Next Bubble Pop When?
April 4, 2021 10:35 AM Subscribe

If you sell a house these days, the buyer might just be a pension fund. Yield-chasing investors are snapping up single-family homes, competing with ordinary Americans and driving up prices. This bubble might be different due to the expansion of rents as opposed to mortgages, but the effects mirror the growth rates seen in 2005.
posted by Philipschall (169 comments total) 37 users marked this as a favorite

WSJ is unfortunately paywalled but you can see the evidence of this everywhere. We managed to buy our first house last year and the worries i have about paying too much are only slightly allayed by the fact that the market around here just keeps going up and up and up.

It's gotta stop sometime, I'm just praying it's after i have enough equity that this wasn't the worst decision I could have made
posted by dis_integration at 10:45 AM on April 4, 2021 [8 favorites]

Watching the housing market in LA not collapse at all and actually heat up last year, in a city and state whose economy was trashed by covid to a startling degree, was a real wake up call. History isn't repeating literally but we all know the rhyme scheme by now.
posted by feloniousmonk at 10:54 AM on April 4, 2021 [24 favorites]

I live in Austin, TX. I was planning on buying a house back in October 2020. Decided to wait until after the holidays. Oops. Got priced out of the market entirely. The properties I'm interested in went from $325k to $450k and continue to shoot up. Even if you have a down payment and the appropriate income level and credit score to bid competitively, anyone who needs a home loan is getting blown out of the water by all-cash offers.

I have a good job and my health so I'm not too sour about it... I have options! But it's so disheartening. I laugh when I think of how 10-15 years ago Austin was still a velvet rut town. There's no slack in this town anymore, that's for sure. Lately I've been looking at Class B RVs instead.
posted by lefty lucky cat at 10:57 AM on April 4, 2021 [14 favorites]

The housing market in the Twin Cities is so bonkers (and getting crazier) we've decided to pull up stakes and move somewhere else as opposed to participate. At least we have the privilege to do that, renters are getting HOSED.
posted by djseafood at 10:59 AM on April 4, 2021 [4 favorites]

We're in college town in rural mn and had to bid above asking on a house that needed all its utilities replaced because there's so little housing stock here. And of course all the people in town are fighting increased density tooth and nail.
posted by Ferreous at 11:03 AM on April 4, 2021 [6 favorites]

Yeah, this is nuts. I'm in the Bay Area and I'm pretty sure my only hope of getting into home ownership is another bubble pop, because right now, even with the fact that I got married last year and my wife and I are both upper-middle-class, mid-career high-earners, there's just nothing we can afford that wouldn't require a multi-hour commute.
posted by Alterscape at 11:06 AM on April 4, 2021 [13 favorites]

If it isn't slum lords looking for an angle its the relentless parade of flippers slapping granite counters over firetrap knob and tube wiring.
posted by Ferreous at 11:07 AM on April 4, 2021 [49 favorites]

I'm not just feeling grim about owning but about being able to keep renting. We have to rein in these speculators.
posted by emjaybee at 11:13 AM on April 4, 2021 [40 favorites]

The properties I'm interested in went from $325k to $450k and continue to shoot up

*waves* from Vancouver where that gets you a 1bd apt in the suburbs. We bought our apartment a couple of years ago and I was nevertheless hoping the pandemic would take down our ridiculous housing market a peg. But no! It has somehow accelerated things, and is further increasing the affordability gap for younger people, who financially were worst hit by the pandemic.
posted by Jon Mitchell at 11:16 AM on April 4, 2021 [14 favorites]

Christ I'm never gonna own a home, am I

I've come to terms with that being the case for me. It's the down payment mostly, and every 6 months prices keep going up, so yeah by the time I get a decent down payment it'll be too close to retirement to make sense. Someone I know sold his house last August. Put it on the market Monday, had an offer over asking Wednesday noon. Downside: he's still living in a temp place as prices just keep going up.
posted by 922257033c4a0f3cecdbd819a46d626999d1af4a at 11:17 AM on April 4, 2021

renters are getting HOSED.

I think average rents in the twin cities are actually trending down right now.
posted by paper chromatographologist at 11:17 AM on April 4, 2021 [1 favorite]

anyone who needs a home loan is getting blown out of the water by all-cash offers.

I have never sold a house but I don't understand why this matters.
As long as the final price is met, what does it matter to the seller where the money comes from?
When I bought my house, the title search and all the rest took longer than calling the mortgage company and transferring the money.
Closing wouldn't have been any faster even if I was literally walking around the open house with a briefcase full of cash.
posted by madajb at 11:40 AM on April 4, 2021 [6 favorites]

Oh good. We take a pretty messed-up industry (housing), a fairly vile process (house buying and selling), then add even more financialization.

Adding this to the growing pile of "reasons I don't ever ever ever want to move, buy a new house, or for the sake of Cthulhu's living flesh sell this house."
posted by doctornemo at 11:42 AM on April 4, 2021 [3 favorites]

As long as the final price is met, what does it matter to the seller where the money comes from?

Banks have their own set of requirements and expectations. For example some banks won’t let you buy a house if the price is too far above the appraised value. If you’re a cash buyer there are fewer impediments. So the deal is more likely to go through.

For sellers it’s less likely that the sale will fall through.
posted by oddman at 11:49 AM on April 4, 2021 [31 favorites]

This seems like a very good topic to know about, but it's hard to have an informed discussion with just a paywalled WSJ article that I can't read since I'm not a subscriber. I'd like to know the reasons for this phenomenon, why now, are there groups offering possible solutions, etc. Also, the WSJ typically has a corporate bent, are there other media sources that might have alternate perspectives? Otherwise it seems like just a very sad and depressing headline that makes me feel powerless and lacking context.
posted by rogerroger at 11:51 AM on April 4, 2021 [17 favorites]

> It's gotta stop sometime

People have been saying that about the Toronto real estate market for 20 years, but there’s only one direction prices can go and it’s up, forever.
posted by The Card Cheat at 11:56 AM on April 4, 2021 [5 favorites]

I apologize for linking only the WSJ. For some reason it wasn't paywalled on my computer, even though I'm not a subscriber. I'll try digging around for some more helpful links, but if anyone else can provide an un-paywalled link or alternative sources, that would be very helpful. Sorry folks :/.
posted by Philipschall at 11:56 AM on April 4, 2021 [4 favorites]

NZ calling. Our mean house price rise last year was 16%, been in that ballpark for several years. Covid has made things wose as ten-of-thousands have come back long-term and have cash.

Our last govt. engineered a housing shortage to financialise the sector afaict. And Jacinda promised not to do a capital gains tax when she was running. Unlike most pols Jacinda doesn't like breaking promises.
posted by unearthed at 12:00 PM on April 4, 2021 [5 favorites]

This is disgusting.
posted by Artifice_Eternity at 12:01 PM on April 4, 2021 [4 favorites]

I had thought we were in unsustainable bubble territory before the pandemic, and then I figured that the pandemic economic downturn would mean a housing collapse. Good thing I am not an economic prognosticator, because obviously house prices did exactly the opposite of what I had thought would happen. My opinion that it is a bubble and due for a correction hasn't changed, but the near-total disconnection of house prices from local economies makes it seem like people are playing by completely different rules.

Right now I'm living in a city where buying something isn't quite impossible for us, but would be a huge stretch and would feel really risky to me. And we are a DINK household with decent middle class incomes -- a huge percentage of people here are priced completely out of the market, despite having good jobs, working hard, and doing the "right things" in a traditional sense. Unless you have a really high income or inherit, the gulf between a regular job situation and housing costs right now is just vast.
posted by Dip Flash at 12:02 PM on April 4, 2021 [6 favorites]

I think this is a non-paywalled version.
posted by Omon Ra at 12:02 PM on April 4, 2021 [7 favorites]

>>anyone who needs a home loan is getting blown out of the water by all-cash offers.

>I have never sold a house but I don't understand why this matters.
As long as the final price is met, what does it matter to the seller where the money comes from?

Also many mortgage companies and underwriters want assurances that things are up to code: smoke alarms are all wired correctly, septic has been authorized, land easements have been investigated etc. That can all take time and hassle to clear up. Someone with all-cash can basically say, it's cool, I was going to replace the septic anyway don't worry about it, whereas someone getting a loan has no such leeway.

Plus as someone who has sold houses to both types of buyers, the process for all-cash is MUCH faster, sometimes 1-2 months. It's not so much the money (although it can be) as it is getting the paperwork done and scheduling all the middle-men's calendars for the closing.
posted by jeremias at 12:11 PM on April 4, 2021 [12 favorites]

The place I live has just knocked London off the top of the list of UK locations British people most want to move to. House prices here are already at the bad end of the affordability spectrum.
posted by biffa at 12:16 PM on April 4, 2021 [4 favorites]

I have a rental property (I know...I know...) and I get approx. 5x calls a day asking me to sell my house. It get's so infuriating that I've started screaming at them "YOU AREN'T STEALING THE ONE THING I CAN COUNT ON AND THAT IS HAVING A HOUSE TO LIVE IN WITH ROOMMATES IF THINGS GET REALLY THAT WAY FOR ME WHEN I AM OLD I'M GOING TO BE THE GOLDEN GIRLS"

This is a function of something that's not quite a pyramid scheme, where people sell a useless course on house flipping and a list of rental properties scraped from public data to people who are desperate for (more) money. A scam on a scam, as it were.
posted by codacorolla at 12:17 PM on April 4, 2021 [7 favorites]

This seems to be an acceleration of the issue that Curbed wrote about in 2018:
Wall Street’s new housing frontier: Single-family rental homes

According to a recent study by the Alliance for Californians for Community Empowerment Action (ACCE), which spoke to more than 100 residents of single-family rental homes, tenants of these companies “are negatively impacted, with large annual rent increases, fee gouging, a high rate of evictions, and rampant habitability issues.”

A 2016 study by the Federal Reserve Bank of Atlanta found that large corporate owners of single-family rentals in Fulton County, Georgia, were 8 percent more likely than small landlords to file eviction notices.
...
The desire to keep vacancies low can potentially put a ceiling on what landlords will charge in rent, but that cap can also lead to other cost-cutting maneuvers that negatively impact tenants. St. Denis and other former residents interviewed for this article claim that these corporate landlords are slow to respond due to a lack of local staff on the ground and a reliance on contractors, and that the companies skimp on repair and maintenance.

Recent moves to standardize leases and increase maintenance costs have proven profitable. Waypoint’s 2016 annual report cites a 51 percent increase, from $17 million to almost $26 million, in “other property income” like service charges, tenant chargebacks, late charges and early-termination charges. A former Waypoint CEO said failure to harvest the “low-hanging fruit” of ancillary revenues, such as fees, is “revenue leakage.”

Many of these incidents can cause serious short- and long-term financial issues for both current and former renters.

posted by cynical pinnacle at 12:22 PM on April 4, 2021 [7 favorites]

Another way of saying “all cash” is “no finance contingencies”. To a seller, it means the deal isn’t going to fall apart because the buyer’s mortgage isn’t approved. That’s worth some money, but not so much that it should push mortgage buyers out of the market.

Having a bunch of cash offers in a market is more a signal that you’re competing with people who have the resources to go higher. That’s not a great feeling.
posted by qxntpqbbbqxl at 12:23 PM on April 4, 2021 [12 favorites]

The REITs and so on were well underway pre-pandemic indeed. Is the main difference now that super-low interest rates are hotting up the individual side of the market (and the flippers), or are the big investors taking advantage of something in pandemic relief too?
posted by joeyh at 12:26 PM on April 4, 2021 [2 favorites]

I wonder if this will deflate a little as more people realise that WFH is not going away. There are good schools and communities in places that aren't also within a hellish commute of the studio or office. Colleagues have been offered long cheap leases on their apartments recently, so this may already be happening.
posted by inpHilltr8r at 12:32 PM on April 4, 2021

It's probably bc the rates are low right? The Fed set the rates low to offset the recession and keep the market from collapsing. But then speculators move in as a result.
posted by subdee at 12:32 PM on April 4, 2021 [1 favorite]

My husband's mother is trying to sell her house and move to Florida, but she's having a hard time closing on anything bc of all the reasons given in this thread. But she wants to close now while the interest rates are still low.
posted by subdee at 12:34 PM on April 4, 2021 [1 favorite]

Zillow seems to think that our $200K house is really worth $490K. That seems nice but we don't want to sell and if we did, what would we buy? Fortunately, the county tax office still thinks it's worth $250K.
posted by octothorpe at 12:35 PM on April 4, 2021 [7 favorites]

The killer three paragraphs, IMO:

D.R. Horton Inc. built 124 houses in Conroe, Texas, rented them out and then put the whole community, Amber Pines at Fosters Ridge, on the block. A Who’s Who of investors and home-rental firms flocked to the December sale. The winning $32 million bid came from an online property-investing platform, Fundrise LLC, which manages more than $1 billion on behalf of about 150,000 individuals.

The country’s most prolific home builder booked roughly twice what it typically makes selling houses to the middle class—an encouraging debut in the business of selling entire neighborhoods to investors.

[...]

“You now have permanent capital competing with a young couple trying to buy a house,” said John Burns, whose eponymous real estate consulting firm estimates that in many of the nation’s top markets, roughly one in every five houses sold is bought by someone who never moves in. “That’s going to make U.S. housing permanently more expensive,” he said.

posted by clew at 12:36 PM on April 4, 2021 [23 favorites]

This is so infuriating. It just makes me so mad, and so upset. The thing is, I wouldn't mind so much, if renting was actually highly regulated and there were stiff penalties for being a shitty landlord. Or even just consequences for being a kind of crap landlord.

I would be happy renting for the rest of my life if that didn't mean always having to live somewhere that is substandard.

Always the cheapest possible bathroom fittings. Always the worn out kitchen cabinets that leave dust all over your plates and pans. Always the slightly grubby lino on the floor, that's seen better days.

I am sick of it.
posted by EllaEm at 12:41 PM on April 4, 2021 [54 favorites]

San Francisco tried to pass a flipper tax, a tax on real estate sales by parties who have owned the property for less than some amount of time. Sadly it didn't pass.

I don't know much about them, but my general internet radar has indicated that SPACs have something to do with all this.
posted by rhizome at 12:44 PM on April 4, 2021 [4 favorites]

I wonder if this will deflate a little as more people realise that WFH is not going away.

At least here, that assumption is part of what is fuelling the hot housing market - people who can who are working remotely are using the absurdly low interest rates to upsize on the assumption that they'll need a permanent home office. Not on the cards for us, our kid will need that room sooner rather than later, so I'm wondering if we can convert a literal clothing closet into the world's tiniest office. Doable, i think!
posted by Jon Mitchell at 12:45 PM on April 4, 2021 [3 favorites]

Cool, so homes are the next Tesla stock. Why is there so much money sloshing around? Is it like blood pooling in a body after the heart has stopped? How does this not end in a spectacular economic implosion?

The wealthy got wealthier during the pandemic. MUCH wealthier.

Which is why we so badly need a government that is willing to aggressively tackle problems of wealth inequality in all feasible ways.
posted by Gadarene at 12:47 PM on April 4, 2021 [44 favorites]

For a couple of months, the steep increase in prices here on Long Island seemed to have been driven by people fleeing NYC as the epidemic took hold. That was particularly true of areas either abutting New York City or out in the Hamptons where people either bought up pricy summer rentals they'd had previously or drove even more local folks out as they bought other people's rentals. But it has continued and all over Long Island. A real estate agent I know has been posting details of the properties he's listing. It's not at all unusual for him to receive multiple, multiple offers for a single house, for him to have two sales close in one day, for 30 or 40 people to show up for one showing. He just mentioned that a buyer offered him a Covid-19 vaccine immediately if he could steer the seller to selecting that buyer, since apparently all other things are equal. Another agent told me she's seen a fistfight break out while potential buyers were standing in line to see the house. It's absolutely insane what is going on.
posted by etaoin at 12:53 PM on April 4, 2021 [2 favorites]

If one has a chunk of investment capital, housing is about the only place that currently appreciates. Put cash in a bank with a 0.5% interest rate and basically loose money. Stocks go up but may be at the top. Invest in Chinese companies just before they nationalize all foreign assets (too cynical perhaps but...). And the last couple bubbles in housing... just dipped for a week and then ramped back up.
posted by sammyo at 12:54 PM on April 4, 2021 [3 favorites]

My house has been "appreciating" in value (quotes because I don't really believe it) at around $100K per year for the last four years. I receive *so* many calls from very polite realtors eager to show up at my door with a check in hand.

That's entirely bonkers.
posted by aramaic at 1:06 PM on April 4, 2021 [5 favorites]

San Francisco tried to pass a flipper tax, a tax on real estate sales by parties who have owned the property for less than some amount of time. Sadly it didn't pass.

They did raise the Transfer Tax here in Pittsburgh to 5% with the intent to discourage short-term buying and selling.
posted by octothorpe at 1:19 PM on April 4, 2021 [3 favorites]

It's great to be able to sell for a lot, but that same market bites you in the ass when you have to buy your new place if you don't want to move somewhere less desirable. It's nuts.
posted by emjaybee at 1:32 PM on April 4, 2021 [3 favorites]

It's great to be able to sell for a lot, but that same market bites you in the ass when you have to buy your new place if you don't want to move somewhere less desirable. It's nuts.

Which tightens up the market and exacerbates the problem.

Tax non-occupied ownership. Make it a function of both the number of properties owned, and of the supply on the market. You want to "invest" by purchasing your fifth house in a market in which there's not 3 days of supply? Pay *everyone* for it to the tune of six figures.
posted by weston at 1:35 PM on April 4, 2021 [31 favorites]

We bought a house over 20 years ago after our landlord pissed us off on an important maintenance issue which they just couldn’t be bothered to deal with for a few weeks. The house payment was double the rent we were paying, but we reasoned that hey, in 15-20 years we’ll be paying less in mortgage than we would be paying in rent due to inflation. We had no idea just how right we were going to be on that one.

My thought on how to rein this in would be via the federal tax code. The law should be that you can sell one house every two years without a tax penalty. If you sell more than that, you will pay a steep capital gains tax specific to housing. Hardship waivers would be available on a limited basis (I.e. you got a new job in another city, or you’re broke and you need the money and selling the house is the only way you can get it.) One waiver per two year period and you have to document it. Upon implementation of the law, there would be a two year grace period where houses could be sold with no tax penalty. That would give the investors incentive to sell off their inventory. Housing is a human right and this shouldn’t be yet another vehicle for the rich to suck the middle class dry. Housing should be considered infrastructure, a place to live, not a damned investment vehicle.
posted by azpenguin at 1:45 PM on April 4, 2021 [27 favorites]

I'm not just feeling grim about owning but about being able to keep renting.

I simultaneously feel lucky that we're in a rent-controlled building and resentful about how much of my mental energy goes into not drawing any landlord attention because if they had an excuse to boot us they could charge more from the next tenants.
posted by Lexica at 1:56 PM on April 4, 2021 [9 favorites]

So is there anywhere in the world that does housing "right"? As in, no real estate bubbles, housing has stayed consistently affordable for the average citizen, corporations aren't buying housing as investments, etc., etc.
posted by maxwelton at 1:57 PM on April 4, 2021 [5 favorites]

azpenguin, I don’t think that would inhibit the buy-to-lease giant landlords, as in the article? Who make me think of the chunks of Victorian London owned by single landlords, who were mostly terrrrrible.
posted by clew at 1:58 PM on April 4, 2021 [3 favorites]

The law should be that you can sell one house every two years without a tax penalty.

That's pretty much the law already in the US. The Section 121 tax break on home sales is only for those who have "owned and used [their] home as [their] main home for a period aggregating at least two years out of the five years prior to its date of sale." If you haven't used the home as a primary home for two years in the past five years, you're subject to capital gains.

So, it's not precisely "one house every two years" - you could live in a house for two years, buy another house and live in it for two years (or some interleaving thereof), buy a THIRD house in year five and then sell the other two in the same year - but it functionally holds you to living in a house for two years and not holding it for all that long after you move before you sell it.

As for increasing capital gains taxes, I'm right there with you, although not just i/r/t housing.
posted by I EAT TAPAS at 2:01 PM on April 4, 2021 [5 favorites]

"investing" in housing by those who do not perform the services of property management themselves (eg. actually adding value to the economy by performing bookkeeping, taxes, and maintenance) should be banned, period.

I'm not sure what this means. Avoiding bookkeeping, taxes and maintenance is a good way to lose money on your investment. It's sort of self-banning, regardless who's actually tasked with it. None of this has any significant effect on the speculation driven market, either. "X should be banned, period" sounds like a plea that something should be done. But something should not translate into anything.

Housing prices here in my part of L.A. maybe slowed down a bit during covid, but haven't been seriously hurt. Rentals have gone down a bit. Understandable, as rentals were insane and unsustainable when so many lost their livelihoods. I do expect them to recover as things begin to normalize.

I do own a rental property. Sort of. I bought it as a place for my Mom to live in 2007, as her apartment building was being rehabbed and the landlord gave her the opportunity to get refurbished unit at a higher rate. As she could see a point when she'd be on a fixed income, and I was in a place where I could actually purchase a property where she could live at a stabilized rate and at no rent when she retires. Which finally happened last November. Being located in the shittiest part of L.A. county made it all possible. Sort of thankful my Mom didn't want to leave the area. Also made it so that the property hasn't appreciated since I bought it, so not much of an investment.

We've been very fortunate to be able to do this. The house where I live, which I purchased in 1999, turned out to be the stupidest wise decision I ever was lucky to make. It seemed so extravagant at the time, as I had to beg borrow and steal from everyone I knew to make it happen. Being in a fairly desirable area, it has gone up in value several times. It's insane. I couldn't afford to rent here now, despite the household income going up significantly since then. Let alone buying. I don't know how people do it. Up to now, the neighborhood has been working class, with roots here for many decades. It's rapidly changing.

And, yes, I'm constantly getting cold calls to buy my properties from outfits who know nothing about them. Someone called about my Mom's place, offering to by it. I said, sure, for about $1.1 million. The guy goes on like it's serious (The house is worth maybe $200K on a lucky day). I ask, "You have no idea where this house is, do you?" It just tripped him up and he promptly hung up when I laughed. It's crazy.
posted by 2N2222 at 2:04 PM on April 4, 2021 [15 favorites]

> So is there anywhere in the world that does housing "right"?

The first countries I think of are Japan and Germany. Japan is interesting in that houses tend to have relatively short lives, with lots of tear downs and reconstructions. Japan also has flexible property zoning laws (Urban kchoze, 2014) -- this has the consequence of increasing supply of land for most kinds of uses, which should lower the cost of land.

There's a bunch of interesting points from a 2014-australia-property-bubble-centric article that compares German tenant protection laws to those in Australia:

> In Germany (which is around average for tenant protection in Europe):
> - rent increases are capped at 20% every three years. Landlords who overcharge can be fined.
> - notice requirements [of landlord forcing a tenant to vacate property] vary according to how long the tenant has lived there: three months is the minimum for someone who has lived in the property for less than five years. Six months notice is required for a tenancy between five and eight years; nine months for longer than eight years. Elderly long term tenants are protected: a landlord has to make a very strong case for their eviction, and is required to pay compensation and/or assist with their relocation.
> - [forcing tenants to vacate so a property can be sold with "vacant possession"] is illegal: tenanted properties are sold with their tenant in place.

The article also makes the following highly relevant point:

> This strong [tenant protection] legislation is possible partly because of the role of large landholding institutions in Germany that treat their housing assets as long-term secure investments that provide a steady return. The resulting long leases mean tenants can consider their rented property their home and fit it out accordingly. The tenancy protections supporting this arrangement act as a disincentive to speculators, which in turn reduces demand for investment properties and therefore competition at sale.

I can think of far worse landlords than a well-run pension fund with a 100+ year planning horizon that appreciates stable and predictable income stream from rents and understands that running a business involves (horror) periodic maintenance expenses.
posted by are-coral-made at 2:18 PM on April 4, 2021 [28 favorites]

Real Estate Investment Trusts, Pension funds, etc., buy up housing and have it managed to maximize profit. This drives up the prices of homes and rents. When I was young, I sold a business, bought a 2 family, kept rents a bit behind market rates. Still capitalism, but not rapacious and I feel fine. Peak, Rapacious Capitalism is genuinely vile and harming people every day. ordinary scale capitalism can be debated, but the way it's being done in the US is not okay.
posted by theora55 at 2:21 PM on April 4, 2021 [8 favorites]

The role that interest rates play should be noted as well - while sticker prices have gone up a lot, the actual cost of a mortgage has gone up a lot less. A real example from my own history, living in what is currently one of the hottest real estate markets in the country:

In 2002, I bought a house for $102,400. I got a mortgage at 8.875% interest; that was high but not terrible for the time, because it was a NINJA (No-income, no job or assets) loan. I was between jobs and was using a generous severance package from my previous employer to relocate. I put down $25,600 (25%) and financed the rest. My monthly payment after taxes and insurance was $755.48.

As of today, that same house is estimated to be worth $360,000 on Zillow. OMG, housing prices have more than tripled, right?

Adjust that $25,600 down payment for inflation and you get $37,000. Look at the current property taxes for that property, and assume an inflation-adjusted insurance price. A quick google shows 30-year interest rates as low as 2.75%.

If you buy a $360,000 house with a $37k down payment, you'll have to get mortgage insurance or do an 80/10/10 split that I don't feel like calculating. So we're going to pretend that you somehow get a 90% LTV mortgage without PMI at 2.75%.

With those parameters, your mortgage payment comes out to about $1510 per month. In actual dollars, that's almost exactly double what the 2002 mortgage cost. After inflation, the old $755 housing payment would be about $1092.

So, adjusted for inflation and lower interest rates, the cost of a house has gone from $1092 per month to $1510 per month, less than a 40% increase. Even assuming a more standard loan back in 2002, or a more expensive loan today, you're still looking at about a 50% increase over 19 years.

Finally, I'll note that that house is in many ways better now than it was in 2002. In 2002, it was at the edge of town, surrounded by farmland; today there is a city park, schools, and shopping centers close by.
posted by Hatashran at 2:38 PM on April 4, 2021 [13 favorites]

Counterpoint to earlier previous post regarding desirability of having some large German corporation as a landlord, here's a different take (again, australian housing market perspective):

> most countries also have a sector of large corporate landlords. In some countries, these landlords are very large. For example, America’s five largest corporate landlords own about 420,000 properties in total. Germany’s largest landlord, Vonovia, has more than 330,000 properties alone.

> In the US, multi-family (apartment) landlords have been around for decades. And in the aftermath of the global financial crisis, they have been joined by a new sector of single-family (detached house) landlords that have rapidly acquired large portfolios from bulk purchases of foreclosed, formerly owner-occupied homes.

> In these countries and elsewhere, the rise of largest corporate landlords has been controversial. Germany’s have a poor record of relations with tenants – to the extent of being the subject of popular protests in the 2000s – and their practice of characterising repairs as improvements to justify rent increases.

> American housing advocates have voiced concern about “the rise of the corporate landlord” – especially in the single-family sector, where there’s some evidence that they more readily terminate tenancies.

> These landlords also don’t build much housing. They are most active in renovating (for higher rents), merging with one another, and – especially in the US – developing innovative financial instruments such as “rental-backed securities”.
posted by are-coral-made at 2:44 PM on April 4, 2021 [4 favorites]

Coastal FL is crazy - in spots. Here, my son and I bought a 3 br house for $300K in late 2020. This was about $250/sqft. I thought I overpaid but we are whipping into shape. My son and family moved in and barely got settled and the owner across the street listed his (slightly smaller) house as a FSBO for $450K and just sold it after 2 weeks. At that price, my son could sell his house for $200K profit after owning it for less than 6 months! He’s not going to because, well, there’s just not much available for sale or rent. We looked at building new but construction costs are well above $250/sqft.

I think infusion of cash into the market by the Fed, low interest rates for mortgages, less available housing stock (due to moratoriums on foreclosures and evictions), terrible returns on other investments are driving this.
posted by sudogeek at 2:45 PM on April 4, 2021 [2 favorites]

Might be worth a read: The Rise of The Corporate Landlord (July 2014)

> The Rise of The Corporate Landlord: the institutionalization of the single-family rental market and potential impacts on renters. A report by the Homes For All Campaign of Right To The City Alliance
posted by are-coral-made at 2:52 PM on April 4, 2021 [3 favorites]

I'm not just feeling grim about owning but about being able to keep renting. We have to rein in these speculators.

Guide to US tenants' unions. Good idea to join such an organisation. Here in the UK, there's this. They get concrete wins for specific members and also campaign for more reasonable housing policy. Mass tenant organising is probably necessary for the latter for straightforward reasons that I would imagine also apply in the US.
posted by busted_crayons at 3:16 PM on April 4, 2021 [6 favorites]

> It's great to be able to sell for a lot, but that same market bites you in the ass when you have to buy your new place if you don't want to move somewhere less desirable.

The Toronto housing market seemingly has both an infinite number of people who want to move into the city and drive prices up here, and people moving out of Toronto and driving prices up in every other city within an eight hour drive.
posted by The Card Cheat at 3:26 PM on April 4, 2021 [2 favorites]

The same entities were bidding up prices back a dozen years ago when treasuries first went below one percent and stayed there for over a decade. Pension funds have obligations, need returns and diversity and treasuries weren't pulling their weight. Real estate was one option. Then there was a lot of foreign money looking for a safe place to stash the goods; US and Canadian real estate fit the bill.

Going forward? The price of lumber is up 180% recently. Copper's at a nine year high. I assume these go higher still if the infrastructure proposal actually goes through and money goes into actual infrastructure.

Cheap money doesn't come cheap.
posted by BWA at 3:28 PM on April 4, 2021 [2 favorites]

My SO's sister just bought a house. 20 years ago it was under $100k. She paid over $300k. It ain't that nice. Everywhere is turning into what Miami has been for the past decade, sadly. Well, not literally everywhere, but it's getting close.

It's always been that way to some degree. My boss used to tell me stories about how when he moved to Arkansas back in the 70s the neighbors were all gobsmacked by what he paid. The problem isn't so much the increase in prices, but that they are going up way faster than inflation or income growth.

When my friend bought a house almost 20 years ago now, it seemed like a bubble. When my SO and her friend bought a house 12 years ago, it still seemed like a bubble price. Apparently I'm just shitty at understanding real estate. The last time I've seen housing prices actually drop outside a major metro was in the 90s when we could only get $85k for the house my parents paid $100k for in 1980.
posted by wierdo at 3:43 PM on April 4, 2021 [1 favorite]

Tax non-occupied ownership.

I wanted this so badly in my small college town's downtown area. Big moneyed out of the area investment corporations kept buying up property there and raising the rent so high no one was willing to rent there and it would sit empty for years. As more and more of this happened, foot traffic to the area dropped, damaging all the other businesses that benefited from people walking through, making the problem worse and worse and shifting consumers to soulless strip malls on the edge of town where business owners were willing to take a chance because of the more affordable rates.
posted by Candleman at 4:29 PM on April 4, 2021 [16 favorites]

We see similar issues in my county. No towns bigger than 25,000, plenty of small villages. You can see places that have gone over to second homes and holiday lets, where locals couldn't keep up with prices and they become dead over time as services close down. A local shop can't survive on 3 months of summer trade. You walk around in winter and it's like the place has been shuttered. You can see other places on their way. I've seen out of towners opposing affordable housing to protect their investment but no alternative for locals to stay around.
posted by biffa at 4:54 PM on April 4, 2021 [7 favorites]

Tax non-occupied ownership. Make it a function of both the number of properties owned, and of the supply on the market. You want to "invest" by purchasing your fifth house in a market in which there's not 3 days of supply? Pay *everyone* for it to the tune of six figures.

I think this is the best idea: make a healthy jump based on occupancy and have it double for property nobody is living in to make it uneconomical to try to keep places vacant holding out for the highest rates since that also has a strong negative impact on the local community.
posted by adamsc at 5:34 PM on April 4, 2021 [3 favorites]

I've heard of a subtler version of that where the mortgage interest deduction can only be taken on a primary residence.
posted by rhizome at 5:44 PM on April 4, 2021 [1 favorite]

I hate capitalism, but the planet is full of people and there's only so many places to live, so land/housing is a scarce resource to begin with, and as such, capitalists will do everything they can to make an already-scarce resource more scarce if that means they can charge an arm-and-a-leg for it.

See: Nestle's CEO saying we should privatize water. They'll get there someday, too. When the planet is burning and water is running dry, they'll claim we need to ration it out for survival. They don't actually give a shit and will hog all the resources until we all go extinct.

So, sadly, not surprised in the least.

What's the old saying?

A capitalist will sell you the rope to hang them with.

They only care about the money. They would happily kill everyone on the planet as long as it meant that they had more. Dumbass King Midas motherfuckers, you can't eat money idiots.
posted by deadaluspark at 5:49 PM on April 4, 2021 [16 favorites]

I've heard of a subtler version of that where the mortgage interest deduction can only be taken on a primary residence.

That doesn't help with the big businesses doing it
issue though, because all interest is deductable as a business expense for them. There's some individuals buying second homes in desirable places to live that mostly sit empty but drive up the costs there but it's far more common to buy someplace that's more of a vacation home in a sparser populated area. There's problems with that too, with locals getting priced out of their family's historic homes/areas but it's a different one than people letting buildings sit empty while waiting on the ideal tennant (that may or may not exist) or to sell it at a profit without the messiness of having to pass on or terminate leases.

Not that I don't agree that second mortgages shouldn't be deductible but first ones probably shouldn't be either.
posted by Candleman at 5:55 PM on April 4, 2021 [4 favorites]

We paid $230k for our place in Ottawa 14 years ago, and at that time I thought it was nuts to pay almost a quarter million for a tiny 1950s bungalow. But, it is a nice central neighbourhood, and prices have gone up steadily. Before the pandemic, similar places to ours were going for about $400k. Then the pandemic hit, and a house like ours in worse condition across the road went for $550k after being listed for a week. By December, a run down dump down the road no bigger than ours backing onto a parking lot went for $770k the day it was listed. Nuts. We could never afford to move even if we wanted to.
posted by fimbulvetr at 5:59 PM on April 4, 2021 [4 favorites]

We're in a small town in a suburban verging on still-sort-of-rural part of New Jersey. We bought our half of a duplex 22 years ago for $179k. It's at least doubled in price since then (assuming our lack of upkeep doesn't cost too much to undo, we could see most of those gains if we sell). We'd love to move to a single family home, but if we want to move anywhere comparable we'd be taking on another mortgage just as we're paying ours off. It really doesn't make much sense.

Meanwhile, houses around us are selling for half a million plus, and all of the housing stock here is at least 50 if not 80 or more years old. The new stuff in the surrounding area is even more astronomical. Who's making enough to afford this? Who has the resources to withstand a job loss and keep their house for any length of time with those costs?
posted by mollweide at 6:20 PM on April 4, 2021 [2 favorites]

This only gets better when at some point, we have built so many houses that there is an oversupply. Once there are more houses available than there are people who want to buy houses, then prices may start to stabilize, if not go down slightly.

When this may start (if ever) to happen is anyone's guess.
posted by freakazoid at 6:31 PM on April 4, 2021 [1 favorite]

I know there are a lot of wealthy but really how many people actually have most of a million in cash ready to buy a small bungalow? Have they borrowed from the mob?
posted by sammyo at 6:51 PM on April 4, 2021 [4 favorites]

PSA: "Free market" from Adam Smith doesn't mean "unregulated capitalism" it literally means "you're not allowed to rent shit. Buy it, or walk away."
posted by metametamind at 6:51 PM on April 4, 2021 [3 favorites]

I know there are a lot of wealthy but really how many people actually have most of a million in cash ready to buy a small bungalow?

Practically every single person buying a house in the Bay Area these days. Except the amounts are much higher than “most of a million”.

While some people use services that front the money, all cash offers are the norm. Often without contingencies.
posted by sideshow at 7:13 PM on April 4, 2021

At least we have the privilege to do that, renters are getting HOSED.

At least here in the Bay Area, I got a pretty damn good rent cut last month. It'll be curious to see how rents go after the eviction moratorium is lifted. There's plenty of units still available, so its not like they have a huge incentive to evict.

"investing" in housing by those who do not perform the services of property management themselves (eg. actually adding value to the economy by performing bookkeeping, taxes, and maintenance) should be banned, period.

I'm not sure why vertical monopolies are better for renters. A property management firm setting rent prices would presumably want to maximize profits on services rendered by maximizing units rented out even if at a lower price, while a vertically integrated company is going to have far greater pricing power -- it's easier to raise rents the fewer options your tenants have to go elsewhere.
posted by pwnguin at 7:16 PM on April 4, 2021 [1 favorite]

I know there are a lot of wealthy but really how many people actually have most of a million in cash ready to buy a small bungalow? Have they borrowed from the mob?

There's a very real risk of precisely that. Apparently real estate is a preferred home -- beyond the lax reporting standards, I imagine you can "rent out" your unused units to fake tenants who pay in cash.
posted by pwnguin at 7:24 PM on April 4, 2021 [3 favorites]

We just sold our modest Levitt townhome in suburban Maryland because I changed jobs. After three days on the market we had 6 offers, some over asking, and an all-cash offer below asking. I think that the price we listed for was fair, but I have no idea how young families are supposed to have a shot at a home. We bought a nice house in the Madison area, but things are pretty hot out here, too. We did OK because our financing was in good shape, but many sellers are requiring proof of financing or they won't consider your offer. I do wonder a lot about how sustainable this all is because one day my generation is going to be ready to sell, but who will be buying? I guess the pension funds. I don't particularly love owning, there's a lot of overhead that goes with that, but I'm not really willing to count on finding a landlord that's not awful. Kind of hard to imagine renting from the same person for most of my life, like my grandmother did.
posted by wintermind at 7:36 PM on April 4, 2021

But also it's not impossible to mass up a million dollars after 5-10 years working at FAANG. Personally, I prefer to diversify my portfolio, and max out money in the retirement accts, but even while doing so I still have enough liquid assets to buy the house I grew up in without a loan. And every year the number of markets I can move to as a cash-only buyer grows.
posted by pwnguin at 7:40 PM on April 4, 2021

There are not enough homes to go around. No amount of money gets around this; what should be happening is the demand is met by new supply. But the Boomers have a bunch of lies about why all this obviously available land shouldn't be developed, and totally screwed the Millennials (who are *majority* living in their parents basement, and who are absolutely going to murder Social Security and Medicare for this).

There's a real YIMBY movement but it's focused on keeping the fight local -- replacing single family homes with multi family homes just means there's a neighborhood of existing voters that can unite to screw new voters. What's needed is actually developing new cities, and probably moving corporate headquarters to where their workers actually live.

We stopped making new cities. Company towns were a thing, and it didn't go great. We assumed The People should be responsible for building new cities. But companies have an interest in their workers having shelter, and The People only have an interest in their kids (and they just shoved em in the basement). Not rational; but it's what we ended up with.

Matt Yglesias is openly wondering if megacorps shouldn't manage the housing stock instead. It's horrifying on its face -- isn't part of the American dream owning your own home? -- but the status quo means there's no homes to own, even if you're "rich".

All these kids think they're rich because they get big FAANG paychecks. Their parents had homes. They don't. Their parents had spouses. They don't. Their parents had kids! Them!

Their parents were middle class. They can't be rich.

But their parents, in a distributed fashion, have ensured a policy where vast tracts of available land are simply left undeveloped. San Mateo, CA added hundreds of thousands of jobs, and hundreds of homes. There's land. Lots of it. Demand unmet. Lots of taxes and economic activity taken, though. Stolen, really.

Say what you will about the megacorps, I can buy a cell phone and the service isn't backbreakingly expensive. I can buy a cheeseburger. I can buy lots of things, but the one thing the megacorps haven't been doing, houses, a fundamental necessity, that's hard.

This doesn't work, and people aren't going to get any nicer about it. This is probably where we end up with pension funds getting into the housing game -- once these organizations own enough, policy starts applying to them in ways it simply doesn't to the masses. If Americans want to remain homeowners, they better figure out how to house the Millennials, quick.
posted by effugas at 8:19 PM on April 4, 2021 [7 favorites]

Queen, thy red.
posted by effugas at 8:19 PM on April 4, 2021

we just bought taquito house in the Phoenix East Valley after looking for months & yeah it was a hell of a housing market to shop in

nothing that wasn't pretty much falling over or currently hosting an active gunfight stayed on the market for more than a couple days; there was one day we drove around for some hours to look at the outsides of 12 different houses & when we got back home they all had new offers on them

the process was so exhausting & demoralizing that despite not being even a little bit Catholic I one-clicked a bag of one dozen plastic St. Anthony figurines & the very next day we went to see the house we're currently in, which has a smaller yard than we'd wanted & no garage but otherwise checks all the boxes on our wishlist, & somehow no one else had gotten there before us? the listing even said something like "look no further, you've found the home you've dreamed of!"

if that wasn't enough of a Fucking White Girl Communication From the Universe the house had a set of SALE SALE / SASALELE woman-yelling-at-cat meme prints but in ukiyo-e style on the wall, which we happen to also own

so basically out-of-state investors buying up houses caused me to believe in saints now, thanks one dozen St. Anthonies
posted by taquito sunrise at 8:25 PM on April 4, 2021 [13 favorites]

Plus as someone who has sold houses to both types of buyers, the process for all-cash is MUCH faster, sometimes 1-2 months. It's not so much the money (although it can be) as it is getting the paperwork done and scheduling all the middle-men's calendars for the closing.

Months? That's absurdly long.

Maybe in an environment like that, all-cash makes sense as a bid enhancer, but around here, it is rare for a closing with a mortgage involved to take more than a week or two.
Longer than that means someone found something to quibble about during the inspection.
posted by madajb at 8:28 PM on April 4, 2021

So is there anywhere in the world that does housing "right"

I've mentioned this in a few threads, I'm not totally opposed to what Singapore is doing - a tiny, wealthy country that has maxed out all available land on their island. Basically, the government controls the supply, quality and price of most housing on the island, and "sells" it (a 100 year lease) to buyers based on need - you qualify if you are getting married and moving out of your family home. You don't qualify if you're single or just want to buy one for investment. If you have 3 children and you are outgrowing your unit? You qualify for an upgrade. Needs based housing instead of "may the best capitalist win". It's a bit like a country with a public healthcare option, rather than relying purely on the private sector.

Over 80% of Singaporeans live in HDB housing. This has led to Singapore having one of the highest home ownership rates in the world, at over 91%.

Contrast this to images we see out of Hong Kong, as an example of housing prices in a wealthy, tiny land area left to capitalism.

---

Regarding the cash vs loan thing, the difference is with a loan, it's actually the BANK that is buying the house so they have to go through more rounds of institutional checks to ensure their investment is sound, and those checks could potentially lead to the deal being cancelled. This is quite bad for the seller - you may have lined up 3-4 offers, and picked the highest offer, and when that deal fell through 2 weeks later, you go back to the other 3 buyers who made offers and find they've not interested anymore because they're bought something else, etc... now you have to re-advertise your place, and get viewings going again... your rankings have now fallen in the advertising algorithm because your house is now stale.... and the perception also suffers - wow this house hasn't sold for 2 months, there must be something wrong with it, especially if the previous offer ended up with the bank rejecting it after doing due diligence. As opposed to - wow this house JUST listed on the market for a great price, I better get to it quickly before its snapped up.

A seller might be well advised to sell to the 2nd or 3rd highest offer if they are offering straight up cash and immediately settlement.
posted by xdvesper at 8:31 PM on April 4, 2021 [14 favorites]

@effugas: We're already seeing millenials and other generations respond to the harsher wage and cost of living conditions by not having children. Domestic birth rates in most first world countries are below replacement, which would lead to excess housing supply in the long term, but the first world governments are actively counteracting the response by its younger citizens, by opening the borders to more immigrants. So federal governments, which are in complete control of the immigration flow, are actively messing with younger citizens to prop up its older citizens retirement funds.

The first world would also hit their environmental pollution goals if they would also just let the population decline for a while.
posted by DetriusXii at 8:39 PM on April 4, 2021 [2 favorites]

Plus as someone who has sold houses to both types of buyers, the process for all-cash is MUCH faster, sometimes 1-2 months.

Yeah, this isn't quite right. You can close on a house within 3-4 weeks between offer and escrow with a conventional mortgage and the right conditions. I've been through it both as a buyer and a seller, and looking back on my records, it's been less than a month each time between offer and closing. If both buyer and seller are motivated and fair, and the buyer has good credit and communicates that to the seller, a full completed sale can and will happen within a month.

In any case, the fact that there's a mortgage in the mix certainly doesn't mean that you're pushing things out 2+ months.
posted by I EAT TAPAS at 8:47 PM on April 4, 2021

This article talks about the effect of today's super-low interest rates, which it attributes to low wages:

Bubble or boom? Why ultra-low interest rates mean house prices may never bust [Guardian]

So while a bubble might be defined as a market where rising prices are not justified by the fundamentals, the era of cheap money ushered in by the global financial crisis and sustained by Covid, has fundamentally changed those fundamentals. There is an expectation that authorities will do anything necessary to keep the party going.

[...] the wider picture is that the global economy is stuck in a race to the bottom: without a reversal in the decades-long stagnation of wages, interest rates will remain low, and house prices will remain high.

“Australia is stuck in same debt trap as everyone else where we’ve got so much debt we can’t raise rates because it makes it more difficult for people to pay back debt,” says Klassen. “To get more growth we have to cut rates, so people borrow more and the cycle goes on.”

Joe Biden’s gigantic stimulus packages for the US economy could spark a change, he says, if mass New Deal-style work schemes push up earnings and growth comes from real spending power instead of debt.

In the meantime, other ingenious ways could emerge to keep the property juggernaut trucking along, perhaps again following the Japanese example and extending the term of repayments beyond the natural span of a lifetime to 100 years.

“It’s like frogs in boiling water,” says Klassen. “Once mortgages were for 20 years, then 25, now 30. Soon it will be 50. Many people will never pay it back, so owning a home will become like renting – just that it’s renting from the bank.”

posted by trig at 8:57 PM on April 4, 2021 [8 favorites]

I have a rental property (I know...I know...) and I get approx. 5x calls a day asking me to sell my house.

We rent, and get occasional calls asking if we want to sell our house. My favourite was the guy who asked (after I told him it was a rental property) if I wanted to buy a house. Yes, I definitely want to buy a house from someone cold-calling me.
posted by ricochet biscuit at 9:29 PM on April 4, 2021

I apologize for linking only the WSJ. For some reason it wasn't paywalled on my computer, even though I'm not a subscriber.

The WSJ selectively paywalls some articles, opening it up if you follow a link from one source but rejecting if you copy and paste it to a random site. Pasting it in a new incognito / private browser instance is a pretty good way of checking if others will be able to see it.
posted by mark k at 9:40 PM on April 4, 2021 [3 favorites]

When we sold my in-laws house several years ago in the Los Angeles area, the closing dragged out for about two months. We had the option to cancel the sale and move on to another buyer after a month, but at that point you’re either looking at something that should close any day, or possibly restarting the clock with someone else who may hit different problems. We wanted to maximize what we were able to get and had some time, so the lower all-cash offers were less appealing.
posted by jimw at 10:04 PM on April 4, 2021

prices are not justified by the fundamentals, the era of cheap money...has fundamentally changed those fundamentals

I agree with most of the other stuff in the above pull quotes from Klassen, so maybe it's just me...But doesn't this kinda sound like bullshit? Ie, doesn't an accelerating profit squeeze at the institutional finance level just mean that there's no longer any value creation, just rolling sovereign collapses?

I'll unpack:

- Typically financial schemes become untenable and we have a correction
- During these, the people who's model went bust go away and their capital gets written off
- Then a new model takes its place and the cycle repeats

- But in recent cycles, the 2nd step doesn't really happen in a structural way. What happens is that the failures of the existing model get bailed by public debt.
- This incentivizes a double down by the same vultures and then we play another hand of the same game

I suppose the middle game here is that the currencies could go bust. And what we're anticipating is an unwinding of dollar hegemony. If recent history is a guide, either there will be a war or, more likely, there'll be a relatively graceful feudalization of previous US financial outposts as the new bosses take over.

What does this mean for housing? I don't think it means that fundamentals are different, at least not from the perspective of housing markets. I think what it means is that the larger financial system is willing to play chicken with the feds until the dollar goes bust, or some larger thing (climate washout) takes over or the sun explodes.
posted by Reasonably Everything Happens at 10:21 PM on April 4, 2021 [6 favorites]

There is an expectation that authorities will do anything necessary to keep the party going.

And the more people believe that, the more the FIRE economy turns into a Fyre Festival.
posted by clew at 10:57 PM on April 4, 2021

They can't make new land, at least not directly. That's something the UBI "Star Trek" economics types forget when they talk about the effects of automation. I realize I just created something of a straw-man, but I'm kind of reacting to the possibility of Andrew Yang becoming mayor of NYC, a city that certainly knows a thing or two about insane rents and real estate prices.

I hedged on the "create new land" statement because of course we can build denser housing, and zoning laws influence our ability to do that. Still, that pits incumbent property owners and renters against comparatively politically disorganized newcomers. Moreover, decades of infrastructure underinvestment couple with a history of racial and economic oppression and segregation creates incentives for people, in the US at least, to move to a few "desirable" areas, further decreasing the amount of "desirable" (again the quotation marks), housing stock. The economic decline of most areas of the US interior relative to the coasts also doesn't help. Time was, you could get by on, say, a lifetime factory job in the midwest. Those days are long gone. With most people regularly changing jobs if not careers, it becomes desirable to live in areas with with a diverse labor market, further limiting desirable areas and driving up costs. And of course, hanging above all of this like the sword of Damocles, is the pretty certain prospect of mass dislocation and migration necessitated by climate chance.

Thus, land will always be a scarce commodity - and a good investment if you can get it. Still, the fundamentals did chance post 2008-2010 "bailouts". Always in this discourse, I see people waiting for correction, wondering how this process possibly can continue if housing prices and rents continue to rise far beyond affordability for most. The answer is simple: We no longer live in an economy that operates according to the rules given to use by the mythology of capitalism most older than 40 grew up with. When the US government decided to intervene to prop up property values post 2008, it created an expectation that real estate always will be a risk free investment, immune to bubbles. I honestly don't see any reason to doubt that expectation. With so much wealth, from 401k's to pensions, tied up in real estate, a complete collapse in property values simply would be too destructive to allow to happen. Property prices would go down, but the vast majority of people would not have jobs to be able to afford any kind of large scale purchase. It's something of a standoff - mutually assured destruction. In such an environment, individuals inevitably lose out to institutions able to bid up property values beyond the ability of all but the very wealthiest to afford.

All that, of course, assumes US government policies and individuals continue to play the "rules"; but, of course, those rules were tilted against individuals long ago. During the Depression, law enforcement in some areas stopped enforcing foreclosures and eviction notices. Given the alienation of law enforcement from US citizenry, such actions are unlikely to be repeated.

One further point: the United States government for a long time operated based on a policy of encouraging - at least the appearance of - property ownership (amongst white people) based on the idea that a property owning citizens would have a stake in the system and therefore would be less likely to act against the system. One might hypothesize that a nation of renters would be more restive. Here again, though, age cohorts matter. A generation still exists that was able to buy into property before it shot up in price. That generation tends to much more politically organized than younger cohorts, so the political system has yet to reflect the change.
posted by eagles123 at 11:03 PM on April 4, 2021 [3 favorites]

It's more an issue of balance. As it is now, this obsession with keeping property values from falling isn't just keeping prices stable relative to inflation. Property values are increasing far in excess of inflation. Building enough housing would merely slow the growth, not stop it.

Hell, if we build more housing through increasing density in existing neighborhoods, property values will continue to increase apace, at least in those neighborhoods. That's exactly what has been happening in Miami for over a decade now. Unfortunately, because such a large fraction of the new units have been snapped up by the wealthy to use as vacation homes or AirBnBs, rents continue to rise despite the massive building spree. Without that, rents probably would have stabilized or even dropped even as purchase prices rose.
posted by wierdo at 12:54 AM on April 5, 2021 [3 favorites]

They can't make new land, at least not directly.

Having grown up in Hong Kong, let me assure you: they literally can.
posted by Dysk at 1:04 AM on April 5, 2021 [6 favorites]

I saw this elsewhere today, and was talking to Mrs. Ghidorah about it. There are definitely problems with Japanese housing, and all the various loopholes and weird old laws about what's okay and what isn't (say... insulation? central heating/air?) but houses here (and especially condominiums) are not, and never really have been investments. As mentioned above, houses here have long been considered a disposable good. There was a push, a couple prime ministers ago, to end the practice of building 20-30 year homes in favor of building homes that would stand for 100 years, but that never really seemed to go anywhere. In general, a home lasts for one generation. Young couple builds house, has kids, grows old, and, if the kids are going to take over the land, they'll probably knock it down and build a new one on the same land, rinse, repeat. Houses here depreciate like new cars, you unlock the door and you've already lost significant value because almost no one wants to live in a used house.

It's honestly hard to wrap your head around, and makes for a lot of really interesting side issues that, had I known more about home ownership here, we might never have bought a house. For one, it makes the whole process of selling much, much more laborious. Our house is just about 12 and a half years old now, which means it's fundamentally worthless. The only thing of any value is the land it's on, and even that is complicated (we live on a hillside, and when the house was built, it wasn't hooked up to municipal gas, so we have kerosene, while the new houses across from us built in the last two years all have city gas, so there's a hit to our land value right there). Weirdly, the area we live in is seeing a sort of boom in land prices, in that where we live has appreciated a whopping 1.3% over ten years. On the other hand, we have the (pretty standard) 35 year loan. The earliest we could sell and move without taking a loss would be about the time we've paid the principal down to the base value of the land, and then we'd be starting back at zero, meaning it's highly, highly unlikely we'll ever move, though we both would kind of like to.

But, then, weirdly, with this news, and the revelation of just how badly AirBnB has been for housing worldwide, it's bizarrely a great time to live in Japan. The old ideas of Tokyo as the most expensive city in the world (which were always largely bullshit) are completely wrong now. Yes, rents and housing prices have continued to rise here, like everywhere else, but you can still find places in Tokyo for $600-$800 a month (no, not palatial, literally a room, a tiny kitchen, and a bathroom, but that's not unusual here), and those same places were those same prices twenty years ago. We're not seeing the boom in speculation over houses here, and it's one of the more amazing developments, to me, in the last ten years. Vancouver, Chicago, London, New York, LA, SF, are all but unliveable now, but Japan, hell, they're giving land away. (sort of, but really)
posted by Ghidorah at 3:35 AM on April 5, 2021 [12 favorites]

A friend bought a house in Golden, CO just a few short years ago for $400,000. It's now appraised at $900,000 and going up every day. He said that people from out of the area continue to pour in, bags full of cash, ready to buy whatever comes available on the spot which means nothing stays on the market for very long unless it's a dump AND priced well above current market value.

Oddly enough he doesn't see this as any kind of bubble. Golden obviously offers things that most places can't but still, if a small house more than doubles in value in the span of 5 years you have a bubble.
posted by drstrangelove at 3:47 AM on April 5, 2021 [1 favorite]

eagles123,

There's lots of land. What we can't do is build new cities on top of that land, for reasons that come down to "I got mine". Here's San Francisco over the last few decades. See how nothing changes? Trillion dollars of wealth, lots and lots of green, no new cities. Possibly unprecedented in world history. Go check out any other major region of growth. Look at Shenzhen, yes, but look most anywhere. You can see SF NIMBY oppression from space.

Yeah, there are reasons. They are lies.
posted by effugas at 4:11 AM on April 5, 2021 [6 favorites]

effugas, I kind of thought the same thing. I live in the middle of nowhere and in a nearby village a house listed recently for $15,000 and apart from being a little dirty is actually a perfectly decent place. Alas, the town isn't San Francisco or anything approaching a desirable place to live. It's a 15 mile drive for groceries and closer to an hour to get much of anything else. Many of the houses in this place are abandoned and completely run down and a few of the other residents are into making/selling meth and are there precisely because law enforcement is seldom around. So it's huge tradeoff.
posted by drstrangelove at 5:02 AM on April 5, 2021 [2 favorites]

What can be done?
Immediately, rent control and house price controls.
Soon, land taxes to punish undeveloped land holding.
Later, community control of the housing market through Community Land Trusts and other mechanisms to permanently phase out land and property speculation and holding housing as an investment.

While not ever house needs to be owned by the community, the market should be controlled by democratic forces. Housing is too important to be a source of profit and speculation.
posted by Lord Chancellor at 6:26 AM on April 5, 2021 [8 favorites]

re again, though, age cohorts matter. A generation still exists that was able to buy into property before it shot up in price. That generation tends to much more politically organized than younger cohorts, so the political system has yet to reflect the change

This is a great point and actually has many, many 2nd and 3rd order effects that are salient both for politics and for economics.

Another thing I want to add to my earlier point about bullshit fundamentals. I haven't had a chance rtfa in full, but a big part of current fundamentals being wonky is the once in multiple generations unwinding of boomer assets that has no precedent or likelihood of happening again.

If anything, the follow on of this unwinding will be something that looks like its opposite.
posted by Reasonably Everything Happens at 7:13 AM on April 5, 2021 [1 favorite]

I have said for some time that homes purchased in addition to your primary residence should have a 100% sales tax.

And that will happen precisely never.
posted by drstrangelove at 7:17 AM on April 5, 2021

https://archive.is version
posted by craniac at 7:46 AM on April 5, 2021

prices are not justified by the fundamentals, the era of cheap money...has fundamentally changed those fundamentals

I think there are a list of 'bad things' that people like to say causes institutions to purchase lots of houses without putting too much thought behind them.

Fundamentals of the current housing market: the median credit score for a home buyer is 770 out of 850. Credit score is basically a determination of income, so this tells us the vast majority of homes are sold to high income households. Before the laws were changed in 2008, the median credit score was closer to 660. So that means that way more lower income people were able to buy houses.

Fundamental #2: This chart:
Housing permits per 1000 residents 1990-current See #1. There is no bubble.

Fundamental #3: cheap money ie: low interest rates. Do you know who mostly benefits from high interest rates? People who already have lots of money. There seems to be a supposition that if interest rates were higher, that people who already have lots of money would just sit on it and not purchase assets, but that's a giant supposition.

Main Issue: (and other people have brought this up too) the severe income disparity in the US, coupled with a serious lack of building. It sucks to hear this, but there is no bubble, the people buying houses can afford them, and if you cannot afford one, you are the wrong end of the income disparity chart.

We could change this by loosening credit standards (not tightening), building public housing, and all housing in general, and dealing with the income disparity through taxation or other methods.
posted by The_Vegetables at 7:47 AM on April 5, 2021 [4 favorites]

We got out of the California housing market nearly at the height of the last bubble, thanks in large part to posts on MeFi. I distinctly remember this video making an impression.

We're in Philadelphia now, and the value of our house has doubled from what we paid 7 years ago. Our neighbors across the street just sold after being approached by a realtor desperate for houses to sell. Another up the street is under contract after being on the market for just a few days.

This feels like another bubble taking off. I think prices are going to sky-rocket this summer once COVID eases and the job market actually recovers. I think it might be time to sell and move into a cabin in the woods somewhere.
posted by Eddie Mars at 7:47 AM on April 5, 2021

I have a friend who has been trying to buy a cabin in New Hampshire for the last four months (or really, any plot of rural land they can build a cabin on). He tell's me prices for cabins are sky rocketing as well.
posted by dyslexictraveler at 7:58 AM on April 5, 2021 [3 favorites]

Millennials can't even afford Tiny Homes now.

A nation of renters? More like a nation of homeless drifters.
posted by deadaluspark at 8:01 AM on April 5, 2021 [7 favorites]

lots and lots of green, no new cities.

Living in the area, San Francisco proper doesn't have a lot of green. I guess you could destroy Golden Gate park, but the place doesn't have a lot of spare land.

The Peninsula has green, but the solution is not to pave over the bits we've preserved and make the whole Peninsula look like the 101 corridor. It's to allow higher density in the areas we've already built up.

The outlying areas have green but those have expanded (some). But with the bridges those are hellacious commutes.
posted by mark k at 8:12 AM on April 5, 2021 [3 favorites]

If we believe housing is a human right, then just like water or schools, the government should get into the business of providing it (as a direct option at least).
posted by asra at 8:49 AM on April 5, 2021 [3 favorites]

I feel personally attacked by this topic. I just sold my house in NC for a stupid amount of money compared to what I paid for it. I sold to a corporation, for which I feel very guilty about taking the house out of the hands of potential real buyers - my buyer made me remove my washer and dryer because "they don't want to be responsible for upkeep on those for their future tenants". What kind of shitty landlord turns down something their tenants would probably kill for, that they'd be getting for free, just because they don't want to pay to fix them at some point in the future??

Annnnnyway, my profit sounds great on paper, except now I'm house shopping in NJ instead of NC and...my profit from that NC house is only going to let me make a reasonable downpayment while my monthly mortgage+taxes practically triples compared to NC. And that's if/when I can even find a house to throw my money at: nothing stays on the market for more than a day or two, everything has multiple offers way over list price, and I'm stuck living with my parents until I manage to a) find something that's still on the market but not a dump and b) convince a seller to sell to me instead of that guy over there offering 50k over asking and waiving inspection and appraisal. And I know I'm relatively lucky - I can make a downpayment, and I can absorb that increased monthly payment - but damn, it doesn't feel like it.

I'm looking here in particular for some very strong reasons, but I wish I could go somewhere else. Back to NC. Delaware. Somewhere where my relatively big profit would have actually felt like a profit. Or I wish that I had waited to move to NJ instead of doing it this year, except that based on recent history, there's never going to be a time that's any better, either - doing this next year or in five years or ten would probably mean the same exact problems. Because housing is the bubble that won't die.
posted by Hold your seahorses at 9:10 AM on April 5, 2021 [1 favorite]

effugas, I kind of thought the same thing. I live in the middle of nowhere and in a nearby village a house listed recently for $15,000 and apart from being a little dirty is actually a perfectly decent place. Alas, the town isn't San Francisco or anything approaching a desirable place to live. It's a 15 mile drive for groceries and closer to an hour to get much of anything else. Many of the houses in this place are abandoned and completely run down and a few of the other residents are into making/selling meth and are there precisely because law enforcement is seldom around. So it's huge tradeoff.

That describes a whole lot of Western Pennsylvania. You can buy a house super cheap but you're living in the middle of nowhere in a town with no open stores, no broadband access and half the other houses have giant Trump flags flying.
posted by octothorpe at 9:11 AM on April 5, 2021 [3 favorites]

We have a lot less functionally workable land to build new cities on than we would like to believe. This is part of why the market will keep going up, there's a lot less workable "stock" than people think there is.

We hardly have any "contiguous" forests on the planet, left, where the forest is unbroken by human involvement. In fact, I'm fairly sure the USA has zero contiguous forests left.

We're headlong into climate change and we spent decades making bullshit nobody actually needed to create giant trash piles and reduce the total amount of material we had to work with going into the future.

I really don't see how building new cities for all the poor people is going to jive with all the changes we need to make to functionally "save the climate." As others have pointed out, climate change will soon make large swaths of the planet virtually unlivable (cough Phoenix cough) because of the extreme heat, will make growing crops in those areas virtually impossible, and will just generally further reduce the total stock of land available to build on.

I am all for affordable housing, but I think people are vastly overestimating how much "space" there is to use out there. All the "space" I can think of people expanding into is last vestiges of green wilderness in our cities, and they're already quickly being torn down to put up more shopping centers.

In the last year our city alone has lost six square miles of trees to development. If we want a planet that's worth living on, this isn't the fucking answer.

It's like the people who claim overpopulation isn't a real problem and it's a right-wing bogeyman. No, it's a real fucking problem and if we don't address it those right wing bogeymen can and will use it to punish and control others when shit hits the fan. Not addressing real ecological problems right now is sleepwalking into ecofascism. (more people equals less housing space and thus higher housing prices.)

You think housing and water and food are scarce now, just wait until the ecofascists take over. They will absolutely use the fact that the ecosystem is broken and failing as a reason to hoarde resources and demand even more fealty to get access to those resources.
posted by deadaluspark at 9:14 AM on April 5, 2021 [7 favorites]

Each state must pass a law giving Housing Trusts first right to purchase housing in a community over any potential landlord or flipper (those who are purchasing housing as a commodity instead of a place to live). Then states must help fund these housing trusts. This will not prevent private sale of house but it will greatly depress the prices, especially as more and more housing move out of corporate hands.

Even if we increase the cost of housing, private investor housing will snatch up new units. There's plenty of housing that's gone fallow in NYC and other places, but they won't fill it at lower prices as that would depress the price of all the other housing their selling and renting. Large companies have deep enough pockets that they can buy housing and sit on it. We cannot just feed supply; we must fundamentally take housing back from these so called lords.
posted by Lord Chancellor at 9:17 AM on April 5, 2021 [3 favorites]

Side note that it's not so much pension funds, directly, as REITs and similar instruments that pension funds invest in at the recommendation of fund managers. One possible approach to at least partially fixing the problem is to push for pension funds to divest from this sort of harmful real estate speculation.
posted by eviemath at 9:17 AM on April 5, 2021 [1 favorite]

I'm a systems oriented geek, so I take the axiom "the purpose of a system is what it does" as my starting point for any really complex topic.

What is our housing system doing?

Answer: moving mountains of cash away from the poor and middle class and to the upper classes and megacorporations by moving homes from private ownership to corporate and/or wealthy individual ownership and then rental.

That, right there, is the current purpose of how we do housing.

The question then is not "what is wrong with the system" but rather "what do we want the system to do instead of what it currently does".

Because there's nothing wrong with our housing system, provided your goal is an ever shrinking number of homeowners and a transfer of wealth upward. If that's not your goal then the problem isn't that the system is broken or flawed it's that you want a different goal.

Do you want maximal homeownership? Do you want dense urban cores with minimal suburbs? Do you want lots of small homes?

Once we define what we want then the problem of developing a system to produce that is a lot more straightforward.

But if you start with the current system and try to address what you see as flaws in that system, without addressing the purpose of the system, you're going to have a bad time.

What do you want?

I'll also add that I don't think a 19th century ideology, whether you're talking about Capitalism or its mirror twin Communism, can really do much for a 21st century problem and economy. Capitalism is as obsolete as the buggy whip or coal oil lantern. Its dead, we're just seeing the galvanic twitching in its corpse.
posted by sotonohito at 9:40 AM on April 5, 2021 [24 favorites]

Now as a class warrior I'd say what I want is a system of semi-socialized housing where landlords are banned by law. No profit without work, no rent seeking parasites.

Housing non-profits where the tenants are the board maybe? A semi-Georgist type setup where land is not owned by private individuals but rather leased from the state?

As long as the proposed solution gives us housing at a reasonable rate, encourages citification and discourages suburbs, and claws back the wealth stolen by the parasite billionaire class I'll be happy. Obviously they won't be and that's kind of the problem in a nutshell isn't it?
posted by sotonohito at 9:44 AM on April 5, 2021 [9 favorites]

I'll also add that I don't think a 19th century ideology, whether you're talking about Capitalism or its mirror twin Communism, can really do much for a 21st century problem and economy.

I wish I could favorite this a million times because my god, people really want to hang on to these ideologies that literally don't speak to the situations of the modern world.

We're literally about to enter a period in history where people won't even have their labor to sell since their labor can be automated. Tell me what we're supposed to do about that, Karl Marx? How am I supposed to go on strike when humans don't have fucking jobs anymore? It feels like things have changed so much and are continuing to change so fast that these "old rules and ideas" really don't even begin to apply anymore.

We need some god damned new ideas instead of this 200 year old bullshit.
posted by deadaluspark at 9:45 AM on April 5, 2021 [14 favorites]

Woof. Right when I was hoping to have scratched together enough to take a swing at this particular ball (and being able to even clawingly reach that point), there it goes sailing off into the horizon.

Which, it was already racing ahead here in Seattle, but I was still hoping I might be able to find something.

Talked with a real-estate person (don't remember realtor or not, I know that's a contentious thing) last week, she was saying it's all "Place gets listed Wednesday/Thursday, appointments over the weekend, buyer compares bids on Monday, and it's sold by next week"
That and "No-inspection contingencies on anything (if you're lucky, sellers have an inspection to provide), figure out how much you want to bid on an appraisal gap, figure out how much above asking price you're willing to bid"...

And now all these articles are coming up cementing things a bit more. It feels like it's time to back away & hold on a bit longer hoping things mellow out, but it also feels like the 'mellowing out' has already come and gone and anybody who wasn't willing & able to jump on it in the middle of a pandemic is being left further behind.

Since I'm new to all this, is "no inspection contingencies, required appraisal gap, figure out how much you want to bid over to potentially beat all-cash offers" normal, or something to worry about?
posted by CrystalDave at 9:56 AM on April 5, 2021

My understanding of what truly constitutes a "bubble" may be limited but I suspect that even during the height of the tulip bulb craze there were people saying similar things about it not being bubble and that it was simply a situation where someone could afford tulip bulbs and others couldn't.
posted by drstrangelove at 9:57 AM on April 5, 2021 [4 favorites]

Since I'm new to all this, is "no inspection contingencies, required appraisal gap, figure out how much you want to bid over to potentially beat all-cash offers" normal, or something to worry about?

Worry about it, as seriously as you can. The skipping inspections thing is insane in Western Washington where nearly literally every house has mold problems and structural problems due to lots of rain and high humidity.
posted by deadaluspark at 10:06 AM on April 5, 2021 [8 favorites]

CrystalDave: Since I'm new to all this, is "no inspection contingencies, required appraisal gap, figure out how much you want to bid over to potentially beat all-cash offers" normal, or something to worry about?

That's been the way of Seattle real estate in hot neighborhoods for at least a few years. Do a pre-inspection, and only put in an offer if you can live with the inspection results. Bake your maximum price into an escalation clause, and don't go above it. Most importantly, be ready to walk away.

What's different now is that prices seem to be climbing to a new valence level. Is it a bubble or are we becoming San Francisco? A house near me recently sold for an obscene $500k above asking price.
posted by qxntpqbbbqxl at 10:15 AM on April 5, 2021 [3 favorites]

Since I'm new to all this, is "no inspection contingencies, required appraisal gap, figure out how much you want to bid over to potentially beat all-cash offers" normal, or something to worry about?

Depends where you want to live.

Here in Orange County, I bought my house in Dec 2019 and basically told the seller and seller's agent to go fuck themselves and gave them permission to start the legal proceedings when they tried to blow up the deal over me not removing contingencies quick enough for their liking. Going through the legal process and finding a new buyer would have taken longer than me getting my end squared away, so I called their bluff and they piped down. We ended up closing on the expected day anyway, so their "hardball" really didn't make a difference.

But, I know people trying to buy up in parts of the Bay Area who have been told by their agent that any non-all-cash offers with contingencies are a waste of time, and that the offers would only be forwarded to the sellers because the buyer's agent is legally required to do so.
posted by sideshow at 11:08 AM on April 5, 2021

Oof. In theory I should be thinking about buying a house right now — and I get reminded of this every time I’ve talked to my mom for the last year or so — but DC area real estate is beyond bonkers and getting moreso all the time. Lots of ‘went on the market, sold within a day’ stories.

That said, this has been on the market for 74 days. It’s a mile from my work, it looks gorgeous, and even though it’s $100k and 1000SF bigger that what I actually want I keep going back to look at the listing again. Presumably it’s haunted, because otherwise I can’t imagine why it hasn’t sold.
posted by nonasuch at 11:27 AM on April 5, 2021 [1 favorite]

74 days? Agree, haunted by something...

Does look pretty.

Here in N Seattle, house on my cul-de-sac went on the market for 1.05M last week. Not a great house, though does have a wicked view of the Sound. Offer pending already.
posted by Windopaene at 11:35 AM on April 5, 2021 [1 favorite]

Oh, hey! This is my neighborhood, and this article is causing a commotion right now. A little bit of backstory- and this is largely hearsay, based on the local gossip and the neighborhood's residents only facebook group. (You may remember Foster's Ridge making the news a year ago, too)

The Foster's Ridge community sits back from a main road by about a mile, and you pass a horse farm and two cattle ranches to get there. The largest traffic jam recently was caused by cattle being moved from one pasture to one across the one lane road. It's made up of about 10 different neighborhoods, all put in by the same builder, and is still expanding. 9 of the 10 neighborhoods sit on the left side of said one lane road, and then Amber Pines sits on the right. There is much drama between the sections of the community, as each neighborhood is a different price point but we all have the same HOA fees and access to amenities. (One neighborhood is gated, one has larger lots, one is built for retirees and it gated, another has lake views, etc. One section is surrounded by giant portraits of Jesus. )

The community plan originally had a place across from the road from the main entrance labeled as retail space. Then it was zoned for a school. Then it was zoned residential, and became Amber Pines. Initially, the Amber Pines homes were for sale as single family homes. They sat on the market for about 2 years before the builder got tired of holding on to so much inventory and started renting them out to people at a discount rate. These went generally to people who were waiting for their homes to finish construction in parts of the larger neighborhood. As a part of Foster's Ridge, they had access to the pool, clubhouse, etc.

Once DR Horton had pretty much every home locked in a lease... They took the community to market. Which is when what's described in the article happened. And now the community has lost its rights to the amenities, most of the leases were short term, and the houses are starting to empty again as people move into their new construction. And identical homes are being built in the new, new section of Foster's Ridge, and are slow to sell.

There are currently 89 homes for sale in Foster's Ridge- some on the market for over 150 days. Amber Pines is a great illustration of a concept, and it's disgusting it's happening- But it's a poor investment, and I'm worried about what it will look like in a year.
posted by Torosaurus at 12:13 PM on April 5, 2021 [5 favorites]

Great, it's come full circle again.

I remember reading metafilter and The Housing Bubble Blog in 2008 and 2010 and thinking I would be forever in my horrible sweatbox apartment where my demon landlord cut down the grapefruit tree we all ate off and there were no laundry facilities and the plumbing blew up on the regular.

Yesterday I planted a limon in the back yard of my house near the grapefruit tree I planted in 2013 when I bought it. The first hole I tried to dig I met solid gravel, so I moved a couple feet to the east, whereupon I dug up an enormous hunk of cement with part of a brick in it left there by the goddamn builders when they were cynically flinging up houses all over town in 1926/27. The entire back yard is a giant slag heap. I can just imagine the scene when they threw up the neighborhood. They probably burned barrels of oil for light at night so they could lay brick 24/7. When you look at it, the house looks like this tight-as-a-tick little bungalow, but a couple of years after I moved in I noticed how nothing's quite straight. The fireplace is between two windows of identical size but not centered. The hall door is flush to the wall on one side instead of centered between the two walls of the hall. And so on and so on. Because the people who built it devoted all of about a day and a half to its construction. Their carelessly asocial building practices 95 years ago have given me the idiotic tanlines I suffer with today. I had gardening gloves on as I dug hole after hole in the giant construction midden they made in my backyard just looking for enough dirt for poor little Frankie limon to have room to grow, so now I have burnt forearms and pale fishy Mickey Mouse hands.

I resent all boom building and buying current, recent, and long ago. Anyone with more than one house should have to give the larger of the two away to families struggling to live in their cars or trapped in apartments with no AC and evil landlords who cut down fruit trees. Anyone with more than two houses should go directly to prison.
posted by Don Pepino at 12:16 PM on April 5, 2021 [15 favorites]

Last week, Utah had the honor of having more licensed real estate agents than there were available houses to sell. A combination of NIMBYism, pandemic WFH influx from other states, and a very young population that is aging into home buying ages has decimated available stock. I think our house has doubled in value since we bought it a short 8 years ago, which is insane to me. Not that I am going to be able to realize this value without joining the masses looking for a home. We also are in the middle of a desert and another extreme drought season (which is becoming more and more common) so I'm not sure how adding more suburbs will help anything in the long-term. Luckily it seems like we're doing a lot of in fill and relaxing the laws with ADUs on existing parcels within the city.
posted by msbutah at 12:50 PM on April 5, 2021 [2 favorites]

That chart above showing housing starts is deceptive. It compares 1990-2007, a 17 year period that includes a construction bubble, to 2008-2018, a 10 year period that includes the Great Recession where much construction stopped entirely.
posted by sepviva at 1:01 PM on April 5, 2021 [2 favorites]

My parents relies on the rental income from 4 houses that they own. They don't make much since they are paying mortgage in all of them still. They are retired and besides a little bit of social security money this is how they sustain themselves. They came with no money or social capital to this country and gradually acquired these houses by working themselves to the bone and continue to manage the properties themselves while in their seventies.

If any one in real life told me to my face that my parents should be locked up for having x number of houses would have gotten a punch in the face.
posted by Pantalaimon at 1:17 PM on April 5, 2021 [9 favorites]

I know there are a lot of wealthy but really how many people actually have most of a million in cash ready to buy a small bungalow? Have they borrowed from the mob?

A expert on crime told me that, yes, organized crime is using real estate to launder money.

I looked at the link at the top of this thread to a small house in Toronto supposedly asking for $2.9 million - the listing claims that it's rented out for $4400/month. That is utterly ridiculous. I know that neighbourhood - it's not a good neighbourhood, pretty industrial, not near the subway or good transit- and I rent in Toronto. We pay $2500 for a larger house in a much better neigbourhood, within walking of two subway stations.

If I were investigating money laundering in Toronto, I would check out whoever supposedly owns and/or rents that house asap.
posted by jb at 1:37 PM on April 5, 2021 [3 favorites]

Pantalaimon, yes, and they'd deserve it, too, for being so thoughtless and sloppy. I meant people with multiple summerhouse mansions hogged up all for themselves, but that's not what I said, and I'm very sorry for it. Anyway, good for you for defending your parents, who sound wonderful and I bet they never in their lives would have cut down a grapefruit tree.
posted by Don Pepino at 1:46 PM on April 5, 2021 [8 favorites]

What's needed is actually developing new cities

Not to extend this into a whole derail, but this is as absurd as moving all the techbros to Wyoming to change the political climate. Geography exists. There are lots of reasons cities are where they are. Some of them may not be good reasons, but all of them have something, on some level, to do with political, social, and physical geography. And there are a lot of good reasons not to build more cities where they aren't now, reasons that go beyond some sort of latent selfishness. Water is probably the biggest one.
posted by aspersioncast at 2:40 PM on April 5, 2021 [6 favorites]

What's needed is actually developing new cities

Only if you have a particular hatred for life on Earth, and wish to destroy as much of it as possible.
posted by aramaic at 4:10 PM on April 5, 2021 [4 favorites]

It's like the people who claim overpopulation isn't a real problem and it's a right-wing bogeyman. No, it's a real fucking problem and if we don't address it those right wing bogeymen can and will use it to punish and control others when shit hits the fan. Not addressing real ecological problems right now is sleepwalking into ecofascism. (more people equals less housing space and thus higher housing prices.)

Attempting address ecological problems by taking on "overpopulation" kinda makes you indistinguishable from the right wing bogeymen/ecofascists.

It's an odd argument to make in a thread about housing, because like environmental problems, there are pretty obvious, and effective, solutions that never even come close to regulating fertility. You know, by addressing the actual practices that damage the environment. Or in the case of this thread, building more housing. Gouging out your eye because it causes you to sin, gets you points for dedication, but mostly makes you a whack job.
posted by 2N2222 at 4:42 PM on April 5, 2021 [7 favorites]

Pantalaimon You think you're going to change many minds with the internet tough guy routine?

I don't say they should be locked up, but I do say rent is morally wrong. People do what it takes to survive in late stage capitalism and we all make our own compromises. I don't claim to be pure by any stretch (I once worked for rather evil lawyers cuz my kid needed food).

But just because they're not cackling villains doesn't mean the route they chose for navigating late stage capitalism is morally right. It's the immorality forced on them by a bad system. That's the really filthy part about our economy, it coerces all of us into morally bad choices.

I **DO** say that while no one should be ashamed of how they survive in this vile system [1] neither should we buy the propaganda and agree that when all of our choices were immoral somehow by magic the one we picked became moral.

It was morally wrong of me to work for lawyers who ran a binding arbitration racket that was designed to cheat immigrant slaughterhouse employees out of their workers compensation. I did it because I needed the money and all the other choices were equally immoral.

It's morally wrong of your parents to be landlords. They did it because all the other choices were also immoral and they picked that route for survival.

And that's ok. We do what we need to in order to survive.

But it means the system is rotten because it makes all of us do immoral things, not that our path is pure.

[1] Except the rich who create and sustain it, they should be very ashamed.
posted by sotonohito at 4:53 PM on April 5, 2021 [7 favorites]

Not clear why it's worse to be a landlord than to make a profit off of stock investments. Obviously you can believe both are "morally wrong" but singling the one out doesn't make much sense to me.
posted by mark k at 5:11 PM on April 5, 2021 [4 favorites]

Why is rent morally wrong? Do you think students should not be able to rent? My neighbourhood is full of student rentals. Not everyone wants to own a house. There was a good 20 year stretch of my life when I certainly Did not want to own a house. I wasn’t interested in the bother of owning and maintaining property, or was moving around too much to make it worth my while. I was happy renting, had great landlords, and don’t regret it at all.
posted by fimbulvetr at 5:40 PM on April 5, 2021 [1 favorite]

It's morally wrong of your parents to be landlords.

It would be wrong if they were bad landlords (and there are many, many bad landlords). But simply having rent isn't a bad thing -- I am renting currently and it is far and away the best option for me. Maybe we'll own again later, but not now, not here.
posted by Dip Flash at 6:15 PM on April 5, 2021

Not clear why it's worse to be a landlord than to make a profit off of stock investments.

I don't think it's logical, but think about who, historically, has gotten to be landlords. There's a reason that people resent landlords even more than their bosses. Maybe it's the millennia of being ruled by landlords, maybe it's the way that prices for housing keep ratcheting up - and rent strikes don't seem to do anything to change the balance of power between landlords and tenants.

Even small, relatively low-income landlords - it does feel different from earning money from stocks or bank interest. Maybe it's the immediacy, the idea that you can see this person taking 30-50% of your income - or more! - for what is a necessity of a decent life. We have a lovely, responsive landlord, we quite like him personally. But I'm also very aware that every year, we pay him $30k to rent a house that he's also earning capital gains/value on, that we're helping pay down the mortgage on property that he will sell for a profit and that we'll never benefit from -- and that one of the reasons that we cannot afford to buy a house in our city (despite our slightly over median household income) is that millionaires like him (he owns a successful business as well as more than one $1mill house) can afford to pay a lot more than we can.

I'm not personally made at him, but I also know that the system which encourages him to move into landlordism as well as his successful business is also the system that keeps me from building up equity or paying into property that I could possibly rent out to support MY old age.
posted by jb at 6:54 PM on April 5, 2021 [6 favorites]

There's also an aspect of landlordism where it's "they who have will get" - someone works hard and buys rental property. But, of course, they were also someone who was lucky enough to be in a position where working hard allowed them to purchase those properties. Lots of us will work hard all our lives, but due to circumstances beyond our control - local property markets, when we started earning, access to other capital - we can never even get on that property ladder. And once you have property, that opens up opportunities to build up that property.
posted by jb at 6:58 PM on April 5, 2021 [5 favorites]

Part of all this is housing supply, but there's visibly something going on with money chasing return, across not just real estate but the untethered stocks, biotech VC, blind pools. Money is chasing some fairly dumb VC pitches because it's desperate for return.

The current problem is not housing supply versus housing demand, it's investment vehicle supply versus investment vehicle demand, with shelter for humans as collateral damage. Where "demand" means "some people have extracted so much fucking money that they have no idea what to do with it."
posted by away for regrooving at 7:36 PM on April 5, 2021 [5 favorites]

Which can lead to bubbles. I wouldn't swear to whether we're seeing a bubble in these assets, or seeing stably shifted fundamental prices in reflection of the current wealth of the rich, though it sure smells like another "too rich to lose" bubble with everybody else left holding the bag.
posted by away for regrooving at 7:41 PM on April 5, 2021 [1 favorite]

Not clear why it's worse to be a landlord than to make a profit off of stock investments.

Stock is magic money that comes from nowhere for nothing. Nobody loses the roof over their head because they can't afford the dividend payments to the owners of stocks. There are lots of things to be said about the stock market but it's a much different thing than the rental market.

Rent is inherently morally questionable because it's a demand for payment for the sheer fact of having the title to shelter that the owner doesn't need but someone else does.

Want to be free from the cold? Fuck you, pay me. Want a dry place to sleep? Fuck you, pay me. Running water and heat? Fuck you, pay me. A private place to attend to your bodily needs and hygiene? Fuck you, pay me.

Sure not all landlords are rude about it and some are even forgiving and nice people, but the threat of eviction is inherent in the lessor-lessee relationship. I can think of no moral justification for eviction as such, especially when there is, in most people's communities, basically no safety net provided by the state. If you are a landlord you are agreeing implicitly or with full consciousness to the possibility that you will enlist the sheriff to make someone, or perhaps a whole family of someones, homeless. Just because you have a title and they don't.

I, the landlord, get to demand endless and continual profit in the form of rent simply for the sheer fact of owning (and sometimes, but not always marginally maintaining) a piece of real estate. Not for creating new value, for providing in-demand goods or services. Not for some kind of innovation. Not for some feat of labor that society requires. But just because I have the title to these four walls and a roof and you, poor fool without assets, don't.

Human beings have fundamental needs --- food, water, love and shelter: a place to eat, drink, sleep, love, and shit. We should ensure that everyone can fulfill those needs no matter how much money they have. It's just plain wrong to demand someone only get their fundamental needs fulfilled if they can come up with the cash to make it happen.

The only thing that distinguishes the renter and the owner is that one holds the deed and the other has the need. Capitalism makes sinners of us all, restaurants throwing out food that's perfectly good to escape liability, fast-fashion shredding clothes to maintain market scarcity, and so on, but nobody is more complicit than the landlord, who leverages the advantage they have to be able to purchase real estate in order to extract earnings from those who can't buy and maybe never will be able to because month after month they hand over their meager earnings in rent.
posted by dis_integration at 8:16 PM on April 5, 2021 [12 favorites]

Nobody loses the roof over their head because they can't afford the dividend payments to the owners of stocks.

The stock market obfuscates the guilt, but people absolutely lose the roof over their head. It's amazing to hear this from someone going on an anti-capitalist rant but I guess that's part of the genius of the set up.

You can own Amazon and Apple stock and profit from workers driven near to suicide, own bank stock and profit from foreclosing on mortgages, but profiting from providing someone a place to live is the greatest sin of all.

I, the landlord, get to demand endless and continual profit in the form of rent simply for the sheer fact of owning (and sometimes, but not always marginally maintaining) a piece of real estate. Not for creating new value, for providing in-demand goods or services. Not for some kind of innovation. Not for some feat of labor that society requires. But just because I have the title to these four walls and a roof and you, poor fool without assets, don't.

And this differs from me putting money in my stock-based retirement fund how, exactly? The one difference I see is that I never contribute to the success of a company by owning stock--it's always separate from my labor--while that's not 100% true for landlords.

Human beings have fundamental needs --- food, water, love and shelter: a place to eat, drink, sleep, love, and shit. We should ensure that everyone can fulfill those needs no matter how much money they have. It's just plain wrong to demand someone only get their fundamental needs fulfilled if they can come up with the cash to make it happen.

Well, I pay for food, drink and plumbing. People charge me for that.

Landlords play a role almost exactly analogous to the stock market. Developers who build shelter are paid for it indirectly by the profits the landlords (and mortgage lenders, to be fair) expect long term. They bring capital to the table and assume some of the risk. I'm just not seeing the special sinfulness of landlords other than their proximity to the consumer.

Without hyperbole, I think there's probably more damage done to housing supply by homeowners who jealously restrict zoning to protect their investment than by landlords. (I say this as a homeowner who has never gotten a dime in rent.)
posted by mark k at 10:04 PM on April 5, 2021 [6 favorites]

So. I visited a friend earlier tonight, he told me that he and his wife have been shot down on six homes that they attempted to purchase, some of the six over the asking price. No dice on any of them. One they were close on but since they are going to go with a VA loan they got shut out of the bidding by people who have cash, or at least enough cash to make up the difference between what the VA will assess the home at. They have enough cash but they don't want to shove it all into a house when interest is so low. (VA traditionally has low assessments, apparently.) In any case, the house was *way* out of where they really want to live anyways, it's gorgeous, it's really nice, but it's at least 45 minutes from Austin, and more like 55 minutes.

Central Texas is just insane right now, Insane.

He is currently leasing a house, has decided to stay put for another year.

He is newly married, he and his not-so-long-ago ex-wife had a pretty nice house, they had to jump through lots of hoops to sell it -- new septic system, new this, new that, new the other. I think they got 400 grand for the house, last spring. The person who purchased the home tore off a really nice patio off the master bedroom, he tore down a really nice wooden roofed area between the house and the pool, he tore down some really nice overhang to park under, aside from the three car garage, you could easy store a boat there, and the house is in fact close to the river. All of those things he tore down, it strikes me as berserk -- it was nice nice nice. The new owner did do one thing that I'm totally in line with, maybe 10 or 15 grand in landscaping, maybe some new fencing, poison ivy taken out of a back corner of the yard. 4 months after he purchased it from my friend he sold it for 650 grand.

My friend left a quarter of a million dollars laying on the table. He tries to not think about it.

It's hard for me to think of much else.

Jesus H. Christ.

250 grand.

Cash.

~~~~~

I live in a condo about the size of my shoe, on the Colorado river, directly across from downtown. If I were to walk down to the dock and continue this from there, I would be able to see the gorgeous skyline that has changed almost completely in the past ten years, beautiful new high-rises. I could easily count, from a chair on the dock, at least five cranes, more buildings going up. Many people bemoan that Austin isn't the tiny town that it was; I am not one of those people. When I bought this condo (1993) the parking lot was filled with beaters, pickup trucks, the odd van here and there. The parking lot is now filled with luxury vehicles, aside from my 1996 Ford F150 pickup, which is mint, looks brand new, and I sure love it, more than I like your truck, for example. This place has just passed 10 times what I paid for it, here in the past six months. There is only so much land on the Colorado river.

Warren Buffett said that the safe place to put your cash, if you wish it safe yet growing, is in a fund indexed on the NYSE. Ever since I read that, I have tracked this condo -- it has always beaten that fund, some years by a considerable amount. When the rest of the US completely tanked off of the last bubble, Austin went flat but didn't sink, and in short order began to jump again. If I were to travel, or to move, I do not see myself selling this place, but rather renting it out, and even if I'm out of town or out of the country I can get it taken care of and still make a fat profit off of the rent. I have never made a better financial decision -- which was just completely luck -- I have never made a better financial decision in my life than to spend four hours in a room at a title company signing my name.

~~~~~

Five days ago, Elon Musk sent out this tweet;
Elon Musk sends tweet urging people to move to Austin for Tesla jobs

I'd bet that tweet put at least 20 grand into my wallet. One tweet. Tesla is here, Oracle is here, god only knows who else is coming.

I welcome them.
posted by dancestoblue at 10:11 PM on April 5, 2021 [2 favorites]

dancestoblue,

As someone else mentioned it's not much of an "investment" if you really can't realize the gains without having to go out and compete in that same market for another place to live. Furthermore, a friend in finance did the numbers and found that a standard index fund equaled Seattle's insane real estate gains over a 30-year period.
posted by drstrangelove at 3:43 AM on April 6, 2021 [4 favorites]

Landlordism is a relic of a feudal past (people are literally referred to as "lords" and "ladies" for crying out loud), where people with title were allowed to profit on the fact that people without title need that same housing/land. It's the same iteration of people getting wealth from what they own, not what they do, and therefore, the business is innately immoral, a theft upon theft.

Even Adam Smith agrees:

"As soon as the land of any country has all become private property...the landlords…love to reap where they have never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come…to have an additional price fixed upon them.”

Landlordism is a larger problem, and no individual shares the full responsibility for living in a rotten system, but we should try to resist it. Being a landlord is wrong, but being a property manager is a type of labor, where your performance of work to maintain other folk's dwellings is how you make your living.

Now, there are some landlords that are so large and powerful, they hire separate waged labor to manage the property, at which point, they're being paid literally because they have a deed and others do not.
posted by Lord Chancellor at 4:41 AM on April 6, 2021 [14 favorites]

Lord Chancellor, the Eponysterical
posted by effugas at 5:04 AM on April 6, 2021 [3 favorites]

(I appreciate the Adam Smith cite, thanks!)
posted by effugas at 5:04 AM on April 6, 2021

There are a lot of people out their who do not want to buy a house or condo to live in or are in a situation (like students, people who move around for work, etc.) where owning a house is not compatible with their current life situation. Therefore, there is a need for landlords. A system were people cannot buy a house even when they would really prefer to own their own place certainly has problems, but there will always be a need for rental accommodation.

Unless you want to completely socialize housing and have it provided by the government, landlords are a necessity. And I am not convinced that government could ever provide decent, adequate, or reasonable housing as history has certainly demonstrated otherwise. Nor would it be free. Even current community housing has a monthly rent due, even if it is geared to income.

All this ridiculous ranting against landlords and rental accommodation is complete bullshit. There are no workable alternatives that would adequately meet all needs. And I say this as a 50-year old anti-capitalist leftist.
posted by fimbulvetr at 6:41 AM on April 6, 2021 [1 favorite]

it's not much of an "investment" if you really can't realize the gains without having to go out and compete in that same market for another place to live.
-- drstrangelove

I think people have subverted the meaning of investing activities. These financial instruments are designed to reduce risk, not increase them. People hear the word "hedge funds" and they think gambling, when in reality these instrument were designed to reduce risk and provide more certainty (eg, a farmer hedging the price of his inputs - fuel, and his outputs - grain - so he can stop worrying about short term fluctuations in his costs and revenues and just focus on producing a good crop).

You buy a house to lock in the cost of a roof over your head - sure you might win, or you might lose, relative to putting your money in stocks, but to a conservative investor "winning" should never be the real intent to begin with.
posted by xdvesper at 6:48 AM on April 6, 2021 [1 favorite]

There are no workable alternatives that would adequately meet all needs. And I say this as a 50-year old anti-capitalist leftist.
-- fimbulvetr

Really? What would your response be the Singaporean solution I briefly described above - where over 80% of the population live in units sold by the government, and where home ownership rates are over 91%? The government treats homes as public infrastructure - like water, electrical and road infrastructure - and builds them to spec, controls the quality and price, and controls who gets them - needs based rather than simply selling them to the highest bidder, similar to a robust public health system that sets the benchmark and then coexists besides private healthcare.
posted by xdvesper at 6:54 AM on April 6, 2021 [5 favorites]

And I am not convinced that government could ever provide decent, adequate, or reasonable housing as history has certainly demonstrated otherwise. Nor would it be free.

In the Netherlands, 75% of all rental properties are "social housing" subsidized in part or in whole by the state. It's a nice place to live! There are also really fascinating historical forms of social housing (some great, some bad) in the Soviet Union and the former Soviet states.

People forget that the housing projects of mid-20th century America were originally a utopian project, a dream to provide housing for working and lower middle class Americans, giving them a chance to build their own American dream. If you take the racist history of American housing out of the equation a lot changes right away (in my city property values fall off a cliff if you cross certain magical boundaries, race is the only explanation).

In Cuba, housing is a right, *and* 90% of the population owns their dwelling. Rent essentially does not exist for citizens, who have historically been able to purchase their own dwellings from the state on a payment plan.

China also offers millions and millions of public housing units throughout its massive metropolises. Are they luxurious? No, but people would pay thousands a month for the equivalent apartments in Flushing or San Francisco.

We can do a lot of things! Nothing is "free" that requires the labor of others, and none of these solutions are perfect (there is no utopia!) but there's no way that the absurd housing market of the United States is the only way that things can be done. Another world is possible!
posted by dis_integration at 7:12 AM on April 6, 2021 [11 favorites]

You are proposing a situation where to live in place, you MUST own it. I, and quite a few of my friends, went through a long period of our lives where we DID NOT want to own property. Once again, what about students? What about a professor on sabbatical for a year in another country? What about all the people I know working in the foreign services or other jobs that require an itinerant lifestyle? What about elderly people that no longer want the bother of maintaining property? Should they be forced to buy a property ever time them move or just to put a roof over their head?

There is a false assumption that buying and owning property is in the best interest and desirable by everyone. This is patently untrue. Therefore, there is a need for rental accommodation. Who provides it, landlords or a socialised system, is up for debate. The logical conclusion to rent being morally wrong is that is individual property ownership is also morally wrong should also be abolished.

I don't disagree that people should be forced into renting if that is not what they want, but neither should people be forced to purchase and maintain property. All needs should be met.
posted by fimbulvetr at 7:15 AM on April 6, 2021

I admit I am only personally familiar with the social housing system in Canada.
posted by fimbulvetr at 7:16 AM on April 6, 2021

Fimbulbetr - fair point that I didn't address rental directly but my first order approximation is that it's analogous to healthcare - with the government setting a baseline standard (free healthcare at robust enough standard for 90 percent of the population who want to use it) it naturally constrains how much the private sector can extract out of their patients - they have to compete with free after all.

Where the government is providing good quality housing for those who want to own, I think it will automatically benefit the subset of people looking to rent as well.
posted by xdvesper at 7:57 AM on April 6, 2021 [4 favorites]

For young people and people that are moving around, yes, non-owned housing is useful. That rented out housing should not be owned by landlords, but by local community trusts (subsidized by federal governments, perhaps), where rooms or flats are rented out at set rates with protections. The purpose of those rental units will not be to generate profit (only enough money is needed from rent to finance upkeep and labor), but to provide housing for community members.

This system has existed across the world, though perhaps not very effectively in the US, because poor people and non-White people need to be punished for existing and using resources. But there's nothing to say a housing project can't be for all members of society, from poor to comfortable. You don't need landlords to provide housing (landlords don't actually build the housing, and management can be done by a property manager working for the housing/rental trust). The ideal is the removal of extractable profit from housing.

Additionally, we should make buying and selling housing through a community-owned market possible. It should be like a car dealership where I can sell my house to the trust and then they can hold onto it until someone else wants to buy a house in stock. That way, we can remove the need for finding a very specific buyer and seller between people, and the community-owned housing market can set fair prices to prevent speculation and "investment" properties.

Another world is possible! In some cases, it already exists, just not in front of us.
posted by Lord Chancellor at 7:59 AM on April 6, 2021 [8 favorites]

I, and quite a few of my friends, went through a long period of our lives where we DID NOT want to own property. Once again, what about students? What about a professor on sabbatical for a year in another country? What about all the people I know working in the foreign services or other jobs that require an itinerant lifestyle? What about elderly people that no longer want the bother of maintaining property? Should they be forced to buy a property ever time them move or just to put a roof over their head?

Student housing co-ops and other co-operative housing solutions for people in transient positions are also a well-established and functional solution already in the US.
posted by eviemath at 8:05 AM on April 6, 2021 [7 favorites]

Yeah, they had student co-ops where I went to university. I rented from a nice old couple because I did not want to deal with the co-ops. Those were not great places to live, and there was way too much politics involved in the co-op for me. A specific situation, not a general comment on all co-op housing.

I am in favour of socially-owned housing. I am not in favour of an absolute abolition of renting out property. There is not enough socially-owned housing to meet needs. In an ideal world there would be, but we currently have to live with the system we have. There used to be quite a few houses and duplexes in my neighbourhood that were owned by the city and rented out as geared-to-income, but the city sold off all those a few years ago as a cost-cutting measure. They were almost all snapped up by slumlords. Regulation, rent control, and other measures are required to ensure the rental system is not exploitive.

As I mentioned earlier, I live in a neighbourhood with a lot of student housing. Some of the buildings are owned by exploitive slumlords who buy up everything they can, only do the bare minimum to maintain the buildings, and treat their tenants terribly. What they do is awful for the neighbourhood, for the tenants, and society. Other buildings are purpose-built by numbered corporations and maintained by property management companies. These are large buildings with as many people crammed into them as is legally possible. While the structures are well maintained they don't care about long-term impacts on the surrounding neighbourhood. I'm sure they are much preferable to live in than the slumlord buildings, but they are certainly exploitive. Ban or regulate away.

Other buildings are owned by people who live in the neighbourhood and have a vested interest in ensuring the buildings are well maintained and the tenants are happy. I have a few neighbours who bought the house next to them years ago to keep them out of the hands of the slumlords. The family behind us has been renting for the past year as their house is being built. A family renting down the road from us is on rotation in Ottawa for a couple years before being posted overseas again. Many of the old people in our neighbourhood who have been here for 50+ years rent out rooms or the basement in their house. We also have quite a few single neighbours who do the same, as they see no point in knocking around a house that is too big for their needs when they could rent out part of it, and it helps cover the mortgage.

Yes, adequate housing is a human right. How to get there is another question. Absolutism will not solve all housing problems. There is room for landlords in a fair and well-regulated system.
posted by fimbulvetr at 8:37 AM on April 6, 2021 [2 favorites]

I have multiple friends who are competing Realtors now in a very-hot Dallas market. They've begun to get VERY CREATIVE with their offers on behalf of their clients (imgur link of negotiation list that includes things like "I will pay for your next year's Netflix subscription and take you out for all-you-can-eat tacos, location of your choosing").

I'm now getting free magazines mailed to me with Realtors' faces printed on the covers and pleas to let them sell my house whenever I'm ready printed directly underneath. It's some weird stuff going on out there, y'all...

That said, I plan to die in the house I bought in 2015 -- hopefully decades in the future and after it's paid for, universe willing! But it's startling to see my home's value increase by more than 50% in less than 6 years. When we bought our house, the sellers told us they'd throw in all their own furniture and artwork (minus their baby grand piano) for $200 just to avoid moving it all to a smaller retirement condo in Austin. This is my first encounter with people rich enough to find moving 20-year-old solid cherry wood furniture an "inconvenience," and kind enough to basically give it away to strangers for pennies on the dollar.

Who knows, maybe someday I'll be in the same situation and can pay that kindness forward.
posted by Unicorn on the cob at 8:52 AM on April 6, 2021 [3 favorites]

I mean there are plenty of issues with Ricardo, but there's a reason "rent-seeking" is considered a negative activity.
posted by aspersioncast at 9:39 AM on April 6, 2021 [4 favorites]

Speaking personally I'd much rather not own a house.

I have no problem with rental from a non-profit housing co-op or what have you. Or a government agency. Or whatever.

I don't have anything intrinsically against homeownership as a concept in general, but I can't say I'm really in favor either. I could definitely get along in a semi-Georgist type setup where no one actually owns land.

The immorality is not from paying rent, but from landlords growing wealthy by virtue of simply owning property.

Rent to a non-profit charging cost (including maintenance, property management, etc) + some small percentage for a buffer in bad years or disaster is totally cool in my view of the world. Clearly property needs upkeep, and buildings require labor to construct. I'm not even slightly opposed to that being paid for.

My sole objection when it comes to rent is to people becoming wealthy simply due to owning property.

mark k I can't speak for anyone else, but I was singling out landlords here because that was the topic under discussion.

I absolutely think that stock market parasitism is immoral. In fact I'd argue that for the really big players it's much worse than mere landlordism. If that were the topic I wouldn't be bringing up landlords. But since the topic was real estate landlords are relevant.
posted by sotonohito at 11:09 AM on April 6, 2021 [6 favorites]

I agree. Rent is not the problem. Rent to generate profit is the problem.
posted by Lord Chancellor at 11:30 AM on April 6, 2021 [4 favorites]

Now, there are some landlords that are so large and powerful, they hire separate waged labor to manage the property, at which point, they're being paid literally because they have a deed and others do not.

Knowing a fair bit about medieval and early modern land management -- this is just getting back to tradition. The medieval lords didn't do any maintenance on the land they rented out; instead, part of your rent was to come and do more unpaid labour on the land that they were farming. Imagine that you fixed your own plumbing and then had to go fix your landlord's too - and rake the leaves while you were there.

Even Adam Smith agrees:

"As soon as the land of any country has all become private property...the landlords…love to reap where they have never sowed, and demand a rent even for its natural produce. The wood of the forest, the grass of the field, and all the natural fruits of the earth, which, when land was in common, cost the labourer only the trouble of gathering them, come…to have an additional price fixed upon them.”

This is getting at a bigger, but different issue: the movement (aka enclosure) to convert traditionally common lands into private lands. It's not about housing, but livelihood and who can own the land (or the oceans or the skies): those who live on them, or those who are granted title to them (by power of the sword or money or both).

I'm feeling mildly surprised that Smith was critical of this transition - I really should know more about what he said about the enclosure process.
posted by jb at 1:00 PM on April 6, 2021 [1 favorite]

I am not convinced that government could ever provide decent, adequate, or reasonable housing as history has certainly demonstrated otherwise.

History has shown that government housing sucks when it is only being used by poor people who lack political power - and gets even worse when those people are also marginalized minorities.

Where social housing is used by middle class people who complain to their representatives - as in Singapore or the Netherlands - it's perfectly decent, adequate, and reasonable.

This is true for all social services: where the rich and middle class use public transit - or schools or hospitals or whatever - they are much better than places where only the poor use these services. It has nothing to do with the provider and everything to do with the power of the users to complain and be listened to.
posted by jb at 1:03 PM on April 6, 2021 [9 favorites]

Other great Adam Smith quotes on so-called landlords:

"The landlord demands a rent even for unimproved land, and the supposed interest or profit upon the expense of improvement is generally an addition to this original rent. Those improvements, besides, are not always made by the stock of the landlord, but sometimes by that of the tenant. When the lease comes to be renewed, however, the landlord commonly demands the same augmentation of rent as if they had been all made by his own. "

"The rent of the land, therefore, considered as the price paid for the use of the land, is naturally a monopoly price. It is not at all proportioned to what the landlord may have laid out upon the improvement of the land, or to what he can afford to take; but to what the farmer can afford to give. "

"RENT, considered as the price paid for the use of land, is naturally the highest which the tenant can afford to pay in the actual circumstances. In adjusting the lease, the landlord endeavours to leave him no greater share of the produce than what is sufficient to keep up the stock"

Dude did not like landlords as he thought they were the worst part of the feudalistic order: someone who doesn't produce anything but still wants everyone to pay them due to their position in society.

"[Kelp] was never augmented by human industry. The landlord, however, whose estate is bounded by a kelp shore of this kind, demands a rent for it"

posted by Lord Chancellor at 1:42 PM on April 6, 2021 [10 favorites]

It would be kind of fun to see how many Adam Smith quotes you can post attributed to "Karl Marx" without anybody batting an eye. Which makes sense, in some basic ways they are closer to each other than either is to, say, Milton Friedman.
posted by away for regrooving at 8:57 PM on April 6, 2021 [6 favorites]

You can probably do the same with Karl Marx quotes attributed to Smith -- as the joke goes, Marx liked capitalism much more and Smith much less than pop culture assume.

Where social housing is used by middle class people who complain to their representatives - as in Singapore or the Netherlands - it's perfectly decent, adequate, and reasonable.

For the middle class people, anyway. Some of the reporting on COVID-19 hotspots in Singapore says that 20% of the people there are noncitizens living in terrible housing, and a plurality of those are essential workers. (Follow on reporting says that the pandemic disaster has led to more government and some popular attempts to improve and spread out worker housing, so there's hope, but a fifth of the population. US is about 7% noncitizen afaict.)
posted by clew at 12:50 PM on April 7, 2021 [3 favorites]

Another thing to consider in respect to why renting can be a "good" thing is the number of people with the sheer lack of knowledge they need to properly keep up their house.

(Gonna try to avoid making this a rant about how my roommate is a dumb motherfucker and I don't understand how dumb motherfuckers succeed in life so easily.)

My roommate makes way more money than I do and constantly talks about wanting to buy this house we're renting out. The problem is that despite me likely never having enough money to own a home of my own, only I am aware of basic upkeep that needs to be done on the home. This guy is constantly letting stuff that will literally wreck the house and cost thousands to fix slide because he's oblivious. Yet he wants to buy this house.

Recently, since there are two bathrooms and he had neglected to buy toilet paper for a year, I stopped stocking his bathroom, and only stocked a small amount in mine at a time, because it's not my job to make sure he can wipe his ass. Well, instead of taking the time to go, you know, buy toilet paper, he spent over a month flushing non-flushable baby-wipes and paper towels. I eventually left him a note that he was certainly going to break something in the septic system, if nothing else almost definitely the pump. It still took weeks before he showed up with toilet paper. He has never taken part in winterizing the house, seeming to think the pipes will be fine, or just being oblivious to the whole need to do it at all. When the wheels broke in our sliding shower door he was convinced they just needed more WD-40. In three years he has never once mowed the yard but he's paying someone to put in raised beds and strawberries because he likes strawberries? His ability to do maintenance seems out of alignment with his desire to use this house as a place for his hobbies.

Personal opinion? Someone like him isn't cut out to own a house and honestly needs a property manager checking on stuff because he's too oblivious to pay attention. Honestly, there's a lot of people out there like that who either can't or won't take the time to really learn how to manage maintenance. Frankly, those people are poor stewards of such properties and probably shouldn't be left in charge to own them. While they might think it's invasive to have a property manager to come inspect things sometimes... well, I've known enough people personally who have fucked up properties because they're just oblivious I think some people really need it.

An even more extreme example might be my neighbor, who is an old man with a serious drinking problem and while he has money, refuses to spend it on fixing his house or his property, which is basically just a big trash heap. He doesn't have garbage service and burns his garbage (illegal, but the cops and firefighters won't do anything about it), at night he walks down to the beach and unmoors boats so he can "find them floating free", claim them, and then drag them back to his property to build more junk piles out of. That property is an extreme fire hazard, just like his parents property before him. Small world vibes, but this guys parents were also my parents neighbors in a different city, all the way back in my hometown. They burned garbage illegally as well, and they also hoarded and created fire hazards. Their house literally burned down at one point due to it (and their new one is just as much of a fire hazard). To this day, the even older man (also with a drinking problem) still thinks the rats that infest their house are "cute," instead of a "public health hazard."

There's a lot a lot of things that are majorly unhealthy for cities but to me one of the major ones is people not knowing or caring enough to know how to take care of their properties, which leads to things like mold and structural problems, pests that spread to other homes, high likelihood of fires which can spread to other homes, and serious damage to sewage and septic systems. These are all things which effect far more than just the negligent homeowners.

Like honestly, some basic "you don't put fats down the drain" kind of stuff really needs to be taught and enforced in more serious ways. Because cities can't keep affording to dislodge fatbergs and other knock-on effects of people not properly managing their homes.

So yes, rent-seeking is bad, renting maybe not so much because some people are just incapable of knowing when maintenance is needed. "Property Managers" should be a weird class of people who do the job because they love to ensure that people are safely housed, not because they want to make money. Because while I am deeply annoyed with my roommate and neighbor, they deserve to be safely housed, but so do the people around them (and I don't feel safely housed with my neighbors firey deathtrap of a house being quite capable of spreading its fire to mine). So in effect, I'm saying we might have to work on this whole "rights of private property owners" thing because it seems like a lot of private property owners just don't give a fuck and need some sort of guiding hand so they're not harming others with their negligence.

Because, having grown up with my current neighbors parents as neighbors, I have literally lived my whole life breathing the toxic smoke of families burning their garbage and not caring. They didn't even stop when my sister was diagnosed with asthma. It's their private property, and so they can do what they want with it, and the city services seem to agree, because they won't do anything to stop them from continuing to burn plastic and other horrible toxic crap next to my home daily. (The goes for both parts of their family, in both cities, cities won't do shit about them.)

Nah, I'm over that and there needs to be some god damned "nanny state" regulation of this shit.

Why? Because these people have proven they need a fucking nanny.
posted by deadaluspark at 8:44 AM on April 8, 2021 [1 favorite]

Huh. It would not have occurred to me prior to reading this thread that anyone would assume that the alternative to landlords extracting rent was universal home ownership in a capitalist sense with inviolable private property rights; but given the totalizing nature of capitalism that makes it hard for folks to envision alternatives, that makes sense in retrospect.
posted by eviemath at 9:14 AM on April 8, 2021 [13 favorites]

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