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Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

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Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#381

Post by greenie_beans »

forshaper wrote: post #338
greenie_beans wrote: post #276

Earlier quoted context omitted.

i would love to hear a YIMBY consider the market forces/how capitalism works and not just reduce it to regulation. aka when it costs over $500k to build a single apartment unit and most of those costs are construction with very little of the regulation burden driving up that cost.

Permitting admin is part of regulation, which in turn is required for construction.

yeah for sure and i didn't say that isn't a cost. i said it's a small part of the cost, almost negligible compared to the cost to actually build

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#382

Post by estearum »

rootusrootus wrote: post #74
estearum wrote: post #44

Earlier quoted context omitted.

It's worth being precise about this because it's a really important point. Most people who we call "landlords" are simultaneously a landlord and a property manager. Property management is an important and productive job. But the vast majority of such people's financial outcome is actually from being a landlord , that is doing literally nothing except holding a piece of paper granting them monopoly on a plot of land.…

> If you remove landlords (but keep property managers, developers, etc In this scenario, who owns the property? And if you are advocating that everyone should own their home, what is the point of a property manager? What about the people who do not actually want to own their home?

They can be privately owned and have the land value (unearned value, by definition) simply taxed away.

Or you can have the government own the land but do long-term (99 year) leases, like they do in Singapore.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#383

Post by JeremyNT »

amazingamazing wrote: post #174
throwaway041207 wrote: post #158

Earlier quoted context omitted.

In my neck of the woods (New England), home prices have doubled since March of 2020. I have yet to read a comprehensive overview of how this happened and how we get out of it. Of course, people went nuts offering over the asking price when interest rates were super low so I understand, to some degree, that baselines were reset. But the current housing market doesn't feel sustainable. I don't understand how a proper m…

It is very simple. Housing is not built.

You can sprawl further out and you can build infill in sparsely populated areas, but you run up against the reality that desirable areas are going to be expensive because they're desirable, and the cost of demolishing existing multifamily homes to increase density further becomes infeasible in already dense areas.

I bet you actually can find affordable housing in the middle of nowhere / towns where people are actually leaving.

This is not to say there isn't low hanging fruit that market rate housing can help with, and some areas have more room for improvement that way than others, but there's a limit to where that takes you that reveals a deeper problem: we treat housing as an asset that "should" continue to appreciate indefinitely, and we even subsidize people using extensive leveraging to acquire it.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#384

Post by bluefirebrand »

treis wrote: post #204
pickleglitch wrote: post #129

Earlier quoted context omitted.

The median monthly rent for houses and apartments in the U.S. in 1970 was $108, or around $930 in today's dollars. So, in today's dollars, that would be $11,160/year. Median household income in 1970 was $9,870, or $84,714 in today's dollars. Median rent in the us today is around $1,750, or around $21,000/year. Today's median income in the us is around $89,000. So, housing cost has nearly doubled, while wages have onl…

What we spend on housing has doubled. That doesn't mean the cost has doubled. It means that we buy a lot more housing than we used to. Real estate cost is local and there are parts of america where the prices have gone nuts. But there's a lot more where it hasn't and housing is affordable.

> But there's a lot more where it hasn't and housing is affordable

In many of those places salaries have been stagnant or work has dried up

So we have a weird situation where someone living in a big city with a large salary is priced out of real estate by high prices, and someone living in a smaller city with more reasonable real estate prices is priced out by a lower income

It's not universal of course, but it's a squeeze that a lot of people are feeling

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#385

Post by estearum »

fooker wrote: post #116
estearum wrote: post #44

Earlier quoted context omitted.

It's worth being precise about this because it's a really important point. Most people who we call "landlords" are simultaneously a landlord and a property manager. Property management is an important and productive job. But the vast majority of such people's financial outcome is actually from being a landlord , that is doing literally nothing except holding a piece of paper granting them monopoly on a plot of land.…

I'm going to assume ignorance and try to explain why landlords exist. Of course you could already understand this and have this as an ideological stance, in which case my effort is likely wasted. Landlords assume a similar role in economy that banks do, they assume risk on your belalf. We have quantified this to an extent that you can reliably put a dollar amount on how much risk there is. When you are renting and th…

Landlords do not assume risk in their role as landlords.

The land is there regardless of whether anyone "takes on the risk."

Landlords often take on risk in their role as property managers or developers. They should be rewarded more for that, and not at all for their simple ownership of land, which again: would be there regardless of whether someone else or no one at all owned it.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#386

Post by estearum »

Aurornis wrote: post #93
estearum wrote: post #44

Earlier quoted context omitted.

It's worth being precise about this because it's a really important point. Most people who we call "landlords" are simultaneously a landlord and a property manager. Property management is an important and productive job. But the vast majority of such people's financial outcome is actually from being a landlord , that is doing literally nothing except holding a piece of paper granting them monopoly on a plot of land.…

> If you remove landlords (but keep property managers, developers, etc, which are all different jobs sometimes played by the same people) You need to be specific about what you mean by “remove landlords” because that’s a nonsensical statement by itself. Some party must be responsible for the investment to produce the property. Some part must own the property. The most charitable interpretation of what you’re trying t…

You tax away all the gains generated by the land value, which effectively eliminates the "landlord" component of a rental fee and directs the owner's incentives toward producing value via construction, improvements, or services instead of rent-seeking on an asset they did not create and which would continue to exist if they never set foot on it.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#387

Post by win311fwg »

epistasis wrote: post #372
win311fwg wrote: post #217

Earlier quoted context omitted.

> the type of person that can afford to pay slightly more for the newer apartment. Relying on that is the root problem. I could technically afford the new house, but in the end I couldn't find a good reason to tie up that much capital for something that does the same thing as what I've already got, only shinier. If the price were more reasonable then I'd make the move and then someone else could move into my much che…

And yet, the new "too expensive" housing is 98% occupied, so there are slightly wealthier people who are actually paying to alleviate the housing shortage crisis with their higher rents. Yet the same people lobbying to block the building of these new apartments are still saying that "nobody lives there" because it doesn't fit their mental model of the world.

> And yet, the new "too expensive" housing is 98% occupied

Too expensive housing doesn't get build.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#388

Post by bluefirebrand »

SoftTalker wrote: post #292
pickleglitch wrote: post #129

Earlier quoted context omitted.

The median monthly rent for houses and apartments in the U.S. in 1970 was $108, or around $930 in today's dollars. So, in today's dollars, that would be $11,160/year. Median household income in 1970 was $9,870, or $84,714 in today's dollars. Median rent in the us today is around $1,750, or around $21,000/year. Today's median income in the us is around $89,000. So, housing cost has nearly doubled, while wages have onl…

Supply of housing has not kept pace with population since then. So you have more people chasing relatively fewer houses. Also compare a 1960s or 1970s house to one built today. Today's houses are bigger and much more luxuriously appointed, with gourmet appliances, stone countertops, multi-head showers, walk-in closets, huge bathrooms, etc. Once the boomer generation dies off or goes into assisted living you'll see a…

> Once the boomer generation dies off or goes into assisted living you'll see a lot of those 1970s houses coming back on the market

But will they be affordable? Or will they be bought up by real estate conglomerates to be rented to the younger generations?

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#389

Post by estearum »

jonahx wrote: post #213
frankus wrote: post #139

Earlier quoted context omitted.

The difference is that investment in a company can create “more company”, whereas investment in land can’t create more land.

You can improve the land, build more units, replace an small old house with a 4 story apartment building, etc.

Correct, which you should be rewarded for as a developer. I recommend 0% tax on improvements and 100% tax on land value.

Re: Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

#390

Post by estearum »

rootusrootus wrote: post #222
frankus wrote: post #139

Earlier quoted context omitted.

The difference is that investment in a company can create “more company”, whereas investment in land can’t create more land.

> investment in land can’t create more land But investment in housing can definitely create more housing, and that is by far the most common type of landlord.

As described above, a landlord is not a developer is not a property manager. Sometimes a single individual plays multiple roles, but that does not make them the same inseparable job.
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