Its the upscale equivalent of ticket or GPU scalping (the practice of buying up all material and simply only upselling it for more money).
Parasites of the system.
Not that landlords do construction work themselves - that's a different industry. But someone has to arrange financing. Many renters are not trusted by banks enough to get a mortgage, often for good reasons. They still need a place to live, though.
Someone has to try to prevent people from damaging the buildings and repair them when they are damaged. Maybe that's the super, but someone has to hire them. The people who damage buildings are often pretty nasty.
In theory, the state could do this. In some countries, the state does a lot of it. But someone has to do it. It's an essential job, and if not a landlord, there will be a manager that does pretty much the same thing.
Just about everything can be outsourced, but it adds overhead. The labor doesn't go away, it just gets moved around.
Not everyone is ready and willing to be responsible for a building.
Not to mention the obvious, the new owner would become the new landlord and the process would start all over.
I have to tell you though. This weird attitude makes me hesitate on my next move. My family unit was discussing keeping current house ( and likely rent ) and moving into something further away. I will admit that this anti-landlord sentiment makes consider just straight sale to the highest bidder.
Like.. I have a married friend, whose dad is an actual landlord asshole ( and he was confronted over that ), but not everyone is an asshole despite what some recent actions by humans may suggest.
Calling landlords parasites is like blaming tech employees for gentrification. You're missing the bigger picture.
The majority of landlords in the US (at least in the small scale - not sure about big complexes) do not own the property outright. They have a loan (e.g. mortgage) just like anyone else.
So what will happen? The banks will become the new owners. And they'll sell it at a discount to someone else (with a loan, of course).
I know it's easy to complain about landlords, but if you suddenly kill all landlords and ban landlording, you'll get a lot more homeless people.
Try being a landlord for the "median" renter, and you'll see how many irresponsible people are out there. A lot of below median folks have zero interest in maintaining their place - even if they own it. They'd make for very poor co-op members.
Unless you want to live in government built housing.
That would be utterly disastrous. Homelessness would skyrocket. I mean, where are people who can't afford a down payment going to live?
Also, a lot of people don't want to buy, even if they can. If you know you're going to live in a city for a two-year employment contract before moving again, you want to rent.
I'd imagine they do but I try hard to not just imagine data matches my priors. (Yes, this almost always makes me unpopular)
Not really. Being a landlord takes a bunch of money to sink into the real estate assets. If you don't put it in there you'd just leave it in a mutual fund or whatever and be making passive income of about the same order. Real Estate is a solid investment choice but it's not *that* much better.
Basically this argument is for the form "being a landlord looks like a working class job but pays better and that's not fair".
But the actual truth on the ground is "being a landlord is just a different way of being wealthy, and you have to fix plumbing on the side instead of working a day job in an office".
Maybe the number of bankruptcies of landlords versus other professions normalized for age (since many bankruptcies are health related and landlords tend to be older).
Is there some hard data somewhere that can be scrutinized rather than narratives and sentiment?
(see I told you I'm unpopular)
The theory is it extracts productive capital which could have a better multiplier effect allocated elsewhere such as education, research, public infrastructure, etc.
I'm sure there's some economic wonks that have long academic papers on this to support or refute this 170 or so year old idea, but I'm merely an amateur.
There was an economic movement after Henry George that very adamantly advocated for redoing this social relationship if you're curious. It was (most likely) the inspiration for the original version of Monopoly among other things. It might be regarded as a form of Economic Populism if you look at the adjacent beliefs of the prominent early 20th c. Georgists, but that'd probably be a 5,000+ word article.
Merely the fact that a typical landlord works far fewer hours than most other careers. Even a property portfolio of 100 properties probably isn't a full time job if you have managing agents.
Which is its own solvable problem, but is a problem.
Keep adding these small tasks to the list, and when the list gets long or something urgent comes up, call the handyman out for a half-day.
Really if these people just died and the companies moved to their workers or customers what would change?
Landlords provide one thing capital. And capital expects returns. Maybe at times there is not enough competition in where capital is spend, but in general it is not that great place to put capital.
I enjoy coding. I do not enjoy dealing with unreliable contractors and months of partially finished projects
Maybe in an apartment, a maintenance person might; but smaller rentals; at most the landlord charges the tenant and calls a plumber;
in reality the tenant is often responsible for calling and paying the plumber;
At worst, the landlord has never had the plumbing cleaned or inspected, the tenant or landlord hires a plumber, the plumber finds an object stuck at the tree roots in the pipe, and the landlord charges the tenant for the whole job, threatens the security deposit, and when the tenant refuses to pay, the landlord evicts them.
And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.
For some time house values would drop, they will be sold to largest possible buyers. This isn't small buyers but probably banks, since they have lots of capital. Because of price drops, demand will be lessened and house construction industry will experience layoffs.
Many people will be without a house to rent, so banks or large money interests will offer their stockpile of houses under strict terms i.e. rent without renting (timeshare/leasing/house borrowing).
You'll get landlords but with deeper pockets.
There's an argument to be made about affordability, but there are a lot of arguments against paying someone else, for which you receive no equity, and they get to keep any price appreciation of the property.
It'd be interesting to see a rental market that banned anything but rent-to-own contracts, where some portion of your monthly rent had to buy equity in the property you occupy. (With standardized terms for disposal, sale, etc)
The other components of the market aren't fixed and immutable.
If state governments wanted to mandate denser rezoning and smaller minimum unit sizes once unaffordability reached a certain level... they could.
Pointing at expensive housing and saying "We therefore have to make it cheaper by forcing more people into bargains in which they receive none of the gains" seems like the tail wagging the dog.
Micro housing that's cheaper should certainly be able to meet that bar.
Therefore, the sum of the rents of the tenants of the property is enough to cover the purchase of the building, which is a subset of those costs.
The "sum of the rents of the tenants" isn't relevant to a single tenant, the loan isn't used to "secure the purchase", and you're confusing cash flow for total equity.
A building owner puts down a deposit for some percentage (say, 20%) of the building's cost, gets 80% in debt, and pays down that debt over time with the cash flow from the tenants' rent payments. They make a small margin net of expenses, plus whatever equity accumulates over time.
Setting aside the (significant) question of whether or not a given tenant would have the credit necessary to do such a thing, a tenant is not necessarily able to do the same thing, just because they can afford to pay the rent.
Real scenario: Someone buys a 4-plex for $1M. They put in $240K down payment. That's $60K per apartment. Will those tenants have that $60K they can put down to continue living there?
Sure, they'll own it and can get it back if they sell, but the majority of tenants don't have that kind of cash lying around.
You're paying the landlord for the cost of capital and the property management. And a 400k house in the stock market would on average generate 40k a year in appreciation. Most apartments in functional markets aren't anywhere near that appreciative.
Only in your dreams. The massive value increase in the last decade is an extreme outlier. Schiller showed that in the long run, looking overall, the appreciation is only 1-1.5% above inflation.
Sure, some places do get big increases. But it's not the norm.
Switzerland also has an interesting system that seems designed to somewhat equalize renting vs. owning.
Basically if you and 3 friends want to buy a 4-plex for 400k you would assume the bank would just make sure each person could afford 100k, they don't. Instead the bank will ensure each person individually has sufficient financial resources to afford a 400k home.
That and converting a 4 plex into condos doesn't make financial sense when you could just demolish it and build townhomes.
> And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.
You are using a logical fallacy known as false dichotomy. We have many other possibilities such as commie blocks and even denser privately owned residential housing with fair competition and pricing. Maybe hard to achieve fair pricing but not impossible.