improvements which shouldn't be taxed are taxed. The land owner of an empty acre pays far less tax than the land owner of an acre with 40 people living there. That's wrong.
The 40 people living on that acre demand more local government services (schools, libraries, fire/police protection, etc.) which are paid for with property taxes (in general) than the empty acre does.
Corporate food production should not be allowed. Free markets are not fair enough to make sure everyone is properly fed, and once enough of it is owned they will price gouge. There are plenty of other places for companies to make money.
You are aware that food riots routinely bring down governments, which is why there is government policy that keeps the price of food affordable. (It also brought us consolidation and rural depopulation, but that's the price you pay.)
The thing that's really worrying is this - real estate is inherently unproductive. Investment capital ought to be steered into areas that yield technological progress, not into the equivalent of gold stored inside a mattress.
That's the real reason that policy that keeps housing affordable is needed. It's not only good social policy but also good technological policy.
Housing as a speculative investment is absolute lunacy and entirely unfair to upcoming generations. I agree this is not where investment funds should be going. It’s doing nothing but cause mass financial struggle to younger generations to enrich older generations—but what else is new. The incentives need to change to shut down NIMBYism and foreign/corporate investment in housing in a constrained market.
The people making housing a speculative investment aren't the investment firms, they are just along for the ride. It's your average middle to upper middle class homeowners that refuse to allow new housing to be built
If you think there is no difference between the food industry and real estate, then I am afraid that is a failing of your own deductions.
The issue I forsee is deep pockets cornering specific markets and dictating the price to people who haven't got as much flexibility. Corporate scale slum lords, in other words. It is already happening with private real estate investors.
Anyone can ship in and sell potatoes, I can even buy them online. The market forces work because I have so much flexibility. Not everyone can move, nor should they have to move just because money moves in. People live in communities not investment potfolios.
>Anyone can ship in and sell potatoes, I can even buy them online. The market forces work because I have so much flexibility. Not everyone can move, nor should they have to move just because money moves in.
But within a given city you have a choice of hundreds, or even thousands of landlords? Any specific building might only be owned by one landlord, but you don't exactly have to move to the other side of a city to get away from that landlord.
That's no guarantee either, especially with increasing consolidation of land under larger corporate umbrellas. I recently moved away from Columbus after getting on the bad side of an investment group that seems to own nearly all of the publicly-listed apartments in the area within my price bracket, and are still actively buying up more. Said bracket is fairly low, granted, but it's all I can afford on even a decent full-time income, especially with other expenses spiking as of late.
Columbus has recently found itself to be the new largest city and center of economic growth in the state, and changed rapidly and radically over the past couple of decades. As a result, it's nowhere near as seasoned and well-established as many other major metros, and the massive influx of new monied interests into the area quickly cornered their respective markets.
Moving back to the Cleveland area, which was quite the boom town a century ago but has infamously been in near-perpetual decline ever since (with many residents, like I had, migrating to Columbus), has much healthier competition in the rental market.
Perhaps in a few decades as new assets are built and today's ones slosh around the economy, Columbus will have healthier, more diverse competition and see your point ring true. It's certainly healthy in other sectors—one of my favorite things about living there was the great wealth of hole-in-the-wall bodegas, ethnic grocers, restaurants, and food trucks around me that meant even on my last dime I could always try new cuisines—but at least for those of us for whom even a high five-figure income is a distant dream, options are very limited.
Hey man, I agree 100% on the point you're making. BUT if you're reading hacker news in your spare time for fun, you can definitely find a remote gig that pays a comfortable six figure income and elevates you to membership in the class of people putting the squeeze on middle America. I don't know you or your situation, so I can't provide any real advice, but I can say with absolute certainty that something is out there for you
So I'd like to think. In reality my skills don't exist on paper save for basic helldesk work, and even that's been a crapshoot. Loving the positivity, though.
Should probably throw more work into networking and portfolio pieces in between shifts.
Is this supposed to be a snarky retort to the idea that housing should not be owned by a corporation? Food production in America today is already heavily subsidized by the state[1], and despite these subsidies, and despite America's immense food production and exports, there are still people going hungry in every city.
So what individual do you think can afford to build $1 billion in rental homes? The parent poster is incorrect about what JP Morgan is doing. This will increase supply not decrease it.
Traditional property developers don't usually hold onto the properties they build, they sell them off. Even skyscrapers sell off their apartments and commercial sections. Maybe some don't now, but I think that might reflect a shift from building being most profitable to renting being most profitable. In that case, eventually a renting-developer would lose incetive to build more as not to dilute their rental margins.
And the people buying them also have profit incentives. Whether JPM is doing it to profit from rentals directly or with the expectation that some future buyer won’t make a difference.
But it’s illogical by any standard economic model that any supplier will not build more units if they see it can bring in more money. Either they build more or someone else does.
It's not an issue right now though. I look around and I see thousands of apartments and condos for rent from different entities- many of them small renters. There are also tons of houses for sale.
Why aren't they all corporate owned yet? I think a lot of renting is not profitable but if all you need is a place to live that's no problem. Perhaps I'm a bit ignorant here?
The worry is that during a recession, when real estate assets are cheap, corporations might buy up the assets in order to rent them back or sell them for profit. It is just a worry at this point, but this rumbling from JPM is not confidence inspiring.
I have been a renter my entire adult life, and over the decades have plowed several hundred thousand dollars into the pockets of the various landlords I’ve rented from. The total maintenance done during all my tenancy is:
1. A broken seal on a washing machine was replaced
2. A leaky toilet was repaired
3. A broken kitchen drawer was replaced
I don’t believe my case is particularly uncommon. In ~20 years of renting, ~$500k of rent paid, the total maintenance done on the units I’ve rented probably cost under $100. Toss in the most expensive paint and cleaning regimen after I’ve vacated, and let’s call it a cool $1,000. If the value landlords are providing is “maintaining properties”, their margins here are colossal.
- Property taxes
- Hazard insurance
- Debt service
- Some utilities (water, trash, sometimes even electricity and HVAC, depending on your rental agreement)
- Maintenance and repair of exterior and common spaces
- Repairs and updates after you move out, and before you move in (assuming you have not been in the same apartment for 20 years)
Yes of course you're paying for these things via rent. But the owner's margin is probably much smaller than your math would suggest.
The value provided to you in the owner's margin includes:
- Someone to call if *anything* goes wrong. (Oven broken? faucet dripping? window stuck? Disposal burned out? All problems have one simple solution: Call this number.)
- Flexibility of movement. Want to move at the end of your lease? No problem. (Need to sell to move? That will be a long and/or exhausting process, and will cost you 6% of the property sale price!)
- The security of knowing that you will never be hit by surprise maintenance costs. $30K for a new roof? $20K for a new furnace? $250K for a seismic retrofit? Never going to be your problem.
- The ability to live where you want to! In many locations, there are no apartment-equivalent units for sale.
Some property owners are terrible to do business with, and in some markets/neighborhoods only terrible owners are easily found (there's a reason for this! See also hiring, dating, etc).
But as an exchange of cash for services, the equation is more balanced than you might realize.
You, yourself, might not have had any maintenance required, but you're also somewhat subsidizing anyone else in your complex who might.
In exchange for a fraction of what the real maintenance cost of a large repair will be, you get peace of mind that you will never be actually responsible for fixing it or footing the whole bill. The landlord gets to collect profits but one day will have to fix a major problem (and this is guaranteed -- houses wear down over time) that will require them to dip into said profits.
And then you have risk. There are levels of damage that will render the unit or units uninhabitable, wiping out possible years if not decades of gains. The margin is to (theoretically) protect against that.
Not saying this is the perfect system, and definitely greed has inflated these margins while reducing the value of services rendered, but this is the core idea behind it.
Depends on how you rent. I went through and calculated my total housing expenses for the last 15 years- they’re about $120,000; in my area that’s a (minimal) down payment. It’s less than a year of salary.
I’ve had all appliances replaced, a new roof (and a new ceiling when this leaked), the parking lot resurfaced twice, and a new water heater, endless bits and bobs (sink disposal, all new light switches, door knobs, fully new shower enclosure and faucets). Maintenance shovels snow, cleans up leaves, and de-ices. I have never mowed a lawn, shoveled snow nor done any physical labor at all- I’m still in good shape, there’s a gym and pool on premises.
My apartment is small, that’s why it’s inexpensive. But I won’t have kids and don’t need >1 bedroom. Already married for the whole time as well. Depends on how one wants to live their life.
Landlords virtually always hire maintenance companies to maintain the property - and you're paying for it via your rent. You could hire the same maintenance companies if you owned it yourself.
If you don’t personally have $200K burning a hole in your pocket, or you might want to move out next year, getting underwritten and committing to a mortgage in your place is a valuable service.
I don't disagree. I think we would benefit from a survey that shows how many people actually want to be renting. Since property is so expensive, thanks to how lucrative of an investment property has become, individuals are struggling to buy since they are competing with deeper pockets. I argue this isn't a free market, it's a market slowly being cornered by investors. Not a problem for say, fancy watches. A big problem for a core living utility.
So, yes, housing is artificially scarce because of "anti-development and NIMBY forces". But there are other forces at work, particularly good old market forces.
Corpos that compete with me when I am buying housing for my family can go suck a big fat dick.
Market forces exist whether you like it or not. If you design policy pretending that they don't, the market just spills over to a closed system of exchanging political favors, AKA corruption.
And with that every single house around also increases in price, because house prices are often dictated by what comparable houses recently sold for. As if they weren't already expensive enough. Besides, I don't think lack of profit prospects is currently a bottleneck for house building. There seems to be tons of regulations and control to what is allowable to be built. And from, there it doesn't matter that building a house would be 20% profit, if it's illegal to do so.
JPM decided it was more profitable to buy single family homes instead of apartment complexes. I'm not sure it's as simple as "more apartments = more money".
I'm sorry for your situation. Did you read the article?
This is not about buying existing homes. This is a joint venture to build new build-to-rent housing developments.
> The build-to-rent trend initially emerged during the Great Recession as a way for homebuilders to continue adding supply at a time when consumers were not buying homes. It refers to a process where developers construct an entire community of typically detached single-family homes that are later rented out by an operating partner.
In my opinion, this strategy and investment makes sense to large institutions like JPMorgan because interest rates are high while property values remain high. Building new rental housing increases overall supply, which is something that should, at least in theory, help people like you.
Late stage capitalism!! This is turning into a tehcnofeudalism fast. Surveillance is getting ready, facial recognition check, no location privacy check, all money in fewer hands check. It will be ugly, no pitchforks will work this time
No idea why you're being downvoted. Neotechnofeudalism is one of the most interesting concepts I've come across on this site and it's a very realistic vision of the future we're heading towards.
I don't know what "neotechnofeudalism" is, but if a bank built a single building 60 floors high with 8 condos on each floor and the condos averaged about 2 million USD each, would that then be neotechnofeudalism ?
If that construction was part of a broader concentration of capital in the top 0.1% of society that was then deploying that capital to buy up as much real estate as possible, then yes.
Whatever the situation the arguments/analysis/incentives/outcomes always seem to align with the interests of the mega-wealthy.
Recently, for example, the arguments around off-shoring jobs have changed completely due to the supply-chain crisis and its impact being greater than situation previously, when the only consequence had been that the people that dont matter lost their jobs.
That’s the natural progression of capitalism if you don’t take measures against wealth accumulating at the top. Owners need to find ever more places where their capital can earn money.
> Owners need to find ever more places where their capital can earn money.
Because of inflationary currencies that punish anyone that simply accumulates money instead of investing it. They want to make everything "efficient" by incentivizing everyone to either spend their money or lend it out so that someone else can spend it. Under such a system, people must allocate their capital just to break even. To fail to do so is to lose money to inflation.
Capitalism worked the same way under the gold/silver regime. Marx wrote Capital which explains this dynamic in the 1800s when that regime was in effect.
After a certain point, personal wealth is nothing more than a highscore showing how good you are at the capitalism game. There is no need to accumulate an ever-growing pile of money - you could just spend it on stuff and let trickle-down economics do its job. It's not like you are going to need it when you inevitably die.
It creates the incessant need to offset those losses. This turns housing into an investment and prices everyone out.
> After a certain point, personal wealth is nothing more than a highscore showing how good you are at the capitalism game.
What? No. Money is a form of power. It's hard for mere mortals like us to even comprehend the extent of the power wielded by the truly rich individuals and corporations.
With enough money, you can buy laws by lobbying the government. If that doesn't work, you can often just ignore laws and buy yourself out of trouble once it catches up with you. Fines? They're nothing.
Want to see something happen? Just invest some money into it and things will start happening immediately. Want to change things in the world? Just buy whatever you want to change and remake it as you see fit. Use money to incentivize the behavior you desire.
There is no point after which it's enough. The more you have, the more powerful you are. You're limited only by your dreams and ambition. There are rich people out there who bought military fighter jets just to fly around in a highly maneuverable aircraft. How many children out there dream of doing that?
> It's not like you are going to need it when you inevitably die.
My children will. My parents worked hard to give me a good life. I consider it my personal responsibility to honor that effort by going even further in life than they did. I want my children to be even more successful than me.
This seems to be the public establishment of a neo-feudalism, where the new barons are the megacorp capitalists, who can afford to strategize long-term and implement land grabs, while lobbying with governments to strenghthen their stranglehold on the people by capturing natural resources. Capitalist piracy, in a sense.
Now, I'm not a (neo-) Marxist in the strict sense, but this is too much in line with the Marxist understanding of the state as an institution that looks out for the interests of (big) property owners, rather than those of the people.
Fast forward a couple of decades, and we can project with some certainty an outright voiding the social contract that understands the state as a neutral institution that cares for the interest of the people, and reverting to such feudal-esque configurations.
And, for the record, no, I don't believe for one second that playing it the capitalist way and buying shares in megacorps has any possibility of having a positive counter-balancing effect. It'd be more like buying shares in slaveships, and partaking of the profits of the trade.
It's pretty good advice on a micro-level, though. When you see a situation brewing where one side is going to get screwed and another side is going to get-off handsomely, take the winning side of the trade if it's at all open to you. Do this enough times and you end up one of those rich capitalists, because each trade that ends up in your favor opens up more opportunities for future trades.
Capitalism has a bunch of negative feedback loops - usually by becoming a problem you help solve it. If people notice that a particular good is about to become really expensive and switch sides to become a producer, they increase the supply of it and drive the price down. Even if they hoard and don't produce anything, they drive the price up early, when existing producers might still be able to increase production, and then drive the price down during the shortage as they unload their hoard. If people notice that renters are going to get fucked by rising rents and buy property to become landlords, they increase competition in the landlord market and drive rents down during the crisis.
The average person gets the initial capital to enter the game of capitalism by living like a poor person and banking the difference. That's how it works: this "capital" that earns a return is simply the difference between what people earn and what they consume. If you get a positive return on it you might eventually start being able to earn like a rich person and live like an average person.
YOU can do it, since you're here and presumably have a technical skill that can pay 2-5x the median income. That opens up the door to saving and investing your way to wealth MrMoneyMustache style
I agree that most people can't, and we need to do something to ward off a populist uprising
Yeah, that's what I'm hoping for. I guess the other option is using technology to turn the entire country into a maximum security prison. We seem to be running full steam ahead into the prison future, though..
I have some empty apartments in Kharkiv, Ukraine if you want to get in one. I'll let you stay for free until you get a few months revenue-positive. There's lots of opportunity due to the ongoing conflict. All sorts of moneyed interests are entering the region.
HN is full of some very intelligent people, but it's scary to see that even most of them are buying into the changing of the definition of "capitalism".
One thing I think has become clear to investors is that the US Government will always "socialized the losses" for Housing. Which is to say that while such ventures could be considered risky investments (particularly during a downturn), the US Government has made clear that there's a floor on housing and that the money-gates will open if things turn bad.
So in essence the US government has created, for corporations, a nearly risk free investment. Highly profitable in the good years, and the bill picked up by all of us in the bad years.
Because the implicit promise of housing is that it will never depreciate it's value. It's a safe bet against inflation over long run.
For normal homeowners who want to pass an inheritance to the next generation, a house is both a home and, a retirement plan, and an inheritance investment.
The big losers in cheap housing are the families that've paid a mortgage for 30 years in order to save money for the future.
Asking for cheap housing, today, is like asking for eating the cake and selling it too.
> Asking for cheap housing, today, is like asking for eating the cake and selling it too.
We don't want cheap housing that appreciates in value so that we can use it as an investment. We want cheap housing that we can live in, period. We are being screwed out of that because other people got cheap housing and then decided it should appreciate forever, and pulled the ladder up behind them.
You are right, though, that it is impossible to have housing be affordable and an investment good. That's why we want it to stop being an investment good.
I'd never get into a 30 year mortgage knowingly that after 30 years it'd be less valuable than what I paid.
Therefore, want it or not, mean it or not, the whole point of buying a property is to get something that appreciates in value. Otherwise it'd be cheaper or better to just keep renting.
In order to stop being an investment, we need more houses, both in quantity and diversity. Lower the barrier to entry for everyone, everywhere.
You got value. You have a roof over your head and that money isn’t being burned up completely in rent. The problem is people want to enjoy having a nice house and a large return as well. There is no good coming our way from current asset owners pulling up the ladder to new home owners. Salaries cannot keep up with homeowners investment expectations.
Something never depreciating against its value is simply bad economics. Things will always appreciate and depreciate. I don’t know who promised you this, but it sounds like you got sold a bridge in Brooklyn.
Given that, there are plenty of other ways to save, pass on an inheritance, etc. You don’t need to hoard land so that I can’t live anywhere.
I don’t really care about your 30 year mortgage, respectfully. I probably wasn’t born when you signed it - why do you get to fuck me out of having affordable housing when I wasn’t even born yet to have that fight with you?
> I don’t know who promised you this, but it sounds like you got sold a bridge in Brooklyn.
Gold keeps increasing in value, the Mona Lisa too... Econ 101.
I've already partially answer this in another comment but if you think about it: I'd never buy a property with a 30 year mortgage if I'd known it'd lose its value. I'd be better or cheaper to just rent. But then if buying is a bad choice, because what just said, then who we'd be renting from?
I'm with you, that housing should be affordable. But it seems that everyone here forgets basic Economics.
Is gold more useful now than 20 years ago?
More desirable?
Has gold as a material been improved?
Most of the increase in "value" is something artificial like inflation / scarcity due to increase in population. But that's not value, that is only indeed economic forces only mildly related to gold itself.
If you wouldn’t have bought it with a ridiculous amount of money if it would ever go down, maybe that’s a hint that prices are, indeed, way too high…
Anyways, gold doesn’t go up like you think it does (I recall it spent the better part of a decade getting smoked) and your house in some city isn’t a one off like the Mona Lisa.
I wouldn't say infinite growth. Boom and bust cycles have been the norm in the few couple thousand years.
But housing prices are artificially held up because of voters and taxpayers who would vote them out of office if 2008 were to be the norm, it's not a shady conspiracy.
The population curve helps ensure that the fixed amount of planet available is needing to be divvied among a continually, exponentially increasing quantity of humans.
Or, from another angle, the uninhibited spread of the human race does come with significant ecological drawbacks, at large scale. Those costs are realised, in the value of land over time - while the population curve sustains.
1. Being a landlord has become a more attractive investment because in job-rich regions, cities don’t let developers build enough new homes. The lack of competition from new units allows landlords to raise rents on existing units. Let us be clear on a point of confusion: Developers DO NOT EQUAL landlords. Sometimes developers will rent the units they build, but often not. Developers are the good guys here. When they build shiny luxury towers, it gives the Amazon tech bro something to buy instead of coming into your neighborhood and bidding up the price of older units.
2. Financialization of homes as a personal investment is a BAD thing. It’s essentially a Ponzi scheme operating over decades where home buyers depend on people wealthier than themselves to buy their home at a higher price decades later. This is clearly unsustainable. Homes need to stop being seen as an investment, but rather a consumption, much like a car or other goods. The Atlantic had a good article exploring this topic:
The solution to our housing crises will include A. State governments allow lots of new homes such that homes are no longer a scarce (thus expensive) commodity, and B. We put in better tenant protections or practices such as multi-year leases that can be broken without too much of a penalty. That is, a family can, say, sign a 10-15 year lease on a home and still break the lease if life events make it necessary.
I note these are mostly US-specific reasons, but the property bubble has been a thing all over the world both now and pre-2008. It's a phenomenon of popular cities everywhere.
Those specific reasons might be US-specific, but other countries have other policies to favor home ownership for the same reason (ie. "voting demographics skew towards property owners"). For instance, it's pretty common in other countries to have capital gains exemption on houses.
China is a weird case where there is no property ownership per se, and all the property owners were sent to the fields, yet a generation later everyone is acting as if their 70 year lease is literally the same thing as property and entails the same rights of inheritance and so forth.
> - another side convo about suburban housing = bad. we should all live in tightly packed cities with no cars.
Are they wrong though ?
Removing zoning restrictions (and fake environmental/historical significance reports) will immediately restore supply-n-demand stability to housing. Want more housing ? Build it. Simple as that.
> second only to 'tech interviews and hiring' in terms of predictability
The main difference is that no one has a good alternative to tech interviews. On the other hand, every single NIMBY problem has been analyzed to death, with location relevant solutions proposals and verified proofs of them working.
Implement a land value tax by exempting buildings and improvements from paying a property tax, shift state income and sales taxes onto land value, and ease zoning regulations.
that's still going to have the effect of lowering property values though.
it's a catch-22. "lowering the cost of housing" and "lowering property values" are the exact same thing. there's no actual political appetite to lower the cost of housing, because all the people in charge of making those decisions are property owners who don't want to see their investment lose value.
It may lower property values some, but in the long run even homeowners will be better-off as other, more burdensome taxes decrease. Sure, increasing land taxes may not be that popular, but pair it with abolishing income taxes? That's a different political proposition.
It's also why my first step is not to sell it as the implementation of a new tax; rather, it is an exemption to buildings. People don't like new taxes, but everyone loves exemptions!
Political problems are often difficult to solve but that by no means makes them impossible.
>poc should be allowed to build inter-generational wealth via housing
IMO, this is slightly at odds with the OPs point that creating housing investments is a bad thing. One of the problems in my eyes is that a disproportionate amount of Americans wealth is tied up in their homes. This creates incentives to protect those "investments" through things like NIMBY policies, tax incentives, etc. An alternative would be to create a system that fosters more diversified inter-generational wealth.
Many of those perspectives have gained ground in recent years/decades and were not common or popular perspectives in years past, when housing prices weren't in crisis. You make it sound like repetitive nonsense when in fact these are salient points, relevant to the times and worthy of being spread and discussed.
> Being a landlord has become a more attractive investment
This is changing as we speak due to the interest rate. These investments are less attractive if you can get a safe 4% or higher return without having to deal with tenants and maintenance.
Is 4% an average rate of return for landlords? 4% of what: the capital you used to buy the house?
So if I buy a house for $100,000, I get $4000 in rent per year? Or I get $4000 in my pocket after I use the rent money to pay the mortgage and property tax?
Typical RE return targets are 10-20%. Anything less than that and you might as well be in public securities.
There are different ways to calculate returns: IRR, cash on cash, but it’s immaterial for this discussion. TLDR you want returns higher than you can get elsewhere easier.
(you must not just develop housing, you must lock it up from investors if you want to ensure long term affordability; capital is callous, uncaring, and voracious for returns)
> Financialization of homes as a personal investment is a BAD thing. It’s essentially a Ponzi scheme operating over decades where home buyers depend on people wealthier than themselves to buy their home at a higher price decades later. This is clearly unsustainable. Homes need to stop being seen as an investment, but rather a consumption, much like a car or other goods.
What do you mean by 'bad'? Morally bad? Macro-economically negative? A money-losing investment for the investor?
The investment has been a good one for generations. One reason is we have continued to grow wealthier for generations.
Owning your property, with the rights and independence that come with it, is fundamental to personal liberty and security. Your home is your castle; the landlord's home is not. Not everyone has to do it, but you are handing over a lot of power to someone else when you rent.
Homes are seen as an investment: they are being bought with the expectation that they can be sold at a later point in time at a higher price. However, this leads to some serious issues down the line.
I think it is fairly safe to say that the general expectation of an investor is that the value of a home will grow faster than inflation - why else bother investing? This means that the average inhabitant's costs for living in that home (rent, mortgage payments) must also grow faster than inflation. However, the average inhabitant's income will only grows with the inflation rate.
This means that for homes to be used as investment, the cost of living in them must be an ever-growing percentage of the inhabitant's income. And this is what we are currently seeing in practice: since 1965, home prices have increased 7.6x faster than income.[0]
This is obviously unsustainable - we can't end up with everyone spending 100% of their income on housing. The big question is, who will be holding the bag when the bubble bursts?
In part, because it incentivizes a lack of diversification in wealth, which leads people to support policies that protect the one egg in their basket.
Secondly, unless you own multiple properties, it's a market you can't exit. You always need a place to live so if you sell your "investment" at a market high, you have to buy your next "investment" at a market high.
Combining the two, you get a lot of policies that protect paper wealth not generating much value. I think it was Putin who said something along the lines of "I don't understand the American economy. It seems like they're just buying and selling homes to each other."
The OP seemed pretty clear to me that they were referring to a financial investment. I don't think "investment" is particularly useful for describing other value, and think that more aligns with "utility" rather than an "investment".
Homes are a great long term investment. However They are a bad source of income. Cash out refinancing is a bad thing, as you are using your house as income now instead of an inflation protected savings.
The pay off from investing in a house is when you retire you live there rent free, thus needing less in other retirement investments. Most home owners fail at this, instead living beyond their means and have nothing saved for retirement.
Along with food, water, and clothing, shelter is a basic thing that everybody needs. Few of us see rising food costs as a good thing yet many people cheer on rising housing costs because they got theirs already.
I believe they are generalizing past owning your own home, to owning _other_ homes as a pure investment. I.e. becoming a landlord. Owning your own home wouldn't require someone wealthier than you purchasing it -- even if it did not go up in price. When home prices don't rise, purchasing investment properties becomes less lucrative and more risky (where as purchasing your own home remains low risk).
No I am not ‘generalizing past owning your own home’. I am saying the official government policies that preferentially promote personal, primary residences as investment vehicles are bad public policy. As stated, these policies have manifested in practice as a decades long Ponzi scheme that is built on ever increasing home prices. It’s not sustainable. Younger generations will not be able to afford housing, as we are now witnessing.
Hmm in that case I think your argument doesn't make sense. "Good investment" regarding purchasing your own home is in comparison to renting. The price of the home doesn't need to go up for it to be a good place to put money, nor does it require any sort of "Ponzi scheme". It only requires the total price of maintenance not exceed the price of forever paying rent.
That’s because twice now you’ve not bothered to read what was actually written. I’m not going to explain the argument a third time to someone who isn’t putting in the effort.
Of course i could be wrong but you seem to contradict yourself in your first reply (You claimed new landlord policies were paramount, then that you were talking about primary residence ownership where landlordship wouldnt apply?).
You then said primary home ownership is a ponzi scheme which I gave an example as to why that seems untrue. I might be wrong here but providing a counter argument supporting why renting should be preferential to home ownership financially would be helpful as that seems superficially untrue.
The mortgage tax deduction and the Homes Sales Tax exclusion should be eliminated. They are regressive pieces of legislation that serve to widen inequality.
The mortgage interest tax deduction is effectively eliminated for 90% of Americans because the standard deductions are high enough that 90% of people do not itemize to be able to claim the mortgage interest tax deduction.
The mortgage interest deduction serves to put prospective owner-occupants on an equal footing with prospective landlords (for which business loan interest is deductible against profits).
The capital gains exclusion I have less strong feelings about, but it amounts in large part to excluding being taxed on the effect of inflation.
The MDI defines "owner occupant" over "landlord" in such a way as to effectively subsidize the single family detached suburban home lifestyle preference. It encourages the middle class to tie up a big chunk of their net worth in sprawling developments with questionable claims of being an appreciating asset.
I’m trying to gain understanding of your first sentence, but have been unable.
Landlords can deduct mortgage interest just like any profit-seeking business can deduct interest on loans taken on in furtherance of their business. That’s true for single-family homes or duplexes in a suburb same as a rowhouse, 4-plex or 50-unit building in a city.
The owner-occupant deduction applies to their unit, whether that’s all of an SFR, half a duplex, one level of a triple-decker, or 1 unit in a 4-plex.
They positively must be eliminated on the primary residence if want to halt the financialization of personal homes. Why should the related well-off be given a tax break anyway? It’s regressive. The US is one of the very few countries that allow mortgage interest to be deducted:
It already is. Tenant Rent and Owners’ Equivalent Rent (OER) is included. That’s capturing the cost of occupying the property, which is the “cost of living [there]” as separated from the cost of buying it.
> Financialization of homes as a personal investment is a BAD thing
there's two parts to home ownership
Physical asset, which deprecates (or needs a lot of maintenance to keep its value)
Land, which appreciates, as they aren't making any more
The former is fine. If you take a wreck and improve/renovate it and sell it for more than you paid, that's great, should be encouraged. The problem is the land value. Ironically the US tends to tax the physical asset far more than the land.
"Has become?" Seems that being a landlord has always been one of the more profitable things you could do.
And it has always been an odd split of who you want as tenants. Commonly, you either wanted very poor, or commercial tenants. Middle class was not desired.
For the middle class, you wanted to be their bank.
Homes are durable goods, hence an investment. Homes that are cared for can last a hundred years or more.
Contrary to your statements, it benefits everyone if these are seen as a personal investment - but not a liquid asset like stock or something.
Financiers shouldn't make broad stroking national moves on this, and it's basically up to state governments to beat back their capital by regulating things like quality, tax levels, and even build rates to prevent gluts, stem out-of-state "investment", maintainable infrastructure. If the banks try to dive into "house" be assured that they mindlessly leave it up to government to assure upkeep of every other dependency.
Banks can't even upkeep the property they plan to buy, they are so dumb and myopic that they'll buy a place, turn off the sump pumps in the basement to "save money" and literally destroy 2% of the available housing in an area -- which is fine for them since they can write it off pricing everything else up a bit, not as fine for the people who already couldn't afford a home, and are more deeply priced-out.
Governments could make them liable for this, akin to how you are contractually obligated not to destroy a leased car, but most homeless folks make poor lobbyists.
Sure, but durable goods aren't necessarily investment goods. Homes do depreciate in value- their quality declines and they become increasingly expensive to maintain, and they simply don't have the same amenities as newly-built homes without increasingly expensive remodeling.
What makes "homes" appreciate in value is almost never the building itself, it is the land.
>Homes are durable goods, hence an investment. Homes that are cared for can last a hundred years or more.
This is largely context dependent. For example, Japan's homes aren't built to last as long as many American ones. Additionally, even heavily depreciating assets like cars can last virtually indefinitely with proper maintenance. (E.g., Model T's aren't really worth much because there still are many around and they are relatively easily maintained)
Right, but there remains a need to have responsible parties between financiers that are exposed to toxic assets, like leverage, expiring options, margins, dark pools, EV ponzi schemes, and derivatives markets large enough to collapse housing loans up into the fed every 4 years. If the banks turn off the sump pump, the fed lights candles to get rid of the stink.
A giant like JP Morgan does it either way. JP Morgan originates mortgages (via Chase Home Finance). It likes to do that in places where the price of homes does not go down. Put it differently, it likes to do that in places with strong NIMBYs. I suspect Citi and Bank of America and Wells Fargo have the same preferences. I'm not sure how these preferences manifest themselves, and I'm also sure they are not doing anything illegal. But they create some market pressure to hinder development.
It isn't, at all. The increase in prices is tied to increase in GDP, interest rates and disposable income. Unless you think investing is a Ponzi scheme.
The problem is that this isn't true. Since 1965, home prices have increased 7.6x faster than income.[0] This obviously cannot continue indefinitely (that'd lead to everyone spending >100% of their income on housing), so at some point the price increase will have to stop.
Property developers are one of the most despised groups in Ireland, despite our extreme housing shortage, and there are many very fucking good reasons for that.
I don't know about Ireland, but in UK they are known for buying huge amount of land getting all the grants and permits for building say, 10k houses, then they build ~500 houses a year, because if they built more it would crash the price. So now there is no land to buy and build on by yourself, and developers build fewer houses than they theoretically could to keep the prices high. Not to mention absolutely abysmal quality of newbuilds at every price level, and the smallest(by area) size of newbuilds anywhere in Europe - the average new house in the UK is smaller than an average flat in most of EU. And of course there are only really 3 big companies which have completely strong armed the market so you either buy from them, or pay 4x the price from a "boutique" developer just so your walls aren't made out of cardboard.
Yeah this is the landbanking problem. The solution is something like a land value tax which penalizes this kind of speculation and development-throttling. In fact there was a great article about that I just posted: https://progressandpoverty.substack.com/p/land-and-the-liber...
Successive Ministers for Housing have dramatically under-built social housing, every year, for decades. This, while a "housing emergency" has been recognised for near as long.
These failures are used to justify things like the HAP scheme, which subsidize landlords directly. If this seems stupid - you're right. Many have pointed this out, but the politicians and landlords and developers responsible don't see any issue.
We sometimes subsidize developers to the tune of tens or hundreds of millions, just so we can rent the future property off of them, at above market rate, for decades. And we give it back afterward!
We allow developers to lobby the Government on policies that will make housing less affordable for young people.
Sometimes we just straight up give them €150,000 taxpayer cash per unit, to build "unprofitable" €450,000 units.
All this, while we have all time high homelessness rates, with hundreds of thousands more Irish adults living on friends couches.... While State homelessness organizations accuse charities who question this of "virtue signalling".
Even our constructions materials companies are staggeringly corrupt, eg, CRH (https://villagemagazine.ie/a-history-of-scandal/). They're widely known among Irish people to be criminal, and have been for a long time. See the mica blocks scandal for another example. Yet somehow they all keep getting lucrative contracts. No one is ever punished. And every time there's a big documentary planned about their various mafia type scams, it gets pulled. "Orders from up top".
"Consumption" doesn't mean disposable, it means homes should be used to be used to fulfill needs and desires, and not used to increase wealth (as an investment good).
Easiest way to do that is a land value tax; the home itself is not what is appreciating in value anyways, the land is what is appreciating.
Please, taxing something doesn't mean the government owns it. Does the government own someone's home because they have to pay property taxes to the city for paving the streets and running the garbage service?
Good point. At the end of the day, men with guns will come and put you in a cage if you disobey. Drafts are pretty nightmarish too, if you think about it.
Who said anything about disposable? In fact, they could make attractive rental investments maintained and held over decades if not a century. See Vienna’s social or privately owned housing that is rented out.
Housing simply should not be seen as the primary personal investment vehicle for the average person.
Developers purchase land where they get the best ROI, and as I’ve witnessed it, that means first and foremost very central apartment blocks aimed at yuppies and financially secure people over 40.
In order to get the attractive spots, they’ll throw you a very lucrative bid, which also raises the surrounding property values considerably (well, until the blocks have been finished, that is. Could take years in cities with strong NIMBYism).
To be honest, many of the newer and “cheaper” apartments in such blocks (still costs you $350k minimum) kind of suck. Small, narrow, etc.
$1B is absolutely peanuts, if they spend this yearly on acquiring real estate it will be a hundred years until they could be considered a mega landlord like for example Blackstone with its $550B worth of residential rental properties. They bought a billion and a half worth of properties in the small provincial city of Amsterdam in The Netherlands over the past couple years and it doesn't even make a dent on the housing market. That, and because of their corporate nature they're a lot less shitty landlords than the previous owners were.
I'm in full agreement that big money is a threat to society, but at least be realistic about the numbers. Just imagine how insanely large amounts of money you need to corner the market. I'm not saying it's impossible, but if the articles aren't talking about trillions, then they're simply not relevant.
Maybe if the article was about a thousand JPMorgans becoming "mega" landlords it could be relevant. Also.. who is really losing here? The way I see it, this is a threat to the lower upper class, who are being pushed out of the renting market. Are we supposed to feel bad for them, or is this article intended audience the lower upper class?
I agree with this take, $1b is absolutely nothing in the housing market. It’s like 3000 homes, maybe more in a cheap market, less in an expensive market. It could distort a regional market if it’s all concentrated in one area, but in the grand scheme of things it’s a rounding error.
I am also of the opinion that big landlords are typically preferable to smaller landlords. They are very predictable known entities with brands to protect, and have legal departments that ensure they will follow laws. They may in some cases be more eager to raise rent (although my corporate landlord hasn’t in the last year despite the market rate increasing about 10%) but they’re not gonna do random manual inspections or capriciously fail to perform maintenance, nor do something batshit like change your locks.
The only thing I find problematic is when entities like blackstone purchase SFH for rentals as I see it as a way of capturing value from the middle class (taking the margin that makes home ownership economically attractive) where it wasn’t previously.
Definitely agree, though in Amsterdam they only bought rental units, no SFH, I don't know what their global strategy is in that regard. I'm not sure if there's a clear business case for buying single family homes and turning them into rentals. You're basically competing with the entire mortgage industry then, families have insane buying power when backed by mortgages. They also make decisions that make no financial sense, basically only tempered by governmental regulation and the risk appetite of mortgage lenders.
Indeed it would be surprising if a company in JP Morgan's position did NOT have significant property holdings. It's a foundational investment class.
And frankly, having worked on the inside in the land development industry: the primary clientele of virtually every land development office in the world - from small city to large - is either wealthy old dude/family, or their companies.
Because land = wealth. If you have one, you can have the other. Or already do. In that sense, this JP Morgan topic is, as you say, just a drop in the ocean.
It sounds like they're dipping their feet in the water. If the risk/reward calculation is favorable compared to other assets they'll increase their investment.
Was chatting to my younger cousins the other day and they were surprisingly hostile against landlords. Not some types or some practices - all of it. Even relatives doing single buy to let.
Younger generation really isn’t on board with all this & only a matter of time before it shows in polls
I see this amongst younger users (under 35) on the forums I run.
They are very happy sharing a vitriolic dislike of everything that is a landlord society.
This is very clearly against even a single buy-to-let landlord, but fully extends to all AirBnBs, their rental flats/homes (it is shocking how few seem to have a communal living space - their living room has been converted to a sleeping room to make the rent affordable), and it extends to the perception of what Netflix is and everything about SaaS business models.
They do not hesitate to share ways in which they sabotage landlords in small ways daily. They gleefully share about coffee grinds down the sink in the AirBnB that has a septic tank, of using "bills included" rentals to run the heater... some of them in the cold snap before Christmas went into discount AirBnBs just to run the heating constantly, and of course there's rampant piracy.
There is a very angry generation coming up.
I'll note, I wouldn't have even thought the demographic of the sites I run would be considered left leaning or poverty, these are middle-class people who are angry at their hardship compared to what they perceive as they easy wealth and times of the preceding generations.
It seems to me that home prices are increasing at a much faster rate than incomes in many areas. The home ownership % of younger people is declining over time:
Given the perception (and perhaps reality) that they are worse off than their parents generation, it’s not too surprising that they rebel against the system.
Why does it have to be angry? Landowners and those with excessive wealth have fought tooth and nail to keep wages low, prices high and laws bent against working people. Do we consider those landowners and wealthy people to be angry? No, just looking out for their best interest.
But when working people look out for their best interests, suddenly there's something wrong with them.
Does most housing "rent" qualify as "rent" for the purpose of the phrase? I thought it mostly didn't, because the idea was that a rent is a recurring payment exchanged for no additional value, but apartments, while hideously expensive, are still a you-get-what-you-pay-for thing.
It depends on where you live; properly speaking, the proportion of your rent that is caused either by regulatory capture or by land ownership is the "rent-seeking" kind of rent, the rest is "hiring a house" kind of rent.
In municipalities with highly restricted supply due to regulation, as well as expensive land due to lack of a land value tax or property tax, most of your rent will be the "rent-seeking" kind of rent. Apartments usually are built on very expensive land and are still affected by restricted supply caused by regulatory capture, so they're not different in this instance.
When I was a student, the typical landlord where I lived was someone who owned an extra house, probably inherited or similar, had a basement apartment they did not use, and were reasonably priced.
Then everyone and their mother decided that becoming a landlord is where the money is at, and started bidding each others up. This was sustainable because the city had a surge in people moving there.
These days, most landlords here are just some random small companies charging exorbitant rents while trying to avoid costs and responsibilities at all cost.
And as perverse as it sounds, these folks are often also involved in local politics, and will actively vote against things lie new development projects, changes in zoning regulations, etc.
> These days, most landlords here are just some random small companies charging exorbitant rents while trying to avoid costs and responsibilities at all cost.
Man that is the most accurate description I’ve seen in a while.
My current apartment (powered by RealPage, just like my last 3 weeee) sent us all no less than 6 notifications during the cold last week about making sure we run water to not have the pipes freeze.
A total of 4 buildings have burst pipes that included the fire sprinkler system, and they are now trying to blame the residents for not keeping their apartments warm, and also trying to say that “this is why you should have renters insurance because it’s not our fault.”
I’m really hoping to get some popcorn and watch this shot show go down in lawsuits.
I don't know how young they are, but it's because renting absolutely sucks.
It's an entire inconvenience for not having an inital capital for a mortgage deposit.
I've rented many places, both with excellent and terrible landlords. And it makes little difference, when the laws offer so little protection to the renter.
It wouldn't be half as bad if the inconvience was offset with the rent being the cheaper option. But that isn't going to be economically viable in such a captialistic society.
Many more would complain if renting was a software product.
Renting here too. :( Their stance seemed driven more by ethical considerations than affordability. literally being a landlord is immoral fullstop. Heard that from two complete unconnected people now - different countries
As a former landlord even in the very red business friendly Georgia, there are plenty of protections for tenants that make it almost impossible to evict anyone in less than three months.
Genuinely curious, are you pointing this out as a case of "very protected"?
To me this seems absurdly low. Losing a dwelling is much more difficult than losing a job. It can be absolutely traumatic, and set people back financially, or worse for people who are already on the brink. In Quebec, where I live, thankfully it's one year. But it should be longer unless you can demonstrate some sort of valid legal reason like your tenant is damaging the building. Just cause you can extract a higher rent shouldn't mean you upend where someone lives.
A major argument for why landlords should make money is that they provide risk smoothing. They take on risk and the renter pays a premium (like insurance) for that risk. But that means that some landlords have to lose. The idea that landlords should never lose money breaks the entire arrangement. If that is the case then there should be absolutely zero risk premium and renters should just be paying for the cost of maintenance (often skimped badly by landlords) and the marginal opportunity cost of having either a mortgage or having equity tied up in the property (often much lower than the nominal rent).
Landlords often retreat at this point and just say "well we are charging what the market rate is" and leave behind any pretense that this is a fair economic transaction. In that case, landlords can get fucked, in my opinion. A system that buys up a scarce and necessary resource and then sells it back at prices disconnected from the actual value provided by landlords is unethical.
Who said anything about expectation? I'm not saying that landlords need to lose money in expectation. I am saying that some landlords need to lose money if they are indeed charging a risk premium. Same way we expect insurance companies to make money on average but lose money on some individual policies.
My point is that complaining about rare cases where landlords lose money because they cannot evict a tenant who isn't paying at the drop of a hat is simply ridiculous. It is like complaining that an insurance company occasionally has to pay out for their policies.
I think a problem with this approach is you rid yourself of all small landlords and move towards corporate owned housing. Only those with a large portfolio of homes can afford the statistical averages you’re talking about.
That's not really true. Individual people make all sorts of investments that in expectation grow but still carry risk. A system where renters pay risk premiums to landlords is a fine marketplace. A system where landlords insist on carrying minimal risk while also using risk as an argument for extracting money from their renters is garbage.
The truth is that the price of rent is utterly disconnected from the value of a landlord's labor plus the various premiums you'd pay for risk smoothing, lower transaction overhead, and opportunity cost. Landlords simply charge whatever they can get away with and we should all laugh at attempts by landlords to justify their rent through any argument other than "fuck you, pay me." After all, I've never heard of a landlord reducing the rent when they finish paying off their mortgage.
Once we at least have this shared understanding we can start having a real conversation about the merits and costs of the system we have today, rather than this fake conversation about how landlords are so nice for paying for that new roof.
It’s not about carrying minimum risk. When you carry more risk, you expect a larger return - you increase the rent. Which hurts the people you are trying to help
Is your pay based on market rate for your services? Do you voluntarily make less money than you can?
> It’s not about carrying minimum risk. When you carry more risk, you expect a larger return - you increase the rent. Which hurts the people you are trying to help
I don't believe that rents would actually go down meaningfully if states adopted laws enabling evictions within two weeks. As you say, rent is actually based on market rate and is entirely disconnected from the expenses landlords pay. All of these discussions about landlord expenses are non sequiturs that just hide the real discussion.
> Is your pay based on market rate for your services? Do you voluntarily make less money than you can?
I am performing labor rather than gating access to a scarce and necessary resource. The social damage of charging for labor is not the same as the social damage of charging for housing.
> Your job is enabled by someone at some point taking a financial risk to start the company you are working at.
That's true. The founders of my employer are mega-billionaires though. I'm not worried about them.
> Your pay is also more than likely built on the back of the less privileged.
That's also true. Capitalism is fundamentally unjust. I donate a huge amount of money to anti-poverty charities annually to help mitigate this.
> What’s the alternative?
I am not certain. But we can't even have this conversation until people stop talking about landlords like they are engaged in some essential charity for renters.
Would it be preferable for an individual to build a single family home on the land than a corporation build multi unit housing? Which does more to increase housing supply?
Higher profit risks mean that I’m going to charge more. If it doesn’t make sense for me to invest in real estate, why not invest in something else? How does that help reduce housing costs?
If the regulations change, all landlords that have any business acumen are going to address that by raising rent. The entire market is going to change.
Exactly, that's the entire point. If landlords are less willing to invest in property the housing price will drop, making it easier for people to buy the house themselves.
People don't want a landlord, they want a home. For many people the landlord is currently a necessary evil they'd rather get rid of.
The market conditions as they exist today with the known expenses has established an equilibrium. When expenses go up or risks go up across the market, the market adjusts.
The supply of land is fixed. If we're talking about the US then most of what you pay for when you buy is the land.
The current setup hasn't exactly been great at generating new housing. Juicing speculation increases nimbyism just as much as it increases developer interest.
That is not true in most of the US. Yes the supply of land is fixed. But there is plenty of air. Who is going to make the investment to build up? Individuals buying land and building SFHs is not going to help as much as building multi unit housing.
There is also plenty of affordable land in the US in flyover country.
Huh? Save for a small number of cities most of the nation is sprawling suburbia. 70% of Americans live in single family homes.
Most of what you pay for here is the land. And this is becoming ever more important because of agglomeration effects in the modern world.
> Build up
Ok you're switching gears a bit here but I'll entertain anyway. If you want to build up the right solution is a Land Value Tax. Landlords of course hate this idea.
> Most of what you pay for here is the land. And this is becoming ever more important because of agglomeration effects in the modern world
This is also not true. With an investment property you can depreciate the value of the building. But not land. It would reduce the tax incentives greatly if that were true.
I’ve owned five properties in my life and the house “improvements” is always more valuable.
Out of those five, two were new builds I had built from the ground up as primary residence. You can see the value of the unimproved land and compare it to the values of the houses built on top of it.
The other three were investment properties where I could only depreciate “the improvements” - the amount attributed to the house
In “sprawling suburbia”, builders can buy land cheaply and build hundreds of homes.
> Ok you're switching gears a bit here but I'll entertain anyway. If you want to build up the right solution is a Land Value Tax. Landlords of course hate this idea.
You realize any increase in cost is passed on to the tenants. How does that help affordable housing?
That statista link is maybe the wrong one? I don't see anything in there stating that the majority of Americans live in apartments.
> You realize any increase in cost is passed on to the tenants. How does that help affordable housing?
This is 100% totally wrong. The concept you're reaching for is called tax incidence. In the case of Land Value Tax it's fully the burden of the landowner.
You won’t be able to infinitely increase your rent (renters can only afford so much), and other landlords with more tolerance for risk may not raise rents as much (or at all). Some landlords will exit the market which will lower the price of housing and transition some renters into owners.
How will it lower the cost of housing by decreasing supply? Not everyone wants to or should buy a house. A house ties you down to one location makes mobility a lot harder when you want to change jobs and goes up your capital.
Does this meaningfully tip the balance? Even if you don't get evicted (let's be clear - made homeless), your credit is still in shambles at this point.
I've rented from several different single-person landlords. None of them have ever done any preventative maintenance on the property and every single one dragged their feet terribly when it came to urgent and necessary maintenance. Two summers ago my AC broke and my landlord was uncontactable (I tried for days). I arranged for a HVAC company to come and repair it on my own and my landlord refused to pay for the bill because I didn't use their normal company (I was never informed of their normal company). Even though in my state it is a legal requirement that rented homes have working air conditioning, it was a huge fucking ordeal to get my landlord to take the cost off my rent.
Now imagine I'm a non-native english speaker who didn't have spare time to dig through state regulations and this happens to me. I'd just get fucked. That's what happens to a huge number of tenants.
I am not saying that refusing to pay rent shouldn't affect your credit. I am saying that the "renter rights leads to people just deciding to not pay rent" claim is BS.
My experience with corporate landlords has also been shitty, but in different ways. They've done fun things like have terribly sealed granite countertops with stains that they charge each tenant for "ruining" but then don't actually change out between tenants. I was dinged for $2,100 for stains that were present when I moved in (I foolishly didn't have photos). The new tenant was in a few days later without new countertops.
It’s part of every walk through that I’ve ever done to note any pre-existing damage. But I do always take pictures.
But we have plenty of evidence from especially around 2008-2011 that people were both not worried about squatting and not paying their rent and owners doing “strategic defaults” credit be damned.
No walk through with these folks. Just got the key at the leasing office and I was off.
Yes, I could have avoided their abusive nonsense by protecting myself more carefully. But that's fucking awful. People shouldn't need to enter adversarial relationships with their landlords on day one.
Would you buy a house without getting an inspection? But a used car without getting it inspected? Buy a new car without driving it? Change jobs without doing research?
Do you do any large scale transaction without doing due diligence?
Believe it or not, people sometimes end up in situations where it isn't possible to do this sort of thing. In my case, the unit I had seen and agreed to rent suddenly was unable to be leased and so my only option was to take a different unit. I had already canceled my lease with my previous landlord and arranged a day for movers to come. "Oh, I'll just find another place to live" was not an option.
I also made a cross-country move during covid and had to choose a place to rent based on old photos because the current tenants understandably did not want their landlord to come into their home to do a virtual walkthrough for me.
"Oh, if you don't work hard to protect yourself of course you get fucked over" is not a good world. It may be the real world but this should not be used as a defense of the virtue of landlords.
There are plenty of other options. You move to the new place, you move your things into storage and you move into an extended stay until you get the lay of the land.
I did something similar. My lease was up and instead of rushing to buy a home. We moved our stuff into storage. We found an extended stay close by and we stayed there six months while our house was getting built.
I had a friend who relocated from Seattle to Atlanta and did something similar.
I'd like to see some proposals on how much rent can be raised with respect to local rates. Some European cities have attempted this, but not without issues.
And some enforcable time limits on how soon repairs can take - for example a broken boiler.
If it were that simple would not the mass exodus of landlord owners have reduced prices? There are massive amounts of new supply being built.
Single person occupancy growth in the last 20 years has pushed up pressure on stock as has the addition of many millions of persons beyond the national fertility rate. Incredible levels of regulation of which I wager you know nothing make building nearly impossible. I've built many properties, managed many, sold many, bought many. These flippant simplifications don't make sense. Costs to building quality housing to a modern standard are considerable. This the explosion in generic poor quality housing with aesthetics that are vile. If there were real cost pressures we'd see trailer parks everywhere in the UK. But we don't.
And who is going to foot the bill for building more houses without a profit incentive?
Builders of individual homes are building larger houses that are unaffordable to the people who need them the most. The answer is multi unit housing - like those being built by the evil profit seeking capitalists.
His answer will be an all benevolent all generous and arbitrarily infinitely funded government. Infinite housing, for infinite people - the motto of the true altruist - all paid for by persons TBD. The same position held widely in this thread
Exactly. It shouldn't be an investment vehicle, rent on land causes rocketing costs on everything down the chain. Only big monopolies survive. Places that are well governed and cheap to live in are often creative hubs.
You might want to argue that monopoly is efficient, but it's only a temporary thing until they have built their moat.
Tail wagging the dog. Land costs wouldn't be millions if you couldn't turn the thumbscrews on tenants.
To be a little less glib, it's easy to imagine other non-profit funding structures such as co-ops and government help (dirty phrase in the U.S. I know).
I imagine a lot of the costs of actually building would decrease a lot when remove the incentive for NIMBYish building codes.
There would be challenges as you point out, but the overall situation would be much better for all of society.
Increasing inventory occurs by building more housing.
It wouldn't be linked to inflation, as the housing and renting market has historically been above inflation. So limiting to market rate would still be beyond inflation.
It would be balancing between having housing as a necessity vs a comodity.
What can we do about it ? We can - in maybe 10-15 years time with enough protest. But that is too late. If you are 28 yo and want to settle down what do you do - create a non profit to lobby against corporate landlords?
That requires at least as much effort to do as keeping a regular job and maintaining your relationship. A young person without a solid family backing is already stretched too thin. And families is rapidly disintegrating across America leaving the young particularly vulnerable to the corporate landlord scheme.
That resentment is natural given that the people they're renting from often had their foot on the property ladder in their twenties. For millenials and younger that's the exception unless you've had help from your parents.
When I moved from home (almost 20 years ago) to study, I had to chose between living on campus - which came out to around $150 / month in only the rent, rent private for $200-$350, or purchase a smaller apartment. The apartment would cost around $50k-$100k, but back then the banks would give you a loan with as little as 5% down payment on the mortgage. A 20 year mortgage would cost around $200-$400 a month, depending on price of the apartment.
Coming up with $2500-$5000 for a down payment was not that difficult, even for someone just finished in high-school. One could easily save that up over a summer or two.
Fast forward 15 years, and the same apartments now goes for $250k-$350k. Rent is $1k minimum, and all the rooms on campus are either full and waitlisted, and you can only live there for 2 years anyway. Oh, and banks require a minimum of 15% for the down payment. And that's for the smallest, most basic "starter" units. The 2008-2009 crash killed all momentum, and building only reached the same pre-crash levels some 5-6 years later. This vacuum led to used housing exploding in price.
I think the resentment comes from the fact that many young people are paying $1500 in monthly rent, while a mortgage for the same unit would come at $1000 / month. They go to the bank and apply for a loan, but the bank says "Sorry, you need to save up more for the down payment". Next year the same house is 5% more expensive, while the rent has also increased in the same manner - but salaries have not.
Probably not a problem for us that are working in high-paying fields, but for regular people - especially young ones starting at the bottom - it probably seems like a race where the goalpost is being moved further and further away.
I had a similar conversation with some young relatives recently.
Their argument was “My landlord bought the house 20 years ago and it’s paid off. So they should charge me less/nothing because their expenses are zero.”
It was weirdly illogical to me as first, they thought the mortgage was the only expense and didn’t even know about taxes and insurance.
And second, the idea of markets didn’t seem to matter and they thought they should get very low/free rent because they lived there. And they hadn’t thought about how people would be able to rent if this is how the world worked.
I think maybe it’s because of virtualization where there’s not a clear cause and effect with digital goods so it all becomes very relative. Or something. But it made me not want to ever be a landlord as negotiating with people like that would be tough.
What they've identified is that the amount of profit a landlord who owns a house outright can extract from their tenants "feels" too high. Even if they can't explain the reasons, intuitively they feel there is some kind of injustice occurring.
There is, because land owners are monopolists that can extract economic rents (extra-high profits due to monopoly ownership) far beyond the ordinary rate of return in a fair and free market of capital goods.
This is primarily because land (or more specifically, location) is a monopoly good, not a capital good that can be created if demand increases.
The extreme end of this reality is feudalism, which most countries in the world decided against for one reason or another. Your young relatives are intuitively sensing that they feel like serfs in feudalism, and there's an increasing truth to that.
In my county, they have a “homestead exemption” that only applies to people to live in their home. I think this helps with the problem you’re describing.
This allows the property tax rate to increase while impacting non-resident owners more than resident owners.
Sadly though, this kind of tax just increases rent as it’s an additional cost to land owners.
Landlord costs aren't ordinarily passed onto tenants, or only in minor part, because landlords already charge as much as they can. If they could raise rents by some incoming cost amount, they would have already done it. I don't know if there are good statistics showing this in the USA, but in NZ it's pretty easy to demonstrate (e.g. interest rate rises are an increase in costs to most landlords, but they aren't followed by corresponding rent rises, and vice versa for interest rate decreases). Landlords charge as much as the tenant can bear, so an increase in discretionary tenant income is where you see a correlation to rents, not landlord costs.
I disagree. Costs are frequently passed on directly. For example, if utilities are included in the rent and the utility rates shift up, then the rent will increase due to that.
I think it’s common that there’s an expected rate of return that investors want in their rental property and they invest according to that.
It’s not that landlords charge what the tenant can bear as the tenant might be able to afford lots. The landlord charges what the market will bear. If the tenant makes $1M/year it won’t really affect what the landlord charges them.
> For example, if utilities are included in the rent and the utility rates shift up, then the rent will increase due to that.
This is an example of a tenant cost, not a landlord cost. In fact, the landlord may not be able to increase rent as much in the future due to the utility cost increase, because the tenant has less disposable income.
> If the tenant makes $1M/year it won’t really affect what the landlord charges them.
I don't think an extreme end of the scale is particularly useful to consider in this case; most tenants don't make $1m a year, and most people who make $1m a year don't rent.
This is relatively easy to resolve, anyway. If "Costs are frequently passed on directly" as you say, then you should be able to make some predictions about landlord costs and rent and then see them replicated in the market.
An example would be:
Many landlords have mortgages. An increase in mortgage rates in countries with non-30-year mortgage rates is an increase in landlord costs. We can expect a doubling of mortgage rates to have a significant impact on landlord costs, and thus a significant impact on rents. Do we find in countries with non-30-year mortgage rate rises that rents go up significantly more than usual with significant mortgage rate rises, or not?
You can also think of an example more to prove whether rents go up when tenant incomes go up or not, such as:
Do rent increases have a correlation with tenant income increases, or are they unrelated?
In my country (New Zealand), there is ample evidence to support landlord costs not generally being passed onto the tenants (I say generally because there will be specific instances where this isn't true).
Yeah, it makes sense when you consider what value landlords provide. A landlord may provide services like maintenance. But a renter pays not only for maintenance costs, but also mortgage costs. And the only benefit they get is the maintenance — not even any of the property value.
Renters essentially finance the ongoing ownership of an asset without getting any of the value back. At the end of the day, the landlord typically doesn’t have to do much work (or can use rent to pay someone to do the work), but gets an entire house in value. Whereas a renter does a huge amount of work to handle the cost of rent, but gets nothing at the end of their stay.
The only difference between a landlord and a renter is that the landlord has enough money for the initial downpayment in the first place. The renter is still covering all ongoing costs associated with ownership anyways, including mortgage and maintenance. (If they didn’t, renting out wouldn’t make financial sense.)
A renter will easily pay $90k over 3 years, but will have nothing to show for it. Whereas the landlord gets 3 years of their mortgage paid off.
The financial aspect of renting is very unfair to renters, and incentivizes perverse behavior. And JUST because renters don’t have the upfront capital for a down payment, or because all housing inventory has been snatched by landlords.
Reiterating: renters CAN handle ongoing ownership costs, because they’re already the ones paying for the landlord’s ongoing ownership costs. In fact, that’s the only way that renting makes sense for the landlord in the first place.
So the entire concept of renting is based on one class of people having capital and one class not.
It's just normal rage against capitalism in general. Land is just yet another thing that capitalists own. Just like factories, corporations. Just yet another facet of the "you'll own nothing and be happy" future.
I agree that leveraging 5x your net worth into a single asset in a single location who's value is wholly outside of your control has been working out well for many Americans.
But I'm not sure I'd envy people who bought in 80s Japan.
My point has literally zero to do with the financial aspect. Being beholden to a landlord fucking sucks, and I'd pay any amount of money to be out from under their boot. The financial gains I've gotten from homeownership over the last decade are just gravy.
But the upsides almost always outweigh the downsides.
If you plan on moving every year or something, then buying will be bad due to the transaction costs. But even if you move every 5 years, it’s possible that owning will be better in the long run.
I disagree as there are many $12-40/hour jobs in customer service that are remote and can get $100-200k houses in the middle of nowhere. I live in an area with lots of rural space within 2 hours drive. Remote work has been helpful for people who are “computer savvy” and deal with being in a remote call center.
Yes and that still doesn’t help teachers, firemen, public service workers, factory workers, health care workers, and all of the other people who can’t work remotely.
And there was just another post here within the last couple of days about how many of the remote customer service work jobs require unpaid training, inconsistent hours and are a race to the bottom.
This argument is losing its edge. Working from home being mainstream now means you don't need to move around as much.
Not that you ever needed to sell up in order to move. As a kid I moved around a lot when my father changed jobs. We rented in each new place but the family home was kept (and rented out).
> Working from home being mainstream now means you don't need to move around as much.
It's not really mainstream. For tech workers and middle management maybe but certainly not blue collar, medicine, retail, transportation, HORECA, etc. For perspective, the majority of adults in the US don't have college degrees, narrowing down their opportunities for work that can be done via Zoom. It was a deep point of resentment between the cozy work from home laptop class who could have all their needs met through delivery apps and everyone else during lock-downs.
Institute high Land Value Tax and eliminate most zoning and JPM can do whatever they want with their money. They’ll just have to compete on units and services provided instead of who had enough capital to capture indefinite land rent.
Land value tax which is free if you live in an owner occupied property, without the ability to sublet. Higher if rented out, and then make a linear increasing penalty percentage with the number of properties owned. So if you own one house and live there, zero tax. If you own 5 properties, you pay zero on the one you live in, then regular tax on the second, tax+penalty on the third, tax+higher penalty on the fourth, etc.
It would not make any sense to create real estate ETFs under this world for example because the tax penalty would be extremely high.
So you want to punish developers building apartment complexes in high-demand cities, while billionaires can enjoy their hundred million dollars tax free? NIMBYs tend to be private homeowners, so this would defeat much of the purpose of the LVT.
You could develop a giant complex and sell the units to individuals instead of renting!
Or there could also be a different tax rate depending on density. Single family home would be taxed the highest. Lower taxes for townhomes. Lower still for apartments.
The rate would still increase with number of units that a single entity owns, but by a smaller amount for more-dense housing.
This is the system we have in Sweden, although it has a problem in that it sometimes happens that developers saddle the resulting condominium association with debts, which are sometimes substantial.
Or make a progressive tax on property value: low tax rates for the first $500k or $1m of value and higher after, for "natural person" (i.e. non corporate) landowners. Let corporate land owners pay the higher tax on all value.
The problem with any of this is with elected government and privately funded campaigns, elected officials are mostly responsive to the needs of the donor class. So good luck getting passed any legislation that benefits the masses over the campaign donors.
So how do you think it will help anyone if it costs more to build more rental units. Every single response so far is going into moral outrage about JPM buying up existing home inventory didn’t even bother to read the bullet points
> The companies plan to acquire up to $1 billion in build-to-rent properties, starting in Atlanta.
And how does that help people who don’t want to commit to buying a house? The end goal should be affordable housing not home ownership. Buying and selling a house has high transactional costs and definitely shouldn’t be the go to. If you need to change jobs, it’s much harder to move if you own a home.
Besides, “owning” a condo when you still have all of the issues of being in an apartment is not ideal. You are still dependent on the condo association to fix common parts of the building , it needs to be a well run association, you have to deal with neighbors and shared walls etc.
Regarding the "owning a condo not being ideal", it's actually the norm in many countries, assuming by "condo" you mean a flat in a shared building with many houses - where I'm from, condominium is the name you give the association of neighbors, not the structure. Almost 50% of the EU residents live in flats[0]and have to indeed communicate with their neighbors and solve common issues together through a management company or directly through the owners association, depending on the building. I think you're making it out to be more complex than it is.
Both are benefiting from the labour and value created by the rest of society, outsized to their contributions. Land receives its value due to all the infrastructure, people, businesses, and so on that are around the land, and everyone who owns land benefits from this as their land value increases. Owner-occupiers benefit just as much as landlords (they are, in fact, lords of their land too, but their tenant is themselves). They should return to society the value that society created for them, in the form of a land value tax.
This should of course be offset by a reduction in other taxes, but it is a supremely just and efficient tax and far preferred to most other taxes.
That’s a lot of assertions but one could also make the argument that vacant spaces have far lower land value because there aren’t large numbers of families living there. If this is true, it seems questionable that the people living there are benefiting only in a one-way manner.
Yes, everyone contributes to society in some way, hence "outsized to their contributions." If you sit on a piece of land and wait 10 years in my city, you might have made $500,000 of tax-free land value gains, but without needing to contribute anything to achieve it. In fact, if you do nothing but sit on the land, you're a net negative on society because you deny access to that land from everyone else.
I just don’t see the “outsized to their contributions” part. The bureaucracy is built off the tax dollars of the people who first decided to settle there but you could probably reduce that tax burden and bureaucracy by a large percentage and the people living there, as long as they felt a good reason to do so, would continue to create a decent quality of lives for themselves. Either way, we’re basically just debating ideology at this point.
The easiest way to compare is to look at what a family of renters get vs a family of landowners. In a city with growing land values, the renters get nothing but the landowners get a lot, yet their contributions as "families contributing to society" would be equivalent.
That depends on what the purpose of the tax. If it’s to pay for local government services (fire, police, trash removal, schools), then why would you tax them differently?
If taxes are mostly punitive means to shape behavior, then sure.
The point of an LVT is to incentivize the efficient use of land and to compensate the public for the recognition of exclusionary title to use of a location. This doesn't change based on who it is that is using the land or what they are using it for. Take a $20 million plot of land in LA; it makes no sense to exempt a person with a mansion there from paying a tax and penalizing a developer who builds a huge apartment building that can house 50 families! By keeping the LVT flat and not exempting particular uses, you avoid distorting the market and- in the case of a homestead exemption- punishing people who build apartments over single family homes, etc.
A heavy, mostly-flat LVT should be the end goal, but would have to be phased in over a generation to be politically viable and not cause tremendous social disruption.
Nobody's going to get behind a law that kicks grandma out of the house she's been living in for 50 years.
You have to start with residential properties owned by investing companies first, then phase it into nonprimary residences owned by individuals, then primary residences over a certain dollar amount for people under 65, etc. Then you slowly ramp up land value taxes and dial back traditional property taxes until they're entirely replaced.
> The point of an LVT is to incentivize the efficient use of land and to compensate the public for the recognition of exclusionary title to use of a location.
I'd say an additional point should be to try and not make it so that the path of least resistance for the system of taxes being for a few corporations to accumulate all the available real estate. From what you say you're fine with one company owning all the land as long as they pay the tax. What I'm proposing is similar except the tax gets more and more prohibitive the more you own, instead of being a flat rate.
They give diversity and abortion to the left wing plebes and guns and religion to the right wing plebes but would never do anything that costs the capitalists money or power.
I don't think Congress even matters anymore now that the Supreme Court and lower courts are owned by the Federalist Society. I suspect any attempts to tax capital will be determined to be unconstitutional now. The US is locked in all the way.
Are you seriously suggesting there's a judiciary dictatorship installed in the USA right now? There's one where I live and also in many other south american countries but I never expected the US to be that corrupt.
For 50 years in the US, women had some rights of bodily autonomy that they lost this year because of the Supreme Court. Whether you agree with that outcome, it seems hard to deny the immense power there, and why there has been a multi-decade campaign on the right to control it.
Look up the controversy over a wealth tax - most Conservatives would tell you it's unconstitutional and/or wildly impractical, but I pay property taxes every year which sure feel like a wealth tax.
fwiw where I live in Los Angeles we have actual operational oil derricks right in the middle of residential neighborhoods but it's nearly impossible to build apartment buildings.
If zoning can't prevent the heaviest of heavy industries from sharing space with schools and playgrounds then I don't see why keeping it around to kill new housing projects is so useful.
It isn’t surprising that they want to start in Atlanta, as the combination of few renter protections, lax code enforcement, and affordable housing subsidies can combine to make an ideal situation for maximizing profit at the cost of human misery.
The hazards created by the dynamic public rent subsidy most stood out to me. The strongest protection against these units would be to replace it with direct cash assistance pegged to overall inflation, rather than the cost to rent at specific buildings.
Look, I have a lot of strong opinions but I cannot get over the fact that housing as an investment is a thing, especially by corporations.
Let's back up a bit.
The richest country in the history of humanity has a ton of homeless people yet its corporations buy up houses purely for the sake of preventing others from living in the house so they can sell it at a higher price later on.
Is that not absurd?
Even canada, vast beautiful land with most living close to the US border. Yet land or house in the middle nowhere in the Yukon costs a fortune now. All because this one simple disease: corporations, which are legal entities constructed to allow a group of people to use their collective wealth to advance a goal (such as profit) are treated the same as natural persons whose rights and liberties are naturally justified beyond the scope of any country's laws, all because collective wealth meant collective power to influence lae makers and judges?
The answet to this and so many other first world ailments is simple:
1) corporations as legal entities are not the same as natural persons. They are not created equal to individuals and do not enjoy human rightd or civil liberties.
2) Land and housing is for individual needs first (because of #1). Investment housing by nature forms a perverse incentive, investors can instead invest in derivstives or ETFs where they can build equity in a similar way without robbing people of housing.
I am really shocked that these things are missing from mainstream discussions. It sounds like everyone wants to avoid the big fat elephant in the crowded room.
Of course these things aren’t heard in mainstream discussions.
The media, and by extension the minds of majority of our citizens, are owned by the same corporate entities you mention.
They control language so that people will go along with their greed.
So if you’re a corp, you steer the discussions around your profit seeking avenues so people don’t even posses the language necessary ti discuss your demise.
People will never discuss the abstract idea that this whole “legal entities == people” thing is fucked, because they think they’re clever to talk about some vague future tax that will never be implemented because the corps own the politicians too.
People aren’t avoiding the elephant - they have been programmed to not realize the elephant is the problem.
IMO, as someone who has (briefly) worked in real estate tech the United States NEEDS TO pass legislation similar to what Canada has passed regarding the ownership of homes by non-Canadian:
>Broadly speaking, the Ban prohibits foreign corporations and individuals who are not permanent residents of Canada or Canadian citizens from purchasing residential real estate in Canada between January 1, 2023, and December 31, 2024. Any contractual obligations arising or assumed prior to January 1, 2023, will not be subject to the Ban
Banning non-Canadian residents from purchasing residential properties as well as banning corporations that are owned (in part or in whole) by non-Canadian residents seems like a good start. It will be interesting to see how many LLCs (or the Canadian equivalent) get created by Canadians but that are actually used as shell companies for international buyers. I hope that there's some sort of flagging of Canadian individuals who suddenly become real estate moguls, buying up dozens or hundreds of properties via LLCs, when the Canadian had no interest in real estate prior to 1 Jan 2023 (which is when the law takes effect).
Is it me or does $1B not seem like much? At an average cost of $75,000 per unit, they’ll have around 13,000 units. There are 126,000,000 units in the US, giving them 0.01% market share. That is absolute peanuts compared to large property developers.
How does this differ from banks lending money for traditional mortgages, it's just another method of financing?
Yes, I know the cost of housing is insane and something should be done about it, but introducing some level of market efficiency isn't necessarily a bad thing.
I can't speak for the US but in the UK a huge majority of private landlords are individuals, many of who want to earn a living from renting out two or three homes max. I rent an office from such a person, his sense of entitlement is off the scales.
Some of these landlords had the homes fall into their laps via inheritance, some are simply playing an arbitrage game, very few are actually doing anything economically productive.
Anything that threatens this method of exploitation has to be positive.
One major difference is that a mortgage is essentially “rent to own” - at the end of the repayment you own the property. Here ownership remains with JPMorgan?
Most BTL (buy-to-let) landlords will have interest only mortgages. You wont be paying down their capital as they have none. The revenue that they generate is the difference between your rent payment and the interest payment. The landlord will never own the property.
Indeed, as a UK renter dealing with one of these mega landlords (eg Greystar) is so much better than the usual exploitation game that private landlords play.
Fascinating. My experience in the US is the exact opposite. Corporate landlords are generally awful, where everything they rent out is full of shoddy repairs and minimum-cost ‘luxury facilities’ to drive up rent. Private landlords, particularly where the owners live in the same building, are almost always better. My experience has largely been in urban areas of the US, not sure about smaller towns; I suspect higher demand is what allows for it.
In my experience, the main benefit of corporate landlords is predictability. Especially when they are large. They have a reputation, and you know in advance what you get.
Private landlords are a gamble. They are better on the average, but the variance is also higher. Because most private landlords only have a handful of properties, it's effectively impossible to know in advance what they will be like if something goes wrong.
Individual experiences are anecdotal but here's a few of mine.
My Son lives in a "mega landlord" unit in Saskatoon (Canada) and it is well maintained and his rental fee is very reasonable.
My Son-in-law lives in a "mega landlord" unit in New Jersey (USA) and it is also in excellent condition.
I personally rented from a private individual in Connecticut for several years and it was a slumhouse.
Landlord was never around, no one to call when things didnt work. we actually had to fix the heating system in Jan because we were freezing cold and the owner was once again MIA.
My guess here is that in part to how common renting has traditionally been in the UK (pre WWI , something like 9/10 homes were rented, this greatly declined to ~7% until rising again since the nineties). More than a few big UK landlords have been around for centuries.
No. You are focused too downstream and skipping the source of the problem. What should be illegal is the surrounding context that causes JP Morgan's decision to buy up units to be detrimental in the first place. This is zoning restrictions that block new unit construction.
Without such restrictions, JP Morgan buying up thousands of units does little to both rents and unit values in the long-run.
I remember reading about a company that was using the latest technology to be a fully automated landlord. From video verification to sign the lease and unlock the keys, to automatically accepting and denying tenants based on AI... seems like these mega-landlords would not be possible without the use of AI and extensive automation.
1B is a tiny investment in this space, many individual skyscrapers are worth significantly more than 1B.
Managing ~3,000 single family home rentals is possible for a single small office assuming it’s all in a small geographical area. But the article mentions they are outsourcing the work to a third party.
Having recently had to move homes, I welcome these mega landlords with open arms. They verticalise the whole process and in doing so greatly improve the experience for tenants.
The traditional process with estate agents and unreasonable private landlords is completely broken and extremely frustrating to deal with.
Because corporations with the cashflow of nation-states have routinely given better customer service in your experience?
Or does it sound simpler having only 3 choices to rent from in your city instead of 30? Because it does sound like a hell of a time-saver making it onto 30% of your city's "Do not rent to" list when you can do it by taking a single company to small-claims court over an issue they don't want to fix, when you have tenent protections laws on your side forcing them to.
They can "greatly improve the experience" when everything goes smoothly, but it's difficult to argue with a tag-team comprised of a computer database, and a different customer service agent for every call you make.
In Chicago, the Cook County Sheriff will not do evictions in the winter, and are very hesitant to do an eviction if children live at the house unless they have verified that they have another place lined up.
Most but not all big corps want nothing to do with being landlords in Chicago, though there are a lot of local corporations involved. My first apartment in Chicago was owned by the family that also owns the Blackhawks hockey team, and you had to call their front office with any problems. I’m sure that was fun for them - any phone call could be about some important hockey business, or maybe just a broken toilet.
lol. I've read someone saying that if chatgpt can do computer interview questions… maybe the questions are trash. Seems we aren't the only ones with the issue.
I've never heard this one before and I have an unhealthy obsession with housing discourse.
The idea is to divide up income tax brackets based on property wealth instead of income level? That's interesting. Is it just your idea or something people advocate for somewhere?
Land value tax is better, imo, it charges directly based on the value of the scarce factor of production (land) and encourages development (i.e. more housing). Pretty silly to tax someone who owns a bunch of apartments in the middle of nowhere tons more than someone who owns one megamansion in LA.
The idea is to increase the amount of real estate tax to be paid accordingly to the amount of real estate properties you own.
If you own a house you should pay higher tax on it than your neighbor that has the same house but doesn't have 30 other houses like you do.
And of course you should pay more on each of the 30 houses you own.
Basically large propery owners should pay higher real estate tax than it would be paid if their real estate was split up between multiple smaller owners.
That's why I mentioned subsidiaries, so you can't fake-split ownership.
To play devil's advocate, these big institutional buyers moving into the single-family home market after a huge run up just feels like suckers rushing in at the top.
We're possibly at a multi-generational peak in inflation-adjusted returns to homeownership. Total population growth has essentially peaked, and working age population is falling. Expect more inflation over the next 50 years as we have more retirees (pure consumers of goods) to working age folk (who are net producers). On top of that, we've built more housing than "needed" in 99% of the country (look up the numbers if you're curious... construction has outpaced population growth).
Renters are yimby, owners are nimby. Supply side regulatory capture is the problem; it is run by democracy. Thus if you look at demographic trends in rent-vs-own and turn-out (by region to account for non-proportional representation) one should be able to forecast when a nation will transition from nimby to yimby. In the UK looks to be a ways off.
What rate of return is socially acceptable? Putting the market to one side, there's affordability to tenants, this is a home not just an investment vehicle which has to balance off against investment returns, in many cases LPTs are what pension funds invest in, so the income in turn is funding retirement.
the market rate of return. You establish this by making sure that a market has enough participants that they all vie for the investment. This will drive down the rate of return, down to an acceptable level that allows participants to continue.
Microeconomics suggests there are multiple common scenarios where consumers are priced out of the market entirely. If you can't afford rent then you can't afford to move. People homeless to appease shareholder value.
Land/location is not a capital good and isn't affected by the same market rules as capital goods, because it is unique and possesses monopoly properties. It's essentially impossible for land and other natural resources to have a free market, by nature.
0%, large landlords should be non profit cooperatives, there should be several to ensure efficiency/prevent monopoly stagnation and they should be under constant scrutiny from independent parties.
Why do you think it doesn't happen?
I believe that if you extend it to all the services you get a communist state. There may be no profit for sure but you get low performance as well with a lot of corruption.
Also no amount of housing will fix the issue with people wanting to live all in the same place(i.e location, location, location). You can build your own house if you want to cut off the middle man but it won't be in the city center.
Hmm, maybe we should ban selling housing for more than the purchase price + inflation based on some index. If rent controls are popular, why not also have price controls on properties themselves. Maybe allow some increase if entire building is replaced, but some value must be attributed to land that can not increase in value.
What if the government guaranteed income as risk management on this form of investment and made the housing bond a gilt, at marginal cost rather than absorbing the full cost of social housing?
I mean I still prefer public housing but if we're on a mixed economy road, don't have a national pension model that works and people do market investment in property trusts for income class reliable returns...
It's effectively the new risk-free rate. So whatever watershed where it stops making sense to put money in a mortgage instead of a viable, profit-making, problem-solving business.
Question: if you or I need a loan to buy a house the interest rate is 6% or so, currently. Does JPM have a source of far lower interest rate loans than that? Or are they simply creating the money out of thin air by creating credit, in effect, loaning money to themselves?
The corporate bond rate for AAA companies is currently 4.71% [0] so they are likely able to borrow at a lower rate than you or I could mortgage.
They can’t just create money out of thin air. And even if they could, that money would compete with other investments.
In some ways, that’s what banks do as there are deposit reserve ratios and what not where they take in deposits and loan out more. But JPMorgan internal projects would “borrow” similarly to anyone else who wanted to use $1B to buy a bunch of houses.
But wouldn't there be an additional tax advantage:
Suppose that we have a company buying houses and an individual buying a house using his salary. In order to move money from a company to an individual income tax must be paid and if a company instead invests its money, I assume that no tax is paid immediately.
Consequently if companies start bidding for houses, they will have much more money available than individuals, ensuring that houses will in the long run hardly ever be owned by individuals.
The result would thus be large company-owned estates, filled with renters.
The individual would just form an llc or even c-Corp and use that to purchase the real estate.
I think most real estate rented out is technically owned by a corporation because of the liability issues. So we’re already there. But I think there’s a difference between a solely owned Corp and a huge Corp. But for tax purposes, they seem the same.
No, not really. Individuals can deduct the depreciation of rental properties and reduce their taxable income.
I think the advantage of corporations over individuals is their ability to more easily raise capital.
If an individual is making high levels of income, it’s likely they are already deferring and rerouting income into tax advantaged mechanisms. Kind of like a partner in a high value partnership.
But I don’t imagine an individual directly funding a billion dollars through their income.
The issue with individuals is that they just aren’t likely to use earned income as the source for these investments.
If it were me and I wanted to say invest $1M in rental properties. I would form an LLC and take out a bit loan in the LLC’s name backed by my personal assets as collateral. Then I’d buy property using the loan and collect all income into the LLC to pay the loan and invest in new properties over time.
The taxes on my personal income don’t really factor into it.
When you buy new builds in bulk you also don’t pay full price, the builder will extend a nice discount as it provides a great channel to get rid of inventory and move on to the next site.
So, one or two neighbourhoods?
Barring some dramatic kind of tenure reform, this isn’t such a bad idea for tenants, given that unlike so many landlords, this venture is being run by firms big enough to attract scrutiny, and competent enough to know what processes and laws to follow, even if they will push those boundaries.
As an aside, the article also refers to a story on ‘digitising the rental market’ which seems to be about moving the US market away from rent checks? Why are these still a thing there? in most countries at least in OECD this is like doing business via fax or even telex.
An excellent argument for further consolidation of every industry - now they are big enough to attract scrutiny! Look, less competition is actually better for consumers!
Not arguing that at all - real estate is weird in that it’s much less liquid than other retail markets, and moreover buyers ie renters are at a further economic and information disadvantage. So some consolidation in the context of making the market more transparent and better regulated for renters to counter this _maybe_ should not be immediately dismissed if there is not a political mandate for more dramatic reforms.
It sounds like you're arguing in good faith, but no, I'm sorry, you're just wrong. In any conflict, a smaller adversary is better. Individual landlords, who live in the neighborhood, are in every way more accountable for their behavior.
Sounds like you don't live in the US... I have a feeling rental companies are very different where you live. They are notoriously and laughably bad here. Broken webapps, slow replies, understaffed maintenance crews, misdirection in the name of profit, and sometimes outright deception.
An actual workable solution with quick easy numbers: each additional rentable/livable property address (not per-unit) beyond some base level (10?) should incur a 0.1% multiplier on overall tax burden of all lands, 10 properties = 1.0 multiplier, 15 properties = 1.5% multiplier, and so on... this new extra mega-lord tax burden must apply to all properties, and span all other corporations owned by the entity.
It’s not the mega landlord that people have a problem with, it’s that the rent is too high. Land lording isn’t going to go away, so it’s best to focus efforts on reducing rents.
Land value tax is one of the few taxes where the incidence is primarily on the land-owner, not the tenant. This is because it's an essential need that is of limited supply, so the price of the land rent is already set to the maximum. The landlord has to eat the cost of the tax.
He is in competition with other landlords, who can afford to charge less, he has no freedom to simply raise rent arbitrarily. When every landlord has to pay land value tax, then they all will raise their rents to accommodate it.
The Renter will pay the tax.
Landlords are running a business, they are not “eating” costs, the costs are paid for by the rent, and if the rent isn’t high enough to cover the costs, they go out of business. Every tax you inflict is simply violence against the renter. So go ahead, make a land value tax, make it even harder for people to rent.
Landlords aren't in proper competition in supply constrained cities (most of them), so they aren't actually competing that much with each other. In reality, landlords are charging as much as the tenant can afford to pay (in aggregate). This means that the tenant will not be able to pay a higher rent, even if every other landlord also raises rent, so instead they become homeless (or move back with their parents). This happens across the tenancy market, so landlords are already charging as much as they can.
Homes should be afforded by and owned by families. Corporations have no business owning family homes. The fact this is even a thing shows how broken the system actually is.
As if that somehow makes it better when they purchase all the homes and jack up rents? How many people can even afford to buy voting shares especially among the renting population? Do they have enough money to throw around like that?
in the past year after the COVIDicide i've traveled all over the US, and it's fuckin scary how many empty homes there are. owned property, but empty. no for sale signs. no occupants. why are these homes not selling? i will never rent a home! i've been renting for 30 years and it SUCKS. we have to live under the torment of never having a place to call home ever! the looming threat that when we lose our jobs because of pandemics or disasters, or economic turmoil, there's no guarantee that we'll ever not be homeless. ask me, i know from experience, i am a homeless programmer, living in a shelter, typing this from the public library. i lost my job in September, and my rental. i have no cash to drop money on rent now, so this is just one example of what's to come for the rest of you who don't own property. it's a LIVING HELL!
Solution would be: the more properties you or your company and network of companies owns, the more taxes you pay. These taxes cannot be legally forwarded to the renter. If the property stays empty for some time, you pay more taxes. There should also be a guard against people who rent multiple properties at once to dodge these taxes.
The foundation of American Democracy is based on core tenet that everyone deserves right to life, liberty and property. (It was based on John Lock's Idea)
This megalandloards directly violate the core tenet "Right to property". Day by day these mega wealthy people are undermining the democracy, and our government is silent due to lobbies.
I have thought for some time that there is a large fraction of the USA population who aren't really wild about democracy, even in the flabby and corrupt version practiced here. They'd rather have, on a subconscious level, a king and aristocracy ruling them. Here we have Blackrock doing their part by trying to reintroduce feudalism.
In feudalism, all things being average, a vassal benefits from loyalty to a lord because the lord provides protection (because the lord considers the vassal's land ultimately theirs and the vassal primarily as a steward of it).
Corporations buying up and renting real estate is worse than feudalism because you're just paying them for the right to live in a place. Protection such as it is is "outsourced" to the police, but the police don't actually have a material incentive to keep the peace either because they get tax money one way or the other. If anything, some crime is good for business because it provides political leverage to call for more tax money.
So please, let's bring on feudalism because it would actually align incentives far better than what we have now.
> Haven Realty Capital and JPMorgan Chase's asset management arm said they will invest up to $1 billion to develop build-to-rent single-family homes across the country, according to a November 15 announcement.
It sounds like this will involve building new houses, increasing the housing supply, which is a good thing.
I agree it seems like that’s what the article is saying, although there is a confusing part:
> [Haven Realty Capital and JPMorgan Chase plan] to seed their investment with up to $415 million in equity. The first installment will include a purchase of 250 homes in three communities around the Atlanta metropolitan area…
It’s hard to tell if these homes have been built yet or not. (I assume “not”).
>It’s hard to tell if these homes have been built yet or not. (I assume “not”).
Could be a very good assumption. Or maybe it's supposed to be hard to tell.
I can almost imagine a well-connected Atlanta real estate operator with something like $100 million in loans, building 250 units at one time in the hottest subdivisions, where the units are not quite completely built and there may now be pressure due to rising interest rates. The market might not be quite so hot now.
The properties can not stand to be unloaded slower or for lower sales prices than it was expected when they were originally financed.
So faster it is, with major restructuring and even more leverage.
It could even be called a bailout, and the big capital groups will be able to structure the rental cash flow as an operating loss while it actually pays its own way the whole time. Leaving the underlying real estate appreciation to be realized in a more tax-advantaged situation after it becomes possible in the future, at which point the actual cash outlay for the asset itself would be quite nebulous.
The money brokers are all-in with the $415 million, they'll be owning homes that are now too far out-of-reach for retail buyers to make them fly off the shelf as fast, and the builders can keep making money building more of them anyway.
Other builders in the same subdivisions, who are not being bailed out, will benefit too since there will be less downward pressure on sales prices overall.
So everybody wins except the renters who are paying for it all, but at least they can count on their payments starting out within reach, with gradual rate increases providing a competitive return for the investors, considering the future prevailing interest rates and inflation as a guideline.
No ordinary mortgages will ever apply to these properties, not even at the beginning.
If the renters' income fails to increase at the rate their rent payment increases over the long run, the landlord will get replacement renters as always. Why do you think there are so many more homeless?
A business model could be built on young families who had worked for years to be able to own a home in a target neighborhood by about the end of 2022 or so. Or maybe before the start of the school year in 2023. As this date approached, things escalated rapidly and ownership jumped beyond the reach of their monthly income. If they can be persuaded to enjoy the same homes as renters instead that can be arranged no problem.
Now once it doesn't make any difference if the homes are already built or not, the only homes that will be built will be the ones where the outcome is not much different than simply buying up many of the already-built homes and turning them into rentals. Without building anything new unless it reaches an ever-higher bar of consumer disadvantage.
Or something like that.
When a vulture swoops in it's a pretty good sign there's something more rotten than you thought.
If you think about it, why have a buy-to-let market that requires assessing landlord credit risk, property value risk and rental cashflow (occupancy) risk, just eliminate the hapless intermediaries.
Next step: build-to-lease EV's.
Final step: Eloi renters/users and Morlock builder/banker/owners
I guess I don't think JPMorgan should be regulated a whole lot more here than someone that owns a single rental. The renters of either place should have a reasonable experience.
This ends up being a relatively small investment relative to the overall housing market (thousands of units gets you to a billion dollar acquisition cost). I can see it being a problem if large investors started to own most housing, but the best check on that is probably distributed and local (building more housing).
And then JPMC like all property developers will buy politicians to prevent even more housing being built to appreciate their existing assets. We know how this goes.
The uber-concentration of wealth and the exploitation of labor that we are allowing to happen is short-term thinking.
The #1 factor in homelessness by a mile is the cost of housing. Poverty is the most significant factor in crime. We, as a society, would rather spend billions on an overmilitarized ineffective police force to be "tough on crime" rather than address the systemic issues that lead to that crime.
The first stage we will see is a well-documented phenomenon called the alienation of labor where the people required to produce something cannot possibly afford it. Once that reaches housing (and some argue it already has) then we're in big trouble.
What comes next? War and revolution. These are the ultimate forms of wealth redistribution once wealth inequality becomes too extreme.
This country produces enough wealth for every man, woman and child to have shelter, food and health care, period. It is a political decision to let people die on the streets, starve or die from being unable to afford insulin. This is state violence.
A fairer distribution of wealth isn't just about the morality of providing for basic human needs. It's also about giving those increasingly-consolidated megacorporations customers for the widgets they sell and preventing the inevitable violent uprising that lies at the end of the road when late stage capitalism turns into neofeudalism.
On a related note, my wife and I travel half the year flying to different cities. We explicitly chose to do hotels instead of dealing with AirBnbs for the same reason. I always know what I’m going to get when staying at Hiltons and I know that they are going to be professionally managed and legal.
I'm in the middle of arbitration with Airbnb now because they wouldn't refund me when a host denied me entry after I arrived because the host thought my negative covid test was faked (?!).
Property rights are, to many theorists, the foundation of liberty. The widespread ownership of property is arguably the foundation of democracy. Owning your home gives you rights and independence; your home is your castle. The landlord's home is their castle.
Now we are concentrating wealth and property back into the hands of a few, a corporate aristocracy. You can use property at their pleasure. What happens if you want to do something politically unpopular? Put a sign in your yard? Work someplace or say something on social media? What if you have a dispute with this landlord - can you compete in court with their lawyers? where else will you live? Will other megalandlords accept you?
They also will have enormous influence in local communities. Property owners, not renters, are the influential people in any community. These new megalandlords will concentrate that power in a large corporation which has enormous resources. Local government will not be able to compete.
How does this arrangement differ from feudalism, with the wealthy controlling the land and the rest reduced to renting it. Well past feudalism, the concentration of property ownership has been a serious obstacle to democracy in many countries trying to make that transition. Now we are going backward.
Do you think these wealthy, powerful people, who pride themselves on their naked aggression and disregard of others' welfare, who have a long history of buying government, will not use this power?
A crucial question is, is this part of the deliberate attack on democracy by the (unnamed) coalition of wealthy and corporations, or truly just an investment? Regardless, the power will be there for that coalition to utilize.