The things that make housing affordable here are the zoning codes and laws which basically prevent neighbors from restricting development. Lack of stupid laws dictating how development must be done help a lot too: things like setbacks, parking requirements, etc.
Of course, there's significant survivor bias here, because there were plenty of shoddy older buildings that have been torn down.
Brick buildings don't exist in Japan. Any such structure would quickly collapse in an earthquake. Any older buildings that still exist were either exceptionally well-built for the time, and/or were retrofitted to meet modern earthquake standards. So some historic buildings are still around because they're valuable for cultural or historic reasons, but this doesn't include housing built in the last century.
I'd take modern wood frame construction or aerated concrete with insulation and a brick veneer over a cavity wall or a full brick wall any day.
Because new buildings these days are invariably the same boring gray dull shit that robs any place of its identity?
It's a tough one, breaking against most economic dogmas: foreigners and second home owners would be severely limited to stop them from abusing the system, while existing mortgages would need to be taken as a shared loss between the banks and the homeowners.
The alternative seems to be a broken society, and sadly that might be more probable.
If I owned a property outright, and rented it out at market rates at a decent yield, is it not both?
The problem is property exists in a debt market. Mortgage pricing basically determines property prices.
Imagine a world without landlords. It's way worse than the one we live in now. It's a world where you cannot rent, you can only choose between buying or being homeless.
Landlords provide housing and most of them don't make a ton of money out of it. They hope for future appreciation of the property, which they can only realize if they sell, and their monthly income often doesn't cover the cost of ownership.
I don't believe they exist.
If you are referring to corporate owners of apartment buildings, that's one thing. But to say there is a huge class of people who are landlords is just unrealistic. Very few people own more than one home, and even fewer people own more than two.
To wit:
> Of the approximately 50 million rental housing units in the United States, around 41% of the rental units are owned by mom and pop landlords, also known as individual investor landlords. That means approximately 20.5 million units are overseen by mom and pop landlords.
https://getflex.com/blog/landlord-statistics/
Also, from the same site, the average landlord has 3 properties. That means there are more than 6 million individual landlords in the US. I'm not going to nitpick whether that's "huge" or not; the point is proven.
In a population of 330 million. That's ~1.8% of the population. Hardly a "huge class".
Most people who currently rent don't want landlord. You already make that point yourself: the alternative for them is being homeless, because they are unable to buy due to high housing prices and restrictions on getting mortgages.
In many cases the landlord are making boatloads of money, simply by being the middleman between tenant and bank. They are not the selfless charities you are making them out to be.
Property developers only build things because they know they can rent them out directly or sell them to landlords who will. None of this exists without a market that will demand it.
Why is housing different in your mind? Or is this an American view that everything must be a "free" market? Note that the government doesn't need to be the sole provider of housing, but allowing the government to compete with private industry hardly seems unreasonable.
Is that really preferable to your landlord being an individual you can sue in court?
There is no world without landlords.
They're also there to provide housing services to all including the most needy that many landlords might reject.
See (for example): https://www.housing.wa.gov.au
Do you really want to be a slave, and for all of your descendants to be slaves?
Government ownership of housing is the worst solution.
It's a smart investment that saves on policing costs and reduces crime .. that other wise the same citizens would have to pay for and live with.
Do try and think more broadly and out of the box. The slavery stuff is just ridiculous (you're US, right?).
> Is that really preferable to your landlord being an individual you can sue in court?
Yes, in the country I live in that's much more preferable than to have an individual I can sue. Public housing was the scheme that afforded most people in this country with their first dwelling, and the government in the 1950-1960s publicly incentivised the construction of 1 million dwellings.
So yes to your question, I prefer if I have the option to rent an apartment from my government than from an individual, thank you very much.
With rare exceptions, developers want nothing to do with owning the properties they build. They want to finish the build and get those properties off their books and close the contruction loans and move on.
So somone has to own the property after build is complete.
Possibly to the point where a mortgage would be cheaper and easier than a rental is currently.
Governments could set themselves up as a monopoly landlord for those people unable to afford even cheap homes.
If you wanted to make the current situation worse, congratulations, you have found a solution! Now you can't get out of your rent because your landlord is the damn government!
If a tenants rent only covered the the monthly mortgage, that's still a 5.5% ROI assuming 20% down, 30 year mortgage. Accounting for interest rates, then the ROI is 5.5-(R*0.8)% returns.
But rents go up yearly to match market rents so the actual returns are closer to 15-22% (though it tends to scale poorly which is why REITs pay so little IMO). Even after accounting for loan interest & costs, real estate is a very attractive 8%-15% investment with very favorable tax incentives. E.g. gains gan be deferred as long as they are invested in other real estate, positive cash flow is typically tax free due to depreciation of property - despite it's market value going up!.
No, since parent said "lucrative investment". Key word: lucrative.
If housing was cheap enough to be affordable, not only a house wouldn't be a lucrative investment, but rent wouldn't be that good of a return either.
For you yes, but if everyone does it, then the market is priced on the "market rates" which have now become much higher than your initial price due to market capture.
The problem with private land ownership is that land is a natural monopoly and as such has very actual market conditions. You could theoretically have a functioning one as long as you build way more than people need, housing then becomes elastic despite the land below being non elastic but the math quickly breaks down.
For the conditions to be met where housing "always goes up", and "housing is a basic need" someone is gotta give. And power wise, homeowners wreck non homeowners and have for 70 years hence, they always win. Now with the rush of institutional house buyers and the rush of big corps buying entire house blocks, the problem is gonna become much worse, and quickly.
If you wanna see alternatives to fix the problem, Singapore nationalised all land and has no private landlords and Austria has about 50% of the houses in Vienna to be non market rates (so the price is dictated by construction costs plus a percentage not on how much you can charge for rent). Both models heavily bring down rent/ mortgage costs and yield better results for people, the only ones who lose out are IRA's tied to housing and large landlord conglomerates.
My father has owned a house for 29 years and when he’s gone I don’t care about cashing out or making a profit. Its just great to have a literal home base to rely on in case things get rough.
Too bad, I have bought every house around and put them on the market for 1000% what your dad bought it for. Your taxes are calculated based on market rates, and therefore your housing tax is now completely unaffordable to you. You gotta sell the house you grew up in because I decided to fuck the market in your area.
Also because I own 30 houses and you only own one, I can dictate the price, doing things like marking 28 above you and one below you so yours doesn't get sold. Then 27 above you and 1 below you, and keep doing that while you pay taxes on a house you can no longer afford nor sell.
Welcome to your new nightmare of having me as a neighbour maximising my investment, meanwhile 27 people are homeless because the houses are not on the market despite the demand being there, but if I make them desperate first my return will be higher.
Even people like you, with the right idea, to use housing as a house, can be caught up in the never ending bullshit that is the current housing model.
For a well-financed developer it's a much better deal to drip-feed some 30 renovated apartments at 1x over 1-3 years than sell a chunk of 30 renovated apartments at once and at 0.8x due to the increased supply. If they wait they know the demand will still be there to sell at their full 1x.
And this is what causes things like Prop13, when people revolt against being pushed out of their homes by taxes.
Is there any reason why we can't ban institutional investors from the personal housing market? Seems unfair that a family who wants shelter should compete with giant faceless piles of money which only wants to make a profit at the cost of fucking those who want shelter. Let them chase other investments instead (stocks, crypto, bonds, whatever).
The same reason Corporations have personhood, it makes investors money.
> Let them chase other investments instead (stocks, crypto, bonds, whatever).
All of those are down, but housing isn't, thats why they are chasing it like crazy.
If I am not wrong, in London the most prevalent number fo homes owned was 1, then 2 and then it was like 7. Because 3-6 was expensive but not maximising yield, by 7 your investment pays for itself plus then you can accrue value to buy more property. So landlords get as many as possible. In the early 2010s when I was renting there a landlady asked us to pay rent on direct debit every 1st of the month because she had 42 properties and couldn't afford all the mortages if everyone didn't pay at once. An 82 year old lady, with 42 properties. This was not uncommon when meeting landlords at the time (maybe not as crazy as 42 but still higher than 5 was commmon).
Yeah obviously, but it doesn't answer my question of why can't we regulate them out of the housing market?
"It makes investors money" is not a good answer because a lot of nefarious things used make investors money, like slavery, child labor, 16h workdays, warmongering, snake oil, using asbestos or other toxic substances that kill you, building shoddy buildings that can collapse on you, drugs, polluting cars, alcohol, opioids, tobacco, fossil fuels, dumping toxic chemicals in rivers, deforestation, Ponzi schemes, and yet in most of the west we have regulated a lot of them or even outlawed some of them completely for the greater good because what's good for the investors isn't always good for humanity or for the environment.
So why can't we do the same with housing? Tell institutional investors to fuck off with their bags of money somewhere else. Let them speculate on NFTs, famous paintings or Pokémon cards for all I care.
>An 82 year old lady, with 42 properties.
My point exactly. It's obvious that for basic human necessities like water, shelter and healthcare we can't just leave it to the free market competition to sort itself out, since over time it creates a system of winners and losers, where few who lucked out end up monopolizing the majority of the market share and defaulting to rentseeking, while the rest are left out completely, with no hope of ever being able to jump on board and forced to rent their whole lives.
This rampant inequality is what led to the communists seizing power ~100 years ago, and despite being only ~30 years since communism collapsed in Europe, communism is on the rise again in elections in some EU countries especially among young people because the last 20-30 years of deregulated globalized capitalism has seen the biggest and quickest wealth transfer from the working class to the upper class ever seen.
Sorry I misunderstod your question. Well the main reason I would argue is the disconnect between politicians and general people. The examples you gave, like asbestos or child in mines do not benefit politicians directly. However most politicians are house owners, most own multiple properties, those laws affect them directly. The fact many of their constituents do not own a home is irrelevant because signing those laws affect them.
> This rampant inequality is what led to the communists seizing power ~100 years ago, and despite being only ~30 years since communism collapsed in Europe, communism is on the rise again in elections in some EU countries especially among young people because the last 20-30 years of deregulated globalized capitalism has seen the biggest and quickest wealth transfer from the working class to the upper class ever seen.
I think whatever is coming is gonna be inevitable, there has been an economic capture of levels unseen, coomers owned 30% of the gdp when they were the age millenials are now. Millenials own like 7%. It is unsusteinable and things like AI, the Internet, Globalisation have not yet been integrated properly into the economic model.
I think the prefered solution is more horizontal models, unions are coming back, cooperatives are having a resurgance. Ideas like digital money can be terrible but could also reduce lending barriers. We are at a point where it seems to be more than enough for everyone its a matter of logistics. Green energy and 4 day weeks seem atteinable goals
Uhm, coomers?
>Millenials own like 7%
Luckily GenZ won't own anything, they will only have subscriptions for everything. /s
I doubt this would ever work out, as a high availability elsewhere won't help here. People pick a place to large parts due to job availability, social factors (close to friends/family), infrastructure (shops, restaurants, sports, schools, cultural activity) which is hard to replicate to some scale.
On a very narrow scale there can be an effect, say in Tokyo, where JR builds some railway station and develops that into a new urban center with lots of local infrastructure and connection to job, school, friends, but that is still benefiting to proximity to the other.
Think about how cars generally depreciate over time such that a used car becomes more affordable. During the pandemic, this trend broke to supply side disruptions and used cars actually started to appreciate. Housing always has supply side constraints to zoning regulations to guard the entrenched interests of existing homeowners, and thereby housing generally appreciates in value.
The closest that we can come to balancing both affordability and investment interests in a growing area is to constantly increase housing density. Then the land itself can appreciate in value as larger buildings are built in a fixed footprint. Yet the price of an individual unit of housing can stay roughly constant in real terms due to the ever increasing supply.
This is precisely why a house is different. You can't live in a stock certificate but you live in a home. If you buy a stock at $10 and sell it for $10 ten years later you lost money. If you buy a house and sell it ten years later at exactly the same price it was still good value because you got to live in it for a decade.
To be a good investment, housing must appreciate faster than the rate of inflation.
The politics of the last two decades have overwhelmingly produced the latter.
For most of the period since WWII housing was both affordable and a good investment.
We have no "landed gentry." Stop sharpening your guillotine and deal with reality. People who can afford housing are not guilty of anything -- we should celebrate success, rather than meet it with envy and veiled threats.
It's just a bit less immediately tangible than it used to be. It's still there, and the market still ebbs and flows.
In America almost all of the homes sold today are purchased with money from income, rather than being inherited.
Almost all of the people who are buying homes today can afford them by themselves, based on their income. They aren't "landed gentry", they are just successful people. To demean them by implying they don't deserve their success is insulting and wrong.
That is very different than being angry that the Compte du Whatevertheheck inherited a chateau from his parents. And it requires a different response than fulminating about how the "landed gentry will have to be brought to heel" which is total nonsense.
Almost 30% of all houses sold last year on Texas was to LCC and institutional investors. You can keep the myth going of people without help buying their house and being succesful but the reality is most people report having help from friends or family for the deposit, that most mortgages are sold with criminal variable interest rates and that the corp mass buying of houses has been growing year after year since 2016.
https://localprofile.com/2022/06/07/investors-bought-texas-h...
People love to blame corporations and "foreign investors" for bidding up the price of housing. Canada has banned that in various ways multiple times in the past few years and it has had no noticeable impact on the price of housing. It turns out that institutional and "foreign" investors, just like anyone else who has their heads screwed on straight, don't overpay -- the price of housing is what it is no matter who the buyer is.
At the start sure. But if you have a 2 year fixed rate and then it switches to variable, then you have a variable mortagege for 90% of your 20 year mortgage.
> People love to blame corporations and "foreign investors" for bidding up the price of housing.
They 100% play a significant role on the problem.
> Canada has banned that in various ways multiple times in the past few years and it has had no noticeable impact on the price of housing.
Not in any way that fundamentally changes the status quo, certainly not to reverse it, and also housing has been in a downspiral of accesibility for 70 years, 3 local laws in Canada is not gonna fix it.
> just like anyone else who has their heads screwed on straight, don't overpay
Housing is a need, overpaying or homelessness is a real junction for a sizeble part of the population.
Look at singapore, they are more capitalist than the US and has banned private landlords. Their results speak for themselves, cheaper mortgages, more space per person, shorter commutes, possibilities for larger families to find enough space.
If you prefer to have a building "for billionaries" empty like New York does instead of close to 0% homelessness then thats your choice, but do not pretend it is to help hard working people be rewarded for their labour. Landlords are a remenant of aristocracy, a way for rich tophs to keep living large from their estate. Adam Smith called them parasites for a reason, they are a negative GDP engine.
Ok, you just don't understand how mortgages work in the US.
Fixed-rate mortgages, which represent 91% of the mortgage market, can be had for terms of 15 or 30 years.
This is not like Europe where you have to re-mortgage every two years. You can, right now, lock in a rate for the next 30 years in the US.
This isn't strictly true - 2 years tends to be the shortest (with the lowest rates) you can get, but longer terms are very common.
In the UK, 2/3/5/10 year fixed rates are common. Many people used to go with 2 year fixed rate (for the lowest interest rates), then at the end of the term, switch to another fixed rate for the next N years. Now people are opting for 5/10 year fixed rate a lot more than they used to, especially if they can lock in to a low interest rate deal.
In France you can get a fixed rate mortgage for the entire term of the mortgage. In Germany, I've seen fixed rate mortgages for 10/20/30 years advertised.
Those are the only countries I'm familiar with though, not sure how other European countries differ.
We also had the good fortune to have done this in 2015, when you could still occasionally find a rowhouse in a close-in suburb near transit for a non-insane amount of money.
I feel for my younger colleagues.
what can one do but suppose this is true, wonderful.
How would you even had stats like that and what is that supposed to mean? How would you distinguish money from "income"?
> That is very different than being angry that the Compte du Whatevertheheck inherited a chateau from his parents.
Afaik, America has currently low movement between social classes - rich people are the ones who had rich parents and poor people had poor parents. The issue with landed gentry was not that they inherited stuff, it was disproportional power these people had combined with fixed social classes where your fait was pre-determined.
Mortgage underwriters are very good at doing that.
It's not exactly a counter point, but there have been lots of new millionaires lately:
> People got richer last year, with Americans making up nearly half of the new millionaires across the globe. According to Credit Suisse's annual wealth report, as many as 5.2 million people became millionaires in 2021; 2.5 million of those people were in the U.S.
> "This is the largest increase in millionaire numbers recorded for any country in any year this century and reinforces the rapid rise in millionaire numbers seen in the United States since 2016," the report stated.
https://www.entrepreneur.com/business-news/us-gains-25-milli...
hold up. take a moment to consider that "landed gentry" might change as a demographic and we're suddenly allies.
The Bennets and Darcys from Pride and Prejudice were the landed gentry, with the Bennets being in the middle of it, albeit very precariously for the Bennet women, as Mr. Bennet failed to father a son.
Their interests very famously clashed with those of the up-and-coming merchant class, and of course, those of the tenant farmers and hired laborers.
(Charles Bingley, son of a very prosperous merchant, was not yet part of the landed gentry, but would be as soon as he used his cash to buy an estate and started receiving that sweet sweet land rent from his new tenants.)
We certainly have "landed gentry" in the US - have you ever noticed that auto dealerships tend to be handed down from father to son? It's a good deal of why Tesla can't sell direct in a lot of states.
Also: family farms. Most agricultural workers worked land they didn't own, both now and in the previous two centuries.
Why should I be celebrating my landlord (who bought this house outright in 1995 for $86,000AUD) putting up our rent by $210 (24%) per week just because he can? My partner and I are both pretty decent earners but because of the amount of money we have to pay in rent (for a not even that great place) we will never be able to own a house in the city my partner was born in because we simply can’t save enough for a deposit in a period of time where the house prices wont rise out of reach.
Greed-driven housing policy is ruining communities for a lot of people. All but a small handful of politicians in Australia own multiple investment properties. It is in their interest for the current system to continue as is.
You should be glad that success is not punished, because if that was the case, nobody would try to succeed and your society would suffer tremendously as a result -- and when the economy suffers it always hurts the poor more than it hurts the rich.
By renting you are getting a place to live, you are benefitting from the success of others who were able to afford housing, and you are buying time for yourself be successful. It's how healthy markets work.
Our definitions of success are obviously very different.
"The law, in its majestic equality, forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal their bread."
My rent has normally been just following the advice of my agent, in turn following market trends. But the most recent update from them was recommending a rent increase, which I rejected because of the news from the UK containing many references to a cost of living crisis. (The property is in the UK, if that wasn't clear).
"Following the market" isn't a crime, but the market is not kind or generous.
The phrase "without a fight" can be legal or physical; the former is a foregone conclusion, the latter would be undesirable.
You'd be surprised.
Large land ownership is a huge deal regarding money, status, and influence, without even going into readings of the situation like Georgism.
An investment which increases its value at the rate of inflation or worse is a pretty poor investment. After all, you could probably make more money by simply buying government bonds.
If the housing price increases more than the rate of inflation, it will eventually become unaffordable. After all, salary increases at the rate of inflation - if the housing price increased faster it'd take up an ever-increasing portion of your salary, meaning it'd become less affordable.
Housing was affordable, but its price increased in such a way that it is now unaffordable. This made it a great investment for the people who already owned housing, but newer generations no longer have access to housing and can't invest in it.
That's quite an assumption there. Specifically, it assumes no increases in per-worker productivity.
By your logic, housing never would have been affordable. But we know that it was!
> This made it a great investment for the people who already owned housing, but newer generations no longer have access to housing and can't invest in it.
Actually about 43% of new homebuyers are millennials, and that could not happen if new generations could not afford housing. https://www.nar.realtor/newsroom/nar-report-shows-share-of-m...