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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

#131

Post by billmalarky »

toomuchtodo wrote: post #129
billmalarky wrote: post #115

Earlier quoted context omitted.

A renter's financial risk is limited to his/her lease agreement. This could be the remainder of the rent due according to the lease (ie if there are 6 months left on the lease agreement you will need to pay 6X rent). In practice typically a renter is usually on the hook for the security deposit or a month's rent, so long as they can find another renter to take over their lease. The owner assumes the total risk for th…

> Odds of having to declare bankruptcy in this scenario are high. Not at all. If you could not afford your property because of a loss of income, you are eligible for another mortgage after a short sale or foreclosure within a year. If you can't document a loss of income, its only 3 years to get another mortgage. Temporary credit damage? Indeed, but not necessarily bankruptcy.

Of course. I was wanting to keep my example reductionist on purpose to answer mrow84's question in an easily understandable way.

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

#132

Post by watwut »

billmalarky wrote: post #40
_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…

> 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…

What risk? I bought the flat I live in to make risk lower. If you live on somebody else's property, you are more vulnerable and owner can limit how you treat the property.

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

#133

Post by downrightmike »

JSONwebtoken wrote: post #104
mrow84 wrote: post #83

Earlier quoted context omitted.

> 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. Are there any risks that affect only the landlord, and not the renter, other than the possibility of losing ownership? For example, if you rent a plot of land for farming, what risks does the owner of that land face that you do not?

That the value of the land might go down? Risk means financial downside, you can lose money on real estate on a multitude of things, millions of investors do every year. Real estate is not as easy to diversify as stocks and bonds, certain unexpected and uninsurable external shocks can have disastrous effects on the profitability of your investment. Things such as new rent control, property tax increase, termite damag…

Sure they do, but we now have a ton of anti slumlord laws because there was a long precedent of landlords being slumlords.

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

#134

Post by citizens »

switch007 wrote: post #11
hackermailman wrote: post #10

Rising rents doesn't seem to effect the number of applicants though, every time I've viewed a place here there was a lineup of 20+ other renters there waiting as well. They pushed us through in under 10 minutes then another 20+ people showed up for the second appointment already gathering outside. There was no time to dispute the lease they dangled which stipulated you had to vacate the day the lease expired in order…

I wonder if breaking point be when rents exceed the means of 2 people? Something like 60% of their combined take home pay.

I've seen groups of 5-6 roommates looking at 1 bedrooms in Brooklyn.

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

#135

Post by corpMaverick »

The solution is to build more. The free market should take of it. But the market is not free, local economic interests wield sufficient political power to prevent this.

This is happening in almost every medium and big cities in the U.S. It is capturing a big chunk of the productivity gains in the whole economy. It is a tax from one generation to the next. A national solution is needed.

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

#136

Post by gowld »

chimeracoder wrote: post #52
moultano wrote: post #44

Earlier quoted context omitted.

Land Value Tax. https://en.wikipedia.org/wiki/Land_value_tax This is distinct from a property tax in that it only measures the value of the soil it sits on, so doesn't punish the landlord for improvements. The value of the land itself is almost entirely outside of the landlord's control, it's determined by the community around it. As a result, this is one of the least distortive taxes.

> This is distinct from a property tax in that it only measures the value of the soil it sits on, so doesn't punish the landlord for improvements. The value of the land itself is almost entirely outside of the landlord's control, it's determined by the community around it. As a result, this is one of the least distortive taxes. When land value is taxed at a higher rate than property value, it creates a perverse incen…

How have all the economists missed this obvious point?

Murder also hurts property values. Fortunately, we have the ability to create laws to punish destructive behavior.

Why would a landlord destroy the value of their own property, harming their own ability to draw rent?

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

#137

Post by downrightmike »

sampo wrote: post #97
quickthrower2 wrote: post #33

This is about households Social housing? Minimum wage increase? Rent assistance?

> What can be done I wonder? The best option would be to build more. Unfortunately, this also seems to be the least popular option.

Building expensive housing is the game right now and they go unpopulated. There is no desire to build affordable housing.

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

#138

Post by gowld »

pc86 wrote: post #120
moultano wrote: post #44

Earlier quoted context omitted.

Land Value Tax. https://en.wikipedia.org/wiki/Land_value_tax This is distinct from a property tax in that it only measures the value of the soil it sits on, so doesn't punish the landlord for improvements. The value of the land itself is almost entirely outside of the landlord's control, it's determined by the community around it. As a result, this is one of the least distortive taxes.

Please explain how this additional tax isn't immediately (at the next least signing) passed on to renters. If I rent out a property and the taxes go up $X, I will raise rent at least 1x.

Econ 101 supply and demand. Why haven't you _already_ raised rent $X? Because you love your tenants? If landlords kept down rents out of _charity_, we wouldn't have a rent problem in the first place.

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

#139

Post by billmalarky »

watwut wrote: post #132
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…

What risk? I bought the flat I live in to make risk lower. If you live on somebody else's property, you are more vulnerable and owner can limit how you treat the property.

What will happen if the economy collapses and the value of your flat is worth half what you paid for it and you lose your job?

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

#140

Post by bmmayer1 »

bko wrote: post #49
_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…

I don’t think many landlords get rich from rent but housing appreciation. Real estate cap rates are generally very low, especially in places where rents are high. Take nyc for example. If you look at what someone pays for rent and take an estimate as to what the apartment is worth and estimate mortgage and taxes you’ll see that the rent often doesn’t even cover the mortgage. For instance in manhattan you can get a ch…

Sure, but to make money on housing appreciation you also run the risk of losing money on housing depreciation. Given that owning property is a risk, it's not a fair characterization to look at landlords as some sort of leech on society that just get rich at the expense of everyone else. That's survivorship bias looking at only the successful landlords and ignoring the real risk involved in owning property.
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