Probably the number one thing keeping America down right now is economic inequality. Homes should be a place to live, not a way for those that got a head start to suffocate those that didn't....
Probably the number one thing keeping America down right now is economic inequality. Homes should be a place to live, not a way for those that got a head start to suffocate those that didn't. Investing in homes as a way to enrich yourself should be discouraged by increasing taxes on each additional home owned.
I was in a rental unit for 2 years. They raised the rent $60/month between the two leases. Before the second lease ran out we decided to buy a house. Ended up with a Mortgage about $100 less than...
I was in a rental unit for 2 years. They raised the rent $60/month between the two leases.
Before the second lease ran out we decided to buy a house. Ended up with a Mortgage about $100 less than what our rent was (now well down below that thanks to being able to refinance with super low rates), meanwhile the rental company was willing to reward our rental history with another $100/month rate hike had we stayed and renewed.
Oh also during those 2 years we had 52 maintenance requests, often for the same issue multiple times, and they traumatized our cats one of the times they came by that we were not home.
Best phrases I've heard regarding landlordism: "If you rent a house for $1400 a month for 10 years, you've bought your landlord most of a house." "The bank decided I can't afford $1400 a month for...
Best phrases I've heard regarding landlordism:
"If you rent a house for $1400 a month for 10 years, you've bought your landlord most of a house."
"The bank decided I can't afford $1400 a month for a mortgage, so I end up paying $1800 in rent instead."
Minimum down payments, points, and mortgage insurance are all bull which enables wealthier individuals to buy houses exponentially cheaper. If the house is collateral, nothing more than a quick income check should be needed.
Landlordship prevents renters from building equity, and drives up housing costs because homebuyers have to compete against the wealthier landlords.
You know, i used to pay a lot of attention to these numbers and feel in a rush to buy a house because it felt like my rent was being "wasted" instead of working towards ownership. Now that I can...
You know, i used to pay a lot of attention to these numbers and feel in a rush to buy a house because it felt like my rent was being "wasted" instead of working towards ownership.
Now that I can actually afford to buy a house I'm not actually as certain that it's a good move. There are much better ways for me to invest the money.
Sure, i would love to have a place i can truly call my own, be able to replace some things without calling my landlady first etc. But it comes with a bunch of responsibilities i don't actually want to deal with. And short of buying the entire building, i would still be at the mercy of the copropriety / coop that shares the whole building. It also comes with monthly and yearly costs and taxes which, while nowhere near rent costs, still do add up.
I opted to just rent another year. I'm paying a bit extra in order not to have to deal with all the above, and be able to invest in more flexible and directly beneficial things.
This doesn't apply to every city mind you. I live in a european capital - and i also don't have a car, i only cycle, which limits my option to city centers. But it's worth considering that home ownership isn't always the best option.
The point is that renters do not build equity, and that is by virtue of a system that exalts the wealthy and punishes the less wealthy by stripping them of equity they're paying to build and...
The point is that renters do not build equity, and that is by virtue of a system that exalts the wealthy and punishes the less wealthy by stripping them of equity they're paying to build and giving it to the already wealthy.
I'm in the USA, and I can't speak for how the EU is, but my counterpoint: I'm contemplating a move because between house appreciation and my payments, I can get out $50k more than I put as down...
I'm in the USA, and I can't speak for how the EU is, but my counterpoint: I'm contemplating a move because between house appreciation and my payments, I can get out $50k more than I put as down payment, inside of 4 years. That will enable me to move to a nicer house, or a better location, or a cheaper location.
If you buy a move-in ready house, keep it maintained, and live there more than 3-5 years, owning is 100% better than renting.
Hoises in my area rent for $2100+. Mortgage+taxes is about $1900.
5 years in, you can cash out the principle you paid on the home. If you rent for 5 years, you get your first month's down payment back, if you are lucky.
The problem is that unless you're already well off, you can't invest that money in something better. It goes straight to rent instead, which isn't an investment of any kind. Homeownership allows...
There are much better ways for me to invest the money.
The problem is that unless you're already well off, you can't invest that money in something better. It goes straight to rent instead, which isn't an investment of any kind.
Homeownership allows people to turn that expensive rent payment into an actual investment, even if it's not the most lucrative.
But as far as I can tell in most countries, unless you're willing to take a ridiculous rate (and make it a really bad investment), you do need to be somewhat well off in order to make a decent...
But as far as I can tell in most countries, unless you're willing to take a ridiculous rate (and make it a really bad investment), you do need to be somewhat well off in order to make a decent downpayment (20% or so). And by the time you get there, there are better places to put that downpayment money imo.
I was able to buy my house with 3% down. There were 0% down options, but they would have incurred a higher interest rate. I pay about $85/mo in PMI. This still works out to be a considerably...
I was able to buy my house with 3% down. There were 0% down options, but they would have incurred a higher interest rate. I pay about $85/mo in PMI. This still works out to be a considerably better investment than just flushing my money down the rent toilet. Really any scenario that allows you to build some equity is going to be a better long-term deal than rent.
I don't know what interest rates are like in your country, but in the US they are pretty low even with a small down payment like mine. This is of course assuming you have good credit.
In the area where I live (near San Francisco), to buy a house with 3% down would leave me with a mortgage payment twice the cost to rent an equivalent property, and that's not talking about taxes,...
In the area where I live (near San Francisco), to buy a house with 3% down would leave me with a mortgage payment twice the cost to rent an equivalent property, and that's not talking about taxes, maintenance, anything. Even though I would like to buy at some point, it's not worth an extra $2500-$3000 a month to do so.
The bay area seems like kind of an outlier. Home there are insanely overvalued. That $2500-$3000 extra you would be paying on your mortgage is more than twice my total monthly mortgage payment.
The bay area seems like kind of an outlier. Home there are insanely overvalued. That $2500-$3000 extra you would be paying on your mortgage is more than twice my total monthly mortgage payment.
The situation described by @MimicSquid is also the case in NYC and Boston, as well as parts of Seattle. That's the extent of places in the US I've lived or tried to buy property in, it could very...
The situation described by @MimicSquid is also the case in NYC and Boston, as well as parts of Seattle. That's the extent of places in the US I've lived or tried to buy property in, it could very likely be more. We calculated out if we buy a house or apartment with a 15% down payment our monthly costs would be $2400-3000 a month. And that's not even big places! We don't plan on having kids so we look at 2 bedroom, or at most 3 bedrooms.
All those places seem to have something in common with San Francisco; they are highly desirable metropolitan areas with very strong culture and history. The pricing in them is obscene. I've never...
All those places seem to have something in common with San Francisco; they are highly desirable metropolitan areas with very strong culture and history. The pricing in them is obscene. I've never even thought about living in any of these places because affordability is out of the question.
I live somewhere that has very little of that, and there are still a plethora of high tech jobs for me to choose from without an obnoxious commute. So I don't think the issue is with housing prices themselves, or with these areas being the only ones with good employment. The problem is that people just really, really want to live in these particular places so badly that they drive the prices up to an absurd degree.
It seems like you’re setting up competition between would-be home owners and renters. After all, rental property is usually occupied, and not by the landlords. If you wanted to buy it, the people...
It seems like you’re setting up competition between would-be home owners and renters. After all, rental property is usually occupied, and not by the landlords. If you wanted to buy it, the people renting it would have to be kicked out.
Everyone needs a place to live, some prefer to rent for good reason, and renters deserve to have a place to live too.
Or, you know, nobody rents anymore. There is no good reason to rent other than the ownership process being made exceedingly complicated. You simplify home/apartment transfer, only permit people to...
Or, you know, nobody rents anymore. There is no good reason to rent other than the ownership process being made exceedingly complicated.
You simplify home/apartment transfer, only permit people to own one home, no ownership for profit.
Multi-family, condo, and apartment buildings can change to co-operative ownership.
A house or a condo is a very large investment. For many people, it’s their largest investment. If you have a mortgage, it’s also a leveraged investment. Even if the hassle of buying and selling...
A house or a condo is a very large investment. For many people, it’s their largest investment. If you have a mortgage, it’s also a leveraged investment. Even if the hassle of buying and selling were streamlined so it were as easy as buying and selling stock, this isn’t something to be done casually because you want to live somewhere for a year. You would take a risk of losing money if you owned the place for a short time and the market price went down, or maybe you just paid too much and nobody else is willing to pay that when you have to leave.
Consider all the people who decided they didn’t want to live in San Francisco anymore after the pandemic started, and how screwed they would be if they had to find someone to sell their place to in a hurry when they left.
So is a car loan. Make houses like car loans. You get one for 0 down, no credit check needed, just payment for first month. You don't get stuck in the hole. Worst case you walk away with nothing,...
A house or a condo is a very large investment. For many people, it’s their largest investment. If you have a mortgage, it’s also a leveraged investment.
So is a car loan. Make houses like car loans. You get one for 0 down, no credit check needed, just payment for first month. You don't get stuck in the hole. Worst case you walk away with nothing, same as renting.
You do this, there is no risk of loss. You pay monthly on your loan, and even in worst case you can still get more back than renting.
The monthly payments aren’t going to be the same, though. When buying a car, monthly payments on the loan are higher than for a lease of the same length because at the end you get a car, while for...
The monthly payments aren’t going to be the same, though. When buying a car, monthly payments on the loan are higher than for a lease of the same length because at the end you get a car, while for a lease you end up with nothing. If the payments were the same then nobody would lease.
The loss from buying a car using a loan and then walking away is the additional money you paid over leasing.
(That’s an interesting question though. It took me a while to figure out the catch.)
But on the other hand, we previously discussed some companies that do something like what you want for housing with some sort of rent-to-own deal. I assume the companies make money at it somehow or they wouldn’t do it, but maybe it’s a good deal for some buyers?
There are lots of other reasons to rent a home. If I take a 6 month contract in a city across the country, I don't want to have to buy a home for that. If I want to go on vacation and have a...
There are lots of other reasons to rent a home. If I take a 6 month contract in a city across the country, I don't want to have to buy a home for that. If I want to go on vacation and have a kitchen because my spouse's health condition means we can't eat food prepared by other people, I don't want to have to buy a home. If I want to buy a home but want to try out different neighborhoods for a few months at a time, I don't want to have to first buy a different home. That would be hugely inconvenient and unrealistic.
Abolishing rent in the economic sense doesn't mean personal homeownership is the only model for housing. There could be various models coexisting, like public housing 'rented' at cost of...
Abolishing rent in the economic sense doesn't mean personal homeownership is the only model for housing. There could be various models coexisting, like public housing 'rented' at cost of maintenance. The problem isn't with the concept of not owning your home after all, the problem is with landlords being able to buy the right to enrich themselves from the labor of others in perpetuity.
I don't think the rent vs buy dichotomy is the issue here. The price of houses has also increased about 2x faster than household incomes (price to income ratio was ~2 in 2000; now it's ~4). It can...
I don't think the rent vs buy dichotomy is the issue here. The price of houses has also increased about 2x faster than household incomes (price to income ratio was ~2 in 2000; now it's ~4).
It can be better to rent than buy; the usual rule of thumb is to look at the price-to-rent ratio; if it's over 15, it's better to rent. If it's below 15, it's better to buy. And it is currently above 15 in many areas in the US and abroad. That isn't factoring in the mobility advantage for renters.
It's more that housing in general has risen quite a bit over the last decades.
That's true, but at the same time the price of my mortgage isn't going to arbitrarily increase from year to year once I actually own the house (obviously property taxes and homeowners insurance...
That's true, but at the same time the price of my mortgage isn't going to arbitrarily increase from year to year once I actually own the house (obviously property taxes and homeowners insurance plays a part but we'll consider those separate.)
Why? If you're renting (be it apartment or house) the property taxes and insurance generally increase each year and that cost is passed onto the renter as would be expected.
(obviously property taxes and homeowners insurance plays a part but we'll consider those separate.)
Why? If you're renting (be it apartment or house) the property taxes and insurance generally increase each year and that cost is passed onto the renter as would be expected.
My spouse and I hit this issue, too. After a few years our rent went up some reasonable amount. The second-to-last year we were there, they increased the rent 33%! We spent the next 6 months...
My spouse and I hit this issue, too. After a few years our rent went up some reasonable amount. The second-to-last year we were there, they increased the rent 33%! We spent the next 6 months looking for a house and found one where our mortgage would be ~50% of our rent. (Of course, we had been saving for years for a huge down payment, so it's not a totally fair comparison.) We refinanced last year so now it's even lower. Before the 33% increase, though, it didn't really make sense to buy. We were actually getting a better deal renting as @stu2b50 mentions below.
My husband and I made the move to buy a house when the apartment that we were living in would be raising our rent over 20% (and we were already paying through the nose for it). We got the house...
My husband and I made the move to buy a house when the apartment that we were living in would be raising our rent over 20% (and we were already paying through the nose for it).
We got the house lined up right as our lease ended, but needed an extra month for closing. So, we re-signed our lease with the apartment as month-to-month, and then I gave notice that we would be leaving at the end of that month. The property manager literally told me “you can’t do that”. I told him I absolutely could, and he fished through my paperwork and then swore when he found a page was “missing”. Apparently their usual policy was to give month-to-month renters a form to sign that says that they must give three months’ notice before moving out. They never gave me that page (and I wouldn’t have signed it anyway if they had), but it really highlighted how scummy the management company that ran the place was. I have no doubt other people just signed it without paying it much mind.
So glad to be done with that shit. So sad that so many other people are stuck with shit like that.
You probably already know this, but comparing a rental payment directly to a mortgage payment isn’t quite right because a home owner is on the hook for other expenses like repairs, insurance, and...
You probably already know this, but comparing a rental payment directly to a mortgage payment isn’t quite right because a home owner is on the hook for other expenses like repairs, insurance, and property tax.
Could this be a signal that it's time for America to move from mostly single family houses to multi level apts? Pricing is a function of supply and demand so the options are either to build more...
Could this be a signal that it's time for America to move from mostly single family houses to multi level apts? Pricing is a function of supply and demand so the options are either to build more houses or reduce the population/stick more people in each house.
America has chosen to build more housing but moving outward but that has hit its limit since car transport does not scale. The only option left is to build up.
I don't think it makes sense to talk about America as a whole for this issue. If I recall correctly, 50% of Americans are in urban/suburban areas and 50% are rural. We have plenty of space to...
I don't think it makes sense to talk about America as a whole for this issue. If I recall correctly, 50% of Americans are in urban/suburban areas and 50% are rural. We have plenty of space to spread out in the rural areas.
Also, renting doesn't preclude renting houses. My spouse and I rented a house for 8 years before buying our current house.
According to the Census Bureau, 80% of Americans live in urban areas these days. There's plenty of housing in rural areas, but there aren't jobs and no one is investing in rural areas like they...
According to the Census Bureau, 80% of Americans live in urban areas these days. There's plenty of housing in rural areas, but there aren't jobs and no one is investing in rural areas like they are in urban ones.
Rural areas are draining out and moving to cities because thats where the jobs are moving. The problem is there are only so many people you can fit close to the city when laws block medium density...
Rural areas are draining out and moving to cities because thats where the jobs are moving. The problem is there are only so many people you can fit close to the city when laws block medium density buildings.
Sounds like we just need to work at creating more jobs in remote areas. If only there was a way many people could work remotely. Maybe from their homes. And they could live in a less-dense area....
Sounds like we just need to work at creating more jobs in remote areas.
If only there was a way many people could work remotely. Maybe from their homes. And they could live in a less-dense area. And more economic activity could spread out.
All those dying rural coal towns? Run some fiber and turn them into solar-powered tech villages.
I’d probably go for improving transportation too. You could add conventional fast railroad lines radiating outside of major cities connecting to small rural towns, allowing them to become...
I’d probably go for improving transportation too. You could add conventional fast railroad lines radiating outside of major cities connecting to small rural towns, allowing them to become connected commuter towns.
We might have plenty of space in rural areas, but as I stated in another comment a while ago... "in reality the demand for sprawl not only consumes land on its own, but causes continual...
We can do both. Eliminate the giant, sprawling single-family culdesac of doom suburbs. Replace with semi-dense villages. 0.25 or less acres per property, some apartments/condos close to center of...
We can do both.
Eliminate the giant, sprawling single-family culdesac of doom suburbs.
Replace with semi-dense villages. 0.25 or less acres per property, some apartments/condos close to center of town with shops and public transport.
We don't all need to collapse into giant mega-cities, we just need to make well-deaigned new omes that emphasize making more forests. Dense villages with forests between them and rail connecting them. Give people enough land to start cultivating their own food, maybe raise some chickens.
I'd wager we would save energy in doing so too. It takes a lot of energy to support cramming so many people in urban areas.
It's a good idea, and if put into practice very well could work, I'd love to live in a community like this. That said, despite some saying the housing crisis is indicating that supply is low, for...
It's a good idea, and if put into practice very well could work, I'd love to live in a community like this. That said, despite some saying the housing crisis is indicating that supply is low, for rental units there's a significant number of vacant units, https://www.census.gov/housing/hvs/data/q420ind.html. According to table 3, 2020 Q4 had a 26.2% (±2.0%) vacancy rate for 1 and 2 room rentals. I don't mean to make a case against your ideas, but I do see a lot of opportunity for reuse as compared to new developments. I also think it would be easier to take government action through zoning and regulations to change our approach to current housing than to create all new housing. I also question the size of these villages, how big could they get? How many villages would we need to build? Would this contribute to more vacant housing as people move to new construction? I like this idea but I've a lot of questions. Do you know of any resources to read more about it?
Yes, in my opinion. The issue is a strange hold on the supply of housing by outrageously restrictive zoning in much of America. Things are getting better, though. YIMBYISM has started to become...
Yes, in my opinion. The issue is a strange hold on the supply of housing by outrageously restrictive zoning in much of America.
Things are getting better, though. YIMBYISM has started to become much more mainstream (whereas home owners cleverly aligned them with "evil capitalist developers" prior, poisoning the association). The passage of ADUs in California, for instance, or the removal of single family zoning in Sacremento and similar pushes in other cities like Berkeley.
Things like rent control are never going to work - they've literally failed everywhere they've been implemented. If there literally isn't enough housing for everyone in an area, that is a problem that can only be solved if nothing else on a mathematical basis by having more housing.
Rent control works, it's just that rent control isn't anywhere near enough when we've only been drip fed new housing over the past half century, let alone new high density housing or new...
Rent control works, it's just that rent control isn't anywhere near enough when we've only been drip fed new housing over the past half century, let alone new high density housing or new affordable housing. At least where I live, developers almost exclusively build luxury housing, despite there being numerous laws about how new development must include affordable housing. High density housing is fought tooth and nail against by property owners, as is affordable housing.
What does rent control actually solve? It's looking at the effects without looking at the source. The source of high prices is constrained supply; if you just lower prices, that doesn't solve the...
What does rent control actually solve? It's looking at the effects without looking at the source. The source of high prices is constrained supply; if you just lower prices, that doesn't solve the fact that in almost every urban area of the US, there cannot be enough housing for everyone by law.
If you have 1000 people and 100 homes and 400 apartments, even if you rent control the 400 apartments, that cannot solve the issue that 500 people literally cannot possibly have a place to live.
You swap it from "wealthy people get to live in the apartments" to "first-come-first-serve (or whatever mechanism you choose for selection) get to live in the apartments", but that is a bandaid made of bark and grass.
Supporting development doesn't mean you can't impose things like, say, vacancies taxes to discourage the (vastly overstated) problem of foreign developers building empty, overpriced apartments, but fundamentally you need to build more homes, and the first step is making it legal.
Rent control puts a damper on exploitative housing cost increases on people who can't afford it, prevents renters' displacement and allows people to live where they've built their networks and...
Rent control puts a damper on exploitative housing cost increases on people who can't afford it, prevents renters' displacement and allows people to live where they've built their networks and family roots. It isn't perfect, and I'd be in favor of whatever policy has the same effects even if it isn't the particular implementations of rent control that exist in the US. If rent control is an imperfect bandaid over the problems present in housing in the US, I'll take it.
On the whole, I think housing in the US is a market failure, and the US policy to make real estate an attractive investment asset plays into that. I think there are much, much larger problems plaguing housing in the US than rent control.
I see rent control as being similar to the ACA: it doesn't even begin to address the real issue plaguing healthcare/housing in the US, it did manage to cut the rate at which health insurance premiums/rent increase, but that rate is still positive and there are millions of uninsured/unhoused people. However, I'll take the ACA over the healthcare market sans-ACA in the same way I'll take rent control over the housing market sans-rent control.
The US also has insane laws about parking in most cities. Rules like for every person in an apt building, there must be 1.5 parking spaces available which completely kills cheap housing with no...
The US also has insane laws about parking in most cities. Rules like for every person in an apt building, there must be 1.5 parking spaces available which completely kills cheap housing with no parking when its not needed if you are in a dense area.
Increasing peoples buying power explodes demand. There is an issue in Australia right now where interest rates are low so more people can afford to buy and it has shot prices through the roof with...
Increasing peoples buying power explodes demand. There is an issue in Australia right now where interest rates are low so more people can afford to buy and it has shot prices through the roof with increased demand.
You can try to warp the market but the only real solution is more supply.
There are more empty homes in the USA than homeless. Demand for housing should be consistent with wages. If housing demand spikes when wages do, that just means there was inadequate housing and...
There are more empty homes in the USA than homeless.
Demand for housing should be consistent with wages. If housing demand spikes when wages do, that just means there was inadequate housing and people couldn't do better. This means wages were entirely too low to start with.
Nobody should be homeless. If that means taking houses from people who have multiple, builsing more, or giving them away, so be it.
Other than extreme cases like San Francisco, it does not look like homelessness really is about housing affordability. Where I live in South Australia, I don't think there is ever a time where you...
Other than extreme cases like San Francisco, it does not look like homelessness really is about housing affordability. Where I live in South Australia, I don't think there is ever a time where you have literally no choice but to be homeless. I have known people who have had to go through the welfare system, and as poor as the system is, you won't end up homeless. Or at the very least, you won't end up homeless for more than a few weeks. And yet the city is filled with homeless people. But if you look at them, almost all homeless people hanging around are very unstable. They will scream at walls or pick fights with random people on the street.
These people are less in need of money and more in need of services to care for their mental health and drug addictions. Dropping them in some random investment property in the suburbs won't solve their problems and likely the house will only end up destroyed/condemned.
IMO the real solution to homelessness is an unlimited homeless shelter policy. Meaning that as soon as demand for shelters exceeds the supply, the government must build more capacity. And then couple that with making it illegal to sleep on the streets. Effectively moving all homeless people in to shelters where they can be given better care for medical and mental health issues as well as making drug usage difficult/monitoring their recovery.
I very much concur and have arrived at the conclusion that homelessness is not due to a lack of a home per se but due to a confluence of many issues: uncontrolled mental illness, antisocial...
I very much concur and have arrived at the conclusion that homelessness is not due to a lack of a home per se but due to a confluence of many issues: uncontrolled mental illness, antisocial attitudes, severely underdeveloped or impaired social skills, lack of employable skills, and lack of social capital. I learned this from spending some time hanging out with some homeless folks to give them some company and dinner on holidays. A few were normal functioning adults, but the rest were... clearly not normal. Some could not maintain coherent conversations because they couldn't 'turn take' or read cues well. Others were extremely emotionally volatile and would just 'flip' with barely a warning. I remember one suddenly broke out in the middle of a conversation circle to sprint with a knife at an interloping homeless guy (whom the homeless group had exiled) who was starting to lurk around at the perimeter. Some of these guys I can see reintegrating into society with extensive help; others I can't see reintegrating and functioning in normal society. Granted, I've spent relatively little time with them so I'm not a good judge.
I think that most functional adults get impacted by housing affordability in that they become housing insecure where they lose their place and end up in limbo living with family or a friend or in a hotel/motel until they get back on their feet or they have to move somewhere else to find different opportunities. But homeless people don't have that kind of social capital to draw upon because they're estranged from family and/or they have no friends willing to offer support. I imagine that for someone to end up on the street, they must have really exhausted all other options — and that's indicative that they have far larger problems than not being able to simply afford housing.
So far, I think that homeless people should be given one of two options:
If they can take of themselves, receive housing subsidies and social assistance until they can get back on their feet.
Appreciate the anecdote, it certainly matches what I have felt would be the case and I agree with the rest. Normal, housed, and sane people can certainly end up in less than ideal situations when...
Appreciate the anecdote, it certainly matches what I have felt would be the case and I agree with the rest. Normal, housed, and sane people can certainly end up in less than ideal situations when they are still not homeless. Shuffling around between rental properties or living in places which are not the nicest experience like share houses.
IMO the government should be doing something but I don't think rent control, or taking peoples unused property to give to people for free will help particularly much. What I think would work is if the government funded or at least subsidized high density, non luxury apts buildings and then rented them out at market rate with fair terms and not kicking people out every year to get the best deal. Trying to prevent people from collecting the market rate for their properties is unlikely to be productive in the long term but pumping extra supply into the market will naturally lower prices and get more people in to houses.
I also feel like maybe we need laws about minimum rental contracts because from what I can see, the number one problem with renting is having to move so frequently. So perhaps some laws that help people get one place for longer will help.
I also think we seriously need to get unstable people out of the streets. I'm a fit male and I have felt unsafe and harassed while walking. I can't imagine how much worse it would be for people who don't feel that they are an equal or stronger level than these people. The city doesn't feel like a safe place for woman and children. I 100% believe the stats that the majority of woman have been harassed on a regular basis when I myself experience it regularly without being a specific target.
Probably the number one thing keeping America down right now is economic inequality. Homes should be a place to live, not a way for those that got a head start to suffocate those that didn't. Investing in homes as a way to enrich yourself should be discouraged by increasing taxes on each additional home owned.
I was in a rental unit for 2 years. They raised the rent $60/month between the two leases.
Before the second lease ran out we decided to buy a house. Ended up with a Mortgage about $100 less than what our rent was (now well down below that thanks to being able to refinance with super low rates), meanwhile the rental company was willing to reward our rental history with another $100/month rate hike had we stayed and renewed.
Oh also during those 2 years we had 52 maintenance requests, often for the same issue multiple times, and they traumatized our cats one of the times they came by that we were not home.
I don't miss renting.
Best phrases I've heard regarding landlordism:
"If you rent a house for $1400 a month for 10 years, you've bought your landlord most of a house."
"The bank decided I can't afford $1400 a month for a mortgage, so I end up paying $1800 in rent instead."
Minimum down payments, points, and mortgage insurance are all bull which enables wealthier individuals to buy houses exponentially cheaper. If the house is collateral, nothing more than a quick income check should be needed.
Landlordship prevents renters from building equity, and drives up housing costs because homebuyers have to compete against the wealthier landlords.
You know, i used to pay a lot of attention to these numbers and feel in a rush to buy a house because it felt like my rent was being "wasted" instead of working towards ownership.
Now that I can actually afford to buy a house I'm not actually as certain that it's a good move. There are much better ways for me to invest the money.
Sure, i would love to have a place i can truly call my own, be able to replace some things without calling my landlady first etc. But it comes with a bunch of responsibilities i don't actually want to deal with. And short of buying the entire building, i would still be at the mercy of the copropriety / coop that shares the whole building. It also comes with monthly and yearly costs and taxes which, while nowhere near rent costs, still do add up.
I opted to just rent another year. I'm paying a bit extra in order not to have to deal with all the above, and be able to invest in more flexible and directly beneficial things.
This doesn't apply to every city mind you. I live in a european capital - and i also don't have a car, i only cycle, which limits my option to city centers. But it's worth considering that home ownership isn't always the best option.
The point is that renters do not build equity, and that is by virtue of a system that exalts the wealthy and punishes the less wealthy by stripping them of equity they're paying to build and giving it to the already wealthy.
The idea and ideal of personal housing as an investment is a broken idea that contributes a lot to inequality, I wish we could get rid of it.
I'm in the USA, and I can't speak for how the EU is, but my counterpoint: I'm contemplating a move because between house appreciation and my payments, I can get out $50k more than I put as down payment, inside of 4 years. That will enable me to move to a nicer house, or a better location, or a cheaper location.
If you buy a move-in ready house, keep it maintained, and live there more than 3-5 years, owning is 100% better than renting.
Hoises in my area rent for $2100+. Mortgage+taxes is about $1900.
5 years in, you can cash out the principle you paid on the home. If you rent for 5 years, you get your first month's down payment back, if you are lucky.
The problem is that unless you're already well off, you can't invest that money in something better. It goes straight to rent instead, which isn't an investment of any kind.
Homeownership allows people to turn that expensive rent payment into an actual investment, even if it's not the most lucrative.
But as far as I can tell in most countries, unless you're willing to take a ridiculous rate (and make it a really bad investment), you do need to be somewhat well off in order to make a decent downpayment (20% or so). And by the time you get there, there are better places to put that downpayment money imo.
I was able to buy my house with 3% down. There were 0% down options, but they would have incurred a higher interest rate. I pay about $85/mo in PMI. This still works out to be a considerably better investment than just flushing my money down the rent toilet. Really any scenario that allows you to build some equity is going to be a better long-term deal than rent.
I don't know what interest rates are like in your country, but in the US they are pretty low even with a small down payment like mine. This is of course assuming you have good credit.
In the area where I live (near San Francisco), to buy a house with 3% down would leave me with a mortgage payment twice the cost to rent an equivalent property, and that's not talking about taxes, maintenance, anything. Even though I would like to buy at some point, it's not worth an extra $2500-$3000 a month to do so.
The bay area seems like kind of an outlier. Home there are insanely overvalued. That $2500-$3000 extra you would be paying on your mortgage is more than twice my total monthly mortgage payment.
The situation described by @MimicSquid is also the case in NYC and Boston, as well as parts of Seattle. That's the extent of places in the US I've lived or tried to buy property in, it could very likely be more. We calculated out if we buy a house or apartment with a 15% down payment our monthly costs would be $2400-3000 a month. And that's not even big places! We don't plan on having kids so we look at 2 bedroom, or at most 3 bedrooms.
All those places seem to have something in common with San Francisco; they are highly desirable metropolitan areas with very strong culture and history. The pricing in them is obscene. I've never even thought about living in any of these places because affordability is out of the question.
I live somewhere that has very little of that, and there are still a plethora of high tech jobs for me to choose from without an obnoxious commute. So I don't think the issue is with housing prices themselves, or with these areas being the only ones with good employment. The problem is that people just really, really want to live in these particular places so badly that they drive the prices up to an absurd degree.
Absolutely. I just wanted to provide a counterexample of a place where the math of home ownership was more complex.
It seems like you’re setting up competition between would-be home owners and renters. After all, rental property is usually occupied, and not by the landlords. If you wanted to buy it, the people renting it would have to be kicked out.
Everyone needs a place to live, some prefer to rent for good reason, and renters deserve to have a place to live too.
Or, you know, nobody rents anymore. There is no good reason to rent other than the ownership process being made exceedingly complicated.
You simplify home/apartment transfer, only permit people to own one home, no ownership for profit.
Multi-family, condo, and apartment buildings can change to co-operative ownership.
A house or a condo is a very large investment. For many people, it’s their largest investment. If you have a mortgage, it’s also a leveraged investment. Even if the hassle of buying and selling were streamlined so it were as easy as buying and selling stock, this isn’t something to be done casually because you want to live somewhere for a year. You would take a risk of losing money if you owned the place for a short time and the market price went down, or maybe you just paid too much and nobody else is willing to pay that when you have to leave.
Consider all the people who decided they didn’t want to live in San Francisco anymore after the pandemic started, and how screwed they would be if they had to find someone to sell their place to in a hurry when they left.
So is a car loan. Make houses like car loans. You get one for 0 down, no credit check needed, just payment for first month. You don't get stuck in the hole. Worst case you walk away with nothing, same as renting.
You do this, there is no risk of loss. You pay monthly on your loan, and even in worst case you can still get more back than renting.
The monthly payments aren’t going to be the same, though. When buying a car, monthly payments on the loan are higher than for a lease of the same length because at the end you get a car, while for a lease you end up with nothing. If the payments were the same then nobody would lease.
The loss from buying a car using a loan and then walking away is the additional money you paid over leasing.
(That’s an interesting question though. It took me a while to figure out the catch.)
But on the other hand, we previously discussed some companies that do something like what you want for housing with some sort of rent-to-own deal. I assume the companies make money at it somehow or they wouldn’t do it, but maybe it’s a good deal for some buyers?
As a side note, there's a reason why we call people who expect to get paid for nothing "rent-seekers".
There are lots of other reasons to rent a home. If I take a 6 month contract in a city across the country, I don't want to have to buy a home for that. If I want to go on vacation and have a kitchen because my spouse's health condition means we can't eat food prepared by other people, I don't want to have to buy a home. If I want to buy a home but want to try out different neighborhoods for a few months at a time, I don't want to have to first buy a different home. That would be hugely inconvenient and unrealistic.
Abolishing rent in the economic sense doesn't mean personal homeownership is the only model for housing. There could be various models coexisting, like public housing 'rented' at cost of maintenance. The problem isn't with the concept of not owning your home after all, the problem is with landlords being able to buy the right to enrich themselves from the labor of others in perpetuity.
I don't think the rent vs buy dichotomy is the issue here. The price of houses has also increased about 2x faster than household incomes (price to income ratio was ~2 in 2000; now it's ~4).
It can be better to rent than buy; the usual rule of thumb is to look at the price-to-rent ratio; if it's over 15, it's better to rent. If it's below 15, it's better to buy. And it is currently above 15 in many areas in the US and abroad. That isn't factoring in the mobility advantage for renters.
It's more that housing in general has risen quite a bit over the last decades.
That's true, but at the same time the price of my mortgage isn't going to arbitrarily increase from year to year once I actually own the house (obviously property taxes and homeowners insurance plays a part but we'll consider those separate.)
Why? If you're renting (be it apartment or house) the property taxes and insurance generally increase each year and that cost is passed onto the renter as would be expected.
My spouse and I hit this issue, too. After a few years our rent went up some reasonable amount. The second-to-last year we were there, they increased the rent 33%! We spent the next 6 months looking for a house and found one where our mortgage would be ~50% of our rent. (Of course, we had been saving for years for a huge down payment, so it's not a totally fair comparison.) We refinanced last year so now it's even lower. Before the 33% increase, though, it didn't really make sense to buy. We were actually getting a better deal renting as @stu2b50 mentions below.
My husband and I made the move to buy a house when the apartment that we were living in would be raising our rent over 20% (and we were already paying through the nose for it).
We got the house lined up right as our lease ended, but needed an extra month for closing. So, we re-signed our lease with the apartment as month-to-month, and then I gave notice that we would be leaving at the end of that month. The property manager literally told me “you can’t do that”. I told him I absolutely could, and he fished through my paperwork and then swore when he found a page was “missing”. Apparently their usual policy was to give month-to-month renters a form to sign that says that they must give three months’ notice before moving out. They never gave me that page (and I wouldn’t have signed it anyway if they had), but it really highlighted how scummy the management company that ran the place was. I have no doubt other people just signed it without paying it much mind.
So glad to be done with that shit. So sad that so many other people are stuck with shit like that.
You probably already know this, but comparing a rental payment directly to a mortgage payment isn’t quite right because a home owner is on the hook for other expenses like repairs, insurance, and property tax.
Could this be a signal that it's time for America to move from mostly single family houses to multi level apts? Pricing is a function of supply and demand so the options are either to build more houses or reduce the population/stick more people in each house.
America has chosen to build more housing but moving outward but that has hit its limit since car transport does not scale. The only option left is to build up.
I don't think it makes sense to talk about America as a whole for this issue. If I recall correctly, 50% of Americans are in urban/suburban areas and 50% are rural. We have plenty of space to spread out in the rural areas.
Also, renting doesn't preclude renting houses. My spouse and I rented a house for 8 years before buying our current house.
According to the Census Bureau, 80% of Americans live in urban areas these days. There's plenty of housing in rural areas, but there aren't jobs and no one is investing in rural areas like they are in urban ones.
Ah, OK, my data is out of date! Sorry about that!
Rural areas are draining out and moving to cities because thats where the jobs are moving. The problem is there are only so many people you can fit close to the city when laws block medium density buildings.
Sounds like we just need to work at creating more jobs in remote areas.
If only there was a way many people could work remotely. Maybe from their homes. And they could live in a less-dense area. And more economic activity could spread out.
All those dying rural coal towns? Run some fiber and turn them into solar-powered tech villages.
I’d probably go for improving transportation too. You could add conventional fast railroad lines radiating outside of major cities connecting to small rural towns, allowing them to become connected commuter towns.
We might have plenty of space in rural areas, but as I stated in another comment a while ago... "in reality the demand for sprawl not only consumes land on its own, but causes continual destruction of environments in an unsustainable fashion." We can not afford to continue the suburban sprawl into rural areas, especially if we are to combat the climate crisis in any meaningful way.
We can do both.
Eliminate the giant, sprawling single-family culdesac of doom suburbs.
Replace with semi-dense villages. 0.25 or less acres per property, some apartments/condos close to center of town with shops and public transport.
We don't all need to collapse into giant mega-cities, we just need to make well-deaigned new omes that emphasize making more forests. Dense villages with forests between them and rail connecting them. Give people enough land to start cultivating their own food, maybe raise some chickens.
I'd wager we would save energy in doing so too. It takes a lot of energy to support cramming so many people in urban areas.
It's a good idea, and if put into practice very well could work, I'd love to live in a community like this. That said, despite some saying the housing crisis is indicating that supply is low, for rental units there's a significant number of vacant units, https://www.census.gov/housing/hvs/data/q420ind.html. According to table 3, 2020 Q4 had a 26.2% (±2.0%) vacancy rate for 1 and 2 room rentals. I don't mean to make a case against your ideas, but I do see a lot of opportunity for reuse as compared to new developments. I also think it would be easier to take government action through zoning and regulations to change our approach to current housing than to create all new housing. I also question the size of these villages, how big could they get? How many villages would we need to build? Would this contribute to more vacant housing as people move to new construction? I like this idea but I've a lot of questions. Do you know of any resources to read more about it?
Yes, in my opinion. The issue is a strange hold on the supply of housing by outrageously restrictive zoning in much of America.
Things are getting better, though. YIMBYISM has started to become much more mainstream (whereas home owners cleverly aligned them with "evil capitalist developers" prior, poisoning the association). The passage of ADUs in California, for instance, or the removal of single family zoning in Sacremento and similar pushes in other cities like Berkeley.
Things like rent control are never going to work - they've literally failed everywhere they've been implemented. If there literally isn't enough housing for everyone in an area, that is a problem that can only be solved if nothing else on a mathematical basis by having more housing.
Rent control works, it's just that rent control isn't anywhere near enough when we've only been drip fed new housing over the past half century, let alone new high density housing or new affordable housing. At least where I live, developers almost exclusively build luxury housing, despite there being numerous laws about how new development must include affordable housing. High density housing is fought tooth and nail against by property owners, as is affordable housing.
What does rent control actually solve? It's looking at the effects without looking at the source. The source of high prices is constrained supply; if you just lower prices, that doesn't solve the fact that in almost every urban area of the US, there cannot be enough housing for everyone by law.
If you have 1000 people and 100 homes and 400 apartments, even if you rent control the 400 apartments, that cannot solve the issue that 500 people literally cannot possibly have a place to live.
You swap it from "wealthy people get to live in the apartments" to "first-come-first-serve (or whatever mechanism you choose for selection) get to live in the apartments", but that is a bandaid made of bark and grass.
Supporting development doesn't mean you can't impose things like, say, vacancies taxes to discourage the (vastly overstated) problem of foreign developers building empty, overpriced apartments, but fundamentally you need to build more homes, and the first step is making it legal.
Rent control puts a damper on exploitative housing cost increases on people who can't afford it, prevents renters' displacement and allows people to live where they've built their networks and family roots. It isn't perfect, and I'd be in favor of whatever policy has the same effects even if it isn't the particular implementations of rent control that exist in the US. If rent control is an imperfect bandaid over the problems present in housing in the US, I'll take it.
On the whole, I think housing in the US is a market failure, and the US policy to make real estate an attractive investment asset plays into that. I think there are much, much larger problems plaguing housing in the US than rent control.
I see rent control as being similar to the ACA: it doesn't even begin to address the real issue plaguing healthcare/housing in the US, it did manage to cut the rate at which health insurance premiums/rent increase, but that rate is still positive and there are millions of uninsured/unhoused people. However, I'll take the ACA over the healthcare market sans-ACA in the same way I'll take rent control over the housing market sans-rent control.
The US also has insane laws about parking in most cities. Rules like for every person in an apt building, there must be 1.5 parking spaces available which completely kills cheap housing with no parking when its not needed if you are in a dense area.
I think the real answer is increasing wages and rent control.
Home prices will always go up faster if buyers have to compete with landlords.
Increasing peoples buying power explodes demand. There is an issue in Australia right now where interest rates are low so more people can afford to buy and it has shot prices through the roof with increased demand.
You can try to warp the market but the only real solution is more supply.
There are more empty homes in the USA than homeless.
Demand for housing should be consistent with wages. If housing demand spikes when wages do, that just means there was inadequate housing and people couldn't do better. This means wages were entirely too low to start with.
Nobody should be homeless. If that means taking houses from people who have multiple, builsing more, or giving them away, so be it.
Other than extreme cases like San Francisco, it does not look like homelessness really is about housing affordability. Where I live in South Australia, I don't think there is ever a time where you have literally no choice but to be homeless. I have known people who have had to go through the welfare system, and as poor as the system is, you won't end up homeless. Or at the very least, you won't end up homeless for more than a few weeks. And yet the city is filled with homeless people. But if you look at them, almost all homeless people hanging around are very unstable. They will scream at walls or pick fights with random people on the street.
These people are less in need of money and more in need of services to care for their mental health and drug addictions. Dropping them in some random investment property in the suburbs won't solve their problems and likely the house will only end up destroyed/condemned.
IMO the real solution to homelessness is an unlimited homeless shelter policy. Meaning that as soon as demand for shelters exceeds the supply, the government must build more capacity. And then couple that with making it illegal to sleep on the streets. Effectively moving all homeless people in to shelters where they can be given better care for medical and mental health issues as well as making drug usage difficult/monitoring their recovery.
I very much concur and have arrived at the conclusion that homelessness is not due to a lack of a home per se but due to a confluence of many issues: uncontrolled mental illness, antisocial attitudes, severely underdeveloped or impaired social skills, lack of employable skills, and lack of social capital. I learned this from spending some time hanging out with some homeless folks to give them some company and dinner on holidays. A few were normal functioning adults, but the rest were... clearly not normal. Some could not maintain coherent conversations because they couldn't 'turn take' or read cues well. Others were extremely emotionally volatile and would just 'flip' with barely a warning. I remember one suddenly broke out in the middle of a conversation circle to sprint with a knife at an interloping homeless guy (whom the homeless group had exiled) who was starting to lurk around at the perimeter. Some of these guys I can see reintegrating into society with extensive help; others I can't see reintegrating and functioning in normal society. Granted, I've spent relatively little time with them so I'm not a good judge.
I think that most functional adults get impacted by housing affordability in that they become housing insecure where they lose their place and end up in limbo living with family or a friend or in a hotel/motel until they get back on their feet or they have to move somewhere else to find different opportunities. But homeless people don't have that kind of social capital to draw upon because they're estranged from family and/or they have no friends willing to offer support. I imagine that for someone to end up on the street, they must have really exhausted all other options — and that's indicative that they have far larger problems than not being able to simply afford housing.
So far, I think that homeless people should be given one of two options:
But leaving them on the streets is cruel.
Appreciate the anecdote, it certainly matches what I have felt would be the case and I agree with the rest. Normal, housed, and sane people can certainly end up in less than ideal situations when they are still not homeless. Shuffling around between rental properties or living in places which are not the nicest experience like share houses.
IMO the government should be doing something but I don't think rent control, or taking peoples unused property to give to people for free will help particularly much. What I think would work is if the government funded or at least subsidized high density, non luxury apts buildings and then rented them out at market rate with fair terms and not kicking people out every year to get the best deal. Trying to prevent people from collecting the market rate for their properties is unlikely to be productive in the long term but pumping extra supply into the market will naturally lower prices and get more people in to houses.
I also feel like maybe we need laws about minimum rental contracts because from what I can see, the number one problem with renting is having to move so frequently. So perhaps some laws that help people get one place for longer will help.
I also think we seriously need to get unstable people out of the streets. I'm a fit male and I have felt unsafe and harassed while walking. I can't imagine how much worse it would be for people who don't feel that they are an equal or stronger level than these people. The city doesn't feel like a safe place for woman and children. I 100% believe the stats that the majority of woman have been harassed on a regular basis when I myself experience it regularly without being a specific target.