Author Topic: Buying more houses than you can occupy bad for society?  (Read 5840 times)

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 2454
Buying more houses than you can occupy bad for society?
« on: March 03, 2021, 10:50:45 AM »
Read this in a book, the author was lamenting the fact that skyrocketing house prices were making home ownership a failed dream for many.

He pointed out that tenants do not form the same close community that owners do in housing communities.

It got me thinking about the fact that many quite liberal minded people on MMM are landlords.

Are you actually hurting society by being a landlord and driving up the house prices such that the poorer working class can never have that pride of ownership?

bbqbonelesswing

  • Bristles
  • ***
  • Posts: 319
  • Age: 31
  • Location: Philly
Re: Buying more houses than you can occupy bad for society?
« Reply #1 on: March 03, 2021, 10:52:48 AM »
He pointed out that tenants do not form the same close community that owners do in housing communities.

Could you share the evidence or stats of this?

Morning Glory

  • Magnum Stache
  • ******
  • Posts: 4867
  • Location: The Garden Path
Re: Buying more houses than you can occupy bad for society?
« Reply #2 on: March 03, 2021, 10:57:56 AM »
I don't think being a landlord is bad, as long as you keep your units well maintained and occupied. I think that owning multiple homes for purpose of a vacation house or second home is bad because you are taking up housing stock that could be used as a rental, thus driving up rent prices in the area.  In that vein having a bigger house or yard than you need is also bad because it contributes to housing shortages and increases sprawl.

Rhinodad

  • Stubble
  • **
  • Posts: 142
Re: Buying more houses than you can occupy bad for society?
« Reply #3 on: March 03, 2021, 11:10:22 AM »
Read this in a book, the author was lamenting the fact that skyrocketing house prices were making home ownership a failed dream for many.

He pointed out that tenants do not form the same close community that owners do in housing communities.

It got me thinking about the fact that many quite liberal minded people on MMM are landlords.

Are you actually hurting society by being a landlord and driving up the house prices such that the poorer working class can never have that pride of ownership?

I find this to be very reductionist thinking, especially on an MMM forum. We, and I say that generally for this board, were probably at one time all "working poor"...because of several reasons perhaps (not enough skill, not enough education, living beyond our means, young for the industry, etc.), and most of us have worked our way out of that (gained skill/experience, learned more, lived below our means, and made more as we grew, and learned about money/lifestyle management). Your post surmises that being working poor/home ownership is beyond the control of the working poor for an entire life.

windytrail

  • Stubble
  • **
  • Posts: 224
  • Location: Seattle, WA
Re: Buying more houses than you can occupy bad for society?
« Reply #4 on: March 03, 2021, 11:14:26 AM »
Everyone needs a place to live, whether that be a rental or a mortgaged house. Poorer people are more likely to be renters, a group that benefits from more rental units in supply. By adding to the supply of rental units, landlords are beneficial for renters.

The skyrocketing housing prices are more appropriately blamed on outdated zoning laws (supported by NIMBYs/BANANAs) which only allow for single family homes to be built in a large swath of the country, and which have been restricting the supply of new housing for decades. A New York Times analysis found that 75% of residential land in major cities is restricted to single family homes. (https://www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html)

Related is that homes keep becoming larger, though the size of the American family (with exception to waist size) is not increasing.
« Last Edit: March 03, 2021, 11:19:40 AM by windytrail »

Morning Glory

  • Magnum Stache
  • ******
  • Posts: 4867
  • Location: The Garden Path
Re: Buying more houses than you can occupy bad for society?
« Reply #5 on: March 03, 2021, 11:40:57 AM »
I have also seen articles about how many rental units in large cities have been converted to air B&b rentals, thus driving up rent prices and contributing to housing instability for poor families.  These kind of rentals would not contribute to the sense of community in an area.  I would think that a  traditional lease that only renews once a year would actually increase the sense of community with one's neighbors.

crimp

  • 5 O'Clock Shadow
  • *
  • Posts: 74
Re: Buying more houses than you can occupy bad for society?
« Reply #6 on: March 03, 2021, 11:55:34 AM »
Everyone needs a place to live, whether that be a rental or a mortgaged house. Poorer people are more likely to be renters, a group that benefits from more rental units in supply. By adding to the supply of rental units, landlords are beneficial for renters.

The skyrocketing housing prices are more appropriately blamed on outdated zoning laws (supported by NIMBYs/BANANAs) which only allow for single family homes to be built in a large swath of the country, and which have been restricting the supply of new housing for decades. A New York Times analysis found that 75% of residential land in major cities is restricted to single family homes. (https://www.nytimes.com/interactive/2019/06/18/upshot/cities-across-america-question-single-family-zoning.html)

Related is that homes keep becoming larger, though the size of the American family (with exception to waist size) is not increasing.

Agreed. Also, thank you for teaching me the term BANANA -- that is wonderful.

Villanelle

  • Walrus Stache
  • *******
  • Posts: 6657
Re: Buying more houses than you can occupy bad for society?
« Reply #7 on: March 03, 2021, 12:10:15 PM »
As someone who rents (and also owns a place that is rented out), I think this is asinine.    My spouse's work means we move every 2-3 years.  It would be ridiculous for us to buy (and sell) each time we did that.  Having available rental units saves us a ton of money, both because it is cheaper to rent and because we aren't paying transaction costs.  It also deeply decreases the amount of risk for us.  If we bought each time and had to sell each time, a down market could be nearly catastrophic for our finances. 

Rentals are a valuable and important part of not only or economy, but just our ability for people to find appropriate shelter.  The notion that it is, without exception, "bad for society" is silly. 

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 7254
  • Age: 39
  • Location: Seattle, WA
    • My blog
Re: Buying more houses than you can occupy bad for society?
« Reply #8 on: March 03, 2021, 12:13:19 PM »
I have also seen articles about how many rental units in large cities have been converted to air B&b rentals, thus driving up rent prices and contributing to housing instability for poor families.

I think that these Airbnb conversions are often used as a red herring to distract affordable housing advocates from the real issue: zoning. Okay, some small percentage of your rental units was converted to Airbnb use. Yes, supply and demand is a thing, so this will place some upward pressure on rents for long-term residents. However outside of beach/resort towns this will never make up a very significant fraction of the overall homes, so the effect is minor.

You could ban Airbnbs and unlock all those homes for long-term rental use. It might be enough to absorb a year or two of population growth, keeping rent increases at bay for that time. What happens after that? At some point you need to build some more homes to house your population. For those homes to be relatively affordable without subsidy you need to have your zoning laws allow dense enough construction for the land cost per home to be relatively negligible, for the home's cost to be dominated by the cost of building materials and the labor needed to put it together.

As to the original question: is landlording inherently bad because it forces people to pay more in rent than they might pay for a mortgage in an alternate universe where rental homes didn't exist and everybody owned instead? I don't really think so. Landlords or no, the price of a used home in a growing city is closely related to the cost of building a new one. Upward pressure on prices spurs new construction, which adds to supply and cools off prices a bit.

Just like with the Airbnb ban, you could imagine what would happen if you banned landlording altogether. This would be a much more significant change. In the short run the price of homes would plummet, as landlords would be forced to sell off their properties to people who currently rent, at whatever amount they can get for a mortgage (often not much). This would have the effect of decimating the construction industry. Who would pay to build a new house if a used one can be obtained for a fraction of the price? Meanwhile population growth would continue, gradually pushing prices back up again. At some point the price of a house would rise to the point that new construction would make financial sense once again, and at that point we're basically back to where we are now with prices.

vand

  • Handlebar Stache
  • *****
  • Posts: 2305
  • Location: UK
Re: Buying more houses than you can occupy bad for society?
« Reply #9 on: March 03, 2021, 01:05:22 PM »
Read this in a book, the author was lamenting the fact that skyrocketing house prices were making home ownership a failed dream for many.

He pointed out that tenants do not form the same close community that owners do in housing communities.

It got me thinking about the fact that many quite liberal minded people on MMM are landlords.

Are you actually hurting society by being a landlord and driving up the house prices such that the poorer working class can never have that pride of ownership?

I certainly think there is a lot of truth in this. Homes should primarily be for nesting rather than investing, which is why I believe there is a moral issue with landlords who buy up residential houses that could otherwise go to first time homeowners.

While I do think that if you have money then you should be allowed to invest it in property or anything else, I'd like to see a system where every additional investment home is progressively taxed at a marginally higher rate, so it becomes hugely unattractive to own a huge property portfolio of say half a dozen or so houses. Some landlord own many, many more than that.

I have recently acquired one rental myself but have no plans to become a bigtime landlord.

I believe that investing in housing is ultimately bad for society in another way because it drives home prices up across the board, so ultimately we end up spending more of our incomes on what is ultimately a non-productive asset, which over time it  has the effect of acting as drag on a country's growth and international competitiveness.  I believe this is a big reason why Japan has slid down the order of competitiveness over the last generation, and my country the UK too with our perenially expensive housing.

chemistk

  • Handlebar Stache
  • *****
  • Posts: 1739
  • Location: Mid-Atlantic
Re: Buying more houses than you can occupy bad for society?
« Reply #10 on: March 03, 2021, 01:10:41 PM »
I personally see the small-time landlord who owns 1-5 properties and maintains them well as absolutely not being a problem.

What's bad for society is the trend towards economy-of-scale property management, with institutional investors and large property management firms buying up properties in bulk and building new luxury rental developments where the rents are just low enough that it just makes sense to rent, but just barely.

I'd much rather deal with a guy who just wants to make cash on the side and is willing to negotiate the finer points of a lease (and someone I can get to know) than a cold property management group and/or the community office of a regional or national housing conglomerate.


chasingthegoodlife

  • Bristles
  • ***
  • Posts: 340
Re: Buying more houses than you can occupy bad for society?
« Reply #11 on: March 03, 2021, 01:14:45 PM »
Why does the author think that renters don’t become involved in community to the same extent as owners?

I’m curious if they believe the same of renters of government/social housing (who, at least here in Australia, pretty much have a lifetime right to live in the property and will stay many years).

IF they are less involved I’m guessing it might be partly because
1) renters skew young and are more  focused on establishing themselves in their communities of choice (workplace, friendship group etc) than building connections with their neighbours.
2) renters are more transient and so don’t invest in community connections because they don’t see themselves living there for long.

Landlords can address #2 somewhat by offering longer term leases and minimising rent rises but I suspect for the most part people who want to be involved in community and plan to settle in that area will do so regardless of whether they rent or own.

(Where I live housing affordability is a huge issue and I feel an important one. I’m not an economist but I would think reducing or eliminating rental properties in an area could have unintended consequences for less affluent renters. From an affordable housing perspective I’d rather focus on increasing supply, renter rights, and subsidised government housing for those who need it.)

ysette9

  • Walrus Stache
  • *******
  • Posts: 8930
  • Age: 2020
  • Location: Bay Area at heart living in the PNW
Re: Buying more houses than you can occupy bad for society?
« Reply #12 on: March 03, 2021, 02:36:07 PM »
This feels like a poor argument to me. I’d be happy to see some data one way or the other but I am not convinced.

The way I see it there are three general groups of people: those who can and do own, those who would like to own but can’t, and those who don’t want to own.

For the second group we tried increasing the number of people owning through looser lending standards and other tactics and we got a big housing bubble and bust. For the third group there will always be people who can’t or don’t want to own. The first time you move out of your parents’ house, college students, transient, temporary work contracts, and so many more situations.
We currently rent where we live now and while we are multimillionaires who could easily buy if we wanted, we don’t want to now because it isn’t right for where we are in life.

So people will always need places to rent. So what is the alternative if you don’t have landlords? You want the government to own and manage it all? That might work in some counties but in the US the government is purposefully starved of sufficient operating funds so they right can claim that government doesn’t work and cut it back further. I also suspect there would be a cultural disinclination to government housing on a mass scale. Would non profits step in and be landlords on a mass scale? Perhaps, but I’d guess it would only be housing for the neediest, putting the middle class in a bind. What else is there?

And why is it morally wrong to make money investing in real estate and not in anything else like stocks or bonds or businesses?

I agree with others that the issue is zoning and an insufficient supply leading to unaffordable housing problems.

Villanelle

  • Walrus Stache
  • *******
  • Posts: 6657
Re: Buying more houses than you can occupy bad for society?
« Reply #13 on: March 03, 2021, 04:15:00 PM »
Read this in a book, the author was lamenting the fact that skyrocketing house prices were making home ownership a failed dream for many.

He pointed out that tenants do not form the same close community that owners do in housing communities.

It got me thinking about the fact that many quite liberal minded people on MMM are landlords.

Are you actually hurting society by being a landlord and driving up the house prices such that the poorer working class can never have that pride of ownership?

I certainly think there is a lot of truth in this. Homes should primarily be for nesting rather than investing, which is why I believe there is a moral issue with landlords who buy up residential houses that could otherwise go to first time homeowners.

While I do think that if you have money then you should be allowed to invest it in property or anything else, I'd like to see a system where every additional investment home is progressively taxed at a marginally higher rate, so it becomes hugely unattractive to own a huge property portfolio of say half a dozen or so houses. Some landlord own many, many more than that.

I have recently acquired one rental myself but have no plans to become a bigtime landlord.

I believe that investing in housing is ultimately bad for society in another way because it drives home prices up across the board, so ultimately we end up spending more of our incomes on what is ultimately a non-productive asset, which over time it  has the effect of acting as drag on a country's growth and international competitiveness.  I believe this is a big reason why Japan has slid down the order of competitiveness over the last generation, and my country the UK too with our perenially expensive housing.

How do you balance these two statements?  Since it's only one rental it's only a little morally dubious?

trygeek

  • 5 O'Clock Shadow
  • *
  • Posts: 65
Re: Buying more houses than you can occupy bad for society?
« Reply #14 on: March 03, 2021, 05:07:11 PM »
Landlords don't drive the cost of rentals. Tenants and demand to live in a place do. San Francisco rents are only high because everyone wants to live there, the market is rent controlled,  tenants believe it's worth it to pay those rents, and the city will not or cannot build new housing. On the other hand you can rent a very nice place 3br 2ba in savannah Georgia for 2000.00.

Paper Chaser

  • Handlebar Stache
  • *****
  • Posts: 1851
Re: Buying more houses than you can occupy bad for society?
« Reply #15 on: March 03, 2021, 05:55:15 PM »
If there's a problem here (and I'm not sure there is), it's not about owning multiple properties, it's about using multiple properties efficiently. For example, a landlord with a small portfolio of occupied rentals is providing efficient housing. But a business or entity that owns property that spends most of its time unoccupied would reduce the housing supply in a given area and inflate prices.
Rents are typically tied more to local income levels than they are to home values, so I'm not seeing an issue with owning an occupied rental.

scottish

  • Magnum Stache
  • ******
  • Posts: 2716
  • Location: Ottawa
Re: Buying more houses than you can occupy bad for society?
« Reply #16 on: March 03, 2021, 07:44:50 PM »
House prices up here are going crazy.   Cities are implementing taxes on unoccupied properties and non-resident ownership.

According to Bloomberg, the Canadian government gave away 120B CAD in emergency relief to replace 6B CAD in lost income, so lots of families are awash in cash.   Combine that with historically low interest rates and the urge to have more space during pandemic lock downs and we're seeing real estate prices climb rapidly.

I don't think our problem is landlords buying properties and renting them out.

Bloop Bloop Reloaded

  • Pencil Stache
  • ****
  • Posts: 757
  • Location: Australia
Re: Buying more houses than you can occupy bad for society?
« Reply #17 on: March 03, 2021, 08:27:13 PM »
I would have thought it'd be obvious that it's in landlords' interests to buy up as many houses as possible so as to maximise rental income. This is probably bad for society but it's good for landlords. The rest of the philosophical discussion is over my head - I'm just a simpleton who wants to retire off passive rental income.

bacchi

  • Walrus Stache
  • *******
  • Posts: 7056
Re: Buying more houses than you can occupy bad for society?
« Reply #18 on: March 03, 2021, 08:48:01 PM »
I would have thought it'd be obvious that it's in landlords' interests to buy up as many houses as possible so as to maximise rental income. This is probably bad for society but it's good for landlords. The rest of the philosophical discussion is over my head - I'm just a simpleton who wants to retire off passive rental income.

Any monopoly is bad for society. In the states, hedge funds are/were buying up single family homes to rent. In my city, over 10% of the homes bought in 2019 went to hedge funds.

https://newrepublic.com/article/112395/wall-street-hedge-funds-buy-rental-properties

Re: Airbnb, a few touristy cities like Paris did have problems with too many short term rentals. NYC also has a problem.

https://www.bloomberg.com/news/articles/2018-03-05/what-airbnb-did-to-new-york-city-s-housing-market

Quote from: bloomberg
Wachsmuth found reason to believe that Airbnb has indeed raised rents, removed housing from the rental market, and fueled gentrification—at least in New York City.
(bolded)

Bloop Bloop Reloaded

  • Pencil Stache
  • ****
  • Posts: 757
  • Location: Australia
Re: Buying more houses than you can occupy bad for society?
« Reply #19 on: March 03, 2021, 08:51:55 PM »
Well, if houses are spread evenly among many retail investors then it can't really be called a monopoly.

Obviously it's bad for society for a so-called essential like housing to be captured by investors but it's also bad for society for us to prevent people from putting their honestly earned money into fair investments.

If you gave me $100k I can't think of many consumer items I'd want to spend it on (I'm very happy with my current lifestyle) but I'd gladly invest it in land. It's arguably bad for society to prevent people from using their money as they see fit. If you force me to buy useless goods/services with my money that just creates inflation.

bacchi

  • Walrus Stache
  • *******
  • Posts: 7056
Re: Buying more houses than you can occupy bad for society?
« Reply #20 on: March 03, 2021, 08:53:38 PM »
Well, if houses are spread evenly among many retail investors then it can't really be called a monopoly.

Right, I was referring to the hedge funds buying up billions of dollars of SF houses.

vand

  • Handlebar Stache
  • *****
  • Posts: 2305
  • Location: UK
Re: Buying more houses than you can occupy bad for society?
« Reply #21 on: March 04, 2021, 12:59:25 AM »
Read this in a book, the author was lamenting the fact that skyrocketing house prices were making home ownership a failed dream for many.

He pointed out that tenants do not form the same close community that owners do in housing communities.

It got me thinking about the fact that many quite liberal minded people on MMM are landlords.

Are you actually hurting society by being a landlord and driving up the house prices such that the poorer working class can never have that pride of ownership?

I certainly think there is a lot of truth in this. Homes should primarily be for nesting rather than investing, which is why I believe there is a moral issue with landlords who buy up residential houses that could otherwise go to first time homeowners.

While I do think that if you have money then you should be allowed to invest it in property or anything else, I'd like to see a system where every additional investment home is progressively taxed at a marginally higher rate, so it becomes hugely unattractive to own a huge property portfolio of say half a dozen or so houses. Some landlord own many, many more than that.

I have recently acquired one rental myself but have no plans to become a bigtime landlord.

I believe that investing in housing is ultimately bad for society in another way because it drives home prices up across the board, so ultimately we end up spending more of our incomes on what is ultimately a non-productive asset, which over time it  has the effect of acting as drag on a country's growth and international competitiveness.  I believe this is a big reason why Japan has slid down the order of competitiveness over the last generation, and my country the UK too with our perenially expensive housing.

How do you balance these two statements?  Since it's only one rental it's only a little morally dubious?

I candidly admit that I struggle with it. I guess I don't lose sleep over it. Hypocritical? sure, but aren't we all, just a little.

I'd prefer a system that prioritizes homeowners over investors, but we have what we hae today and I'm a pragmatist as much as an idealist.


vand

  • Handlebar Stache
  • *****
  • Posts: 2305
  • Location: UK
Re: Buying more houses than you can occupy bad for society?
« Reply #22 on: March 04, 2021, 01:04:25 AM »
For many people, property ownership is their only significant asset, and owning your home gives you a stake in society.  I don't think there's any question that communities that have higher ownership also have a stronger sense of community.

If you don't agree then I invite you down to the projects...
« Last Edit: March 04, 2021, 04:48:56 AM by vand »

Imma

  • Magnum Stache
  • ******
  • Posts: 3193
  • Location: Europe
Re: Buying more houses than you can occupy bad for society?
« Reply #23 on: March 04, 2021, 02:58:03 AM »
Why does the author think that renters don’t become involved in community to the same extent as owners?

I’m curious if they believe the same of renters of government/social housing (who, at least here in Australia, pretty much have a lifetime right to live in the property and will stay many years).

IF they are less involved I’m guessing it might be partly because
1) renters skew young and are more  focused on establishing themselves in their communities of choice (workplace, friendship group etc) than building connections with their neighbours.
2) renters are more transient and so don’t invest in community connections because they don’t see themselves living there for long.

Landlords can address #2 somewhat by offering longer term leases and minimising rent rises but I suspect for the most part people who want to be involved in community and plan to settle in that area will do so regardless of whether they rent or own.

(Where I live housing affordability is a huge issue and I feel an important one. I’m not an economist but I would think reducing or eliminating rental properties in an area could have unintended consequences for less affluent renters. From an affordable housing perspective I’d rather focus on increasing supply, renter rights, and subsidised government housing for those who need it.)

I don't have a problem with landlords in general. Some people want or need to rent and someone needs to offer those homes for rent. But where I live (the Netherlands) the rental market is a mess and landlords are a huge problem. Zoning is not the issue here, detached single family homes are hard to find here. Most people live in terraced homes or flats.

My grandparents were lifelong renters and lived in the same home for half a century. There was a strong sense of community there and the home was affordable (owned by a non-profit). Home was maintained well. My grandparents also spent some of their own money on upgrading the house because they knew they were going to live there forever. No issue with that at all. Not if it was owned by a for-profit landlord either.

But these days rental contracts are generally 1-year contracts, not permanent contracts. This means that it's much harder to create a community, because everyone is always leaving. It also means that tenants are not going to spend any money on their home and they can't complain about maintenance issues because they know their rental contract won't be renewed. Almost all homes owned by landlords in my neighbourhood look terrible.

There are rules for low-income tenants (rents under €750-ish/month) so landlords make sure they don't rent out cheap units, they don't want to deal with tentants with rights. We still have non-profit housing associations but they have 15-year waitlists. Rents are often extremely high compared to mortgages - we pay €300/month mortgage and a landlord rents out the same house down the street for €1250. A lot of people are paying 1/3 to 1/2 of their income on rent, making it hard for them to save for their own home. Very often it's not allowed to sublet a room to a roommate and many landlords only rent to single people or couples, not to friends (I've heard of people pretending they're a couple). Since landlords usually offer very high cash bids for a property, a seller will prefer selling to a landlord rather than to a family that needs a mortgage.

Because rents are so expensive, few renters can save enough money to buy. And due to all sorts of rules it's very hard for working class people to buy even if they can afford it - the mortgage lending rules are very much written for middle class jobs with permanent job contracts. They're trying to make it easier for people without a permanent contract but the result is mostly that middle class people can buy earlier in their career, not that working class people get a better access to mortgages.

Bloop Bloop Reloaded

  • Pencil Stache
  • ****
  • Posts: 757
  • Location: Australia
Re: Buying more houses than you can occupy bad for society?
« Reply #24 on: March 04, 2021, 03:54:24 AM »
I don't want to rent out to tenants unless they have something to lose. That rules out really low-income tenants. If they create problems for me as a landlord I have no real recourse. Can barely even get an eviction order these days. If you write too many tenant protections into your laws then people will just not rent out to the marginal tenants. Same as how a high min wage means the unskilled jobs get threatened.

Fishindude

  • Magnum Stache
  • ******
  • Posts: 3075
Re: Buying more houses than you can occupy bad for society?
« Reply #25 on: March 04, 2021, 07:00:03 AM »
A couple points:

Many landlords that have lots of rental units in a community purchase run down blighted properties cheap, then put some money into them, fix them up and make them presentable so they are suitable for occupancy as rentals.   A case could be made that they are improving the community by cleaning up these blighted properties.

There are a whole lot of people out there that are terrible home owners.   They won't / can't keep the place maintained, fall behind on maintenance, taxes, etc. and soon the place is an eyesore in the neighborhood and uninhabitable or seriously devalued.    These people do much better as renters as they are pretty much forced to maintain some minimum standards and there is a landlord looking after the property.


Morning Glory

  • Magnum Stache
  • ******
  • Posts: 4867
  • Location: The Garden Path
Re: Buying more houses than you can occupy bad for society?
« Reply #26 on: March 04, 2021, 07:07:18 AM »
For many people, property ownership is their only significant asset, and owning your home gives you a stake in society.  I don't think there's any question that communities that have higher ownership also have a stronger sense of community.

If you don't agree then I invite you down to the projects...

Have you been to the "projects".  My husband grew up in one. There were lots of elderly and disabled folks there, some of whom had been there for decades. There were multigenerational families too. My sister in law and mother in law lived next door to each other for a while 🙄.  It was ugly and run down, and the buildings were in poor repair, but neighbors knew each other and kids all played together.  I would say there was more sense of community there than in neighborhoods where people own their houses. Less drug use too.

KarefulKactus15

  • Handlebar Stache
  • *****
  • Posts: 1283
  • Location: Southeast
Re: Buying more houses than you can occupy bad for society?
« Reply #27 on: March 04, 2021, 07:15:07 AM »
A couple points:

Many landlords that have lots of rental units in a community purchase run down blighted properties cheap, then put some money into them, fix them up and make them presentable so they are suitable for occupancy as rentals.   A case could be made that they are improving the community by cleaning up these blighted properties.

There are a whole lot of people out there that are terrible home owners.   They won't / can't keep the place maintained, fall behind on maintenance, taxes, etc. and soon the place is an eyesore in the neighborhood and uninhabitable or seriously devalued.    These people do much better as renters as they are pretty much forced to maintain some minimum standards and there is a landlord looking after the property.

This - have any of you guys done real estate investing?

If you blame the fix and flip, or the fix and rent crowd that's not right.

It's hard to buy a turn key property and make good ROI. Most of the time you have to buy distressed and run down property and fix it up.    The government thinks landlords provide a valuable service and the tax code reflects this.

Imma

  • Magnum Stache
  • ******
  • Posts: 3193
  • Location: Europe
Re: Buying more houses than you can occupy bad for society?
« Reply #28 on: March 04, 2021, 07:47:33 AM »
For many people, property ownership is their only significant asset, and owning your home gives you a stake in society.  I don't think there's any question that communities that have higher ownership also have a stronger sense of community.

If you don't agree then I invite you down to the projects...

Have you been to the "projects".  My husband grew up in one. There were lots of elderly and disabled folks there, some of whom had been there for decades. There were multigenerational families too. My sister in law and mother in law lived next door to each other for a while 🙄.  It was ugly and run down, and the buildings were in poor repair, but neighbors knew each other and kids all played together.  I would say there was more sense of community there than in neighborhoods where people own their houses. Less drug use too.

I live in a neighbourhood like that, although, like almost all neighbourhoods in my country, it's not exclusively rent or own, but mixed. So I'm a homeowner in a majority low-income rent neighbourhood. There is still a strong sense of community here. We have about 50% cheap rentals owned by non-profit housing associations, 25% owners and 25% for-profit landlords. The last group is an issue, because most of them don't give out permanent contracts, only 1-year contracts, so the people who live in those homes never really get the chance to become part of the community.

A couple points:

Many landlords that have lots of rental units in a community purchase run down blighted properties cheap, then put some money into them, fix them up and make them presentable so they are suitable for occupancy as rentals.   A case could be made that they are improving the community by cleaning up these blighted properties.

There are a whole lot of people out there that are terrible home owners.   They won't / can't keep the place maintained, fall behind on maintenance, taxes, etc. and soon the place is an eyesore in the neighborhood and uninhabitable or seriously devalued.    These people do much better as renters as they are pretty much forced to maintain some minimum standards and there is a landlord looking after the property.

This - have any of you guys done real estate investing?

If you blame the fix and flip, or the fix and rent crowd that's not right.

It's hard to buy a turn key property and make good ROI. Most of the time you have to buy distressed and run down property and fix it up.    The government thinks landlords provide a valuable service and the tax code reflects this.

I don't have any issue with landlords who operate like this, because good quality rentals with good quality tenants are great for a city. But at least in my city there are very few small-scale landlords (with, say, less than 10 properties) that operate like this. Landlords buy run down properties, don't fix them up, but instead find a way to convert it into a few run-down apartments on the lowest budget they can get away with -  not just family homes, but apartments are split into even smaller apartments -  and then find tenants so desperate for a place to live they're willing to accept anything. Where we live tenants are basically at their knees begging a landlord for a roof over their head. Landlords try and find tenants with some money who will do up the apartment a bit. Whenever they start complaining, their rental contract is not renewed, and the landlord has a slightly nicer home to put on the rental market, that he can then charge more money for. After a few good quality tenants, the house will look a whole lot better and the landlord didn't pay a cent.

There are several small-scale landlords active in my community operating this way. I only know one "decent" landlord that actually fixes up all homes before renting them out, and keeps up with maintenance. Every time I see a for-sale sign I hope he buys it and not one of the other guys. I used to live in a run-down rental like that too, owned by one of the notorious guys in the area. You don't want to invest as much money in a rental property, but I felt like I had no choice but to replace the stained dirty carpets for hygienic reasons, several rooms didn't have light fixtures in the ceiling so I bought plug-in lamps that I hung from the ceiling and left there. The kitchen only came with one cupboard, so I added a few used cupboards and some shelving. Etc etc. My downstairs neighbours spent even more money because they wanted a "nice" looking home and not just a basic functional place.
A couple points:

Many landlords that have lots of rental units in a community purchase run down blighted properties cheap, then put some money into them, fix them up and make them presentable so they are suitable for occupancy as rentals.   A case could be made that they are improving the community by cleaning up these blighted properties.

There are a whole lot of people out there that are terrible home owners.   They won't / can't keep the place maintained, fall behind on maintenance, taxes, etc. and soon the place is an eyesore in the neighborhood and uninhabitable or seriously devalued.    These people do much better as renters as they are pretty much forced to maintain some minimum standards and there is a landlord looking after the property.



In my country, mortgage providers tend to keep an eye on the state of the property. If it's in disrepair they can force a sale. Very few people who are too poor for repairs own their property outright.

Metalcat

  • Senior Mustachian
  • ********
  • Posts: 17394
Re: Buying more houses than you can occupy bad for society?
« Reply #29 on: March 04, 2021, 08:46:43 AM »
For many people, property ownership is their only significant asset, and owning your home gives you a stake in society.  I don't think there's any question that communities that have higher ownership also have a stronger sense of community.

If you don't agree then I invite you down to the projects...

Well, then I invite you to my low-income neighborhood, which has the highest rate of renting in my city, and is well known for its very high level of community involvement among the residents.

Also, a higher crime rate doesn't equal a less involved citizenry within a community. Many "projects" actually have a very firm sense of community within them.

poetdereves

  • Stubble
  • **
  • Posts: 228
  • Location: Dirty South
Re: Buying more houses than you can occupy bad for society?
« Reply #30 on: March 04, 2021, 09:38:31 AM »
Just like most people here, I think there is a right and a wrong way to go about it, and there are so many factors (economy, location, zoning laws, etc.) that you cannot really pin it down to individual landlords driving up property values so high that people cannot buy.

I have two rentals in the area where I live. They are kept in good shape, updated, fully functioning, and I am responsive and prompt if any issues do arise for my tenants. My tenants either don't want to buy (military family that moves every few years) or cannot buy yet (living in my rental for a couple years while they save their down payment and pay down student loan debt).  My tenants are professionals with good credit and are active in our small community and participate in improving my houses within reason to keep their neighborhood nice.

On the flip side, in these same neighborhoods that I have my rentals, a wall street hedge fund bought up over 500 houses in the metro area, keeps them in horrible disrepair, uses a property management firm that manages them poorly and does not take care of tenants. They do not screen well when placing their tenants, so the tenants often trash the place and leave. Within a one mile circle of my two rentals there are over a dozen homes owned by this company that have sat vacant for over a year. For some reason (probably tax benefits) they will not sell any of them, but they are not actively trying to rent them out once the first set of tenants wreck the place. They will put no money into repairs or improvements and hire the worst handymen in the area, so the issues continue. It limits the inventory in the area, decreases the quality of the neighborhood, and causes crime issues because people know these are unoccupied and they are squatting in these houses or have raided them for all the copper and appliances and they just sit and rot.

Villanelle

  • Walrus Stache
  • *******
  • Posts: 6657
Re: Buying more houses than you can occupy bad for society?
« Reply #31 on: March 04, 2021, 11:51:15 AM »
If there's a problem here (and I'm not sure there is), it's not about owning multiple properties, it's about using multiple properties efficiently. For example, a landlord with a small portfolio of occupied rentals is providing efficient housing. But a business or entity that owns property that spends most of its time unoccupied would reduce the housing supply in a given area and inflate prices.
Rents are typically tied more to local income levels than they are to home values, so I'm not seeing an issue with owning an occupied rental.

San Diego is currently (or recently was) considering several things to address skyrocketing rents, and one of them is a vacancy clause, which was a new concept to me.  I'm not sure if that was just for land that isn't developed, or if it also applies to having units sitting empty.  And I don't know the exact details of their plan, but the concept seems to me like it is a good solution.  If a property is empty for more than, say... 1/10 of the year, someone pays a fee because presumably they could get it filled if they dropped the rent.  (Or if 10% of an owner's units are empty.)  It seems to me like for the sake of simplicity, single unit  (or even >4 units, maybe) owners could be exempted as in that case, improvements plus usual turnover could easily put them over those sorts of limits.  But a 100 unit apartment complex may well be willing to drop prices a bit if they face steep fines for being empty, and a developer is going to do everything he can to get his units built on on the market if, in addition to regular carrying costs, he pays a hefty fee for each additional month they planned units aren't ready and rented. 

Tinker

  • 5 O'Clock Shadow
  • *
  • Posts: 76
Re: Buying more houses than you can occupy bad for society?
« Reply #32 on: March 04, 2021, 11:53:59 AM »
i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

chemistk

  • Handlebar Stache
  • *****
  • Posts: 1739
  • Location: Mid-Atlantic
Re: Buying more houses than you can occupy bad for society?
« Reply #33 on: March 04, 2021, 12:17:49 PM »
i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

I agree, this is more or less my line of thinking.

Landlords and renting are an integral aspect of our housing supply and they always will be.

But we're approaching a point now, assuming housing really never takes a nosedive like everyone hoped with Covid, that folks who use real estate as an investment vehicle can better leverage their assets to purchase more property and continue to purchase houses in desirable areas that otherwise would have been purchased by someone who doesn't have the ability to put cash on the table and outbid others.

Unfortunately for renters right now, rents are rising commensurate with the housing market, while wages stagnate. If you're not already grandfathered into a lower rent, it's getting harder and harder and harder to save for a downpayment, creating more opportunities for those who choose to invest in real estate to purchase more properties.

Trying to tie that back to the original question - there's nothing wrong legally, or economically for this to occur. But from a societal basis, its pretty fucking shitty. As a prospective homebuyer, it feels something real shitty when a home that I've been interested and could reasonably afford is purchased by someone who is better leveraged to put more cash on the table and then immediately turns it into a rental at a price that's wildly higher than I could afford.

chasingthegoodlife

  • Bristles
  • ***
  • Posts: 340
Re: Buying more houses than you can occupy bad for society?
« Reply #34 on: March 04, 2021, 12:37:14 PM »
For many people, property ownership is their only significant asset, and owning your home gives you a stake in society.  I don't think there's any question that communities that have higher ownership also have a stronger sense of community.

If you don't agree then I invite you down to the projects...

Have you been to the "projects".  My husband grew up in one. There were lots of elderly and disabled folks there, some of whom had been there for decades. There were multigenerational families too. My sister in law and mother in law lived next door to each other for a while .  It was ugly and run down, and the buildings were in poor repair, but neighbors knew each other and kids all played together.  I would say there was more sense of community there than in neighborhoods where people own their houses. Less drug use too.
I’m so glad you said this.

I’m a social worker and spend a lot of time in low income neighbourhoods and public housing high rise. In my experience, people are much more likely to know their neighbours and support each other in the ‘borrow a cup of sugar’ sense than the middle class neighbourhoods I’ve lived in.

I’d still love to hear more from the OP about the author’s theories about community (including how they define it)

Meanwhile, hearing about shonky landlords and slummy properties makes me so cross. The hedge fund! WTF! Our state just brought in much stricter standard for rentals - reading through them I was kind of shocked that some things were not already required.

seattlecyclone

  • Walrus Stache
  • *******
  • Posts: 7254
  • Age: 39
  • Location: Seattle, WA
    • My blog
Re: Buying more houses than you can occupy bad for society?
« Reply #35 on: March 04, 2021, 12:53:08 PM »
i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

I see this "buy a home and then let it sit empty indefinitely" thing bandied about as something that is happening a lot. Is it really? I struggle to understand the motivations. It seems analogous to buying a stock speculatively (expecting it to increase in price) but then just throwing the dividends away because you only care about the price increase. Not renting out the property is leaving a ton of money on the table. I'm not denying that this might happen sometimes from a buyer who is so wealthy that they don't need to care about throwing money away, but it seems illogical for it to be a common occurrence.

Even if it does happen with some frequency, is it really such a bad thing overall? The owner is paying property tax at the full rate and using essentially zero local government services. They're not sending kids to the local schools, not using the public transit or parks or libraries or anything else. The money they spent to build the house went into the pockets of local workers. These are all good things! The downside (one less home available for rent) can be largely remedied by fixing your zoning so that someone who wants a home to live in can just pay for another one to be built. And furthermore if you allow the supply of housing to increase without limitation, the speculation angle for owning houses goes away. You might reasonably expect land to appreciate in such an environment, but a building would be seen as a depreciable asset that you only want to own if you're getting some use out of it.

Imma

  • Magnum Stache
  • ******
  • Posts: 3193
  • Location: Europe
Re: Buying more houses than you can occupy bad for society?
« Reply #36 on: March 04, 2021, 01:02:29 PM »
i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

I agree, this is more or less my line of thinking.

Landlords and renting are an integral aspect of our housing supply and they always will be.

But we're approaching a point now, assuming housing really never takes a nosedive like everyone hoped with Covid, that folks who use real estate as an investment vehicle can better leverage their assets to purchase more property and continue to purchase houses in desirable areas that otherwise would have been purchased by someone who doesn't have the ability to put cash on the table and outbid others.

Unfortunately for renters right now, rents are rising commensurate with the housing market, while wages stagnate. If you're not already grandfathered into a lower rent, it's getting harder and harder and harder to save for a downpayment, creating more opportunities for those who choose to invest in real estate to purchase more properties.

Trying to tie that back to the original question - there's nothing wrong legally, or economically for this to occur. But from a societal basis, its pretty fucking shitty. As a prospective homebuyer, it feels something real shitty when a home that I've been interested and could reasonably afford is purchased by someone who is better leveraged to put more cash on the table and then immediately turns it into a rental at a price that's wildly higher than I could afford.

I may be banned from MMM for saying this, but it feels very unfair to me that where I live, income from real estate investment is not taxed in the way income through work is. Rental income is almost tax free. If you own a 200k rental property outright, you pay €588 in tax over the value of that property, and any income is tax free. If you have a 100k mortgage on it (assuming no other assets) you'd pay €0 tax and the rental income would still be tax free. Meanwhile, the tenant, making €25k a year, pays roughly 30% of their income in taxes. No wonder landlord can continue to buy homes that working people on stagnating incomes can no longer afford. I feel strongly that all income should be taxed equally, even if it would make becoming FI much harder.

chemistk

  • Handlebar Stache
  • *****
  • Posts: 1739
  • Location: Mid-Atlantic
Re: Buying more houses than you can occupy bad for society?
« Reply #37 on: March 04, 2021, 01:46:59 PM »
i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

I agree, this is more or less my line of thinking.

Landlords and renting are an integral aspect of our housing supply and they always will be.

But we're approaching a point now, assuming housing really never takes a nosedive like everyone hoped with Covid, that folks who use real estate as an investment vehicle can better leverage their assets to purchase more property and continue to purchase houses in desirable areas that otherwise would have been purchased by someone who doesn't have the ability to put cash on the table and outbid others.

Unfortunately for renters right now, rents are rising commensurate with the housing market, while wages stagnate. If you're not already grandfathered into a lower rent, it's getting harder and harder and harder to save for a downpayment, creating more opportunities for those who choose to invest in real estate to purchase more properties.

Trying to tie that back to the original question - there's nothing wrong legally, or economically for this to occur. But from a societal basis, its pretty fucking shitty. As a prospective homebuyer, it feels something real shitty when a home that I've been interested and could reasonably afford is purchased by someone who is better leveraged to put more cash on the table and then immediately turns it into a rental at a price that's wildly higher than I could afford.

I may be banned from MMM for saying this, but it feels very unfair to me that where I live, income from real estate investment is not taxed in the way income through work is. Rental income is almost tax free. If you own a 200k rental property outright, you pay €588 in tax over the value of that property, and any income is tax free. If you have a 100k mortgage on it (assuming no other assets) you'd pay €0 tax and the rental income would still be tax free. Meanwhile, the tenant, making €25k a year, pays roughly 30% of their income in taxes. No wonder landlord can continue to buy homes that working people on stagnating incomes can no longer afford. I feel strongly that all income should be taxed equally, even if it would make becoming FI much harder.

Your sentiments should not be the cause for a forum ban (actually, I would wager they absolutely won't be).

It's completely fair to point out arguments that would be unpleasant for landlords to reckon with. The real estate subforum heavily skewed towards the landlords (rightfully so, there's a lot to navigate with being a landlord)

Europe is worse than the US for this, because you can't just pick up and move wherever and there's generally less land in Europe to build more housing than the US so your experience is even worse than that of us muricans.



bacchi

  • Walrus Stache
  • *******
  • Posts: 7056
Re: Buying more houses than you can occupy bad for society?
« Reply #38 on: March 04, 2021, 02:30:32 PM »
I may be banned from MMM for saying this, but it feels very unfair to me that where I live, income from real estate investment is not taxed in the way income through work is. Rental income is almost tax free. If you own a 200k rental property outright, you pay €588 in tax over the value of that property, and any income is tax free. If you have a 100k mortgage on it (assuming no other assets) you'd pay €0 tax and the rental income would still be tax free. Meanwhile, the tenant, making €25k a year, pays roughly 30% of their income in taxes. No wonder landlord can continue to buy homes that working people on stagnating incomes can no longer afford. I feel strongly that all income should be taxed equally, even if it would make becoming FI much harder.

While rental income in the States is treated somewhat equivalent to earned income (they're both ordinary income), we have very pro-landlord tax laws as well. The latest round of tax cuts were pushed by a landlord President.


(Yes, I own rental properties.)

Bloop Bloop Reloaded

  • Pencil Stache
  • ****
  • Posts: 757
  • Location: Australia
Re: Buying more houses than you can occupy bad for society?
« Reply #39 on: March 04, 2021, 05:57:13 PM »
i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

This is just the free market at work. I don't have any issue with it.

Imma

  • Magnum Stache
  • ******
  • Posts: 3193
  • Location: Europe
Re: Buying more houses than you can occupy bad for society?
« Reply #40 on: March 05, 2021, 04:58:34 AM »
i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

This is just the free market at work. I don't have any issue with it.

So, if there's a food shortage, and I buy up a lot of food and store it in a warehouse until the prices have gone up a lot, is that the free market at work?
What if I just buy up all heart medication and wait until the prices go up, is that ok too, because it's the free market at work?

I support a free market, but not a market without any kind of laws. Housing, food and healthcare are (imho) basic human rights that everyone should have access to. If you own homes in a market with a massive shortage, and you leave them unoccupied on purpose, while families are living on the streets, "free market" is no excuse.

i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

I agree, this is more or less my line of thinking.

Landlords and renting are an integral aspect of our housing supply and they always will be.

But we're approaching a point now, assuming housing really never takes a nosedive like everyone hoped with Covid, that folks who use real estate as an investment vehicle can better leverage their assets to purchase more property and continue to purchase houses in desirable areas that otherwise would have been purchased by someone who doesn't have the ability to put cash on the table and outbid others.

Unfortunately for renters right now, rents are rising commensurate with the housing market, while wages stagnate. If you're not already grandfathered into a lower rent, it's getting harder and harder and harder to save for a downpayment, creating more opportunities for those who choose to invest in real estate to purchase more properties.

Trying to tie that back to the original question - there's nothing wrong legally, or economically for this to occur. But from a societal basis, its pretty fucking shitty. As a prospective homebuyer, it feels something real shitty when a home that I've been interested and could reasonably afford is purchased by someone who is better leveraged to put more cash on the table and then immediately turns it into a rental at a price that's wildly higher than I could afford.

I may be banned from MMM for saying this, but it feels very unfair to me that where I live, income from real estate investment is not taxed in the way income through work is. Rental income is almost tax free. If you own a 200k rental property outright, you pay €588 in tax over the value of that property, and any income is tax free. If you have a 100k mortgage on it (assuming no other assets) you'd pay €0 tax and the rental income would still be tax free. Meanwhile, the tenant, making €25k a year, pays roughly 30% of their income in taxes. No wonder landlord can continue to buy homes that working people on stagnating incomes can no longer afford. I feel strongly that all income should be taxed equally, even if it would make becoming FI much harder.

Your sentiments should not be the cause for a forum ban (actually, I would wager they absolutely won't be).

It's completely fair to point out arguments that would be unpleasant for landlords to reckon with. The real estate subforum heavily skewed towards the landlords (rightfully so, there's a lot to navigate with being a landlord)

Europe is worse than the US for this, because you can't just pick up and move wherever and there's generally less land in Europe to build more housing than the US so your experience is even worse than that of us muricans.




I'm in the Netherlands. So our country is tiny, we have lots of people living here, and our population is increasing every year because our booming economy attracts a lot of expats. We don't really have LCOL areas, just VHCOL, HCOL and MCOL. My city is now a HCOL area but we were able to buy when it was still MCOL. Also, for environmental reasons, we really do want to keep the last bits of nature intact, so we can't just go and build a couple of new suburbs. Any new homes are built within the already developed areas, which makes construction fairly expensive.

Bloop Bloop Reloaded

  • Pencil Stache
  • ****
  • Posts: 757
  • Location: Australia
Re: Buying more houses than you can occupy bad for society?
« Reply #41 on: March 05, 2021, 05:04:47 AM »
Food and medicine aren't the same as freestanding houses. You need food and medicine; you don't need to own a house, or even rent one. You need only shelter, which is often provided by the state. If you want to own or rent a freestanding home then I am content with that being dictated by the free market.

uniwelder

  • Handlebar Stache
  • *****
  • Posts: 1697
  • Age: 44
  • Location: Appalachian Virginia
Re: Buying more houses than you can occupy bad for society?
« Reply #42 on: March 05, 2021, 05:33:27 AM »
i don't dislike the entire landlord thing.
But I'm definitely skeptical of people buying up houses and apartments for speculation, keeping them empty in starved markets over long periods

I see this "buy a home and then let it sit empty indefinitely" thing bandied about as something that is happening a lot. Is it really? I struggle to understand the motivations. It seems analogous to buying a stock speculatively (expecting it to increase in price) but then just throwing the dividends away because you only care about the price increase. Not renting out the property is leaving a ton of money on the table. I'm not denying that this might happen sometimes from a buyer who is so wealthy that they don't need to care about throwing money away, but it seems illogical for it to be a common occurrence.

It actually happens quite a bit near where I live.  There's a university with a big name football team, and in some new subdivisions, alumni with too much money buy townhouses just for the privilege of having a place to stay for football game weekends.  They sit empty 95% of the time.  A friend lived in one those neighborhoods and she loved the quiet.  Perception is that the house will appreciate in value and the people who own them don't want to deal with damage/repairs.

Even if it does happen with some frequency, is it really such a bad thing overall? The owner is paying property tax at the full rate and using essentially zero local government services. They're not sending kids to the local schools, not using the public transit or parks or libraries or anything else. The money they spent to build the house went into the pockets of local workers. These are all good things! The downside (one less home available for rent) can be largely remedied by fixing your zoning so that someone who wants a home to live in can just pay for another one to be built. And furthermore if you allow the supply of housing to increase without limitation, the speculation angle for owning houses goes away. You might reasonably expect land to appreciate in such an environment, but a building would be seen as a depreciable asset that you only want to own if you're getting some use out of it.

I do agree its great for tax revenue.  Just sucks for people that want to live in town and can't find affordable housing. 

Imma

  • Magnum Stache
  • ******
  • Posts: 3193
  • Location: Europe
Re: Buying more houses than you can occupy bad for society?
« Reply #43 on: March 05, 2021, 07:55:18 AM »
Food and medicine aren't the same as freestanding houses. You need food and medicine; you don't need to own a house, or even rent one. You need only shelter, which is often provided by the state. If you want to own or rent a freestanding home then I am content with that being dictated by the free market.

Did I say that people need freestanding houses? Of course not. In urban Europe a freestanding house is a pipedream for most people. I agree with you that housing for the wealthy can be left to the free market.

But that's not the case with housing for the poor. I feel that all people are entitled to a bed to sleep in, the use of kitchen and bathroom facilities and a locked storage space for their personal possessions. I That's the bare minimum in a civilized society. And where I live, tons of people don't have that. The local government only provides shelter for all homeless people when it's freezing, not year-round. Children are taken into care when their parents can't provide them with a home, so at least they don't have to live on the streets, but living in care is often not much better. In my city of 225k people, there are about 500 people on the streets and no one even knows how many people are sleeping on a different sofa every night, but it's estimated to be at least 3 or 4 times the amount of people sleeping on the streets. The majority of these people are economically homeless, so they have jobs and don't have addiction/mental health problems, they are just homeless because there's nothing available for them to rent.

Right now it's not possible for local governments to force owners to rent out their spaces, but I know they are working on a law that enables local governments to charge raise taxes for owners of empty homes in areas that have a housing shortage. We have 112.000 homes in our city and 4% of them are empty. That's 4500 - enough to house all those homeless people.

Bloop Bloop Reloaded

  • Pencil Stache
  • ****
  • Posts: 757
  • Location: Australia
Re: Buying more houses than you can occupy bad for society?
« Reply #44 on: March 05, 2021, 08:05:01 AM »
Right but those homeless people wouldn't be able to afford the rent on those 'empty' houses if they were at market anyway. The homeless will always need shelters.

If and when the non-homeless population cannot afford a single room in a share house (or one room per every 2 occupants in a share house) then it becomes a problem - but here in Australia at least it's nowhere near like that.

We have young Australians whinging about not being able to afford a freestanding home of their own when it's perfectly doable to simply rent in a share house. I did that till I was 30 and the net cost for me was about $200/week - or $100/week/person since I was partnered. $100/week is nothing. And yet people whinge that they want to be able to afford a freestanding house - that's a pipe dream, and not something the market should cater for. I mean by all means pay it if you have the money, but if you don't have the money, just get a share house.

SwordGuy

  • Walrus Stache
  • *******
  • Posts: 8956
  • Location: Fayetteville, NC
Re: Buying more houses than you can occupy bad for society?
« Reply #45 on: March 05, 2021, 08:18:17 AM »
Those run down homes in our city won't fix themselves.

If their current owners could fix them, they would.   Obviously, they can't.

Most properties I buy for investment have been on the market for a very long time.   If someone wanted to buy it to fix it up and live in it, they would have.   Obviously, they either don't want to or can't.  I'll come back to this point in a bit.

Buying and fixing those houses up so they are now in good repair, and then putting responsible people in those homes instead of having them fall apart vacant, is good for society.

Having a place for people to live who don't want to buy a home is good for society.

Now, let's talk about why people won't or can't buy a house that needs a fair bit of fixing up.   

The won't is easy to understand.   Gobs of Americans are too damn lazy to do the work necessary to repair a house on weekends and evenings after work.   Some think it's "beneath them".    I'm not going to lose sleep over either of these groups of folks.

Now let's discuss the "can't" buy a fixer-upper issue.   Why can't they buy it?

Well, one reason is a down payment requirement for many mortgages.    Hard for low income folks to save up a down payment and then save up EVEN MORE to handle some repairs.

One reason is mortgage lending guidelines that require costs to be below certain percentages of income.   These guidelines often ignore the fact that the folks have RELIABLY been paying rent that's at an even higher percentage of income!

One reason is that mortgage lenders don't want to loan money on a house that's not in good repair, so low income folks need to pay for the entire house in cash.   

One reason is that lenders who will loan money for houses in bad repair require the borrower to hire contractors instead of do lots of the work themselves.  This drives up the cost.   Plus these loans are a pain in the butt to arrange.

And, of course, owning a house means being able to afford to repair the roof or hvac when it inevitably dies.   This is also hard for low income folks.

If you want more low income folks to own homes in low and medium cost areas, the solution is to design mortgages that solve these problems.

For example, in Australia, one can get a mortgage and prepay some of it.  But, one can withdraw the prepayment at any time if you need it.    Take that idea and give a mortgage for $X to purchase and $Y dollars as a draw for major repairs.   Require no down payment if the borrower has a good rental payment history and a non-property destruction rental history and the monthly payment would be at or below the rent they are paying.

Make a clear delineation between "cosmetic repairs" and "things that must be done by a licensed professional for safety reasons".   Make mortgages for fixer uppers just as fast and easy to get as a regular mortgage and allow the buyer to do all the non-license required tasks themselves.  Allow lenders to charge a higher interest rate until the repairs are made and pass the local inspections (because they are at higher risk until then).

It costs just as much to service a $50,000 mortgage for 30 years as it does to service a $300,000 one.   But the amount of interest on the smaller loans won't cover the cost of servicing the loan so lenders don't want to make the small loans.   Allow lenders to charge a per month service fee so the servicing costs are covered regardless.    That way, they can afford to issue the small loans and fixer uppers become more feasible.

And, of course, provide big tax breaks to builders to build "starter homes" so they make comparable profits to building bigger homes.   That will increase the supply of newly built more affordable homes.


mathlete

  • Handlebar Stache
  • *****
  • Posts: 2070
Re: Buying more houses than you can occupy bad for society?
« Reply #46 on: March 05, 2021, 08:58:37 AM »
As a landlord myself, this is a little self serving, but nah, I think it's fine.

Leasing has it's benefits. I did it for 6 years as an adult before buying my home and it was what was right for me at the time. I think I signed a total of six leases with 9 different roommates over that time. Kept my housing costs low without having to make a long term commitment to where I was living or who I was living with.

Of course that's all anecdotal. But this argument has gotten pretty popular lately. We have homes. We have people who need them. Why can't we connect the two? I think a lot of the problem is we have much of the population wanting to live in about a dozen or so metro areas. There's ways to make that affordable. Namely, zone for ultra dense development. But the one thing homeowners and renters have in common; they don't want more neighbors. Homeowners want to protect the value of their homes. Renters don't want more traffic on their commutes.

I think changing the hearts and minds of people who go to local city zoning meetings will probably be more effective at making homeownership attainable than a revolt against the landed class.

stoaX

  • Handlebar Stache
  • *****
  • Posts: 1008
  • Location: South Carolina
  • 'tis nothing good nor bad but thinking makes it so
Re: Buying more houses than you can occupy bad for society?
« Reply #47 on: March 05, 2021, 09:34:13 AM »
Read this in a book, the author was lamenting the fact that skyrocketing house prices were making home ownership a failed dream for many

In the early 80's I thought I would never own a house or condo because of the "skyrocketing house prices".  Sounds like the same old lament to me. 

Roland of Gilead

  • Handlebar Stache
  • *****
  • Posts: 2454
Re: Buying more houses than you can occupy bad for society?
« Reply #48 on: March 05, 2021, 09:43:08 AM »
Read this in a book, the author was lamenting the fact that skyrocketing house prices were making home ownership a failed dream for many

In the early 80's I thought I would never own a house or condo because of the "skyrocketing house prices".  Sounds like the same old lament to me.

I think the author must have been lamenting the "skyrocketing house prices" in desirable areas.  Areas with good schools, good jobs, lots of services.

Still a lot of cheap housing in some of the flyover parts of the USA and in towns where people ride to the local bar on a riding lawnmower cause they lost their DL to too many DUIs.

stoaX

  • Handlebar Stache
  • *****
  • Posts: 1008
  • Location: South Carolina
  • 'tis nothing good nor bad but thinking makes it so
Re: Buying more houses than you can occupy bad for society?
« Reply #49 on: March 05, 2021, 09:47:26 AM »
Read this in a book, the author was lamenting the fact that skyrocketing house prices were making home ownership a failed dream for many

In the early 80's I thought I would never own a house or condo because of the "skyrocketing house prices".  Sounds like the same old lament to me.

I think the author must have been lamenting the "skyrocketing house prices" in desirable areas.  Areas with good schools, good jobs, lots of services.

Still a lot of cheap housing in some of the flyover parts of the USA and in towns where people ride to the local bar on a riding lawnmower cause they lost their DL to too many DUIs.

I ride my lawnmower to the bar to avoid getting a DUI. It's part of being a responsible drunk!

 

Wow, a phone plan for fifteen bucks!