If landlords get wiped out, Wall Street wins, not renters
bloomberg.com
bloomberg.com
1. The woman sitting on 27 units and only making $24k, is seriously over leveraged. Sounds like she took on more debt than she could reasonably manage and expect her tenants to be the safe bet even though she isn't.
2. Family owned Mott St apartments. Something is wrong with this story as well. If they owned the properties for a century (1st wave Taosinese immigrants I bet) they should be printing money. Chinatown rents are high for old, low amenities buildings. There is a whole lot more to this story because someone is lying.
3. Something tells me they refinanced one too many times and pumped the equity out of their property. Property bought in the 90s is worth 3x as much today so where is the renters money going exactly?
A: it goes to the banks, who do literally nothing to care or maintain for the housing or support the renters.
Existential question: how is this different from taxation without representation?
there's a layer of abstraction! Duh!
Now, another faceless drone in a suit will simply replace the collector, the soldiers are domestic and called police, and the money is distributed to a large amount of people via fake work jobs in the financial industry who will fight tooth and nail to preserve the system.
Landlords are subject to the laws of the land, so you actually have your government representative making laws about what your landlord has to do and how much they can charge you for it.
You're also your own representative with your landlord. If you have a problem with your situation, you can talk to your landlord and try to work it out. That's the thing that representatives are supposed to do with the government. It doesn't guarantee results, but you have representation.
It's also different from taxation without representation because it's much easier to opt out of a bad landlord than it is to opt out of a bad government.
I think with a lot of land lords, in high COL areas especially, the question of "where isn't the money going" is obvious and more important. It's definitely not back into the property. It's not making improvements to make the property more amenable to tenants. No new windows/insulation. The cheapest utilities and fixtures.
The worst part is, is that they can basically cash out whenever they want. People will buy the property to do the exact same thing.
There is very little left over as positive income. Maybe 10% if you are lucky, which makes up a little for the huge headaches. It can be really bad if you get bad renters. You get some back as equity over time and that is nice, unless the housing market crashes.
As for evicting people, it sucks. Once you start eviction you are stuck paying someone else's mortgage. In fact you are also paying to evict them too. Some renters go from house to house just paying a deposit and first month's rent then sitting on the house for as long as possible. If you try to be nice to them and give them more time they will bankrupt you.
In the meantime they are actively trashing the house, peeing on walls, keeping dogs in the fireplace like it's a kennel without cleaning it for months, putting holes in walls, flooding bathrooms, and spreading feces inside wall spaces. Then when you finally get them out by offering to give them back their deposit (Cheaper than eviction) they move in next door and trash the next poor landlord's place.
If you are doing background checks and credit checks you can keep the above from happening for 95% of cases. However the moment you start being nice and renting to that poor family on section 8 funding because "Someone has to" you are back cleaning poop out of your walls after paying their mortgage for 6 months and being called a "Slum Lord" because the people you rented to have trashed the pristine house you put hundreds of hours into.
This is actually the your (the landlord's) mortgage, not someone else's. That is one part of the risk of an investment vehicle that allows more tax write downs than most other investments.
Just like other investments, the pain is much less dramatic if you aren't over levered. If you are, profits are good until they aren't. Higher risk comes with that higher reward.
However the cheap leverage and massive influx of foreign investment kinda fell off which made prices drop like a rock in 2008. I wouldn't be surprised to see it happen again in late 2020 and 2021 when a bunch of people see balloon payments from deferred mortgages.
Just to be clear for other readers. The only special tax write downs for real estate is depreciation, which isn't a write-down, it's a deferral. (OK, yes you can escape the deferred tax by dying)
Having a mortgage is irrelevant to the tax situation. Mortgage interest is not treated any different than interest on any other business or investment financing. Even the margin interest in our brokerage accounts is deductible.
Only if the house's value doesn't go down. Like if the house needs to be torn down because it's been destroyed by a flood, the market crashes, or the major employers in the area leave.
Do you consider paying your own mortgage, in your own name, which causes you accumulate wealthy, the act of paying somebody else's mortgage?
I can't see how what you say makes any sense, unless I go to that interpretations (which still makes no sense), but which makes me dislike landlords even more.
Anybody who doesn't think the work of being a landlord is worth it should get our now and dump their equity into index funds or something.
>stuck paying someone else's mortgage.
What he meant was that when someone is not paying the rent, and you are evicting them, you are paying for the living expenses for a stranger who may holding your property hostage, who may be actively abusing the property, who may be deliberately prolonging the experience.
This does not feel good to pay out of your own pocket to shelter someone else's family for any amount of time. There is no recourse to recover the money. Your best outcome it to just get the property back as soon as possible, even if that means rewarding the bad tenant with more money. And in most places in the US now, evictions are not even possible due to virus lockdowns.
Not paying rent is theft. It hurts financially and emotionally when people steal from you.
And for the soft-hearted landlords who didn't screen properly, or took a chance on a sob-story, it was already months of slow-pay or no-pay before you started the eviction. Can you imagine someone stealing 4-6mo of living expenses from you?
Compare these supposed woes to any contractor and their clients, and this sort of bellyaching would be just be laughed at. "Theft"!!! Come on.
Any landlord who thinks in these moral terms deserves to lose their shirt. It is a business!!!
And on top of that, it's not web design or some other sort of service. They are literally providing somebody's home. I have zero sympathy for any landlord that gets into such a business and then bellyaches about evicting somebody.
This is a cost of doing business. 4-6 months of rent should be cash on hand to deal with these sorts of things, and many (most? all?) mortgages for rental properties demand that you show you have that much cash before you can even get the mortgage. So even the banking industry is requiring these amateur landlords to learn basic biz before they can enter the game.
There's huge asymmetry here, landlords have lots of wealth, lots of flexibility, lots of recourse and backup plans, but their tenants often do not and often have no safety net whatsoever. If landlords start advocating for a basic social safety net, I may start to have sympathy. And some of their tenants might be deadbeats. But I've come across a tooooon of really shitty landlords, a few people that hit hard times that are doing their best to pay rent with their extremely limited means, and basically zero of the supposed deadbeat that landlords say are their perpetual problem.
I don't follow. The contractor isn't forced to work for months without pay against his will if the client stops paying.
> This is a cost of doing business. 4-6 months of rent
Losing 4-6 months of rent erases multiple years of profits on that property
> There's huge asymmetry here, landlords have lots of wealth, lots of flexibility, lots of recourse and backup plans, but their tenants often do not
By your logic all business owners similarly are very wealthy and can absorb large losses. So all businesses have a duty to give way several years of profits to needy customers. Food is a necessity of life. Do restaurants have a duty to let customers eat for free?
Pretty much the point is that being a landlord isn't a free ride. Often you need to put in a lot of work and you take a big risk investing in a house that can be destroyed or made worthless by factors completely outside your control.
How many times did this happen to you and your family? Do you mind sharing the court documents if they are public?
I'm sure understand why such a grand claim would require some evidence and diligence, right?
I can see both sides. But being a landlord is agreeing to run something closer to a public utility than not.
It's 10 times easier to get someone to leave on their own accord by giving back a deposit. Tenants would rather have the cash in hand than squat. This was in California so eviction is a 6 month process that costs a lot in legal fees.
Let's not forget that you, when you are using the rent to pay off mortgage, you are building capital - even if 90% of the rent is allocated to costs already.
> Once you start eviction you are stuck paying someone else's mortgage.
Your mortgage. But go on...
> Some renters go from house to house just paying a deposit and first month's rent then sitting on the house for as long as possible. If you try to be nice to them and give them more time they will bankrupt you.
Some renters are people just trying to get by. They have kids who are traumatised by the constant lack of housing security. They, themselves, may be unable to gather the resources to secure their own future by finding a better job, growing more valuable skills, etc. But I notice you don't raise them as the special case that drives your decision making, only the (more unlikely) case that you lose out.
There's a pervasive culture in the US right now around "but think of the businesses" that you see pushed by lots of folks small and large.
As someone who launched a product in February which has struggled due to COVID, it would seem SO tone-deaf of me to go out and say stuff like "think about the business owners!" when people are losing their jobs, not able to make bills, and all while facing a very serious and deadly disease.
An example of this is, "keep going to your favorite restaurants because they're sure to be hurting!" Excuse me, but due to having more time at home + having my financial anxiety/risks dialed up I'll be cooking as much as I possibly can.
Sorry for the rant but this is a time we should be putting people first. I find the whole "but think of the businesses!" narrative to be horribly tone deaf when people are unemployed in record numbers with infection/death rates that are continuing to go up.
Warning: I'm also pretty biased here towards rent seekers too because last month the electrical panel to my apartment building caught on fire and the landlord has been doing everything in their power to put the hurt on us to the point that I've had to lawyer up. They're doing stuff without permits from the city, have had issues with inspectors, have lied to us saying it's an "act of god", they're claiming a non-powered unit is habitable, etc. We're in the process of moving out and things are OK as we're with family. Honestly, I picked a lower-monthly-rent apartment to work on my startup and this is all really my fault for trying to live below my means.
So are dictatorships. The fact that Kim Jong Un is a person is not enough to make me sympathetic to his troubles. A lot more context is required to figure out if one should be sympathetic or not to a businessman's situation.
But, as a rule of thumb, I'd say business owners are due less sympathy than your typical working man. At a minimum they have far more capital than a typical person has, which usually means they have far more income, too.
So, when a politician wants to pass a bill to help certain businesses, you have to ask which of these are they SAYING they want to improve, and which of these they ACTUALLY improve. If you pass a bill that reduces taxes for capital gains, it's usually proposed as a way to produce more jobs (more capital available for investment), but it may mostly be adding to the returns one enjoys from ownership (in an economy where capital is abundant.) The opposite might be true if the economy is capital-starved.
As far as businesses go, land-ownership and management is clearly rent-seeking, and an unproductive use of capital. Human society doesn't gain new products or services or save labor by the mere increase of land prices. If anything, as we see with the homelessness crisis, it can be totally counterproductive. Using my rubric above, landlords aren't providing many of the benefits of a business (no R&D, not many jobs), so they should be lower on the ladder of businesses worth saving. I would much rather support the bailout of a restaurant with a long history than a landlord.
After all, if returns the fruits of risk taking, losses must be the fruits of losing those bets.
For the buyer, it makes them feel good supporting their local economy instead of just Amazon. For the small business owner, it increases the odds that they'll make it. For the employee, a more stable job/employer reduces their financial anxiety/risk aka fear in that area.
A good chunk of the economy is based on confidence. Ordering from restaurants doesn't solve problems directly but may give people a fighting chance.
And I'm sorry for your shitty landlord. I hope karma, your lawyer, and the law hammer him.
> I hope karma, your lawyer, and the law hammer him.
It's a her. Also they'll get off with a minimal amount of fees with the city and that's about it. Courts are shut down indefinitely etc. and with a pay-to-play legal system where representation costs me $350/hr they're just throwing up smokescreens and telling us "take us to court". They'll get away with everything in this circumstance because by the time I'd see ANY money back I'll already be in the hole. Would we win? Maybe... but man is that one heck of a risk/liability.
The deposit, etc. are all moot, and so are the current legal fees - I knew this from day #1 as multiple lawyers wouldn't touch it knowing it was not profitable for me as the client. I still decided to get a lawyer in this circumstance because I need to protect myself for the rent that they're trying to collect in regards to the unit being not habitable. Basically I needed to get representation so that if/when they inevitably harass me with collections or attempt an eviction while we're moving out I'm ahead of the ball with a fully documented case. Hopefully I deter from these threats by showing them I can afford an attorney + document + work with the city...
All-in-all I'm out thousands, displaced with family, and as a 1099 contractor no other landlords want to touch me due to COVID and increased risk on their behalf for someone without a W2 + 6 months of employment history. We're looking at having to pre-pay 3-6 months worth of rent + deposit upfront for even the crappy places to take us... Wooooo =(
Better you, having the means to lawyer up and even outright move, than someone else living "at their means" (aka stretched thin) who would have no choice but to just take the abuse.
FWIW swapping in a new residential service panel is basically a one day job. Your situation doesn't sound like the result of greed, but rather outright stupidity.
Yep - due to it being a lower-rent complex I feel for the people who have been living there for over a month without power. Lots of those folks have nowhere to go... it's just freakin' horrible what they're doing and how they're treating people =(
It's also greed - they've been awful to us through this entire thing outright lying to our face trying to get it pinned on our rental insurance. Then the fact that they were doing all of this without permits from the city... oof.
Thanks for this though - I definitely need to hear it.
You also have to consider that the UK was formerly feudal, so they never had the same culture of individual ownership as America does.
Not OP, but they don't say that. At least what I interpreted was, people with spare money bought properties to rent them, and then have more spare money to keep buying that ultimately results in unaffordable housing as the double whammy of 1. Costs to buy a house keeps creeping up, whilst 2. The wealth transfer from renters to landlords continues at an unsustainable clip.
All around London there are bucolic villages and one of the most extreme property value bubbles is in the San Francisco bay area which is largely reserved for extremely inefficient and wasteful single family homes.
In any case, it's not a coincidence that rent is worth 25-45% of median income almost everywhere.
In any case, it would not be enough. See, for example, Hong Kong. Despite incredibly high density, rent still ended up stabilizing at 35-55% of income.
Building housing doesn't mean people are born to fill the new housing. Everybody has to live somewhere! So the choice is to build out in sprawl, on green/brown fields. We did that. It turns out that suburbs are economically unsustainable because they require too much infrastructure per capita. Each person requires more roads, more pipes, more sewage lines... whereas cities are economically sustainable, because the per-person infrastructure costs are much lower, because the same pipe is far more efficient, and there's far less roads needed per person when they aren't sprawled out and people are able to walk to their destinations.
We are so far from becoming HK that it's not really a relevant comparison. We force additional housing costs where we don't need to by artificially restricting supply. If we continue to do that, the housing price imbalance will get even further out of whack.
The only people who lose under these conditions of housing austerity are those with less wealth, as it always is with austerity policies. Those who are striving to improve their situation won't get a chance to move to an area of higher economic opportunity because when prices are high, nobody can even make it in to the city. This has an enormous opportunity cost both for the individuals who can't live in the city of their choice, and for society that excludes that social interaction and economic activity. It has tremendous effects of increasing wealth inequality too.
Buying property and renting it out is expected to yield returns. There's nothing wrong with that. It actually increases access to housing by allowing people who can't afford to buy property to still live somewhere in the meantime. The problem is when you're not just buying a $200,000 house whose value tracks inflation and renting it out, but buying a $200,000 house as the value quintuples and all of that money goes to the landlord while the tenant's rent quintuples as well.
Nonsense. We can build 100 story buildings but there is nowhere in the world you can find a hundred square miles covered in nothing but 100 story buildings.
> Plus the rich can just buy any new supply quickly and we are back to the same.
So the rich are going to buy the new supply and do what with it? If they rent it out, supply still goes up. They have to compete with each other for tenants. If they don't, wow -- huge profit opportunity building hundred story buildings and selling them to rich idiots who are willing to pay top dollar for something they get no returns from. Do that until they run out of money.
The idea that the rich get no profit from sitting on buildings is wrong.
[1] https://www.brickunderground.com/rent/why-landlords-leave-ap...
This is fine, then you don't need as many hotels and can convert those those to permanent housing. It's not as if there is unlimited demand for short term rentals.
> or they sit on the property and grow their investment over time because of how limited land is in metro areas.
Which only works because construction is not actually happening, so sitting on the properties is profitable because the value appreciates over time. Build enough that values at least stop increasing and that stops being profitable.
Notice also that your article is talking about a vacancy rate of 3.45%. If you increased the housing supply by 50%, do you really think they're going to buy all of it and let it sit vacant?
And the best actual reason the article lists for why landlords do this is that their building is rent-controlled and they correspondingly want to convert it to condos and sell it, because that's more profitable, but first they need to get rid of the existing tenants, which implies not replacing them when they leave/die. So the reason the building is half empty for decades is the economic implications of rent control, not some plot by landlords to lose money.
Property grows in value because of its proximity to other things of value, not because of the amount of it on the market. If you were to expand the size of NYC to encompass the entirety of New York, housing inside of NYC is going to be vastly more valuable than housing located on the edges of the state.
No amount of construction you do is going to devalue that property, and often you can't build upwards because of the rich property owners (see: NIMBY) choosing to use their financial leverage and property ownership to deny that.
This is not an either/or situation, both of these impact the price of property!
Calling inadequate supply a reason for high prices "just an assumption" is not borne out by any actual analysis of any market, anywhere, at any point in time.
It's not just rich property owners that prevent building up, what you are engaging in here is just as much a reason that we can not provide housing for people, and why there is overcrowding in so many parts of the world.
This is extremely illogical, because they can do this with existing supply, and do do this with existing supply. You even point out that it's a problem because of existing land.
So saying that we shouldn't increase housing because of this, when it only has the potential to reduce this, is absolutely nonsensical. Refusing to act by building more will in fact make the problem you describe worse!
Of course, urban design is a field in its own right so I can’t weight up the pros and cons of each option. Public transport? Zoning? Other?
That said, I agree with you: there can’t possibly be no solution to the housing shortages when there is so much land between different cities.
It's like complaining people who buy stocks are bidding up the prices. While true, there is no vitriol against stockholders vs real estate owners.
One could even argue that buying real estate does more for the economy than buying stocks - you are liquidating a developer to build more properties, and banks to give loans. Buying stocks... I guess drives up the stock price, allowing the company to borrow more money?
You see less vitriol against shareholders bidding up stock prices b/c buying a fixed amount of stock isn't a necessity -- lots of people just don't do it. But everyone needs housing.
To make a different comparison, in the 2007 food crisis, when poor harvests combined with sudden enthusiasm for making ethanol from corn helped drive up food prices around the world, there was some quite legitimate vitriol. You might think the high prices help produce more grain next year (analogous to your developers). I don't think that's actually true, I'm not sure -- but even if it were, it did little to help people during the crisis.
I'm not sure of the solution though. Would the problem be worse if, say, people were limited to just one residence? Where would a rental supply come from?
You're starting with the concept of an asset class. Surely the concept of a home is more foundational than that, and should get prior consideration?
I don't know of a single bullet to address the concept that the necessities of life are subject to the whims of the market, but some suggestions:
- Have high vacancy taxes, with an actual inspection and enforcement mechanism. Strongly discourage buying and holding empty property (esp where renting it will "lower" its value).
- Structure taxes associated with the sale of a property be inversely proportional to the time time since the last sale. If you try to flip a property in a year, you should pay an exorbitant. If you hold onto your house for 20 years, and sell when you want to move to Arizona, you can pay something more modest.
- Create a space for not-for-profit housing foundations, land trusts, etc. Help fund these with the proceeds from the suggestions above.
- Build nice public housing for the middle class, without stigma. A majority of Singapore lives in public housing, with flats sold for 99-year leases. Because every one does it, it's not looked down on, and residents have some political clout.
- Label every house with data about what they pay in property tax, how much of a benefit they get from things like the mortgage interest deduction, and what any rental property is charging their tenants. - Teach children to shame rent-seeking behavior instead of shaming people for their bodies.
- Give tenants a small deduction on their rent. When they report their rent, the IRS can easily tell if the landlords are under-reporting their income.
...only such taxes will bite landlords every time they have a legitimate vacancy between tenants.
> Structure taxes associated with the sale of a property be inversely proportional to the time time since the last sale.
... Only now people cannot afford to sell a recently purchased home to care for an unexpectedly ill relative in another state. Or take a new job opportunity. Or afford to move to follow their heart. Etc.
> Create a space for not-for-profit housing foundations, land trusts, etc.
...only now the trusts are competing with landlords with entirely different tax structures and perverse incentives to create bureaucratic nonsense because they don't compete in the fully free market.
> Build nice public housing for the middle class, without stigma.
...only now no one wants to build this because they're taxed when the new properties are vacant per your earlier proposal. And now the public is likely on the hook for losses.
> Label every house with data about what they pay in property tax, how much of a benefit they get from things like the mortgage interest deduction, and what any rental property is charging their tenants.
...only now people's financial privacy is wildly violated.
> Teach children to shame rent-seeking behavior instead of shaming people for their bodies.
... Only now, really? Really? Like in the schools we should teach people that providing a way for others to have a roof over their heads at considerable business risk is shameful? The ones that are presently being paid zero rent without recourse due to local edicts?
> Give tenants a small deduction on their rent.
... Only now you're trusting people to not inflate their reported rent to gain illicit tax breaks.
Any other unintended consequences worth spit balling?
People have been saying that for decades but we seem unable to achieve it. Meanwhile the proportion of people in rented accommodation has been increasing and the proportion of home owners has been falling.
Perviously landlords in the UK were getting a tax advantage that home owners didn't have access to. This seems to be slowly shifting.
Buying property and renting it out is expected to yield returns. There's nothing wrong with that.
Actually I think there is something wrong with that. Personally I won't use my easy access to capital to deny the younger generation the ability to buy a house in the way I was able to.
If no one can make money renting properties, where will this supply of rental properties come from?
(This is a joke. Unfortunately, the joke is on NYCHA residents, and on those priced out of apartments.)
The UK had a pretty good housing situation that was developed after the end of the second world war. It was disassembled by Thatcher.
Allow densification, abolish green belts, reduce the friction and cost of obtaining planning permission, etc.
The solution is simple, but it’s not politically viable when a majority of the population have a vested interest in property prices remaining high.
In theory this shouldn't happen in local areas where the tenants outnumber the homeowners, but then some jackass invented rent control for those areas, thereby giving the existing tenants an interest in maintaining the status quo and once again screwing over new tenants and prospective homeowners.
Tenants are incentivized to vote for rent control (for obvious reasons), and rent control has the unintended consequence of restricting supply — on average developers construct less housing in markets with rent controls than those without, relative to the demand.
https://www.ethnicity-facts-figures.service.gov.uk/housing/o...
That’s because for decades, we’ve also been destroying low volatility, decent paying jobs via outsourcing and automation and concentrating high paying secure employment into fewer regions.
The people who have been saying that for decades have been right. The problem isn't that it doesn't work, it's that we haven't done it.
> Meanwhile the proportion of people in rented accommodation has been increasing and the proportion of home owners has been falling.
Not meanwhile, because of. Demand has been growing faster than supply for decades.
> Actually I think there is something wrong with that. Personally I won't use my easy access to capital to deny the younger generation the ability to buy a house in the way I was able to.
But that's not what's doing that. The only way you could get someone to rent who otherwise would have been able to buy is by offering them a better deal. You can't just outbid them because without supply constraints, higher prices would result in more construction, and then that person would have a new house built instead of having to outbid you on the existing stock.
Meanwhile there are are still people who need somewhere to live and can't afford a down payment yet.
Meanwhile there are are still people who need somewhere to live and can't afford a down payment yet.
Nobody said there isn't, there will always be people for whom renting makes sense. But right now there are a lot of people where they would much rather buy the property they are in than rent it.
This isn't the problem until the zoning prohibits tall buildings.
> as well as a planning system and a cabal of builders banking land.
The planning system is the problem. Reforming it is the solution.
> But right now there are a lot of people where they would much rather buy the property they are in than rent it.
So what's stopping them? High prices as a result of supply constraints, right?
While you're right that there is a finite amount of land, we haven't even come close to reaching the practical limit of how much housing we can construct on that land: https://marginalrevolution.com/marginalrevolution/2016/08/la...
The solution is to ban short term leasing in cities, increase taxes on sales of property within a certain timeframe and increase taxes on owners who have a property with nobody registered to live in it.
Basically you don't want people buying property to flip it quickly, to hoard it or to have a holiday home. You only want buyers who'll live in the property and/or rent it long term.
Land, on the other hand, is severely underused. Zoning changes could easily triple the housing supply in American cities. That's a lot better than 5-10%.
High end estimates of AirBnB apartments are about 4% of units in the most popular neighborhoods -- Times Square, the East Village, Williamsburg. Drift out to Park Slope and you can see 2%, maybe.
House hoarding? Very few people pay a mortgage for empty space when they can get a tenant to pay the mortgage instead. The real house hoarding is the high end luxury market with $20 million penthouses, where renters were never in the picture.
We don't need to free up 4-5% more units in the most popular neighborhoods. It'll help a little, yes? It's just that it's such pathetically small thinking.
Why don't we have a plan to build 50% more units citywide, and make housing actually affordable? Hell, it's New York. Build us 100% more apartments. Put real price reductions on the table. Do what it takes to chop rental prices in half.
I'm not sure what you mean by "increase housing supply": there are many ways to do this, some simple, some complex and challenging.
If you simply mean "build more houses" (this is the most common answer I see), that comes from an oversimplified view of the the market.
Too much for a HN comment but some variables to consider:
- financialisation of residential property affects vacancy rates (and by extension market supply). When selling and renting aren't the only two options for extracting value from residential property, the equation becomes a lot more complex.
- tourism is another obvious one: while tourism is economically nice, it's not a stable source (see current crisis) and overtourism negatively impacts many aspects of society, housing supply being just one of them. Building more housing without accompanying measures means slightly more AirBnB, further overtourism and accompanying negatives.
- urban planning. A lot of supply problems are regional, and caaused largely by poorly planned distribution of services, and places of work. Building more in one area will lead to an oversupply in another area where infrastructural change could simply relocate demand.
Yes, this means more infrastructure. Unfortunately, this does mean actually spending money on that infrastructure, instead of spending it on incompetence and/or corruption, and I fully admit this may be impossible. ($4.5 billion for three new stops on Second Avenue? That's 9x the cost of the Golden Gate Bridge. Yes, adjusted for inflation.)
I get that you believe building more houses will solve the issue, but I can't see where you've said why you think that or why I'm wrong here.
No, it won't solve it because it's a simplistic one-dimensional answer to a complex multifaceted economic problem. I've listed some of these complexities.
Would building housing be a component of some successful solution: highly likely. But it wouldn't even make up the majority of such a solution.
If 700,000 of Manhattan's residents could find a 2BR in Brooklyn for $1000/mo, with a reliable 15-20 minute commute in to work, in a neighborhood not wreaked with crime ... do you think no one would take it? Do you think that landlords could keep getting away with $3000/mo for a shoebox studio apartment in the East Village that's falling apart? When cheap substitutes become available, the price of a good falls.
Clear from this opener you've not read either of my comments. At no point do I contradict or argue against the laws of supply and demand
I'm merely pointing out that (a) building houses has limited impact on supply without accompanying measures and (b) building houses increases demand in particular circumstances.
The combination of these two (less impact on supply and an increase in demand) make this measure only a small component of what's needed.
> Do you think that landlords could keep getting away with $3000/mo [...] When cheap substitutes become available, the price of a good falls.
Your last line is confusing as you say "cheap" and "price of good falls": how can one lead to the other, they're both the same thing? This is the cart before the horse? The market sets the prices of the "cheap subsitute" so it will only become cheap according to the laws of supply and demand. i.e. only if supply approaches/matches/exceeds demand.
I'm not arguing supply and demand doesn't apply (that's ridiculous), I'm just arguing your idea won't increase supply as much as you believe, and won't leave demand static.
One of the things that drives me nuts about my town is (1) 90% of new, non-SFH development is rental, (2) new, non-SFH development is only in the upper price ranges, & (3) renovations are actively converting low range SFH stock into higher priced stock.
I understand this is good for the city (tax revenue+, especially via SFH up-valuing, given that school demand will be unchanged), but it paints a pretty grim "in 10 years" picture.
As a landlord myself (hobbyist), it's 100% unfair that someone is paying me wages they earn, because they don't have other good options.
People should, at minimum, be able to realistically earn equity in their own homes. Full stop.
Looking holistically at the entire chain: ownable, dense, affordable housing needs to be created.
To do so, cities should use their leverage to reprioritize builders' incentives: decrease the permitting (and anything else) burden for such stock, and mandate ratios of own:rent and affordable:unaffordable for projects (it'd be fine to create and trade credits!).
You're a private landlord, but not for the money? I don't think I've heard of that before. What do you get out of it instead? You actually enjoy the process?
I haven't been a landlord, but I worked for one doing the things he would have had to do if he couldn't afford to pay me to do it. Repair, maintenance, sales, evictions. I can't imagine doing that stuff for pleasure, but it takes all kinds.
It's a hobby that interests me to learn about, but not one I'd say I currently enjoy, past the learning.
I strictly rent to <= 2 degrees of separation from friends / family, which helps with evictions. And am currently renting to a newly married couple in their 20s, as it makes me happy to rent more stable housing than they could otherwise afford.
The problem isn't the builders, it's the citizens of the city/town that are trying to keep people out, and limit supply. I'm that environment, the only builders that can exist at all are the ones trying to extract maximum dollars, and those who try to experiment with more affordable building types are locked out of the process. The process is selecting for exactly what you claim to not want.
Your market may vary, but I can say there are different tensions in mine. Understand there are very different reasons in SF, NYC, etc.
We have less direct, homeowner-led, NIMBY resistance to increasing density.
Affordable, small, dense housing here could be built, but if you're a builder... there are more rewarding options.
I look at builders and investors as rational actors (in aggregate). They're not going to turn down an opportunity to make more money.
So the onus should be on the ex-builder/investor portions of the process to realign the market so that affordable, ownable starter-home housing stock is the optimal self-interested choice for builders and investors.
Simply mandating affordable housing is a joke -- it never gets built in economically impactful quantities.
Get creative! Maybe just say "Any permits for properties above this price range automatically have +6 months of wait time added."
And, personally, I see dense rental developments as just a more efficient way to transfer wealth from workers to capital.
Say what you want about bank mortgages, but it's a competitive market, and the homeowner gets to keep equity (or, let's be honest: inflate away their debt while their home's current-money-value keeps pace).
I guess the way I look at the entire system is that you'd be hard pressed to come up with a financial reason to develop high-density, affordable homeowner-owned homes, if you have the options to build higher end or rentals. And that means anyone doing the former is going to be outbid on property by anyone doing the latter.
I'd be wary of lionizing home ownership as capitalism done right, as it has led to many of California's problems. For example, rental versus condos is a weird issue here. Million-dollar home owners here deride owned-condos, at half the cost of their detached homes, as "luxury condos" only for the super wealthy as they try to block them. They see themselves as working class, but because of the incredible appreciation of property values, and their regulatory capture which has prevented building any more housing, they have become the capitalists just like the multifamily rental building owners. (And in fact many are owners of both, because buying real estate in the 60s-70s in California has been the easiest form of capitalistic gains that I know of... protected tax status, regulatory driven shortages, etc...)
We place all sorts of restrictions on new housing, but I think we should transfer all of those to existing housing as well. If somebody is against luxury condos in their neighborhood, then all remodels should have to go through just as rigorous a process. Perhaps income caps on those purchasing existing property, just as are demanded in newly built property. Otherwise, by restricting just new property in this way, we are systematically locking our younger people and immigrants from the system that provided so much wealth to the Boomers.
I'm curious if there's anywhere world-wide that's tried land swaps on a large scale. Maybe Japan?
In the sense of "I give you my house + lot (and my neighbors do), you give me back X units in the more dense development you replace them with."
I read on an article here that China does something similar, but that was more geared around transit right of ways and farmland, vs increasing density in low density urban areas.
As you pointed out, California seems like it needs a carrot and a stick. A carrot, to financially incentivize existing homeowners to be part of the solution. And a stick, to discourage the worst tendencies of sit-on-it-forever.
My old landlord was a civil engineer who went into business buying multi-family homes in Los Angeles with his brother-in-law maybe 30 years ago. They now own close to 30 buildings, maybe around 120 units total.
I'm not unhappy that he's been successful. What's annoying is that this success is not replicatable by other generations. There's no way two people who make less than $100,000 are going to buy a single multi-million dollar residence, let along leverage that process 20 times over.
Why don't you try being a landlord and see how easy it is.
Put another way, if it was easy money everyone would be doing it ... and yet, people find other places to put their money in.
>Hoping to stop being a landlord fairly soon
Too easy?
Not exactly, but it feels kind of vampiric. I bought the house with sitting tenants a few years ago without really wanting to be a landlord, and they're still there (strictly speaking the people they sublet to are still there). They're apparently planning to move out soon but obviously everything's on hold for the moment.
That's not what I said. It is not uncommon for people to claim X is easy or easy-money, when it actually isn't.
>Let me complain about telemarketers, shady supplement makers or aggressive Internet advertises
You can complain, and I'll probably agree. But if you come out and say that you make EASY money running a telemarketer operation, I'll call bull on that.
In the post-war period governments have continuously pursued policies to keep the returns to housing as an investment high and low-risk. This includes buildings restrictions and zoning laws to cap supply, subsidized and guaranteed mortgages, price supports during downturns and a plethora of favorable tax treatments. That's made residential property produce returns at or near public equities with much lower drawdowns.
The problem is that it's propped up housing prices far above the levels you'd see in a free market. And herein lies the dilemma. New generations buy housing expecting similar wealth-building returns as previous generations. Yet if any of the artificial supports were removed, prices would not only stagnate but significantly contract. The economy has become heavily adapted to the maxim that real estate prices never fall. We're simply not equipped to handle a 25% decline in housing prices, without causing downstream distress, default and panic. Witness the 2008 crisis.
So the government keeps pumping more and more support, particularly every time a recession rolls around. Which distorts housing prices even further, which in turn makes the market even more fragile. Price to income ratios get stretched even further, at which point the only solution is to make credit looser and interest rates lower. Yet that pushes the average homeowner to be even more leveraged and less equipped to handle any rough patches in the market.
The only real solution I see is a protracted soft-landing, where the housing market is gradually deflated over two or three decades. We should be aiming for housing prices to stay fixed in nominal returns, so people stop using their home as an investment vehicle. Mortgages, tax policy, and particularly building/zoning restrictions should be steadily moved in the direction of cheaper housing and more renting over home ownership.
In particular, during recessions policymakers should let home prices fall by 10-15% and not recover. It's a good level that creates pain for the property investor, without pushing mortgages underwater. This will start to acclimate consumers to the idea that housing is not a risk-free investment.
I scoured the net and did not find much additional information and even tried to call a Realtor I know to see if the red-flags in commercial RE are the ripple to follow post-covid and if the downward pressure on residential home prices by residential conversions is on the horizon.
The jury is still out (not enough data), but that may end up being a bright spot of the new normal(word soup) if millions of new units become available over the next 12-24 months.
Somewhere along the line house-owners became endless cash-cows for bankers and got political support. I guess an asset-owning class is deemed a more stable reliable voter in this scenario. Renters are just so many fish in the sea.
Moreover, politicians advocated house ownership as a solution to an economy's woes. The mortgage-holders are tied in to life-long jobs (when jobs were for life) and continue plowing money into their asset endlessly. Kinda like buying the latest fashion of car year-after-year in a consumer driven economy, where just getting from A-to-B is no longer the real objective.
Now we are seeing a younger (wiser) generation who saw their parent's treadmill for what it truly was and are rejecting that path by opting for tiny homes or mobility etc.
i’m not super-sympathetic to the plight of most landlords, but that’s too vindictive and counter-productive.
i’d rather have an escalating tax on number of units owned, with a sweet spot where landlords can make enough to be professional (have good tools and service providers), but discourage an overbearing imbalance of power over large numbers of other humans. i’d intuitively guess the sweet spot is probably in the range of 4-20 units, or 1 building with however many units, in high density zones.
The estate agent I’m using takes x% of the rent each month (plus costs for any actual work) to do all that stuff for me. So I guess the number should be ~1?
Progress & Poverty, George’s own book, proposes the LVT.
In any case, not to let the narcissism of small differences derail this too much: LVT is the right thing.
The primary problem with the Georgist proposal is that it involves a lot of arbitrary determinations of value. The goal is the same, but the much simpler mechanism of LVT can actually be implemented with reasonable accuracy and efficiency. It's not totally trivial - it's kind of hard to figure out the value of land if you were to counterfactually remove all the improvements, but it's simpler than determining something as abstract as the value derived from it.
> Georgism proposes to tax the value derived from land
Incorrect, it's almost completely the opposite. The Georgist proposal is rather to tax the economic rent on land, not the value derived from it. Recall the classic example of the landlord leaving his lot in downtown Manhattan undeveloped. No value is derived from the land, the upside for the owner is purely in speculation (benefitting only from improvements to neighboring land).
In any case, by whatever name we wish to call it, LVT is the path forward.
How do you determine that? Also, here’s the wiki description, which matches what I said very closely:
“ economic value derived from land (often including natural resources and natural opportunities) should belong equally to all members of society.[3][4][5]”
This is not the same as LVT. LVT doesn’t try to determine the source or type of value, and Georgism does.
LVT (and Georgism writ large) propose to tax the unimproved value of land. This is a form of discriminating the source/type of value.
Fun fact: It was written in San Francisco after the gold rush when there was obscene wealth around but horrible wealth inequality. This yielded awful urban living conditions, which George set out to investigate. Sounds familiar...
I've recently been listening to the audio version of Piketty's more recent book, Capital and Ideology. I think noting the difference between wealth and income, and the wage-share vs capital-share (more his 2013 book) is helpful framing for the question of "how badly should we feel for small landlords?" But the rest of this lobbying piece is echoing the more recent book much more clearly. It participates in creating and perpetuating a set of beliefs and values.
The concept pitched here is that "most landlords are small-time, having only a handful of units". But if the big ones are big, e.g. if there's a power-law or similar distribution, don't forget that most tenants (or most units) might have much larger landlords, which don't look like the people discussed here. Their own copy implies it: "Over 43% of rental units ... are owned by small businesses" -> "A majority of rental units are not owned by small businesses".
The largest landlord in my city, with over 5K units and a value of over $3B, received PPP funds, b/c its number of "real" employees is relatively modest.
And even the small ones are too used to having the law or policies bent to their needs. I live in a multi-unit building in a popular neighborhood, which should probably be worth >$3M, but is taxed at an assessment of ~$135K. And my landlord is probably by most standards not bad.
I walk by some buildings near me that were quite likely torched by their owners to get out old, low-paying tenants. Arson is pretty hard to prove, but it can work out quite well for the owners.
Whatever I feel for landlords, it's not sympathy.
It sucks to lose your savings but this is just how the free market is. If you dump your life savings into a penny stock, you might get screwed over there too. That's the free market, if you don't like it then invest in bonds or atleast diversify.
I suspect in some number of months, stock values are going to begin taking real hits, and when that happens I suspect we will start seeing the lost-my-retirement-to-SPXL sob stories
There is no free market. It gets constantly manipulated to the benefit of favored groups. 2008 made this very blatant and we see the same thing now again. And the little guy is certainly not part of the favored groups.
If you're a retail investor, nobody's coming to bail you out. Diversify or face the consequences of your leveraged risk assets collapsing.
All of this is painful, but reasonable under the circumstances we find ourselves in.
But "free market!" isn't what has messed up their plans. Surprise, almost completely unpredictable government regulation has messed it up.
Either the government bails out the entire investor class, literally anybody who faced capital losses or loss of dividends in 2020, or we accept that risk assets are risk assets because a black swan can annihilate them, and we let them be annihilated.
In fact, I'm even not making an argument that we should bail them out. But I am making the argument that "free market: you lose" isn't really the situation we find ourselves in.
"Free market: you lose" is quite literally what's happening. Absent further action by government, there are a lot of investors who are going to lose their shirt. Free market is defined as business in the absence of government intervention, hence my attribution.
Would you prefer "risky assets in a black swan event: you lose"?
That isn't "free market: you lose". That's the only claim. And yes, "risky assets in a black swan event: you lose" is a much better claim.
If by retail investor you mean the person holding stocks, I disagree.
Most countries allow comically high levels of leverage when it comes to real estate. 5X is normal, 20X is not rare, and even infinity (e.g. no money down) was possible. On top of that I can use a mortgaged property as collateral for another mortgage to another property. It's leverage backed by leverage in the most hazardous way possible.
Compared to other markets, the average real estate "investor" is so leveraged it would make even the most degenerate of WallStreetBets poster blush.
Then there's these people- "The townhouse they bought 24 years ago was at the center of their plans to fund retirement. Now they may have to dip into their retirement savings to cover the mortgage." Why isn't that mortgage paid off yet? Sounds like they made some bad decisions. And any place bought in Boulder 24 years ago could be sold for at least 3x what was paid.
Edit: these are 2 separate people discussed in the story.
Let's not assume poor decision making when there are plenty of factors outside of the average blue collar workers control that directly impacted their ability to to the right thing.
Edit: Ah, 1.2 million total, not currently owing.
$24k is a yield of only 2% so yeah she's on razor thin margins... which does explain why she's immediately in jeopardy from the slightest economic wobble (not that this is a slight wobble).
Just talk to professional landlord about cap rates. Generally you aim for 10%+ cap rates, which are exceeding difficult to find with the exception of a few markets.
If your cap rate is less than 10%, you’re on thin margins and a new roof would probably push you into the red.
Putting your money in VOO or a bunch of FAANG stock will prob net you a lot more for a lot less work based on how the government needs to keep the equity markets appreciating.
Real estate purchased decades ago in hot spots might be easy money, but buying it these days is just for diversification of assets for me.
Her profit is probably in the 6 figures and the 24k is cash flow.
But even if it's low-income housing in Connecticut, that's got to be close to $500-1000/month in rent per unit. Accounting for some amount of delinquency or vacancy, that's still $150k-$300k in revenue, and I think I'm being conservative. Something doesn't add up with this story.
Depreciation, as it is normally calculated, is somewhat nonsense on properties, especially over the past decade as they have increased by leaps and bounds in value.
It's an accounting strategy that we are using for all fixed assets. All things have a useful life, and we just need a way to account for that. Not all improvements to a property will be durable. (Only land has durable value, which is why we only depreciate the portion of the purchase price that was for the improvements to the land)
The new roof we put on a property has a limited useful life. The kitchen remodel has a limited useful life.
If a property is not well maintained, then it may not be worth much in the distant future. If it is well maintained it may be worth more later.
If there is residual value, then we pay the tax when we recapture that value at a sale. If there is no value left at the end, then we don't.
Also, not all houses exist in San Francisco, where a dilapidated tool shed can be worth $1MM and be expected to double every year. Many markets are not very hot in terms of price appreciation. In my midwest market, I'm not even sure there has been any notable appreciation in the last decade. (And if there was, please don't let the county assessor know.)
Lots of business owners, farmers, landlords, etc. give the same sob story and conveniently forget they're going to end up with multi-million dollar properties, farms, businesses by the time they retire.
I can see how it's tough with no cash flow right now, but how is that any different than your mom ending up unemployed? Excluding the current situation, no one cares about normal people losing their jobs, but now that the business / landlord class is in a negative cashflow situation we should all be thinking of them.
I'd say in the scheme of suffering going on right now this doesn't feel like the most deserving of sympathy. Taking out huge loans is a risk. As a society, this is not a good way for members to build wealth. But they're not villains by any means.
Agreed that they are not villains, but nor should we act like they’re doing some service. No one pays their rent because they believe their landlord is adding value. They pay it for access to the jobs, amenities, services that the community (not the landlord) provides.
Generally you do this because you either do not have the necessary credit to obtain your own property, can not afford the transaction costs of buying/selling a property in your desired timeframe, or simply want the convenience of not having to maintain it yourself.
None of this is really the point. Generally when people pay for a service, if they stop paying, the company is allowed to stop providing the service. Eviction laws already impose a higher bar on “stopping service” in the case of rental housing, but an outright moratorium on evictions is just another way the government response to COVID wipes out small/independent business for the benefit of mega corporations.
No one should be forced by government decree to offer their property or services for free. I’m sure at some point there is a Constitutional issue to be argued.
In any case, I'm not asking for a moratorium on eviction per se. I'm a proponent of giving landlords 100% of the revenues created by their property, but 0% of the revenues created by the things around their property. The Land Value Tax (LVT) mentioned elsewhere on this thread is exactly that.
In this case it’s fair to note as TFA does that the burden will be disproportionately borne by individual landlords holding low income housing. The more units someone holds the more diversified and the less likely this new government policy will wipe them out. Perhaps it is the law of unintended consequences that a policy like this will cause long-term harm to renters by centralizing the market and reducing competition.
Also worth noting that the end result of a foreclosure is not just the renter losing their home, but maybe the landlord as well.
I don’t understand your quip about renting air. I can understand somewhat being angered over turning a residential home into a short-term AirBnB. But buying a property and renting it is making housing more accessible not less, and a market of individual landlords each buying one house and renting it is extremely competitive.
If we were debating whether the government should pay landlords monthly for their vacant units we could agree that bailouts are not appropriate. But forcing someone to rent their personal property for free is not generally ethical or legal.
Real Estate taxes are an interesting debate. It’s worth mentioning that whatever the tax rate, the cost of taxes is largely borne by the renter. In fact taxes are a major component of rent cost.
Assuming you bundle no services at all (landscaping, utilities, etc.), a property generally cannot rent for less than their taxes, interest, upkeep/depreciation, and a risk adjusted return. There are a massive number of options for investors, they won’t choose to invest in a vehicle which doesn’t cover those four basic things.
There are some very narrow circumstances where an investor might depend on equity appreciation to make up for an operating loss. This is more akin to speculating than investing and is significantly more risky.
Not all small businesses employ other people.
For flats, concierge service and maintenance is built in the monthly payment, usually included of the lease fee that the landlord pays (about £3/sqft/mo in the UK).
24 properties and can't pay mortgages, does she owe money on all 24 properties... or could she sell some of them she owns and reduce her debt load maybe?
> Many landlords operate on thin margins, typically 9 cents for every $1.
What kind of horseshit figure is this!? Someone tell me what they mean, do landlords have a 9% profit margin on a static piece of property and that isn't enough still?
> Many landlords aren’t any better off than their tenants and certainly aren’t rich enough to credibly pull off a bow tie, says Jan Lee, who manages two buildings in New York’s Chinatown that his family has owned for nearly a century.
Owns 2 properties in the most ridiculous real estate market in the US but doesn't make money, ok. Oh wait, it's that he can't pay property taxes this year, even though he hasn't had a mortgage for 70 years and is coming out of a 10 year bull run.
In my opinion if you were to do this, you should sell a few properties here or there to have 6-12 months of cash reserves on each property.
If you do feel bad for them, then your statement just exposes your own bias and hypocrisy, my dude. Landlords are people too.
This is a measure of wealth, but Bloomberg makes the same mistake that all of these borderline propaganda rags make which is to compare incomes.
It’s like saying a farmer is wealthy because he owns a tractor and a plot of land. Absolutely asinine.
> It’s like saying a farmer is wealthy because he owns a tractor and a plot of land. Absolutely asinine.
These are all assets that can be liquidated for something. The renters have no such assets.
The landlords are just as capable of going and getting a job as anyone. Most landlords are not employed full time simply because there isn't enough work to be done as a landlord to justify 40 hours of labor every week, at least until a substantial number of units are being rented out. The income the landlord receives is typically declared after all costs of ownership, which include any mortgages. So, the work of the landlord results in a greater share of their asset ("equity").
The jobs their tenants have likely do nothing to increase the value or share in an asset.
Emphasis added. The world has changed. Today, if folks attempted intimidation, such auctions would be attended by hoards of cops in riot gear. They'd be there to protect the rich, who will be happy to outbid the locals and sell the property back to them at twice the price.
For better or for worse, the stability of civilization is a lot shakier than it seems.
Nope, I watched the conflict between the WTO protesters and cops first hand, and got caught out during the beer riot of the SLC Olympics. Crowd control is scary effective, and it's backed by lethal force including rooftop snipers. Folks will need to come with gas masks, body armor and armor-piercing rounds to overtake the riot cops. The folks willing and prepared for that aren't nearly as populous as "renters."
But then what happens? Is the auction "legitimate" after this escalation? The aggressors would need to overthrow the courts as well. Not saying it can't / hasn't happened, but it's quite a leap.
> There would be essentially no way to find who did it, following the principles of stochastic direct action.
The surveillance state is pretty bad too.
> For better or for worse, the stability of civilization is a lot shakier than it seems.
Here, we agree. A second civil war has seemed like an obvious eventuality to me since circa Bush II.
When I've been to small/medium protests the cops were a lot more willing to use force. But in truly massive protests, (>500 000), the cops are a lot less willing to use force. Because they know they will likely lose. Seriously, seeing cops rushing to dismantle barricades before they get caught by the march was surprising.
Also, you don't need armor-piercing rounds to defeat a riot cop, any rifle round will do. As for gas masks, yes, but there are only so many rounds that can be fired, and eventually people learn how to defeat them or throw them back.
And honestly I don't think the surveillance state is anywhere close to what's needed to catch someone that did unprompted arson. There's a reason why pretty much the majority of homicides don't even end up in an arrest, much less a conviction.
In any case, the point of this escalation isn't to justify the auction, it's to scare off anyone else from bidding.
I normally perform brick and mortar store purchases with plastic, but during the recent furlough I would make small local purchases at random cash registers and calculate my subtotal such that I could absorb as many pennies from the register that I could (not sure of price per pound of zinc currently, but perhaps there will be a convergence point where the weight of the penny is worth more for its zinc than its Federal Reserve declared value).
The reason for this is that I want to build a small backyard sheds worth of zinc bromide batteries. HDPE is a common plastic (milk jugs, oil containers, etc) and I've found lots of it scattered around my city (lazy, disenchanted citizens dumping illegally, but you and I know that no one is going to catch them - which is advantageous to me since I need this easily recyclable material).
HDPE does not react with a bromine solution. I need this material to house my electrodes suspended in a bromine based electrolyte (zinc electroplating gravity battery lasts "indefinately"). Even beyond that - HDPE is useful to mold into whatever sturdy shape you need (for some reason Youtubers are making slingshot hilt molds).
The reason your comment prompted my tangent is because I'm listening to the audio of "Capitalism: A Love Story" and simultaneously parsing HN output and I am so bored with all of these beat-around-the-bush definitions of wealth, money, equity, derivatives, etc when the people peddling these terms are going into your grocery stores to spend your labor on individually packaged (not HDPE, probably PETE) baked and seasoned treats, or worse fast food prepped by bored&athletic young people who have sentenced themselves to spending months or years of their capable lives slapping together cheaply sourced ingredients using probably natural gas heating elements.
In the 2030s, the people coming to power will have spent thousands of hours on the internet and playing video games where they learned how to operate (regardless of parental lethargy and ignorance).
They will be annoyed with the inefficient world they were bred into.
I have to laugh at this because Americans were told a) you're getting a stimulus check and b) you can't be evicted.
I am almost positive that many people used the stimulus check as found money and blew it rather than using it for rent. The mindset being that if they can't be evicted now, they'll cross that bridge when they get to it.
It's either now, or a future crisis when the black hole of debt has grown even larger.
You're right about defined benefit pensions. They also are in the class of economic rent payments, and so should also be drastically reduced during the pullback.
I understand we all want to see landlords reap the full rewards of their bad decisions, but the article is correct that this will just allow the administrators of the next higher level to mop up, with nothing fundamentally changing. When the eviction freeze is over, tenants will be right back on the debt treadmill, with an even more distant and less empathetic landlord.