You paid much more than that. A substantial part of your rent is property taxes. I also doubt you included sales taxes in that number. Then there's more esoteric stuff like tariffs, etc
My parents lived in North County and paid 13k+ a year on a $350k house. Their current place in Tampa is about 400k and the taxes are less than half of what they were in NY. Maybe Florida is a special case?
https://www.zillow.com/homedetails/41-W-72nd-St-APT-8C-New-Y...
https://www.zillow.com/homedetails/491-Marcy-St-Portsmouth-N...
Property taxes on the NYC place are estimated by Zillow at 715/month, while NH place is 1445/month. NH has no income tax.
Mortgage much much more likely to be the dominant expense for a residential landlord, but varies significantly with age.
There are many longtime landlords for whom their tenants are now nearly all profit. Which is INSANE.
Without detailed analysis there's no way to know if this is true, or how true it is. It is entirely possible for an increase in taxes to lead to no increase in end prices or even a drop in rent prices. It's a complex system.
Here.
Without determining elasticity, it's impossible to determine how much of that cost is flowing through or how much goes to impact margin.
So what?
The percentage of rent that is taxes is exactly the amount paid in taxes by the landlord. Period. It is an absolute number.
Why do they need to have an effect on rent for you to understand that you're paying them?
Bobby gave Lisa $10. Lisa then gave $3 to Uncle Sam. What percentage of Bobby's money went to Uncle Sam? 30%. It's that simple.
No I'm not. This is pretty entry level econ material. Price elasticity is very well studied and there's plenty of resources to learn more about it.
...
"Health insurance costs raise the average effective tax rate on American labor from 29 percent to 37 percent, they said."
https://www.washingtonpost.com/business/2019/10/16/americans...
There’s really no way to increase taxes without impacting consumers. Unless you try to limit rents, but then you have other problems with people not wanting to invest in apartment buildings.
In a world where corporations make profits, some competitors choose to eat the taxes and retain customers, while others may increase prices and lose some customers, and some customers may eat the increased price and remain even though they're getting a worse deal than before. This is the concept of "consumer surplus" vs "producer surplus", and taxes are cutting into those surpluses differently depending on the specifics of each market participant.
All of this has been debated endlessly by economists, in terms of just how much of corporate taxes get passed along to consumers and so on. And the answer seems to be "not zero, and not 100% either", and everything beyond that is up for debate. So no, not "everything is ultimately paid by the consumer", that is the 100% answer and that's pretty clearly wrong in a market where producer-surplus exists.
In reality, real-estate and rents are probably one of the least-efficient markets imaginable. The frictional costs to buying and selling property, and finding a new tenant who might be a problem/deadbeat/etc, or spending a bunch of time apartment-shopping, picking up your life and packing your stuff, and moving, are immense, and all parties involved are highly emotionally invested as well. Landlords are trying to make a long-term calculation about whether the property is going to appreciate - even if they are losing money today, if they expect to make capital gains in the long term it could be worth it. And all parties are operating with minimal information. Out of all the markets in the world, real-estate and rental living spaces are probably one of the least efficient possible.
Pass-through taxes exist though, yes.
Also, 1-year leases are typical in the U.S. (at least Philly/NYC northeast U.S.), so from that contractual perspective, your rent can go up every year and that's totally legal.
Its actually much more complicated then that, depending on factors such as the propensity of landlords to cease renting out units if their profit decreases, the propensity of renters to shift to smaller dwellings in the face of rent increases, etc.
Your mistake is assuming that people who bought up housing stock are guaranteed future profit on their speculative investment.
Step 2) Force out investor class and/or repossess properties out of tax adjudication.
Step 3) Public housing!
How does this logic work? Building apartments becomes a bad investment. Then developers don't build apartments. And somehow constrained supply is supposed to result in lower prices?
You can say the market won't let it happen, but the second case is the current real estate market for the town I went to school in.
Personally I think owning a residence you don't actually live in should just straight up be illegal, but I'm admittedly pretty radical about parts of the system that seem to exist solely to make the rich richer.
There's no guarantee that builders will use the loosened restrictions to build the most efficient housing. In fact they will most likely build the most profitable housing instead.
The most profitable is on the high end - so marble countertops, stainless steel appliances, etc. All the builders will race to build as much of that as they can, as fast as they can. Then, when the market is glutted, they'll be unable to sell off their investments. Builders will end up with their capital all sunk in cheap land and expensive housing. no one can afford to buy. The builders can't sell the cheap land since they leveraged it to pay for developing the expensive housing. They can't sell the expensive housing because the market has temporarily dried up. The builders will just wait until the glut resolves and continue business as usual.
Meanwhile, there is not really that much more actual housing for the low end market. Some builders made a bunch of money and some craftsmen got extra work building houses they can never afford.
Capitalism at it's most typical.
If there’s a glut in the market prices fall. If you have invested a lot of money in something in the hopes of selling it at a profit and you can’t you go out of business and your assets are sold. So if you over leverage and prices fall you go out of business and lose all your assets and the bank may lose some of its assets. Housing supply increases though. In a market where there’s excess demand at current price points (rising prices) that’s good.
Capitalism doesn’t make ever increasing housing prices, zoning does.
I have both owned and rented at different points in my life. There have been times where renting was a better choice for me, for a variety of reasons. I am glad that renting is an option.
If some kind of community property system exists (not for ALL properties but a large number of them) then any rent you pay in say New York is also paying down a virtual mortgage you have the the "community" that spans the country. Like a virtual HOA.
But then a right-wing government came to power and sold most of the social housing off, while banning local authorities from building any more. So now, we have the situation here where the large majority of tenants are renting from private landlords, who are just pocketing all the rent for themselves and doing the bare minimum upkeep, while holding a rapidly appreciating asset.
Which is exactly what the right-wingers wanted, but of course doesn't help everyone else who isn't a landlord, and just wants somewhere decent and affordable to live.
Sure would be awful for a rental market to exist. Without rental there’d be only be home owners and homeless and that is clearly a better world.
Surely you see stuff like this is part of what is driving this very bubble?
Land owners seem to feel entitled to businesses with no risk. Costs are always passed down, even if it makes people homeless. I'm more than happy with you going out of business if an event that makes you richer isn't an event that you can handle in terms of cost.