9 ms·

I don't know about the US but speaking for the UK, landlords have had a ridiculously easy ride in recent decades. As a result, people with spare money customari

by Joeboy 6y ago

I don't know about the US but speaking for the UK, landlords have had a ridiculously easy ride in recent decades. As a result, people with spare money customarily invest it in buy-to-let properties, the cost of housing has rocketed, and vast amounts of cash are continuously siphoned from poorer people to richer people. We don't have to vindictively celebrate these people getting wiped out, but anything that discourages customary amateur landlordism has to be a good thing.

nightski 6y ago
I'm confused by this. You say that becoming a landlord is more accessible to the masses, yet indicate this somehow creates wealth disparity? Wouldn't it be the opposite where your proposal of making more exclusive would have that effect?
- MattGaiser 6y ago
  Upper middle class vs lower working class. So while ownership is more accessible to the top 25%, it is hurting the bottom 25%. You also have to consider that the UK was formerly feudal, so they never had the same culture of individual ownership as America does.
- ignoramous 6y ago
  > You say that becoming a landlord is more accessible to the masses... Not OP, but they don't say that. At least what I interpreted was, people with spare money bought properties to rent them, and then have more spare money to keep buying that ultimately results in unaffordable housing as the double whammy of 1. Costs to buy a house keeps creeping up, whilst 2. The wealth transfer from renters to landlords continues at an unsustainable clip.
  - m0llusk 6y ago
    Housing only ever becomes unaffordable when building stops. In the UK property rights and markets have kept the vast majority of tracts unavailable for housing development and in the US zoning and environmental impact hearings achieve the same result of making most land impossible to develop. All around London there are bucolic villages and one of the most extreme property value bubbles is in the San Francisco bay area which is largely reserved for extremely inefficient and wasteful single family homes.
    - sudosysgen 6y ago
      Building in a given city cannot continue forever. Space is finite. In any case, it's not a coincidence that rent is worth 25-45% of median income almost everywhere.
      - rhino369 6y ago
        We are so far off from saturating the peak density in American cities that its not even worth worrying about. Ground space is somewhat scarce, but we could easily bulldoze Sunset District and replace it with 40 story high rise apartment buildings.
        sudosysgen 6y ago
        First of all, that is impossible. Our infrastructure is not able to fulfill the needs of a city with such density. You would need massive investment on infrastructure, that would be incredibly costly and would take decades, possibly more given the history of public city infrastructure in the United States. It would also require re-organization of many industries to adapt with much lower car usage. In any case, it would not be enough. See, for example, Hong Kong. Despite incredibly high density, rent still ended up stabilizing at 35-55% of income.
        epistasis 6y ago
        And yet somehow, the current infrastructure was built and financed. Why can't more infrastructure be built in cities, and how could it possibly not be financially viable? Building housing doesn't mean people are born to fill the new housing. Everybody has to live somewhere! So the choice is to build out in sprawl, on green/brown fields. We did that. It turns out that suburbs are economically unsustainable because they require too much infrastructure per capita. Each person requires more roads, more pipes, more sewage lines... whereas cities are economically sustainable, because the per-person infrastructure costs are much lower, because the same pipe is far more efficient, and there's far less roads needed per person when they aren't sprawled out and people are able to walk to their destinations. We are so far from becoming HK that it's not really a relevant comparison. We force additional housing costs where we don't need to by artificially restricting supply. If we continue to do that, the housing price imbalance will get even further out of whack. The only people who lose under these conditions of housing austerity are those with less wealth, as it always is with austerity policies. Those who are striving to improve their situation won't get a chance to move to an area of higher economic opportunity because when prices are high, nobody can even make it in to the city. This has an enormous opportunity cost both for the individuals who can't live in the city of their choice, and for society that excludes that social interaction and economic activity. It has tremendous effects of increasing wealth inequality too.
fred_is_fred 6y ago
Here here. Buying rental property is a risk, not a guarantee, and articles like this seem to imply that these people should get some kind of bailout.
- klmadfejno 6y ago
  fyi it's 'Hear, Hear'
AnthonyMouse 6y ago
The answer to this is to increase the housing supply. Housing costs increase when demand increases and supply doesn't. Increase supply at the same time and rents don't increase faster than inflation. Buying property and renting it out is expected to yield returns. There's nothing wrong with that. It actually increases access to housing by allowing people who can't afford to buy property to still live somewhere in the meantime. The problem is when you're not just buying a $200,000 house whose value tracks inflation and renting it out, but buying a $200,000 house as the value quintuples and all of that money goes to the landlord while the tenant's rent quintuples as well.
- popotamonga 6y ago
  There is only so much you can increase the supply without being hours away from the jobs. Plus the rich can just buy any new supply quickly and we are back to the same.
  - jeffbee 6y ago
    Hrmm. Speaking of my town, Berkeley, California, the housing supply has been almost static since 1950, the number of jobs in town is now double the number of employed people (prior to pandemic), and virtually all land is zoned for detached single-family dwellings. Increasing the supply in this town would be as easy as the stroke of a pen, and would bring people closer to, not further from their jobs.
  - AnthonyMouse 6y ago
    > There is only so much you can increase the supply without being hours away from the jobs. Nonsense. We can build 100 story buildings but there is nowhere in the world you can find a hundred square miles covered in nothing but 100 story buildings. > Plus the rich can just buy any new supply quickly and we are back to the same. So the rich are going to buy the new supply and do what with it? If they rent it out, supply still goes up. They have to compete with each other for tenants. If they don't, wow -- huge profit opportunity building hundred story buildings and selling them to rich idiots who are willing to pay top dollar for something they get no returns from. Do that until they run out of money.
dredds 6y ago
Right. The title implies renters lose too. But if you're not "contracted in" (long-term lease) then keep an eye out for discounted rentals and remain flexible. It's not like after an earthquake or other natural disaster where housing stock is reduced leaving renters price-gouge-able.
macspoofing 6y ago
>landlords have had a ridiculously easy ride in recent decades Why don't you try being a landlord and see how easy it is.
- Joeboy 6y ago
  This is awkward, but I actually am a landlord. From my experience, it's not much work and is very profitable, compared to other investment options. Hoping to stop being a landlord fairly soon, although Covid-19 has put a bit of a spanner in the works.
  - ben_w 6y ago
    Likewise on both counts. I couldn’t take the flat with me when I moved from Cambridge to Berlin.
  - macspoofing 6y ago
    Not awkward at all. Between the capital outlay (and the opportunity cost, and associated risks of that deployed capital), and the work you're doing - it's effort. It's not easy. Put another way, if it was easy money everyone would be doing it ... and yet, people find other places to put their money in. >Hoping to stop being a landlord fairly soon Too easy?
    - Joeboy 6y ago
      > Too easy? Not exactly, but it feels kind of vampiric. I bought the house with sitting tenants a few years ago without really wanting to be a landlord, and they're still there (strictly speaking the people they sublet to are still there). They're apparently planning to move out soon but obviously everything's on hold for the moment.
  - dwaltrip 6y ago
    Why do you want to stop?
    - Joeboy 6y ago
dcolkitt 6y ago
Most of the Western economies, particularly the Anglo-sphere, have run into a dilemma. For decades home ownership was promoted as the primary avenue to middle-class wealth accumulation. However as homes are fundamentally not productive assets, that policy eventually turns into an economy-wide Ponzi scheme. Particularly when population growth rates are stagnant. In the post-war period governments have continuously pursued policies to keep the returns to housing as an investment high and low-risk. This includes buildings restrictions and zoning laws to cap supply, subsidized and guaranteed mortgages, price supports during downturns and a plethora of favorable tax treatments. That's made residential property produce returns at or near public equities with much lower drawdowns. The problem is that it's propped up housing prices far above the levels you'd see in a free market. And herein lies the dilemma. New generations buy housing expecting similar wealth-building returns as previous generations. Yet if any of the artificial supports were removed, prices would not only stagnate but significantly contract. The economy has become heavily adapted to the maxim that real estate prices never fall. We're simply not equipped to handle a 25% decline in housing prices, without causing downstream distress, default and panic. Witness the 2008 crisis. So the government keeps pumping more and more support, particularly every time a recession rolls around. Which distorts housing prices even further, which in turn makes the market even more fragile. Price to income ratios get stretched even further, at which point the only solution is to make credit looser and interest rates lower. Yet that pushes the average homeowner to be even more leveraged and less equipped to handle any rough patches in the market. The only real solution I see is a protracted soft-landing, where the housing market is gradually deflated over two or three decades. We should be aiming for housing prices to stay fixed in nominal returns, so people stop using their home as an investment vehicle. Mortgages, tax policy, and particularly building/zoning restrictions should be steadily moved in the direction of cheaper housing and more renting over home ownership. In particular, during recessions policymakers should let home prices fall by 10-15% and not recover. It's a good level that creates pain for the property investor, without pushing mortgages underwater. This will start to acclimate consumers to the idea that housing is not a risk-free investment.
- aSplash0fDerp 6y ago
  I can`t find a link to the story (thought it was tech crunch), but I came across an an article a few weeks back speculating on all of the commercial real estate on the west coast and the possibility of residential conversions of defunct commercial space to dramatically increase housing supply in larger cities practically overnight. I scoured the net and did not find much additional information and even tried to call a Realtor I know to see if the red-flags in commercial RE are the ripple to follow post-covid and if the downward pressure on residential home prices by residential conversions is on the horizon. The jury is still out (not enough data), but that may end up being a bright spot of the new normal(word soup) if millions of new units become available over the next 12-24 months.
clairity 6y ago
> “...anything that discourages customary amateur landlordism has to be a good thing.” i’m not super-sympathetic to the plight of most landlords, but that’s too vindictive and counter-productive. i’d rather have an escalating tax on number of units owned, with a sweet spot where landlords can make enough to be professional (have good tools and service providers), but discourage an overbearing imbalance of power over large numbers of other humans. i’d intuitively guess the sweet spot is probably in the range of 4-20 units, or 1 building with however many units, in high density zones.
- ben_w 6y ago
  Data point (I’m a landlord): The estate agent I’m using takes x% of the rent each month (plus costs for any actual work) to do all that stuff for me. So I guess the number should be ~1?
  - clairity 6y ago
    possibly! there are some scaling effects and diversification arguments to be made though.

by Joeboy 6y ago

nightski 6y ago

I'm confused by this. You say that becoming a landlord is more accessible to the masses, yet indicate this somehow creates wealth disparity? Wouldn't it be the opposite where your proposal of making more exclusive would have that effect?

MattGaiser 6y ago
Upper middle class vs lower working class. So while ownership is more accessible to the top 25%, it is hurting the bottom 25%. You also have to consider that the UK was formerly feudal, so they never had the same culture of individual ownership as America does.
ignoramous 6y ago
> You say that becoming a landlord is more accessible to the masses... Not OP, but they don't say that. At least what I interpreted was, people with spare money bought properties to rent them, and then have more spare money to keep buying that ultimately results in unaffordable housing as the double whammy of 1. Costs to buy a house keeps creeping up, whilst 2. The wealth transfer from renters to landlords continues at an unsustainable clip.
- m0llusk 6y ago
  Housing only ever becomes unaffordable when building stops. In the UK property rights and markets have kept the vast majority of tracts unavailable for housing development and in the US zoning and environmental impact hearings achieve the same result of making most land impossible to develop. All around London there are bucolic villages and one of the most extreme property value bubbles is in the San Francisco bay area which is largely reserved for extremely inefficient and wasteful single family homes.
  - sudosysgen 6y ago
    Building in a given city cannot continue forever. Space is finite. In any case, it's not a coincidence that rent is worth 25-45% of median income almost everywhere.
    - rhino369 6y ago
      We are so far off from saturating the peak density in American cities that its not even worth worrying about. Ground space is somewhat scarce, but we could easily bulldoze Sunset District and replace it with 40 story high rise apartment buildings.
      - sudosysgen 6y ago
        First of all, that is impossible. Our infrastructure is not able to fulfill the needs of a city with such density. You would need massive investment on infrastructure, that would be incredibly costly and would take decades, possibly more given the history of public city infrastructure in the United States. It would also require re-organization of many industries to adapt with much lower car usage. In any case, it would not be enough. See, for example, Hong Kong. Despite incredibly high density, rent still ended up stabilizing at 35-55% of income.
        epistasis 6y ago
        And yet somehow, the current infrastructure was built and financed. Why can't more infrastructure be built in cities, and how could it possibly not be financially viable? Building housing doesn't mean people are born to fill the new housing. Everybody has to live somewhere! So the choice is to build out in sprawl, on green/brown fields. We did that. It turns out that suburbs are economically unsustainable because they require too much infrastructure per capita. Each person requires more roads, more pipes, more sewage lines... whereas cities are economically sustainable, because the per-person infrastructure costs are much lower, because the same pipe is far more efficient, and there's far less roads needed per person when they aren't sprawled out and people are able to walk to their destinations. We are so far from becoming HK that it's not really a relevant comparison. We force additional housing costs where we don't need to by artificially restricting supply. If we continue to do that, the housing price imbalance will get even further out of whack. The only people who lose under these conditions of housing austerity are those with less wealth, as it always is with austerity policies. Those who are striving to improve their situation won't get a chance to move to an area of higher economic opportunity because when prices are high, nobody can even make it in to the city. This has an enormous opportunity cost both for the individuals who can't live in the city of their choice, and for society that excludes that social interaction and economic activity. It has tremendous effects of increasing wealth inequality too.

fred_is_fred 6y ago

Here here. Buying rental property is a risk, not a guarantee, and articles like this seem to imply that these people should get some kind of bailout.

klmadfejno 6y ago
fyi it's 'Hear, Hear'

AnthonyMouse 6y ago

The answer to this is to increase the housing supply. Housing costs increase when demand increases and supply doesn't. Increase supply at the same time and rents don't increase faster than inflation. Buying property and renting it out is expected to yield returns. There's nothing wrong with that. It actually increases access to housing by allowing people who can't afford to buy property to still live somewhere in the meantime. The problem is when you're not just buying a $200,000 house whose value tracks inflation and renting it out, but buying a $200,000 house as the value quintuples and all of that money goes to the landlord while the tenant's rent quintuples as well.

popotamonga 6y ago
There is only so much you can increase the supply without being hours away from the jobs. Plus the rich can just buy any new supply quickly and we are back to the same.
- jeffbee 6y ago
  Hrmm. Speaking of my town, Berkeley, California, the housing supply has been almost static since 1950, the number of jobs in town is now double the number of employed people (prior to pandemic), and virtually all land is zoned for detached single-family dwellings. Increasing the supply in this town would be as easy as the stroke of a pen, and would bring people closer to, not further from their jobs.
- AnthonyMouse 6y ago
  > There is only so much you can increase the supply without being hours away from the jobs. Nonsense. We can build 100 story buildings but there is nowhere in the world you can find a hundred square miles covered in nothing but 100 story buildings. > Plus the rich can just buy any new supply quickly and we are back to the same. So the rich are going to buy the new supply and do what with it? If they rent it out, supply still goes up. They have to compete with each other for tenants. If they don't, wow -- huge profit opportunity building hundred story buildings and selling them to rich idiots who are willing to pay top dollar for something they get no returns from. Do that until they run out of money.

dredds 6y ago

Right. The title implies renters lose too. But if you're not "contracted in" (long-term lease) then keep an eye out for discounted rentals and remain flexible. It's not like after an earthquake or other natural disaster where housing stock is reduced leaving renters price-gouge-able.

macspoofing 6y ago

>landlords have had a ridiculously easy ride in recent decades Why don't you try being a landlord and see how easy it is.

Joeboy 6y ago
This is awkward, but I actually am a landlord. From my experience, it's not much work and is very profitable, compared to other investment options. Hoping to stop being a landlord fairly soon, although Covid-19 has put a bit of a spanner in the works.
- ben_w 6y ago
  Likewise on both counts. I couldn’t take the flat with me when I moved from Cambridge to Berlin.
- macspoofing 6y ago
  Not awkward at all. Between the capital outlay (and the opportunity cost, and associated risks of that deployed capital), and the work you're doing - it's effort. It's not easy. Put another way, if it was easy money everyone would be doing it ... and yet, people find other places to put their money in. >Hoping to stop being a landlord fairly soon Too easy?
  - Joeboy 6y ago
    > Too easy? Not exactly, but it feels kind of vampiric. I bought the house with sitting tenants a few years ago without really wanting to be a landlord, and they're still there (strictly speaking the people they sublet to are still there). They're apparently planning to move out soon but obviously everything's on hold for the moment.
- dwaltrip 6y ago
  Why do you want to stop?
  - Joeboy 6y ago

dcolkitt 6y ago

Most of the Western economies, particularly the Anglo-sphere, have run into a dilemma. For decades home ownership was promoted as the primary avenue to middle-class wealth accumulation. However as homes are fundamentally not productive assets, that policy eventually turns into an economy-wide Ponzi scheme. Particularly when population growth rates are stagnant. In the post-war period governments have continuously pursued policies to keep the returns to housing as an investment high and low-risk. This includes buildings restrictions and zoning laws to cap supply, subsidized and guaranteed mortgages, price supports during downturns and a plethora of favorable tax treatments. That's made residential property produce returns at or near public equities with much lower drawdowns. The problem is that it's propped up housing prices far above the levels you'd see in a free market. And herein lies the dilemma. New generations buy housing expecting similar wealth-building returns as previous generations. Yet if any of the artificial supports were removed, prices would not only stagnate but significantly contract. The economy has become heavily adapted to the maxim that real estate prices never fall. We're simply not equipped to handle a 25% decline in housing prices, without causing downstream distress, default and panic. Witness the 2008 crisis. So the government keeps pumping more and more support, particularly every time a recession rolls around. Which distorts housing prices even further, which in turn makes the market even more fragile. Price to income ratios get stretched even further, at which point the only solution is to make credit looser and interest rates lower. Yet that pushes the average homeowner to be even more leveraged and less equipped to handle any rough patches in the market. The only real solution I see is a protracted soft-landing, where the housing market is gradually deflated over two or three decades. We should be aiming for housing prices to stay fixed in nominal returns, so people stop using their home as an investment vehicle. Mortgages, tax policy, and particularly building/zoning restrictions should be steadily moved in the direction of cheaper housing and more renting over home ownership. In particular, during recessions policymakers should let home prices fall by 10-15% and not recover. It's a good level that creates pain for the property investor, without pushing mortgages underwater. This will start to acclimate consumers to the idea that housing is not a risk-free investment.

aSplash0fDerp 6y ago
I can`t find a link to the story (thought it was tech crunch), but I came across an an article a few weeks back speculating on all of the commercial real estate on the west coast and the possibility of residential conversions of defunct commercial space to dramatically increase housing supply in larger cities practically overnight. I scoured the net and did not find much additional information and even tried to call a Realtor I know to see if the red-flags in commercial RE are the ripple to follow post-covid and if the downward pressure on residential home prices by residential conversions is on the horizon. The jury is still out (not enough data), but that may end up being a bright spot of the new normal(word soup) if millions of new units become available over the next 12-24 months.

clairity 6y ago

> “...anything that discourages customary amateur landlordism has to be a good thing.” i’m not super-sympathetic to the plight of most landlords, but that’s too vindictive and counter-productive. i’d rather have an escalating tax on number of units owned, with a sweet spot where landlords can make enough to be professional (have good tools and service providers), but discourage an overbearing imbalance of power over large numbers of other humans. i’d intuitively guess the sweet spot is probably in the range of 4-20 units, or 1 building with however many units, in high density zones.

ben_w 6y ago
Data point (I’m a landlord): The estate agent I’m using takes x% of the rent each month (plus costs for any actual work) to do all that stuff for me. So I guess the number should be ~1?
- clairity 6y ago
  possibly! there are some scaling effects and diversification arguments to be made though.