
$1,000 hikes hit some older Seattle rentals - mburst
http://www.seattletimes.com/business/free-lunch-is-over-for-tenants-1000-hikes-hit-some-older-seattle-rentals/
======
jseliger
The comments here are so far not good. The big problem in Seattle, as in many
other U.S. coastal cities, is zoning, which prohibits the supply of housing to
rise to meet demand. See my post, "Do millennials have a future in Seattle? Do
millennials have a future in any superstar cities?"
([https://jakeseliger.com/2015/09/24/do-millennials-have-a-
fut...](https://jakeseliger.com/2015/09/24/do-millennials-have-a-future-in-
seattle-do-millennials-have-a-future-in-any-superstar-cities/)) or "Zoning's
Steep Price"
([http://object.cato.org/sites/cato.org/files/serials/files/re...](http://object.cato.org/sites/cato.org/files/serials/files/regulation/2002/10/v25n3-7.pdf))
for more detail.

~~~
Finnucane
Yeah, everyone loves to blame zoning, though in practice, developers are only
really enthusiastic about building as long as prices are high and rising. When
that stops, they walk away. Plus, there's never enough to meet demand: as long
as people are moving into the area because there's money to be made there, and
money keeps flowing in, there will always be more demand than supply.

And, I would wager that there's a correlation between those who say there
should be no limits on building, and those who are unwilling to pay for public
infrastructure (schools, roads, transit systems, water and electric supply,
etc.) needed to support the increased population.

~~~
saosebastiao
Tokyo has consistently grown faster than any other first world megacity for
over 30 years now, feeding off of its status as pretty much the only place in
the country that hasn't had stagnated economic growth. And despite this growth
(housing units growing at >2% per year every year, compared to 0.3% for
Seattle which is one of the fastest growth rates of any city in the US),
housing prices have remained flat for 30 years now. Developers don't 'walk
away' because prices are low...they are forced to compete to survive and they
deal with the low prices.

The problem really is supply, and japanese zoning is objectively better for
housing costs. Anybody who thinks that it is impossible for supply to keep up
with boom time demand has no idea how much housing that developers are willing
to build _if we just fucking let them_.

~~~
kazinator
Tokyo also has decent transportation from the suburbs. The area available in
the suburbs grows proportionally to the square of the radius. If people can
commute to some city from 80 km away as efficiently as people elsewhere travel
to another city from 20 km away, that effectively creates sixteen times the
available area for the same convenience with regard to work proximity.

------
mratzloff
High-density housing has been going up throughout the area because the
population is skyrocketing. It's true that single-family homes are in short
supply and sell quickly, but they can't build enough single-family homes to
keep pace with the demand; there simply isn't space, _especially_ in the city.
Wallingford is a desirable neighborhood and rents are going to increase there.
That's just reality. These tenants had been insulated from the last decade of
market pressures, but there are plenty of apartments available.

I do sympathize with their situation. Being priced out of your home and having
to quickly find a new place and move is incredibly stressful and can be
personally devastating if you've grown attached to where you live, your
neighbors, etc. And I do think legally limiting the rate of rent increase each
year (as a percentage of overall rent) is a reasonable compromise.
Unfortunately, with Amazon and other tech companies importing thousands and
thousands of young men with six-figure salaries, housing prices in general
will only continue to increase.

~~~
kazinator
> _Unfortunately, with Amazon and other tech companies importing thousands and
> thousands of young men with six-figure salaries, housing prices in general
> will only continue to increase._

Indeed.

The only problem is that people with six-figure salaries rely on the services
of people who don't have six-figure salaries, and those people also require
proximity to their own non-six-figure jobs.

Oh, like teachers for their kids, police officers, supermarket cashiers, you
name it.

------
hanoz
Free lunch! The home hoarding rentier class have been engorging themselves on
the biggest free lunch going for a generation. Funded with borrowed into
existence free money, and protected from market forces on the downside using
money taken from the very people they're pricing out, in the form of state
funded intervention and negative real interest rates.

~~~
pliftkl
"The home hoarding rentier class"?

What about someone who's primary assets are a couple of houses that (s)he
rents out? Should (s)he be restricted from getting a market rate income on
those houses?

I disagree pretty strongly that the "rentiers" are protected from market
forces. If we look at the case of people who really are in the "rentier
class", who are heavily leveraged, they are taking a fairly big risk here that
the economy and housing prices are going to stay high, and many are risking
bankruptcy should we suffer a reversal.

~~~
tostitos1979
I have to side with the parent poster. The state essentially subsidized the
"rentiers". I don't see how this is different from former communist countries
doling out lucrative enterprises to private individuals. You might say what
was done in capitalist countries (i.e. insane regime of low interests/hidden
debasement of currency) wasn't corrupt because of free markets. I call BS on
this. A poor person does not have access to said markets (downpayments are the
hurdle). Take Toronto as an example. Pretty much most people who bought
detached houses prior to 2005 are millionaires. The rich people at the time
bought a bunch of houses. How is this not a gift from the state? If you happen
to be a schmuck who came in later on or have poor parents, well ... sorry ...
that's the way it is.

~~~
seibelj
No one forces anyone to live anywhere. You don't have to pay the rent. Move
somewhere else, buy in an inexpensive area, etc. The mortgage interest tax
deduction is a handout but otherwise the government isn't propping up anyone,
and there are government programs that help first time home buyers into houses
with 0% down (which I think is a big mistake). On the NPR program On Point
last week, a guy called in complaining that he couldn't find anything in
Nashville for under $400k, and the guest responded that the average home in
Nashville was around $200k. People need to realize that you don't get to live
in the most desirable places just because you want to. No one has the right to
live someplace, you need to pay for it, and if you can't pay then go somewhere
else.

~~~
tmptmp
I disagree. The dirty rich will horde tens and even hundreds of apartments (or
acres upon acres of land) in strategic places (with insider knowledge) and
then with lobbying of various kinds make these places more and more desirable
by bringing developments to these areas only or by concentrating various
services in these areas only. So your point that no one forces someone to live
in somewhere is wrong.

edit: added point about insider knowledge

~~~
seibelj
> The dirty rich

You have no idea what you are talking about and your bias is plain

~~~
tmptmp
The dirty rich: the people who are avoiding big taxes (in excess of multiples
of a year's worth of minimum wage) and/or bending/pressuring the system
(through lobbying) to change such that they don't have to pay taxes (with
various loopholes set in place).

That's roughly captures the essence of my idea of dirty-rich.

These dirty-rich grab most or all of the strategically important spaces and
then make more money off the rents.

I have very good idea of what I am talking and FYI I am not a communist with
bias against all rich people. In fact, I am a strong opponent of communism.
But I also oppose the dirty-rich in capitalist nations.

------
jacknews
Oh dear, what a headline. What about the 'free lunch' that landlords already
enjoy in the form of rent, just by owning property. Or should that be "im-
property".

~~~
mirkules
I got the impression that the headline was sarcastic, given that it is a
direct quote from one of the landlords.

Anyway, there was a better quote in the article where a landlord said he is
being vilified by the public for doing the "right thing business-wise". My
opinion: he should be. As a former renter in an expensive area, it is really
tough to swallow that a rate hike is nothing more than a money-grab. As a
former landlord, if the rent covers my mortgage and expenses, it is a _far
better_ business decision to keep a steady-paying, no-trouble-causing tenant
than it is to price them out of the area and lose that customer loyalty, and
to have to spend time and money looking for new tenants. And most importantly,
as a human being I just can't do this to people. But then again, I have a
heart when it comes to this kind of stuff, and having been burned by a tenant
because of my abundant good will, I sold my property and don't rent anymore -
I just can't handle being cold and ruthless and "businessy" to people who
depend on me for a roof over their head.

~~~
spacehome
For a 5 or 10 percent increase, maybe you're right, but an extra $1,000/mo is
real money, and probably worth the hassle of finding another tenant.

------
option_greek
Are the rent increases part of the inflation indexes ? I ask because Fed seems
hell bent on stoking up inflation and I don't see why this shouldn't be part
of it.

~~~
tehabe
The Fed is using the Personal consumption expenditure index done by the
Department of Commerce. And yes, rents are in.

[https://en.wikipedia.org/wiki/Personal_consumption_expenditu...](https://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_index)

~~~
tostitos1979
Yes, but home prices are not. If they were, my guess is we'd see a different
story (especially regionally). Someone used to do a shadow inflation index ..
when energy prices were excluded from the numbers. Forget the details.

~~~
n00b101
[http://www.shadowstats.com/alternate_data/inflation-
charts](http://www.shadowstats.com/alternate_data/inflation-charts)

------
mcoliver
Housing articles appear on HN quite frequently and the comments are usually
quite devisive. The same people that deride owning property as a terribly
illiquid investment also complain about instability with regards to rent. Yes
a 30 year mortgage may cost you interest expense and yes your down payment is
locked up in an illiquid asset buy one of the main things you get is stability
in your cost of housing. Your 20 year old self may be fine with moving here or
there,telecommuting, etc..buy your 60 year old self on fixed income may be in
another boat being forced to move from a community you have been in for 30
years. Buy land...it's the only thing they aren't making more of. Take a RE
investment class, learn about valuations, figure out a place where you want to
live. As hard as it is to do now...IMAGINE YOUR LIFE AT 60 OR 70. Set yourself
up to be in control of your life then and make the immediate gratification
sacrifices now.

~~~
kazinator
> _Yes a 30 year mortgage may cost you interest expense and yes your down
> payment is locked up in an illiquid asset buy one of the main things you get
> is stability in your cost of housing._

A $1000 mortgage, even if variable rate, isn't suddenly going to jump to
$2000. I suppose it could happen if this is early in the mortgage (most of the
payment is interest and the interest rate suddenly doubles). Unlike rent,
interest rates don't go monotonically up, though; they go up and down. Unless
it's already at zero, interest has room to go down, too. A mortgage gets
cheaper when the interest rate goes down. Won't happen with rent, except in
some god forsaken town that is shrinking. (The company closes the mine, and
everyone leaves or whatever, and the remaining people practically have to be
paid to stay.)

That is to say, a mortgage can get cheaper even if you're living in a
desirable place where values are appreciating, because the interest rate is
linked to national and global finance which isn't related to the real estate
dynamics of your particular neck of the woods. Rents will never get cheaper in
a place like that.

------
n72
"Their pleas for a smaller, phased-in rent hike were rejected.

“We couldn’t believe it. All my friends have just said that it’s not right,”
Haug said. So now, they’re getting ready to move out."

Would they have preferred he had raised the rent slowly over the last five
years, thereby resulting in more money paid to him overall?

------
reustle
I'm not very familiar with the situation, but could these fast rising prices
have anything to do with the recent bump in minimum wage in Seattle to $15? It
doesn't mention it in the article.

[http://www.forbes.com/sites/timworstall/2016/02/19/seattles-...](http://www.forbes.com/sites/timworstall/2016/02/19/seattles-15-minimum-
wage-jobs-down-unemployment-up-this-isnt-working-is-it/)

~~~
akamel
It's mostly tech money and foreign investors.

In addition 15$ hasn't taken full effect yet, it is a steady increase to 15
and will only reach that target in a few years.

~~~
jseliger
_It 's mostly tech money and foreign investors._

No: It's mostly about supply not meeting demand. See
[http://jakeseliger.com/2015/09/24/do-millennials-have-a-
futu...](http://jakeseliger.com/2015/09/24/do-millennials-have-a-future-in-
seattle-do-millennials-have-a-future-in-any-superstar-cities/) or
[http://www.amazon.com/TheRent-Too-Damn-High-Matters-
ebook/dp...](http://www.amazon.com/TheRent-Too-Damn-High-Matters-
ebook/dp/B0078XGJXO).

~~~
mdorazio
Seems like two sides of the same coin. Demand outstripped supply because of
the influx of tech workers and foreign investors. If not for that, the city
wouldn't need more housing supply.

~~~
coredog64
Demand has been outstripping supply in the Puget Sound area for a long time.

------
louprado
Since these rent hikes usually occur when a property changes ownership, we
should encourage landlords to offer their tenants a first right of refusal to
purchase. At least it would prime every tenant's mind that the rental terms
might change one day.

I recently told one of my tenants that I'd be selling the property next year
and would give her first rights. She now keeps the front yard clean (the city
had filed past complaints), she is saving money to prepare, and she has hope.
Simply put, she is a better citizen.

People need encouragement to think long term. It is human nature to not
consider risks when things haven't been a problem in the past. Nearly everyone
now wears a seat belt and a helmet, but a few decades ago even the smartest
people didn't bother until they were strongly and repeatedly encouraged to do
so.

~~~
daveguy
> Simply put, she is a better citizen.

Threats of $1000 rent hikes sound like a good way to keep the citizens in
line. Well done, landlord.

~~~
louprado
Well, I have a practice of never raising the rent on a tenant in good
standing. By why would anyone give a landlord the benefit of the doubt. A
cynical mixed-context response is so much easier than contemplating solutions
to a complex problem.

Perhaps many landlords initially want to do the right thing. But after years
of hearing "landlord" used as a slur they just say, fuck it, and act
indifferently towards their tenant.

