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Setting homeowners and renters at odds in this way is a straw man, since these are two distinct stocks of housing that only affect each others prices indirectly

Setting homeowners and renters at odds in this way is a straw man, since these are two distinct stocks of housing that only affect each others prices indirectly, and are free to appreciate at different rates to some extent. It’s more appropriate to consider landlords vs renters, as they are on opposing sides of transactions involving the same housing. Contrary to your assertion, landlords are not primarily focused on the appreciation of the market value of their assets exceeding inflation but instead on achieving a reliable income stream from rents. This cash flow can be sustainably profitable under stable rents, so the structural conundrum you propose doesn’t exist in the real world.

26fingies 3y ago
In Canada, at least, there are many people who have bought 2nd and 3rd+ homes and rented them out. There's more overlap between "landlord" and "homeowner" than you might think.
- semiquaver 3y ago
  Sure, a single person can have multiple roles in the system. But this line: > Owners expect (and bank on) the value of their house increasing faster than inflation. may be true for an owner-occupier for whom price appreciation is the only way they can treat their house as an investment, but it’s not at all true for someone receiving monthly rents that exceed their costs. It’s like comparing the prices of two stocks while ignoring the large dividend payments paid by one of them.
_vertigo 3y ago
While not contending directly for the same stock, homeowners are very interested in matters that influence rental prices, albeit in less direct way, as you say. Try proposing to build affordable housing in a neighborhood and you’ll find yourself drowning in homeowners coming out of the woodwork complaining that “we want more affordable housing, but this project just isn’t right for our neighborhood.” I think we’re on the same page. As I wrote in my comment, rents and home prices cannot diverge >for long<, and you write that they can diverge >to some extent<. I think we are saying the same thing, just emphasizing different aspects of the same statement. > Contrary to your assertion, landlords are not primarily focused on the appreciation of the market value of their assets exceeding inflation but instead on achieving a reliable income stream from rents. This cash flow can be sustainably profitable under stable rents, so the structural conundrum you propose doesn’t exist in the real world. Rare is the landlord who continually settles for a stable rent when increasing it is feasible. As home prices rise, would-be buyers are forced out of the market and have to contend with existing renters, increasing demand for rental housing, which in turn causes rents to increase. Taxes on rental properties increase, also serving to increase rent.
brailsafe 3y ago
It depends, but I don't think it's true to say there is no conflict. The article centres around the Canadian market, and in many areas there's a active push against building more types of housing, zoning changes, demographics changing, from both landlords and homeowners that essentially have control over neighborhoods that are already predominantly populated by people who have no option to buy into that same neighborhood, but who otherwise make that neighborhood. Many homeowners have prejudice against different types of housing other than these behemoth ranch houses or Victorian mansions, yet are perfectly happy enough to literally lift up their house and rebuild their ground floor as a rental unit, effectively preventing renters from doing anything but renting basements. Homeowners, regardless of whether they're landlords or not, will sometimes actively oppose anything they think will negatively impact their appreciation, regardless of whether it's even remotely true, sometimes even going so far as to preemptively move away if mid-rise apartments go in nearby.

26fingies 3y ago

In Canada, at least, there are many people who have bought 2nd and 3rd+ homes and rented them out. There's more overlap between "landlord" and "homeowner" than you might think.

semiquaver 3y ago
Sure, a single person can have multiple roles in the system. But this line: > Owners expect (and bank on) the value of their house increasing faster than inflation. may be true for an owner-occupier for whom price appreciation is the only way they can treat their house as an investment, but it’s not at all true for someone receiving monthly rents that exceed their costs. It’s like comparing the prices of two stocks while ignoring the large dividend payments paid by one of them.

_vertigo 3y ago

While not contending directly for the same stock, homeowners are very interested in matters that influence rental prices, albeit in less direct way, as you say. Try proposing to build affordable housing in a neighborhood and you’ll find yourself drowning in homeowners coming out of the woodwork complaining that “we want more affordable housing, but this project just isn’t right for our neighborhood.” I think we’re on the same page. As I wrote in my comment, rents and home prices cannot diverge >for long<, and you write that they can diverge >to some extent<. I think we are saying the same thing, just emphasizing different aspects of the same statement. > Contrary to your assertion, landlords are not primarily focused on the appreciation of the market value of their assets exceeding inflation but instead on achieving a reliable income stream from rents. This cash flow can be sustainably profitable under stable rents, so the structural conundrum you propose doesn’t exist in the real world. Rare is the landlord who continually settles for a stable rent when increasing it is feasible. As home prices rise, would-be buyers are forced out of the market and have to contend with existing renters, increasing demand for rental housing, which in turn causes rents to increase. Taxes on rental properties increase, also serving to increase rent.

brailsafe 3y ago

It depends, but I don't think it's true to say there is no conflict. The article centres around the Canadian market, and in many areas there's a active push against building more types of housing, zoning changes, demographics changing, from both landlords and homeowners that essentially have control over neighborhoods that are already predominantly populated by people who have no option to buy into that same neighborhood, but who otherwise make that neighborhood. Many homeowners have prejudice against different types of housing other than these behemoth ranch houses or Victorian mansions, yet are perfectly happy enough to literally lift up their house and rebuild their ground floor as a rental unit, effectively preventing renters from doing anything but renting basements. Homeowners, regardless of whether they're landlords or not, will sometimes actively oppose anything they think will negatively impact their appreciation, regardless of whether it's even remotely true, sometimes even going so far as to preemptively move away if mid-rise apartments go in nearby.