Don’t allow companies to own residential properties… it’s that simple…
And non US citizens.
As a US citizen living in another country and trying to buy a house, you want me to have to change my citizenship to do this? 0.o I’ve lived in Japan for the better part of a decade and am trying to buy a property where, hopefully, my wife and I can live for the rest of our lives. Having to become a citizen in Japan (which does not allow other citizenships except in some very specific cases) is a non-starter for me. I need to be able to freely enter and leave the US in case my family have any issues. Why should I be fucked like this?
They probably mean non-residents instead of non-citizens. Would make more sense that way at least.
And you could make that non-local residents and it would still work out well. Stop letting foreign and domestic “investors” buy up all the housing in cities they don’t live in.
Yeah, that would be reasonable.
I mean, housing issues and challenges in Japan are likely different than in the US.
If Japanese law required you to be a Japanese citizen in order to buy a home, then yeah, I’d expect you to become a citizen to get a home.
I just happen to live in Japan, but you can reverse the countries in my example if it helps. If I were a Japanese citizen living in the US almost 10 years and wanting to just buy a home for my family, I think it’s unreasonable to have to give up Japanese citizenship just to get a house in the US. Using my example, I would not give up JP citizenship because I have aging family I need to have unlimited access to in Japan.
I’ll be honest, I don’t think it’s unreasonable to need to go through some form of certification to purchase residential housing.
To use US terms, as those are what I’m familiar with, a greencard would be sufficient, since it would allow you to legally live and work in the country.
I would say “valid status of residence/visa” (greencard/permanent residence can be super long processes of over a decade), but yeah that makes sense to me.
Just a visa would be too low of a bar, imo. Show you’re a permanent resident and planning to stay here.
Non-residents, not non-citizens.
Who’s going to make apartment buildings? Isn’t that the best solution towards making more housing, to have compact apartment structures? How do you think those get built?
You could make every one an HOA and have it be condos.
Honestly I don’t think outright prohibition of companies owning buildings is good, but there needs to be a better mix of ownable housing units to rentable ones. There also needs to be better anti-trust enforcement so that three companies don’t own and price control nearly all of the housing in a city (I think there’s maybe six companies in my city that own almost all of the apartment complexes).
They should mandate that a certain subsection of newly zoned housing be owned by people instead of corporations. It would be a much better, much more competitive market for housing if it were possible to own apartments because you could get small time landlords in those buildings as well as people that own their places outright.
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It is property…for residents…
I supposed we can both find sources to say whether it’s commercial or residential. https://www.google.com/search?channel=fen&client=firefox-b-1-d&q=are+apartment+buildings+residential+real+estate
I guess my question is, what’s the point in arguing about this? Are you saying the only housing corporations should own are apartment buildings, the biggest most efficient source of housing for individuals in large cities?
My bad I thought residential prop meant single family homes.
But I didn’t say anything about who should own apparements. My only point was when people refer to residential property that refers typically to single family homes and is likely what op is referring to as well.
It’s literally the most residential of all possible properties, what are you talking about?
Already apologized, look farther down.
That simply results in shitloads of homeless people
Good thing our current system doesn’t.
Good thing our current system doesn’t.
By comparison it does not
That is a bad idea as owning a house isn’t right for everyone.
While that may be, companies should not be able to have a stronghold on what should be considered a basic human need. Housing is already in pretty short supply, and it’s worsened by the fact that these companies buy a considerable chunk of this short supply and then turn the purchased properties into rentals.
“buying one home and turning it into 4 home reduces the amount of homes” and other fun takes.
“Buying a house and renting it out to families that were wanting to buy it outright in the first place” FTFY
Oh I’m sorry, do 4 families generally get together and purchase a house as a collective?
People buy parts of buildings all the time. They’re called condos and multiplexes.
“Buying one home and charging 4x as much for it” is the actual problem, but I suppose you have your head in the sand by default when the large boot of capitalism is on your neck.
Strong disagree. People having homes where they otherwise would not is a feature, not a bug.
If you want prices down, you must increase supply
The idea being proposed here doesn’t outlaw renting, only corporate ownership of residential property. It means that the people you’re renting from are human beings who will eventually die and either be estate taxed or the house will be sold, rather than a corporation who owns your property until they go bankrupt or until the sun explodes.
Bingo. A lot of current problems get better by:
A) 100% death tax on all money over 100,000,000.00 at time of death.
B) Closing loopholes that allow hiding that kind of money in unnecessary corporate assets or non-charitable trusts.
C) Cracking down on what qualifies as a charitable trust. Want to leave that money to trust that makes the world better, better have numbers to prove it or it gets disolved automatically into other more effective charities.
D) Automatically splitting every corpportation the moment it crosses a reasonable value threshold.
So corps pay higher taxes on property vs sole owners?
Fuck you you shouldn’t own a goddamn thing with that mentality.
You bootlickers are the reason shit is bad and was always bad.
Solid intelligence response there
Parse their response, instead of just the tone. That person’s mad and sad both at how tough living has become.
We’ve all had that one lazy piece of shit roomate that never cleans up after himself and I bet it’s him.
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Lol no one gets forced to buy one just because prices become realistic, wth
My understanding is that rent control backfired pretty spectacularly in the long term.
The better plan here would be to stop companies from buying residential properties, to incentivized the conversion of commercial properties into apartments, to penalize banks and individuals who are sitting on unused residential properties.
Oh, and wipe out all student loan debt so that younger generations have a prayer of buying a house someday.
My understanding is that rent control backfired pretty spectacularly in the long term.
Yeah, the basic problem with rent control is that it creates the opposite long-term incentive from what you want.
Rentable housing is like any other good – it costs more when the supply is constrained relative to demand, costs less when supply is abundant relative to demand.
If rent is high, what you want is to see more housing built.
What rent control does is to cut the return on rents, which makes it less desirable to buy property to rent, which makes it less desirable to build property, which constrains the supply of housing, which exacerbates the original problem of not having as much housing as one would want in the market.
I would not advocate for it myself, but if someone is a big fan of subsidizing housing the poor, what they realistically want is to subsidize housing for the poor out of taxes or something. They don’t want to disincentivize purchase of housing for rent, which is what rent control does.
Where’s all this housing being built as a result of sky-high rents? If they are being built, they’re being snatched up immediately by “investor” parasites.
New construction is happening. Just not as fast as we need it. And the cost of materials isn’t helping.
What are you referring to? I don’t see all this new housing being built. I only know about three active sites in my city. I also know that our local zoning board has been rejecting applications because of neighborhood character.
I would run to serve but it’s an appointed position. Which yeah not great.
I also know that our local zoning board has been rejecting applications because of neighborhood character.
Sounds like you already know what one of the biggest issues is.
It’s so bad in California that the state legislature has been passing laws directly addressing city zoning boards that won’t approve housing.
If you subsidize housing you create increased demand for housing, ultimately leading to rent going up for all.
Zoning reform is the solution. Cities are no place for single-family exclusionary zoning and height limits on housing
If you subsidize housing you create increased demand for housing, ultimately leading to rent going up for all.
So, as I said, I’m not an advocate of subsidizing housing out of taxes. I’m just saying that people who are arguing for rent control are arguing for a policy that tends to exacerbate the problem in the long run.
Subsidizing housing doesn’t normally run into that, because it’s normally possible to build more housing.
It is true that that’s not always the case, and one very real way in which that can not be the case is where there have been restrictions placed on constructing more housing. If housing prices are high, the first thing I would look at is “why can’t developers build more housing, and are there regulatory restrictions preventing them from doing so”. It is quite common to place height restrictions on new constructions, which prevents developers from building property to meet that demand, which drives up housing prices (and rents). In London, there are restrictions placed that disallow building upwards such that a building would be in line-of-sight between several landmarks. That restricts construction in London and makes housing prices artificially rise. Getting planning permission may also be a bottleneck. I agree with you that that sort of thing is the thing that I would tend to look at first as well: removing restrictions on housing construction is the preferable way to solve a housing problem.
I remember an article from Edward Glaeser some time back talking about how much restrictions on construction – he particularly objected to the expanding number of protected older, short buildings – have led to cost of housing going up.
How Skyscrapers Can Save the City
Besides making cities more affordable and architecturally interesting, tall buildings are greener than sprawl, and they foster social capital and creativity. Yet some urban planners and preservationists seem to have a misplaced fear of heights that yields damaging restrictions on how tall a building can be. From New York to Paris to Mumbai, there’s a powerful case for building up, not out.
By Edward Glaeser
It looks like it’s paywalled, so here:
Ah if you meant subsidizing housing construction I’m 100% with you
Part of the problem with rent control is that it doesn’t subsidize the building of new housing. The times in which housing prices dropped in the USA were typically when a government either opened up land to development, subsidized the building of housing, or built the housing themselves.
My understanding is that rent control backfired pretty spectacularly in the long term.
There are critiques against rent control that have persisted for decades that are now seeing a growing body of counter-evidence that it maybe isn’t that bad after all. Hence the resurgence of rent control being suggested as a policy tool. It makes sense that the myth that rent control is bad has persisted for so long - high earning economists (yes, they’re very high earners) who are thus more likely to own rental units have an incentive to publish research showing that policies that harm their rental income are bad, and have less incentive to publish research that shows policies like these benefit the renter over the landlord.
Here’s a great article by J. W. Mason, who has a PhD in economics, who goes over more recent research around rent control. He shows that it’s far more nuanced and less clearly “bad” than right wing economists have been trying to push us to believe.
https://jwmason.org/slackwire/considerations-on-rent-control/
This better matches my understanding than OP’s take. It’s not necessarily that certain folks were being disingenuous (though of course with financial matters that’s also common), but more so that rent control is designed to help people closer to the bottom of the financial ladder, and those people are also disenfranchised in other ways, including their results bring unreported or thrown under the rug.
The difference now is that the housing system is so screwed and skewed overall, rent control would likely benefit far more folks than those at the absolute bottom of the financial ladder – that, or the wealth gap is just so large that there’s a huge number of people at the bottom, all roughly equivalent to each other given how rich the rich have become.
test
Who told you rent control backfired? Cause that’s a lie. It was just never adopted as widely as it should have been, and rich owners always have the ear of lawmakers … the same can’t be said of poor/working poor people.
There’s a supply shortage.
You can’t sprawl your way out of this problem, despite Texas’ best efforts. All you do there is create traffic.
The answer is simple. Legalize housing. More triplexes, more quadplexes, more ADUs, 5 over 1s, more of everything. Developers want to fill this demand. They can’t. They’re hamstrung by city ordnances and state laws that often only allow apartments or single family housing. Not everyone wants or needs a separate house. Make rent boring again and the corporations will lose interest.
Eh, I mean there is a record number of vacant homes at the moment. The investor class owns a fuck load of housing that could be actually be used to ya know, house people. I’d bet If a large tax was placed on 2nd homes /income property, there’d be no supply shortage. So many people bought homes for AirBNB, and rent seeking in the last decade that in years past would be being bought by families. I know in my town they’ve been putting up high rise after high rise. Rent still goes up because of (imo) artificial scarcity. Landlords are using software to fix price on rent, banks intentionally trickle out foreclosures to not flood the market, companies with vacant units are not allowed to drop price of rent and keep pricing high because of financing agreements made when the building was built. Most of the luxury apartments that have been built are maybe 30% full. No one wants to live in a duplex/ triplex /multiplex. People want houses, and there are none because companies like Blackstone backed Invitation homes and Chinese companies/ citizens buy them all to rent seek.
The ripple effect from these rate hikes might help drop rents because a lot of commercial loans are ARMs, and when that rate adjusts, landlords are going to feel pain, but they may just pass it on to their tenants and make housing affordability even worse. We’ve allowed too many people to commodify what was once viewed as a necessity, and the single family home is now an investment vehicle for big business.
The real estate market as a whole feels like a giant game of hot potato at the moment. Something has got to give. The America of today is so much worse than the one I grew up in as a result of all the BS we’ve allowed the investor class to do. It needs to get reigned in somehow because imo the American dream is dead as a result.
there is a record number of vacant homes at the moment.
We’re currently close to the record for all time lowest vacancy rates. We’re at 6.3%. The highest (over the past 70 years) was in 2009, at 11.1%. It got down as far as 5% a few times. I downloaded the raw data and it says the average is 7.28%
https://fred.stlouisfed.org/series/RRVRUSQ156N
There’s a popular image of a bunch of Scrooge McDucks sitting on giant inventories of housing but the evidence doesn’t support that. Someone saying, “I saw a bunch of empty houses.” is exactly as logical an argument as a climate denier saying, “It’s been cold all week.” That’s just an anecdote.
The data is very clear on the matter. We don’t have enough housing.
A vacant home doesn’t mean affordable or accessible. Single family homes are stupidly inefficient and expensive or in middle of nowhere. Dense cities are the only solution.
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The core problem, which causes that shortage, is that we have conflicting views on what housing is for.
On one hand, we want housing to be a right. On the other hand we want our houses to be good investments.
Those are conflicting goals. We need to pick one and be ready to sacrifice the other.
If you want your house to be a good investment, it needs to appreciate in value at a rate higher than inflation. The only way for that to happen is if housing keeps getting more expensive on a real money basis. That’s a fancy way of saying that housing will be a bigger and bigger chunk of income.
Every single policy that reduces the cost of housing also degrades its effectiveness as an investment. If people can get housing any time they want, they have no incentive to pay somebody a bunch of money to someone hoping to fund their retirement by downsizing.
Your suggesting to legalize more housing will destroy the ability of homeowners to make a profit off their homes. Even though I stand to earn huge amounts of money from the appreciation of my own house I would support that, but I’m afraid I’m in the minority. The US has a 65.9% home ownership rate and for most people their home is their single biggest asset. If we address the housing shortage those people will all see their single biggest investment asset drop in value.
I mean, boo hoo?
I bought a house, not because I wanted an investment, but I wanted a place to live. Fuck the CCP, but man were they on the money saying “Houses are for living in,” their current, ironic, housing bubble aside. Houses are homes. You want an investment vehicle, buy stocks or bonds.
If the people who see housing as an investment are outweighed by the people who simply want an affordable home as a right, it’s become an unsustainable and unjust privilege and needs to be rectified.
Also, I think this ignores the larger factors of: poor zoning due to NIMBY-friendly policies at the local level, and corporate greed as companies, not people, buy up supply. Solve these two problems and we don’t have to pick between housing as a right and housing as an investment.
The problem with this plan is that it assumes that we’re only hurting some cigar puffing Wall Street fat cats but, in reality, the pain would be felt much more broadly.
In the US, the majority of people own the home they live in. https://www.propertyshark.com/info/us-homeownership-rates-by-state-and-city/ Those aren’t big corporation or greedy landlords, they’re 50+ percent of the population of each state. Some of those people are billionaires and many of them have below median income. https://www.visualcapitalist.com/chart-assets-make-wealth/
Those super wealthy people that we’re happy to throw under the bus don’t have their wealth tied up in their homes. Their real estate investments tend to be small fractions of their portfolios. The ones that would get hit the hardest are the ones with less than $100k. I’m glad that you’re in a position where you can survive a large financial loss on your house but a lot of people don’t have that luxury.
Any plan that just kills their investments without some way to take care of those people will create a disaster. Maybe we could bump up Social Security somehow? That would involve significant tax increases but it could plug the gap.
Huge swaths of our economy are set up to assume that houses are financial assets. NIMBY policies are largely about maintaining or increasing the financial value of the real estate. The corporations buying up all the housing are kind of a red herring. The US has one of the highest owner occupancy rates in the world. There has been a slight (about 1.6%) in non-own occupied housing and only a fraction of those 1.6% are corporations. So it’s technically true that corporations hold more residential real estate but they hold so little of it that it’s unlikely to be a primary factor in home pricing or availability.
As I said elsewhere, the data is very clear on the matter. We don’t have a lot of empty housing inventory being horded by greedy investors. By any reasonable measure, we have a housing shortage.
On the other hand we want our houses to be good investments.
I don’t.
I understand you’re speaking in general terms here but no, i think having housing being tied to investments at all is a terrible idea we’ve just normalized.
The flip side of course we’ve experienced, like 2008 when the market went sour, putting people out of home and destroying retirement funds
I don’t think it’s a good idea either but we live in a society that effectively decided that we do want houses to be investments decades ago. That’s entrenched now and many people bet their life savings on the promise that their house would be a good investment.
If we change that without taking those people into account they’re all screwed. While some rich people would get screwed in that process a whole lot of poor people would get screwed too.
Exactly! We need the missing middle housing.
As someone who worked on multi family property development for fifteen years–for the love of God, force the developers to build to a standard. Simply requiring that the landlords pay all utilities would go a long way toward this, since it would incentavise building a better structure.
more ADUs
This. I own my home and could probably fit at least two ADUs on my property but the permitting fees alone exceed the cost of construction. Not to mention the cost and hassle of obtaining a permit.
2015 - rent was $1200
2017 - rent was $1600.
2021 - rent was $2100 average. I was paying $2400.
2023 - rent was $2500 average. I’m paying nearly $3000.
These are all two bedroom, two bathroom apartments in the same city.
I’ve asked college age tenants who lived here how they can do it. They split it with roommates (2bd/2bath - like four ppl living there)
My city has been even more dramatic.
2016 - $680
2022 - $2200
Over 300% increase in six years.
That’s crazy. I’m in a decent sized city and the average rent for a 2/2 is ~$1800. Hell my mortgage is less than $3k/month.
My PITI for my mortgage is $3350/month. Mortgage is $28xx something. It’ll be nice whenever I can get that mortgage insurance off. I was renting an admittedly very nice 2 bed 2 bath apartment for the same before I bought. Now I have a 3x2 1000sqft rambler and know that, while the mortgage is high, it will be lower than rent in the next 5 years.
that many people in the house has to be breaking fire code…
Your city badly needs zoning reform, not to exacerbate this problem with rent control (further stifling new building)
We should make owning residential, single family real estate for commercial purposes illegal. You own it, you live in it, don’t live in it, don’t own it. That would make gobbling up houses and renting them out unprofitable and force cities to open up multifamily development
That sounds nice in theory but what happens when you want to sell your house?
The only potential buyers would be people who either currently rent or are ready to sell their old house as soon as they buy yours.
What if someone wants to fix it up first? Nope, they can’t do it. It will cut out the flippers but we’ve also just cut out all the renovators and restorers.
We could do something like this (and it may not be a terrible idea) but there will definitely be a cost. If we add that law, all the people who currently own homes (that includes both investors and owner occupiers) will see the value of their real estate holdings drop. In the US, over 65% of people own their homes and for most of them, their home is their single biggest asset. Richer people can diversify more so while this law wouldn’t hurt the 35% who don’t currently own homes, it will disproportionately affect the poorer end of the 65% homeowners (who have proportionately more of their savings tied up in their home).
If we don’t also address that problem at the same time we’ll create a cohort of people who can’t afford to retire because we killed their plan of downsizing when their kids move out and living off the difference.
The only potential buyers would be people who either currently rent or are ready to sell their old house as soon as they buy yours.
What if someone wants to fix it up first? Nope, they can’t do it. It will cut out the flippers but we’ve also just cut out all the renovators and restorers.
Not at all. They can buy and renovate all they want. They just have to sell it afterwards rather than rent it out.
Then you end up with a lot of properties on the market for millions while no one lives in them.
Why would anyone renovate a property if it’s just gonna sit on the market out of reach of potential customers? I would hope that investors would be smarter than that. Like we’re saying, homes should be for living, not for investing. If there’s no pressing need to renovate, then great. Don’t. Whoever wants to buy it as is now can. And if they want to they can renovate what they want at their own pace.
Like now
Fair point. So we cap profit at 10% above purchase price, and hit the renovators with 90% taxes if the home hasn’t sold in, say, six months.
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Then the speculators eat it. This doesn’t make me sad.
We could. Why would anyone want to make those investments once we’ve cut off all their profit potential?
Investors chase profits. We can cut off their profits but when we do that 2 things happen; some of them just leave the industry and some of them break the law to try to get around the regulations. Almost nobody just eats the loss and continues investing.
We didn’t cut off all their profit potential. It’s just limited.
I don’t really see the problem with this hypothetical. Small time flippers are unaffected. 10% or whatever profit is still profit. If it disincentivizes big commercial flippers or investors because they can no longer make “enough” profit, good, that’s the point.
The problem we see when we try to implement price controls is that they inevitably lead to shortages. The oil caps in the 70s are a famous example but the NYC rent controls were just as bad. The standard practice if you wanted an apartment was to look in the newspaper for open house listings that day. You would show up before the open house starts with at least 1 months rent plus first and last months rent as security deposit, in cash. If you liked the place you signed within the first half hour. If you waited someone else took the apartment.
Part of the challenge is that it’s not as simple as a 10% profit cap. What if someone owns a house for 2 years? Do we cap it at 20% profit? Do we index the allowable profit to inflation and then add a “reasonable” offset? Do we want to allow different profit caps for different renovations? (maybe we don’t want to treat swimming pools and solar panels the same way?) How long do you need to live in a house to consider it owner occupied?
As those regulations get more and more complicated you end up with a ton of loopholes. The more you do that the more profitable regulatory arbitrage becomes as a business model.
In general, tight margins favor large companies over small firms. They can operate at such a large scale where they can thrive off of profit margins that would starve small businesses. That’s the general issue with mega-retailers. They operate on single digit margins. Mom and pop can’t streamline their operations enough to survive on those margins.
Our housing stock needs both growth and maintenance. That comes from investment. If we push the private sector out of those investments without replacing them we’ll just end up with a crumbling housing infrastructure. If we cut large businesses out of it government would likely need to take up the slack. And to be clear that government intervention would need to be massive. The real estate market is huge and if we cut out the private sector we will definitely need to raise taxes, by a large amount, to cover it. That’s not off the table but we should walk into a decision like that with eyes wide open.
Exactly.
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No one ha said that they can’t own more than one. They just can’t rent one while living in the other. The vacant one stays vacant.
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I’m assuming OP intends to specifically exclude rental companies. As near as I can tell this plan would also exclude individual renters. Not sure how that would play out if someone wanted to defray the cost of their home by renting out a room or subdividing their home.
Do you not maintain the things that you own just because there will never be a day where it is worth 10x what you paid for it?
Btw I really want to meet these flippers and landlords who are maintaining their homes. Every time I have dealt with one they are obsessed with making it look like the house is great, not actually maintaining it. Oh wow you sprayed cookie dough smell before showing it, hey check out that black mold in the basement that stupidly has fucking sheetrock.
This is the most beautiful strawman I’ve ever seen. Well done!
How about instead of banning it we heavily disincentivize it? After 2 properties you pay 50% in property tax. This allows people to rent out homes to college kids and people saving for a home, without allowing vultures to pick at the bones of the middle class
I live in a rented house, and I’ve rented out a house I owned because I wanted to move and I was underwater on my mortgage. I get where you’re coming from but I do think there should be exceptions. Maybe just capping the rent at 110% of the mortgage payment or 0.5% of the appraised value would be enough to allow some rentals while discouraging people to buy houses just to rent them out.
And cut into profits!? How very un-American of you. String’em up boys!!
Housing should NEVER have been part of determining ones worth or wealth etc. People need places to live…fuck this shit. Idgaf about people that boohoo about selling their home later in life when soooooo many of us can barely afford a rental in shitty areas these days. I have zero sympathy for any owners concerns as I can’t even own and I make more money than I ever have in my life. Can’t win vs the rich bastards that swoop in and pay 100k above asking price and just destroy any chances many of us have at just having a home and a life. Fuck your “starter home” boomer mentality. I want a home to die in someday and it can be the first home I buy if I ever get to
Yet another negative side effect of supply side economics. More money in the investor class than there are good investments. So they dump money in real estate which drives up the price.
We have to wait for the people that love Reagan out of nostalgia to die off. Then we can tax the bloated investor class and have a healthier economy.
It’s more a symptom of artificially low interest rates. A lot of the money currently buying up places to rent them would happily buy mortgage backed securities instead, but that market bottomed out when rates were 2-3%, so they bought property directly instead.
It’s going to take time, but eventually some companies will prefer the low risk 7-10% MBS vs managing property to get roughly the same return if you’re lucky.
More than 30 U.S. economists have signed a letter expressing support for strong federal tenant protections and rent control as housing costs remain sky-high, even amid broadly cooling inflation.
The economists note in their letter, released Thursday, that the median rent in the U.S. “has surpassed $2,000 for the first time, and there is not a single state where a worker earning a full-time minimum wage salary can afford a modest two-bedroom apartment.”
“We have seen corporate landlords—who own a larger share of the rental market than ever before—use inflation as an excuse to hike rents and reap excess profits beyond what should be considered fair and reasonable,” the letter continues. “Renters are struggling as a result.”
The letter’s signatories—including Mark Paul of Rutgers University, James K. Galbraith of the University of Texas at Austin, and Isabella Weber of the University of Massachusetts Amherst—call on the Federal Housing Finance Agency (FHFA) to require rent regulations as a condition for federally-backed mortgages and reject the “economics 101 model that predicts rent regulations will have negative effects on the housing sector,” likening it to typical arguments against raising the minimum wage.
“Empirical research on local rent control policies in San Francisco, CA and New York, NY found that rent regulations lower housing costs for households living in regulated units,” the economists wrote. “In Cambridge, MA, empirical research showed that the repeal of rent stabilization laws resulted in an average rent increase of $131 for tenants.”
Given that “Fannie Mae and Freddie Mac mortgages on the secondary market support nearly half of rental units in the U.S.,” they argued, “Government Sponsored Entities (GSEs) have the influence needed to meaningfully change the trajectory of the housing crisis.”
The economists’ letter is part of a broader push by tenant rights groups and housing justice organizations to secure federal protections against egregious rent hikes and wrongful evictions.
Earlier this week, 17 U.S. senators wrote in a letter to the FHFA that “renters also have too few protections, making them vulnerable to steep rent increases and deteriorating housing conditions—factors that are out of their control.”
“Tenant protections vary drastically from state to state and even sometimes from county to county, often leaving renters without recourse,” the senators added. “There have been repeated reports of investors using low-cost financing from Enterprise-backed loans to buy properties and then sharply raising rents, mistreating tenants, and allowing buildings to fall into disrepair.”
More than 140 academics, over 70 climate researchers, and dozens of local elected officials have also joined the call for nationwide rent regulations.
Tara Raghuveer, director of the Homes Guarantee campaign at People’s Action, said in a statement Thursday that “tenants are coming for rent regulations, and everyone from senators to economists agree: tenant protections are common sense.”
“Due to lack of regulation, affordable housing is lost quicker than it can be built,” said Raghuveer. “Corporate landlords call the shots with federal financing through Fannie Mae and Freddie Mac. That’s why tenants spent this summer organizing to win what we need: federal tenant protections like caps on annual rent increases.”
In late May, the FHFA issued a request for public input on tenant protections at multifamily properties with mortgages backed by GSEs.
Tenants with the Homes Guarantee campaign responded by knocking on more than 4,000 doors at GSE-backed properties and organizing more than 2,000 comments in support of tenant protections and rent regulations.
“The system as we know it today has failed everyday people, many of whom make impossible choices between rent and food, their homes or their medications,” said Raghuveer. “The status quo is not working for the people, it is only working for the profiteers, and it is time for change. It is time for the federal government to make changes to that system, to correct the imbalance of power between landlords and tenants, to protect tenants, and to stabilize the American economy.”
“We have seen corporate landlords—who own a larger share of the rental market than ever before—use inflation as an excuse to hike rents and reap excess profits beyond what should be considered fair and reasonable,” the letter continues. “Renters are struggling as a result.”
Literal rent-seeking.
Rents are out of control, especially in big cities, but come on. Rent control, by all measures and by all historical policies, are terrible.
We don’t need rent control. We need them to stop allowing single family dwellings to be owned by huge conglomerates, and particularly foreign interests. It’s insanity.
I don’t know enough about corporate and foreign home ownership, is it that big of a problem?
What I do know, is government preventing building houses is causing a housing shortage.
Investors buy on the order of 25% of all residential real estate available. Big money uses its leverage to do this in order to raise the prices (due to the scarcity that they are helping create), which they then use to drive up rents or flip properties at a profit. This cycle has been on repeat for several years now. This is why you see people doubling and tripling up living together and it won’t stop until they can’t do it anymore or our legislators decide to do something about it which I don’t even know why I bother saying it like there’s any chance they will.
Foreign ownership of US property is certainly a significant percentage of that equation, but there are other reasons why its important to pay better attention to foreign ownership. Allowing foreign interests unrestricted access to property in the States ends up giving us stupidity like Saudi Arabia feeding its cattle alfalfa grown in Arizona. One of the most water-intensive crops in existence that its own government won’t allow it to grow itself, is grown instead in our desert, while our own citizens get their water cut off.
Edit: it may technically be “supply and demand” when 25% of everything available is bought with the intention of making a profit on it rather than providing a place to live - but it isn’t beneficial to the citizens of this country when the whole world and all its big business interests can compete with individuals to buy housing.
Yes, lack of housing is the bigger issue. Here in the Boston area, it’s pure supply and demand. Neighborhoods are full of triple-deckers just off the city center that could be denser apartment buildings. Landlords can charge whatever they want, because they know that anyone who wants to live in the area will have a hard time finding another place.
There’s also the question of transit infrastructure. Even with less dense housing, if there were easy ways to get around other than cars, proximity would be less of an issue.
because they know that anyone who wants to live in the area will have a hard time finding another place.
I mean, you’re just saying supply and demand still. They’re charging that because that’s what someone is willing to pay.
Even with less dense housing, if there were easy ways to get around other than cars, proximity would be less of an issue.
Agreed, the U.S. as a whole has had incredible incompetence with government officials regarding public transit. If we had reliable train and bus systems, we’d be in a much better position.
Terrible for who?
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Rent control doesn’t fix the problem of inequitable ownership of housing or the bad incentives that prevent the building of more housing or the lack of support for public housing. Rent control is a bad bandaid
It helps remove the incentive to buy up all of the single family homes. The calculus is pretty simple -
- buy a house
- rent it
- pay the mortgage, insurance, and maintenance with the overinflated rental costs because everyone colluded to jack up rental prices across the board
- eventually own the house entirely off of the back of renters
- repeat
Renting a home shouldn’t cost enough for that cycle to be self sustaining.
I work in municipal development.
100% of the single-family home projects that have been proposed in my area for the last year have been rental-only communities.
Like - they don’t even want to give the houses individual water meters. They want to hook them all together, which means they can’t even be converted down the line to something else without digging up all the damn infrastructure.
I’ve visited some friends in those rental only neighborhoods. The lawns are all trashed. The neighborhood was less than three years old but it was already sliding toward a slum because of the clear lack of ownership by the occupants.
Honestly I can’t believe that part of the rent didn’t go toward neighborhood wide lawn care.
I don’t think it actually fixes that. Rent control numbers are in the hands of politicians who may just act as toadies for landlords. Maybe they’ll control rent on the higher side some but ultimately they have an incentive to keep that cash flowing.
The only way rent covers mortgage is if a double rental unit.
Having money gets you no PMI and better interest rates. It’s cheaper for someone well funded to buy a house than someone who isn’t. I’m not saying that it’s a slam dunk rent is covered, but it can be a lot closer than you’d expect.
It’s not without risk though. The renters could damage the house. There will be broken appliances and roof replacements. You still have property taxes and maybe HOA fees.
Even if it’s half a house for free, that’s a pretty strong addition to your wealth management.
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There is no way the corporate-loving leaders of our country will agree to this, but I wish them luck anyway.
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It’s also partially pricing in the risk of another eviction moratorium. It’s still recent enough in landlord’s that the government could take away their recourse for non-payment.
Rent has been high for a LONG time… and yet somehow it keeps going up. I’m very fortunate in my rental situation… but I do see the other side of the crunch, which is LIFE is fucking expensive. Every last thing we do these days is expensive. When you are getting squeezed in every single direction…
I just got a 24% raise. Went to negotiate it lower and they basically just said “the market is the market”
I’m not getting a 24% better apartment. Their property tax has gone up only 6.9 % and I know based on two employees their labor costs didn’t change.
The sad thing is moving to a slightly cheaper, and much worse, apartment will cost me about the same over the course of one year as staying. Because of paying a deposit and pet deposit etc
I just got a big raise and it’s all gone to rent now. One step forward one step back for a decade I feel like. Doubling my salary in 5 year means nothing to my quality of life
Foreign investors and real estate speculators are squeezing the middle class dry. The only options out there if you don’t want to live in the middle of bumfuck nowhere are either really really old properties, really really shitty properties, or too far above your means to be able to afford it.
Renting should be the most affordable option, yet if you actually look at the numbers, you are paying almost as much as the value of an entire mortgage with one monthly rent check in some areas. Properties built in the 60’s that are falling apart and lacking modern amenities should not be going for $2,500/month, but that’s the reality I live in right now. I’m on the fucking brink and I’d do anything to have a chance at climbing on the real estate ladder right about now. I don’t care if my house never gains a cent in value, at least it would be mine.
I manage the business lending department at a credit union ($400MM in assets) and lately we’ve just had a ton of investors looking for single family homes. For the most part, they’re all just couples looking for properties and they only have a few of them but we also have some realtors buying up a bunch of them. Looking for a new job solely because of that. Feel like I’m contributing to the lack of affordable housing. I liked the job more when we were doing loans for farmers/truckers/commercial real estate/or people that needed equipment. I hate dealing with single family homes.
We need legislation now.
50% tax on any property past your 2nd. Let people downsize and rent their home to young families, while buying a condo for retirement or whatever. But if we keep on this path we will truly be living our entire lives as a subscription model and never own a thing
It’s been the case in my town for decades that a mortgage is much less expensive than rent. The only way renting makes sense if you don’t plan to live here more than a few years or don’t want to deal with maintenance and taxes.
If foreign investors were a serious issue, local legislation would have already solved the issue. This is all about domestic greed.
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Rent is inherently predatory
No it’s not. Just because you don’t like it doesn’t mean it’s inherently predatory.
I have to move to a city for 6 months, should I have to buy a house and sell it during that time? I need to rent, it gives me the flexibility without having to shell out capital or get in debt to live.
As with everything, it can be bad, especially when the government restricts building of houses so much, but my buddy buying a house, fixing it up and renting it out isn’t malicious.
What’s your alternative to renting? Government owns all houses and gives them out for people to live in for free?
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Having social housing or low-cost rental housing owned by the government with an option to purchase does not sound at all bad.
We have social housing for low income people, is that not enough? Do we just need more? How much more?
https://en.wikipedia.org/wiki/Subsidized_housing_in_the_United_States
Have you heard of the term the ‘projects’ - it’s provided housing, but many of the subsidized housing areas are more like a 3rd world country than our prosperous 1st world country. Is this the policy you’d like more of?
My biggest head scratcher now that I’ve bought a house is “huh, my mortgage is locked in now, no matter what the market does… Why did rent keep going up if my landlord’s mortgages were locked in?”
I honestly don’t have a good answer, I could be looking at something perfectly explainable. But to me it seemed like they raised rent not because costs went up, but because they could. Why not. Everybody else is doing it.
Mortgages are locked in. Taxes, insurance, utilities, maintenance/upkeep are not. All of those things have increased since I bought my house a year ago. Rental properties experience the same thing.
My landlord’s taxes went down, I pay for utilities, not sure about insurance, as for upkeep I will let you know when I see that happening.
Property taxes went down? I doubt that. As far as upkeep, if the furnace goes out, who pays for that? The property owner. That’s what I meant.
We got federal money for Covid and the commerical sector is doing well. Pretty sure the furnace is fine, but it isn’t like I have lived here for multiple years.
My biggest head scratcher now that I’ve bought a house is “huh, my mortgage is locked in now, no matter what the market does… Why did rent keep going up if my landlord’s mortgages were locked in?”
Property taxes, market rate, costs to repair and maintain, interest rates increasing. How much money, beyond your mortgage, have you spend on your house since you moved in?
Less than my apartment ever was 😜
And what’s especially nice is everything I buy and repair goes to me, belongs to me.
Sure I had to buy a washer and dryer, lawn mower, more furniture, etc, but that’s all mine forever.
The only cost that’s higher at my house than my much smaller apartment is utilities.
Less than my apartment ever was 😜
How much?
A few hundred a month less. I’m not suddenly drowning in money, obviously, but it’s interesting paying less for much more, and that money actually benefitting my net worth vs being flushed down the toilet
See, you can’t even answer a simple question.
You weren’t actually asking questions to gain knowledge, you just want to hide the facts so it looks like you’re right. Home ownership is expensive, and for most people, isn’t ideal, renting is a huge need on our society so I don’t have to give up 50k cash right now, so I don’t have to pay 15k/yr in property taxes, a 20k water heater bill randomly and I can move next money if I want to. You being willingly ignorant to those don’t change the facts.
I would rather pay the cost of service to the government than my landlord’s mortgage
Just curious, why? What difference would it make for you? Many of these mortgages are government funded anyway. I don’t rent anymore but my government is far more inept and corrupt than any landlord I’ve ever dealt with. Just my experience though.
What difference would it make for you?
Well, paying an at-cost price would mean it is inherently cheaper as the government wouldn’t be trying to turn a profit, merely charge an amount that compensates for upkeep.
Many of these mortgages are government funded anyway.
But is still building equity for a private individual.
my government is far more inept and corrupt than any landlord I’ve ever dealt with
I have a say in my government though, at least theoretically. I think housing (at least primary housing) shouldn’t be a for-profit industry, so I advocate against it via my government.
the government wouldn’t be trying to turn a profit
lol.
But is still building equity for a private individual.
With risk attached, yes.
I think housing (at least primary housing) shouldn’t be a for-profit industry
Agreed. Nor should food, water, electricity, health services, etc. but here we are.
I would rather pay the cost of service to the government than my landlord’s mortgage
So you want housing as government controlled? How much? 100%? 80%? 50%? How much private residential property should be stolen by the government to achieve what you want.
How much private residential property should be stolen by the government to achieve what you want.
wow is that the best strawman you could come up with? Public housing shouldn’t exist because *checks notes* it is literally impossible to achieve without stealing existing homes? That’s how you’re gonna present your initial argument? Be better sporto
That’s not really reflective of the market in reality. Rent in a competitive market (I.E. anywhere people want to live) tends to hover around the cost to own, buying with 20% down, plus property tax and mandatory homeowners insurance required by the mortgage holder.
In fact, usually it’s cheaper to rent than it is to buy with only 20% down and good credit.
This is because people do this calculation, come to the conclusion “it will cost us a little more, but we get to own our dwelling, our payments eventually go to principal (though this is rigged by the banks too), and hopefully the market goes up and we get equity”
Yes, the market fluctuates, particularly in economic crisis. But it teeters back and forth based on the costs to buy and rent. Because if rent exceeds the cost to buy, investors snap up property just to rent it out, and that raises demand on real estate to the cost goes up.
The rates going up as fast as they have when prices are still high have killed buying as an alternative to renting in my city.
I feel for people who weren’t “smart enough” to buy during the pandemic, because unless prices, rates, or both drop dramatically, it looks like they may have been permanently priced out of buying and renting is only getting less affordable.
I agree. It sucks all around right now for anyone on the market to rent or buy. We’re all squeezed. Only people that had the luxury of owning and/or capital and foresight to invest are happy right now.
The wealth divide has only increased substantially.
But that doesn’t mean that rent is “predatory” except in the cases of long time owners hiking rates when their costs have stayed the same. The reality is that rent is closely related to the current cost of buying at any given time.
But that doesn’t mean that rent is “predatory” except in the cases of long time owners hiking rates when their costs have stayed the same. The reality is that rent is closely related to the current cost of buying at any given time.
Not all landlords are predatory maybe, but at least in this city the overwhelming majority of them are. They’re also like a half dozen corporations that hold most of the apartment buildings. They raise their rates dramatically like clockwork even though I’m in California and we have Prop 13 which holds their tax raises to very low percentage increases yearly.
I would say that for the most part, yes, it has a relationship to what it would cost to buy the same property…but it’s location dependent. You can’t (for the most part) buy an apartment here. It’s almost certainly the case (I’m only not 100% sure because a lot of the apartment complex holding companies are private) that they have low rate mortgages or no mortgages at all on the buildings, and they charge more and more as time goes forward despite their costs not really increasing.
We’re entering a neo-feudalistic economy and while yes, again, there’s some relation to the cost…a lot of it is just straight up greed.
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Your use case reflects what I said exactly.
For someone to buy your condo today, they will be signing up for a mortgage whose monthly cost is near the going rent price. And most likely, more than the going rent price.
If they were to just buy and rent it out, they will likely be doing so at a loss.
The market going up or down after the purchase of the property is independent. It may go up, it may go down. That’s the gamble you make if you’re doing it as an investment.
Your experience happened to take place at an extraordinarily good time to already own property., and FOMO was certainly fueling the frenzy during the peak.
Whether that continues to be the case is unknown. Economists are all over the map.
It made you more rich on paper, but the reality is that you aren’t in the same boat as landlords. The reason is that if you live in your property in order to realize the profit on it you’ll have to sell it and move somewhere less expensive (i.e. somewhere likely less desirable).
Prices in real estate going up only really benefits real estate tycoons, the local government (depending upon location), and other side players in the market (e.g. real estate agents). For the rest of us, if you sell it just means that you have to turn around and buy in a more expensive market. Also (depending upon location, California properties aren’t completely re-assessed for taxes until they change hands) it hikes your taxes.
As a single property owner in California, I’m rooting for prices to drop so I can upgrade and still pay the same amount of taxes (or less).
I wouldn’t bet on it happening though.
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OK but we have more empty houses than homeless people. We don’t need more houses. We need to stop wasting resources for the sake of capitalism and stop letting people die for it as well. There is going to be a point where people start setting fire to vacant houses in protest. It is amazing what millions of desperate people will do when their screams of frustration go unheard long enough.
This is the chaos that our leaders secretly want. Otherwise they would have to be abysmally stupid. There is no excuse for ignorance in the information age.
we have more empty houses than homeless people
This is true, but very few of those houses exist where homelessness is a major problem. Location plays a huge role in someone’s life and we can’t just ship everyone that’s homeless or struggling to a dying small town in the US.
The lowest non-condemned house in my city is currently listed at over half a million dollars. There is a three story office building in my block that has been empty since March 2020.
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Pity we don’t have people whose job it is to do plumbing work. Nope, doesn’t exist.
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800 billion on the military could probably be enough to fix up all those houses.
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Make the military fix them. They are always bragging about vocational training. Right now the only training they give is how to not seeing a therapist for PTSD. This would at least teach them how to do some basic carpentry work. And would benefit us a lot more compared to making planes that can’t fly in the rain.
Human suffering is power. Kind of crazy imo. I’m imaging a bit of ritual too, like a sacrifice.
There are very few things almost every academic economist agrees on. One of the things that almost everyone agrees on is that rent control does not work.
Economists work for banks not for us. Their models have no connection to the real world. They support bailouts but not student loan debt reduction. Says all you really need to know about them.
Meanwhile Ontario removed rent control on all buildings newer than 2018 and now people find their rents going up by 40% over a year with no recourse because the government is favouring the developers over all others, and no government level wants to mandate what developers should build.
Meanwhile areas in North America that didn’t have rent control also show skyrocketing rents. Rent control is starting to look pretty good. I would rather get decades of lower rent than not.
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Almost, except for the parts where there’s no proof only wishful statements, and there’s more doubt than ever.
Areas that did not have rent control now = rent going up
Areas that did = rent going up
Except that areas that did still got decades of lower rent.
You talk a lot about proof but I am not seeing any.
Using SF and NYC as the main examples kinda distorts things as these are both some of the most expensive, developed, and dense parts of the country where development costs are staggeringly high. Something not working there doesn’t mean it doesn’t work anywhere else. The rate of increase in property/rental costs is unsustainable.
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It did for the folks using it.
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Please explain how.
Are you an economist?
Or did you just see a supply and demand curve and think that’s all there is to it?
If you studied economics beyond the 101 level, you’d know the supply and demand curve is a theoretical concept that doesn’t actually exist in the real world because the requirements for it are impossible. Supply and demand most definitely exist, but it’s more of a fuzzy force kind of thing not clean lines on a graph. Realistically, it’s more like fuzzy splotches on the graph instead of clean lines.
And there are multiple levels to it as well. Cities have to compete with other cities to attract businesses and businesses would prefer to be in a city where they don’t have to pay someone $100K per year to sweep the floors. Which might happen if that’s the pay level required to live in a city. You could get into a yo-yo situation where a city becomes unaffordable, people and businesses leave, causing the rent prices to drop, attracting people an businesses back, causing it to by unaffordable again, etc, etc. This instability comes at an economic cost that’s greater than the inefficiencies caused by rent control.
You see an economy isn’t just one simple supply and demand curve. You might want to consider that economists might be aware of some factors you aren’t aware of.
an economy isn’t just one simple supply and demand curve.
Aggregate supply and aggregate demand.
Boom. Roasted.
This instability comes at an economic cost that’s greater than the inefficiencies caused by rent control.
It’s extremely difficult to get someone who only understands Econ 101 to grasp the idea of competing economic inefficiencies. Conservative think tanks have been on a rather successful crusade to ensure that de-regulation is only good. So, it’s difficult to convince someone that higher taxes on “job creators” leads to a better, less expensive life for everybody else.
Yeah and aggregate demand is basically impossible to model because people be crazy.
And sure, rent control could cause issues in the long run, but in the long run we’re all dead anyway. Other, bigger, problems will likely happen sooner than something like rent control having a significant economic impact.
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Except climate change is backed up by data studied and gathered by real scientists the vast majority of which are under no pressure to prove it.
Rent control attacks are generated by economists. A pseudoscience employed by the banks to create propaganda.
They are not the same.
The point is to provide relief for those who can’t afford rent.
Please show me actual economic modelling using real world data of the negative impacts of rent control. You know, something that isn’t just theoretical extrapolations based on the non-existent supply and demand curve done by someone who spent too much time reading propaganda on mises.org
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What is that link? So over a decade ago, 40 people that I don’t know indicated their opinion about rent control on a website. That’s your proof? Of what exactly? What was the methodology in which they were selected? Come on, some basic science please!
At any rate that’s not an economic model involving real world data. It’s just a poll on website that 40 people responded to.
And I did take Econ 101. And also Econ 201 where they explain the requirements for supply and demand: -Free movement of labour -Infinite number of competing companies -Perfect knowledge -No barriers to entry
In other words, things that are impossible in the real world.
Looking at a supply and demand curve and thinking you know about economics is like reading Act 1 of Romeo and Juliet and thinking you’re a PhD in English Literature. Supply and demand is theoretically how things are supposed to work which you learn about in Econ 101. Beyond Econ 101, most of economics is about why it doesn’t work like that in the real world what regulations are needed to approximate something vaguely resembling supply and demand. And sometimes a regulation that moves away from supply and demand in one market can get us closer to a reasonable supply and demand approximation in other markets. As I mentioned before, rent control helps the labour market, which is kinda important.
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Ok, so you got nothing but appeal to authority, and the “authority” is a decade old poll that 40 people responded to on a janky website?
Apparently this IGM forum is something paid for by the Chicago Stock Exchange. I don’t see any indication of the methodology they used to select these particular people. Given the source of their funding, it makes me a little suspicious. $1.5 million to 40 economists to answer an email once a week? Was the Chicago Stock Exchange paying that money for honest answers or were they paying for the answers they wanted to hear?
And they don’t seem to do any macroeconomic analysis. Methinks it’s just some bullshit meant to influence public opinion. I guess it worked on you.
