The UK has completely abolished fees (I think) for tenants - I am a reluctant landlord - and I completely agree with that, the power asymmetry in finding housing is already bad enough without allowing blank-cheque negotiations.
In my section of Germany, housing is even worse with rent caps and tenant rights, plus a lack of housing. Tenants are hard to move on, so landlords are painfully cautious about getting the right tenants - and there isn't a lot of money to maintain properties either, it seems. Our place has the worst decor and electrics, terrible ventilation and mould. And I think we're at the high end.
Systems geared up for incumbents, like "council houses for life" in London, ought to be sunset, just to get housing moving again. I don't think rent control works well, but I don't think open market rent works either. Anything critical with a limited supply needs to be externally regulated in ways that keep the wheels moving.
Land Value Tax: Make it financially unfeasible to speculate, to withhold units from the market, and to withhold unused land from the market. Let prices freely fluctuate with the market. Increases in rent derived from externalities (i.e. Amazon HQ2 setting up shop nearby or a new subway station) go back into public coffers, while increases in rent derived from landlord actions (i.e. renovations, building bigger, better units that command higher prices) go directly into their pockets.
I'm in Texas, a state with pretty high property tax. We've also seen a ton of appreciation in recent years. Booming economy, transplants from other states, then the COVID factor. We also have a near free market on rent; I've been a landlord and not aware of any limitations. There are a couple limits on property taxes (namely a cap of 10% increase per year on "homesteads", and an Agriculture exemption for rural properties). But for most people in the towns and cities, this means our property tax bills have been growing 10% a year for probably the last 15+ years. So, the problem we're having now is people that have owned a home for decades or even just 5 years are finding they get forced to sell because they can't afford the tax bill. Since housing has appreciated, they're not just forced to sell, they're likely forced to leave their community for another cheaper place. I don't think it's right to lock up land/property forever, but I do think people buying property should be able to predict whether they will be able to afford to continue living there as they age. Even rather young families are dealing with this.
I personally think it's awful to see elderly people getting priced out of a house they've owned for decades, young families have to move their kids in their high school years because the taxes have become unmanageable, how it disproportionately impacts POC as gentrification occurs, and all the other ways it impacts people's lives who just thought they were buying a house to set roots for their lives/families but then externalities cause it to suddenly become unaffordable.
It's extremely perverse when you consider that these people's tax dollars are often used by politicians to encourage the very "growth" that contributes to their affordability problem. They court corporations and give huge tax breaks to move their offices/factories to Texas, which drives up the demand for housing, etc.
Property tax on owner-occupied residential property everywhere should have a "replace it with a lien against the property" option - some states have it.
The exact situation you're referring to caused Prop 13 in CA, and something has to be done before something like that gets enacted.
California has the California Tax Postponement Program which predates Prop 13 and specifically protects poor old grandma.
Prop 13 wasn't passed as a law to help the unfortunate. It was anti tax hatred of the government. Jarvis wanted a "tax revolt" which is why all property in the state, even oil fields and golf courses, gets the tax break.
Doesn't that approach just defer the tax until the property was sold?
If so I wonder if that can create the opposite of the problem of elderly people being forced out by rising taxes. Namely someone who wants to move out but can't afford to because after all the deferred taxes are paid from the proceeds of a sale they won't have enough left for another place.
Do you mean transfer the lien to your new property? A lot of seniors move to different states which might complicate things.
There's another way that is better than it currently is, without the downside of building a potentially large debt if the senior manages to live a long time after retirement before finally needing to move.
That's exemptions and/or freezes. E.g., here in Washington if you are at least 61 and have a disposable income under 70% of your county median income they freeze the assessed value of your property and exempt you from part of the state-wide property tax. On a $400k assessed value home that would cut the taxes from $3400/year to $2200/year in my county. The 70% threshold is $65k.
There are more exemptions at 60% ($56k) and 50% ($46k) that remove more of the state-wide tax and also some of county and city taxes. For those below the 50% threshold in my county that would reduce the tax on a $400k assessed home to $900/year.
Washington does also have a tax deferral program, but that is aimed to low income in general rather than seniors. I think it is meant for cases where you have a temporary reduction of income but are expected to recover.
Exemptions also work - and we end up with something like that in areas that don’t have them - few taxing authorities will force s tax lien sale against an elderly or disabled family - the optics are just way too bad.
They’ll just record them and wait. It’s the one thing the government has that normal companies/people can’t do. Wait it out over lifetimes.
I can only find information on property tax liens as it relates to delinquency and non payment, not as an alternative model for deferring property taxes (I imagine until death of the owner or sale of said property)
Do you have any more information? At first blush I can see how inheritance schemes would create massive loopholes in this for example.
Old people in Texas get their property taxes frozen I believe at 65. But honestly it might be better for them to downsize into something more appropriate and perhaps free up the larger houses for families. My mother has basically just turned my parents' house into an eBay warehouse full of junk that she intends to sell one day. I can't say that I have any big problem with that at the end of the day, but if you think getting young families into housing is a more important goal for society, then it does seem like a waste.
Meanwhile, I'm pretty sore about the 10% year over year thing, particularly when I hear about how Republicans run a low-tax state or that a wealth tax is unconstitutional/infeasible. I pay my wealth tax every year, but I suspect I'm too poor for the kind of wealth tax they mean. I can at least enjoy the irony.
> Old people in Texas get their property taxes frozen I believe at 65.
True but if you're turning 65 after you're tax bill has grown 10% for over a decade as your transitioning to your fixed income years; it's not a good thing just to freeze the tax bill. You might not have time to earn and save enough to cover the value it gets frozen at. It does help soften the blow for many though.
> But honestly it might be better for them to downsize into something more appropriate and perhaps free up the larger houses for families.
I wholeheartedly despise this line of thought, unless it's coming from their individual decision to downsize. You're basically treating the house like a commodity. It's a Home this person lived in, raised family in, hopes to continue hosting holidays in, where grandchildren can go to visit, etc. They should be able to use it until they decide to leave. On average, they only have another decade or so of life left anyway after their taxes get frozen at 65, let them enjoy their home.
If you despise that thinking, then we need to regulate the housing market to discourage seeing housing as an investment as we see it today. Everyone expects, more or less, for real estate to climb in value but nobody wants to square that with these other emotional ideas attached to housing.
It either is an asset or it’s a commodity as far as the market goes. If you want generational housing and for housing to be generally affordable something has to give. Kill it as an asset class and you get what you’re looking for.
10 years is a long time in the housing market. Assets sitting for 10 years under utilized is another way to think about it.
These two ideas - that housing is an investment and that people shouldn’t be incurring tax burdens on them like this - do not square
It's fine to be an investment. It can climb in value. But it doesn't need to be such a need to force the liquidity. Your example of "under utilized asset" and downsizing must then translate down to some metric of square-footage per resident. How exactly to you propose to regulate the housing market with this in mind, in a reasonable manner. Because, to me I think of the 2 sides. Growing households and shrinking ones. On the shrinking side, we want the government enforcing laws requiring homes get sold as each child moves out to adult hood? Then again as each spouse dies? On the growing family side, they get to move into a bigger house only as each child is born? This is just insane right?
I personally do not think 10 years is that long in housing. Sure a lot can change in housing over that time but at any given moment, If I'm in need of housing and supply doesn't exist, I can build a custom home in less than 2 years. I can buy in a development basically immediately. This might not be a global truth but it's the state of things in Texas specifically, and has been for a long time. Affordability is the limiting factor, not time.
I think the property taxes in Texas make sense if RE grows at rate of inflation. For a long time, we had affordable housing and now that's not necessarily the case. So the rules/laws need to change to protect people from getting priced out due to taxes is all. It's an issue that didn't bother anyone before because they were assuming their raise in income would cover the raise in taxes. But wages don't increase 10% annually like our taxes do (whole other topic LOL!) so they get put in a hole. Anyone coming into the market now knows the prices, it's all available information, and they can decided if they want to move here or not. It could all be a bubble that pops and corrects one day, but not until inbound population growth slows down.
market churn (which is in part informed by time) matter with affordability.
I don’t propose what you’re saying either. A land value tax is more than sufficient, by any research I’ve seen on this topic. It doesn’t in any sense mean what you’re saying here. Only that under utilized land (usually classified as unbuilt or vacant) is taxed more heavily. Thats one facet. The other is that it shifts the property tax off of building values and onto land values can make both buildings and land less expensive. This has a knock off affect of reducing the value of real estate holdings to varying degrees in terms of value in the short term but stabilizes in the medium and long term.
That would be better in my view but as it exists today, we instead have to rely on building more housing or putting more existing supply in the market, neither of which in broad strokes are happening in a way that keeps pace with demand unfortunately
Also: not everyone who can afford to buy a home can buy a home built from scratch. There are different classes of home buyers and the vast majority aren’t moving into custom homes like that. Its unreasonable to think that it’s common place in aggregate
I don’t know that it’s possible to intrinsically make real estate non appreciable per se, but you can shift it to be more commodity like and stop treating it special and pass regulations that encourage selling and discourages holding, which as a land value tax, would be a good start. Removing the mortgage interest deduction would be another
Removal of sub class zoning for housing would also be beneficial. Its one thing to zone an area for industrial vs housing but it should not be permitted that when land is zoned for housing they can zone specifically for single occupancy homes for example.
> If you despise that thinking, then we need to regulate the housing market to discourage seeing housing as an investment as we see it today
Quite the opposite, regulation of the housing market rarely ends well. There's quite a few countries that can speak to the horrible deadlocks that occur when regulation suffocates the housing market.
There's nothing particularly wrong with investment per se, now if you make the market so regulated such that there's no competition, you're destroying any kind of forces that push the price down, or if you make the investment so costly the prices go up to compensante.
Heck, there's even countries where the regulation was so insane it was far better to hold an empty home than to actually rent it out.
The property taxes should be placed proportionally towards those who are making money from owning properties and therefore have an ability to pay them.
If grandpa and grandma are just living in their house in Texas and surviving on the last of the pension, they're not even vaguely in the same category as a property owner deciding which of the next condo buildings to buy.
Their tax bill is rising 10% a year, depending on their property tax (if it is budget based or not), this could just be that their property is appreciating 10% faster than everyone else’s property. That means their equity is shooting through the roof. If it isn’t on a budget system, that could mean that their property (and possibly everyone else’s) property is appreciating 10% a year, or maybe they are adding levies or increasing the rate to fund new spending.
All of this sounds well and good until you see the natural conclusion of those policies to keep old people from having to pay for their dragon hoarde. It turns your city into the Bay area where no one can afford to live there except the landed gentry you've created.
You need to fix the problem, but fixing it by Prop 13 has numerous issues. If it had been deferred as a lien against future sale/inheritance, or didn't apply to commercial properties, or ...
Fixing the "problem" of people not moving out when the area prices go up is exactly the problem itself.
The issue is availability of property flat out. As long as there's no incentive to make affordable property available, every actor wants their property values to rise and cares little for the negative effects it has on everything else.
Those property taxes exist for good reason because you have to be able to pay for the services / infrastructure from it. Without those matching the area, problematic spirals occur.
Thanks for posting this view: I had read the "Land Value Tax"-side of the argument before (and somewhat agree with it), but I hadn't seen someone post good reasons _not_ to support LVT. I think your reply - and your other replies - are pretty good reasons
"We've got a bunch of people with massive wealth, so tax only the people earning new money" doesn't sound like it is going to equalise the state of the world.
I will also accept inheritance tax at 90%, if you really want to skip property taxes :)
California's housing situation is because they are a highly desirable location and didn't build enough housing to meet demand not because they have an income tax.
Selling your house and losing your lower assessment is a huge reason not to sell your house. This make California’s real estate market less liquid then other real estate markets, since selling can have a huge extra cost vs not selling.
One reason would be that it is the things on top of the land that determine how much of various government built and maintained infrastructure is needed.
Texas doesn’t have an LVT they have a traditional property tax system that primarily bases taxes on assessed value of the home on top of the land, not the land itself.
LVT would actually negate the parent posters complaints, as only the underlying land would be assessed and the penalties only really kick in if the land is unoccupied or is not utilized (sitting vacant is the most common of this, followed by lack of utilization, for instance under many LVT implementations large lot owners with single homes also get hit with underutilization penalties to encourage subdividing and utilization of the land which is a net win for society
And often the immediate land owner. Objections tend to philosophical on this point)
It disincentives empty / under-utilized land holdings like vacant lots or lots that could support more utilization (usually via an activities like building homes on top and selling / renting them or farming)
There is nuance in implementation details but in broad strokes that covers it in tl;dr fashion
There are ways to address this problem, but in any case this is still ultimately a very good problem for property owners to have. Their property value has increased dramatically. Being forced to move is inconvenient, but you do so with a large bag of cash.
That big bag of cash won’t buy a community where you know most everyone and have friends of decades or more whom you support and support you in return. Social connections take a long time to build and are hard to replace with cash.
You can’t have your cake and eat it too. Everyone wants their home to be worth more and more year over year but doesn’t want to incur any obligation for it.
How do you square that with the idea that communities and social connections are more important? Look at what California did with prop 13. It’s a disaster by all accounts. We need to switch models not create more complicated exemptions around property taxation.
Land Value Tax is more equitable and doesn’t have the intrinsic volatility and unpredictably of how we do property taxes today which is assessed in the unit value not the land and only punishes under utilization and vacant land holdings. This encourages building and to some extent smaller parcels of land per unit built
I would rather have my home than a bag of cash. I’m not even old, but I did grow up here and it has immense sentimental value to me. My grandma lived in her house for over 65 years, and died in it. I doubt she would have moved for anything short of multigenerational wealth.
In Texas, although homes are valuable it is or was easy to lose your home to an HOA without a court proceeding. There is a famous incident in 2010 where a soldier lost his home and neither him or his wife knew anything about it. Supposedly the HOAs have been reined in but the whole concept of HOA in a state that prizes rugged individualism is beyond me.
There was another case, in Texas too, I believe where an older widow didn't pay a HOA due after her husband died.
The amount was in the low hundreds (maybe $300).
HOA liened her house, then forced sale.
A local landlord put a bid that was found later to be about 70% under market (like $125,000 offered for a $400,000 home). The HOA Board voted to accept the offer and sold the house to this landlord.
In the drama that unfollowed there was also this little nugget: the landlord was on the HOA Board, and was one of the ones who pushed for the forced sale, and then voted in favor of the Board accepting his short offer on the house.
I don't recall the details of the outcome, although I believe some compensation was paid out to her.
> I personally think it's awful to see elderly people getting priced out of a house they've owned for decades
Housing being seen as this generational I own it forever thing that Americans have doesn’t also square with the American narrative of housing as an investment.
It’s one or the other. If you want housing to be seen as something that more or less “always goes up” but you can’t be taxed in the increased value then you are by nature distorting market dynamics you don’t see elsewhere.
We need a land value tax instead it’s more fair and less volatile
> Another way to think about it: they’re selling at a premium well over they bought it for.
It's not a premium. It's what housing costs. If they take their "premium" and buy the next house, their tax bill is unchanged (more or less). They have to actually go find a house that is much cheaper so they can afford the tax bill.
More often than not, it causes them to move out of an area that has seen growth to an area that has not seen as much. This might be moving from Houston to a suburb of Houston, or moving from a suburb of Houston, to a small town 100 miles outside Houston.
The correct "Other way to think about it" is like telling someone this;
You bought this property when the neighborhood was worth nothing. You lived here for years when it was nothing. That might mean it was rural or crime ridden or whatever; but it was cheap and you could afford it. Good job sticking it out all those years and then letting "us" build it up around you. However, now that we've done that, we feel you are still a nothing if you can't afford the tax bill, so go find another rural/crime ridden area to live in. That's where you belong.
> Another way to think about it: they’re selling at a premium well over they bought it for.
Not necessarily. The fact that they're getting priced out right now via taxes on the estimated value of the house doesn't mean they can sell the house at that value (being forced to sell) and that they can find a cheaper alternative that works as well for them. So they can be in for a net loss, all things considered.
> Housing being seen as this generational I own it forever thing that Americans have doesn’t also square with the American narrative of housing as an investment.
I agree with this part. Viewing it as investment is the wrong choice.
Not sure I do agree. During ownership, it should appreciate as assets do. Then things like taxes get reset for the next owner based on whatever they pay. In this way, things reset transparently and still often enough as the normal duration of mortgage is something like 8 years. Not everyone is a buy and hold generation of ownership, people move for jobs and a million other reasons, but people that do choose to live in a house for 50 years shouldn't get penalized for it.
This is why I distinguished it as asset class vs asset. It should be primarily tied to the value of the land beneath plus some nominal appreciation for the building on top rather than assessed value of the building on top plus nominal appreciation of the land. Similar to the land value tax formula. This treats it closer to a commodity rather than its own asset class as it is today.
This makes it more of a modest investment overall, one that people would stop tying their entire net with to
Deferring tax increases based on the sale of a house until the next owner is what California does and it’s a disaster.
Land value taxes are more equitable and treat it closer to a commodity and drive more efficient utilization
>>>> tied to the value of the land beneath >>>plus some nominal appreciation for the >>building on top
I'm not sure i agree with this take.
The building is clearly a depreciating asset. If left alone the house will eventually be worth nothing because a decrept properly carries liabilities instead (neighborhoid fire hazard, penalties , fees etc) So there no nominal value there.
Onward to the land. The only real reason for land to appreciate is because it ia scarce resource. But then you see that the land also has a carrying cost (taxes) that is fixed regardless of its use. Therein lies the dilemma. If land is an asset that generates expense , and then that expense only grows as time passes but theres no income associated with it, are you really seeing land appreciation when you sell, or are you simply recouping your carrying cost during the term it was held?
Here in Washington state we have a pretty good system for helping elderly people not get forced out due to rising property taxes.
If you are at least 61, and your disposable income is less than 70% of the median income for your county you get two forms of property tax relief:
1. The assessed value of your property is frozen at the value of the first year you signed up for the tax relief. If your disposable income goes about the threshold for a year but comes back down the next you won't lose your frozen assessment. If you go above the threshold for two consecutive years you do lose the freeze. When it comes back down again you get a new freeze at whatever the current assessment is.
2. You are exempt from all "excess property taxes" and part of the state property tax that is for schools. An "excess property tax" generally means voter-approved levies, such as local school taxes.
If your disposable income is under 60% of the median income for your county but above 50% in addition to #1 and #2, you get:
3. You are exempt from regular property taxes on the maximum of $50k or 35% of the property value, but not more than $70k. For example for a $400k property you'd be exempt for $70k, so your regular property taxes would be computed as if your property was assessed at $330k.
If your disposable is under 50% of the median income for your county, in addition to #1 and #2, instead of #3 you get:
#4. You are exempt from regular property taxes on the maximum of $60k or 60% of the property value. For a $400k property this would mean regular property taxes would be based on a value of $160k.
In my county the 70/60/50% thresholds are $65k/$56k/$46k.
In my county a $400k assessed value home for someone below the $46k threshold would have an annual tax of $900, compared to around $3400 for someone not in the tax relief program. Here is a breakdown of the two (with some rounding):
$300 $ 760 fire
$240 $1000 state general
$ 930 local school
$140 $ 360 county road
$100 $ 260 county
$ 50 $ 130 stormwater management
$ 40 $ 111 regional library
$ 7 $ 18 PUD
$ 2 $ 2 noxious weed
Someone below the 70% threshold but not below the 60% threshold would pay about $2200, so still a big savings over the normal amount.
If your property tax is 23 million dollars then your overall income would in proportion be well over 100 million a year to afford it reasonably no? To even own a home like that in the first place, you’d have to have a property worth over 100 million dollars if tax calculators are correct.
I think this is outside the realm of what most people run into affordability wise and frankly at that level of income I’m willing to bet affording the property tax is much less of a concern
The property value may or may not be growing at 10% a year. My state (Oregon) has a tax cap similar to California's. Taxable property values were capped at their value in (I believe) 1979 and are only allowed to increase by 3% a year. My property market value could increase 10% but my taxes will only go up 3%. During the housing crash of the 2000s, my property lost about 40% of its value. My taxes still went up 3% every year because the gap between actual value and taxable value was so large.
Depending on the structure of TX property taxes, it is certainly possible to have your tax bill increasing rapidly while property values are stagnant or even falling.
> I personally think it's awful to see elderly people getting priced out of a house they've owned for decades
Do you actually have numbers on this? It's a huge talking point for the anti tax crowd but as far as I can tell there's no epidemic of house rich boomers being forced out of their homes.
Why punish a low income grandma who put roots into a community that she contributed towards?
Why punish people who helped build the place? Why would you want to steal value from people who simply want to be left alone?
If you want to buuld you dont need to kick people out that have less than you. Instead, you have to make it easier for others to build. If the state makes that impossible via state taxes and regulation, blame the state not the citizen that simply wants to live happy.
You're making it too complex. Enforce owner-occupancy aggressively.
You can own two housing units untaxed, as long as you can produce evidence you spent at least 30 days a year in each of them. This doesn't disrupt non-speculators-- even the modest rich with a single vacation home, or the snowbirds who have a home in Minnesota and a winter place in Arizona don't see an impact.
Anything beyond that? Annual tax of 70% of its appraised value.
Nothing appreciates fast enough to justify holding it at that cost, so you'd see a fire-sale on housing. Add some cheap state-backed credit to lubricate the transition period, and unoccupied units glut the market while renters become owners.
Multi-family structures might create some interesting situations. With the landlord effectively forced to divest himself of properties, he has to reinvent himself as a service contractor, bidding for the maintenance contract on the buildings he once owned. This would be a great moment for karmic feedback against the ones who had neglected quality and safety-- who'd contract for $200/month maintenance from the same firm that never fixed anything when you paid $1500/month for maintenance-plus-land-access?
Do you just hate renters? This sounds like everyone and their child will own a single family home while running an apartment becomes too expensive. Spoiler, the apartments will just become single family homes.
LVT only works if it is applied uniformly and with zoning reform. It will actually be a tax break for landlords because they are utilizing their property near the limit of its value.
What you’re describing is far more complex than an LVT. Interstate records of property ownership and interstate reconciliation of “presence?” Do children or family members using a property for 30 days count?
We already have a fair amount of that infrastructure:
* Land ownership is generally public record, or at least orchestrated at local government levels for property tax assessment, school enrollment eligiblity, and other similar local services.
* Some states already have concepts of presence-- different tax regimes for part-year residents versus full-year.
I'd expect that this would end up being relevant in only a very narrow set of cases. Most cases are slam-dunk clearly "owner occupier" versus "investor-owned", and hopefully they'd put more than a HN post worth of effort trying to define rules that handle the ambiguous cases.
I tend to be a bit suspicious of the LVT, because it can create toxic consequences for individual landowners.
Sure, if I have an empty lot and a new Job Factory opens next door, a rising LVT creates incentive for me to build. But if I already had a house there, my LVT has tripled and my house is no longer affordable.
Locking the LVT to the current owner might prevent that toxicity, but it also encourage all sorts of evasion strategies.
People have tried this. It’s extremely extremely hard to do in practice even when you’re only trying to measure whether a unit is vacant and don’t need to know where else they’ve been or what else they own.
Occupancy rate for commercial property is mostly over 90% in London, and I believe the residential market is even more efficient. How would LTV help if occupancy is so high? Don't forget occupancy rate also highlights slack in the market allowing for the dynamism you need, if you punish that I suspect the unintended consequences would be less desirable than any tax proceeds, after all, all forms of rent control invariably disadvantage the renter the most - and I don't see this being any different - the market would absorb the risk and rental prices would likely increase.
As a percentage of total units in NYC there are effectively no rent-able units withed from the market. The total vacancy rate is about 1.4% right now and and for anything under about $3k/mo it's sub 1%. There are probably a few thousand units being held to get buildings out from under rent control, but the city has 2.1 million or so renter occupied housing units. Even during the height of the pandemic when the well off were fleeing the city, vacancy topped out at ~4%.
They did that in China and housing prices are still sky high. As long as "number go up" is the belief in housing you'll have speculators and empty housing. Now you could tax empty (non-rented dwellings without a declared tax residence) and that would lower prices and increase supply.
Fair enough though there's a lot more behind China's construction boom than just market forces. Property taxes + ease of building still seems like a panacea for the rest of the world to me.
The end result: By the end of year 5 of it's implementation, the local tax authority shall determine the land owned by politically connected investment funds is virtually worthless, while ordinary citizen's derive virtually no value from any improvements they construct on their properties.
Where this love for arbitrary taxation comes from? How much have you donated to your mayor's electoral campaign? Do you golf with aldermen?
Poland has a system where it's basically impossible to evict anybody if you rent under the standard rules. However, there exists a special type of contract which allows for quick and painless eviction, but where the tenant must provide proof that they have a place to stay at, either a deed to a property they own or a declaration from somebody who is willing to take them in. A lot of landlords insist on this type of contract, which makes it much harder to find housing for foreigners and those who decided to cut contact with their families.
Landlords basically have no other option, we don't really have a credit score system like the US does, so it's much harder to verify how trustworthy you are. There are agencies that can tell you if somebody's currently in debt or not, but as far as I'm aware, somebody with no credit history is basically indistinguishable from somebody with "good" history.
These kinds of things are side-effects of "tenant's rights" laws.
Some may consider it the end-goal, to be fair - as eventually you'd drive landlords completely out of business. The problem is that this is antithetical to higher density, because you need landlords of some form if you have anything denser than a duplex. You can have condos perhaps, but not everyone can afford to get into one, or even wants to.
And if there's a lack of landlords willing to rent, there will be a lack of landlords willing to build to rent, and so the housing stock will continue to increase at a glacial pace.
The laws of unintended consequences can strike in weird ways - making it easier to evict may result in more housing in total ...
The solution is strengthening the social housing sector. If anybody would be able to rent housing from the state, nobody would be dependent on private landlords (though private landlords could still fill niches like short-time rentals).
As it is though, the social housing sector is woefully underfunded, leading to sometimes decades-long waiting lists (at least where I live, in the Netherlands).
If we're talking about this sort of solutions, we must nevertheless implement a means to manage demand. After all, it's impossible to house the entire Netherlands in Amsterdam.
In countries where housing was socialized they had a system of residency. You couldn't move to another city, without a permit. If you live in Tholen, you shouldn't be able to move to Amsterdam, unless you mary someone from there or if society determines there's a social need for more workers in the capital.
After all, you can't socialize things while maintaining bourgeois concepts like "freedom of movement". You can't eat the cake and have it too, right?
You need to manage the supply, not the demand. As long as enough properties are built in the areas where people want to live, there’s no problem.
Sure, maybe not everyone will be able to live smack in the center of Amsterdam, but there’s enough space in other parts of the city, not to mention nearby places like Amstelveen, Hoofddorp or Almere (which, you will know, house mostly ‘overflow’ from the Amsterdam market).
If you want to create a fair system you should also build infrastructure otherwise it is unfair when someone lives near the subway in a historical part of the city and someone has to live near the forest among ugly modern high-rise buildings.
That is how things are done all over Europe though. The state plans a new suburb by also planning bus stops, roads, subways, trains, parks, shopping malls and schools within walking distance etc. That ensures there are no really bad homes so even the cheap homes are in nice livable areas.
It isn't expensive to build such areas, so there is no reason not to do it except if you want to punish the poor.
We also have the clown situation where you are deemed fit to rent for €1200 a month, but the banks won’t give you a €900 a month mortgage for the same sort of housing.
The problem is that it really adds insult to injury.
In the aforementioned situation, the home owner is both creating equity and saving 25% extra each month.
It creates a very broken situation. But the Dutch government has coddled home owners for four to five decades already. And the real estate market is often zero sum, where advantaging one group disadvantages another.
Time to make home owners bleed for a couple of decades. Balance must be restored.
This is really the theme of this thread. You hate renters and want a world of single family homes or massive government intervention. Landlords meet a housing need, taking property they own and subdividing it so it is affordable for others to live in an area.
It wouldn't surprise me if they are personally a frustrated renter who can't see or manage the expectations that are making them frustrated. Been there, it sucks. Turns out I had a deeply manipulative set of folks around me at the time, and I was also wildly desensitized/in denial to my own needs.
I cannot express how much pain occurred to figure that out! Still occurring.
The good news for them is, in 5-10 years the dynamics will likely look very different. It's already been changing against landlords, for instance with the covid rent holds, rent control expanding in some areas, cost of money rising and changing market dynamics, etc. I expect a lot of landlords will be trying to exit shortly, and the ones who think they can't are going to be trying to squeeze as much return as they can - as their expected future return due to speculative property prices disappears.
So poster - it might be more worthwhile taking an inventory of who is around you (and if the influence they have is helping you), what YOU actually want your life to look like long term and your own values, and figure out how to get there and if you're willing to pay that price or not.
The pro of it being a commodity (widely available, easily traded, of easily quantifiable quality and accessible quantity) is important to get what you say you want! For 'sellers', it actually makes life a bit harder as they have much smaller profit margins in general and need to get very good at what they do to compete. If you think making housing not a commodity is going to make it easier to access, you're not paying attention.
It may produce more bespoke, custom houses though. But they'll only go to those who can afford to do a LOT more to get it.
The reason why that listing has a $15k broker fee is exactly BECAUSE of the weird and hard to deal with reality that is a rent controlled apartment in NYC.
There are probably other off the books type things going on too, IMO.
If you want something transparent and easy to get for the average person, making it a commodity with clear rules is exactly what you want! If you want to incentivize gaming the system, the other direction encourages that.
Regardless of if it is a commodity or not, there needs to be constant vigilance regarding manipulation, scams, etc. Scams and manipulations are easier to hide when goods AREN'T commodities. There are some amazing horror stories (on both 'sides' of the economy) behind NYC rent controlled apartments and living in NYC in general.
"1
: an economic good: such as
a
: a product of agriculture or mining
agricultural commodities like grain and corn
b
: an article of commerce especially when delivered for shipment
reported the damaged commodities to officials
c
: a mass-produced unspecialized product
commodity chemicals
commodity memory chips
2
a
: something useful or valued
that valuable commodity, patience
also : THING, ENTITY
b
: CONVENIENCE, ADVANTAGE
… the many commodities incidental to the life of a public office …
—Charles Lamb
3
: a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors (such as brand name) other than price
4
: one that is subject to ready exchange or exploitation within a market
… stars as individuals and as commodities of the film industry.
—Film Quarterly
5
obsolete : QUANTITY, LOT"
How do you solve the problem of condo owners not maintaining a property and letting problems fester for a couple decades after which they might be dead or move out?
There is normally a kind of owners assembly in which the various owners can take (binding) decisions or action regarding such problems or anything that concerns the building as a whole. It might not be mandatory in all countries I suppose, but it should be.
It's called a home owner's associate or condo board or similar. And a relatively common issue is underfunding it, so one of the things you have to be aware of if buying a "used" condo is how funded the association is, or you may find that the "deal" you got compared to others in the area is because you're going to be hit with a $50k additional assessment in a few years to fix deferred maintenance.
> you need landlords of some form if you have anything denser than a duplex
Why? What value do they provide, other than having a bunch of money upfront? I’d argue there are many, many ways to fund building construction other than for-profit ownership
Why don’t they issue a loan then, and get paid back with interest? It’s insane that our system, by design, has an underclass that is earning WAY less because they can’t afford the entry price for a home, so all their rent for years and years goes into someone else’s pocket instead of their own equity. IMO
For the same reason the banks won’t lend to the same people. Sure, some renters can qualify for a home loan and choose not to, but not all can.
And it’s much much much easier to eventually evict someone and lose thousands than to try to get loaned money back from someone who is judgement proof, losing hundreds of thousands.
I’m assuming you’re also not in the business of having long fundamental disagreements on days old posts so I won’t try to convince you, but just so you can see my perspective: I think you’re focusing too much on the microeconomic dynamics in your defense of the system, when we want a macroeconomic overhaul. In other words, at some level socializing that risk to solve this huge inequity.
I think you’d agree that we could fund a national/regional/global system that would provide a sufficient safety net for a system where everyone is paying into some kind of equity for their land. You just don’t agree that it’s worth it / sets the right incentives / a bunch of other reasons I could never think of that I’m sure are sound. But I hope you see why taking the “but everything’s on fire!!!!” macro perspective is appealing in theory :)
I always found this funny, because housing is required for all of us but tenants rights is controversial where as all the incentives we give to builders / owners / landlords isn’t questioned nearly the same. Perhaps we should adjust those incentives more instead to align with tenants and occupancy home owners and stop treating everything about housing as investments
That’s like saying “why not hire someone that’s never worked as a software engineer to be your principal?” Why should they be judged for _not_ having a job in the past??
Because businesses need to make money to exist.
Credit history == has successfully made other people money in the past, and if past behavior is indicative of future behavior, they likely will to someone else too.
I don't think this really has any relationship. You can open an account and never use it, and your credit score is just as good as someone who borrowed $10,000 at 30% APR and makes the minimum payment every month. Probably better, because lower "credit utilization".
Not true, based on everything I’ve ever seen for credit reporting.
Holding zero balances on accounts means you aren’t costing them money, which is better than defaulting on loans, not making payments, etc. but doesn’t mean you actually made them much money. People who never get into debt are generally not valuable customers for companies who make their money off interest.
People who require they keep book keeping/overhead for (aka keep active accounts), while not paying them money are actually costing them money.
If you show a past history of being able to cost them money, and then not actually doing so, or even making them money, that is certainly better than actually costing them money.
Aka, you held some debt for awhile, but made your payments and paid it off. Those are high credit score/low risk folks.
Having large outstanding credit balances (especially escalating ones) and only making minimum payments means you’re currently making them money, but are a relatively high risk of costing them money shortly in the future when you inevitably default. Which is a low credit score/high credit risk.
If you have high open credit, but rarely use it, they can’t tell if you’re high risk (you’re waiting to blow all your credit and leave the country) or low risk (would work yourself to the bone to pay every dollar back and would never overcommit) - but one thing is for sure, you aren’t actually making them money right now, and there is some risk you’ll max out your credit and disappear.
If you are paying ongoing interest and never default though, you’re the gravy customer for a CC company, as you’re be paying them waaaaay more interest than anyone else. So medium credit score, medium credit risk.
It’s a balancing act.
Someone with zero credit history is a complete unknown, which for various reasons is likely the highest risk of all, and why it’s also only slightly easier to get credit in that situation than if you were a serial bankruptcy machine.
You will be happy to know that the big property management companies are willing to charge you an extra per-month fee to report your rent payment history to credit reporting agencies.
To some extent, renting an apartment does take on some debt. You're basically being loaned the property in exchange for making interest payments.
> You will be happy to know that the big property management companies are willing to charge you an extra per-month fee to report your rent payment history to credit reporting agencies.
Which, to me, they should not be allowed to do. I'm yet to find a rental property that lets you pay rent in arrears, so there's absolutely no use of credit occurring.
Since it takes quite awhile to evict in most places if you stop paying (months to years), they've always got some degree of 'arrears' risk going on.
Not to mention you have the ability to literally burn down their property (even by accident) with no real way they can stop you, since you have the run of the place. At best they can try to lock you up afterwards, but if you do it right it would be nearly impossible to prove.
Having a tenant in possession is always a 'credit' risk.
None of which is 'credit' in the sense of a score. And the fact that you have PM companies doing it as a "value added service", for a fee of course, rather than in the normal course of business also shows how shady this is.
If it's credit, report it. Don't charge people a fee to do so. I'm actually fairly surprised the bureaus haven't forbidden this. And if I was a renter and this was being done to me as a condition of rental I'd be disputing the tradeline.
> they've always got some degree of 'arrears' risk going on.
That's not a default of an extended line of credit.
> Not to mention you have the ability to literally burn down their property (even by accident) with no real way they can stop you
That's your investment risk as a landlord and why you carry insurance, still has nothing to do with my creditworthiness. Like you say, "even by accident".
If credit is the concept of ‘I get back what I loaned out, plus agreed upon interest per the agreement’ all of the situations are 100% credit like. If you like it or not. And the credit score is all about if you’re a worthwhile person for a lender to lend money to.
Same reason some employers like to check your credit if they expect you to be handling their or their customers money.
A track record of following your agreements when other people’s money is at stake, in a way they can get what is agreed on at the end of the day is important to them - and to if they want to place their money or assets in your hands going forward. There are many ways for a loan, or tenant, to go south and be a bad deal for them.
If that is inconvenient for you, they’ll usually be happy to tell you to bother someone else instead. If they’re smart, anyway. Dumb lenders lose principal, and that’s death to them if they do it too often.
Personally I don’t write loans/notes or rent out property because I’m not interested in dealing with the manipulation or excuses. I do have excellent credit though. And have had people write private notes for some side projects of mine. YMMV.
Credit in the sense of credit bureaus is the extension of secured or unsecured credit.
You pay upfront for the use of a home/apartment/condo - you are not being extended any kind of credit.
For the same reason prepaid phones don't report to credit bureaus.
That corner cases exist where you might be out money through the fault - or not - of the tenant doesn't make it a credit instrument.
All of your examples are entirely understandable - they're just not credit.
That's why there are separate reporting agencies for tenants and evictions.
No matter how you slice it, you are not extending credit to anyone by renting your home.
> A track record of following your agreements when other people’s money is at stake, in a way they can get what is agreed on at the end of the day is important to them - and to if they want to place their money or assets in your hands.
Now you're trying to conflate doing a credit _check_ for prospective tenants (something I have zero issue with and is completely different to this) with "allowing property management companies to, for a fee of course, report your entirely-paid-in-advance rental / lease payments as credit arrangements in arrears.
Perhaps if you start billing your rent in arrears, there would be a case for this.
To wit, the fact that in some situations you might be out some money doesn’t mean you have extended someone credit.
> If credit is the concept of ‘I get back what I loaned out, plus agreed upon interest per the agreement’
By your argument if you lend me your car and ask me to fill it with gas/replace the gas I used and I don’t, you could report my default to a CRA. Somehow I don’t think that would work.
This comment is really weird. Because the comment you are replying to literally doesn’t say the things you seem to be replying to, and instead does actually say what you seem to think it should say?
Did you read it before replying?
For instance, I literally said a lease is ‘credit like’. Not actually credit. And that some landlords and employers might want to check your credit report before engaging with you to see how you do with credit, as they might give them useful information on how you might do in other areas they care about - not that they would report their own activities there.
The car loaner situation is also completely inapplicable to a lease - which, btw, is almost the exact same broad structure as a bond.
Possession of X is given to debtor in exchange for monthly payments of Y with some additional conditions, and in the event of default or end of term, X needs to be returned to the bond writer in whole. With optionally some funds held in escrow (security deposit) in case of default or damage to X.
It’s real property for a given time in exchange for rent of course, not a chunk of principal for time in exchange for interest, but it’s the same kind of deal.
And similar to most bonds, the full interest/rent amount isn’t paid up front. It’s done for given periods of time (a month being pretty standard).
Now one could imagine a way a car loaner could be structured so that payment of gas IS payment for the loaner, and even how it could be structured as an automobile lease. But it would require that structure no? And would be pretty ridiculous paperwork wise.
Okay, let's back it up to the simple part - which isn't to say anything about you, but things went in several different directions.
Right - leases are credit-like, somewhat. However, leaving aside the concept of eviction taking time (that to me is investment risk, not 'extending credit') - lease payments are made in advance, and when I was a tenant, every single one had a clause allowing for termination in the event that prompt payment was not made, in advance.
My objection there is that these payments should not be being reported to Credit Reporting Agencies because they're not credit.
And as supporting evidence, if they were credit, every tenant for decades would have every lease or rental agreement being reported as a matter of business. Why has that not happened? Because it's not credit. And now, some "innovative" companies are offering to work with Property Managers and landlords to offer it as a "service" to their tenants.
However, you look at things and very quickly you realize the benefit to the tenant is almost a side effect:
These services charge a fee to the tenant, a portion of which goes to the landlord (can you say kickback?), and if you look at the websites of these services, the "allow your tenants to record good payment history on their credit report" is but one bullet point. Every other bullet point talks about the benefits to you as a landlord.
You mentioned landlords doing credit checks to establish a sense of the tenant's fiscal responsibility. I think that is fine. As for evictions, damage, deposits being withheld, and so on - there's a need for that. And it exists, entirely separate to the CRAs.
This whole thread started because of one point, that I don't believe they should be able to report it as a credit tradeline, because it's not. And I still think the single biggest argument I have that that's the case is that it's only been in the last three or so years that this has been offered, when credit reporting has been around since the 1980s.
You REALLY need a lease to not be a type of credit, and hence not be within the scope of a credit reporting agency? Or included in a credit score?
Though, notably, not like anyone necessarily needs to care if it fits the nominal term on their sign if they want to take on new business right? (though various regulations can of course come into play in some cases)
Hell, a ton of their revenue now seems to come straight from 'credit monitoring' services which are only thinly veiled scams near as I can tell.
The issue I have with the argument you're making, is that as you yourself note - investment risk is fundamentally the umbrella under which credit risk lives. And that is the same umbrella that landlord/tenant risk lives under. And in fact, the risk that a landlord takes on with a tenant is SO CLOSE to the risk that someone takes on with lending someone money, that it's an ALMOST artificial distinction.
Near as I can tell mostly due to historical reasons.
Renting existed long before standardized currency (and hence the ability to loan someone currency). And since having a roof over ones head is rather fundamental to being able to survive at all in most places, the power dynamic is prone to abuse in many concrete ways unique to property.
But, for example, leasing a car is 100% tracked by credit reporting agencies on a credit report. And the difference between leasing a car and leasing a house is... the car can move? and isn't generally a primary residence for anyone. and is cheaper.
So actually aren't renters being screwed here, because paying their rent on time could actually help them build a better credit score by showing they CAN do credit-like activities on time - without having to go into 'debt'?
In fact, wouldn't it actually HELP renters move to owning (by having lower costs to borrow on their mortgage), if they could build a better credit score by renting? And it seems like companies have picked up on that, which is why they're offering it for a fee.
One of the biggest complaints I've heard from folks (and felt myself) for instance, is that paying an equivalent amount in rent does nothing to qualify oneself for paying a similar mortgage. But if reported on credit and included in credit score, it would.
So if you really don't want the credit agencies to be reporting on it, I guess the question is - why?
Too much centralization in an already too powerful set of entities?
Too much transparency in an area prone to really screw some people who have a hard time behaving? After all, the downside would be someone who can't pay their rent would also have a hard time getting a mortgage, but that generally already happens.
Too much absolutism/numericalism for something that "shouldn't be"?
Think they're a bunch of assholes who need to die?
I can see some reasons why you'd object, I'm just not buying the reason you're using on it's face. It's like saying home depot can't sell furniture because they're a 'home improvement' store, and furniture doesn't improve the home itself, but just the experience of living in it. And that no one would benefit from buying furniture there.
And besides that there are other places who specialize in selling furniture.
Which okay maybe?
But perhaps you just hate Home Depot?
Or maybe you own a furniture store?
I can certainly empathize if that is the case! I don't know though.
Unfortunately, they do provide a lot of value in specific situations which others are unable to do, which is why they continue to do pretty well. Lame.
It also isn't clear that them also just selling furniture and 'eating' all the local furniture stores like almost everything else they have done is anything anyone is going to work hard to stop, and maybe Home Depot is good enough.
You are promising to keep paying them x amount of USD per month over time, in exchange for control of the asset and hence them taking on the risk of you trashing the place or that they could find someone willing to pay more during that time.
A loan has a risk to the principal that you’ll not repay it in full. A lease has a risk to the principal that you’ll drive down the value of the property or even destroy it. Same difference, approximately.
Both have the actual cost they’ll be worth less at the end of the term than they were beforehand, due to inflation and wear/tear.
The biggest difference between a loan and a lease is that instead of them giving you x amount of $ directly (aka exclusive control of that money), they’re giving you exclusive or semi-exclusive control of an asset they value at x amount of $.
And that the asset has an address attached to it, and you can live there.
Perhaps stop owning half dozen of mostly uninhabited apartments so tenant laws will not be your problem. It's that simple, seriously feck off with your money somewhere else. If you are so smart and rich buy something in Zurich or Monaco. Poor oppressed real estate hoarders. You want to hoard real estate, evict tenants at will, and masturbate to the perpetual growth of real estate price index.
> we don't really have a credit score system like the US does
Shady predatory credit rating agencies like in US or even Germany are abomination, it's a thing to avoid not to follow.
> Landlords basically have no other option, we don't really have a credit score system like the US does, so it's much harder to verify how trustworthy you are. There are agencies that can tell you if somebody's currently in debt or not, but as far as I'm aware, somebody with no credit history is basically indistinguishable from somebody with "good" history.
And that's actually good. What more could you possibly need to know other than a person's revenues and their debt to be able to decide if they're capable of paying rent? Why would you care if they've had or had not had debt previously? The American credit score system is dystopian (it can literally make or break your life because it's being abused by prospective landlords or employers) and broken (made by private entities who suffer no consequences in case of mistakes, be they leaking your data or mistaking identities).
Some people have a long history of non payment, damages to property and evictions. If you can’t filter these people out you get an adverse selection kind of problem and everyone pays (one way or another)
The issue is the real problem folks are often 'judgement proof'. No assets, no (official) income, or plenty of legal excuses to delay and defer actually doing what they were supposed to do.
Also, often in pretty bad shape, so easy to take pity on. Until they screw you personally, anyway.
Only revenue? Ah, sweet summer child. Unless they used ChatGPT or photoshop to fake it all up. Which happens.
Oh and don’t have a friend pretending to be their boss on the other side. Easier to do now than ever, especially with all the free phone and text services.
Used to be you had to have a friend halfway decent with forgery at least (or with a similar enough name and a real job they’d buy it).
Or steal someone’s mail.
Or any number of scams.
And don’t worry, very few judges will throw them in jail if there are a bunch of kids in tow - even if they aren’t actually theirs, unless you can prove it.
Some people never stopped modifying those ‘F’’s into A’s on their report cards, and just got better at it not getting caught.
Good due diligence should catch it of course, but it’s always a game of cat and mouse.
How thorough would you need to be to feel comfortable? How thorough do you think you would you need to be to actually not get scammed with 99% certainty?
Hamburg. The previous tenants left a mess, the landlord put in a new kitchen for us, new fences around the boundary, new back patio tiles. Ventilation is a problem as extractor fans need replacing and I’ve replaced a bunch of electric switches and sockets, but no fun.
Classmates with income only from the job centre are unable to find a place to live, although that’s hardly better anywhere. In London the rents are astronomical and competitive but the cycle of finding, viewing, renting and moving is still running fine. In Hamburg people can’t even find apartments for rent.
The landlord put in a new kitchen for you? When I lived in several different towns in Germany every single flat was rented without kitchen...I bought more than one and had to dismount the kitchen when leaving. One of German absurdities I don't miss...
I agree that it's dumb to have to buy a new kitchen when moving in (and tear it down when moving out). In most cases, though, you talk to the next person that moves in and, depending on the quality of the kitchen and social factors, sell it to them or just give it away. That is, when it's not part of the lease, which does exist in Germany, even if it's not mandatory. Student housing, for example, is usually fully equipped.
Yes of course I talked to the new tenant. And guess what they replied? ;-)...
..."We already have our kitchen we had to take out form our previous accommodation!"
Yes, well, the kitchen - AND ALL THE LIGHTS IN THE HOUSE - were removed by the previous tenants.
This is so fucking stupid it deserves a dedicated room in the Museum of The Stupid. Kitchens are so fitted to the physical rooms they are in, they are basically part of the house like walls, floors, ceilings and doors.
Argument I heard every time while in Germany "some people like to take the kitchen with them"... apparently they take all these fitted furniture and do something with it. Then yeah, lightning and sometimes even the flooring.... first days in new place in absolute darkness. Still the deposit is three months in case you damage... what exactly? ADSL internet from Vodafone or some other scum is the ultimate blow.
Germany must have inspired whoever wrote the Richard Pryor film, 'Moving' when he arrives in Boise to find that the sellers of his new house were not kidding when they said "we're taking everything with us"...
And yes, darkness, there was literally no light whatsoever in either of the bathrooms unless our next-door neighbour helped out with some basic light fittings he had kicking around...
The limited supply is what makes the market not work.
Whatever people think about migrants we can at least agree that everyone living in an area (town/city/country) all should have a roof over their head.
The real problem seems the disconnect between people, companies, processes and regulations getting in the way of building and the people, companies, processes and regulations wanting to move there or expand the population.
> In my section of Germany, housing is even worse with rent caps and tenant rights, plus a lack of housing.
German rental market is one of the things I decided I will never again deal with in my lifetime. There is finite number of refrigerators and washing machines one can buy, finite number of deposit disputes one wants to experience.
I have lived for a few short times in Berlin and around during the last 10 years.
I have a strong feeling that "worst decor and electrics, terrible ventilation and mould" is indeed an actual high-end housing in Berlin. A modern bright renovated house with brand new appliances would definitely be frowned upon by a typical german landlord.
Ourselves and the landlord are dealing with all the issues, bar a complete rewire, and a new bathroom is the next thing on the cards. There isn't enough money in the system to fund the operational costs of housing here. Inflation and regulations have pushed the costs of improvements into the sky - like some new reg coming in saying that ALL new roofs after 202X must have solar panels and gold plating and be made of Vibranium or something, and that means that roofs are simply going to be left to rot.
Social housing in Germany is asinine. The government heavily co-finances new construction for a subset of flats being offered as affordable housing, but with a 30 year limit to these restrictions. It's a subsidy for the rich. You break even, and you get some very cheap real estate in 30 years. The government should've just done the construction itself.
A lot of social housing is currently reaching that 30 year mark, and it's barely being replaced. And costs for new constructions simply don't make a lot of sense right now, also affected by increasing building standards - which also prevent conversion of much vacant commercial space.
Curiously, some places (notably San Francisco) in the United States have the opposite system: rents are unregulated for the first few decades of a building's life, and then annual increases are capped after that. This ensures that the older housing stays affordable for the people who live in it, but it allows prices to rise for new construction, which should in principle increase the amount of housing that gets built. In theory buildings should generate most of their value in the early part of their life when they're more desirable.
This system isn't always managed as well as it could be — subsidized unit requirements are layered on top of that, and in St. Paul the payoff period is only thirty years, which has made some developers balk. The political factions often imagine all investors as good or bad instead of as a force that can be managed to achieve desired social outcomes.
In Sweden new rentals are exempted from collectively bargained rents for 15 years, the idea being that the landlord should be able to recoup enough of their construction and capital costs in that time to make it attractive.
It’s a way to get around some of the issues that rent control causes, such as reducing construction.
Unfortunately, due to how our rental market works, it’s largely young people living in those more expensive apartments, which is terrible for birth rates and inter-generational equality.
That's pretty much how the private rental market worked in the UK, for a two or three decades at least. The game was to buy a house with a small deposit, break even on the running and loan costs, and benefit from the huge leverage in your investment as house prices rose.
Recently, the current government decided this game was unfair, and tightened taxes and housing regulations to the point where it only really makes sense now for large corporate landlords. Unsurprisingly this led to landlords exiting the market, and now there are too few rentals, leading to insane rents.
Condos are politically caught between a rock and a hard place: leftists who think they turn cities into playgrounds for the rich, and reactionaries who think the government is trying to force everyone into multi-unit buildings.
Ownership is nice for the long term, but sometimes people just aren't ready for that. Some careers nowadays involve several training periods which happen in multiple different cities and stretch out for 8-12 years. Sometimes to get a good job in a less dynamic city you are better off working in SF/NY for a few years after school even if that's not where you want to end up. Maybe people learn faster that way. Retirees may be better off renting if they don't want to do maintenance and may only live there for a decade before moving into assisted living.
When you need to move in temporarily, you can always rent a flat from a person just like yourself who bought one and is renting it out individually. In the absense of rent control and abundance of constructions, offers are plentiful.
I'm guessing they had to move due to life circumstances, but due to taxes, transaction costs, sunk cost fallacy, hassle, etc, decided not to sell the unit.
Every reluctant landlord capitulates and sells... eventually.
The reason I live in a large managed building in NYC is that while such corporate housing may be bad, the broker cartel is infinitely worse. Every independent unit wanted at minimum $7-10K in broker fees, despite the fact that in most cases I didn’t even interact with the broker in any way. So what value are they adding to the system exactly?
The article explains that they are pre-vetting renters and handling showings and such. They add value for the landlord, not for you. But, they are also probably extracting the maximum amount of blood from you, because they can...
They also kick back some of the fees back to the landlord. Not openly or directly of course because that would be illegal. But only an idiot would think that landlords are not getting a cut of those fees.
Sometimes, especially in peak season when they do open houses for a whole afternoon. Many times the broker told me to pick up a key from the doorman and let myself in and let them know if I was interested.
The last time I hunted for apartments, the landlords did all that themselves for no money, so I guess things have changed.
I guess I can see charging some money, but pre-vetting renters is probably just a matter of submitting their application to some service, and maybe doing a Google search, right? How much would you pay someone for that? About $7500?
And I imagine that in an $1100 rent-controlled building, you don't have to do too many showings before someone bites, so how much of a burden is that? A few hours? Would you pay me $7500 for that?
I guess I could see $1000 being a generous amount of money for brokers fees in this situation, if everything was being fairly run. So, in my view, the difference between the asked-for $15000 and the generous $1000 is the amount of inefficiency in this process introduced by what amounts to greed. Greed is to be expected, but when it starts to look predatory, regulators sometimes step in—which means it may be short-sighted and ultimately self-destructive greed.
To be fair, probably nothing will come of it, and the market will just dictate these costs. But, it's still a shitty thing to do.
A broker’s fee for an apartment? I’ve never seen that. I own a house now, but when I used to rent, the process was to visit the websites of local well known management companies, pick a few apartments you like, and have the manager show each to you. Then you pick one and apply. Why are people injecting the expense of a broker into such a simple transaction? And the renters are the ones paying?
It’s basically impossible to rent a place worth living in Boston without paying a broker fee. Even the listings you find yourself on craigslist won’t rent to you unless you pony up the fee.
When I rented a place in Cambridge in 2019, the rent was $3200/month. To get the lease signed I had to write a check for 4x that amount (first+last+security deposit+broker fee). $12,800 before even dealing with any moving costs.
The worst thing about it is that it increases the cost of moving very significantly. So people are coerced into accepting large rent increases as long as the increase is less than forking out another broker fee to move to a cheaper apartment.
There's something about America that fosters the existence of parasitic middlemen. The story usually begins with a promise of some service or convenience, then reveals itself to just exploit information assymmetry or regulatory capture.
Maybe that something is regulations on renting? You can try to control the free market, but the free market (a.k.a. reality) will always exert itself, whether through loopholes or the black market if need be.
So if you're renting an apartment, you need someone to advertise that it's available, you need someone to pick up the phone and answer questions about it, and you need someone to unlock it and show it to prospective tenants. In many cities, the landlord pays this person and passes the cost on to you in monthly rent. In NYC, the tenant that rents the apartment pays these fees up front. It's kind of like the airlines, you sort by price ascending, pick the cheapest flight, and then are outraged when they charge you a non-middle-seat fee, a carry-on fee, an I-didn't-print-my-boarding-pass-at-home fee, etc. People search for apartments in the same way, so it makes sense that the market would remove anything other than the monthly carrying cost from the listed price.
In the end, I'm not sure it's that bad. I moved to NYC in early 2012. I found a rent-stabilized apartment with the help of a broker, and paid about $600 less per month than a market rate apartment. I paid $3000 to my broker, and conservatively saved about $79,200 over the lifetime of the apartment lease relative to equivalent market-rate apartments.
I think broker fees are only a thing in NYC. So far I've rented in Atlanta and Denver and in both cases you can just contact the property, arrange a rental and sign the paperwork and boom you got the keys.
They're also a thing in Boston and a few other areas in the US. It's blatantly exploitative, to say nothing of the obvious corruption pointed out in other comments.
There was supposed to be a crackdown on the practice in NYC in 2020, but the brokers lobby was too powerful.[0]
One can only hope that such legislation eventually passes -- and has teeth.
Brokers fees for the apartment in Cambridge I rent were $4k. This was in addition to first and last months’ rent. Extremely annoying but when every other apartment is doing it too, you don’t have much of a choice if you want to live in the area.
That was my experience for multiple apartments in both Seattle and San Francisco. Never living in NYC but if I had to move there, would try same approach.
New report dropped recently that vacancy rates there are like 2% or less. That is far, far below healthy levels. NYC needs more housing, as does much of the US in places where the jobs are.
I'm sure both would be fine but a lot of people want to live in a place like NYC. They just need to build more housing to accommodate it.
For instance, I'm a single man. I could get numerous remote jobs. This wouldn't help my chances of dating a young professional woman though if I moved out to BFE. Thus, why I'm in NYC. They just need to make more housing. A ton of the projects here in the city are completely frozen.
I'm not familiar with NYC other than a few visits, but my impression is that the city is already very densely populated. Where would new housing go? Is it just more skyscrapers?
Vast majority of Queens is single family housing. All of these could become 5 story walkups easily, especially the western parts and stuff close to the subway. Doesnt have to be skyscrapers.
We left NYC in 2012 due to layoffs, but getting an apartment back then was incredibly difficult. I don’t think people who live in other areas of the US would understand it (except maybe SF folks). Competition for apartments is fierce, and pricing was through the roof even then. We lived in Manhattan for 9 years and then got priced out. A brief move to Sunset park, then further out to Bay Ridge. Bay Ridge was reasonable and not too hard to find a place, but it is an hour from Manhattan via subway.
The situation seems to be much, much worse now 12 years later from what I have read.
When I see people complaining about never being able to purchase a house my response is always the same. move.
$1,100 is considered "well below market rates" for a 1 bedroom apartment in NYC? That's _nuts_ to me.
I'm paying $1,600 for a 3 bed, 2 bath 1800 sq ft house with a 2 car garage. Vaulted ceilings, my neighbor is a police officer and I'm on a corner lot across from a park. fire department is literally 3 blocks away. IOW, I pay more because of the neighborhood.
Granted, I live in a LCOL area, but that's kind of the point. If you feel you don't have the buying power, move. Hell, I know a woman who has a mortgage that she pays off of a fixed income and a bit of side work (600/month I think? in that ballpark) and she's buying more house than that.
There's a reason why low cost of living areas are low cost of living, and it's not because they're self-sustaining futuristic arcologies. It's because people who can afford otherwise generally don't want to live there.
I want to walk, not drive, out my front door, and be within 15 minutes, on foot, from entertainment and dining and friends and shopping and groceries and pharmacies and salons and cafes. And I want those things because I have social/communal living desires, not antisocial/isolated ones, and because I've lived in many different kinds of environments and seen just how much nicer it is to live in a walking city.
The problem is that many walkable cities continue to refuse to build upwards. NYC, Philadelphia, Boston...they're all vastly 2-4 story construction from 100 years ago. Paris generally goes up to 7 or 8, but has restrictions preventing much more. So they get more and more expensive. But they only get more and more expensive because they continue to be more desirable places to live despite the expense.
> The quality of something and validity of people's preferences doesn't depend on popularit
When discussing demand and pricing, preferences are the only thing that matter.
By definition the thing that is the most popular is the thing that is the most in demand and therefore has the most money trying to purchase that good.
This is important and relevant to the discussion of housing, because it tells us how to satisfy the most people's preferences.
Therefore my statement is true and you didn't agree with me when I said: 'Well there is something special about the higher cost places.
That thing special, is that they are more desirable by a much larger amount of people.'.
> Should we dive into the relationship between "preferred" and "better"?
Yes, that's what I'm talking about. They are not the same things; there is nothing magical about subjective preference that makes something 'better', no matter how many people share it. If they like burritos and I like ramen, does that make burritos 'better'?
In fact, people can prefer things that are clearly 'worse', for many purposes, such as beer over hydration fluid. People can prefer things that are clearly wrong, such as disinformation.
ultimately, when someone takes this stance what they really mean is that nothing is knowable so you're a terrible person for judging someone as if you know something!
sue me. I think food for someone without food is more important than a middle class person being able to drive a brand new car.
You can manipulate language as much as you want, I will still judge you for that opinion.
A large part of why I made the post I did is because people post shit like this on this website and expect to be protected by such judgements.
absolutely not, it's an immoral stance made by moneyed people who believe this site is a safe space.
What about it angers you? Do you have a personal experience with it? From what I can see, we're talking about real estate, not usually an inflammatory subject. Nobody else seems angry, but you seem to have something to be angry about.
I can tell you from my experience, whatever it is, you seem to apply it to me. You're attributing things to me that I haven't said nor have they crossed my mind, and attacking me about whatever is making your angry. I just stopped by at my favorite spot for a chat.
The problem is that you are playing a word game that ignores anything that actually matters. Thereby destroying any interesting conversations that could be had about a topic.
And you are doing it in the worst way possible where you get to be technically correct, but correct in a way that is completely irrelevant to what anyone else is saying and is also worthless.
Here is how this conversation basically went.
Other person: "I like these very common qualities about housing that many other people also like. This is proved by the fact that houses with all these qualities have much higher demand and price".
You: "Whoa dude. Have you consider that everything is relative? And that there is no way to prove that those qualities are better than other qualities?
What about a person who really likes their house to be burnt down. Or to have rats in their walls. Or to have high crime and being in constant danger. Nothing is better or worse dude!"
All of this is completely worthless commentary. Yes, it is technically true that I cannot use math or science to prove that certain qualities about a house are better or worse.
But that doesn't matter. Because we live in the real world and it is perfectly ok to generalize preferences without getting into the fact that I cannot prove to the universe that some qualities are better than others.
Instead, we can just generalize things based on obvious and common preferences.
It's hard to penetrate to the heart of the matter, because I'm not sure what you are saying.
> Other person: "I like these very common qualities about housing that many other people also like. This is proved by the fact that houses with all these qualities have much higher demand and price".
That's backwards. The other commenter was saying their home was less expensive and larger than what was in NYC, and therefore superior.
> we can just generalize things based on obvious and common preferences
We can't truly say something is better or worse without some scale on which to measure it. Is a Macbook or cloud Linux instance better? It depends on what we want to do with it - graphic design? Macbook. Host some files publicly? The Linux instance. In other cases it depends on the user - a veteran Linux sysop may use their favorite OS for more things, an Apple guru will prefer theirs.
For some things almost everyone shares the same scale and generalizations are accurate. We could generalize that people prefer running water, heat (as needed), roofs that don't leak, larger spaces (to some limit), lower costs, etc.
But for other things people have different scales and then generalization is false. In this case, preferences for location vary widely; some want NYC because on their scales, it scores really high; some want quiet suburbs, based on their scales; some want rural or small town, warm climate or four seasons, etc. The other commenter seemed to assert that their scales/preferences were universal, and I disagree.
IMHO the best part of human interaction is learning about people and points of view I don't already know - I learn infinitely more than hearing myself talk or by framing their points of view in my perspective; that limits what they say to what I already know, like a someone insisting mathematics be described only in English words they already know - they need to learn new words and use some actual math, or they are limiting themselves. The other commenter seemed maybe to think it was a fight (I don't want to speak for them), so we didn't get far.
> you are playing a word game that ignores anything that actually matters
It seems like you're saying that the other person's ideas are games, and yours are the only ones that actually matter. If you notice I'm not addressing your ideas, you might be right, but not because I'm playing games - I actually have different ideas. My ideas aren't measured by how much they agree with yours - I use a different scale in that case.
Those are the very best chances to learn in life, IME - an opportunity to open territory I didn't even know existed 5 minutes before. If I am curious and interested (and I genuinely am), I find that almost everyone has very interesting, valuable things to say. You too.
I think I'm signing off, as this thread isn't yielding much of that sort.
you go on and on about scales and act as if the context wasn't clear. my post was about affordability and price/sqft.
What you're doing is called post-hoc rationalization. You took issue with the idea of me telling people to move if they can't afford a house and tried to back into all sorts of reasons why that's not possible and tripped over the philosophy of nihilism in your haste.
Apparently I'm angry that other people spend a lot more than me to live in a nice neighborhood in a nice house? rawr, why is my life so much better than the people in NYC!?!?!?
When it's all done I'm still going to believe food is more important than a brand new car. I'm comfortable knowing things are true.
Personally, if you're not a coward you'll proclaim here and now that a brand new car is as important as food. After all, this stuff isn't knowable.
Your comments look pretty angry to me, with lots of extra punctuation, ridicule, and insults. It's too bad we can't connect right now. I think you have some good points, but not to the exclusion of others. Have a good one!
Of course not, you know how heinous that position is, but it's the direct result of what you're arguing here, that we can't make judgements like that.
instead of reading my posts as angry, read them as a complete and utter dismissal of your argument. It has no merit and it's easy to see because you won't make the proclamation that's the obvious result of your stance.
Your argument is just nihilism in a funny dress.
A poor person is _forced_ to strip down to the bare essentials. Middle class _should_ do the same but they have enough money that they can afford the delusion until they can't (lifestyle inflation) due to losing a job, unforeseen expenses (medical bills, for example). The wealthy can do whatever the hell they want because the unforeseen expenses and job loss are a blip to them rather than an existential crisis the way it is for the middle class and poor.
IOW, just because someone is not willing to forego something does not imply it's an essential, it implies they have a preference they won't compromise on. That may or may not be a good decision, but people make poor decisions all the time.
I drive a 2004 corolla, early in 2023 I decided I needed a minivan and purchased a 2007 Honda Odyssey and then paid to have it fixed up. The GPU in my gaming machine was literally more expensive than the initial purchase of that Odyssey.
I'm a tech person and a gamer, I was not willing to compromise on the GPU but at no point was I ever under the delusion that made it an essential. it's like sneaking that candy that you know you probably shouldn't eat, it's a guilty pleasure.
On the flip side, if someone tells me they can't leave NYC because of family, I absolutely get it.
> There's a reason why low cost of living areas are low cost of living, and it's not because they're self-sustaining futuristic arcologies. It's because people who can afford otherwise generally don't want to live there. [...]
That's a very bold statement and a total oversimplification. Like the rest of your comment too IMHO. Do you think people in the countriside don't have "social loving desires"? I know lot of people living on the countryside and friendship is much more better than in an anonymous city (IMHO).
And presumably you can afford to out bid all the other people who want what you want. Its great that you are wealthy and/or able and willing to spend a very high fraction of your income on non essentials like walking to nice restaurants and being near cool people you want to be near.
The problem is that people who can't afford that think it is a hate crime if they can't afford to live in Brooklyn with the rest of the hipsters.
> The problem is that people who can't afford that think it is a hate crime if they can't afford to live in Brooklyn with the rest of the hipsters.
City planning is hard, but it's absolutely the case that cities just do it very stupidly and poorly and myopically and to preserve the wealth of the wealthy at the expense of the everyone else. There are not any good reasons for Cambridge, MA to have a 35 foot maximum height limit, only shitty ones. It's not a hate crime, but it is both hateful and a crime against society.
It's literally not a crime, and it's not even an action motivated out of hate.
I think it would do you good to work out the difference between things that make you angry and things that are unjust.
I agree with you, transportation and planning is intentionally manipulated by wealthy landlords to maintain their high rents. Absolutely. So don't live there? Don't base your self worth on how impressive the resume's of your neighbors are? Find other neighborhoods that aren't based on inherited multi-generational snobbery and artificially restricting access to education to elite morons?
You're using a specific definition of "crime" that is different than the one the people you're arguing against are using, and that makes the argument not apt.
Being shameful for causing harm is also what calling something a crime can mean.
Right, you are using a second or forth definition of crime, changing to that despite the original context of the first definition. I'm the one who originally said it's not a hate crime, as much as people act like it is. That you would then accuse me of trying to play games with definitions is really quite remarkable.
But lets go along with your desire to get away with using your definition instead of the original way the word was used in this context. Is it really a 'grave offense against morality' for a city to democratically decide to not allow skyscrapers? What would be the consequence of not allowing skyscrapers, is it that people like BugsJustFindMe starve to death? nope. That you will be deprived of basic human needs like shelter or the right to self determination? nope. The 'grave moral harm' done to you is that you can't afford to live within walking distance to that cool bar you like to go to. How ridiculous are you going to be?
Your “non-essential” is someone else’s “essential”. Everyone has different needs and wants, and it’s just a useless flamewar. It’s the same as the discussion of whether the cities should stop subsidizing suburbs and other areas. Absolutely useless as everyone have their preferences and we have to find some sort of compromise.
What things are essential? A tent, water fountain, and scavenged scraps will keep someone alive. Is a toilet essential, or could you just use the street like the birds and squirrels do without complaint? Is a bidet essential, or could you scrape your anus with paper until you see spots of blood like many americans do? Is internet access essential or could you just go to the library which is free and open to all? I think there are not any objective definitions of what makes a housing situation essential.
So in that light, I think if we're going to consider physical needs, we should probably also consider emotional wellbeing.
well, as someone who grew up extremely poor (to the point of living in a tent on the side of the river in HS) I'm here to tell you nothing you mentioned is essential.
I looked up the average salary in NYC out of curiosity and I make well above the average there.
but I live extremely cheaply and part of that is the lessons I learned as a child. I could afford a much bigger house, much nicer cars, more toys. I choose not to.
I know people who will finish paying off a vehicle and turn it in for another one. Not essential.
Just because someone _feels_ as though something is important doesn't mean that it is. The difference between middle class and poor is that poor has to deal with reality, middle class gets to keep the delusion that things like nice cars are essential.
These people are choosing not to move. It's great that they can afford it but maybe they should stop complaining vociferously about how victimized they are for choosing to live in that area.
I don't know that I would take that stance but certainly a bidet and a nice car do not fall under that category, nor does being able to walk to a restaurant.
You may try and argue some of the grey areas, but most of the things you listed are _clearly_ not essential, they're desirable by specific people, as you said.
What makes a toilet essential but not a bidet? Plenty of people manage to survive without toilets. Some of them even in downtown San Francisco (you can tell by the state of the sidewalks). They don't tend to thrive with dignity though. Is it not the dignity and thriving aspect that's ultimately important? What things make you thrive? What things make you feel dignified? Are they essential for your wellbeing?
(personally speaking, like many people I have eczema, and my wellbeing tends to be diminished by having a scraped anus)
I'm interpreting that as you have eczema on your genitals or anus, I don't know much about eczema so can't speak to the condition so I'll speak in general.
My mother has heart issues and she has a pump that's connected to her 24/7. She has a medical condition and so has special needs. I would not call that pump an essential but it certainly is essential for her.
The context of this conversation has been _in general_, my responses were never meant to apply to those with medical conditions.
to answer your question, a bidet is a nice to have, a toilet would be an essential otherwise you're shitting in the street, as you implied about downtown SF. Because toilet here does not mean literally toilet, but someplace reserved for using the restroom. When I go to the river to fish they have an outhouse there and I absolutely use it, as do construction workers with the mobile outhouses they employ.
defecating and urinating are absolutely essential activities, how you clean yourself afterwards needs to happen but any specific way of doing it is not essential.
I mean, you're free to make the claim and I honestly hope it makes you feel better about yourself.
buuut... well you know your response is bullshit.
hey guys, dontcha know the only essentials are death and taxes! otherwise you have to admit that a brand new car driven off the lot is also an essential!
Care to elaborate? Obviously something “essential” is a subjective take other than the most basics like “food and shelter”. Walking or being able to take transit to my grocery store is a strict essential for me, but I am sure for people who live in suburbia it is not.
I was born and raised in a city with >2M population, and surely my needs are extremely different than someone who is accustomed to a rural life. Even small things like, sleeping in an extremely quiet rural town has been a torture for me every time I tried it. And I am sure, opposite is true for people who are used to hearing absolutely no sounds at night.
For instance… I am medically… complicated. Living somewhere rural where I’m more than 10 or 15 minutes from an ER isn’t really viable for me. Well, I mean, it would be, right up until it isn’t.
> I want to walk, not drive, out my front door, and be within 15 minutes, on foot, from entertainment and dining and friends and shopping and groceries and pharmacies and salons and cafes.
I live in a city, you can have all of those things here. In fact, we have an entire stretch down the side of a river that has restaurants and other things down the side of it. The housing in that area is some of the most expensive but still doesn't touch NYC.
> I live in a city, you can have all of those things here. ... but still doesn't touch NYC
One way of thinking about this is that everyone in NYC is wrong. Another way of thinking about this is that NYC might have more of those things and then some. Does your city have a dozen museums, dozens of museums, or hundreds of museums? Does your city have a 24/365 public transit system? Bodega cats? Offices of all of the top companies worldwide? Something equivalent to the high line? Broadway? If not, why not? Some places have some of these things. How many places have all of them?
And it's a reason why "just build denser housing" is not a complete solution. More density makes an area more desirable, so prices will remain flat or in rare cases increase since the demand continues to outstrip supply. I believe the solution involves dramatically looser building regulations and major investment in public transit (essentially, get to Tokyo levels of density). Places like SF or NYC are in that uncanny valley of building just enough to keep demand high but not enough to drop prices.
There is the notion of induced demand but it follows a logistic curve rather than a monotonically increasing one. At the limit, you will eventually build enough housing to satiate demand without creating more; there are only a limited amount of people on the planet, after all.
Zoning laws that discourage mixed use developments. One of the only cities in the US that works well with the more European style model of mixed use developments with apartments and businesses all next to or on top of each other is NYC.
I can understand residents not wanting businesses right next door, but how many cities ban apartments on top of businesses? That seems pretty common IME, but maybe I've misunderstood what I was seeing.
I could support that, though maybe not in a place that's unavoidably car-dependant. As you probably know, parking eats up real estate and drives up prices.
> When I see people complaining about never being able to purchase a house my response is always the same. move.
People generally care where they live more than they care about the things you describe. Location is the most important factor for most people in real estate purchases - so much so, that it's a cliche.
You are free to have your own preferences, and I'm glad it has worked out well for you. But let's not be incredulous that others have different priorities - that's the human interaction baseline.
That's not a solution for them, with their preferences and needs. You don't seem to grasp a fundamental issue: Your needs are not a universal truth; they are only yours (and whoever happens to share them). New Yorkers really have different preferences; they don't want what you want, any more than vice-versa.
And while they make the best choice they can, they can still have problems with it - what in the world works out otherwise? Jobs? Elections? Anything?
for a multi-millionaire, living off of 500k is not a solution for them.
no one gives a shit, seriously. This is the worlds tiniest violent playing for those who refuse to adjust to not having as much resources as they'd like to have.
oh man, I'm so turrble, telling them they should probably live as if they're only half-millionaries.
I have no idea what you are talking about. You seem to be responding to a person or counterpoint you are thinking about, but I don't see here on HN. Anyway, have a good one!
This is one of those situations where people make claims but that doesn't make them valid.
If a multi-millionaire cannot accept a solution that has them living like someone worth 500k, maybe the issue is with them as the vast majority of people survive while being worth far less.
But hey, repeat how you just can't understand what I'm saying, I'm sure enough people will believe that to make it worth saying.
Moving doesn't tend to change much.
Yes housing prices go down but so do wages.
Also you'll have the added expense of a car (and all the stress that brings along with it).
that's true in theory, but not practice. It assumes housing availability is a constant across the US
As I mentioned, I know a woman who is buying more house than that and her income is technically below the poverty line.
In addition, I work remote in tech and looking up the average salary in NYC, I'm making more and it's not close. Not everyone can do that and I understand that, but my point is that people around here don't feel as though house ownership is out of their power.
House ownership statements are always with a location in mind. I want to walk or take public transport for 15-20 minutes to have most medical docs around, multiple different cuisines, park etc.
What i do not care is a 2 car garage. That already implies a lifestyle i really do not want. So where wpuld i move to in the US?
if you don't want a 2 car garage then fine, move downtown.
You can get _anywhere_ in this town in 20 minutes or less. We flat don't have the traffic that places like NYC does. rush hour might be a bit slower depending on where you go, but not appreciably slow.
I feel like people who don't live in these areas have a lot of misconceptions.
This might be an exceptional town, not sure what kind of place you're talking about, but most places don't have public transit or much in the way of walkability in the USA. He's talking of not using a car and doesn't want to drive at all.
considering how infamously bad traffic is in NYC I find it difficult to believe that you can actually just not own a vehicle in NYC.
who knows, maybe it's not really that bad and I'm ignorant here, it's possible.
But my point is that if you don't own a car there's automatically a limited range of movement that you have. It might be better in NYC (it probably is), but we have areas like that too. We also have public transportation in the form of buses rather than subways and they stop a lot so it can take longer but you can get anywhere in this city via bus, including the suburbs.
You can absolutely pick an area for its walkability and use the bus transport to move around the rest of the city. But to leave the city will require a vehicle or a greyhound.
This is just naively and ignorantly ignoring supply and demand. If everyone moved to your LCOL area costs will rise. If ever leaves the city (HCOL), city living will decrease in cost.
Not sure how your proposed solution works while also defying basic economics.
stop making excuses, an individual can make an individual decision or they can bitch about their situation but refuse to explore their alternatives.
"oh, but market forces so I'm just going to stay here and continue posting online about how horrible it is that I'll never be able to afford a house!".
I’m not making excuses. I’m highlighting what reality is. Big cities are big because of people population. Why are a lot of people there? Because of work, lifestyle preference or both. That’s not an excuse, that is reality. I don’t want to live in the middle of no where even if the entire mortgage is less then my 20% down payment for something closer to a big city. Economics speak for themselves. Stop pretending demand for a city is artificial.
> I don’t want to live in the middle of no where even if the entire mortgage
I think you should start visiting these areas before you say that.
It takes me less than 5 minutes to get to 2 different grocery stores, a theater, a market dedicated to fish, a greek restaurant, a Mediterranean bar, a mexican restaurant (very good btw), Target supercenter, Lowes, various stores dedicated to clothes, one dedicated to hobbies (not hobby lobby), and more I could go on about. In 20 minutes I can be sitting on a dock by the side of the river enjoying the breeze and fishing. In 30 minutes I can be standing at an orchard purchasing peaches, in 45 minutes I can be standing at a lake enjoying the fishing there. In the summer we have a farmers market that's probably 10 minutes away and is amazing, they generally have someone there playing music live. Which, btw, this area is _known_ for (it's independent artists).
It feels like too many people here imagine LCOL means living in the middle of fields with cows milling about. rural areas are even cheaper but what you're imagining and reality do not match.
It may not ultimately be what you prefer, but to call it in the middle of nowhere is just vastly ignorant. I live in a city.
> I think you should start visiting these areas before you say that.
It is precisely because I spent the first 30 years of my life in such a place that I don't want to.
Beleive it or not not everyone wants a giant lawn, white picket fence and 1.8 kids in the middle of incredible blandness, unworldliness, and closemindedness.
I won't speak to your story but that's not been my experience and yes, this is a conservative area. I'm left leaning but have friends on both sides of the aisle and of varying religions.
I did once get fired for admitting to being agnostic but I dismissed it as assholes, every area has assholes. By far most of the people I run with and encounter don't act like that.
Dude you lost your job because of closed-minded bigotry and you're still confused why people might prefer to avoid those locations? For lots of people the stakes aren't being fired, they're being murdered. If you're fired for being agnostic how safe do you think a transgender person is where you are?
go watch that and understand that conservative areas where BY FAR more supportive than New York.
This is a common trope amongst youtubers and they _consistently_ find that these conservative areas are more accepting than the liberal areas such as New York. And they're more willing to speak up.
But go on, explain to me why an asshole defines the entire region. I want to hear how we have more assholes and somehow can't be forgiven for that, but apparently NYC can!
Respectfully: horseshit. That’s the sort of twisted thing conservatives love to say abouy themselves without understanding ding what actual acceptance even looks like.
I grew up in a Midwest farm town with a population below 10,000 people. I’m well aware of what they have to offer and it’s not what I want in life. I think you should stop taking offense to my comments and realize they are just stating the broad reality.
Not sure why you are getting some defensive. If your city is so great name it so others can learn about it. Either way, big cities and small cities aren’t the same and don’t offer the same thing. Nothing to dispute here.
people are extremely bad at coordinating/advocating for their interests, ie. to get more housing built. it's learned helplessness, and crazy memes (like conservation of neighborhood character)
Denser housing only helps so much though. You need to increase street capacity, increase public transport, more doctors in the area etc. And yes, neighnorhood character is real.
More services will be sorted out by the market, because there is more demand. You're assuming street and public transit capacity is already maxed out; but if it is, yes you need more (of one or the other or both).
I read their post as meaning people will sit in the same HCOL area rather than make decisions for themselves that would improve their lives, such as moving to a LCOL area.
And that they also won't organize to try and fix the issues with the housing in the HCOL area.
I agree with the sentiment personally, it's why I always tell people to move.
I was watching a youtube video earlier this week about a couple who did exactly that. They lived in portland oregan. they bought a rundown old trailer that no one wanted, put the elbow grease in to clean it up and rented out a space for it.
They then realized that with their income it was going to take many more years than they wanted to become financially independent. So they moved out of state and w/i 2 years had paid off a 2 bedroom home (they had savings and sold the trailer) and were living in it and considered themselves financially independent (they no longer had to work to live).
They talked about how their family shunned them when they moved away and they've learned not to talk to friends about it because it just causes friction.
It’s not always so easy to move. People form community. That’s hard to replicate. People have jobs. Those can’t necessarily move with them. People need connections. They tend to congregate near larger areas with high costs of living. It’s really a trade off between paying for what’s more valuable to you.
I work at a 50,000 person company. The powers that be want everyone to be in the office at least 3 days a week. Those offices are in expensive major cities in the US. Some people 'make it work' by living an 1+ hr commute away from the offices. I'm sure this is rinse and repeat around the country for people that a) might like the work they're doing and b) have it dictated from above that they have to be close to a major metro area.
Congrats on whatever opportunities you've made work for you but many people are tied to where they are due to onerous management, community, family etc. We are not the highly mobile society of even two decades ago and the false promises of mobile technology haven't truly been fulfilled. We got close during COVID but business interests and human nature got in the way of fulfilling what people on this forum have been touting for a decade or more with remote work.
Did you buy this property because you knew of the police neighbor? Is it just well known for the kids as well?
It's just a strange signifier to me. Does a real estate agent mention this? Do they know they play this role? Are they compensated in any way? Should other neighborhoods encourage the presence of a single police officer home?
Why is it a strange signifier that a police officer living next door and a park where kids are openly playing implies it's a nice neighborhood that you might enjoy living in?
it's like saying it's a strange signifier that you would avoid a neighborhood with homeless walking down the street pushing carts and empty syringes laying around the sidewalk.
Neither of those seem strange conclusions and I posit that if you can't understand that it says more about you than anything else.
and yes, I've been shown houses in neighborhoods like that, and no, I didn't move in.
I pay $500/month for a very similar setup, but mine is a 2 bed, 1 bath with a 1 car garage, lol. The corner lot, cop neighbor, and close fire department are all familiar though!
Moving to a LCOL is always my recommendation as well.
Before moving into my house, I rented a 2 bedroom apartment in the same town for $700/month. Low interest rates during Covid meant I could get a 30-yr fixed mortgage at 2.25%, and the mortgage payments would end up being cheaper than my rent. Rural development grants introduced a few restrictions on what houses I could choose, but made it possible to buy a house in my 20s with no down payment at all. Seemed like a no-brainer!
In 2017 I was about to get a small 2 bedroom in Brooklyn with for $1550. I was one block from a subway station and 3 stops from Manhattan.
It was an older apartment with newly renovated kitchen and bathroom, albeit small.
The brokers fee was something like $3000(thought this was ridiculous).
At the time I also found a similarly priced apartment but at last minute for some reason it was pulled the broker said.
I don't think any amount of searching can find such deals now.
I lived in NYC for 8 years in a rent-stablized APT in the lower east side, my rent was < 1200 when I left. The price was great but it was in an old building, it was only 220 square feet, and I live there w/ my then gf, now wife. (most of my friends thought we were crazy, but they still rent and I own w/ the money I saved)
I was able to get the apartment by subleasing someone else in apartment in the building. I always paid my rent on time, and caused no issues for the landlord (parties, etc). When a new apartment opened up, I was giving first dibs.
This doesn't answer how you got the apartment, which is invariably either luck, knowing someone, or having rich parents (in which case you can buy one of those income-controlled units that make zero sense for anyone except a nepo-baby -- e.g. need to earn <$30k as a household, but have $250k for a downpayment).
I also had a time in a rent-stabilized apartment in NYC (East Village, probably not far from yours) and the answer of how I got it: luck. It happened to be available when I was looking and I happened to beat everyone else to the seller's agent by physically sprinting with my deposit check in hand.
You're exactly right. The alternative to a market is usually corruption.
My local university offers housing for grad students. At least 50% is unoccupied at any time because there is no pressure for them to fill units. That would just be more work. So getting one is tricks and favors.
I also thought you didn’t answer the question but after re-reading it sounds like you first started living in the apartment by subleasing from another tenant.
Then once another apartment became vacant, because you already lived there you were able to regularize your presence by terminating your sublease so you could lease directly?
In a past life, I was the make-ready electrician for a top local broker. I had to quit this life for a multitude of reasons, primarily that of feeling parasitic to a parasitic industry.
What ever happened to the class action suit against 3% fees... did that ever go anywhere [2023 recollection]?
I thought this seemed fair till i read it was in flushing. Nyc is the worst, but, if you’re American where else can you get a city that international and walkable
Chicago, DC, Boston, SF, Philly (depending on "international"), Portland (walkable but not really international - it's just 90s-2000s white Americans doing 90s-2000s white American stuff, you'd think Kurt Cobain still roams the earth)
Though if you want affordability, that leaves Chicago and Philly.
NYC sucks in that sense though, as a lot of industries that are conglomerated in NYC haven't ensured salaries keep up with those in High Finance and Tech
At least Boston has relatively affordable suburbs and Bay Area level wages, DC has plenty of federal jobs that pay competitively, and SF has the larger tech industry (which is still going great despite a couple high profile layoffs)
Miami? I was impressed with Miami when I visited. Lots of high rise residential housing, sane political governance, nice downtown, and pretty walkable.
IIRC Miami was the worst on a list put together by CityNerd of large cities with a high (housing+transit)/income ratio. I can't access YT at the moment so feel free to correct.
Yeah, though I think Bay Area is similar - LA is huge and more equivalent to compare to Bay Area (SF + Oakland + Peninsula + San Jose), than just SF itself.
To be clear; what I mean LA as in LA city not the county. LA and Miami are similar in they have some neighborhoods that are walkable (the most popular parts), but the majority of them are not and they’re not very walkable between the two. Little Tokyo is walkable but then there’s a gap between there and downtown, then you have a huge Hollywood stretch then a huge gap around ktown if you go between them. Miami has the same issue, Brickell is walkable but as soon as you leave it has a bunch of impassable areas to go to downtown, same as if you were to leave wynwood. The worst part of Miami city’s unwalkability is once you leave those neighborhoods it pedestrian hostile like Shendahdoah or Little Havana.
SF and NYC do have neighborhoods like this, but those occupy very tiny portions of those cities comparably to Miami.
Yes. In the US, sure. Compared to cities outside the US it is horrible. Less walkable than most, food is ok if you know where to go but nothing special and also super expensive like everything else, aggressive drug addicts wandering the streets, high crime including random acts of violence for literally no reason at all, incessant aggressive honking at all hours of the night, even when you are paying $5k a month for your 1 bedroom apartment it the apartment itself is not a nice place to live in terms of things like sunlight and ventilation, and the city itself is super corrupt. There’s a million folks in unions and other arrangements who are “grandfathered in” to all sorts of privileges that are used to secure their vote. The city has an astronomical budget, all the money is going to more or less bribe key voting blocks. It has been this way for well over a century.
The thing that NYC really has going for it is that the rest of the country is a giant suburban dystopia.
i live in NYC and have traveled to plenty of other international cities.
none of the things that you're saying are true compared to my experiences (or those of my friends) in any way that i can think of as meaningful.
the only city i've been to that feels like it's captured the same "vibe" as NYC, for me, has been Paris.
Tokyo was more impressive in its sprawl and history (and obviously cleanliness), but there is a sense of Japanese monoculture that saturates everything in a way that is almost tactile. not in a bad way, but definitely such that i felt like something was "missing" during my visit.
Singapore gets really close to the same feeling, but for all of its heterogeneity there's an undercurrent of authoritarian sterility that made it very difficult to feel comfortable (Disneyland with the Death Penalty, indeed).
anyway this is already pretty long winded so i should probably stop talking, but NYC has a lot "going for it" besides the rest of the US just sort of being a suburban hellscape. at some point i'll move out, but living here has been a really comforting reminder that international views such as yours of American cities are incorrect.
I was born in Manhattan and lived in the city for over a decade and still own an apartment downtown. I know a thing or two about the place. It's cool that you get a vibe from being a transplant here for a couple years, that has literally nothing to do with anything I said. The lawlessness is also quite a different experience for women--I am guessing having random guys off the street try to force your door open and follow you into your building or corner you on a subway or follow you around riding a bike aggressively catcalling you is probably not something you are dealing with on a regular basis.
The day I left I moved out over a pool of dried blood from a stabbing in front of my door the night before. I've lived in over 20 countries since then and not experience anything similar except maybe in Canada, which has similar drug problems as the US.
With the caveat that I moved away (due to work) a little under a decade ago... what you describe doesn't match my experience with NYC at all. Maybe back in the 80s, before it was cleaned up... but I was less frequently there back then. Before you said you lived in the city, the message from your first post made me assume you were talking about the city as someone who learned everything they know about it from the news.
Visiting another city is not in any way comparable to living there. Or would you defer to the opinion of some tourist who visited NYC for a random weekend?
I already felt like I was ranting for too long, but yes that too. People are paying far more now for a much worse experience/quality of life compared to before the pandemic. I was at one point in the city among my reasons because it had good public transit, but then taking taxis all the time because my partner did not feel safe on the subway after numerous incidents, and just had a “what the fuck am I even doing here” moment.
Oh. Yeah I would also probably pay $15k for $1k rent if I intended to stay in NYC long term. You'd have positive ROI on that before the end of year two.
But Flushing is too far from Manhattan and too close to La Guardia. I'd gladly pay more not to listen to that shit all the time, the car noise in the city is bad enough.
Well, if it's "international" you're looking for, there are other cities abroad like that. But I get your point, the US has very few walkable cities with high levels of diversity.
One of the fundamental problems in politics is that taxation is usually more efficient in terms of economics and public benefit but regulation is more effective in terms of electability, PR and public support
Rent control ideally wouldn’t need to exist. But since no one is fucking building anything - you need it to prevent landlords from just extracting more money from the pockets of laborers without having done any labor themselves.
My landlord didn’t provide any more utility this year even though they jacked up my rent $1000/month this year. Nothing about my place got any better and I’m not getting anything out of it. They’re doing it purely to extract money from me because they know no one else is building and we just had 150k+ migrants move into the city to compete for a fixed supply.
End of the day, landlords don’t deserve more money and I don’t know why anyone here argues for it. It’s like you want bezos to have even more money - it’s super weird.
Always good to mention the property management cartel that's in cahoots with rental management software companies to price-fix and jack up rates for everyone ("allegedly").
People keep trying to rationalize the status quo with complex explanations, when the dynamic is really "Army setting up a school" dead-simple (or, even more applicable, Soviets setting up apartment blocks): if you care about fulfilling the need, it gets done. The problem is that there are competing interests that profit from housing insecurity and homelessness, and the government routinely chooses them over us. Nothing will change until the choice is made to throw these entities - developers, management, investors, etc. - under the bus, instead of people who are simply looking for a safe place to live. Unfortunately, without a massive reorganization of the economy and even society, it's impossible to have both come out winners.
Investors are speculators. Fundamentally, they should not be cared about. We should be considering the lives of everyday people and labor.
Just cause some capitalist lost a few dollars doesn’t mean anything. Capitalists don’t do any labor - that’s the whole point of why they invest in things. They put money in places hoping that they’ll get more out of it without having done anything. But it’s a risk - and the government shouldn’t be backing risk taking speculators who gamble with their money. It should be backing laborers!
But it doesn’t. Government is controlled by capitalists because capitalists have the discretionary money (thanks to stealing it from laborers) to keep lobbying to keep status quo.
Introducing rent control makes it even less likely to have new builds. Try to think like a millionaire that could potentially invest in real estate: would you buy a 2 million house not knowing that you can recoup that investment and also make a profit? Isn't it easier to just dump the money in an ETF and get 8% on the market?
> you need it to prevent landlords from just extracting more money
Why do you need to prevent people from making money? Would you like someone preventing bradlys from making that much money? How much is too much? If you work in tech like most people here, you're probably making more than 99% of the world.
Making money is not a problem, if there is money to be made in real estate, investors would flock to it, increasing supply and therefore decreasing prices and profits over time. The problem is when the economics are not allowed to float freely: because of rent control, limitations to building (like zoning laws), insufficient infrastructure (like being stuck on an island with bad connections) etc.
You cannot have housing be affordable and an investment. You need to decouple the two.
Fundamentally these are in disagreement. If you believe that landlords should control the world then keep believing this idea that housing should also be an investment.
I don’t think housing should be an investment. It is impossible for something to be a good investment and affordable. They go against one another.
> If you believe that landlords should control the world
This seems like such an emotional response. The landlords are also controlled by mortgages if they are small, or by boards of directors - and shareholders if they are large.
The landlords can control the rent for their units, that's it.
As to investment properties vs affordable ones, there can be some issue there, for example if you buy a house just to park the money somewhere, but you don't rent it out, you keep it empty. That kind of behavior can be really damaging. These are the only kind regulations I would introduce: 1. don't allow properties to sit empty - tax them heavily. And 2. also don't allow airbnb's in highly troubled cities. Unless you're literally sleeping in the same house with the guests, airbnb's shouldn't be allowed for individual housing units.
> I don’t think housing should be an investment
Let's run a thought experiment: Let's assume you're a retired small business owner that has 5 million dollars in the bank. You can A. built a house in your city and rent it out or B. put the money on the stock exchange.
Everything else staying equal, which of the options would create more housing units in your city?
> It is impossible for something to be a good investment and affordable. They go against one another.
Why do you think that's the case? Many companies are a good investment, while they still provide affordable products. Something can be cheap in an absolute sense, while still providing a good return on investment.
Affordable housing is a loaded term. In the US that means housing whose price is fixed to some percentage of the area's median income. I do not want affordbale housing. I want market rate housing with uncapped supply. This would make it a commodity.
> End of the day, landlords don’t deserve more money and I don’t know why anyone here argues for it. It’s like you want bezos to have even more money - it’s super weird.
See, to me, this vitriol is what seems super weird. It seems like you must be talking about some sort of property shark that owns 8+ figures in property and extracts the maximum possible from the poor peons that dare to want a roof over their heads. Maybe with some large company thrown in the mix for good measure.
My father and grandfather are both in rental (well, they did whatever they could to make their way, primarily carpentry; rental is only part of the picture). Both of them started with nothing and managed to bootstrap their way into some properties, fixing them up as they went. They do all the work on their respective properties themselves. There isn’t a management company involved. They aren’t some evil men trying to extort the populace, the goal is just to live, provide for family, etc. Yet by definition, they are landlords - that thing that so many here despise unilaterally with such passion.
Probably there is considerable diversity (or at least two classes of landlords). But laws are going to apply to both groups.
End of the day, landlords aren't doing any labor for the rent they are collecting.
If you do something that drives up the value of the property - you'll get some amount of that when you go to sell the property. If your father buys properties, rehabs them, and then rents them out... Guess what? He's double-dipping. He's going to charge more for rent and he's going to be able to sell the property for more later. In one instance (selling the property), yes, he's doing labor and will reap some reward for his labor. In the other, he's not really doing any labor to keep charging more rent.
I had "small time" landlords many times. They always jacked up the rent 10-20% every year. You think they're doing that because the 1920's house I was renting was getting improved every year or they were doing anything to make it better? Nope... They just wanted more money and because no one was building more housing - they knew they could get it.
Improvements to property often bring little to no return at time of sale —- especially if those improvements have worn in a few years. More than a few years? Forget it. Improvements are generally made to improve immediate rental value (similarly maintenance repairs are made to retain existing value). Gains realized on sale are mostly from natural appreciation of real estate over time (on which capital gains will be paid). This is why house flipping is not a more popular enterprise.
> going to charge more for rent
You mean, be able to charge anything at all.. it’s not like we’re taking about buying turn-key properties and updating the cabinetry or something.
> not really doing any labor
Properties require upkeep. (N) properties require N times the upkeep. In addition to normal expenses, there are also risks; for example a tenant may damage your property, and then you need to fix it. You may think your security deposit covers that; in reality that amount of money can usually only cover minor repairs / cleaning. Landlords need to recoup that sort of thing over time, so it ends up getting rolled into your rent.
I really don’t think you understand how expenses for these things work. The way you’ve been talking, it sounds like you think your rent check goes directly into the landlord’s bank account as profit. Maybe you should try home ownership, and see what the actual ledger (expenses + time) looks like over time. Compare that plus your mortgage to rent. You may need to do this for the long haul to see the real picture though, not just a couple of years.
Better yet, acquire some properties and try your hand at rental yourself —- either you’ll end up filthy rich for nothing like you seem to think it works, or you’ll learn a valuable lesson about the true cost of services…
Because, while you assert that landlords offer no value, the fact remains that there are people in this world who want to rent, not own. Without landlords, how is that supposed to happen?
Rent control definitely works, because owners lock in the original price of the building with a fixed-rate mortgage. If you buy a building in 1960 to rent out, you can rent it out at 1960s prices pretty much forever, with only a tiny fraction added to cover increasing property taxes (subsidized for owners of rent-stabilized apartments) and the increasing costs of routine maintenance.
If I were to become Dictator of New York City tomorrow, I think I'd freeze rents as a factor on the acquisition cost of the property + prevailing interest rates on 30 year fixed mortgages. If you want to make today's market rates on your property, you have to build a brand new building. This incentivizes the creation of new housing, and provides stability to existing tenants through rent stabilization even for newcomers to the city.
The people maintaining your building need somewhere to live, so unless they're in a rent-controlled unit themselves your maintenance costs will rise at the same rate as housing costs, as they're primarily labor.
Rent stabilized apartments increase their rent by ~3% a year. That seems fine for keeping up with costs. You also have to keep in mind that the required work becomes more efficient over time. An example I've noticed is that in times past, every building had a live-in super/porter that would (among other things) take out the trash 3 times a week. Now I see someone driving around the neighborhood in a moped on trash day, parking in front of a building, taking out the trash, and moving on to the next customer. That's probably cheaper than it was, even if the person's apartment now costs more.
I mean, it's the same as selling a rent-stabilized building today. No, you can't kick the tenants out when you sell. You often sell at a significant discount because of the problem to profitability that the tenants pose. This is fine.
NYC is full of vacant land. You can kick cars out of a parking lot and turn it into a 50 story residential skyscraper without any problem. You can tear down nearly-abandoned office buildings and replace them with housing. Tearing down a building where people are happily living is completely unnecessary. Profitable? Sure, it can be. But the city is under no obligation to making housing profitable. Housing is infrastructure; does the city make a profit by charging tolls on roads? Nope! They don't need to; they exist for the public good, not for your 401(k) plan.
Plenty of people are making TONS of money on brand-new buildings. In the 12 years I've lived here I've watched Downtown Brooklyn change from a forgotten wasteland to the home of the tallest building in Brooklyn. The neighborhood is full of $1M studio apartments (and up for more space) and they are sold before the building even breaks ground. People want new stuff and they can afford it. It doesn't have to come at the cost of existing residents.
There are way too many other variables involved to really make that generalisation. I've lived in a city with very strong rent control and one with none and essentially no tenants rights. Both cities currently have rental shortages, just the one without rental controls is about 3 times as expensive as the one with.
In practise, I've yet to see anything working that doesn't make rentals either scarce or prohibitively expensive.
It can and does work in many places. Whole cities like Stockholm mostly consist of rent-controlled apartments which have same rents paid since WWII era, which now amount to almost nothing. It creates awful social distortions and indirect costs, but it certainly does work.
It works in the sense that the system keeps existing, but it doesn't work in the sense that affordable rental housing exists for everyone.
Ask anyone actually living in Stockholm, and you'll hear how the system really works. Last I heard there was a 20 year wait to get an apartment the legal way.
Supply and demand determines rent; if you have enough supply and also rent control, then you'll have have rent control that magically "works".
But it's always supply and demand that gets the upper hand in the end. If there's a shortage of supply, and you put in more market rules & regulations, costs will shift elsewhere (like the broker in the article) or the black market will simply grow to clear the market.
If landlords determined rent, why isn't rent infinite?
There is some force that pushes rent down from the infinite amount of dollars that landlords would love to have. That force is competition from other landlords.
Think logically for one more second. Very similar logic applies for health insurance/cost of college/rent, because those are “unavoidable” in some ways if you want to live (with dignity, because homeless people are still alive I guess).
The only reason health insurance/college/rent costs near infinite dollars rather than actual infinite dollars is because price hikes work best when they are hiked slowly every year instead of all at once. Health insurers/bloated college admins/landlords would (rationally) love to have infinite dollars, as they have a stranglehold on a necessary resource, except that’s probably a quick path to the guillotines coming out.
This myth has been reviewed by economists over and over. You can always economize and it naturally occurs on both the demand and supply side. I'm not saying these outcomes are good, but people WILL do them.
Housing demand: live in a smaller place, live with more people, live further away than you want to, live in a van
Housing supply: rent out your extra room, try to build a rental (collect sweet premium)
College demand: community college + transfer, alternative education, maximize credits/minimize time
College supply: offer online degrees, price discriminate (financial aid) ,make cheaper offerings (undergrad only universities, etc).
Health Demand: don't go to the doctor, follow insurance incentives (urgent care vs ER), seek alternative treatment (chiropractors, neighbors, etc).
Health supply: maximize services can be performed by less trained workers (nurse practitioner vs MD, Offer lower end services (Telehealth, etc).
> "unavoidable"
When you see how many choices you have this starts to sound like "I have become accustomed to my quality of life, and I am unwilling to accept economic reality and consider alternatives." This is a natural response to declining standards of living.
So our choice is to either legally discourage rent seeking behavior in certain necessary parts of our life (health, housing, education) OR “live in a van… don’t go to a doctor … go to community college” just so the overlords could keep making profits on their investments. I wonder why not more people are signing up for the latter.
No. The point is that these actions at the margin put pressure on prices. People do have an alternative and will not just pay any price. I suspect you're feeling what I described at the end.
Market determines rent the same way market determines the cost of health insurance: people need a place to live the same way they need a doctor when they’re sick. If all the landlords are using collusion software to raise rent in tandem [0] what is your alternative, live in the streets until they give in?
This is not a good analogy. When you are sick, you need to get treatment, you're time constrained and usually space constrained too (you wouldn't travel 3 states out if you need an urgent procedure).
With housing it's more flexible: you can commute longer each day. You can just not move to a city where you know the "salary/cost of living" is not working in your favor. You can also time these decisions: go to NYC when you are in your 20s, live with some roommates to get some savings and then when you get older you can move to a more spacious city. You can be flexible about the space you need too: from 1 bedroom in a shared apartment, to a 3 beds detached house in a quiet suburb in another city, there is a lot of flexibility.
In a city there is a constraint on how much you can build, and everybody wants to be there. You can let the free market set the price, or you can try to distort the market with rent controls and then you end up with black markets, illegal payments, people holding on to their apartment for way longer they would normally do etc. Why would a 1 person ever move out of a large apartment if they have a low rent? They don't care that the same apartment would be a god-send for a family of 4...
> With housing it's more flexible: you can commute longer each day. You can just not move to a city where you know the "salary/cost of living" is not working in your favor. You can also time these decisions: go to NYC when you are in your 20s, live with some roommates to get some savings and then when you get older you can move to a more spacious city. You can be flexible about the space you need too: from 1 bedroom in a shared apartment, to a 3 beds detached house in a quiet suburb in another city, there is a lot of flexibility.
You _really_ think people aren’t already doing that, huh. Rents are too damn high AFTER all these options have been exhausted, and not because (as Fox News will happily tell you) people are lazy and entitled.
I am a renter myself, and I don't watch Fox. I much rather prefer living in cities(and I lived in expensive ones) where I can budget my rent on the free market, rather than be at the mercy of black markets, wait lists of 20 years and decrepit buildings that barely pass code.
The market for housing in a metropolitan area cannot be organized. Everyone is a landlord. If rent spikes to 100k a year, I'm going to throw away shit so I can rent my 2nd bedroom for 50k, and the cycle continues down.
“Government” isn’t a magical boogeyman coming out of a magical swamp to make magical laws. It’s literally NIMBYs, which are largely current property holders which are also in large part landlords. They’re playing the game to the full extent, and it’s high time they are contested in the same game.
I'm sure it works for the residents of Stockholm, but not so much for all sorts of people who would move to Stockholm but can't wait in line 10 years for an apartment.
Yes that's right! 10 years is an understatement. It means simply that the city is "locked out" for everyone but locals who inherited rental contract from their grandfathers, or multimillionaire cash buyers.
Why do you want successful cities to stop growing? Especially ones that have zero desire to stop attracting employers. Offices take up very little space so if you let developers build commercial real estate you will always have a mismatch between housing and jobs if you stop building residential real estate. This will displace lower income people in the end and lead to gentrification rather than a stop to growth.
Having a mechanism to reduce growth is actually great.
It's hard to increase transportation infrastructure in a built-up area. And when you do, everybody says it didn't work because traffic is still bad or trains are still overfull. But they never notice that population increased during construction. If you could stop growth, then your transportation needs stabilize.
Doesn't really feel fair to me though, because it's so hard to move into the closed city.
Personally, I'm a fan of limiting rent increases to a max of something like 5-10% per year. Not so much that it's a total hardship to deal with a max increase; not so little that landlords have to do max increases every year or get way off market; also not so little that a landlord can't catch up later if they purposefully lag on increases to keep a preferred tenant.
I don't think anyone said they should. However, to the extent that the housing policies are determined by larger-than-local government agencies, there shouldn't be some citizens getting a large benefit and similar citizens getting the shaft.
Because of economies of scale, the incremental increase in tax revenue that a new resident provides is more money than it costs to have one more resident in the city.
Sweden is often used as a case study in how rent controls lead to housing shortages.
Rent control tries to make housing more affordable by reducing the cost, which immediately reduces the supply. At that point, rent control ends up increasing housing costs.
Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing.
> Theory and real-world case studies mean that this is so obvious, that I just assume anyone that's passed economics 101 and is advocating for rent control is either grossly incompetent, currently very drunk, or is disingenuous and actually wants to use the power of the government to make sure other people cannot obtain secure and stable housing.
Or they are one of the lucky few living in a rent controlled apartment.
Well, remove democracy and what people want on a local level (preserve and grow value of their owned homes by limiting development) will not matter - and developers will built out so many homes housing will become affordable. Like in Russia for example - housing is cheap there exactly because it is an industrialised nation without democracy.
Remove market economy and the Party will distribute housing as it sees fit, and you have affordable housing, like in the Soviet Union.
Otherwise, inevitably housing will cease to be accessible once a bit more than 50% of population is happy with their housing conditions - then they will vote for people who will help them build value of their house by locking out the underhoused minority.
I can't see a fix to this that won't undermine either democracy (by somehow making people's political choices matter less or not at all, openly or covertly, aka "Putin elections"), or market economy. Both of which sounds worse than just putting up with unaffordable housing.
If it weren't legal, we'd instead just see deals like this go to friends/family of the owner, or the payment would be under-the-table instead of an upfront broker's fee.
My point is not that it should be legal (as an NYC renter I’d be glad to see a cap on broker’s fees), but that we shouldn’t delude ourselves into thinking that artificial price ceilings would work if only we plugged one last loophole. For every loophole you plug there are two more. This is not true of, say, murder!
Whenever we artificially manipulate the market with ceiling prices, it necessarily means there will be some demand unfulfilled. A better approach is to build enough housing to satisfy the demand.
I think the article isn't about whether or not this is a good deal — rather it argues that people who actually need it have to pay extraordinary fees (for the average Joe, not tech folks on HN) in order to join the market. Most people don't have 15$k laying around.
For real. That's almost free by NYC standards. Even if I wanted to move out I would keep renting so that I could let family use it or something. Plus, if historical trends on rent stabilized units are anything to go by, it will only get better.
Honestly, I don't mind brokers. I think many people feel wronged by them because of huge bills for little perceived work, but they're not exploiting any monopolies or regulations to exist, like say for example a lot of trade workers do. If you're concerned about NYC housing you should be advocating for ways to make more housing, not killing the market with rent stabilized units and regulations.
> Even if I wanted to move out I would keep renting so that I could let family use it or something
Example of why price controls on goods always seem to produce shortages of that good. Solving issues on the supply side is generally a better idea than fiddling with market prices.
A 15k personal loan at 12% (no idea what loan rates are now, but 12% seems high enough) with a payback period of 3 years would be an extra $600/mo. Heck at 1 year its an extra 1,332.73/mo - you would still come in under median.
Because everyone's rich enough to have an Amex account, and no one ever turns over their car title or uses a payday lender to make rent. Everyone is exactly like me, a rich white guy living a casually luxurious lifestyle, so how could they not have access to easy and cheap capital.
1) buying to let is even crazier, and requires major capital - cost to purchase is nowhere near actual current cashflow. Even in the Bay Area, when it was running up it was 3-5x rental cashflow to buy. In places like manhattan or the Bay Area, landlords are often only able to justify buying in based on speculative future property values (aka market only ever goes up, and in 20 years this will be all fine).
As to if they can actually ever make money on this? Good question. If it was clearly penciling out in a spreadsheet though, competition would ensure it wouldn’t for long in the most in demand markets.
Other markets are saner because there is less competition, usually. This started changing nationwide about 10 years ago, as competition nationwide got out of hand due to easy money.
2) renters do all sorts of crazy bullshit sometimes, and unless you’re really good at managing it as a landlord you’re screwed. Sometimes even then you’re still screwed. Markets like Manhattan especially so.
Landlords which know how to manage these kinds of tenants often turn these kinds of tricks against all tenants to increase returns, and the courts adapt to be even more tenant friendly in many areas or political pressure makes things like rent control inevitable. Which amps up the game.
Eventually market conditions shift (either due to changes in money supply, or because the well is ‘poisoned’ on the landlord or tenant side), and we see things like 70’s era NYC or SF which nukes most of the property values for so long, the speculative players are forced to give up - either because they are broke, or because they have ‘greener pastures’ they are pursing. In RE, usually the former due to market liquidity issues.
It's expensive these days. I lived in one of these buildings for 11 years: https://www.bhsusa.com/brooklyn/brooklyn-heights/60--66-clar... Now the set of 4 buildings is on the market for $25,000,000. If you click to the brochure, you can see the rent that each leased unit pays, about $100,000 per month across the set of buildings. Property taxes + other expenses are around $400,000 a year. So without a mortgage, you make about $800,000 a year. With a mortgage (0% down, 6.5% interest, perhaps not completely realistic but ballpark), you lose about a million dollars a year.
That's about the average situation in NYC. Brooklyn Heights is obviously extra-expensive because it's nice and is a 20 minute to commute to pretty much anywhere in the city, but the math is about the same everywhere.
Meanwhile, if you're just going to go for a single unit in a new building as an investment property, budget on about $1.2 million for a 1 bedroom that you could MAYBE rent at $5k/month or $900k for a studio that you could rent for $4k/month. 20% down on a $1MM apartment, you're looking at a mortgage of $5k/month. Add property taxes, $6k/month. Add insurance, $6100/month. So you need to come up with $1100/month as long as your tenant pays on time. That's not a monthly loss per se, you get to keep the principal and recover it when you sell. But how much money you make really depends on your access to capital. I recommend being rich in advance of your foray into becoming a landlord in NYC. If you are buying these units at 0%, and many people are, this is a very nice racket.
Personally, I wouldn't do it. A lot of the more affordable units in NYC are in co-ops, which often prohibit renting (to keep prices lower). So the market has already priced in that "investment property" premium for condos, in the area of 20-30%.
3.2% yield which likely is real yield as it grows with inflation in the long term. And the underlying property price also growth with inflation (with incomes, really, so higher than inflation).
So 3.2% real yield - which is not much lower than the earnings yield on stocks, but with the ability to go heavily leveraged without being exposed to the rapid margin calls in equities. (It's no surprise that many multi-millionaires got their start by developing/renting out property.)
In my section of Germany, housing is even worse with rent caps and tenant rights, plus a lack of housing. Tenants are hard to move on, so landlords are painfully cautious about getting the right tenants - and there isn't a lot of money to maintain properties either, it seems. Our place has the worst decor and electrics, terrible ventilation and mould. And I think we're at the high end.
Systems geared up for incumbents, like "council houses for life" in London, ought to be sunset, just to get housing moving again. I don't think rent control works well, but I don't think open market rent works either. Anything critical with a limited supply needs to be externally regulated in ways that keep the wheels moving.