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Rents for the rich are going down, rents for the poor are going up. Why?

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Re: Rents for the rich are going down, rents for the poor are going up. Why?

#111

Post by imtringued »

renewiltord wrote: post #71
nostrademons wrote: post #45

Earlier quoted context omitted.

Opportunity cost. Housing in the Bay Area goes up an average of about 7%/year, roughly inline with the S&P 500. Google stock has increased 13x in the last 11 years, for an average annualized return of about 25%. If you were at AirBnB or Stripe your return is about 100x, making over 100%/year. With leverage the computation gets a bit more complex, but basically you're paying 4.5% interest on 7% appreciation, and not n…

And you realistically have access to a 2x-3x lever on margin anyway.

Being long on a leveraged ETF is... possible... but unless you know what you are doing it is highly risky. No, the problem isn't the drift causing losses. When the price tanks 33% in a day on a 3x leveraged ETF you lose everything.

Re: Rents for the rich are going down, rents for the poor are going up. Why?

#112

Post by imtringued »

asdff wrote: post #12
m463 wrote: post #6

I think affordable-level housing will always be competitive, and super-luxury stuff will be white elephant stuff that's subject to compromises. It's kind of amazing that they raised the rent. Is it because people stopped paying rent and they tried to get it from other renters?

Landlords in big cities always raise rent because they can. They'd rather push a current tenant out than work with them, because with the high turnover they are sure to get a new tenant pretty soon at the higher price anyway. Its this sort of unscrupulous taking, of maximizing profit because its 'leaving money on the table' to not do so, is why we have rent control ordinances which work by capping the maximum yearly…

Is the landlord at fault that there are so many desperate people willing to pay absurd rent? The only reason the landlord gets to choose is because someone else gave them a better offer.

Re: Rents for the rich are going down, rents for the poor are going up. Why?

#113

Post by imtringued »

ARandumGuy wrote: post #16
lotsofpulp wrote: post #14

Earlier quoted context omitted.

>because with the high turnover they are sure to get a new tenant pretty soon at the higher price anyway Only if coupled with insufficient construction of new housing.

Which is pretty inevitable with our system of housing development. If you're a large property owner and you want to make more money, you have two options: A) Build more housing, to create more units you can rent out. B) Don't build more housing, and use the reduced supply to raise the rent on your existing properties. Since option B has a lower risk and a higher return on investment, is it really surprising that most…

If you are a landlord that had option A you would take it, simply to outcompete all the other landlords.

Re: Rents for the rich are going down, rents for the poor are going up. Why?

#114

Post by postalrat »

hsitz wrote: post #79
tehjoker wrote: post #69

Earlier quoted context omitted.

It's crazy that we live in an economy where you have to pay just to live somewhere, but when the eviction moratorium ends, there's going to be a huge financial reckoning as there's no way anyone is paying all that back rent. Biden is going to have to either bail out tenants or landlords and banks. I'll be taking bets on which one he does.

??? In what economy do most people not have to pay just to live somewhere?

Utopia

Re: Rents for the rich are going down, rents for the poor are going up. Why?

#116

Post by gnicholas »

roguecoder wrote: post #108
gnicholas wrote: post #93

Earlier quoted context omitted.

Chicago does have a large supply of housing and land that can be converted into housing. This helps keep the cost of housing closer to the cost required to construct units. In CA, the cost of a home has almost nothing to do with the input costs other than land. There are areas that could be built up (tons of land just west of 280), but which is protected by environmental laws or restrictions. Full development of this…

San Francisco also has 26 skyscrapers to Chicago's 130. 80% of the Bay Area is zoned exclusive for single family, to Chicago's 41.1%. It's not landscape and it's not rocket science: it's zoning. San Francisco could build up, letting people live closer to their work & be much better for the environment than encouraging sprawl, but chooses not to. Y'all decided to make housing expensive, so it is.

Zoning is absolutely a big part of this. Though I would expect SF to have fewer skyscrapers than Chicago even if it weren't for zoning differences, given the earthquake risk.

https://www.nytimes.com/interactive/2019/06/03/us/earthquake...

Re: Rents for the rich are going down, rents for the poor are going up. Why?

#117

Post by ibrahimsow1 »

Lammy wrote: post #102
roguecoder wrote: post #17

While the article is interesting, there is one dynamic it missed: tech debt. Starting around 1975, housing supply stopped keeping up with the growth of housing demand. It picked back up fifteen years later, around 1990: https://www.brookings.edu/research/the-goldilocks-problem-of... (But that is on a national level: in the West, in comparison, housing growth hasn't been sufficient to house the new households formed a…

> Starting around 1975 Guess what happened in October 1974: https://en.wikipedia.org/wiki/Equal_Credit_Opportunity_Act

Please elaborate, I am deeply curious

Re: Rents for the rich are going down, rents for the poor are going up. Why?

#118

Post by baron816 »

darth_avocado wrote: post #81
baron816 wrote: post #15

Earlier quoted context omitted.

There was an article a saw a few weeks ago about some guys based out of Oakland (maybe someone else can find it) who has accumulated 5 figures worth of rental debt. It talks about how he had just moved into an expensive place at the beginning of the pandemic, got laid off, then couldn’t pay for the whole year. IIRC, he eventually moved, but still couldn’t pay rent and started accumulating even more rent debt there. I…

I know the exact article you mentioned. The real story is actually more nuanced. The guy off course got laid off and could no longer afford the rent. But he racked up rent also because even if he moved earlier, his contract would have made him pay a ton of fines to even get out of it. So he decided to stay.

Yeah it’s not like it was really that much of his fault or anything (though I found it a bit fishy why he couldn’t get another job). Everyone’s mentality up until ~September was “oh just another month or two then everything will be back to normal”.

But my point is how could you expect landlords to rent to anyone without a very stable income? They could be out tens of thousands of dollars.

Re: Rents for the rich are going down, rents for the poor are going up. Why?

#119

Post by TuringNYC »

imtringued wrote: post #106
TuringNYC wrote: post #80

Earlier quoted context omitted.

This comment is spot on. Rent premiums are often not greed, but just a risk premium and buffer-collection for a catch all of issues from future non-payment to other BS.

Prices are negotiated. Two parties must agree on the price. If there is a "greedy" landlord overcharging people there must also be a person "willing" to pay the overpriced rent. Of course there are cases of vacant properties but I don't think this is a problem for most rental markets.

I'm pretty sure vacant properties are a problem in every market, it is just a matter of grayscales -- how many days do you keep units empty waiting for a creditworthy tenant. Perhaps the unit is empty 10 days, perhaps 15. Willingness to keep a unit empty is part of the negotiation -- a landlord is saying "I'd rather keep the unit empty for another couple of days than take a rent that wont adequately-compensate for the 4% chance i get nothing for 10months (i.e., eviction)"

Of course, even eviction timelines vary vastly from one jurisdiction to another

Re: Rents for the rich are going down, rents for the poor are going up. Why?

#120

Post by throwaway0a5e »

roguecoder wrote: post #105
legerdemain wrote: post #68

Earlier quoted context omitted.

If cheap housing is expensive housing built 30-100 years ago, we should have had decades and decades of delapidating housing stock left to go before hitting a shortage. Not to mention your example of housing in Boston built at the turn of the 20th century. A laissez faire policy that makes the poor wait 120 years for housing is hardly any policy at all.

And many cities did, which is why the trend has been getting slowly worse. I didn't talk about any "laissez faire" policy, and as far as I know no city in the US is pursuing a laissez faire policy. I also don't know why you think it is bad to have housing stock that lasts; having lived in a number of those turn of the century homes, they were better and cheaper than the "affordable" new apartment options. They were w…

>I know no city in the US is pursuing a laissez faire policy

Well of course. The people who want laissez faire anything don't wind up living in the cities that have these problems. they self select to live in rural areas and the occasional rust belt dump where there is either no regulation or no enforcement.

The people who don't recoil at the thought of their property rights being violated wind up living in Boston, SF and their surrounding suburbs and vote for more of the same.

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