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Rising Rents Are Pushing More Tenants Past the Breaking Point

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Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#61

Post by cbarker3 »

quickthrower2 wrote: post #45
_wc0m wrote: post #9

Rent is an amazingly effective means of redistributing wealth upwards. I have easily paid over £100k rent in my life, always to people substantially richer than I am. Always enjoyed this Churchill quote - from 1909! Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains -- and all the while the landlord sits s…

The £ sign tells me you are trapped in the overpriced housing country, forced to watch Kirstie Allsop be all smug about house prices. I wonder what if lots of people said f the rent, f the prices let's just go travelling, live in a caravan, enjoy life. Settle in an affordable country. Not be a sheep toiling away to pay for someone else's Ferrari.

I (European) have toyed with that idea but found camping sites very expensive. And the prices would go up if everyone did that.

There are sites that compare caravan vs. cheap flat and the cheap flat comes out ahead (Europe again).

The fundamental issue is that land prices are too high and every square inch is owned by someone.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#62

Post by chimeracoder »

vkou wrote: post #48
billmalarky wrote: post #40

Earlier quoted context omitted.

> He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived. The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. This is why offloading the risk onto creditors (ie purchasing real estate with borrowed money under an LL…

> The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. In hot housing markets, the value they provide is having access to the capital necessary to own property. A 30 year old hairdresser in Seattle isn't renting because they don't want to deal with risk - they are renting because they can't save up a $XY,000 downpayment, and…

> A 30 year old hairdresser in Seattle isn't renting because they don't want to deal with risk - they are renting because they can't save up a $XY,000 downpayment, and tie their entire salary into interest payments.

If you're talking about cities like Seattle, the reason that a 30-year-old hairdresser would have a difficult time purchasing a place is because prices have been pushed absurdly high due to two factors:

a) a housing shortage (primarily in the SF Bay Area, but Seattle has similar problems, and the SF housing problems spill over into other nearby cities)

b) speculative purchasing by foreign entities

The second point is less relevant Seattle than it is to nearby Vancouver - and nowhere is it more true than in New York City - but it still has a huge inflationary impact on property values in a way that doesn't benefit any local residents at all (the properties are used as places to park money by people who don't live there, and may never even have visited the US).

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#63

Post by bmmayer1 »

_wc0m wrote: post #9

Rent is an amazingly effective means of redistributing wealth upwards. I have easily paid over £100k rent in my life, always to people substantially richer than I am. Always enjoyed this Churchill quote - from 1909! Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains -- and all the while the landlord sits s…

This comment doesn't stand up to scrutiny. There aren't a lot of available statistics on how wealthy landlords are, but for instance, according to a San Francisco property owners survey[1], median income for landlords is $90k, only 15% higher than the overall San Francisco median income ($77k). And of course a software engineer's median income in San Francisco is higher ($92k). Either way, there is little evidence that in one of the hottest real estate markets in the country, landlords would be 'substantially' richer than tenants on average.

Of course, income is only a component of wealth--no doubt the property owned is worth quite a bit--but, according to the same report, at least 75% of these landlords are still paying mortgages on their properties, and over 10% spend more than their rental income on their mortgages!

Since most landlords borrow money to buy property, then attempt to sell access to that property profitably over time, they are more like entrepreneurs than the land baron 'monopolists' portrayed by the Churchill quote above.

This isn't wealth redistribution in any direction. It's a trade. Renters get access to property without having to own it. Owners, if they are smart and/or lucky, can profit from property, but of course take a substantially larger up front risk.

And, I would be remiss if I didn't point out that Winston Churchill was from one of the wealthiest British aristocratic (read: rentier landowning) families and was born in the family home, this palace[2].

[1] http://sfrb.org/sites/default/files/FileCenter/Documents/188... [2] https://en.wikipedia.org/wiki/Blenheim_Palace

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#64

Post by billmalarky »

vkou wrote: post #48
billmalarky wrote: post #40

Earlier quoted context omitted.

> He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived. The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. This is why offloading the risk onto creditors (ie purchasing real estate with borrowed money under an LL…

> The value landlords provide is the assumption of risk. The premium you pay to rent is in exchange for vastly limiting your exposure to said risk. In hot housing markets, the value they provide is having access to the capital necessary to own property. A 30 year old hairdresser in Seattle isn't renting because they don't want to deal with risk - they are renting because they can't save up a $XY,000 downpayment, and…

Hot housing markets are extremely high risk high reward investments.

Buying NYC real estate for example, it is practically impossible to use a traditional "buy and hold" strategy and have the rents cover the cost of investment (typically rent covers more like 50% of operating costs in NYC). You pretty much only make money in NYC REI via speculation (ie the property goes up in value) not from paying down the mortgage with rents.

The solution to high pricing is to increase supply of housing. Mind you _this_ is an area where landlords do have high rent-seeking behavior in the political sense. Landlords are incentivized to push for increased regulation that limits new development whenever possible. As much as I hate to use him as an example due to his "lightning rod effect," Trump, for example would see his net worth plummet if NYC development regulations were relaxed.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#66

Post by danharaj »

bmmayer1 wrote: post #63
_wc0m wrote: post #9

Rent is an amazingly effective means of redistributing wealth upwards. I have easily paid over £100k rent in my life, always to people substantially richer than I am. Always enjoyed this Churchill quote - from 1909! Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains -- and all the while the landlord sits s…

This comment doesn't stand up to scrutiny. There aren't a lot of available statistics on how wealthy landlords are, but for instance, according to a San Francisco property owners survey[1], median income for landlords is $90k, only 15% higher than the overall San Francisco median income ($77k). And of course a software engineer's median income in San Francisco is higher ($92k). Either way, there is little evidence th…

I don't think medians are the right thing to look at here. The majority of individual landlords will be small-time, but it's the behavior and impact of the largest landlords that is important.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#67

Post by eli_gottlieb »

mousa wrote: post #17
acomjean wrote: post #12

Earlier quoted context omitted.

I think some of this stems from income inequality and access to a lot data. so those with extra money are looking to real estate as an investment, and the data allows them to extract maximum money from people till they break. I'm in the Boston area. Living in a place I couldn't afford if I hadn't bought it 10 years ago. I'm wondering how much of this squeezing maximum profit from renters hurts local businesses as the…

Probably doesn't hurt business as the new people who rent there will have more money

We damn well won't, since the jobs around Boston really don't pay salaries commensurable with Boston rents.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#68

Post by underwoodley »

bmmayer1 wrote: post #63
_wc0m wrote: post #9

Rent is an amazingly effective means of redistributing wealth upwards. I have easily paid over £100k rent in my life, always to people substantially richer than I am. Always enjoyed this Churchill quote - from 1909! Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains -- and all the while the landlord sits s…

This comment doesn't stand up to scrutiny. There aren't a lot of available statistics on how wealthy landlords are, but for instance, according to a San Francisco property owners survey[1], median income for landlords is $90k, only 15% higher than the overall San Francisco median income ($77k). And of course a software engineer's median income in San Francisco is higher ($92k). Either way, there is little evidence th…

You didn't challenge the statement to GP made, but one he didn't make. He didn't say that landlords are vastly richer than workers. He said that landlords make little or no contribution to the general welfare.

Your own comment points out that in SF, the median landlord makes roughly what the median software developer makes. But a software developer in the Bay Area is one of the most productive workers on the planet, with a literally unparalleled opportunity to generate value, both for the company he works for, and for global society/consumers in general. In contrast, the landlord does not produce anything.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#69

Post by purplezooey »

techiferous wrote: post #8
maxxxxx wrote: post #6

Seems the economy is finding the sweet spot where education, housing and health extract the maximum amount of money from people right before they break. Finding that spot while a avoiding a revolution has been the biggest challenge for ruling classes throughout all of history.

That's a simple take on a very complex system.

A very effective tactic of the right wing.

Re: Rising Rents Are Pushing More Tenants Past the Breaking Point

#70

Post by et-al »

beebmam wrote: post #36

In large cities across the US (and probably most of the world), there is some very large scale foreign speculation in the housing market going on. This is leading to rising rents and rising home prices. In Seattle, for example, many (newly) wealthy Chinese people are buying houses purely for investment purposes. I know some of them. One of them has purchased 10 houses, and lives in only one of them (when they are in…

The core issue is real estate as investment regardless of where it's coming from. Right now the most visible are overseas Chinese people with money buying property, but REITs have been picking up rental property for ages, and there are also PEREs (private equity real estate firms).

If governments are to serve their people, then they should curtail this speculation. Of course in America, corporations are people.

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