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Just because people have money now doesn't mean they're unethical for wanting some security. When the stimulus goes away the unemployment will still be there.

Just because people have money now doesn't mean they're unethical for wanting some security. When the stimulus goes away the unemployment will still be there. Owning things isn't a contribution to society. When the thing owned a limited resource like housing, owning more than you need creates artificial scarcity--this is a blight, not a contribution. As a society we're going to have to address this issue.

Red_Leaves_Flyy 6y ago
>As a society we're going to have to address this issue. This cans been getting kicked down the road since before my ancestors naturalized. I'm not holding my breath that'll be addressed in my life time.
- thephyber 6y ago
  The worse life gets for the average American, the more the Overton Window changes and reforms that seemed unpalatable yesterday may be more reasonable today. In this way, the COVID economy is more likely than any other event in our lifetime to help spur change. That said, what you say is correct and I have similarly low expectations that legislators are capable of reasonable policy reforms. Their incentives are far too removed from the average employee.
tathougies 6y ago
> Owning things isn't a contribution to society. When the thing owned a limited resource like housing, owning more than you need creates artificial scarcity--this is a blight, not a contribution. Owning and nothing else is of course a blight. Owning and maintaining is really not. Even a homeowner who simply owns and does no maintenance is a blight, even if they live there. It would be preferable to have the property managed by a landlord who can actually maintain it.
- kerkeslager 6y ago
  Linking ownership and maintenance to justify rent is a fallacy for two reasons: 1. You said it yourself: a homeowner who simply owns and does no maintenance is a blight. This includes people who charge rent, and then use a portion of that rent to pay someone else to do the maintenance. In this case, the landlord is contributing nothing: they're just using the artificial scarcity of the property they own to insert themselves as parasitic middle men between the resident and the maintainer. 2. Maintenance is valued far less than ownership. Even in cases where landlords do maintain the property themselves, they are paid far more than we would pay a super or a handyman. Think about it: if you owned your own home and didn't want to handle the maintenance yourself, would you pay someone $1343/month[1] for the few hours they have to work on maintenance? Obviously not. And landlords agree: supers are paid only a small fraction of what the landlord makes in an apartment building. Let's not pretend what you're paying for when you pay rent is maintenance. [1] https://www.abodo.com/blog/2019-annual-rent-report/ https://www.abodo.com/blog/2019-annual-rent-report/
  - perl4ever 6y ago
    How much profit do you think it is typical to make on rent of $1343 per month? Here's my attempt at estimating for the whole industry: $1343 rent x 12 = 16116 [1] x 7.11 p/s = 114,584 [2] x 3.5% = 4010 [3] / 12 months = $334 Which is to say, from the renter's perspective, they're paying about 25% of their rent towards the landlord's profits, but from the landlord's perspective, they're making about 3.5% on their capital. So I'm curious if you find this believable, whether it's an outrageous level of profit, or what? Do you see any logical problem with my calculation? Does it seem like a good explanation of why, even if you think you're being ripped off as a renter, owning property isn't an automatic way to get rich? While your landlord may not be a big fund that is professionally managed, and might be making more or less, it seems reasonable to me to assume that the people who are the best at extracting profits work in such places and their performance represents the competitive climate for everyone. You can invest in real estate and reap the profits with literally any amount of money, if you live in the US or have access the financial system there[4] But I think 3.5% isn't exciting to most people. [1] Yearly total of rent payments [2] 7.11 is the average price to sales ratio for Residential real estate investment funds. I'm equating sales to total rents and price to property value or amount invested. As a cross check, $114K seems like a reasonable value for an apartment; in fact I happen to know that my former apartment's building was assessed at about $90K per apartment, and the rent was noticeably higher than $1343. https://www.reitnotes.com/reports/REII-Price-to-Sale-P/S-Ratio-Average-per-US-Real-Estate-Investment-Trust-sector-on-2019-09-23/ID/3660 https://www.reitnotes.com/reports/REII-Price-to-Sale-P/S-Rat... [3] 3.5% is about what a residential real estate fund, called REZ paid to investors in the past year. (0.46+0.50+0.63+0.51)/60 = 3.5%. As a cross check, this is in the ballpark of what corporate bond funds pay, and you'd expect them to be similar when investors who want steady income can choose either (but the real estate funds don't get taxed at the corporate level). https://www.ishares.com/us/products/239545/ishares-residential-real-estate-capped-etf https://www.ishares.com/us/products/239545/ishares-residenti... [4]I'm not a customer and this is not an endorsement, but see: https://robinhood.com/us/en/support/articles/fractional-shares/ https://robinhood.com/us/en/support/articles/fractional-shar...

Red_Leaves_Flyy 6y ago

>As a society we're going to have to address this issue. This cans been getting kicked down the road since before my ancestors naturalized. I'm not holding my breath that'll be addressed in my life time.

thephyber 6y ago
The worse life gets for the average American, the more the Overton Window changes and reforms that seemed unpalatable yesterday may be more reasonable today. In this way, the COVID economy is more likely than any other event in our lifetime to help spur change. That said, what you say is correct and I have similarly low expectations that legislators are capable of reasonable policy reforms. Their incentives are far too removed from the average employee.

tathougies 6y ago

> Owning things isn't a contribution to society. When the thing owned a limited resource like housing, owning more than you need creates artificial scarcity--this is a blight, not a contribution. Owning and nothing else is of course a blight. Owning and maintaining is really not. Even a homeowner who simply owns and does no maintenance is a blight, even if they live there. It would be preferable to have the property managed by a landlord who can actually maintain it.

kerkeslager 6y ago
Linking ownership and maintenance to justify rent is a fallacy for two reasons: 1. You said it yourself: a homeowner who simply owns and does no maintenance is a blight. This includes people who charge rent, and then use a portion of that rent to pay someone else to do the maintenance. In this case, the landlord is contributing nothing: they're just using the artificial scarcity of the property they own to insert themselves as parasitic middle men between the resident and the maintainer. 2. Maintenance is valued far less than ownership. Even in cases where landlords do maintain the property themselves, they are paid far more than we would pay a super or a handyman. Think about it: if you owned your own home and didn't want to handle the maintenance yourself, would you pay someone $1343/month[1] for the few hours they have to work on maintenance? Obviously not. And landlords agree: supers are paid only a small fraction of what the landlord makes in an apartment building. Let's not pretend what you're paying for when you pay rent is maintenance. [1] https://www.abodo.com/blog/2019-annual-rent-report/ https://www.abodo.com/blog/2019-annual-rent-report/
- perl4ever 6y ago
  How much profit do you think it is typical to make on rent of $1343 per month? Here's my attempt at estimating for the whole industry: $1343 rent x 12 = 16116 [1] x 7.11 p/s = 114,584 [2] x 3.5% = 4010 [3] / 12 months = $334 Which is to say, from the renter's perspective, they're paying about 25% of their rent towards the landlord's profits, but from the landlord's perspective, they're making about 3.5% on their capital. So I'm curious if you find this believable, whether it's an outrageous level of profit, or what? Do you see any logical problem with my calculation? Does it seem like a good explanation of why, even if you think you're being ripped off as a renter, owning property isn't an automatic way to get rich? While your landlord may not be a big fund that is professionally managed, and might be making more or less, it seems reasonable to me to assume that the people who are the best at extracting profits work in such places and their performance represents the competitive climate for everyone. You can invest in real estate and reap the profits with literally any amount of money, if you live in the US or have access the financial system there[4] But I think 3.5% isn't exciting to most people. [1] Yearly total of rent payments [2] 7.11 is the average price to sales ratio for Residential real estate investment funds. I'm equating sales to total rents and price to property value or amount invested. As a cross check, $114K seems like a reasonable value for an apartment; in fact I happen to know that my former apartment's building was assessed at about $90K per apartment, and the rent was noticeably higher than $1343. https://www.reitnotes.com/reports/REII-Price-to-Sale-P/S-Ratio-Average-per-US-Real-Estate-Investment-Trust-sector-on-2019-09-23/ID/3660 https://www.reitnotes.com/reports/REII-Price-to-Sale-P/S-Rat... [3] 3.5% is about what a residential real estate fund, called REZ paid to investors in the past year. (0.46+0.50+0.63+0.51)/60 = 3.5%. As a cross check, this is in the ballpark of what corporate bond funds pay, and you'd expect them to be similar when investors who want steady income can choose either (but the real estate funds don't get taxed at the corporate level). https://www.ishares.com/us/products/239545/ishares-residential-real-estate-capped-etf https://www.ishares.com/us/products/239545/ishares-residenti... [4]I'm not a customer and this is not an endorsement, but see: https://robinhood.com/us/en/support/articles/fractional-shares/ https://robinhood.com/us/en/support/articles/fractional-shar...