Why Do Fewer Renters Expect to Move?
libertystreeteconomics.newyorkfed.org
libertystreeteconomics.newyorkfed.org
I decided that I'd just go into credit card debt and live in the crappiest hotel that I could find until I had enough money to pay the first/last/security deposit.
Luckily, I found some shady landlord on Craigslist that turned out to be pretty chill, and just let me move in without even paying until I had the money. Dude even picked me up from the airport and moved me right in. It was kind of a rip-off for a room, but it was furnished, and I wasn't going to be in a position to buy furniture for months, so it worked out for both of us for 6 months or so.
I do wonder... At what point does this start to impact who can and can't even move to your area for work? Have we already reached that point?
Just build corporate housing.
Then we can have little Amazon towns where all your needs are met and everyone lives in perfect harmony in downtown San Fransisco.
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If it's a bad offer, it's a bad offer. If there aren't enough good offers, forbidding a weird benefit probably won't fix that anyway.
Vertical integration isn't that unethical if you religiously stick to only integrating what would otherwise suck.
Corporate housing, and worker housing in general, is what we're bouldering towards. The only way to extract further wealth from most of the population is for them not to own anything. It's the Western equivalent of South Asian brick kilns.
What we need instead is social housing like Vienna [1]. Americans in particular always associate such thing with ghettoes and Section 8.
And here's another problem: US corporations already keep employees and pay them less with the fear of losing health insurance. That's why the system exists. How much worse would it be if it's also your housing you'll lose?
I think there's always a way to make these moves work. You just need to take a risk and be ready to suffer.
Number cannot always go up. We are at the top of the carbon pulse. Financialization has taken us far from the material baseline of the rock we are flying through space on. Debt will only get us so far.
For this and many other reasons, why would you believe a house "as an investment" is a reasonable thing to keep hoping for, especially 30 years from now? If you have even a reasonably stable rental, it's less risk exposure if you can save some money that isn't tied up in a down payment.
Physics and reality do not. Once the number gets big enough it loses all practical value. Humans are not really built to reason about very large numbers. At some point you reach Zimbabwean inflation and your currency loses all value because everyone is paid in the trillions. Then you reset your currency back to lower numbers because that's what humans and their systems can handle.
So, no, the number cannot always go up. There is a practical ceiling beyond which numbers lose meaning and value.
Heck, the dollar is already it. What used to cost a penny now costs ten dollars. We just think in dollars and forget about the pennies.
I can't even imagine renting when I'm retired and have less money.
I can only save so much money in retirement plans. A house (in the US - other countries have different rules!) is my next best retirement investment because I can live there rent-free after I retire, or I can sell it for more cash.
If you are not maxing out your retirement accounts then the house may be a worse investment than adding more to your retirement accounts.
Also homes are a bad bad retirement plan. If you're debating paying off your mortgage early, or investing said money in a 401k, 401k is almost always the correct choice, in just about every market. Debt is not a bad thing. Often having more debt means having more cash flow, which means greater investments. That's why companies don't outright buy their real estate, either.
Buying a house can be an investment, but it's also buying a place to live. Even if the home's value merely keeps pace with inflation over 30 years, you've converted a largely fixed housing payment into ownership rather than paying ever-increasing rent indefinitely.
And it's really not that hard to make an unnoticeable drywall repair.
If you purchased a rust bucket of a car, you own it and if it all goes south you still have a roof over your head.
I'm a strong proponent of both owning and renting, and each has tradeoffs vs. the other. I've moved between renting and home ownership a couple times, and I appreciate the customizability of ownership along with the very real financial advantages.
On the other side, I've also enjoyed "freedom" of renting, where I didn't have to spend any additional time, energy, or money on maintenance tasks. In my HCOL part of the country, I could also afford the rent to live "downtown" when owning anything remotely similar was out of the question.
Your "also a place to live" line is fantastically underrated. When the housing market was flat or declining, I'd always get annoyed when people said something like "I've owned this house for 5 years, but now it's worth $20k less than when I bought it!". That also means if they sold it right now at that $20k "loss" then they effectively paid $333/month plus upkeep to live somewhere for 5 years!
This also ignores the costs in buying/selling, including agent fees, lawyers, etc. You should probably only buy if you plan on living in a single place for at least a decade.
I've only ever heard of that stuff paid by seller if seller was a sponsor, and the market was a down market. Think new build in 2020 or in a depressed housing market today.
It can also be a prison, as many people who locked in at low interest rates are learning. If they move, a lot of them will have to reset their mortgage rates and end up paying a lot more. This has trapped people into housing that is substandard for their living situations (growing families, moving for career opportunities, etc).
Renting can be perfectly fine for society, though the explicit tax benefits in the USA usually tilt in favour of home ownership. But a lot of very wealthy countries are majority renters, including Switzerland (where the home ownership rate is in the 30-40% range). This gives the Swiss a huge leg up on lifestyle flexibility and the majority of their wealth isn't tied up in a single asset.
I'm not trying to shit on owning a place, but ideally there should be nothing wrong with renting (assuming a competitive market where rental units can be built and aren't zoned out due to restrictions, etc).
I’m not against renting but the rate at which prices are rising in many areas is unbelievable and the inherent instability it brings frankly sucks. It makes renewal time every year needlessly stressful.
If prices were more stable over long periods and one could more easily secure assurance that the owner isn’t going to rugpull them so one could only move every decade or so at most frequent that’d be easier to deal with.
Its only an investment if you are renting it out to someone else, otherwise you are just gambling.
You have evidence from the future?
Where's your evidence global temperatures won't plummet 20 degrees tomorrow and reverse climate change?
Past observations inform future predictions.
The fact that there was Black Wednesday, 9/11, the dot com crash, the Iraq War, a once in a century global financial crisis, Brexit, and a global pandemic… suggests it wasn’t an “ok period” for markets. Yet, somehow, over the period of a mortgage, they all went up.
The idea that humans won’t adapt to whatever happens in the next 30 years is ludicrous. There will be short term market instability, just like the events I noted from the previous 30 years, but planning for the apocalypse is mind numbingly stupid.
If the apocalypse happens, everyone is in the same boat. If it doesn’t and you didn’t get on the housing ladder early, well, you’ll probably be buying a more expensive house in the future.
I’m saying this as someone who waited far too long to get on the ladder when I saw how rapidly prices were ascending in the 2000s (leading up the the GFC). I used the exact language lots of people in this thread are using about prices coming down eventually. But I was wrong.
Post the crash I couldn’t buy because deposit demands doubled. It took me out of the market for a long time. Ultimately costing me more when I did buy.
The future always seems risky, it’s the nature of the beast.
Easily 30-50% of the money you pay in rent is immediately burned in tax/letting agent fees that don’t happen to a homeowner who “is their own landlord”. Additionally there’s no capital gains tax on one’s primary home.
Even if house prices stay flat it’s usually still better to own if rental yields in your area are higher than 5%.
Of course this doesn't work exactly and you can nitpick this, but I think people should at least look at housing assets as more than "is it going to go up?", and more about long-term risk reduction. (And, just to be clear, this doesn't mean that you should lever up beyond reason to buy a house.)
You have to decide what "enough" is, and that's variable depending on your expected standard of living, etc. I am personally currently lucky enough to be in a good rental situation, which colors my view.
Having a landlord that will fix problems and eat incidental appliance/roof/major expenses is a form of insurance paid as rental.
Yeah, I thought that when I was young too. The housing market can keep going up for much longer than you can hold out. Then, if there ever is a correction, it probably won't drop lower than this point right now.
My advice to any young'un thinking they can wait out the market: you can't, buy whatever you can afford as soon as you can and watch inflation reduce that painful monthly outgoing to something more manageable over time.
Housing isn't an investment opportunity. It's where you live.
I don't think that is quite right. Buy whatever you can afford as soon as life puts you in a position where you can reasonably expect to live in the same place for at least 7 years. You will never perfectly know your future, but predicting 7 years generally isn't too hard, and if you are wrong it is probably close enough to 7 years that you are okay.
My first house I had to sell after 10 years (I got a job in a new city) and I lost money on the sale despite the 10 years, but that is an outlier. Most people will see enough value appreciation in less years as to not be out too much if they have to move. 7 is just a good compromise for most people.
Don't forget when buying a house that you have to pay for maintenance. Make sure you can afford this somehow. If you have friends/family that can help with that work that can save a ton of money over if you have to hire someone.
- buy when home prices are 10x rent
- sell when home prices are 20x rent"
- The Big Short by Micheal Lewis [0]
I remember reading this quote and then checking NYC prices and it was a 33x multiple.
The mortgage was to allow people to eventually OWN THE PROPERTY, not a leveraged investment.
It's an interesting development that some (most?) regular people have forgotten that there is a 3rd option, not just rent or loan. You can actually OWN the thing and pay only property tax on it.
If anything, property taxes could be considered ‘maintenance’, which is an inevitable part of ownership. Nobody likes paying for the maintenance work, but you have to, otherwise the house falls down.
The state has a monopoly on certain types of infrastructure that it ultimately sustains through the threat of repossession. It uses that monopoly to racketeer property owners under the threat of repossessing their property.
If what you are claiming is true, then why does Malta have higher property values than countries with property tax?
https://www.maltasothebysrealty.com/property-for-sale/in/sli...
I would agree to a property tax if the voting systems worked fairly at a sufficiently granular level, but they don't. They are farces maintained by criminal organizations beyond a certain scale.
People who think they have no obligation to contribute to the running of society are delusional and utterly selfish.
I am assuming you’re American, because it is always Americans who have this selfish individualistic view of the world. Seemingly all cooperation or altruism is communism. It’s a national sickness.
Government exists to do the difficult things that individuals or corporations can’t or won’t do. Like build a road network, provide security, or educate the nation’s children (for all, not just you). They have the buying power of a nation, something an individual, local group, or company could t achieve. And they often have the legal authority to do things that individuals or companies cannot (compulsory purchase of land when building a railway or road, for example)
And the most effective way of paying for it is through a ‘national insurance scheme’ aka tax.
And honestly, who cares about Malta? That’s just blatant whataboutism. Malta is a country of 500,000 people. How they raise funds to pay for their infrastructure isn’t important. The point is, they have to do it one way or another. A tourist destination like Malta could be better off with a tourism tax (assuming there are more hotel rooms than residential properties). The end result is the same.
If you want a functioning society it is better to do it formally, rather than ad-hoc (for all but the smallest societies). Because otherwise the bureaucratic processes end up being repeated and become burdensome and in the worst cases descends into factionalism and tribalism. And the ad-hoc approach would certainly lead to inconsistency of provision. That can range from ‘a bit inconvenient’ to societal breakdown between the ‘haves’ and ‘have nots’.
Is Government perfect? Of course not, but replacing it with an anarchic “I’m alright Jack” free-for-all is madness. It is better to work on the focus of what government is for and how to build the correct incentives for high performance.
“I pay tax to the government. The government doesn’t represent or serve its constituents (me). Therefore I should pay less (or no) tax”
The play is so transparent. But in reality you said absolutely nothing of substance, you’re just throwing out Randian sound bites to see what sticks.
Another meaningful reason is that it is a hedge against inflation. You pay a fixed amount for housing for 360 months, rather than having to adjust rental payments that will tend to go up over that time frame.
But, if we hit deflation and a lot of people need to default... Well then we're all in the same boat anyway.
Isn't that how our monetary system works though? Inflation means the numbers WILL always go up.
Why can't it? GDP per capita has been steadily marching up since the dawn of industrialization. You mention carbon but most developed countries have decoupled carbon emissions from their economic growth.
Number go up until we cannibalize the foundations.
Apparently that is beyond the high and mighty Federal Reserve employees who wrote this speculation.
The housing market needs to be socialized.
It is indisputable that there have been successful socialized housing schemes. It is also indisputable there are successful free-market housing systems; for example, Minneapolis.
Rent stabilization - caps on how much landlords are permitted to increase rent - are also not that widespread. Washington DC is unusual in having over half of its rental stock covered by rent stabilization, but even in NYC less than half of the rental stock has stabilized rents.
The promises of WFH have also not come to fruition. The dream of moving anywhere and retaining your email job are not the reality in 2026. Employers seem actively hostile to that idea or are reneging on promises or claims that that "is the future".
I moved a lot in my 20s, and really grew to hate moving. One year I moved into a place that I hated (because I could just move again) and when I moved out of that place into a place that I loved, I really grew to hate moving.
Ex: https://youtu.be/yoT76zITRx8 TLDR: 60% of both left and right wing voters like rent control. 98% of economists oppose it. Even liberal lefty economists. Even though they support price controls elsewhere like utility monopolies. Rent control feels good in the short term, but is detrimental to the vast majority in the long term in a large variety of ways.
The actual solution, to the surprise of no one, is to increase supply.
Unfortunately, there was a paper I don’t have a link to showing that not just old NIMBY homeowners, but largely everyone consistently vote against measures that increase supply. It’s part of a larger effect where people measurably bias their voting against policies that sound like they will benefit rich people. Very similar policies in similar areas will get different votes depending on how the wording makes it clear the rich will benefit.
Well guess who almost always benefits immediately from real estate construction? So… we keep voting to prevent construction and then complaining that the rent keeps going up.
Blaming this on voters gives up the propagandists' game. A statement like "we'll make sure more houses are built to lower housing costs" does not sound like "we'll let business owners do business they otherwise wouldn't be allowed to do", even if they happen to describe the same policy.
Fortunately, you can have rent control and incentivize housing construction. These things are not mutually exclusive.
I didn't make up 98%. I got it from the video who got it from https://kentclarkcenter.org/surveys/rent-control/ Reading more closely, I stated it wrong. 2% agree rent control has helped. 81% explicitly do not, then there are the "other" categories.
No renter should have to live with the constant threat of losing their housing due to perturbations of the local economy or the whims of their landlord. As is often the case, economists are asking the wrong question.
So, here we are. Living today in the long-term consequences of decades of voting for more rent control while opposing urban real estate development. And, the solution everyone is calling for is more rent control while opposing urban real estate development.
Also: no amount of “thinking long term” will convince a renter to vote for their own eviction in order to make housing (maybe) cheaper for someone else many years down the line. It makes no sense. That is absolutely the wrong way to frame the problem.
There is a path where we expand rent control and incentivize housing development. They are not inherently contradictory policies.
Realistically, a, say, capped 10% rent growth is MORE than enough to turn a profit on a property. In fact, you wouldn't just be turning a profit, you'd be compounding. Because your mortgage doesn't go up like that.
When we see this insane 100% rent bumps or whatever, that's opportunistic behavior. The landlord knows they can get away with it because of some blip in the current market, some temporary volatility they can leverage. That's bad for everyone involved.
For the landlord, they're trading off security in their investment for "more money now". They might not realize it, but it's a bad choice. Because eventually they will be forced to aggressively cut the rent or be pushed out. If they had just taken a modest hike year over year, they likely would've come out on top.
Also if you are actually getting paid in Yen then the gap narrows between NY and Tokyo. Then there is the fact that your home could be destroyed in a massive earthquake but everyone has a different price for that risk
- making housing as a depreciated asset, like a car, TV, whatever, it’s NOT an investment. Go invest and start a business that actually contributes to the economy instead of leeching on other’s wealth.
- ban interest rates on mortgages, so banks aren’t incentivized to pour fake numbers into accounts and deducting fake numbers from other accounts as debt all while enjoying the sweet real money from interest. Once that is ban, they won’t give loans based on speculated prices, ending the daisy chain of using another house to get a bigger loan to buy a bigger house based on fake speculated market value.
- relax the permits and regulations on owning and building houses, which is a big topic on its own.
Among many other points that goes after the root cause, not some duct tape solution, housing is a shelter not an investment, look up any human needs diagram and you will find shelter is at the bottom of it, you can’t be creative or do great things when you are not settling in a house, you can’t think about making a business and contribute to economy if you are paying most of your income to landlord who take that to pay a mortgage so the bank can take the interest. Things now seem calm but most the new generation don’t own a house or ever thinking of owning a one, these soon will be the majority of voting and decision making, and it will be a brutal reaction on boomers and the overall selfish system that do anything to make their lives more miserable.
I lived in a 2 bedroom apartment in the 1990s for $200/month 3 miles from the city center. All my other expenses were less than another $200/month. The median house price was less than $80k. College graduate positions typically paid ~$30k but that was OK. This was pre-9/11 so all those old TV shows and movies you saw of people meeting people at the airport gate were very real. I've seen younger people think this was just a trope, like the 30 seconds the trace a call bit. No, that was real. Friends of a friend lived in Iowa and split a 4 bedroom house for $180/month. Not each, total.
For younger millenials and Gen-Z, I honestly wish you could've experienced this world, for no other reason than to see that things weren't always this way and don't have to be this way.
There's an old episode of the Cosby Show that had the father (Bill Cosby) teaching his son, Theo, about finances. It's funny watching it back now because it has the line "an apartment in Manhattan is going to cost you $400" and I remember thinking how expensive that sounded at the time.
The absolute worst thing that has happened is how hoarding housing has become a retirement plan. It's simply stealing from the next generation and it's absolutely strangling the economy. Society is fraying at the edges. For anyone interested, there's been academic work on this that falls under the label of "the housing theory of everything" eg [1].
But what I hate most is how cruel, selfish and stupid everybody seems to be getting, in part fuelled by increasing desperation to stay above the rising tide just a little bit longer. And the ultra-wealthy constantly throw gas on this fire and torch the planet for what? So they can have $200 billion instead of $100 billion? What good does that do you if there's nothing left? But what's crazy is that a third of the population will defend Jeff Bezos in this equation.
What you see in a lot of economic indicators (such as those posted here) can be read as people incradsingly see themselves as having no future. Continued consumer spending is not a sign of a healthy economy or optimism anymore. It's a sign of fatalism.
The entire thing is honestly deeply depressing.
[1]: https://worksinprogress.co/issue/the-housing-theory-of-every...