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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

#261

Post by kevin_thibedeau »

et-al wrote: post #70
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.

In English common law corporations are people, hence the name. They are a synthetic "body" for business purposes. This isn't a new concept created by Citizens United.

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

#262

Post by maxsilver »

chimeracoder wrote: post #148
makomk wrote: post #105

Earlier quoted context omitted.

Last I heard, NYC is literally running out of pavement space for pedestrians, let alone vehicles, and increasing the supply of housing still hasn't brought prices down.

> Last I heard, NYC is literally running out of pavement space for pedestrians, let alone vehicles That's news to me, as someone who lives and works in the two busiest and most crowded neighborhoods in the city > and increasing the supply of housing still hasn't brought prices down. Yes, but that's because of the way new housing has been constructed (skewed towards luxury buildings, which are purchased by foreign spe…

> (NYC running out of space for pedestrians) is news to me, as someone who lives and works in the two busiest and most crowded neighborhoods in the city

I assume that's a reference to this - https://www.nytimes.com/2016/07/01/nyregion/new-york-city-ov...

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

#263

Post by asabjorn »

nikdaheratik wrote: post #253
ryuker16 wrote: post #211

Earlier quoted context omitted.

If the zoning laws werent there, they would be building new buildings(like they currently do in china. Hence the term ghost cities) instead of investing in overpriced existing stock.

That's not always the case. In places like SF, the only way to build is up, which is expensive, requires alot of capital, and is risky by itself even if you don't have NIMBY people fighting it. In this case, Monopoly has it exactly right as far as the costs and values of putting a new hotel on Boardwalk vs. putting 4 hotels on Mediterranean Ave.

What data do you have that building a high rise in San Francisco is financially risky? To the contrary cities like San Francisco is a gold mine for rent seeking as there is such a pent up demand for housing after many decades of under building and the rents are so high that building a high rise is unlikely to carry much risk at all compared to other asset classes.

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

#265

Post by gozur88 »

neilparikh wrote: post #174
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…

I'm not sure why it matters if the buyer is foreign or American. You would get the same issue if an investor from Texas decided to buy 10 houses and live in 1. The key issue here is that there's housing that's unoccupied, even under lots of demand. The fix for that is to tax or ban unoccupied housing, not ban foreign housing.

The fix is to stop printing so much money it's basically free to borrow. These people aren't buying houses with their own money - it's all OPM.

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

#266

Post by billmalarky »

watwut wrote: post #178
billmalarky wrote: post #161

Earlier quoted context omitted.

You've lost your job and were only able to get a job that paid half, how do you make your mortgage payment? If you are renting you are not locked into the property, you have the flexibility to move to a lower cost flat.

The monthly mandatory payment on my mortgage is now a lot lower then typical rent (I have freedom to pay more if I wish to). It was roughly same as rent for few years, but it went down as I paid the debt. If my salary would go down to half and my husband would got unemployed, we would still be able to pay it. You don't have to buy the most expensive flat there is in the city. And if we were not, that would still be n…

What I'm describing is a generalization since you asked about the differences in risk between renting and ownership.

It sounds like you have taken a series of (wise) steps to significantly limit your exposure to the risk involved with property ownership. This doesn't make the rule invalid though it makes you the exception to the rule.

> In really really the worst case, you move to that lower cost flat and have bank take away your flat (since you aint paying mortgage it is theirs).

In the event of the real estate market tanking, like it did in 2008, this is not what happens in a worst case scenario. You are still liable for the cost of the mortgage you owe, if the property loses more value on the open market than the amount left that you owe on the mortgage you can't just give back the property to cancel the mortgage. You might owe $300k left on the mortgage (because you originally bought the house for $500k for example) but now the property is only selling on the market for $250k. In this scenario you can't "give back" the property because even then you still owe the bank $50k. If you can't pay, you must declare bankruptcy in addition to losing the property. So now you have no home and also your credit is so destroyed that landlords refuse to rent to you. This is a very real scenario and happened to a LOT of people during the US real estate crisis.

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

#267

Post by DougWebb »

xvedejas wrote: post #114
DougWebb wrote: post #94

Earlier quoted context omitted.

So, where exactly does the wealthy landlord get the money to pay the land-value tax? From their own labor? From their savings? From after-tax interest earned on their other investments? Of course not! They're going to raise the rent to cover the additional tax, and if the renter can't afford it screw them; they'll be kicked out and replaced with someone who can. This comes up a lot in discussions involving income ine…

The effect of a tax on land works differently than other taxes do. Because the land value tax will free up supply (which was previously held for speculation), the result could just as easily be that rents drop. This is the entire reason that this tax is attractive, and you are right that without this feature, the tax would not make sense. https://en.m.wikipedia.org/wiki/Land_value_tax#Real_estate_v...

That link is talking about the effects an LVT would have on unused land that's being held for appreciation, and land that's being held as an investment. I'm talking about landlords renting property to tenants. Increasing the taxes on the landlord increases their cost, which would force them to raise the rent they charge. This is just like anything else that would raise their costs: higher insurance rates, increased maintenance costs, increased homeowners fees, etc.

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

#268

Post by princeb »

nikdaheratik wrote: post #253
ryuker16 wrote: post #211

Earlier quoted context omitted.

If the zoning laws werent there, they would be building new buildings(like they currently do in china. Hence the term ghost cities) instead of investing in overpriced existing stock.

That's not always the case. In places like SF, the only way to build is up, which is expensive, requires alot of capital, and is risky by itself even if you don't have NIMBY people fighting it. In this case, Monopoly has it exactly right as far as the costs and values of putting a new hotel on Boardwalk vs. putting 4 hotels on Mediterranean Ave.

> the only way to build is up, which is expensive, requires a lot of capital, and is risky by itself

inherently more risky than building up in any other city, like NY or HK?

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

#269

Post by EGreg »

Can't such a story be written pretty much any time?

When landlords can't find people to pay the rent, they'll lower the price (relative to inflation).

Inequality on the other hand leads to speculators usurping the use price of houses and other things for investment purposes.

That was the real cause of the financial crash, not NINJA loan recipients as many conservatives have claimed. Remember all those seminars on how to "flip your house"? Many of those speculators declared bankruptcies.

These days, though, speculation on that scale can only be done by the top percentiles of people.

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

#270

Post by DougWebb »

natrius wrote: post #117
DougWebb wrote: post #94

Earlier quoted context omitted.

So, where exactly does the wealthy landlord get the money to pay the land-value tax? From their own labor? From their savings? From after-tax interest earned on their other investments? Of course not! They're going to raise the rent to cover the additional tax, and if the renter can't afford it screw them; they'll be kicked out and replaced with someone who can. This comes up a lot in discussions involving income ine…

Landlords do not set market rents. Renters and their employers do. Tax changes do not raise or lower rents. They make it more or less likely that new housing will be built, which affects future rents. Land value taxes are so attractive because they avoid changing the incentives to build.

Of course landlords set the rent they're going to charge for their property. They're free to do so, within certain bounds established by the market and based upon the value of the property they are renting. A land value tax, which would be applied to ALL landlords in the area, increases ALL of their costs at the same time, which forces ALL of them to raise their rents at the same time. It would shift the entire market up, raising the cost of living for everyone who lives there.

Some employers might try to raise compensation accordingly, but they're going to have higher rental costs too since most employers have to rent their office space. So it's more likely that they'd be forced to reduce the size of their workforce to reduce costs and spread compensation among fewer, somewhat better-paid employees.

The impact on landlords would be immediate, and the impact on renters would be as soon as they get or renew a lease. Employers and employees would see an impact somewhat later, since it takes a while before a business is forced to downsize. Any new housing would be a long way off, well after all of the negative impacts have occurred. New housing may never come, if businesses and workers are forced out of the area to someplace that doesn't have an LVT.

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