18 ms·

Rising Rents Are Pushing More Tenants Past the Breaking Point

208 points by kimsk112 9y ago

quickthrower2 9y ago
This is about households < 30k/yr. What can be done I wonder? Social housing? Minimum wage increase? Rent assistance?
- sampo 9y ago
  > What can be done I wonder? The best option would be to build more. Unfortunately, this also seems to be the least popular option.
  - downrightmike 9y ago
    Building expensive housing is the game right now and they go unpopulated. There is no desire to build affordable housing.
    - jeffwilcox 9y ago
      Yeah... it's also tough, many real estate investment trusts and companies have a fiduciary responsibility to their shareholders to seek a great return on investment. If there's no margin in the affordable housing game, it's not going to fulfill that obligation. :/
    - ryuker16 9y ago
      The old expensive housing becomes the new affordable housing. Trickle down real estate works assuming the old real estate isn't destroyed.
    - jogjayr 9y ago
      It's not so simple as "luxury housing" vs "affordable housing". Location dominates every other factor when it comes to how much a place should rent for, including fancy amenities. Why else does a shoebox in SF cost twice as much as a modern 2-bedroom apartment in downtown Atlanta? If developers build more luxury units then the prices of the older apartments will drop. At worst it's better than having no new housing stock at all.
maxxxxx 9y ago
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.
- asdfasdfasd333 9y ago
  yep, awesome that they've finally figured it out.
- techiferous 9y ago
  That's a simple take on a very complex system.
  - purplezooey 9y ago
    A very effective tactic of the right wing.
    - AnimalMuppet 9y ago
      The post techiferous was replying to was, if anything, a left wing perspective. And your comment contributes nothing except an ad hominem.
  - bo1024 9y ago
    The simpler the insight, the more valuable and powerful it is -- if correct. I think it does capture a key basic principle underlying current trends. In any economic system, there is some total amount of "welfare" or value generated, and it gets split in some way. So maybe you have a constant value of $2,000 per month for having a place to live. 10 years ago your rent was $1,000 per month and so of the $2,000 worth of utility generated by you living there, you got half and your landlord got half. Now your rent is $1900 and you still would rather pay it than be homeless, and by many reasonable metrics the economy is better than ever, but your landlord is capturing almost all of the value in the system and you are reaching the breaking point. And I personally don't think it's too simplistic to be true that, as powerful companies optimize (including politically), this kind of transfer is occurring in a lot of sectors in the US this decade.
downer71 9y ago
Rising rents force longer work weeks. Longer work weeks force people to be away from their homes more. Being at work all the time leads to lack of a social life. Lack of a social life leads to more socializing at work. More socializing at work reduces productivity. Reduced productivity harms the economy. Discuss.
thebiglebrewski 9y ago
The rent is too damn high!
- acomjean 9y ago
  I'm assuming this is a reference to the short lived political party, who's sole platform item was based on rent. https://en.wikipedia.org/wiki/Rent_Is_Too_Damn_High_Party https://en.wikipedia.org/wiki/Rent_Is_Too_Damn_High_Party
  - kimsk112 9y ago
    Or the book. https://smile.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO/ https://smile.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp...
adamnemecek 9y ago
Bernie 2020!
- chronicy292 9y ago
  Oh please. Bernie has no chance against Trump. Can't stump the Trump.
- asdfasdfasd333 9y ago
  found the commie
tbirrell 9y ago
Google Cache Link to avoid paywall: https://webcache.googleusercontent.com/search?q=cache:-cyHPKwMGE4J:https://www.bloomberg.com/news/articles/2017-10-26/rising-rents-are-pushing-more-tenants-past-the-breaking-point+&cd=2&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:-cyHPK...
adwhit 9y ago
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 still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. 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.
- deleted 9y ago
  [deleted]
- raverbashing 9y ago
  Municipal tax based on the value of the property, due every year But then again, if people they can't afford the rent, they won't pay (or they find different arrangements), landlords who think their tenants have infinite money are in for a (bad) surprise
- refurb 9y ago
  I guess it depends where you live. Not all landlord make money on their property. I've had two landlords so far that lost money on their properties due to a combination of falling home prices and a depressed rental market. It was actually a wealth transfer from them to me!
  - vermontdevil 9y ago
    They may have lost money but they got their $ elsewhere (tax write offs etc)
    - refurb 9y ago
      The tax write offs helped, but they still shouldered most of the loss. And we're not talking a few thousand, but rather $100K+. As a renter, it was great to just be able to pack my stuff up, turn in the keys and let them deal with the financial implications.
hackermailman 9y ago
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 they could bypass provincial rent increase limits of 3.7%, and make you sign a new lease with any increase they wished.
- switch007 9y ago
  I wonder if breaking point be when rents exceed the means of 2 people? Something like 60% of their combined take home pay.
  - humanrebar 9y ago
    In urban centers, you'll just see three or four professionals per family home or apartment. The families will leave town, either to the suburbs with a soul-crushing commute or to a smaller city.
  - citizens 9y ago
    I've seen groups of 5-6 roommates looking at 1 bedrooms in Brooklyn.
- pythonaut_16 9y ago
  If the rents are high everywhere but you can still pay and you have no other options, what other choice do you have? I think in a lot of cases the choice people make is to suffer through the rent until they can either afford property or maneuver their career to let them live in lower cost areas.
- deleted 9y ago
  [deleted]
- asdfasdfasd333 9y ago
  it's called the free market.
nickpp 9y ago
Heavily regulated (construction) market => high cost of building new (housing) units => low supply => high sale prices + heavily regulated (rental) market => high rents Simple economics, no?
- ThrustVectoring 9y ago
  Sale prices aren't coupled to rents like you think. Landlords charge what the market will bear - how high housing prices increase rents is through making purchasing housing impossible for more people, who are then force to bid up rents.
beebmam 9y ago
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 states). They've made millions on just this speculation. In the short term, this means housing prices are absurd. In the long term, when these houses are no longer appreciating in value at such large scales, we can expect a crash in the housing market. Which will likely mean something similar to the housing crisis of 2008. The Seattle city council has wanted to pass a law that would make it visible to the public which houses were being bought by foreign investors, but it was deemed illegal. https://www.seattletimes.com/seattle-news/politics/proposed-seattle-taxes-targeting-foreign-buyers-investment-properties-take-fire/ https://www.seattletimes.com/seattle-news/politics/proposed-... To me, this is absurd. This is a human rights issue (homelessness is growing by a large amount). This is also a national security issue; this speculation cannot happen forever, and when it ends, I forsee an awful crash.
- notyourwork 9y ago
  > To me, this is absurd. This is a human rights issue (homelessness is growing by a large amount). This is also a national security issue; this speculation cannot happen forever. Our economy will very likely crash when this speculation is no longer profitable. This is my biggest concern with wanting to dip my families toes into their first home purchase. We lived in Seattle last few years and the market is stupid, we recently moved to Bay area and this market is even more silly. (I know we pick some great places for first time home buyer but careers and education take you where they take you, that's another discussion.)
  - beebmam 9y ago
    Yep, your career really does take you where it takes you. I'm in the same boat. I've lived here for 5 years and have been saving, was getting pretty close to being able to afford a house, and the last year or so has seen such a huge increase in home prices and a decrease in availability that I've given up hope.
zaph0d_ 9y ago
The problem is getting worse as new jobs are mainly created in cities. They also offer a more attractive infrastructure such as fast internet speeds and shorter commutes, than rural areas. There are of course many other advantages, but I think these are some of the most significant ones. This creates an unhealthy growth, which we see now manifests in the completely out-of-control rents worldwide. The only way this problem can be tackled is to invest massively in the rural infrastructure and stop this disturbing trend towards growing megacities and sparsely inhabited rural areas. Rising rents contribute to an large extent on social inequality. As a renter will only get living space for each month but nothing else of value in return, as opposed to buying a house/flat. The calculation for renting has been fine in the past decades as renting was often cheaper than buying a house, but this changed as we see now.
- kylestlb 9y ago
  I agree with all of this, and I think megacities would be fine if the US had adequate public transit that actually goes to places where people live and work.
- ryuker16 9y ago
  The issue with rising rents is zoning laws. Since investors can't as easily build new housing, they invest in existing ones as speculation. If the demand is there, the skies should be filled with construction cranes and new tech investment in building cheaper, faster, etc. Instead we slap protectionism on it so everybody fights over a smaller piece of the real estate pie.
rm_-rf_slash 9y ago
Everybody on this thread should spend the next five minutes reading about Henry George, his historic work "Progress and Poverty" and the Single Tax: https://en.m.wikipedia.org/wiki/Henry_George https://en.m.wikipedia.org/wiki/Henry_George https://en.m.wikipedia.org/wiki/Progress_and_Poverty https://en.m.wikipedia.org/wiki/Progress_and_Poverty An except from his book: "Take now... some hard-headed business man, who has no theories, but knows how to make money. Say to him: "Here is a little village; in ten years it will be a great city—in ten years the railroad will have taken the place of the stage coach, the electric light of the candle; it will abound with all the machinery and improvements that so enormously multiply the effective power of labor. Will in ten years, interest be any higher?" He will tell you, "No!" "Will the wages of the common labor be any higher...?" He will tell you, "No the wages of common labor will not be any higher..." "What, then, will be higher?" "Rent, the value of land. Go, get yourself a piece of ground, and hold possession." And if, under such circumstances, you take his advice, you need do nothing more. You may sit down and smoke your pipe; you may lie around like the lazzaroni of Naples or the leperos of Mexico; you may go up in a balloon or down a hole in the ground; and without doing one stroke of work, without adding one iota of wealth to the community, in ten years you will be rich! In the new city you may have a luxurious mansion, but among its public buildings will be an almshouse."
- Danihan 9y ago
  That's like saying it's easy to buy a stock and sit on it when you know for sure it's going to go up. Obviously.
- WillPostForFood 9y ago
  you may lie around like the lazzaroni of Naples or the leperos of Mexico Sounds like a racist. And wrong about many other assertions - show me a village that turned into a city where the wages didn't increase.
kylestlb 9y ago
I really hope the economy shifts toward remote work as the standard (at least in the career tracks where it is possible). The ever increasing share of higher jobs moving to metropolitan regions will continue to make the places on this list worse off. More remote work might also even out the salaries across the US a little bit. One can dream...
- allendoerfer 9y ago
  It will mostly help India, not the rural US.
  - kylestlb 9y ago
    Even though flying throughout the US is much easier and cheaper than to India and back? Tons of companies already use talent from other countries to create products, the lack of remote work hasn't stopped them.
pinguinFromY 9y ago
I live in eastern europe, in a city where the life quality is supposed to be the best in my country, working as a software engineer, making ~4 times more than the average salary and the rent and houses grew more than 100% in under 3 years. The problem is that the market adapted to us, the IT workers who can afford a decent rent or buy a house but what happens to students (which are a lot of them here) and people who make the minimum salary (which is ~250 euros / month) ? They are forced to live 3 or 4 in the same apartment or stay in a nearby location outside the city and then commute a longer distance. I expect a market crash in a few years and I'm wondering what will happen. My landlord did borrow a crazy amount of money to pay for an apartment and if the market crashes I expect my rent to go down but that won't happen anyway since the bank probably won't lower his rate. We are all fucked really. This is something that will happen in all growing cities, at one point something will explode.
- bittercynic 9y ago
  Inflation might bring the rent and prices back in line without the euro/dollar amounts having to come back down.
wonderwonder 9y ago
Where I live (Orlando) monthly rent has been rising at a rate of 8 percent per year while wages have essentially stayed still. In the long run this is an unsustainable trend. If a low income individual is able to rent a house while working a full time job and just make it every month, at the end of their current lease when rent adjust upwards they will be forced out. Moving costs alone will cost them several hundred to a thousand dollars. On top of that they need to find another place to live which may not be possible due to the upwards pricing trend. With little in the way of increased income, what is that person to do, especially if they cannot afford to move and don't have a family able to assist them? I have no solution for this issue and certainly don't want to curtail anyone's ability to purchase and profit from property but the future prospects of those on the lower spectrum of incomes does not look good.
corpMaverick 9y ago
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.
swendoog 9y ago
I'm so tired of seeing these articles, and then seeing nothing done to fix the problem. I feel like we've been seeing "HOUSING COSTS PROHIBITIVELY HIGH" and "RENTS OUT OF CONTROL" for years now in California and yet can anyone point to meaningful progress on a solution? The legislature is inept and completely unable or unwilling to address the issue head on. SB-2 for example. This is the kind of legislation we're getting in 2017, when the median home price in CA is twice the national average, and less than a third of CA households can afford a median priced home? Most reform I've seen focusses solely on building more affordable housing (i.e. government programs for low income), but never addresses the fact that even market rates are stratospheric in some areas. Asking for better market rates does not mean we can't also solve low income housing.
elchief 9y ago
Same in Vancouver http://www.cbc.ca/news/canada/british-columbia/census-data-reveals-what-metro-vancouverites-already-know-rents-are-through-the-roof-1.4371734 http://www.cbc.ca/news/canada/british-columbia/census-data-r... It's the Chinese purchasing places (to dump their laundered money at any price), then leaving them empty, so they don't get worn down from use. And Canadians paying those same insane prices and they trying to get renters to pay their mortgage. And everyone renting on AirBNB instead of to locals Re: down-votes, you think I'm being racist but this is what is actually happening: http://vancouversun.com/news/national/exclusive-how-b-c-casinos-are-used-to-launder-millions-in-drug-cash http://vancouversun.com/news/national/exclusive-how-b-c-casi...
- linkregister 9y ago
  That article describes the process but it doesn’t actually say how much property was purchased or whether this affected the real estate market. It might be other Canadians performing the real estate purchases. Until BC actually publishes some stats about what percentage of places are foreign-owned, we won’t really know.
lend000 9y ago
These comments underscore the fact that real estate is increasing everywhere, not just city centers. However, it is magnified in city centers, and here are the (apparently not) obvious primary causes: - A higher proportion of people want to live in small city centers. - There are more people, and the same amount of land. This is one of those things that can never truly be solved, without questionable eugenics programs, some other rate-limiter on population (like famine), or expansion into space. Please, tell me I'm wrong and continue to blame it all on foreign speculators, corporations, and landlords, like most of these existing comments do.
rednerrus 9y ago
It should come as no surprise that housing is appreciating as rapidly as it is. If someone is going to loan you $500,000 at 3% and that property is going to appreciate at 8% a year, you'd be a fool not to take that deal. We really need interest rates to get back in line with what it costs to loan people money.
dba7dba 9y ago
Govt should adopt a policy of gradually increased property tax based on the number of housing units (or total assessed value of all housing property) one person/business owns. It should be to the point where one cannot use buying/selling/holding housing property as a way to amass wealth infinitely. Maybe to a certain point, but not to the extent allowed now. To me, holding a vast number of rental units and amassing a huge income (not for one's living expense but for increasing wealth) is not much different from extracting oil from the ground. Maybe even worse, because high rent/housing is negatively affecting a regular citizen even more directly than dirty oil.
- WillPostForFood 9y ago
  So where does the incentive to build new housing come from once policies are in place to make sure it isn't profitable?
- beager 9y ago
  I'm under the impression that New York City does this. Effective property tax rates in the 5 boroughs are strikingly low contrasted with surrounding counties, but only for a certain number of units. After a certain number, your property tax notches up to a rate I believe is comparable to surrounding areas. Not saying this particular policy ameliorates the issues you're talking about, just that a precedent for it exists in taxation policy in the US.
shmerl 9y ago
> The share of households considered rent-burdened--meaning they spend more than 30 percent of their income on debt--ticked down in 2015 Do they mean more than 30% of income on rent? And does it mean income minus taxes?
- jdale27 9y ago
  Most likely before taxes. In my experience (in the US) the usual rule of thumb has been to spend about 25% of your before-tax income on rent. But in the San Francisco Bay Area today, it's not uncommon for people to be spending 30-35% or more. I've seen apartment listings recently asking for an income of only 2.3x the rent.
- kilovoltaire 9y ago
  It looks like it's defined based on pre-tax gross income. (Here's one reference that mentions it[1] and I saw a few others as well) So it would be an even higher percentage of after-tax income. [1] https://www.nytimes.com/2016/10/23/realestate/how-much-of-my-income-should-be-budgeted-for-rent.html https://www.nytimes.com/2016/10/23/realestate/how-much-of-my...
Bromskloss 9y ago
Don't rents simply reflect supply and demand? It seems unlikely that they would rise beyond the "breaking point" for _everyone_ or even most people. Also, whenever someone is homeless, that's someone for whom the rents are above the breaking point.
- poorrights 9y ago
  Just because enough people can pay $2,500 per month for a studio doesn’t mean the people who can’t deserve to be homeless.
  - Bromskloss 9y ago
    I say nothing about who deserves it. I'm talking about the headline, which makes it sound like rents being past people's breaking point (0) is something that could happen to the population at large, and (1) hasn't always been the case for some.
- poorrights 9y ago
  And no, it isn’t just “simply supply and demand”. This has to be the most ad absurdum reductio I’ve ever read in my life.
burntrelish1273 9y ago
There are 6 vacant homes, with often rooms plural, for every single homeless person in the US.
EGreg 9y ago
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.
TaylorGood 9y ago
A friend today listed an ocean view property where the owner bought it sight unseen, never visited from overseas and is selling it at double digit gain. It was empty the entire time.
wheresmyusern 9y ago
right now i spend 80% percent of my money on rent. through a lot of thought and iteration, ive been able to reduce all of my expenses quite dramatically. but rent absolutely resists my efforts to reduce. it is unmitigated greed. i was talking to my previous landlord and i very carefully broached the subject of why he charges so much and his response was kind of a mental double-think -- he charges what the market can bare. he gets way more money than he needs, and so i call it greed. i find it very strange to look at the situation in renting -- you have some people who are called "owners" who own the land and they make other people, "renters," pay to stay on the land. what is the difference between renter and owner? why do owners get to sit back and sit on their asses, contributing absolutely nothing, having all their bills paid, not working more than a few days in a month? why do renters have to break their backs all day long just to afford to be able to sleep underneath a roof at night? i just find it very strange that nobody thinks this is unfair -- it is unfair isnt it? one guy does no work and another does tons of work and the guy who works is worse off? anyway, the whole system is completely unfair and insane, so i decided that i should get out of it. im planning on buying land within 100 to 200 miles of the city. im going to build an icf house with metal roofing and near passive climate control. interestingly, doing this can cost less than buying a new suv, which i would have never guessed before doing the calculations. if you add a healthy solar system and trade your car in for a chevy bolt, one might even commute 150 miles both ways for free quite regularly. as is usual, i expect there to be many people who will call me an idiot and say none of this is possible -- i am looking forward to scrutinizing actual arguments or evidence if they bring any to the table. for those who arent triggered by the concept of cheap, low maintenance living, i would love to connect and exchange tips. check out these awesome websites while youre at it. http://earlyretirementextreme.com/ http://earlyretirementextreme.com/ https://www.mrmoneymustache.com/ https://www.mrmoneymustache.com/

208 points by kimsk112 9y ago

quickthrower2 9y ago

This is about households < 30k/yr. What can be done I wonder? Social housing? Minimum wage increase? Rent assistance?

sampo 9y ago
> What can be done I wonder? The best option would be to build more. Unfortunately, this also seems to be the least popular option.
- downrightmike 9y ago
  Building expensive housing is the game right now and they go unpopulated. There is no desire to build affordable housing.
  - jeffwilcox 9y ago
    Yeah... it's also tough, many real estate investment trusts and companies have a fiduciary responsibility to their shareholders to seek a great return on investment. If there's no margin in the affordable housing game, it's not going to fulfill that obligation. :/
  - ryuker16 9y ago
    The old expensive housing becomes the new affordable housing. Trickle down real estate works assuming the old real estate isn't destroyed.
  - jogjayr 9y ago
    It's not so simple as "luxury housing" vs "affordable housing". Location dominates every other factor when it comes to how much a place should rent for, including fancy amenities. Why else does a shoebox in SF cost twice as much as a modern 2-bedroom apartment in downtown Atlanta? If developers build more luxury units then the prices of the older apartments will drop. At worst it's better than having no new housing stock at all.

maxxxxx 9y ago

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.

asdfasdfasd333 9y ago
yep, awesome that they've finally figured it out.
techiferous 9y ago
That's a simple take on a very complex system.
- purplezooey 9y ago
  A very effective tactic of the right wing.
  - AnimalMuppet 9y ago
    The post techiferous was replying to was, if anything, a left wing perspective. And your comment contributes nothing except an ad hominem.
- bo1024 9y ago
  The simpler the insight, the more valuable and powerful it is -- if correct. I think it does capture a key basic principle underlying current trends. In any economic system, there is some total amount of "welfare" or value generated, and it gets split in some way. So maybe you have a constant value of $2,000 per month for having a place to live. 10 years ago your rent was $1,000 per month and so of the $2,000 worth of utility generated by you living there, you got half and your landlord got half. Now your rent is $1900 and you still would rather pay it than be homeless, and by many reasonable metrics the economy is better than ever, but your landlord is capturing almost all of the value in the system and you are reaching the breaking point. And I personally don't think it's too simplistic to be true that, as powerful companies optimize (including politically), this kind of transfer is occurring in a lot of sectors in the US this decade.

downer71 9y ago

Rising rents force longer work weeks. Longer work weeks force people to be away from their homes more. Being at work all the time leads to lack of a social life. Lack of a social life leads to more socializing at work. More socializing at work reduces productivity. Reduced productivity harms the economy. Discuss.

thebiglebrewski 9y ago

The rent is too damn high!

acomjean 9y ago
I'm assuming this is a reference to the short lived political party, who's sole platform item was based on rent. https://en.wikipedia.org/wiki/Rent_Is_Too_Damn_High_Party https://en.wikipedia.org/wiki/Rent_Is_Too_Damn_High_Party
- kimsk112 9y ago
  Or the book. https://smile.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0078XGJXO/ https://smile.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp...

adamnemecek 9y ago

Bernie 2020!

chronicy292 9y ago
Oh please. Bernie has no chance against Trump. Can't stump the Trump.
asdfasdfasd333 9y ago
found the commie

tbirrell 9y ago

Google Cache Link to avoid paywall: https://webcache.googleusercontent.com/search?q=cache:-cyHPKwMGE4J:https://www.bloomberg.com/news/articles/2017-10-26/rising-rents-are-pushing-more-tenants-past-the-breaking-point+&cd=2&hl=en&ct=clnk&gl=us https://webcache.googleusercontent.com/search?q=cache:-cyHPK...

adwhit 9y ago

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 still. Every one of those improvements is effected by the labor and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. 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.

deleted 9y ago
[deleted]
raverbashing 9y ago
Municipal tax based on the value of the property, due every year But then again, if people they can't afford the rent, they won't pay (or they find different arrangements), landlords who think their tenants have infinite money are in for a (bad) surprise
refurb 9y ago
I guess it depends where you live. Not all landlord make money on their property. I've had two landlords so far that lost money on their properties due to a combination of falling home prices and a depressed rental market. It was actually a wealth transfer from them to me!
- vermontdevil 9y ago
  They may have lost money but they got their $ elsewhere (tax write offs etc)
  - refurb 9y ago
    The tax write offs helped, but they still shouldered most of the loss. And we're not talking a few thousand, but rather $100K+. As a renter, it was great to just be able to pack my stuff up, turn in the keys and let them deal with the financial implications.

hackermailman 9y ago

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 they could bypass provincial rent increase limits of 3.7%, and make you sign a new lease with any increase they wished.

switch007 9y ago
I wonder if breaking point be when rents exceed the means of 2 people? Something like 60% of their combined take home pay.
- humanrebar 9y ago
  In urban centers, you'll just see three or four professionals per family home or apartment. The families will leave town, either to the suburbs with a soul-crushing commute or to a smaller city.
- citizens 9y ago
  I've seen groups of 5-6 roommates looking at 1 bedrooms in Brooklyn.
pythonaut_16 9y ago
If the rents are high everywhere but you can still pay and you have no other options, what other choice do you have? I think in a lot of cases the choice people make is to suffer through the rent until they can either afford property or maneuver their career to let them live in lower cost areas.
deleted 9y ago
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asdfasdfasd333 9y ago
it's called the free market.

nickpp 9y ago

Heavily regulated (construction) market => high cost of building new (housing) units => low supply => high sale prices + heavily regulated (rental) market => high rents Simple economics, no?

ThrustVectoring 9y ago
Sale prices aren't coupled to rents like you think. Landlords charge what the market will bear - how high housing prices increase rents is through making purchasing housing impossible for more people, who are then force to bid up rents.

beebmam 9y ago

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 states). They've made millions on just this speculation. In the short term, this means housing prices are absurd. In the long term, when these houses are no longer appreciating in value at such large scales, we can expect a crash in the housing market. Which will likely mean something similar to the housing crisis of 2008. The Seattle city council has wanted to pass a law that would make it visible to the public which houses were being bought by foreign investors, but it was deemed illegal. https://www.seattletimes.com/seattle-news/politics/proposed-seattle-taxes-targeting-foreign-buyers-investment-properties-take-fire/ https://www.seattletimes.com/seattle-news/politics/proposed-... To me, this is absurd. This is a human rights issue (homelessness is growing by a large amount). This is also a national security issue; this speculation cannot happen forever, and when it ends, I forsee an awful crash.

notyourwork 9y ago
> To me, this is absurd. This is a human rights issue (homelessness is growing by a large amount). This is also a national security issue; this speculation cannot happen forever. Our economy will very likely crash when this speculation is no longer profitable. This is my biggest concern with wanting to dip my families toes into their first home purchase. We lived in Seattle last few years and the market is stupid, we recently moved to Bay area and this market is even more silly. (I know we pick some great places for first time home buyer but careers and education take you where they take you, that's another discussion.)
- beebmam 9y ago
  Yep, your career really does take you where it takes you. I'm in the same boat. I've lived here for 5 years and have been saving, was getting pretty close to being able to afford a house, and the last year or so has seen such a huge increase in home prices and a decrease in availability that I've given up hope.

zaph0d_ 9y ago

The problem is getting worse as new jobs are mainly created in cities. They also offer a more attractive infrastructure such as fast internet speeds and shorter commutes, than rural areas. There are of course many other advantages, but I think these are some of the most significant ones. This creates an unhealthy growth, which we see now manifests in the completely out-of-control rents worldwide. The only way this problem can be tackled is to invest massively in the rural infrastructure and stop this disturbing trend towards growing megacities and sparsely inhabited rural areas. Rising rents contribute to an large extent on social inequality. As a renter will only get living space for each month but nothing else of value in return, as opposed to buying a house/flat. The calculation for renting has been fine in the past decades as renting was often cheaper than buying a house, but this changed as we see now.

kylestlb 9y ago
I agree with all of this, and I think megacities would be fine if the US had adequate public transit that actually goes to places where people live and work.
ryuker16 9y ago
The issue with rising rents is zoning laws. Since investors can't as easily build new housing, they invest in existing ones as speculation. If the demand is there, the skies should be filled with construction cranes and new tech investment in building cheaper, faster, etc. Instead we slap protectionism on it so everybody fights over a smaller piece of the real estate pie.

rm_-rf_slash 9y ago

Everybody on this thread should spend the next five minutes reading about Henry George, his historic work "Progress and Poverty" and the Single Tax: https://en.m.wikipedia.org/wiki/Henry_George https://en.m.wikipedia.org/wiki/Henry_George https://en.m.wikipedia.org/wiki/Progress_and_Poverty https://en.m.wikipedia.org/wiki/Progress_and_Poverty An except from his book: "Take now... some hard-headed business man, who has no theories, but knows how to make money. Say to him: "Here is a little village; in ten years it will be a great city—in ten years the railroad will have taken the place of the stage coach, the electric light of the candle; it will abound with all the machinery and improvements that so enormously multiply the effective power of labor. Will in ten years, interest be any higher?" He will tell you, "No!" "Will the wages of the common labor be any higher...?" He will tell you, "No the wages of common labor will not be any higher..." "What, then, will be higher?" "Rent, the value of land. Go, get yourself a piece of ground, and hold possession." And if, under such circumstances, you take his advice, you need do nothing more. You may sit down and smoke your pipe; you may lie around like the lazzaroni of Naples or the leperos of Mexico; you may go up in a balloon or down a hole in the ground; and without doing one stroke of work, without adding one iota of wealth to the community, in ten years you will be rich! In the new city you may have a luxurious mansion, but among its public buildings will be an almshouse."

Danihan 9y ago
That's like saying it's easy to buy a stock and sit on it when you know for sure it's going to go up. Obviously.
WillPostForFood 9y ago
you may lie around like the lazzaroni of Naples or the leperos of Mexico Sounds like a racist. And wrong about many other assertions - show me a village that turned into a city where the wages didn't increase.

kylestlb 9y ago

I really hope the economy shifts toward remote work as the standard (at least in the career tracks where it is possible). The ever increasing share of higher jobs moving to metropolitan regions will continue to make the places on this list worse off. More remote work might also even out the salaries across the US a little bit. One can dream...

allendoerfer 9y ago
It will mostly help India, not the rural US.
- kylestlb 9y ago
  Even though flying throughout the US is much easier and cheaper than to India and back? Tons of companies already use talent from other countries to create products, the lack of remote work hasn't stopped them.

pinguinFromY 9y ago

I live in eastern europe, in a city where the life quality is supposed to be the best in my country, working as a software engineer, making ~4 times more than the average salary and the rent and houses grew more than 100% in under 3 years. The problem is that the market adapted to us, the IT workers who can afford a decent rent or buy a house but what happens to students (which are a lot of them here) and people who make the minimum salary (which is ~250 euros / month) ? They are forced to live 3 or 4 in the same apartment or stay in a nearby location outside the city and then commute a longer distance. I expect a market crash in a few years and I'm wondering what will happen. My landlord did borrow a crazy amount of money to pay for an apartment and if the market crashes I expect my rent to go down but that won't happen anyway since the bank probably won't lower his rate. We are all fucked really. This is something that will happen in all growing cities, at one point something will explode.

bittercynic 9y ago
Inflation might bring the rent and prices back in line without the euro/dollar amounts having to come back down.

wonderwonder 9y ago

Where I live (Orlando) monthly rent has been rising at a rate of 8 percent per year while wages have essentially stayed still. In the long run this is an unsustainable trend. If a low income individual is able to rent a house while working a full time job and just make it every month, at the end of their current lease when rent adjust upwards they will be forced out. Moving costs alone will cost them several hundred to a thousand dollars. On top of that they need to find another place to live which may not be possible due to the upwards pricing trend. With little in the way of increased income, what is that person to do, especially if they cannot afford to move and don't have a family able to assist them? I have no solution for this issue and certainly don't want to curtail anyone's ability to purchase and profit from property but the future prospects of those on the lower spectrum of incomes does not look good.

corpMaverick 9y ago

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.

swendoog 9y ago

I'm so tired of seeing these articles, and then seeing nothing done to fix the problem. I feel like we've been seeing "HOUSING COSTS PROHIBITIVELY HIGH" and "RENTS OUT OF CONTROL" for years now in California and yet can anyone point to meaningful progress on a solution? The legislature is inept and completely unable or unwilling to address the issue head on. SB-2 for example. This is the kind of legislation we're getting in 2017, when the median home price in CA is twice the national average, and less than a third of CA households can afford a median priced home? Most reform I've seen focusses solely on building more affordable housing (i.e. government programs for low income), but never addresses the fact that even market rates are stratospheric in some areas. Asking for better market rates does not mean we can't also solve low income housing.

elchief 9y ago

Same in Vancouver http://www.cbc.ca/news/canada/british-columbia/census-data-reveals-what-metro-vancouverites-already-know-rents-are-through-the-roof-1.4371734 http://www.cbc.ca/news/canada/british-columbia/census-data-r... It's the Chinese purchasing places (to dump their laundered money at any price), then leaving them empty, so they don't get worn down from use. And Canadians paying those same insane prices and they trying to get renters to pay their mortgage. And everyone renting on AirBNB instead of to locals Re: down-votes, you think I'm being racist but this is what is actually happening: http://vancouversun.com/news/national/exclusive-how-b-c-casinos-are-used-to-launder-millions-in-drug-cash http://vancouversun.com/news/national/exclusive-how-b-c-casi...

linkregister 9y ago
That article describes the process but it doesn’t actually say how much property was purchased or whether this affected the real estate market. It might be other Canadians performing the real estate purchases. Until BC actually publishes some stats about what percentage of places are foreign-owned, we won’t really know.

lend000 9y ago

These comments underscore the fact that real estate is increasing everywhere, not just city centers. However, it is magnified in city centers, and here are the (apparently not) obvious primary causes: - A higher proportion of people want to live in small city centers. - There are more people, and the same amount of land. This is one of those things that can never truly be solved, without questionable eugenics programs, some other rate-limiter on population (like famine), or expansion into space. Please, tell me I'm wrong and continue to blame it all on foreign speculators, corporations, and landlords, like most of these existing comments do.

rednerrus 9y ago

It should come as no surprise that housing is appreciating as rapidly as it is. If someone is going to loan you $500,000 at 3% and that property is going to appreciate at 8% a year, you'd be a fool not to take that deal. We really need interest rates to get back in line with what it costs to loan people money.

dba7dba 9y ago

Govt should adopt a policy of gradually increased property tax based on the number of housing units (or total assessed value of all housing property) one person/business owns. It should be to the point where one cannot use buying/selling/holding housing property as a way to amass wealth infinitely. Maybe to a certain point, but not to the extent allowed now. To me, holding a vast number of rental units and amassing a huge income (not for one's living expense but for increasing wealth) is not much different from extracting oil from the ground. Maybe even worse, because high rent/housing is negatively affecting a regular citizen even more directly than dirty oil.

WillPostForFood 9y ago
So where does the incentive to build new housing come from once policies are in place to make sure it isn't profitable?
beager 9y ago
I'm under the impression that New York City does this. Effective property tax rates in the 5 boroughs are strikingly low contrasted with surrounding counties, but only for a certain number of units. After a certain number, your property tax notches up to a rate I believe is comparable to surrounding areas. Not saying this particular policy ameliorates the issues you're talking about, just that a precedent for it exists in taxation policy in the US.

shmerl 9y ago

> The share of households considered rent-burdened--meaning they spend more than 30 percent of their income on debt--ticked down in 2015 Do they mean more than 30% of income on rent? And does it mean income minus taxes?

jdale27 9y ago
Most likely before taxes. In my experience (in the US) the usual rule of thumb has been to spend about 25% of your before-tax income on rent. But in the San Francisco Bay Area today, it's not uncommon for people to be spending 30-35% or more. I've seen apartment listings recently asking for an income of only 2.3x the rent.
kilovoltaire 9y ago
It looks like it's defined based on pre-tax gross income. (Here's one reference that mentions it[1] and I saw a few others as well) So it would be an even higher percentage of after-tax income. [1] https://www.nytimes.com/2016/10/23/realestate/how-much-of-my-income-should-be-budgeted-for-rent.html https://www.nytimes.com/2016/10/23/realestate/how-much-of-my...

Bromskloss 9y ago

Don't rents simply reflect supply and demand? It seems unlikely that they would rise beyond the "breaking point" for _everyone_ or even most people. Also, whenever someone is homeless, that's someone for whom the rents are above the breaking point.

poorrights 9y ago
Just because enough people can pay $2,500 per month for a studio doesn’t mean the people who can’t deserve to be homeless.
- Bromskloss 9y ago
  I say nothing about who deserves it. I'm talking about the headline, which makes it sound like rents being past people's breaking point (0) is something that could happen to the population at large, and (1) hasn't always been the case for some.
poorrights 9y ago
And no, it isn’t just “simply supply and demand”. This has to be the most ad absurdum reductio I’ve ever read in my life.

burntrelish1273 9y ago

There are 6 vacant homes, with often rooms plural, for every single homeless person in the US.

EGreg 9y ago

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.

TaylorGood 9y ago

A friend today listed an ocean view property where the owner bought it sight unseen, never visited from overseas and is selling it at double digit gain. It was empty the entire time.

wheresmyusern 9y ago

right now i spend 80% percent of my money on rent. through a lot of thought and iteration, ive been able to reduce all of my expenses quite dramatically. but rent absolutely resists my efforts to reduce. it is unmitigated greed. i was talking to my previous landlord and i very carefully broached the subject of why he charges so much and his response was kind of a mental double-think -- he charges what the market can bare. he gets way more money than he needs, and so i call it greed. i find it very strange to look at the situation in renting -- you have some people who are called "owners" who own the land and they make other people, "renters," pay to stay on the land. what is the difference between renter and owner? why do owners get to sit back and sit on their asses, contributing absolutely nothing, having all their bills paid, not working more than a few days in a month? why do renters have to break their backs all day long just to afford to be able to sleep underneath a roof at night? i just find it very strange that nobody thinks this is unfair -- it is unfair isnt it? one guy does no work and another does tons of work and the guy who works is worse off? anyway, the whole system is completely unfair and insane, so i decided that i should get out of it. im planning on buying land within 100 to 200 miles of the city. im going to build an icf house with metal roofing and near passive climate control. interestingly, doing this can cost less than buying a new suv, which i would have never guessed before doing the calculations. if you add a healthy solar system and trade your car in for a chevy bolt, one might even commute 150 miles both ways for free quite regularly. as is usual, i expect there to be many people who will call me an idiot and say none of this is possible -- i am looking forward to scrutinizing actual arguments or evidence if they bring any to the table. for those who arent triggered by the concept of cheap, low maintenance living, i would love to connect and exchange tips. check out these awesome websites while youre at it. http://earlyretirementextreme.com/ http://earlyretirementextreme.com/ https://www.mrmoneymustache.com/ https://www.mrmoneymustache.com/