The common citizen of this country has experienced nothing but take take take for far too long. I agree, this and other efforts of a similar vein are overdue.
The common citizen of this country has experienced nothing but take take take for far too long. I agree, this and other efforts of a similar vein are overdue.
Rent control is one of those topics where the majority of experts that study it conclude one thing but people want the opposite. Whatever. Here's why unionized tenants sucks. There's no good...
Rent control is one of those topics where the majority of experts that study it conclude one thing but people want the opposite. Whatever.
Here's why unionized tenants sucks. There's no good equalizing factor. If the union at Big Company pushes for unrealistic demands, Big Company fails and the union loses overall. So both sides are incentivized to come to a sustainable, and fair, equilibrium. If tenants unionize and withhold rent, the landlord goes bankrupt but the tenants continue living there because the state is not heartless enough to evict them. This article gives an example, sort of:
We had a two and a half year campaign now where we actually organized the site, 400 units. Got the private landlord to pull out. The Housing Authority took over full ownership of the site
There's no balancing factor there and what ends up happening will be a system that's inefficient yet works for tenants (who wants to pay rent when they could.. not pay rent?). Taxpayers will end up subsidizing the artificially reduced rent for tenants because the spenders (politicians) are too far removed from the payers (citizens) yet also stand to benefit from a voting bloc.
Similar to how shitty police officers are protected by their union because unions derive power through membership and solidarity, tenant unions will also protect shitty tenants. Again, shitty members is not an issue when there's a balancing factor, but there is none here.
Seems that that situation would in turn create a more direct incentive for the government to solve the actual issue by increasing housing supply. Rather than the current equally unsustainable...
Seems that that situation would in turn create a more direct incentive for the government to solve the actual issue by increasing housing supply. Rather than the current equally unsustainable situation where the burden of the system's failure is falling disproportionately on the lower end of the income scale.
I don't think more housing would really solve the issue. Rent is high in popular areas (usually big cities) because everone wants to live there. If you increase available housing, the rent drops,...
I don't think more housing would really solve the issue. Rent is high in popular areas (usually big cities) because everone wants to live there. If you increase available housing, the rent drops, so more people can afford to live there and drive up rents again. There is no equilibrium because there are millions upon millions waiting in line. This cycle continues until the city is eventually completely plastered with houses, making the whole place unlivable because the impervious surface kills the microclimate with heat waves and flooding. Now everyone wants to live in another densely-but-not-too-densely populate area. Rinse and repeat. And if we ever want to win against climate change, building hundreds of millions of new homes is impossible.
In my opinion, the issue is private property ownership. Popular land is a very scarce resource and it should not be subject to market forces. Housing should be rented to cover the costs of housing, not to increase profits for investors. One such solution that I really like is the model where everyone who lives in a house partially owns that house, and when they move out, they lose it. Here in Germany, this keeps rents very low even in high-rent cities. Together with city-owned houses that are also rented at cost but managed by the city should drop rents dramatically.
Of course, this is a pipe dream and will probably never happen on large scales, but I don't see any real reason why this shouldn't work.
Air BNB is essentially just another manifestation of private property ownership being the basic issue. If you own a house for profit, Air BNB is a great way to increase your rent per square meter...
Air BNB is essentially just another manifestation of private property ownership being the basic issue. If you own a house for profit, Air BNB is a great way to increase your rent per square meter per time. Remove the ability to profit (excessively) from owning a house, and that issue is gone.
In existing homes. I don't know about other countries, but the average space per person has been doubled in my country in the last 50 years or so. And I'm not saying no housing should be...
In existing homes. I don't know about other countries, but the average space per person has been doubled in my country in the last 50 years or so.
And I'm not saying no housing should be constructed. I'm saying building new houses in popular places is a losing battle, because popularity moves and houses don't.
There are already many reasons for the government to improve housing availability. (The notion of “solving” it is not really a reasonable goal. Just like you can’t solve health.). It’s hard for me...
There are already many reasons for the government to improve housing availability. (The notion of “solving” it is not really a reasonable goal. Just like you can’t solve health.). It’s hard for me to imagine this would push the government much further.
Could you link some expert studies on rent control? Clearly they conclude rent control sucks, I’d like to see specifics about why. Can you elaborate Can you explain this too? I don’t understand...
Could you link some expert studies on rent control? Clearly they conclude rent control sucks, I’d like to see specifics about why.
tenants (who wants to pay rent when they could.. not pay rent?)
Can you elaborate
Taxpayers will end up subsidizing the artificially reduced rent
Can you explain this too? I don’t understand how the rent is artificially reduced as opposed to just regularly reduced. A private landlord is renting out a 400 units at a profit, and the housing authority without a profit incentive is charging taxpayers? Maybe if the rent is reduced below the cost of upkeep. I’m not educated on the subject, so I’d appreciate it if you could help me understand.
I don't have the studies handy, but I can explain the economics. Rent control is a price control which benefits existing renters that want to stay in their current home while hurting everyone...
I don't have the studies handy, but I can explain the economics. Rent control is a price control which benefits existing renters that want to stay in their current home while hurting everyone else.
Imagine housing supply and demand in a city where all the housing stock is supply and any existing or potential residents is the demand. In a perfect market, price is based on supply versus demand (this is where supply-side progressives come in and argue for housing abundance). Under rent control, we don't change the supply, but we force lower prices which actually raises the demand because housing is now artificially cheap. Rent control also doesn't reflect the cost of running housing, so it can paradoxically reduce supply if renting a unit is more of a headache than the potential profit. As an example, in Argentina the supply of housing in Buenos Aires increased when rent control was removed because people started renting out spare units again.
Because rent control disincentives moving, the housing market also becomes less efficient due to people staying in homes that aren't the right size for them. A common example is a couple staying in a large unit after their children move out because their rent is cheap, and they'd pay more after a move. That home isn't available for a new young couple to move into. This same situation also plays out in many countries with social housing due to supply shortages because renters don't pay enough to support more housing construction.
Rent control also massively reduces incentives to build more housing and increase the supply, so all the supply shortage problems just get worse. It's just another policy that's a hidden wealth transfer from the young to the old.
I'm traveling for the next few weeks and only have a phone, so longer form discussions with good sources is hard, but here's a podcast I listened to a few months ago on rent control. I can link...
I'm traveling for the next few weeks and only have a phone, so longer form discussions with good sources is hard, but here's a podcast I listened to a few months ago on rent control. I can link any study and I'm positive someone could object that it's biased or poorly researched because this topic gets emotional, but I hope this one is palatable since it discusses the topic with several economists that have published papers you can look up, and even includes a brief discussion of Sweden's tenants union and the housing problem in Sweden. I will drop a few highlights so you have something you can refer to and then my thoughts.
In 1997, Ed Glaeser did his own analysis of rent control in New York City, trying to determine just how economically inefficient it was. He and his co-author, Erzo Luttmer, found that “this misallocation of bedrooms leads to a loss in welfare which could be well over $500 million annually to the consumers of New York, before we even consider the social losses due to undersupply of housing.”
DUBNER: Furthermore, you write that landlords who are susceptible to rent control “reduce rental housing supplies by 15 percent either by converting to condos, selling to owner-occupants, or redeveloping buildings.”
DIAMOND: So, when you think about those initial tenants, that’s the best bet you’re going to get for the benefits of rent control to low-income tenants: the people that are already in the housing. But even though we find that those tenants are much more likely to stay in their apartment, when we look 10, 15 years later, the share of those 1994 residents that are still there is down to 10 percent or so. So 90 percent of them no longer live in that initial apartment.
And it’s that next low-income tenant that wants to live in the city, that low-income tenant is going to have a very hard time finding an affordable option, because now there’s going to be less rental housing, the prices that that low-income tenant are going to face when they want to initially move in are going to be higher than they would have been absent rent control.
GLAESER: Sweden, of course, is the place where Assar Lindbeck, the famous economist — and although he was market-oriented, he certainly skewed to the left — Assar famously said that, “short of bombing, I know of no way to destroy a city that was more effective than rent control,” and he certainly had Stockholm in mind.
Note that there are those that criticize Freakonomics for being pop economics. I encourage you to find whatever sources that are not Freakonomics if you do not trust them.
A private landlord is renting out a 400 units at a profit, and the housing authority without a profit incentive is charging taxpayers?
So it's not that the housing authority is intentionally charging taxpayers, but that it eventually gets there through perverse incentives. Imagine that the tenants only want to pay $1k/unit/month. But the cost of everything (property taxes, maintenance, etc) actually costs the city $1.1k/unit/month. The housing authority could either say "tough luck, it's $1.1k and that's fair" and the tenants protest and start withholding rent. Or some smart politician might think "wow, if I just add some grant money to the housing authority to cover the $100/unit/month difference, that's more votes for me in the election". And thus, the perverse incentive exists and nothing counters that.
It may very well be that initially the lack of profits makes running housing cheaper under the housing authority. But over time it becomes so politically impossible to change that inefficiencies become tolerated and paid for by the government because who wants to be the politician that says your rent is going up? Certainly one would have to be very principled or very stupid to vote for their own rent to increase.
Huh? How is that any different from landlords and tenants? Cite sources and studies, please.
If the union at Big Company pushes for unrealistic demands, Big Company fails and the union loses overall. So both sides are incentivized to come to a sustainable, and fair, equilibrium.
Huh? How is that any different from landlords and tenants?
The difference is explained immediately following the quoted part. If you disagree, then please elaborate, but don’t act like they didn’t just spell out their argument. There’s a misaligned...
The difference is explained immediately following the quoted part. If you disagree, then please elaborate, but don’t act like they didn’t just spell out their argument.
If tenants unionize and withhold rent, the landlord goes bankrupt but the tenants continue living there because the state is not heartless enough to evict them. This article gives an example, sort of:
We had a two and a half year campaign now where we actually organized the site, 400 units. Got the private landlord to pull out. The Housing Authority took over full ownership of the site
There’s a misaligned incentive here. Tenants are motivated to push to the point where the landlord fails, and if the landlord fails they still win.
Seems like the landlord has one way out: accept low margins, and be good enough at running an apartment complex that people don't feel the need to put the screws to them. This also puts a...
Seems like the landlord has one way out: accept low margins, and be good enough at running an apartment complex that people don't feel the need to put the screws to them.
This also puts a counterbalance to one of the problematic incentives from rent control: landlords who decide that because they can only charge X, the way to maximize the margins is to do as little as possible to maintain the units.
And that's the problem. There's no such thing as good enough. They'll always ask for more and create an environment where there's no funding to cover essential fees. If you don't believe me, see...
good enough
And that's the problem. There's no such thing as good enough. They'll always ask for more and create an environment where there's no funding to cover essential fees. If you don't believe me, see how often condo and co-op buildings skimp on essential maintenance and end up destroying their building over time.
Yeah, but what's to stop renters from just continually rent striking? When you work at a job, you're selling your labor for money. When you strike, you stop doing labor, and you stop receiving...
Yeah, but what's to stop renters from just continually rent striking?
When you work at a job, you're selling your labor for money. When you strike, you stop doing labor, and you stop receiving money, so there's an incentive on both sides to stop the strike. The employer wants their labor back, and the employee wants their money back. That brings both parties to the bargaining table, because they have a common ultimate goal, they just have opposing motivations with how to get there.
If you're rent striking, you're just not paying rent. It's not like you're moving out. The landlord obviously has an incentive to stop the strike, but what's the renters incentive? For all the renter cares, the landlord can go bust. It's not like their apartment would suddenly vanish if that happened.
The fact that there's no reason for a renter to ever pay if they know they're not going to be evicted means that theres no rational reason to ever not strike, which effectively means that you'll only ever lose money by getting into real estate as a landlord, so new housing never gets built.
No it's not "explained". They made a baseless assertion and I asked that they cite sources and studies. There's one example of a housing authority taking ownership of a site where the landlord...
The difference is explained immediately following the quoted part.
No it's not "explained". They made a baseless assertion and I asked that they cite sources and studies. There's one example of a housing authority taking ownership of a site where the landlord pulled out of the investment. If there were many examples of landlords being driven to bankruptcy and having their properties taken over by housing authorities due to bad faith tenant unions, housing authorities would run out of their limited resources pretty quickly.
Tenants are motivated to push to the point where the landlord fails, and if the landlord fails they still win.
Again, cite sources. I accept that may be the case for single-family properties, but I think it's also safe to assume those properties are the least likely to have tenant unions. A large property with communal space and shared infrastructure would dilapidate very quickly if there was suddenly no property management to maintain it or even keep environmental controls running.
It might not happen as instantly as an employer closing up shop and your paycheck suddenly not arriving anymore, but the effects of bankrupt landlords would still have a negative impact on residents' quality of life within a few months. And if a landlord going bankrupt would not actually have a tangible impact to the quality of a property.... well....... maybe that's part of the problem that's driving tenants to unionize in the first place? And in that case, I can't say I'm moved by the argument against tenant unions.
I think it's clear from the article that tenant unions are a very new idea, so we haven't seen much of what they are going to do. See the literal title of the article: However, the article itself...
If there were many examples of landlords being driven to bankruptcy and having their properties taken over by housing authorities due to bad faith tenant unions, housing authorities would run out of their limited resources pretty quickly.
I think it's clear from the article that tenant unions are a very new idea, so we haven't seen much of what they are going to do. See the literal title of the article:
Tenant Unions Are Coming. Landlords Aren't Ready.
However, the article itself is trumpeting the destroying of a landlord as a huge victory, so I think we have a sense of where it's going.
The SEIU was ecstatic about that, our tenants were ecstatic about that.
Really, I think your demands are a bit unreasonable. We're talking about a concept that has barely begun and you're requiring studies and citations?
I think they are pointing out that OP didn't cite any sources and made some pretty sweeping claims about how tenant unions would affect housing. If they can have such entrenched belief about what...
I think they are pointing out that OP didn't cite any sources and made some pretty sweeping claims about how tenant unions would affect housing. If they can have such entrenched belief about what a debacle this would be, I think it's fair to ask what sources lead you to believe it.
To your own point, right now we're all arguing on anecdotal feels and proxy examples like rent control. And we're all largely doing on what I assume are along rentee vs owners/land lord lines. So rather than warming up those finger for a good, stern waggle, maybe we can accept we don't know what the outcome would be.
And parent was talking about the subject as though they know exactly what tenant unions are going to do, and claiming that it's a much different situation from labor unions. I'm not claiming to...
I think it's clear from the article that tenant unions are a very new idea, so we haven't seen much of what they are going to do.
And parent was talking about the subject as though they know exactly what tenant unions are going to do, and claiming that it's a much different situation from labor unions. I'm not claiming to know how things will shake out with tenant unions, but the current situation with real estate in the US is ludicrous and it's time that something changes.
Hi, it's me. "Labor unions" is too broad of a category. I'm pro-private labor unions. I'm anti-public labor unions. The public unions have no balancing factor (see Chicago Teachers Union). Private...
Hi, it's me. "Labor unions" is too broad of a category. I'm pro-private labor unions. I'm anti-public labor unions. The public unions have no balancing factor (see Chicago Teachers Union). Private ones do. Tenants unions are closer to public labor unions because I believe the government will step in and prevent entire buildings from being evicted if tenants unions push too far.
Upkeep of a property in most cases is far cheaper than the capital investment of the property, which is the whole reason why rents don't just cover the cost of upkeep. What would you rather pay...
A large property with communal space and shared infrastructure would dilapidate very quickly if there was suddenly no property management to maintain it or even keep environmental controls running.
Upkeep of a property in most cases is far cheaper than the capital investment of the property, which is the whole reason why rents don't just cover the cost of upkeep.
What would you rather pay for, the cost to cover the investment on a multimllion dollar property plus some extra for profit, plus the cost of upkeep, or just the cost of upkeep?
Rent isn't just covering upkeep costs, if it were, they'd be condominium fees (which are far, far lower), not rent.
What incentive would there ever be to keep a landlord solvent rather than just force them to go bust and form a coop to share the upkeep costs of a property you now defacto own?
That's an excellent question, and something that landlords really ought to start considering when they decide whether to keep screwing their tenants over petty bullshit.
What incentive would there ever be to keep a landlord solvent rather than just force them to go bust and form a coop to share the upkeep costs of a property you now defacto own?
That's an excellent question, and something that landlords really ought to start considering when they decide whether to keep screwing their tenants over petty bullshit.
No. I don't like your tone here; you do not get to tell me to cite sources or link studies. Your later reply elsewhere confirms that you are not interested in having a discussion but rather you...
No. I don't like your tone here; you do not get to tell me to cite sources or link studies. Your later reply elsewhere confirms that you are not interested in having a discussion but rather you just think I'm wrong. Since you believe I'm wrong, you can feel free to post your sources. Internet discussions suck if you ask for a source upon reading anything you disagree with. I posted my logic. You can post yours if you wish.
From your later text:
If there were many examples of landlords being driven to bankruptcy and having their properties taken over by housing authorities due to bad faith tenant unions, housing authorities would run out of their limited resources pretty quickly.
We don't see that because tenants unions are so rare.
You made assertions as though they are fact. You did not present them as opinion, so yes, I requested sources. You also talked about a landlord going bankrupt but then presented an example of...
You made assertions as though they are fact. You did not present them as opinion, so yes, I requested sources. You also talked about a landlord going bankrupt but then presented an example of where a landlord "pulled out". That's quite different from going bankrupt, right?
Your later reply elsewhere confirms that you are not interested in having a discussion but rather you just think I'm wrong.
I do think you're wrong, but I don't see how that precludes me from being interested in having a discussion.
If it helps you, then imagine I wrote "my opinion is:" before my post. If you had asked nicely, I would have replied nicely. I also don't get the fixation on "bankrupt" versus "pulled out". If I...
If it helps you, then imagine I wrote "my opinion is:" before my post. If you had asked nicely, I would have replied nicely.
I also don't get the fixation on "bankrupt" versus "pulled out". If I had written "the landlord decides that the revenue is not worth the costs, so stops operating their property" instead, would that meaningfully change my point? My point being that a tenants union adds external costs that end up being shouldered by others elsewhere.
I suppose if you think I'm wrong, how do you think a tenants union would play out with landlords and the overall costs to the system as a whole?
It's the narrative difference between the poor sad landlord who really tried to work something out with their tenants but wound up going belly up because of the tenants' unreasonable demands...
I also don't get the fixation on "bankrupt" versus "pulled out". If I had written "the landlord decides that the revenue is not worth the costs, so stops operating their property" instead, would that meaningfully change my point?
It's the narrative difference between the poor sad landlord who really tried to work something out with their tenants but wound up going belly up because of the tenants' unreasonable demands versus the landlord who didn't want to deal with taking slightly lower profits or slightly slower returns on their investments and instead abandoned the property and shoved the problem off onto the taxpayers.
how do you think a tenants union would play out with landlords and the overall costs to the system as a whole?
The same as a labor union. Employers really need labor and employees really need a paycheck. Each employee really needs a paycheck a lot more than how much an employer really needs each employee. Thus, an individual employment contract weighs the advantage heavily in the employer's favor. When employees bargain collectively, they are able to balance the power by the threat of withholding all labor if the employer refuses to cooperate.
Landlords really need rent and renters really need a roof over their head. Each renter really needs a roof over their head a lot more than how much any landlord really needs the rent from any one renter. By bargaining collectively, renters could theoretically balance the power by the threat of withholding rent payments if the landlord refuses to cooperate.
The United States has a legal framework (for now) by which labor unions are formed and can negotiate, including governing the use of strikes and the requirement that both parties negotiate in good faith or be subject to the federal government stepping in. I don't see why a similar framework could not be established for tenant unions as well.
As well, there will certainly be "costs to the system" in the establishment of tenant unions. That's... Kind of the point. Landlords have gotten too big for their proverbial britches. Private equity owns huge swaths of real estate nationwide. For a time, they absolutely threw money at every property that came onto the market, inflating prices beyond that which normal people can afford. They intentionally reduce the supply of housing by overpricing units and colluding with one another to maximize profit across their entire portfolios rather than maximizing occupancy rates as was once the norm.
My partner used to live in one unit of a quadruplex in Utah with included laundry facilities shared among the four units. There were two washers and two dryers, all at least fifteen years old. The washers were on their last legs, one was completely broken for some time, and one of the tenants ran a thrifting operation and used the laundry room quite heavily. One time my partner put a maintenance request in for a broken washing machine. Then a couple months after she renewed her lease, the washers had both broken again and she put another maintenance request in... The property manager said that they can't fix the washer because her lease said that she was responsible for maintenance of the washer and dryer. In the laundry room that was shared with three other tenants. Which they had slipped into the lease at renewal because she had previously requested they fix their broken washers. They eventually finally bought one new washer when one of the tenants moved out and they realized they weren't going to be able to rent it out with included washer/dryer if the washers were completely broken.
I don't think there's a whole lot of risk of all landlords going bankrupt because they're required to maintain the facilities that they say are included in your rent.
This just isn't true. Private equity and other corporations own 0.5% of single-family houses in the US. It makes me doubt your entire argument when you get basic facts wrong. It feels like you're...
Private equity owns huge swaths of real estate nationwide.
This just isn't true. Private equity and other corporations own 0.5% of single-family houses in the US. It makes me doubt your entire argument when you get basic facts wrong.
It feels like you're starting with a narrative of "landlords bad and renters good" and working backwards to find alternative facts to support your opinion.
Depends on the country/state/city, but the strongest is probably the ability to squat without being evicted for months or years. Basically the threat of lost revenue to landlords that have fixed...
Depends on the country/state/city, but the strongest is probably the ability to squat without being evicted for months or years. Basically the threat of lost revenue to landlords that have fixed costs or opportunity costs. In the aggregate, being a landlord is not supremely lucrative.
If we're talking specifically about rent increases and displacement as a result, then there's not much of anything around this. I don't see that as a bad thing. Reducing displacement via force ends up helping those already in place at the cost of those that would like to move in. I live in a hyper segregated city and have a distaste for any notion of "I got mine".
Take all of this with a grain of salt, lots of opinion based on anecdotal experience as a renter and my time as a planning commissioner. It seems to me, based on what I have experienced and you're...
Take all of this with a grain of salt, lots of opinion based on anecdotal experience as a renter and my time as a planning commissioner.
It seems to me, based on what I have experienced and you're saying, that we already have a system that doesn't have an equalizing or balancing factor. I think we're in a housing/renting crisis because of it. The polarized discussion we're having feels like a nice illustration of why we're here: folks who own or are land lords are largely oblivious to the turbulence and difficulty of renting - soaring rents, poor legal enforcement, and little new construction due to NIMBYism. But when folks don't experience it, and it becomes speculative, then there will be a lean towards protecting assets and wealth. Our government prioritizes the same thing.
I live in a hyper segregated city and have a distaste for any notion of "I got mine".
While there are some renters who are sitting on rent controlled apartments/houses and spouting the "I've got mine" ideologies, I think that is much more of an edge case than the norm. Many of us have seen rents increase 10, 20, or even 50% and have been radicalized because of it. Our last increase took us from $2,650 to $3,550. Legal protections are hard to get enforcement on, and when the rental pool is small there aren't many alternatives.
So while I understand to many this feels like an extreme overstep, I think we're at a point where renters are feeling squeezed. Renters are finding limited support from state initiatives and little sympathy from land lords.
I don't think this would be a silver bullet, or potentially even work, but I do think it's time for collective action on the part of renters. They've been left out of the discussion for too long and are working against a system designed and controlled by owners/landlords.
I don't see how tenant unions can work. Let's say every single resident in a property joins a tenant union. At some point a tenant's lease comes up for renewal, at which the landlord increases the...
I don't see how tenant unions can work. Let's say every single resident in a property joins a tenant union. At some point a tenant's lease comes up for renewal, at which the landlord increases the rent to some unreasonable and unaffordable cost. The tenant leaves. The next tenant that comes in to replace them has a lease agreement that prohibits them joining a tenant union. Lather, rinse, repeat. This isn't like a workplace that becomes a union shop and everyone coming in has to join the union in order to work. The fact that there are individual legal agreements with tenants makes tenant unions untenable. Am I missing something? You'd have to have a very significant majority of renters in a market as members of a tenant union in order for this to gain a foothold. That's a tall order.
That's exactly how employment works, too, though. I'm not following why so many people are so adamant that tenant unions are a vastly different situation than labor unions. The union places a...
The fact that there are individual legal agreements with tenants makes tenant unions untenable.
That's exactly how employment works, too, though. I'm not following why so many people are so adamant that tenant unions are a vastly different situation than labor unions.
The next tenant that comes in to replace them has a lease agreement that prohibits them joining a tenant union.
The union places a provision in the contract prohibiting the landlord from including such a prohibition in their lease agreements. If the landlord refuses, the union strikes, the same as any labor dispute.
Sounds like a good thing, and long overdue.
The common citizen of this country has experienced nothing but take take take for far too long. I agree, this and other efforts of a similar vein are overdue.
Rent control is one of those topics where the majority of experts that study it conclude one thing but people want the opposite. Whatever.
Here's why unionized tenants sucks. There's no good equalizing factor. If the union at Big Company pushes for unrealistic demands, Big Company fails and the union loses overall. So both sides are incentivized to come to a sustainable, and fair, equilibrium. If tenants unionize and withhold rent, the landlord goes bankrupt but the tenants continue living there because the state is not heartless enough to evict them. This article gives an example, sort of:
There's no balancing factor there and what ends up happening will be a system that's inefficient yet works for tenants (who wants to pay rent when they could.. not pay rent?). Taxpayers will end up subsidizing the artificially reduced rent for tenants because the spenders (politicians) are too far removed from the payers (citizens) yet also stand to benefit from a voting bloc.
Similar to how shitty police officers are protected by their union because unions derive power through membership and solidarity, tenant unions will also protect shitty tenants. Again, shitty members is not an issue when there's a balancing factor, but there is none here.
Seems that that situation would in turn create a more direct incentive for the government to solve the actual issue by increasing housing supply. Rather than the current equally unsustainable situation where the burden of the system's failure is falling disproportionately on the lower end of the income scale.
I don't think more housing would really solve the issue. Rent is high in popular areas (usually big cities) because everone wants to live there. If you increase available housing, the rent drops, so more people can afford to live there and drive up rents again. There is no equilibrium because there are millions upon millions waiting in line. This cycle continues until the city is eventually completely plastered with houses, making the whole place unlivable because the impervious surface kills the microclimate with heat waves and flooding. Now everyone wants to live in another densely-but-not-too-densely populate area. Rinse and repeat. And if we ever want to win against climate change, building hundreds of millions of new homes is impossible.
In my opinion, the issue is private property ownership. Popular land is a very scarce resource and it should not be subject to market forces. Housing should be rented to cover the costs of housing, not to increase profits for investors. One such solution that I really like is the model where everyone who lives in a house partially owns that house, and when they move out, they lose it. Here in Germany, this keeps rents very low even in high-rent cities. Together with city-owned houses that are also rented at cost but managed by the city should drop rents dramatically.
Of course, this is a pipe dream and will probably never happen on large scales, but I don't see any real reason why this shouldn't work.
There are many zoning changes that could potentially increase housing supply in my city.
Cracking down on air BNB would help in many locations
Air BNB is essentially just another manifestation of private property ownership being the basic issue. If you own a house for profit, Air BNB is a great way to increase your rent per square meter per time. Remove the ability to profit (excessively) from owning a house, and that issue is gone.
Where should people live, then?
In existing homes. I don't know about other countries, but the average space per person has been doubled in my country in the last 50 years or so.
And I'm not saying no housing should be constructed. I'm saying building new houses in popular places is a losing battle, because popularity moves and houses don't.
There are already many reasons for the government to improve housing availability. (The notion of “solving” it is not really a reasonable goal. Just like you can’t solve health.). It’s hard for me to imagine this would push the government much further.
Could you link some expert studies on rent control? Clearly they conclude rent control sucks, I’d like to see specifics about why.
Can you elaborate
Can you explain this too? I don’t understand how the rent is artificially reduced as opposed to just regularly reduced. A private landlord is renting out a 400 units at a profit, and the housing authority without a profit incentive is charging taxpayers? Maybe if the rent is reduced below the cost of upkeep. I’m not educated on the subject, so I’d appreciate it if you could help me understand.
I don't have the studies handy, but I can explain the economics. Rent control is a price control which benefits existing renters that want to stay in their current home while hurting everyone else.
Imagine housing supply and demand in a city where all the housing stock is supply and any existing or potential residents is the demand. In a perfect market, price is based on supply versus demand (this is where supply-side progressives come in and argue for housing abundance). Under rent control, we don't change the supply, but we force lower prices which actually raises the demand because housing is now artificially cheap. Rent control also doesn't reflect the cost of running housing, so it can paradoxically reduce supply if renting a unit is more of a headache than the potential profit. As an example, in Argentina the supply of housing in Buenos Aires increased when rent control was removed because people started renting out spare units again.
Because rent control disincentives moving, the housing market also becomes less efficient due to people staying in homes that aren't the right size for them. A common example is a couple staying in a large unit after their children move out because their rent is cheap, and they'd pay more after a move. That home isn't available for a new young couple to move into. This same situation also plays out in many countries with social housing due to supply shortages because renters don't pay enough to support more housing construction.
Rent control also massively reduces incentives to build more housing and increase the supply, so all the supply shortage problems just get worse. It's just another policy that's a hidden wealth transfer from the young to the old.
I'm traveling for the next few weeks and only have a phone, so longer form discussions with good sources is hard, but here's a podcast I listened to a few months ago on rent control. I can link any study and I'm positive someone could object that it's biased or poorly researched because this topic gets emotional, but I hope this one is palatable since it discusses the topic with several economists that have published papers you can look up, and even includes a brief discussion of Sweden's tenants union and the housing problem in Sweden. I will drop a few highlights so you have something you can refer to and then my thoughts.
Note that there are those that criticize Freakonomics for being pop economics. I encourage you to find whatever sources that are not Freakonomics if you do not trust them.
So it's not that the housing authority is intentionally charging taxpayers, but that it eventually gets there through perverse incentives. Imagine that the tenants only want to pay $1k/unit/month. But the cost of everything (property taxes, maintenance, etc) actually costs the city $1.1k/unit/month. The housing authority could either say "tough luck, it's $1.1k and that's fair" and the tenants protest and start withholding rent. Or some smart politician might think "wow, if I just add some grant money to the housing authority to cover the $100/unit/month difference, that's more votes for me in the election". And thus, the perverse incentive exists and nothing counters that.
It may very well be that initially the lack of profits makes running housing cheaper under the housing authority. But over time it becomes so politically impossible to change that inefficiencies become tolerated and paid for by the government because who wants to be the politician that says your rent is going up? Certainly one would have to be very principled or very stupid to vote for their own rent to increase.
Huh? How is that any different from landlords and tenants?
Cite sources and studies, please.
The difference is explained immediately following the quoted part. If you disagree, then please elaborate, but don’t act like they didn’t just spell out their argument.
There’s a misaligned incentive here. Tenants are motivated to push to the point where the landlord fails, and if the landlord fails they still win.
Seems like the landlord has one way out: accept low margins, and be good enough at running an apartment complex that people don't feel the need to put the screws to them.
This also puts a counterbalance to one of the problematic incentives from rent control: landlords who decide that because they can only charge X, the way to maximize the margins is to do as little as possible to maintain the units.
And that's the problem. There's no such thing as good enough. They'll always ask for more and create an environment where there's no funding to cover essential fees. If you don't believe me, see how often condo and co-op buildings skimp on essential maintenance and end up destroying their building over time.
Yeah, but what's to stop renters from just continually rent striking?
When you work at a job, you're selling your labor for money. When you strike, you stop doing labor, and you stop receiving money, so there's an incentive on both sides to stop the strike. The employer wants their labor back, and the employee wants their money back. That brings both parties to the bargaining table, because they have a common ultimate goal, they just have opposing motivations with how to get there.
If you're rent striking, you're just not paying rent. It's not like you're moving out. The landlord obviously has an incentive to stop the strike, but what's the renters incentive? For all the renter cares, the landlord can go bust. It's not like their apartment would suddenly vanish if that happened.
The fact that there's no reason for a renter to ever pay if they know they're not going to be evicted means that theres no rational reason to ever not strike, which effectively means that you'll only ever lose money by getting into real estate as a landlord, so new housing never gets built.
No it's not "explained". They made a baseless assertion and I asked that they cite sources and studies. There's one example of a housing authority taking ownership of a site where the landlord pulled out of the investment. If there were many examples of landlords being driven to bankruptcy and having their properties taken over by housing authorities due to bad faith tenant unions, housing authorities would run out of their limited resources pretty quickly.
Again, cite sources. I accept that may be the case for single-family properties, but I think it's also safe to assume those properties are the least likely to have tenant unions. A large property with communal space and shared infrastructure would dilapidate very quickly if there was suddenly no property management to maintain it or even keep environmental controls running.
It might not happen as instantly as an employer closing up shop and your paycheck suddenly not arriving anymore, but the effects of bankrupt landlords would still have a negative impact on residents' quality of life within a few months. And if a landlord going bankrupt would not actually have a tangible impact to the quality of a property.... well....... maybe that's part of the problem that's driving tenants to unionize in the first place? And in that case, I can't say I'm moved by the argument against tenant unions.
I think it's clear from the article that tenant unions are a very new idea, so we haven't seen much of what they are going to do. See the literal title of the article:
However, the article itself is trumpeting the destroying of a landlord as a huge victory, so I think we have a sense of where it's going.
Really, I think your demands are a bit unreasonable. We're talking about a concept that has barely begun and you're requiring studies and citations?
I think they are pointing out that OP didn't cite any sources and made some pretty sweeping claims about how tenant unions would affect housing. If they can have such entrenched belief about what a debacle this would be, I think it's fair to ask what sources lead you to believe it.
To your own point, right now we're all arguing on anecdotal feels and proxy examples like rent control. And we're all largely doing on what I assume are along rentee vs owners/land lord lines. So rather than warming up those finger for a good, stern waggle, maybe we can accept we don't know what the outcome would be.
And parent was talking about the subject as though they know exactly what tenant unions are going to do, and claiming that it's a much different situation from labor unions. I'm not claiming to know how things will shake out with tenant unions, but the current situation with real estate in the US is ludicrous and it's time that something changes.
Hi, it's me. "Labor unions" is too broad of a category. I'm pro-private labor unions. I'm anti-public labor unions. The public unions have no balancing factor (see Chicago Teachers Union). Private ones do. Tenants unions are closer to public labor unions because I believe the government will step in and prevent entire buildings from being evicted if tenants unions push too far.
All above is my opinion, not fact.
Upkeep of a property in most cases is far cheaper than the capital investment of the property, which is the whole reason why rents don't just cover the cost of upkeep.
What would you rather pay for, the cost to cover the investment on a multimllion dollar property plus some extra for profit, plus the cost of upkeep, or just the cost of upkeep?
Rent isn't just covering upkeep costs, if it were, they'd be condominium fees (which are far, far lower), not rent.
What incentive would there ever be to keep a landlord solvent rather than just force them to go bust and form a coop to share the upkeep costs of a property you now defacto own?
That's an excellent question, and something that landlords really ought to start considering when they decide whether to keep screwing their tenants over petty bullshit.
No. I don't like your tone here; you do not get to tell me to cite sources or link studies. Your later reply elsewhere confirms that you are not interested in having a discussion but rather you just think I'm wrong. Since you believe I'm wrong, you can feel free to post your sources. Internet discussions suck if you ask for a source upon reading anything you disagree with. I posted my logic. You can post yours if you wish.
From your later text:
We don't see that because tenants unions are so rare.
You made assertions as though they are fact. You did not present them as opinion, so yes, I requested sources. You also talked about a landlord going bankrupt but then presented an example of where a landlord "pulled out". That's quite different from going bankrupt, right?
I do think you're wrong, but I don't see how that precludes me from being interested in having a discussion.
If it helps you, then imagine I wrote "my opinion is:" before my post. If you had asked nicely, I would have replied nicely.
I also don't get the fixation on "bankrupt" versus "pulled out". If I had written "the landlord decides that the revenue is not worth the costs, so stops operating their property" instead, would that meaningfully change my point? My point being that a tenants union adds external costs that end up being shouldered by others elsewhere.
I suppose if you think I'm wrong, how do you think a tenants union would play out with landlords and the overall costs to the system as a whole?
It's the narrative difference between the poor sad landlord who really tried to work something out with their tenants but wound up going belly up because of the tenants' unreasonable demands versus the landlord who didn't want to deal with taking slightly lower profits or slightly slower returns on their investments and instead abandoned the property and shoved the problem off onto the taxpayers.
The same as a labor union. Employers really need labor and employees really need a paycheck. Each employee really needs a paycheck a lot more than how much an employer really needs each employee. Thus, an individual employment contract weighs the advantage heavily in the employer's favor. When employees bargain collectively, they are able to balance the power by the threat of withholding all labor if the employer refuses to cooperate.
Landlords really need rent and renters really need a roof over their head. Each renter really needs a roof over their head a lot more than how much any landlord really needs the rent from any one renter. By bargaining collectively, renters could theoretically balance the power by the threat of withholding rent payments if the landlord refuses to cooperate.
The United States has a legal framework (for now) by which labor unions are formed and can negotiate, including governing the use of strikes and the requirement that both parties negotiate in good faith or be subject to the federal government stepping in. I don't see why a similar framework could not be established for tenant unions as well.
As well, there will certainly be "costs to the system" in the establishment of tenant unions. That's... Kind of the point. Landlords have gotten too big for their proverbial britches. Private equity owns huge swaths of real estate nationwide. For a time, they absolutely threw money at every property that came onto the market, inflating prices beyond that which normal people can afford. They intentionally reduce the supply of housing by overpricing units and colluding with one another to maximize profit across their entire portfolios rather than maximizing occupancy rates as was once the norm.
My partner used to live in one unit of a quadruplex in Utah with included laundry facilities shared among the four units. There were two washers and two dryers, all at least fifteen years old. The washers were on their last legs, one was completely broken for some time, and one of the tenants ran a thrifting operation and used the laundry room quite heavily. One time my partner put a maintenance request in for a broken washing machine. Then a couple months after she renewed her lease, the washers had both broken again and she put another maintenance request in... The property manager said that they can't fix the washer because her lease said that she was responsible for maintenance of the washer and dryer. In the laundry room that was shared with three other tenants. Which they had slipped into the lease at renewal because she had previously requested they fix their broken washers. They eventually finally bought one new washer when one of the tenants moved out and they realized they weren't going to be able to rent it out with included washer/dryer if the washers were completely broken.
I don't think there's a whole lot of risk of all landlords going bankrupt because they're required to maintain the facilities that they say are included in your rent.
This just isn't true. Private equity and other corporations own 0.5% of single-family houses in the US. It makes me doubt your entire argument when you get basic facts wrong.
It feels like you're starting with a narrative of "landlords bad and renters good" and working backwards to find alternative facts to support your opinion.
What is the current equalizing or balancing factor for tenants?
Depends on the country/state/city, but the strongest is probably the ability to squat without being evicted for months or years. Basically the threat of lost revenue to landlords that have fixed costs or opportunity costs. In the aggregate, being a landlord is not supremely lucrative.
If we're talking specifically about rent increases and displacement as a result, then there's not much of anything around this. I don't see that as a bad thing. Reducing displacement via force ends up helping those already in place at the cost of those that would like to move in. I live in a hyper segregated city and have a distaste for any notion of "I got mine".
Take all of this with a grain of salt, lots of opinion based on anecdotal experience as a renter and my time as a planning commissioner.
It seems to me, based on what I have experienced and you're saying, that we already have a system that doesn't have an equalizing or balancing factor. I think we're in a housing/renting crisis because of it. The polarized discussion we're having feels like a nice illustration of why we're here: folks who own or are land lords are largely oblivious to the turbulence and difficulty of renting - soaring rents, poor legal enforcement, and little new construction due to NIMBYism. But when folks don't experience it, and it becomes speculative, then there will be a lean towards protecting assets and wealth. Our government prioritizes the same thing.
While there are some renters who are sitting on rent controlled apartments/houses and spouting the "I've got mine" ideologies, I think that is much more of an edge case than the norm. Many of us have seen rents increase 10, 20, or even 50% and have been radicalized because of it. Our last increase took us from $2,650 to $3,550. Legal protections are hard to get enforcement on, and when the rental pool is small there aren't many alternatives.
So while I understand to many this feels like an extreme overstep, I think we're at a point where renters are feeling squeezed. Renters are finding limited support from state initiatives and little sympathy from land lords.
I don't think this would be a silver bullet, or potentially even work, but I do think it's time for collective action on the part of renters. They've been left out of the discussion for too long and are working against a system designed and controlled by owners/landlords.
Wow.
I don't see how tenant unions can work. Let's say every single resident in a property joins a tenant union. At some point a tenant's lease comes up for renewal, at which the landlord increases the rent to some unreasonable and unaffordable cost. The tenant leaves. The next tenant that comes in to replace them has a lease agreement that prohibits them joining a tenant union. Lather, rinse, repeat. This isn't like a workplace that becomes a union shop and everyone coming in has to join the union in order to work. The fact that there are individual legal agreements with tenants makes tenant unions untenable. Am I missing something? You'd have to have a very significant majority of renters in a market as members of a tenant union in order for this to gain a foothold. That's a tall order.
That's exactly how employment works, too, though. I'm not following why so many people are so adamant that tenant unions are a vastly different situation than labor unions.
The union places a provision in the contract prohibiting the landlord from including such a prohibition in their lease agreements. If the landlord refuses, the union strikes, the same as any labor dispute.