6 ms·

I don't understand this at all. There are certainly plenty of problems in the housing market, but the existence of landlords isn't one of them. Even if you ig

I don't understand this at all. There are certainly plenty of problems in the housing market, but the existence of landlords isn't one of them. Even if you ignore the substantial amount of work it takes to actually maintain a property, find and deal with tenants, the basic tenets of capitalism still apply: somebody has to allocate capital in a speculative manner to predict future needs. It is very easy for a landlord to lose their shirt in even conservative investments. Landlords justify their rate of return due to the financial risk and the cost of capital. My parents lost a lot of money buying and renting property. You can lose money due to tenants destroying property, you can lose money due to insufficient occupancy, and you can lose money by the value of the house going down.

socialismisok 4y ago
Some folks (myself among them) view the idea that because someone started wealthy they should be able to get more wealthy simply because they can leverage their existing wealth to be a negative thing. Sure, there are cases where small landlords are beneficial in providing liquidity. But the big corporate firms being able to leverage their existing assets to buy more units seems antithetical to the goal of "we should eliminate homelessness" to me.
- Ekaros 4y ago
  And probably many of them here work in startups... That is lottery tickets to that exact thing.
- JamesianP 4y ago
  Financial leveraging is risk. You can lose your principal. Investors pay for building new homes too. Speculators do need to get burned periodically to correct bubbles though. Especially now. Making money because you bought sooner than someone else could (practically enshrined in the California constitution) is not really adding value so on average should not pay off any better than inflation.
  - magicalist 4y ago
    As your second paragraph is saying, "risk" isn't inherently valuable. That's also what the GP is saying, you just might disagree on the situations it applies to.
    - JamesianP 4y ago
      Yes in that the situations they refer to account for all investment of any kind being "a bad thing", while I criticize certain govt policies. But other than that, same page yes.
forgotusername6 4y ago
The market doesn't really work as intended. Rent goes up. That should cause more players to enter the market and more homes to be available. Doesn't happen. The market is so distorted with regulation on building that homes become out of reach of normal people. Losing money in a market isn't a sign that the market is working properly. Though even if you were to let capitalism take it's course the natural settling point for the price of a house might be such that a large percentage of people are homeless. That's not good for society.
- mordae 4y ago
  Yes. At some point large swaths of US populace will be asked to choose between housing, food and life saving drugs in an ultimate rent-seeking race of the 21st century. Hopefully, at some point people will finally say "enough is enough" and make the necessary constitutional corrections.
- pandaman 4y ago
  Rent had been extremely low for a long while. Much less than mortgage and a smaller fraction of the tenant's income. 20 years ago it was generally 40x rule: 40 times monthly rent should not be grater than the gross income or, alternatively, rent should not exceed 30% of gross income. 10 years ago many landlords switched to 25% and, even, of the net income in some cases. This had been supported by the rapid capital gains: when your house appreciates more than its payment every month any rent you can collect on it is pure profit. It's gone now and the rent again has to pay the mortgage+insurance+taxes+maintenance on the greatly appreciated property. Building more a year ago was expensive because of shortages of everything from labor to raw materials. Lumber used to be more expensive than steel, which also was not cheap. So anything that had been built then cannot really be rented cheaply because the units are expensive. Building more now is expensive because the shortages are still there, prices of everything are up because of inflation and, most importantly, credit is expensive so everything that is being built now cannot be rented cheaply too because units are still more expensive and the credit is much more expensive. The market works but it's never been intended to protect you from the economy being ran into the ground.
pydry 4y ago
Landlords would be a net benefit if land were, for them, a liability rather than an asset. They would be paid for providing a service rather than monopolizing a natural resource. Roughly 60-80% of your rent is a tithe to the owner of a 4 billion year old chunk of dirt. Dirt made valuable by all of the humans surrounding it. People who provide valuable services like teaching, serving food, providing medicines, etc. People who get a 0% of your rent but who nonetheless will drive it up if they do their jobs really well.

socialismisok 4y ago

Some folks (myself among them) view the idea that because someone started wealthy they should be able to get more wealthy simply because they can leverage their existing wealth to be a negative thing. Sure, there are cases where small landlords are beneficial in providing liquidity. But the big corporate firms being able to leverage their existing assets to buy more units seems antithetical to the goal of "we should eliminate homelessness" to me.

Ekaros 4y ago
And probably many of them here work in startups... That is lottery tickets to that exact thing.
JamesianP 4y ago
Financial leveraging is risk. You can lose your principal. Investors pay for building new homes too. Speculators do need to get burned periodically to correct bubbles though. Especially now. Making money because you bought sooner than someone else could (practically enshrined in the California constitution) is not really adding value so on average should not pay off any better than inflation.
- magicalist 4y ago
  As your second paragraph is saying, "risk" isn't inherently valuable. That's also what the GP is saying, you just might disagree on the situations it applies to.
  - JamesianP 4y ago
    Yes in that the situations they refer to account for all investment of any kind being "a bad thing", while I criticize certain govt policies. But other than that, same page yes.

forgotusername6 4y ago

The market doesn't really work as intended. Rent goes up. That should cause more players to enter the market and more homes to be available. Doesn't happen. The market is so distorted with regulation on building that homes become out of reach of normal people. Losing money in a market isn't a sign that the market is working properly. Though even if you were to let capitalism take it's course the natural settling point for the price of a house might be such that a large percentage of people are homeless. That's not good for society.

mordae 4y ago
Yes. At some point large swaths of US populace will be asked to choose between housing, food and life saving drugs in an ultimate rent-seeking race of the 21st century. Hopefully, at some point people will finally say "enough is enough" and make the necessary constitutional corrections.
pandaman 4y ago
Rent had been extremely low for a long while. Much less than mortgage and a smaller fraction of the tenant's income. 20 years ago it was generally 40x rule: 40 times monthly rent should not be grater than the gross income or, alternatively, rent should not exceed 30% of gross income. 10 years ago many landlords switched to 25% and, even, of the net income in some cases. This had been supported by the rapid capital gains: when your house appreciates more than its payment every month any rent you can collect on it is pure profit. It's gone now and the rent again has to pay the mortgage+insurance+taxes+maintenance on the greatly appreciated property. Building more a year ago was expensive because of shortages of everything from labor to raw materials. Lumber used to be more expensive than steel, which also was not cheap. So anything that had been built then cannot really be rented cheaply because the units are expensive. Building more now is expensive because the shortages are still there, prices of everything are up because of inflation and, most importantly, credit is expensive so everything that is being built now cannot be rented cheaply too because units are still more expensive and the credit is much more expensive. The market works but it's never been intended to protect you from the economy being ran into the ground.

pydry 4y ago

Landlords would be a net benefit if land were, for them, a liability rather than an asset. They would be paid for providing a service rather than monopolizing a natural resource. Roughly 60-80% of your rent is a tithe to the owner of a 4 billion year old chunk of dirt. Dirt made valuable by all of the humans surrounding it. People who provide valuable services like teaching, serving food, providing medicines, etc. People who get a 0% of your rent but who nonetheless will drive it up if they do their jobs really well.