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> My point is that being a landlord is not without risk, and it's not always an "I do nothing and make money by leveraging your fear of homelessness" situation

> My point is that being a landlord is not without risk, and it's not always an "I do nothing and make money by leveraging your fear of homelessness" situation (although, granted, this is the ideal state landlord's seek, which is itself kinda gross). Yep, that's the problem, at least in the US. Ideally we'd reduce risk on both sides. Rent control wouldn't have to hurt this - your tenant's rent doesn't go up much, but your mortgage isn't going up much either. It's not like small landlords are in position to redevelop and increase density anyway, so I'm skeptical of arguments about housing stock if you limit the upside (and downside!) of small private landlording. It's often pitched as the most productive investment strategy for the middle to lower-upper class. Get one property, leverage it into a second, leverage more rents into a third, etc. Even in tenant-friendly states! Yet it's literally just rent-seeking and landlords riding along a wave of demand that they help create (by leveraging their properties and rent to acquire more) to squeeze higher and higher rents out of people is not particularly economically productive overall. Covid is the first real blip I can remember that's hit those landlords so hard, but the truth is many of these people are over-leveraged and were in a precarious position to start with given the risk. Let's say there were no eviction bans: they could evict all these folks not paying their rent, and ... try to rent out the units to the people that got evicted by other landlords? Because they couldn't afford the old market rate in the first place? Doesn't that just depress the rental market even more?

klipt 5y ago
> Yet it's literally just rent-seeking That's not the economic definition of rent seeking. > and landlords riding along a wave of demand that they help create Demand for owning, yes. But for renting they create supply, not demand, in effect helping lower rents.
- majormajor 5y ago
  > Demand for owning, yes. But for renting they create supply, not demand, in effect helping lower rents. No supply is created by person A buying a rental building from person B. Person A paying a higher purchase price does nothing good to the rents charged in that building. Yes, there is no lobbying or current manipulation of the government, but for small landlords it's often just a game of "I want to take advantage of population increasing over time to make more money over time" coupled with "I want to take advantage of other people improving the economy so that I can charge higher rents as incomes increase." Neither of those are productive, and the latter is hard to avoid calling parasitic. They don't have the ability to redevelop into higher density, or often even do much to change the condition of the property. So you get small mom-and-pop rentals in SF or similar places that charge far higher prices for far shittier units compared to those put on the market from larger developers or management companies in, say, Marietta, GA.
  - klipt 5y ago
    But if someone buys a house and rents it out instead of living in it, that creates rental supply. In a free market, pushing up prices of apartment buildings would also cause more apartment buildings to be built. Of course many places like SF are not a free market because NIMBYs block most construction, which keeps supply down and prices up.
    - majormajor 5y ago
      They've still gotta live somewhere. Overall housing supply has not been increased. I actually think this case is worse for the overall economy than the rental building scenario! Perpetual rentership is more economically precarious and less stable than ownership. But here we have the folks with assets and income sufficient to purchase properties buying up additional ones to pull ownership further out of reach for more people. So yay, we've converted a property that someone might've otherwise purchased as an asset to yet another rental. I also don't agree with your claim that in a free market this would cause (much more rapid) increased construction in most cities, given current attitudes about small-landlordship. You can't build there without tearing something else down first, and small landlords are not often going about replacing ten unit buildings with twenty unit buildings! That requires a different level of capital. In SoCal can see this in neighborhoods in places where the current zoning allows, say, 5 story buildings, but those new five story buildings are still sparsely scattered amongst old two-story buildings that are simply too attractive to keep (the dream people are pitched that makes them become small landlords isn't "sell everything eventually to a developer, it's "passive income".) Small landlords made a lot of fuss about earthquake retrofitting, a much smaller expense than "kick out all my current income-generating tenants and rebuild it all." It's been much easier for developers to convert old low-density commercial or industrial property, since the market is more fluid there (and often with much more slack in it, in large cities). I similarly don't expect a high number of single family lots to turn into four-plexes in the next fifteen years now that CA has changed zoning on them. It's definitely different at four units than two - where duplexes aren't selling for any more than SFH currently, since the qualitative demand for a true single family home is just that much higher - but I don't think it's enough different for a significant number of people to want to cash out or try to play developer. (NIMBY's exist everywhere, too - acting like they're unique to big expensive cities is self-defeating. The way lower-cost-of-living cities have maintained those costs is a combination of less demand and more land to expand into. If you can build your new mega apartment complex on empty land, you don't have to convince those small-time landlords or property owners to sell all their separate buildings! Dallas County didn't increase in population much more rapidly than SF County because of rapid increases in density - just look at the Dallas city population vs the burbs.)
- dragonwriter 5y ago
  > That's not the economic definition of rent seeking. It is. In fact, the general economic concept of rent and rent-seeking are generalizations of the inherent features of real property rents, which are the source of the name. (EDIT: Fixed egregious touch keyboard vomit, clarified “land” to “real property”.)
  - klipt 5y ago
    If you want to collect land rents you would buy assets that are mostly land, e.g. empty lots, or even single family houses, not apartment blocks where you're paying more for the building than the land.
  - heavyset_go 5y ago
    Just FYI, it looks like you might have a typo in your post. I usually enjoy your posts and think they're well thought out, so I felt the need to point this out.

klipt 5y ago

> Yet it's literally just rent-seeking That's not the economic definition of rent seeking. > and landlords riding along a wave of demand that they help create Demand for owning, yes. But for renting they create supply, not demand, in effect helping lower rents.

majormajor 5y ago
> Demand for owning, yes. But for renting they create supply, not demand, in effect helping lower rents. No supply is created by person A buying a rental building from person B. Person A paying a higher purchase price does nothing good to the rents charged in that building. Yes, there is no lobbying or current manipulation of the government, but for small landlords it's often just a game of "I want to take advantage of population increasing over time to make more money over time" coupled with "I want to take advantage of other people improving the economy so that I can charge higher rents as incomes increase." Neither of those are productive, and the latter is hard to avoid calling parasitic. They don't have the ability to redevelop into higher density, or often even do much to change the condition of the property. So you get small mom-and-pop rentals in SF or similar places that charge far higher prices for far shittier units compared to those put on the market from larger developers or management companies in, say, Marietta, GA.
- klipt 5y ago
  But if someone buys a house and rents it out instead of living in it, that creates rental supply. In a free market, pushing up prices of apartment buildings would also cause more apartment buildings to be built. Of course many places like SF are not a free market because NIMBYs block most construction, which keeps supply down and prices up.
  - majormajor 5y ago
    They've still gotta live somewhere. Overall housing supply has not been increased. I actually think this case is worse for the overall economy than the rental building scenario! Perpetual rentership is more economically precarious and less stable than ownership. But here we have the folks with assets and income sufficient to purchase properties buying up additional ones to pull ownership further out of reach for more people. So yay, we've converted a property that someone might've otherwise purchased as an asset to yet another rental. I also don't agree with your claim that in a free market this would cause (much more rapid) increased construction in most cities, given current attitudes about small-landlordship. You can't build there without tearing something else down first, and small landlords are not often going about replacing ten unit buildings with twenty unit buildings! That requires a different level of capital. In SoCal can see this in neighborhoods in places where the current zoning allows, say, 5 story buildings, but those new five story buildings are still sparsely scattered amongst old two-story buildings that are simply too attractive to keep (the dream people are pitched that makes them become small landlords isn't "sell everything eventually to a developer, it's "passive income".) Small landlords made a lot of fuss about earthquake retrofitting, a much smaller expense than "kick out all my current income-generating tenants and rebuild it all." It's been much easier for developers to convert old low-density commercial or industrial property, since the market is more fluid there (and often with much more slack in it, in large cities). I similarly don't expect a high number of single family lots to turn into four-plexes in the next fifteen years now that CA has changed zoning on them. It's definitely different at four units than two - where duplexes aren't selling for any more than SFH currently, since the qualitative demand for a true single family home is just that much higher - but I don't think it's enough different for a significant number of people to want to cash out or try to play developer. (NIMBY's exist everywhere, too - acting like they're unique to big expensive cities is self-defeating. The way lower-cost-of-living cities have maintained those costs is a combination of less demand and more land to expand into. If you can build your new mega apartment complex on empty land, you don't have to convince those small-time landlords or property owners to sell all their separate buildings! Dallas County didn't increase in population much more rapidly than SF County because of rapid increases in density - just look at the Dallas city population vs the burbs.)
dragonwriter 5y ago
> That's not the economic definition of rent seeking. It is. In fact, the general economic concept of rent and rent-seeking are generalizations of the inherent features of real property rents, which are the source of the name. (EDIT: Fixed egregious touch keyboard vomit, clarified “land” to “real property”.)
- klipt 5y ago
  If you want to collect land rents you would buy assets that are mostly land, e.g. empty lots, or even single family houses, not apartment blocks where you're paying more for the building than the land.
- heavyset_go 5y ago
  Just FYI, it looks like you might have a typo in your post. I usually enjoy your posts and think they're well thought out, so I felt the need to point this out.