Local authorities. Local authorities should be able to build and own housing of all sorts, not just "affordable" homes. They can rent at a few % over cost, which is great for renters, with the...
Local authorities. Local authorities should be able to build and own housing of all sorts, not just "affordable" homes.
They can rent at a few % over cost, which is great for renters, with the surplus going to building more housing or other fun stuff like schools, parks, policing and so on. There are a few projects where I live which are run like this and they're very effective. One of them won a major architecture prize. Another one banned investors and people from outside the local area from renting/buying and that was also a very good move - the town in question was one where lots of second homes and buy-to-airbnb happens, and locals are priced out of being able to live there.
A little off topic but private development firms are generally very conservative and almost never build the kind of eco-housing we really need to be building - also they're often criminally dull in terms of architecture and I have serious issues with that because good architecture makes good communities but that's a different issue.
That’s great when it works, but I wonder if local governments would actually be able to build or buy enough properties to cover the entire rental market? It seems like it would require huge...
That’s great when it works, but I wonder if local governments would actually be able to build or buy enough properties to cover the entire rental market? It seems like it would require huge investments, and if something goes wrong then taxpayers are on the hook for any losses.
Also, what would the quality be like without competition? There are worse things than dull architecture. I’m not sure that the quality of the architecture is what renters really care about, compared to the building being well maintained and rents not being too high.
Well, most of my private landlords have utterly failed at both of those things (both small time owners and large corporate owned complexes), so the "free market" isn't exactly doing great either...
to the building being well maintained and rents not being too high.
Well, most of my private landlords have utterly failed at both of those things (both small time owners and large corporate owned complexes), so the "free market" isn't exactly doing great either at providing good rental housing.
Why wouldn't government be able to build enough housing? They're a very safe lending target for banks, so money isn't a problem. The work is contracted out so it's not like they need to employ...
Why wouldn't government be able to build enough housing? They're a very safe lending target for banks, so money isn't a problem. The work is contracted out so it's not like they need to employ builders (and even if they did, still not a problem). The local authority is taking the role of the investor, like in any house building project, that's all. The only difference is they're an investor that isn't profit-motivated. Which is a small but very important difference.
As for quality, I don't see why it would be any different. Could well be better, all they have to do is decide to spec higher quality rather than the absolute cheapest. If you think new builds owned by investment funds are magically high quality then I've got some shocking news for you...
And fwiw architecture really matters. Lots of people think it doesn't but they're wrong. Architecture is how you build communities rather than dormitories. Local authority built estates where I live are nice. They're eco friendly, pleasant looking buildings and they're constructed in a way which increases the human benefit of the land by having shared spaces and gardens and so on; not built to maximise the number of houses, which is more profitable but makes for shitty places to live. Meanwhile the new estates being built by banks are horribly generic (there's one near me which is literally how a child would design a house - a cube with a pitched roof, four windows and a door in the middle) and are increasingly built with tiny or no gardens, without shared green spaces, shops, recreation space - in some cases without even parking - all in order to cram every single possible space with tiny bedrooms.
I think this might be a difference in perspective on state capacity based on what local governments seem willing and able to do. In the US these projects aren’t that easy. Cities do build housing,...
I think this might be a difference in perspective on state capacity based on what local governments seem willing and able to do. In the US these projects aren’t that easy. Cities do build housing, but only small amounts and there are typically long waiting lists for affordable housing. Also, for some reason the costs are higher than in other places? The new housing I’ve seen in San Francisco does look very nice, though.
I suppose market-rate housing would be a different story, but in the US, cities don’t do that.
There is also a history of large amounts of terrible public housing in New York and Chicago, and these buildings are still there, which would be another reason for pessimism and local resistance. One wonders if the new projects will still seem nice in 40 years.
What local authorities are willing to do doesn't change that they're theoretically capable of being a non-profit-focussed housing supplier providing just-above-cost (not market rates, far lower...
What local authorities are willing to do doesn't change that they're theoretically capable of being a non-profit-focussed housing supplier providing just-above-cost (not market rates, far lower than that) housing to lots of people, and I don't know how else you might do that at scale. Co-ops are good but they can rarely access the sort of funding needed to build hundreds/thousands of homes. I don't imagine there's much political will in the US to do something so frighteningly close to communism but there you go. It does happen in other countries.
fwiw I live in a 70+ year old state-built house in the UK and it's not a stunning piece of architecture because post-war housing was really just focussed on getting people decent houses quickly during a time of extreme shortages - but it's very well built and comes with the kind of expansive garden you'd literally need to pay a million for these days (I paid a LOT less than that!). Whether any of the cheaply-made housing being thrown up as fast as possible round the corner from me by an investment consortium will still be standing by 2090 I won't ever know, but I'd be very surprised.
You’re right. But I don’t see why you couldn’t have a system where you are considered a fractional owner as soon as you sign a lease. You’re now sharing the labor of upkeep and paying rent that...
You’re right. But I don’t see why you couldn’t have a system where you are considered a fractional owner as soon as you sign a lease. You’re now sharing the labor of upkeep and paying rent that covers property tax and other communal fees.
It seems like governance of a shared building is complicated. I’m thinking of that condo in Florida that collapsed due to a political dispute among the owners over what to do about necessary...
It seems like governance of a shared building is complicated. I’m thinking of that condo in Florida that collapsed due to a political dispute among the owners over what to do about necessary repairs. Some of them didn’t have very much money and were strongly opposed. It makes me wary of having part ownership in what’s basically a political process that you don’t control. No thank you!
I’d rather be making my own decisions over what’s worth paying for, or at least be in partnership with people I know well and trust. Money issues are hard enough for married couples sometimes. The more people you add, the more complicated it gets.
I’ve read that co-ops sometimes have pretty strict vetting processes to make sure that anyone buying in is a responsible person with sufficient income that they will be able to agree with. This doesn’t seem very inclusive, to say the least. I doubt co-ops would be open to giving real political power to renters.
To be fair, landlords vet their tenants as well, but how picky they are varies. There is something to be said for a simpler relationship where you are only responsible for the rent and not anything that could happen to the building.
I’ve been involved in a fairly disastrous condo association, so I definitely agree with you here. One problem was that there was really no way to force things to be handled equitably without...
I’ve been involved in a fairly disastrous condo association, so I definitely agree with you here. One problem was that there was really no way to force things to be handled equitably without spending a bunch of money on a lawsuit. (And then you’re in the position of your own HOA dues going to a lawyer defending the HOA against you.) If the government were involved, that might actually give you a chance of getting something resolved, assuming your government isn’t apathetic, corrupt, or incompetent. That’s a high bar these days.
In general I don't have a problem with renting, as it provides a market for people who wish to spend a few years of their life in a city maybe studying or working or whatever and then somewhere...
In general I don't have a problem with renting, as it provides a market for people who wish to spend a few years of their life in a city maybe studying or working or whatever and then somewhere else, the problem comes from the fact that the people who want to settle down there, found a family, live for decades, can't cause the prices are so insane. Additionally to that, property investory in my country love to buy an asset and don't even rent it out cause it could lower the value when they sell it later. Vienna usually alternates with Salzburg between what city has the higher prices for rent, but Vienna is also the city with largest amount of empty apartments. It's insane.
The lost income from not renting a place out is pretty substantial. I suppose if that’s not enough, a tax on vacant apartments could do more to discourage it? But I don’t know enough about those...
The lost income from not renting a place out is pretty substantial. I suppose if that’s not enough, a tax on vacant apartments could do more to discourage it? But I don’t know enough about those cities to know why people don’t do it.
But if there are no investors in rental housing then it seems like there would be a lot fewer places to rent and rents would go up a lot.
Funny you mention Vienna, which also has one of the best public housing programs in the world. While not perfect, I don't think it's impossible to find an affordable (and livable) place to live in...
Funny you mention Vienna, which also has one of the best public housing programs in the world. While not perfect, I don't think it's impossible to find an affordable (and livable) place to live in Vienna, no matter what income bracket you find yourself in.
Property investors are first of all investors. They invest in property because today its risk-adjusted rate of return is higher than that of alternative areas of investment. And the reason is that...
Property investors are first of all investors.
They invest in property because today its risk-adjusted rate of return is higher than that of alternative areas of investment.
And the reason is that there is artificial scarcity of housing due to excessive zoning and zoning-equivalent laws.
The solution is not to ban investors but to make such investment less attractive than e.g. stock market.
There are three measures to undertake first (IMHO):
The building won't happen though, as the investors can encourage NIMBYs and lobby for property value protectionism. Those who hold assets will naturally try to prevent said assets losing value.
The building won't happen though, as the investors can encourage NIMBYs and lobby for property value protectionism. Those who hold assets will naturally try to prevent said assets losing value.
More precisely, it is not “losing value” but: appreciating at a slightly lower rate In most cases, investors would be much better off if they can build rather than if they cannot. There can be...
losing value
More precisely, it is not “losing value” but:
appreciating at a slightly lower rate
In most cases, investors would be much better off if they can build rather than if they cannot. There can be exceptions like Manhattan or Westminster but these are just exceptions.
Investors can also lobby against any other form of legislation that affects their investment, so I don’t think that should deter us. I believe @MetArtScroll is correct — if the supply of houses...
Investors can also lobby against any other form of legislation that affects their investment, so I don’t think that should deter us.
I believe @MetArtScroll is correct — if the supply of houses met or exceeded demand suddenly it’s not profitable to take on a 3rd+ mortgage and the problem starts to solve itself.
Banning all investment sounds like something that helps some people afford housing while being even more punishing than the current situation to renters and transients.
One thing that makes real estate a desirable investment is that mortgages are really cheap. It's the cheapest loan you could ever hope to get your hands on thanks to incredibly low interest rates....
One thing that makes real estate a desirable investment is that mortgages are really cheap. It's the cheapest loan you could ever hope to get your hands on thanks to incredibly low interest rates. And if you do it right, it's basically free. It is not particularly hard to buy a house, and then rent it out for more than your mortgage payment.
Have you managed rental property? It's conceptually easy, (and mostly is, on a single property, until it isn't) but the day to day logistics are a true job once you have more than one or two.
Have you managed rental property? It's conceptually easy, (and mostly is, on a single property, until it isn't) but the day to day logistics are a true job once you have more than one or two.
I imagine that when you own multiple properties, your income is such that hiring people to help with that is manageable. But I was thinking more from the perspective of those who buy their second...
I imagine that when you own multiple properties, your income is such that hiring people to help with that is manageable.
But I was thinking more from the perspective of those who buy their second house, then choose to rent out their first house rather than sell it.
There are management companies that will do it for you. It’s an expense, but reasonable if you don’t want it to be your job. It’s another cost to consider when deciding whether the investment is...
There are management companies that will do it for you. It’s an expense, but reasonable if you don’t want it to be your job. It’s another cost to consider when deciding whether the investment is worth it.
Yeah but you're investing a lot of time into this unless you're very experienced or very lucky. It's not exactly free, it's more of a job ... One that can pay pretty badly all in all. The obvious...
It is not particularly hard to buy a house, and then rent it out for more than your mortgage payment.
Yeah but you're investing a lot of time into this unless you're very experienced or very lucky. It's not exactly free, it's more of a job ... One that can pay pretty badly all in all.
The obvious upside is that at the end of the day, you own the asset. But that is only beneficial if you're going to live in it; if it's for investment purposes, again, you're making it a job.
Yes please, property investments needs to die.
What about renters? Who will they rent from?
Local authorities. Local authorities should be able to build and own housing of all sorts, not just "affordable" homes.
They can rent at a few % over cost, which is great for renters, with the surplus going to building more housing or other fun stuff like schools, parks, policing and so on. There are a few projects where I live which are run like this and they're very effective. One of them won a major architecture prize. Another one banned investors and people from outside the local area from renting/buying and that was also a very good move - the town in question was one where lots of second homes and buy-to-airbnb happens, and locals are priced out of being able to live there.
A little off topic but private development firms are generally very conservative and almost never build the kind of eco-housing we really need to be building - also they're often criminally dull in terms of architecture and I have serious issues with that because good architecture makes good communities but that's a different issue.
That’s great when it works, but I wonder if local governments would actually be able to build or buy enough properties to cover the entire rental market? It seems like it would require huge investments, and if something goes wrong then taxpayers are on the hook for any losses.
Also, what would the quality be like without competition? There are worse things than dull architecture. I’m not sure that the quality of the architecture is what renters really care about, compared to the building being well maintained and rents not being too high.
Well, most of my private landlords have utterly failed at both of those things (both small time owners and large corporate owned complexes), so the "free market" isn't exactly doing great either at providing good rental housing.
Why wouldn't government be able to build enough housing? They're a very safe lending target for banks, so money isn't a problem. The work is contracted out so it's not like they need to employ builders (and even if they did, still not a problem). The local authority is taking the role of the investor, like in any house building project, that's all. The only difference is they're an investor that isn't profit-motivated. Which is a small but very important difference.
As for quality, I don't see why it would be any different. Could well be better, all they have to do is decide to spec higher quality rather than the absolute cheapest. If you think new builds owned by investment funds are magically high quality then I've got some shocking news for you...
And fwiw architecture really matters. Lots of people think it doesn't but they're wrong. Architecture is how you build communities rather than dormitories. Local authority built estates where I live are nice. They're eco friendly, pleasant looking buildings and they're constructed in a way which increases the human benefit of the land by having shared spaces and gardens and so on; not built to maximise the number of houses, which is more profitable but makes for shitty places to live. Meanwhile the new estates being built by banks are horribly generic (there's one near me which is literally how a child would design a house - a cube with a pitched roof, four windows and a door in the middle) and are increasingly built with tiny or no gardens, without shared green spaces, shops, recreation space - in some cases without even parking - all in order to cram every single possible space with tiny bedrooms.
I think this might be a difference in perspective on state capacity based on what local governments seem willing and able to do. In the US these projects aren’t that easy. Cities do build housing, but only small amounts and there are typically long waiting lists for affordable housing. Also, for some reason the costs are higher than in other places? The new housing I’ve seen in San Francisco does look very nice, though.
I suppose market-rate housing would be a different story, but in the US, cities don’t do that.
There is also a history of large amounts of terrible public housing in New York and Chicago, and these buildings are still there, which would be another reason for pessimism and local resistance. One wonders if the new projects will still seem nice in 40 years.
We do know a good bit more about how to build a healthy and sustainable community than we did when that public housing was built in the 60's and 70's.
What local authorities are willing to do doesn't change that they're theoretically capable of being a non-profit-focussed housing supplier providing just-above-cost (not market rates, far lower than that) housing to lots of people, and I don't know how else you might do that at scale. Co-ops are good but they can rarely access the sort of funding needed to build hundreds/thousands of homes. I don't imagine there's much political will in the US to do something so frighteningly close to communism but there you go. It does happen in other countries.
fwiw I live in a 70+ year old state-built house in the UK and it's not a stunning piece of architecture because post-war housing was really just focussed on getting people decent houses quickly during a time of extreme shortages - but it's very well built and comes with the kind of expansive garden you'd literally need to pay a million for these days (I paid a LOT less than that!). Whether any of the cheaply-made housing being thrown up as fast as possible round the corner from me by an investment consortium will still be standing by 2090 I won't ever know, but I'd be very surprised.
Maybe a system like NYC's co-ops? Dare I say we move towards land use instead of land ownership?
Aren’t co-ops a kind of ownership? How do they differ from condominiums? Can they be rented out?
You’re right. But I don’t see why you couldn’t have a system where you are considered a fractional owner as soon as you sign a lease. You’re now sharing the labor of upkeep and paying rent that covers property tax and other communal fees.
It seems like governance of a shared building is complicated. I’m thinking of that condo in Florida that collapsed due to a political dispute among the owners over what to do about necessary repairs. Some of them didn’t have very much money and were strongly opposed. It makes me wary of having part ownership in what’s basically a political process that you don’t control. No thank you!
I’d rather be making my own decisions over what’s worth paying for, or at least be in partnership with people I know well and trust. Money issues are hard enough for married couples sometimes. The more people you add, the more complicated it gets.
I’ve read that co-ops sometimes have pretty strict vetting processes to make sure that anyone buying in is a responsible person with sufficient income that they will be able to agree with. This doesn’t seem very inclusive, to say the least. I doubt co-ops would be open to giving real political power to renters.
To be fair, landlords vet their tenants as well, but how picky they are varies. There is something to be said for a simpler relationship where you are only responsible for the rent and not anything that could happen to the building.
I’ve been involved in a fairly disastrous condo association, so I definitely agree with you here. One problem was that there was really no way to force things to be handled equitably without spending a bunch of money on a lawsuit. (And then you’re in the position of your own HOA dues going to a lawyer defending the HOA against you.) If the government were involved, that might actually give you a chance of getting something resolved, assuming your government isn’t apathetic, corrupt, or incompetent. That’s a high bar these days.
In general I don't have a problem with renting, as it provides a market for people who wish to spend a few years of their life in a city maybe studying or working or whatever and then somewhere else, the problem comes from the fact that the people who want to settle down there, found a family, live for decades, can't cause the prices are so insane. Additionally to that, property investory in my country love to buy an asset and don't even rent it out cause it could lower the value when they sell it later. Vienna usually alternates with Salzburg between what city has the higher prices for rent, but Vienna is also the city with largest amount of empty apartments. It's insane.
The lost income from not renting a place out is pretty substantial. I suppose if that’s not enough, a tax on vacant apartments could do more to discourage it? But I don’t know enough about those cities to know why people don’t do it.
But if there are no investors in rental housing then it seems like there would be a lot fewer places to rent and rents would go up a lot.
Funny you mention Vienna, which also has one of the best public housing programs in the world. While not perfect, I don't think it's impossible to find an affordable (and livable) place to live in Vienna, no matter what income bracket you find yourself in.
Property investors are first of all investors.
They invest in property because today its risk-adjusted rate of return is higher than that of alternative areas of investment.
And the reason is that there is artificial scarcity of housing due to excessive zoning and zoning-equivalent laws.
The solution is not to ban investors but to make such investment less attractive than e.g. stock market.
There are three measures to undertake first (IMHO):
The building won't happen though, as the investors can encourage NIMBYs and lobby for property value protectionism. Those who hold assets will naturally try to prevent said assets losing value.
More precisely, it is not “losing value” but:
appreciating at a slightly lower rate
In most cases, investors would be much better off if they can build rather than if they cannot. There can be exceptions like Manhattan or Westminster but these are just exceptions.
Investors can also lobby against any other form of legislation that affects their investment, so I don’t think that should deter us.
I believe @MetArtScroll is correct — if the supply of houses met or exceeded demand suddenly it’s not profitable to take on a 3rd+ mortgage and the problem starts to solve itself.
Banning all investment sounds like something that helps some people afford housing while being even more punishing than the current situation to renters and transients.
One thing that makes real estate a desirable investment is that mortgages are really cheap. It's the cheapest loan you could ever hope to get your hands on thanks to incredibly low interest rates. And if you do it right, it's basically free. It is not particularly hard to buy a house, and then rent it out for more than your mortgage payment.
Have you managed rental property? It's conceptually easy, (and mostly is, on a single property, until it isn't) but the day to day logistics are a true job once you have more than one or two.
I imagine that when you own multiple properties, your income is such that hiring people to help with that is manageable.
But I was thinking more from the perspective of those who buy their second house, then choose to rent out their first house rather than sell it.
There are management companies that will do it for you. It’s an expense, but reasonable if you don’t want it to be your job. It’s another cost to consider when deciding whether the investment is worth it.
Yeah but you're investing a lot of time into this unless you're very experienced or very lucky. It's not exactly free, it's more of a job ... One that can pay pretty badly all in all.
The obvious upside is that at the end of the day, you own the asset. But that is only beneficial if you're going to live in it; if it's for investment purposes, again, you're making it a job.