Younger generation really isn’t on board with all this & only a matter of time before it shows in polls
They are very happy sharing a vitriolic dislike of everything that is a landlord society.
This is very clearly against even a single buy-to-let landlord, but fully extends to all AirBnBs, their rental flats/homes (it is shocking how few seem to have a communal living space - their living room has been converted to a sleeping room to make the rent affordable), and it extends to the perception of what Netflix is and everything about SaaS business models.
They do not hesitate to share ways in which they sabotage landlords in small ways daily. They gleefully share about coffee grinds down the sink in the AirBnB that has a septic tank, of using "bills included" rentals to run the heater... some of them in the cold snap before Christmas went into discount AirBnBs just to run the heating constantly, and of course there's rampant piracy.
There is a very angry generation coming up.
I'll note, I wouldn't have even thought the demographic of the sites I run would be considered left leaning or poverty, these are middle-class people who are angry at their hardship compared to what they perceive as they easy wealth and times of the preceding generations.
https://www.prb.org/resources/u-s-homeownership-rates-fall-a...
Given the perception (and perhaps reality) that they are worse off than their parents generation, it’s not too surprising that they rebel against the system.
But when working people look out for their best interests, suddenly there's something wrong with them.
In municipalities with highly restricted supply due to regulation, as well as expensive land due to lack of a land value tax or property tax, most of your rent will be the "rent-seeking" kind of rent. Apartments usually are built on very expensive land and are still affected by restricted supply caused by regulatory capture, so they're not different in this instance.
Then everyone and their mother decided that becoming a landlord is where the money is at, and started bidding each others up. This was sustainable because the city had a surge in people moving there.
These days, most landlords here are just some random small companies charging exorbitant rents while trying to avoid costs and responsibilities at all cost.
And as perverse as it sounds, these folks are often also involved in local politics, and will actively vote against things lie new development projects, changes in zoning regulations, etc.
Man that is the most accurate description I’ve seen in a while.
My current apartment (powered by RealPage, just like my last 3 weeee) sent us all no less than 6 notifications during the cold last week about making sure we run water to not have the pipes freeze.
A total of 4 buildings have burst pipes that included the fire sprinkler system, and they are now trying to blame the residents for not keeping their apartments warm, and also trying to say that “this is why you should have renters insurance because it’s not our fault.”
I’m really hoping to get some popcorn and watch this shot show go down in lawsuits.
It's an entire inconvenience for not having an inital capital for a mortgage deposit.
I've rented many places, both with excellent and terrible landlords. And it makes little difference, when the laws offer so little protection to the renter.
It wouldn't be half as bad if the inconvience was offset with the rent being the cheaper option. But that isn't going to be economically viable in such a captialistic society.
Many more would complain if renting was a software product.
To me this seems absurdly low. Losing a dwelling is much more difficult than losing a job. It can be absolutely traumatic, and set people back financially, or worse for people who are already on the brink. In Quebec, where I live, thankfully it's one year. But it should be longer unless you can demonstrate some sort of valid legal reason like your tenant is damaging the building. Just cause you can extract a higher rent shouldn't mean you upend where someone lives.
Landlords often retreat at this point and just say "well we are charging what the market rate is" and leave behind any pretense that this is a fair economic transaction. In that case, landlords can get fucked, in my opinion. A system that buys up a scarce and necessary resource and then sells it back at prices disconnected from the actual value provided by landlords is unethical.
It's not to allow a subset of renters to explicitly screw the owners by deciding they don't need to pay rent.
"I'll totally be able to get my landlord to pay for mold treatment" is a good joke, though.
My point is that complaining about rare cases where landlords lose money because they cannot evict a tenant who isn't paying at the drop of a hat is simply ridiculous. It is like complaining that an insurance company occasionally has to pay out for their policies.
The truth is that the price of rent is utterly disconnected from the value of a landlord's labor plus the various premiums you'd pay for risk smoothing, lower transaction overhead, and opportunity cost. Landlords simply charge whatever they can get away with and we should all laugh at attempts by landlords to justify their rent through any argument other than "fuck you, pay me." After all, I've never heard of a landlord reducing the rent when they finish paying off their mortgage.
Once we at least have this shared understanding we can start having a real conversation about the merits and costs of the system we have today, rather than this fake conversation about how landlords are so nice for paying for that new roof.
Is your pay based on market rate for your services? Do you voluntarily make less money than you can?
I don't believe that rents would actually go down meaningfully if states adopted laws enabling evictions within two weeks. As you say, rent is actually based on market rate and is entirely disconnected from the expenses landlords pay. All of these discussions about landlord expenses are non sequiturs that just hide the real discussion.
> Is your pay based on market rate for your services? Do you voluntarily make less money than you can?
I am performing labor rather than gating access to a scarce and necessary resource. The social damage of charging for labor is not the same as the social damage of charging for housing.
Your pay is also more than likely built on the back of the less privileged.
How much “social damage” is being caused by a company investing money to build new housing as is the case with JPM?
What’s the alternative?
That's true. The founders of my employer are mega-billionaires though. I'm not worried about them.
> Your pay is also more than likely built on the back of the less privileged.
That's also true. Capitalism is fundamentally unjust. I donate a huge amount of money to anti-poverty charities annually to help mitigate this.
> What’s the alternative?
I am not certain. But we can't even have this conversation until people stop talking about landlords like they are engaged in some essential charity for renters.
If I know that there is more risk involved in being a landlord, why wouldn’t I increase the rent to compensate?
If you could increase the rent and still find tenants you'd do it right now. No reason to wait for any legislation
If the regulations change, all landlords that have any business acumen are going to address that by raising rent. The entire market is going to change.
People don't want a landlord, they want a home. For many people the landlord is currently a necessary evil they'd rather get rid of.
It’s going to increase prices and/or reduce supply as not as much capital flows in.
People may not want landlords. But everyone doesn’t want to own a home. By definition, they want to rent from someone else - ie have a landlord.
If you can really do it then why don't you simply increase rent right now?
Maybe we can agree that the price-to-rent ratio will decrease?
The current setup hasn't exactly been great at generating new housing. Juicing speculation increases nimbyism just as much as it increases developer interest.
There is also plenty of affordable land in the US in flyover country.
Huh? Save for a small number of cities most of the nation is sprawling suburbia. 70% of Americans live in single family homes.
Most of what you pay for here is the land. And this is becoming ever more important because of agglomeration effects in the modern world.
> Build up
Ok you're switching gears a bit here but I'll entertain anyway. If you want to build up the right solution is a Land Value Tax. Landlords of course hate this idea.
That is not true.
https://www.statista.com/topics/5144/single-family-homes-in-...
> Most of what you pay for here is the land. And this is becoming ever more important because of agglomeration effects in the modern world
This is also not true. With an investment property you can depreciate the value of the building. But not land. It would reduce the tax incentives greatly if that were true.
I’ve owned five properties in my life and the house “improvements” is always more valuable.
Out of those five, two were new builds I had built from the ground up as primary residence. You can see the value of the unimproved land and compare it to the values of the houses built on top of it.
The other three were investment properties where I could only depreciate “the improvements” - the amount attributed to the house
In “sprawling suburbia”, builders can buy land cheaply and build hundreds of homes.
> Ok you're switching gears a bit here but I'll entertain anyway. If you want to build up the right solution is a Land Value Tax. Landlords of course hate this idea.
You realize any increase in cost is passed on to the tenants. How does that help affordable housing?
> You realize any increase in cost is passed on to the tenants. How does that help affordable housing?
This is 100% totally wrong. The concept you're reaching for is called tax incidence. In the case of Land Value Tax it's fully the burden of the landowner.
Here is a mountain of data backing me up: https://gameofrent.com/content/can-lvt-be-passed-on-to-tenan...
I've rented from several different single-person landlords. None of them have ever done any preventative maintenance on the property and every single one dragged their feet terribly when it came to urgent and necessary maintenance. Two summers ago my AC broke and my landlord was uncontactable (I tried for days). I arranged for a HVAC company to come and repair it on my own and my landlord refused to pay for the bill because I didn't use their normal company (I was never informed of their normal company). Even though in my state it is a legal requirement that rented homes have working air conditioning, it was a huge fucking ordeal to get my landlord to take the cost off my rent.
Now imagine I'm a non-native english speaker who didn't have spare time to dig through state regulations and this happens to me. I'd just get fucked. That's what happens to a huge number of tenants.
According to the law in GA, you have the right to put your rent toward necessary repairs.
But, all of your anecdotes argue for professionally managed properties - like ones being built by JPM.
My experience with corporate landlords has also been shitty, but in different ways. They've done fun things like have terribly sealed granite countertops with stains that they charge each tenant for "ruining" but then don't actually change out between tenants. I was dinged for $2,100 for stains that were present when I moved in (I foolishly didn't have photos). The new tenant was in a few days later without new countertops.
But we have plenty of evidence from especially around 2008-2011 that people were both not worried about squatting and not paying their rent and owners doing “strategic defaults” credit be damned.
Yes, I could have avoided their abusive nonsense by protecting myself more carefully. But that's fucking awful. People shouldn't need to enter adversarial relationships with their landlords on day one.
Do you do any large scale transaction without doing due diligence?
I also made a cross-country move during covid and had to choose a place to rent based on old photos because the current tenants understandably did not want their landlord to come into their home to do a virtual walkthrough for me.
"Oh, if you don't work hard to protect yourself of course you get fucked over" is not a good world. It may be the real world but this should not be used as a defense of the virtue of landlords.
I did something similar. My lease was up and instead of rushing to buy a home. We moved our stuff into storage. We found an extended stay close by and we stayed there six months while our house was getting built.
I had a friend who relocated from Seattle to Atlanta and did something similar.
I do no think they're sufficient and go far enough.
I say this as someone living in the UK.
https://www.lettingaproperty.com/landlord/blog/renters-refor...
I'd like to see some proposals on how much rent can be raised with respect to local rates. Some European cities have attempted this, but not without issues.
And some enforcable time limits on how soon repairs can take - for example a broken boiler.
A simple supply/demand model is useful but limited when the demand is everyone.
Single person occupancy growth in the last 20 years has pushed up pressure on stock as has the addition of many millions of persons beyond the national fertility rate. Incredible levels of regulation of which I wager you know nothing make building nearly impossible. I've built many properties, managed many, sold many, bought many. These flippant simplifications don't make sense. Costs to building quality housing to a modern standard are considerable. This the explosion in generic poor quality housing with aesthetics that are vile. If there were real cost pressures we'd see trailer parks everywhere in the UK. But we don't.
Builders of individual homes are building larger houses that are unaffordable to the people who need them the most. The answer is multi unit housing - like those being built by the evil profit seeking capitalists.
You might want to argue that monopoly is efficient, but it's only a temporary thing until they have built their moat.
To be a little less glib, it's easy to imagine other non-profit funding structures such as co-ops and government help (dirty phrase in the U.S. I know).
I imagine a lot of the costs of actually building would decrease a lot when remove the incentive for NIMBYish building codes.
There would be challenges as you point out, but the overall situation would be much better for all of society.
It wouldn't be linked to inflation, as the housing and renting market has historically been above inflation. So limiting to market rate would still be beyond inflation.
It would be balancing between having housing as a necessity vs a comodity.
In California owners have a minimum of 5 years for example.
That requires at least as much effort to do as keeping a regular job and maintaining your relationship. A young person without a solid family backing is already stretched too thin. And families is rapidly disintegrating across America leaving the young particularly vulnerable to the corporate landlord scheme.
I don’t think it’s particularly worse for millennials vs genx.
Coming up with $2500-$5000 for a down payment was not that difficult, even for someone just finished in high-school. One could easily save that up over a summer or two.
Fast forward 15 years, and the same apartments now goes for $250k-$350k. Rent is $1k minimum, and all the rooms on campus are either full and waitlisted, and you can only live there for 2 years anyway. Oh, and banks require a minimum of 15% for the down payment. And that's for the smallest, most basic "starter" units. The 2008-2009 crash killed all momentum, and building only reached the same pre-crash levels some 5-6 years later. This vacuum led to used housing exploding in price.
I think the resentment comes from the fact that many young people are paying $1500 in monthly rent, while a mortgage for the same unit would come at $1000 / month. They go to the bank and apply for a loan, but the bank says "Sorry, you need to save up more for the down payment". Next year the same house is 5% more expensive, while the rent has also increased in the same manner - but salaries have not.
Probably not a problem for us that are working in high-paying fields, but for regular people - especially young ones starting at the bottom - it probably seems like a race where the goalpost is being moved further and further away.
Their argument was “My landlord bought the house 20 years ago and it’s paid off. So they should charge me less/nothing because their expenses are zero.”
It was weirdly illogical to me as first, they thought the mortgage was the only expense and didn’t even know about taxes and insurance.
And second, the idea of markets didn’t seem to matter and they thought they should get very low/free rent because they lived there. And they hadn’t thought about how people would be able to rent if this is how the world worked.
I think maybe it’s because of virtualization where there’s not a clear cause and effect with digital goods so it all becomes very relative. Or something. But it made me not want to ever be a landlord as negotiating with people like that would be tough.
There is, because land owners are monopolists that can extract economic rents (extra-high profits due to monopoly ownership) far beyond the ordinary rate of return in a fair and free market of capital goods.
This is primarily because land (or more specifically, location) is a monopoly good, not a capital good that can be created if demand increases.
The extreme end of this reality is feudalism, which most countries in the world decided against for one reason or another. Your young relatives are intuitively sensing that they feel like serfs in feudalism, and there's an increasing truth to that.
Land value tax would solve this.
This allows the property tax rate to increase while impacting non-resident owners more than resident owners.
Sadly though, this kind of tax just increases rent as it’s an additional cost to land owners.
I disagree. Costs are frequently passed on directly. For example, if utilities are included in the rent and the utility rates shift up, then the rent will increase due to that.
I think it’s common that there’s an expected rate of return that investors want in their rental property and they invest according to that.
It’s not that landlords charge what the tenant can bear as the tenant might be able to afford lots. The landlord charges what the market will bear. If the tenant makes $1M/year it won’t really affect what the landlord charges them.
This is an example of a tenant cost, not a landlord cost. In fact, the landlord may not be able to increase rent as much in the future due to the utility cost increase, because the tenant has less disposable income.
> If the tenant makes $1M/year it won’t really affect what the landlord charges them.
I don't think an extreme end of the scale is particularly useful to consider in this case; most tenants don't make $1m a year, and most people who make $1m a year don't rent.
This is relatively easy to resolve, anyway. If "Costs are frequently passed on directly" as you say, then you should be able to make some predictions about landlord costs and rent and then see them replicated in the market.
An example would be:
Many landlords have mortgages. An increase in mortgage rates in countries with non-30-year mortgage rates is an increase in landlord costs. We can expect a doubling of mortgage rates to have a significant impact on landlord costs, and thus a significant impact on rents. Do we find in countries with non-30-year mortgage rate rises that rents go up significantly more than usual with significant mortgage rate rises, or not?
You can also think of an example more to prove whether rents go up when tenant incomes go up or not, such as:
Do rent increases have a correlation with tenant income increases, or are they unrelated?
In my country (New Zealand), there is ample evidence to support landlord costs not generally being passed onto the tenants (I say generally because there will be specific instances where this isn't true).
Well, well, if it isn't the consequences of my own opinions.
Renters essentially finance the ongoing ownership of an asset without getting any of the value back. At the end of the day, the landlord typically doesn’t have to do much work (or can use rent to pay someone to do the work), but gets an entire house in value. Whereas a renter does a huge amount of work to handle the cost of rent, but gets nothing at the end of their stay.
The only difference between a landlord and a renter is that the landlord has enough money for the initial downpayment in the first place. The renter is still covering all ongoing costs associated with ownership anyways, including mortgage and maintenance. (If they didn’t, renting out wouldn’t make financial sense.)
A renter will easily pay $90k over 3 years, but will have nothing to show for it. Whereas the landlord gets 3 years of their mortgage paid off.
The financial aspect of renting is very unfair to renters, and incentivizes perverse behavior. And JUST because renters don’t have the upfront capital for a down payment, or because all housing inventory has been snatched by landlords.
Reiterating: renters CAN handle ongoing ownership costs, because they’re already the ones paying for the landlord’s ongoing ownership costs. In fact, that’s the only way that renting makes sense for the landlord in the first place.
So the entire concept of renting is based on one class of people having capital and one class not.
But I'm not sure I'd envy people who bought in 80s Japan.
Selling a house is hard. Owning has downsides.
But the upsides almost always outweigh the downsides.
If you plan on moving every year or something, then buying will be bad due to the transaction costs. But even if you move every 5 years, it’s possible that owning will be better in the long run.
And there was just another post here within the last couple of days about how many of the remote customer service work jobs require unpaid training, inconsistent hours and are a race to the bottom.
There are remote jobs of varying quality. But they are much more prevalent now, than 10 years ago.
Not that you ever needed to sell up in order to move. As a kid I moved around a lot when my father changed jobs. We rented in each new place but the family home was kept (and rented out).
It's not really mainstream. For tech workers and middle management maybe but certainly not blue collar, medicine, retail, transportation, HORECA, etc. For perspective, the majority of adults in the US don't have college degrees, narrowing down their opportunities for work that can be done via Zoom. It was a deep point of resentment between the cozy work from home laptop class who could have all their needs met through delivery apps and everyone else during lock-downs.