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> you're also making it more risky and thus less profitable to buy and rent out apartments You would be surprised about the sheer number of spaniards that woul
by harperlee 2y ago
> you're also making it more risky and thus less profitable to buy and rent out apartments
You would be surprised about the sheer number of spaniards that would welcome this second-order effect.
In the last ~10 years, renting has skyrocketed, due to the discovery of the spanish renting market by international money, and renting laws relaxation (demand side). Meanwhile, this has not increased the supply of homes, as it is felt that there is oversupply, the demand is very concentrated on selected cities, and the turnaround of building to rent or sell is long. This double-whammy has made renting quite onerous, and buying directly out of reach, for a lot of people.
Some extra tidbits:
- Buying: Upwards of 40% of home purchase is without mortgage (not a pattern of someone buying for the first time)
- Renting: In Madrid, on average 62% of salary before taxes goes to renting; 58% in Barcelona (https://www.fotocasa.es/fotocasa-life/alquiler/los-espanoles-destinaron-casi-la-mitad-de-su-salario-al-pago-del-alquiler-en-2023/ https://www.fotocasa.es/fotocasa-life/alquiler/los-espanoles...) (how is that even feasible? well, young people end up just renting a room)
- Manuel_D 2y agoI think you misunderstood what the above commenter meant when they wrote that risk of squatters makes it "less profitable to buy and rent out apartments". Because of the additional risks of squatters, landowner will either have to take additional security measures (and make up the costs with higher rent) or accept the risk of squatters (and make up that risk with higher rent). In either case, the rent getsor expensive.
- harperlee 2y agoNo, I got it. I just think that would mainly mean investors exit the market. If it is less profitable, they either further raise the prices or they get out of the market; the ratio of those two options depends on price elasticity. And prices don't have a lot of room to grow further in my opinion... unless of course the wages grow quickly (and minimum wage indeed has done it in the last 5 years). But then the country needs to be more productive or people get poor (fired!), which is also not good for the renting business, etc. At the end of the day you're betting on the spanish market either squeezing people further, or gaining productivity real quick. And real estate is not very liquid, yet is typically long-term, and those investors are risk averse. So... there will be some that will exit the market.
- Manuel_D 2y agoAnd what happens when people leave the rental market? Fewer apartments for rent. And what happens to rental prices when there's a scarcity of apartments to rent? Prices go up.
- peter335 2y agoYes, exactly. This is what I was getting at!
- harperlee 2y agoWell, no one can pack the apartment and leave the country. At worst they are left unoccupied, but that's a lot of money to have it parked, and can be discouraged with taxes; so alternatively people sell them... so buy and rent eventually go down.
- Manuel_D 2y agoAnd what will the buyers do with the apartments? Rent them? Well, then they'll either have to spend money on security or price the risk of okupas into the rent. In either case rent goes up. This is as nonsensical as the proposals in San Francisco to prohibit the construction of apartments to try and reduce rent. Dissuading people from renting out apartments reduces the supply apartments. There is zero possibility this results in better rental prices.
- carlosjobim 2y ago> Because of the additional risks of squatters, landowner will either have to take additional security measures (and make up the costs with higher rent) or accept the risk of squatters (and make up that risk with higher rent). In either case, the rent getsor expensive. When renting becomes less profitable, real estate prices fall as landlords want to get rid off their bad investments. That means people can buy instead of rent, which means more rentals become vacant as renters become owners, which means that rents go down. > and make up the costs with higher rent This is not how it works. Landlords will always extract maximum rent possible from tenants.
- f33d5173 2y ago> Landlords will always extract maximum rent possible from tenants Landlords are competing in a market. The maximum possible rent has to do with how much the rest of the market is charging. That in turn is capped from above by how much a would be landlord would pay to buy a unit and start renting it out. If that price goes up, then landlords can charge more. There is also a maximum amount that people can pay, but they have little choice but to pay whatever the market is charging, or else live on the street.
- carlosjobim 2y agoRenters are already paying the maximum they can. No landlord would let that juicy money go unmolested. If landlords prefer to let their investments sit empty instead of selling, because their profits from renting aren't enough, then that is a foolish decision. But you shouldn't annihilate a whole nation because of such folly.
- themaninthedark 2y agoIf the problem is outside investment in the housing market is causing issues, why not just just address the issue? Pass a law either limiting or banning outside real estate speculation.
- zrn900 2y agoEven worse, now the digital nomad phenomenon is increasing rents - ~19% of the demand in the rent market in Madrid in 2023 is from foreigners. As a result, the locals learned the phrase 'digital nomad' and they are now fighting back. https://madridnofrills.com/gentrification/ https://madridnofrills.com/gentrification/
- yazzku 2y agoWhy is this downvoted?
- zrn900 2y agoPeople dont like to be the gentrifier. In digital nomad forums or 'investment' forums the reaction to any news about gentrification is the same - downvoting, denial, blaming someone else. Most blame the locals for letting it happen. Some more educated try to blame 'the corrupt politicians' (whatever the f that means, they plug it everywhere as if its applicable), others blame the 'real estate sellers'. They want to blame anybody but the ones who are doing the actual gentrifying, themselves. This is especially prominent among those from Angloamerican countries where being rich amongst the poverty is something admirable and respectable and you should definitely not hate them and the poor should keep their voice down. Or some variant of that mentality. They are dumbfounded when they find locals openly cursing them and calling them derogatory names and publicly doing politics against them. There's so much cultural difference.