This has come to the forefront in America since Covid and has become the reason why a lot of American’s (younger Millenials and Gen Z) can’t buy homes, beyond Gen Z being unable to find gainful employment (1/3 in unemployed). I think stating holes in their argument like “there are good landlords out there” or “what about this specific instance” is literally arguing against a rule with exceptions. That’s not what this post is talking about. They are talking about the “corporations” who are just some rich older person or couple that are buying one, two, or three extra properties and renting them out. Frankly that’s the biggest reason why housing costs have skyrocketed.
The US Federal Reserve is trying to curb this by keeping the Prime Lending Rate (PLR) high, but Trump is putting pressure on him because lowering the PLR would look good for him on paper because it would look like he did something immediate to alleviate the economic pressure we’re feeling in America, directly because of him and his policies. BUT, that would be catastrophic to us “poor” (people making less that $240K/year; 90% of Americans), and I think you can see why. Yeah, if American’s with large savings accounts (years ago the figure was (0% of Americans have less than $1000 in savings, so just imagine how it is now) all of a sudden saw that the mortgage on a house dropped from . . . lets just take the average cost of a “starter home” @$210K . . . $1,762.34/month to where it was prior to the pandemic at (~3%) $1,347.87, the rich Americans that were already buying those extra houses would just buy more extra houses and charge YOU, a poor American, that ~$1500/month and still charge you for any maintenance they have to do (depending on how your state renter laws are set up).
But even with all that, we still have the issue of how much houses cost. And because of the aforementioned “extra houses,” we have seen a skyrocket in the cost of houses. I won’t do a deep dive on it, but I will sum it up and link to a podcast you can listen to: an average home “should” cost ~$120K in today’s money, but because of the MASSIVE bubble created, that home now costs ~$400K. Why? because of people buying extra homes, and those same people who don’t have jobs being able to make it to zoning meetings to tell the planners they only want “big” homes in their areas to increase the selling price of their own home. That then has a cascading effect: let’s say this happens somewhere in California like a suburb of San Fransico. That means that people no longer can afford to live there so they move to let’s say Dallas. Now Dallas has less supply and more demand and the sellers jack up their prices arbitrarily because they want more profit. Then the buyer rents it out and keeps increasing rent prices so they can keep making more money.
This is what the X Poster is complaining about. Not an immigrant charging reasonable rent prices or “good” landlords, because the truth is, those aren’t the type of people typically renting out houses to poor people who couldn’t afford to buy it.
https://www.youtube.com/watch?v=7bajyEFHK0M&t=1198s Here’s another video that’s kinda related: https://www.youtube.com/watch?v=SfsCniN7Nsc
Y’all are missing something imo. Landlords are artificial demand - they drive up the housing prices for everyone, including home owners.
The argument that it costs to maintain a home blah blah is BS - if it wasn’t profitable then the landlords sell it. They’re not being charitable. They make a profit and it comes out of poor people’s wages.
Why do you think it’s been made so difficult to own a home? Long as you’re paying rent, you’re a cash cow. Also less likely to leave a crappy job.
Lotta people chiming in on the profit rates for landlords – and while I admit that there are shitty landlords out there, I think it’s worth considering the ‘standard’ individual-owner landlord situation (which is historically the ‘norm’ for landlord situations). Ie. Someone who’s a bit older, has an ok amount of savings from working, and wants a second income stream from ‘somewhere’ to hedge against layoffs.
What they typically do, is take out an interest only mortgage with a 30-35 or higher year term. They add in the cost of tax on the property, and any maintenance/condo fees involved, to the cost of paying that interest only mortgage - and that generally sets the rent amount. They use that income to pay off the carrying costs of the property, and hold on to it for a few years assuming that housing prices will always go up – and after 5-10-15 or however many years, they can sell the property for its higher valuation. These deals are often done as Variable mortgages, as they offer lower interest rates, but also expose the landlord to greater risk with interest rate changes (which they pass on to renters).
And as properties in the area increase in cost, the cost of the above formula also increases, prompting the landlord to increase their profit from ‘carrying’ slightly over the years, assuming it can offset the increasing maintenance costs of the unit.
I’ve periodically looked at rent prices in my area, and done the above, and they seem pretty much in alignment. It’s one of the likely reasons you’ll often hear jokes/stories about landlords freaking out at tennants because a bank’ll yell at them if they’re late on payments – because yes, the rent is basically paying off the interest part of the mortgage on the unit. It’s also one of the reasons ‘new’ home owners (who are actually living in their homes) will typically initially pay ‘more’ than renters, but over time they pay less in terms of monthly carrying costs (not even looking at the principal pay down - just the fact that they get a rate that doesn’t get ‘readjusted up’ every year to align with increasing house prices).
Does this still apply to the apartment building I once lived in which was built and run by an immigrant family as a long term family investment, and they charged a really reasonable price?
Just curious.
I pretty much agree with this. The economy has grown up to be for parasites made by parasites. The value of work should be way higher that it currently is. The economy should work on people actually doing things rather needing to own to become prosperous.
Is it better to pay mortgage interest to a bank?
Wait till you hear about loan interests and collateral. Maybe even covenants down the road.
As Churchill put it…
Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains — all the while the landlord sits still. Every one of those improvements is affected by the labor and cost of other people and the taxpayers. To not one of these improvements does the land monopolist contribute, and yet, by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived…The unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.
It wouldn’t be an issue at all we were paying to a normal person who’s got ex. To pay for their mortgage, for college debt etc. The issue is that we are paying evil corporations and not normal people. We are fueling gentrification and we can’t even boycott them
@zedgeist How about rent of things, as opposed to rent of living space? I’m specifically thinking of the hardware I’m renting for this Fediverse server. A network connection, power, and cooling come with it. In my view this is more acceptable than having to rent a house or car. (Related topic: is having a car moral? Related to that: Is there a moral argument to be made for our against living away from a population center? And related to that: why the Hell do people refuse to wear masks during a pandemic?)
Is my renting that hardware more paying for a service than straight rent? There’s certainly the aspect of my not being able to afford the hardware cost up-front and just renting space, network, and power.
Ideally I’d just run the server in my cellar, but I live in the woods and trees fall on the power lines all too often. (Loop to the question of the morality of living away from population centers.)
Basically whomever runs for president needs to announce building out - nationwide concrete apartment complexes construction program on a massive scale.
Offload at least 30-40 mln people demand. Housing costs gonna drop insanelyRemoved by mod
Guys, y’all should read up on Henry George. It’s so logical that it is accepted by both sides in politics.
Rent-seeking behavior is unfortunately very common.
