6 ms·

The “Housing Affordability Crisis”

44 points by stathack 13y ago

ChuckFrank 13y ago
This is a defining problem of our current urban generation. It's fascinating to read about the Next City study that "concludes that poor housing affordability in Philadelphia is a symptom of low income rather than of insufficient rental supply." Having studied this in depth, specifically in regards to China's Ghost Town problems where they increased housing supply by many folds - Here's the current VICE documentary on it. http://www.youtube.com/watch?v=trs_udhjWqc http://www.youtube.com/watch?v=trs_udhjWqc The problem is not one of supply divorced from affordability. There needs to be both sufficient supply (ie. Not SF / LA) and there needs to be sufficient affordability (ie. Not China). Yet with these two constraints people seem to sit around wringing their hands unable to do anything. It's almost as if, politically, people are incapacitated by this problem. To which I always respond - look at Ford. The Pre-Ford cars had the same problem, lack of supply and lack of affordability. And Ford changed the equation with the Model T, by making an affordable, readily available car - thereby jump-starting the car economy worldwide. We CAN do the same thing with housing. By eliminating the speculative incentives on housing (as is done in Germany) through capital gains taxation, and through multiple non-residence ownership taxation, we can address some of the market structures that diminish affordability. And on the other side we can create growth opportunities, through zoning primarily - such as a reduction in the required number of parking spaces per residence unit - and through a reduction in average square footage (which has been growing in America over the last 30 years) -- http://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf http://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf And while this is just a start. This can be done. We don't even need the 'political will' to do it. We just need to do it. With just a few slight changes in the way we manage our housing inventory, both financially, and with regards to zoning and planning, we could radically alter the availability of affordable (NOT low income! or qualified housing) Over night.
- breischl 13y ago
  >>through multiple non-residence ownership taxation Can you clarify what you mean by this? It sounds like basically a "landlord tax." >>reduction in the required number of parking spaces per residence unit Certainly that would reduce costs in some cases, though it could be problematic in others. eg, many neighborhoods near me already have a shortage of parking (street parking is constantly full), and the zoning only calls for 1 spot per unit. Reducing that would just lead to more problems, and probably parking tickets for residents. >>reduction in average square footage That would certainly help, particularly in areas where the land is expensive.
  - rprospero 13y ago
    I interpreted the "multiple non-residence ownership taxation" as more of a non-landlord tax. I met a fellow back around 2002 who owned twenty houses out in Arizona. He had never actually seen any of them - he just owned them as an investment. Also, since being a landlord was too much hassle and legal liability, he wasn't renting them out. The houses just sat vacant and he intended to make his money on housing prices outpacing inflation. The theory behind the tax is that having large numbers of houses sitting around empty is a poor use of resources. By increasing the property tax on unoccupied houses, the owner is encouraged to rent out the units, increasing the overall housing supply and thereby decreasing rents.
    - natrius 13y ago
      You should introduce that fellow to real estate investment trusts, where he'd be almost guaranteed to make more money than his strategy.
    - breischl 13y ago
      Ah, so a "housing speculator tax" or an "unused residence tax." That makes a lot more sense than a landlord tax. edit: Occurs to me that this would help deal with bank-owned properties that can sometimes sit vacant for quite a while. OTOH, that very thing might make it harder to get a mortgage - lenders would be scared they'd end up owning some unsaleable property in downtown Detroit, and paying elevated taxes on it to boot.
- zhng 13y ago
  > reduction in the required number of parking spaces per residence unit Can you elaborate on how this helps people? It was my thinking that requiring a minimum of 1 space per bedroom would help things. Parking is already burdensome and very costly.
  - rayiner 13y ago
    Parking wastes valuable land and creates undesirable and dangerous pedestrian spaces. There should be no parking space requirement. Let the market figure out the right number.
    - nerfhammer 13y ago
      As long as parking spaces are a free public good the market won't figure out the right number
      - dllthomas 13y ago
        Why should they be free?
        nerfhammer 13y ago
        They shouldn't.
        dllthomas 13y ago
        Ah. Where there is sufficient density, I fully agree. Where there is not, I'm less confident, but I don't disagree.
    - gress 13y ago
      Make cars unusable first, and then a decade later a decent public transit system will arise.
      - 13y ago
- malandrew 13y ago
  "multiple non-residence ownership taxation" This is the one I would most like to see. I wish I could find the article now, but I remember reading a while back about buildings on Central Park in NYC where people own all the apartments but that at any given time only 10-20% of them are actually occupied. All the others are owned by rich foreigners who use them maybe once or twice a year for less than a month total.
- ballard 13y ago
  VICE is amazing. That's real journalism. Getting out there getting to the front lines and asking uncomfortable questions.
- pchristensen 13y ago
  "We don't even need the 'political will' to do it." 30-70% of residents are homeowners and therefore real estate speculators with a vested interest in prices going up. See this comment from a homeowner in my town of Dublin, CA: http://www.arounddublinblog.com/2014/03/dublin-ca-positano-home-invasion-robbery-burglary-spree/#comment-51389 http://www.arounddublinblog.com/2014/03/dublin-ca-positano-h... There is a strong, universal, and intentionally designed political will against housing affordability.
- _delirium 13y ago
  > multiple non-residence ownership taxation One thing Copenhagen has done (in a not entirely coordinated way, with some messy parts) is to have large amounts of the housing stock just not permit non-resident ownership at all. A very common organizational structure is the resident-owned cooperative apartment building, and the bylaws usually require that you live there as your main residence as a condition of ownership: if you move, you sell. (Some exceptions for limited-time absences, e.g. if you take a sabbatical abroad, you can rent it in your absence without selling, usually for up to two years.) Another common organizational structure is buildings owned by nonprofit associations dedicated to building and maintaining good-quality housing. They rent but don't sell apartments; they do allow subletting but again with time limits. This particular class of buildings arose initially as "improve the housing of workers" type charitable initiatives (some funded by philanthropists, and some by labor unions), but the organizations have persisted to the modern era, and have continued to construct new buildings (partly through state support for construction costs). The market is being liberalized a bit lately, with many new buildings being sold as private condominium ownership. But there are some worries that if non-resident ownership is completely liberalized, the city will become like Paris, with a large proportion of apartments in the city center being pieds-à-terre owned by people who live elsewhere, which sit empty most of the year except when the owner wants to fly in to eat at Noma or something.
  - jseliger 13y ago
    A very common organizational structure is the resident-owned cooperative apartment building, and the bylaws usually require that you live there as your main residence as a condition of ownership: if you move, you sell This isn't a terribly good idea because for a lot of people owning real estate in general isn't a great idea: it inhibits mobility and ties up huge amounts of money in a single asset (see Edward Glaeser's The Triumph of the City for more research and detail about why this is a bad idea). Owning real estate also leads to financial fragility and problems like the ones discussed here: https://news.ycombinator.com/item?id=7449797 https://news.ycombinator.com/item?id=7449797 . In the U.S. (and perhaps Denmark?) there is a cult of property ownership, but that cult is based a lot of not-very-good ideas that have a lot of drawbacks in actuality.
- patrickg_zill 13y ago
  You haven't addressed any of the real drivers of costs, however. Such as: -compliance with the 891-page residential building code -that making one change to an existing, out of compliance dwelling means that the whole building must then be brought up to the latest building code in all respects (which means that tearing it down and building a newer, more expensive structure which sells for more makes more sense in financial terms) -expensive and onerous licensing of tradesmen leads to more expensive maintenance construction -ridiculous levels of code enforcement -corruption and collusion of developers and local politicians Nice verbiage, though ... makes it sound like you know what you are talking about.
  - dclusin 13y ago
    He identified problems and proposed a solution to those problems. You've identified problems and used them as an excuse to continue the status quo or bring us back to a previous and less safe time in history. What exactly do you find onerous in this 891 page residential code? Which country, state, municipality is it from? Could you provide a link? Who on the city council have you talked to about it? If a foundation is cracked and unsound the landlord should be able to slap a new coat of paint on it and then flip it? Licensing of tradesman is critical because it saves lives and mitigates losses from negligence. If you don't think it is, come to California and ask a Sheriff how swell of a job those pot farmers did wiring up their latest grow up in a house they rented from somebody else. Code enforcement is like doing the dishes. If you don't do them every once and a while they start to pile up. It is also unfortunately necessary because people have shown time and again they WILL prioritize their income over the lives and well being of others. Given your condescending attitude I wouldn't be surprised if you were just such a person, hence the idle complaining.
    - patrickg_zill 13y ago
      More taxes, will not reduce the actual costs inherent in building something on a piece of land. The IRC is a building code that is incorporated by reference into almost all building ordinances across the USA. https://archive.org/details/gov.law.icc.irc.2012 https://archive.org/details/gov.law.icc.irc.2012 Your foundation example is a strawman argument. I said "expensive and onerous licensing" - if there are 3 towns in close geographic proximity, should a tradesman have to pay $500 or more, to each of those 3, in order to be licensed in each town - and have to file more tax forms for each jurisdiction, even if he did not work in that town during the year? Who ultimately will pay the necessarily higher rates that will be charged? (Unfortunately the SF government website either gives me broken links or requires all kinds of online forms to fill out to determine what the cost is for contractors, so I can't easily give you an example.) The collusion and corruption of local pols is well known - it even reached the Supreme Court in the form of the Kelo case regarding eminent domain.
- sAuronas 13y ago
  function endPoorPeoplesHousingProblems(planningPolicy, taxPolicy, currentPolitics) { return failedStrategy; } Still, we ought to be aiming a lot higher in real estate development and planning. In planning: General Planning and the zoning code should be open-sourced. If you think watching a stardard's body change a programming language takes too long, a city can go a half century or more before making trivial improvements to zoning code. Look at the zoning maps for even the most tech-centric cities (Oakland, for example) and they could have been written in 1945 or earlier because they probably were. In development: One word - Finance. Even before you address tax policy, planning policy, incentives, or even change the way we construct buildings,... the way real estate projects are financed through banks with heavy fees and large equity requirements means nothing is built unless the motivation is sufficiently high and, therefore, we experience constant boom and bust. To meet the housing needs of the future we need to build units everyday -- all the time -- in places of high demand like the Bay Area cities. And we need to do so in a way that we treat them are geographically special, because they are. For there to be new home construction in places like Dublin while lots sit empty in a city as naturally beautiful as Oakland's means we are doing it wrong. And, clearly, we are doing it wrong if an apartment in a CRUD low-rise complex in Dublin (granite or not) is $2/SF. If you are wondering, $2/SF could land you in some of the best neighborhoods in Atlanta -- the most affordable, large city in the country.
  - ChuckFrank 13y ago
    You are totally right. Open sourced planning, and changes in real estate financing would help put all the parts together. My main point was that it's not an unsolvable problem. And it's not a matter of political will. It's a matter of the specific structure of Real Estate, as a commodity class. Everything can be political if we want an excuse to stall it. Solutions don't have to be.
zaroth 13y ago
This seems like very circular logic. There are not many single-family units available to rent to ELI (Extremely Low Income) renters for <= 30% of their income. Right, if there were then you wouldn't call it ELI. To look at it another way... Plot the price of every rental, sorted by price, X axis is percentile, Y axis is price. ELI is defined as the Xth percentile price times 3. You want more cheap housing? State it another way, you want to encourage investment in cheap housing. Land is scarce, housing has lots of fixed costs, renting is a massive risk to the landlord. One interesting catch-22 is the stronger the renter protection laws, the more risk to investors who would build and rent these units. There are a lot of ways to make this area less risky for investment. Better legal frameworks to deal with problem renters. Better tools to select reliable ELI renters. Better legal framework for using these tools to screen renters. Better tax incentives for renting to ELI tenants (subsidies).
jjindev 13y ago
In many older parts of California you can rent an apartment over a garage. Great system. Revenue for the home owner, good environment for the renter, distributed rentals. Of course that was then, right? When people talk about rentals versus homes now they have a mental image shaped by very strong zoning. That is the apartment strip, this is the single home suburb. Compare to Japan, Tokyo in particular, with tiny homes and tiny apartments pushed into every nook and cranny. Why do our costs keep rising? Because we have structured it that way, for the apartment owner and for uniform suburban living.
facepalm 13y ago
Rents higher than 30% of income seem pretty normal to me (living in Germany). Makes me wonder: aren't rents prone to rise to the level that people can bear? If people can bear 30%, rents will rise to that level in attractive locations. That's part of what makes the game rigged against common people.
- deleted 13y ago
  [deleted]
- _delirium 13y ago
  Afaict, the 30% rule of thumb has been quoted for a long time, but originated in an era when the main household costs were considerably different in other respects as well. The classic mid-20th-century rule in the U.S. was 60% of your expenses on housing+food, split about half and half. Nowadays the split is nowhere near half-and-half between those, in part because food has gotten much cheaper. It's sort of interesting to see the historical consumer spending breakdowns: http://www.bls.gov/opub/uscs/home.htm http://www.bls.gov/opub/uscs/home.htm
- ceras 13y ago
  > Makes me wonder: aren't rents prone to rise to the level that people can bear? If people can bear 30%, rents will rise to that level in attractive locations. In econ this reasoning is related to the diamond-water paradox: http://en.wikipedia.org/wiki/Paradox_of_value http://en.wikipedia.org/wiki/Paradox_of_value The gist of it is that it's only accurate to assume so when supply is very low. But like water, despite being crucial if housing supply is high enough it should decrease in price until it approaches the marginal cost of production. In this case, it's almost always laws and regulation that prevent he supply from increasing; this in part because (a) most voters (in the US) are home owners who have a vested interest in increasing home value, and (b) people are resistant to change and don't want new housing developments in their towns.

44 points by stathack 13y ago

This is a defining problem of our current urban generation. It's fascinating to read about the Next City study that "concludes that poor housing affordability in Philadelphia is a symptom of low income rather than of insufficient rental supply." Having studied this in depth, specifically in regards to China's Ghost Town problems where they increased housing supply by many folds - Here's the current VICE documentary on it. http://www.youtube.com/watch?v=trs_udhjWqc http://www.youtube.com/watch?v=trs_udhjWqc The problem is not one of supply divorced from affordability. There needs to be both sufficient supply (ie. Not SF / LA) and there needs to be sufficient affordability (ie. Not China). Yet with these two constraints people seem to sit around wringing their hands unable to do anything. It's almost as if, politically, people are incapacitated by this problem. To which I always respond - look at Ford. The Pre-Ford cars had the same problem, lack of supply and lack of affordability. And Ford changed the equation with the Model T, by making an affordable, readily available car - thereby jump-starting the car economy worldwide. We CAN do the same thing with housing. By eliminating the speculative incentives on housing (as is done in Germany) through capital gains taxation, and through multiple non-residence ownership taxation, we can address some of the market structures that diminish affordability. And on the other side we can create growth opportunities, through zoning primarily - such as a reduction in the required number of parking spaces per residence unit - and through a reduction in average square footage (which has been growing in America over the last 30 years) -- http://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf http://www.census.gov/const/C25Ann/sftotalmedavgsqft.pdf And while this is just a start. This can be done. We don't even need the 'political will' to do it. We just need to do it. With just a few slight changes in the way we manage our housing inventory, both financially, and with regards to zoning and planning, we could radically alter the availability of affordable (NOT low income! or qualified housing) Over night.

breischl 13y ago
>>through multiple non-residence ownership taxation Can you clarify what you mean by this? It sounds like basically a "landlord tax." >>reduction in the required number of parking spaces per residence unit Certainly that would reduce costs in some cases, though it could be problematic in others. eg, many neighborhoods near me already have a shortage of parking (street parking is constantly full), and the zoning only calls for 1 spot per unit. Reducing that would just lead to more problems, and probably parking tickets for residents. >>reduction in average square footage That would certainly help, particularly in areas where the land is expensive.
- rprospero 13y ago
  I interpreted the "multiple non-residence ownership taxation" as more of a non-landlord tax. I met a fellow back around 2002 who owned twenty houses out in Arizona. He had never actually seen any of them - he just owned them as an investment. Also, since being a landlord was too much hassle and legal liability, he wasn't renting them out. The houses just sat vacant and he intended to make his money on housing prices outpacing inflation. The theory behind the tax is that having large numbers of houses sitting around empty is a poor use of resources. By increasing the property tax on unoccupied houses, the owner is encouraged to rent out the units, increasing the overall housing supply and thereby decreasing rents.
  - natrius 13y ago
    You should introduce that fellow to real estate investment trusts, where he'd be almost guaranteed to make more money than his strategy.
  - breischl 13y ago
    Ah, so a "housing speculator tax" or an "unused residence tax." That makes a lot more sense than a landlord tax. edit: Occurs to me that this would help deal with bank-owned properties that can sometimes sit vacant for quite a while. OTOH, that very thing might make it harder to get a mortgage - lenders would be scared they'd end up owning some unsaleable property in downtown Detroit, and paying elevated taxes on it to boot.
zhng 13y ago
> reduction in the required number of parking spaces per residence unit Can you elaborate on how this helps people? It was my thinking that requiring a minimum of 1 space per bedroom would help things. Parking is already burdensome and very costly.
- rayiner 13y ago
  Parking wastes valuable land and creates undesirable and dangerous pedestrian spaces. There should be no parking space requirement. Let the market figure out the right number.
  - nerfhammer 13y ago
    As long as parking spaces are a free public good the market won't figure out the right number
    - dllthomas 13y ago
      Why should they be free?
      - nerfhammer 13y ago
        They shouldn't.
        dllthomas 13y ago
        Ah. Where there is sufficient density, I fully agree. Where there is not, I'm less confident, but I don't disagree.
  - gress 13y ago
    Make cars unusable first, and then a decade later a decent public transit system will arise.
    - 13y ago
malandrew 13y ago
"multiple non-residence ownership taxation" This is the one I would most like to see. I wish I could find the article now, but I remember reading a while back about buildings on Central Park in NYC where people own all the apartments but that at any given time only 10-20% of them are actually occupied. All the others are owned by rich foreigners who use them maybe once or twice a year for less than a month total.
ballard 13y ago
VICE is amazing. That's real journalism. Getting out there getting to the front lines and asking uncomfortable questions.
pchristensen 13y ago
"We don't even need the 'political will' to do it." 30-70% of residents are homeowners and therefore real estate speculators with a vested interest in prices going up. See this comment from a homeowner in my town of Dublin, CA: http://www.arounddublinblog.com/2014/03/dublin-ca-positano-home-invasion-robbery-burglary-spree/#comment-51389 http://www.arounddublinblog.com/2014/03/dublin-ca-positano-h... There is a strong, universal, and intentionally designed political will against housing affordability.
_delirium 13y ago
> multiple non-residence ownership taxation One thing Copenhagen has done (in a not entirely coordinated way, with some messy parts) is to have large amounts of the housing stock just not permit non-resident ownership at all. A very common organizational structure is the resident-owned cooperative apartment building, and the bylaws usually require that you live there as your main residence as a condition of ownership: if you move, you sell. (Some exceptions for limited-time absences, e.g. if you take a sabbatical abroad, you can rent it in your absence without selling, usually for up to two years.) Another common organizational structure is buildings owned by nonprofit associations dedicated to building and maintaining good-quality housing. They rent but don't sell apartments; they do allow subletting but again with time limits. This particular class of buildings arose initially as "improve the housing of workers" type charitable initiatives (some funded by philanthropists, and some by labor unions), but the organizations have persisted to the modern era, and have continued to construct new buildings (partly through state support for construction costs). The market is being liberalized a bit lately, with many new buildings being sold as private condominium ownership. But there are some worries that if non-resident ownership is completely liberalized, the city will become like Paris, with a large proportion of apartments in the city center being pieds-à-terre owned by people who live elsewhere, which sit empty most of the year except when the owner wants to fly in to eat at Noma or something.
- jseliger 13y ago
  A very common organizational structure is the resident-owned cooperative apartment building, and the bylaws usually require that you live there as your main residence as a condition of ownership: if you move, you sell This isn't a terribly good idea because for a lot of people owning real estate in general isn't a great idea: it inhibits mobility and ties up huge amounts of money in a single asset (see Edward Glaeser's The Triumph of the City for more research and detail about why this is a bad idea). Owning real estate also leads to financial fragility and problems like the ones discussed here: https://news.ycombinator.com/item?id=7449797 https://news.ycombinator.com/item?id=7449797 . In the U.S. (and perhaps Denmark?) there is a cult of property ownership, but that cult is based a lot of not-very-good ideas that have a lot of drawbacks in actuality.
patrickg_zill 13y ago
You haven't addressed any of the real drivers of costs, however. Such as: -compliance with the 891-page residential building code -that making one change to an existing, out of compliance dwelling means that the whole building must then be brought up to the latest building code in all respects (which means that tearing it down and building a newer, more expensive structure which sells for more makes more sense in financial terms) -expensive and onerous licensing of tradesmen leads to more expensive maintenance construction -ridiculous levels of code enforcement -corruption and collusion of developers and local politicians Nice verbiage, though ... makes it sound like you know what you are talking about.
- dclusin 13y ago
  He identified problems and proposed a solution to those problems. You've identified problems and used them as an excuse to continue the status quo or bring us back to a previous and less safe time in history. What exactly do you find onerous in this 891 page residential code? Which country, state, municipality is it from? Could you provide a link? Who on the city council have you talked to about it? If a foundation is cracked and unsound the landlord should be able to slap a new coat of paint on it and then flip it? Licensing of tradesman is critical because it saves lives and mitigates losses from negligence. If you don't think it is, come to California and ask a Sheriff how swell of a job those pot farmers did wiring up their latest grow up in a house they rented from somebody else. Code enforcement is like doing the dishes. If you don't do them every once and a while they start to pile up. It is also unfortunately necessary because people have shown time and again they WILL prioritize their income over the lives and well being of others. Given your condescending attitude I wouldn't be surprised if you were just such a person, hence the idle complaining.
  - patrickg_zill 13y ago
    More taxes, will not reduce the actual costs inherent in building something on a piece of land. The IRC is a building code that is incorporated by reference into almost all building ordinances across the USA. https://archive.org/details/gov.law.icc.irc.2012 https://archive.org/details/gov.law.icc.irc.2012 Your foundation example is a strawman argument. I said "expensive and onerous licensing" - if there are 3 towns in close geographic proximity, should a tradesman have to pay $500 or more, to each of those 3, in order to be licensed in each town - and have to file more tax forms for each jurisdiction, even if he did not work in that town during the year? Who ultimately will pay the necessarily higher rates that will be charged? (Unfortunately the SF government website either gives me broken links or requires all kinds of online forms to fill out to determine what the cost is for contractors, so I can't easily give you an example.) The collusion and corruption of local pols is well known - it even reached the Supreme Court in the form of the Kelo case regarding eminent domain.
sAuronas 13y ago
function endPoorPeoplesHousingProblems(planningPolicy, taxPolicy, currentPolitics) { return failedStrategy; } Still, we ought to be aiming a lot higher in real estate development and planning. In planning: General Planning and the zoning code should be open-sourced. If you think watching a stardard's body change a programming language takes too long, a city can go a half century or more before making trivial improvements to zoning code. Look at the zoning maps for even the most tech-centric cities (Oakland, for example) and they could have been written in 1945 or earlier because they probably were. In development: One word - Finance. Even before you address tax policy, planning policy, incentives, or even change the way we construct buildings,... the way real estate projects are financed through banks with heavy fees and large equity requirements means nothing is built unless the motivation is sufficiently high and, therefore, we experience constant boom and bust. To meet the housing needs of the future we need to build units everyday -- all the time -- in places of high demand like the Bay Area cities. And we need to do so in a way that we treat them are geographically special, because they are. For there to be new home construction in places like Dublin while lots sit empty in a city as naturally beautiful as Oakland's means we are doing it wrong. And, clearly, we are doing it wrong if an apartment in a CRUD low-rise complex in Dublin (granite or not) is $2/SF. If you are wondering, $2/SF could land you in some of the best neighborhoods in Atlanta -- the most affordable, large city in the country.
- ChuckFrank 13y ago
  You are totally right. Open sourced planning, and changes in real estate financing would help put all the parts together. My main point was that it's not an unsolvable problem. And it's not a matter of political will. It's a matter of the specific structure of Real Estate, as a commodity class. Everything can be political if we want an excuse to stall it. Solutions don't have to be.

zaroth 13y ago

This seems like very circular logic. There are not many single-family units available to rent to ELI (Extremely Low Income) renters for <= 30% of their income. Right, if there were then you wouldn't call it ELI. To look at it another way... Plot the price of every rental, sorted by price, X axis is percentile, Y axis is price. ELI is defined as the Xth percentile price times 3. You want more cheap housing? State it another way, you want to encourage investment in cheap housing. Land is scarce, housing has lots of fixed costs, renting is a massive risk to the landlord. One interesting catch-22 is the stronger the renter protection laws, the more risk to investors who would build and rent these units. There are a lot of ways to make this area less risky for investment. Better legal frameworks to deal with problem renters. Better tools to select reliable ELI renters. Better legal framework for using these tools to screen renters. Better tax incentives for renting to ELI tenants (subsidies).

jjindev 13y ago

In many older parts of California you can rent an apartment over a garage. Great system. Revenue for the home owner, good environment for the renter, distributed rentals. Of course that was then, right? When people talk about rentals versus homes now they have a mental image shaped by very strong zoning. That is the apartment strip, this is the single home suburb. Compare to Japan, Tokyo in particular, with tiny homes and tiny apartments pushed into every nook and cranny. Why do our costs keep rising? Because we have structured it that way, for the apartment owner and for uniform suburban living.

facepalm 13y ago

Rents higher than 30% of income seem pretty normal to me (living in Germany). Makes me wonder: aren't rents prone to rise to the level that people can bear? If people can bear 30%, rents will rise to that level in attractive locations. That's part of what makes the game rigged against common people.

deleted 13y ago
[deleted]
_delirium 13y ago
Afaict, the 30% rule of thumb has been quoted for a long time, but originated in an era when the main household costs were considerably different in other respects as well. The classic mid-20th-century rule in the U.S. was 60% of your expenses on housing+food, split about half and half. Nowadays the split is nowhere near half-and-half between those, in part because food has gotten much cheaper. It's sort of interesting to see the historical consumer spending breakdowns: http://www.bls.gov/opub/uscs/home.htm http://www.bls.gov/opub/uscs/home.htm
ceras 13y ago
> Makes me wonder: aren't rents prone to rise to the level that people can bear? If people can bear 30%, rents will rise to that level in attractive locations. In econ this reasoning is related to the diamond-water paradox: http://en.wikipedia.org/wiki/Paradox_of_value http://en.wikipedia.org/wiki/Paradox_of_value The gist of it is that it's only accurate to assume so when supply is very low. But like water, despite being crucial if housing supply is high enough it should decrease in price until it approaches the marginal cost of production. In this case, it's almost always laws and regulation that prevent he supply from increasing; this in part because (a) most voters (in the US) are home owners who have a vested interest in increasing home value, and (b) people are resistant to change and don't want new housing developments in their towns.