Doesn't anyone feel uneasy about it, that more and more people are looking at real estate as a financial tool, not a basic human right to have a roof over one's head?
Aren't startups like this just adding oil to the fire which is the real estate market?
I do not understand how will someone expect for future generations to achieve their own personal freedom and living inside their own four walls.
[1] - https://techcrunch.com/2022/05/17/backed-by-forerunner-and-bezos-back-arrived-a-startup-that-lets-you-buy-into-single-family-rentals-for-as-little-as-100/
Imagine if we did the same thing with, say, water: privatized it and then "democratized" ownership of it.
It's easy to get retail investors to buy things at inflated, speculative prices, so the price of water would go up. People would say, "Why are so many people dying due to lack of access to water?" And we would blame these startups, laws would be passed, and we would fix it.
Unfortunately the necessity of housing is not as direct and clear, and we have a long history of denying housing to people who are unlucky, sick, or the children of such people.
The market isn't failing to function because someone realized they could buy up current stock and make a large profit over time, people noticed they could make a large profit over time because city governments zoned everything wrong for the actual demand.
Ambrose, c. 350
In Hong Kong, we spent over half of our income for rent [1]. Median per capita floor area for accomodation of 15 square metres, with some people living in subdivided flats with per capita floor area of 5.3 square metres [2]. The average waiting time for public housing is 6.1 years [3], note that public housing are government provided housing available with lower rent for low-income households, which are much cheaper and larger than subdivided housing mentioned previously. The median house price is about 20 times the median family income [4].
Yes, we know that this is a problem. But the government officials don't have incentives to tackle this problem. In fact, about 1/5 of the government income comes from selling land [5], so they probably can't fix this problem and keep the same spending without increasing tax. Let alone many officials are related to this sector or hold many properties.
[1]: https://www.thestandard.com.hk/breaking-news/section/4/17694...
[2]: https://www.bycensus2016.gov.hk/en/Snapshot-09.html
[3]: https://www.scmp.com/news/hong-kong/society/article/3177511/...
— Thomas Paine, Agrarian Justice, 1797
Even beyond that, there's certainly no right to have the roof over your head wherever you want - there is simply not enough space for everyone to have it. Commoditization of housing basically lets the scarcity be managed via market mechanism, the best we have - what creates the problems, like making scarcity worse, is /absence/ of commoditization - where someone decides that things should be a certain way, e.g. via zoning, design reviews, environmental rules, etc. If we could commoditize more in these areas (e.g. something like carbon tax for congestion/sewer use/... instead of a committee deciding; removing free public parking and letting the market resolve that and probably save space and reduce car use; etc.), there'd be more housing. If we commoditize less, scarcity would just be managed via different means - like corruption, connections, etc.
What would be your proposed solution to this problem, as in how would you remake the real estate market in the US? And perhaps more importantly, how coherent is your solution with the US as it is today?
That doesn't mean you can't have exclusive use of some part of it, how else would we encourage people to take care of the land and develop it. But you should continuously pay everyone else for it's exclusive use. Inherited, and corporate (basically immortal) land outright ownership is immoral IMHO.
With the exception of employee housing, any non-individual entity including agents of corporations should not be allowed to purchase even one residential property.
With the exception of diplomats, foreign citizens should not be allowed to purchase more than one property.
These laws should be applied in any developed country.
This is one of the reasons they wanted corporations to have rights as a person, because in regular reasoning a corporation owning houses, making speeches and donating to parties makes no sense as their activity and existence is entirely in the sphere of privileges not rights.
You do not have a basic human right to the labor of the people who build and maintain these houses.
This is where this entire discussion collapses for me. Yes, I agree there needs to be more access to housing. And it’s frustrating to me that our government is too inept to simply provide it. For instance: we have committed to about 45 Billion to Ukraine.
At a cost of $100k/unit (achievable at scale), that’s around 450,000 single family homes.
The “inflation reduction” act, at about $600 Billion, represents about 6 MILLION single family homes.
The “build back better” money, which appears to do approximately no building back of anything whatsoever would build about 40 MILLION single family homes all in.
This entire discussion is absurd to me. You’ve got politicians burning money, some people talking about housing as if they have a “right” to a house (that is: a right to force people like me to build them a house at gunpoint), and still surging homelessness.
Nobody seems to actually want to have a real discussion about any of this. When our elections come up, the “housing is a human right” group votes against any policies which would lead to people actually owning a home, and for the politicians looting the treasury. It’s all just absurd.
It’s always been viewed this way, at least in the west. Land ownership quite literally defined western social power structures for a very long time.
That said, the use case for housing is housing. Ownership generally isn’t that relevant, to the extent that prices are still set by supply and demand. If there are enough units on the market, prices or rents will be reasonable. If not, prices will go up.
My suspicion is that the attraction of single family houses as an investment asset on this scale are going to partially fade away. It’s driven by the fact that real estate is somewhat uncorrelated with equities and unleveraged returns have historically been comparable to the SP500. However, historical performance does not necessarily reflect future performance, and single family homes cost a lot to maintain.
You'd be surprised how difficult it is to find any piece of land anywhere in the US where zoning allows relatively unfettered building of tiny or smaller dwellings. It's possible, but it's very difficult.
I think it would also be nice if there were some kind of scheme whereby property tax is low for a first home, but increases when you own more than one.
This website[0] lists 18 companies in the property equity category, and I know of at least 1 more reputable firm not on the list.
The reality is that low yields, tax changes, and new regulations have recently made being a small time landlord a lot less attractive, which inevitably means big companies with economies of scale and tax efficiencies are going to start moving in on the industry.
[0] https://thecrowdspace.com/directory/real-estate-crowdfunding...
People say a lot of things as fixes:
1) Build more: this only works if they are affordable to the people who "need" them...not just the same investors who are already controlling the market.
2) Higher density: We had a highrise completed last year in my town. There are only 6 full time residents. The rest is investment/vacation rentals. Now another is being built. Meanwhile, affordable houses are being razed in order to leave the lots vacant or develop them into unaffordable housing.
3) Move to where nobody is: I live in Idaho. We used to be that state. Now we just have a market where you are required to make 2-3x what the average renter makes in order to purchase (assuming you can compete with the cash investment buyers). There are very few high paying jobs...and rents are increasing due to people buying investment properties in the middle of a bubble.
I would love to have a solution. The issue is greed. How many warning stories do we have about greed through history? Largely ignored...too much FOMO being exploited.
Currently, our town has companies shutting down (tons of unaffordable commercial/industrial rentals), restaurants closing multiple nights a week due to lack of staff, increasing homeless population in the region, but most importantly...the gap between "classes" is widening and the hatred is growing. Maybe that was the point the whole time.
I would like the barriers to home ownership to be lowered. On the other hand, I don’t think the rental market is evil. A lot of people can’t afford to buy homes, and without homes for rent would be out on the street.
Essentially you have to treat each house as unique and self judge if the price given is worth it for you.
So trying to treat it as a financial asset is problematic. Landlords have to be intimately aware of their properties condition .
I see it kind of like a what friend of mine, who was a pretty decent software engineer, said about going out on his own, rather than working for others (I am an entrepreneurial-type thinker, have run my own businesses for the last 30+ years, although not completed them in a buy-out process, just use them for cash flow).
Paraphrased: He didn't want the work of the overhead of running a business, he just wanted to work on software, then do other things in his life.
It is up to each person in life to do what they do as ethically as they think best for them, and up to each of us to choose whether we care to interact with others or not, with others' values/ethics in mind. And in that way, we get to benefit from others' expertise in areas we may not be as proficient.
Software can do great good, and it can do great harm. It is us humans that make the difference. Same with providing housing or commercial space. It is yet another tool, judge for yourself how that tool is being wielded by each practitioner.
To bemoan the securitization (not commoditization, for not all real estate is equally fungible) of real estate is, ultimately, to bemoan that certain properties are closer to employment, closer to community, closer to commerce. But this is inevitable.
To seek otherwise would be to try to persuade businesses (through tax incentives etc.) to relocate to less-desirable areas, so that people will follow and invest with human capital. This has been tried, many times, in many countries, for reasons ranging from the economically to politically ideological. It has failed. Again and again.
Edit: one more thought, this also really hurts people who priced carefully by increasing their property tax and insurance rates by no fault of their own.
“This is a family friendly neighborhood, we don’t want high arise apartments here. You can’t treat real estate like a commodity, these are peoples homes and communities! We need to preserve our neighborhoods character!”
There are issues with housing markets in many areas of many countries. There may also be issues with the trend you've identified. But if so, you need to identify a much better argument, because I think you've got it exactly backwards - that is, the real problem with housing is that it's not a commodity. (Specifically, housing is not fungible, and there is no liquid market in housing. Houses are not like bushels of wheat!)
> Aren't startups like this just adding oil to the fire which is the real estate market?
I mean....are they? Offhand, the problem appears to be a limited supply, and some of the companies buying houses (like BlackRock) have been very, very clear about this - they analyse markets to find places where housing is in short supply, and buy houses there, because they don't think market forces will be able to impact prices.
In a normal market, money flowing in to a commodoity that's in short supply would quickly lead to an increase in capacity, but it doesn't here. That's a problem!
...but it doesn't seem like one created by BlackRock, nor is it being exacerbated by them. It's not clear they're making things worse. But sure, let's sock it to them and drive the price of housing down. :)
> I do not understand how will someone expect for future generations to achieve their own personal freedom and living inside their own four walls.
Also something to consider - there's no shortage of housing. There's a shortage of housing where people want to live. We could change one side of the equation (build more hosuing) or we could change the other (live other places).
It's very easy to see how we can expect future generations to have shelter; the world is full of empty land and the materials needed to create shelter; given modern technology, shelter is technically cheaper to provide that at any time in history. It just happens to be illegal to build that shelter in the places people want it.
Can we expect future generations to be able to live in the tiny, tiny scraps of land we've decided are incredibly desirable to live in (SF, NYC, London...)? Maybe not.
In many countries, government policy has been (in some cases explicitly) that house prices should always go up. (The calculation is that more people own homes than rent, so this should be worth votes on net.)
If you have an asset class that, by government policy, keeps getting more expensive, then that will be very attractive for investors.
Is this a good policy? No, I think it's catastrophically short sighted. But it's what we've got. But it's important to keep in mind that while a pile of manure may attract flies, the flies didn't create the manure...
The latter is particularly serious. In normal markets, tight supply leads to higher prices. Producers respond to higher prices by increasing supply and prices moderate over time. In the housing market this is not happening: in high demand cities with well-paying jobs it is largely illegal to build new homes. Thus supply does not increase and prices continue to rise. In the oil industry in the 1970s, we saw how OPEC supply restrictions caused oil prices to rise. The same is happening in the housing market: local zoning laws are effectively operating as a cartel.
This government supported financialization of the housing market has created a haven for real estate speculators in the private sector. Continued low housing supply helps insure prices will continue to rise and thus make housing a good investment. This speculation makes the housing market even more frothy.
To break the cycle, we must end federal policies that encouraging housing to be seen as a primary asset investment for individuals; and we must reform local zoning laws that restrict new supply.
Here in Barcelona the market is screwed by shitty foreign investors with seedy letting agencies that totally ignore the tenant's rights. It's all about the money
Housing production is far too centered in the opinions of "the community." Does the community even exist when it is not opposing housing? One wonders. Housing cares far too much about your identity and character. Whether it is qualifying for a mortgage, passing a co-op board interview, or cities and neighborhoods calibrating their codes to attract the "right kind of people" and keep out the "wrong kind of people." This neighborhood isn't for renters. This neighborhood isn't for tech workers. This neighborhood isn't for multigenerational families. This neighborhood isn't for transit riders or cyclists. Housing types that mere professionals could afford would be inconsistent with the character of this aristocratic community.
Shut up! My money's as green as yours. Take it. In exchange I get a place to live. If there are not enough then someone can come along and make more. It would be so much better if housing were dramatically more commodified than it is.
> I do not understand how will someone expect for future generations to achieve their own personal freedom and living inside their own four walls.
Why would anyone expect that? It hasn’t been the case for most of human history. Maybe it’s not up to other people to figure out for you how to achieve your own freedom.
There are real issues around the costs of developing. Building is insanely difficult and expensive now. There's tons of regulation around it increasing the cost, and ironically the labor movement makes it way more expensive in terms of labor (and materials... which also require labor to produce). Then you've got endless numbers of regressive NIMBYs masquerading as progressives who fight development with political means (via zoning), legal means (via lawsuits), and emotional means (via attacking it as gentrification). You face people like professors who decry gentrification, despite having moved into the area, owning multiple properties, acting as a landlord, and then collecting bogus evidence to prevent turning a private dog park into housing [2].
In Philly, you can either spend months or years getting a housing project approved and bribe council people like Darrell Clarke (who stays in office via appealing to NIMBYs and restricting development in blighted areas [3]), or you can build single family homes "by right" (according to existing zoning). Which means single family homes instead of high density or mixed use structures.
Even if land were free, building would still cause housing to be very expensive. Average cost to build a house in Philadelphia (cheap compared to other big US cities) is 300k. There are many places where you can get free land [4] but it turns out people want to live in a limited number of places generally.
1. https://www2.census.gov/programs-surveys/decennial/tables/ti...
2. https://billypenn.com/2021/03/29/west-philly-poop-study-feca...
3. https://whyy.org/articles/philly-council-limits-development-...
It is maddening, knowing that valuation is totally detached from reality - and still having no alternative but to join the game of musical chairs. I genuinely don't understand how anyone can think "Unlike every other thing since forever, my continued use of this property for 20 years actually makes it more valuable... better jack up the price to twice what I paid for it!"
In addition to the insult to your intelligence, you've got the government doing its very best to help investment banks outbid you. Injecting capital into the economy by providing interest free loans and bailouts to the very top of the power structure... what could possibly go wrong?
I think decentralization of work (WFH) will counter it in the long term. If you can work from anywhere then your housing options become limitless. I’ve lived in the country the last 15 years - absolutely no way I’ll live in pricy cities.
That said, people in the service industry will continue to suffer - I’ve heard of people commuting hours each way for work! Service industry and cities for that matter will have to get into real estate to provide community (I hope not dorms or projects) for workers.
I think this thinking has done more harm than corporatization of real estate. Owning a home has a outsized emotional impact on the psyche of regular Americans. Buying a TV isn't a life event , is it? nimby thinking is just downstream from this thought.
I think corporatization trend will finally disassociate real estate as the only wealth building tool for regular people. Cancel all the govt subsidies, lift all the nibmy restrictions, let the home commoditization begin for real. Lets start building homes like any other commodity.
Meanwhile, average homeowners are practically required to consider their house as an investment as well. In an increasingly precarious society, owning a home is one of a few things that a middle class person can do that guarantees some financial stability. Homeowners are incentivized to support policies that drive up their home's value so that they can sell it later (and maybe have enough money for retirement). Some of these policies include supporting single family zoning (of which there is a shocking amount) and opposing affordable housing projects in their neighborhood.
When housing costs rise faster than wage growth, the barrier to breaking into home ownership becomes increasingly difficult. A class system of renters, home owners, and landlords is forming and becoming rigid.
Housing is not supposed to be a financial investment strategy.
My gut feeling is "yes", and we hear more and more about Real Estate funds going to the residential market (they were dealing mostly with office and retail surfaces here before). It is kind of scary because it will accelerate a phenomenon. Commoditization will lead to the same thing, more money trying to buy a limited supply leading to a booming price.
However, recognizing that commoditization is a catalyst should not hide the fact that it is not the root of the problem. No one can promote demographic growth (globally or regionnaly), limit new dwellings and act as if booming prices are a surprise or the by product of greed. It is not, legal constraint has made construction a real pain but demand is growing.
To give a bit of nuance, on many markets rental yields has been collapsing has a consequences of this. Yes prices are climbing but rent are not. So yes, buying your home is a far away dream, but compared to the price of ownership rent have never been cheaper.
What is wrong is fraud. Fraud happens when a bank is allowed to create money out of nothing (banks used to have to SAVE money to lend it, but the Central Bank makes it so they dont have to save money to lend it). That is unethical and also: FRAUD.
Buying a house is expensive and sucks but thats not unethical for things too be expensive. It is unethical for Banks to commit fraud by loaning money they dont have.
NOTE: central bank is there to save the banking cartel. If banks were just allowed to do what ever (free banking) they wouldnt get very far cause of runs on banks and competition between banks, but a central bank allows the tide to raise all ships (banks)
Far more interesting to consider, I think, is there cost per square foot to construct; which has skyrocketed in a few generations.
Dimensional lumber and other materials just cost more. Labour is compensated better. And yes, fees have gone way up in many municipalities.
If anyone is / would like to work on something to further these ideas about definancializing housing please comment.
I don't see this as being any different than the numerous REIT's that you can invest in.
If you think about it this makes perfect sense: why is a small lot in a city (say central Paris) worth millions while a 10ha estate in the Australian outback worth a few thousand? Because of the community that throughout the generations built the city into a place with value where people want to live. It is therefore to the community that this economic value belongs.
Beyond the moral dimension of this proposal, there is also a surprising economic depth: this rent/"tax" would discourage unproductive use of land, as speculators cannot afford to sit in a property, wait for its value to go up, and collect the income from the hard work of the community around it.
I'll leave you with some quotes:
The tax upon land values is, therefore, the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the takingby the community, for the use of the community, of that value which is thecreation of the community. It is the application of the common property to common uses. When all rent is taken by taxation for the needs of thecommunity, then will the equality ordained by Nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return.
—Henry George
Landlords grow rich in their sleep without working, risking or economizing. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.
—John Stuart Mill
The underlying problem is the whole structure of our economy which has become more oriented at increasing rents than increasing productivity and real economic growth that would be widely shared in our society... but a tax on land rents would actually address some of the underlying problems. This is an idea that Henry George had more than 100 years ago but the analysis that I have done says it would actually go one step beyond Henry George. Henry George argued for a land tax because it was non-distortionary but this analysis says that a land tax actually improves the productivity of the economy because you encourage people to invest in productive capital rather than into rent generating wealth and the result of that shift in the composition of savings toward more productive investment leads to a more productive economy and leads to a more equal society.
—Milton Friedman (and believe me, I don't often quote Milton Friedman!)
Money has a cost. Whether you use it to build houses or indirectly invest in companies through stock markets or your own business or treasury bonds, all expect yield vs risk to match other investment opportunities. If you make it tough for new investors to enter housing markets, then new money will stop flowing into housing markets as they can find better yields else where. That means lower new supply and higher rents. If you assume your toothpaste company is ripping you off by increasing prices, then the answer is not to make it difficult for new toothpaste companies to enter the market (or add more taxes to the existing ones). The answer is to make it easy for other companies to enter the market and ensure its profitable for them to do so.
The main issue at the root of the OPs concerns is that as a society we have attempted to make real estate ON AVERAGE a good investment, which by definition means increase faster than inflation. There are demand side subsidies for home ownership, but many supply side issues as well. For example free parking and minimum parking requirements and max height restrictions. Many others have pointed these out. If we as a society tried to increase entrepreneurship in real estate by opening up more options, we could see a flourishing of options for people, with more range than ever, including lower cost options.
California and the Sun Belt have too many people relative to the innate ecological fragility of the regions, and manipulating the market to cram even more people in there than the economy or environment can support is foolishness and irresponsibility masquerading as a moral crusade. Foolishness and irresponsibility always masquerade as moral crusades.
I'm living in a rural mountain village that has become a little more trendy since remote work became a thing. It was a sleepy relaxed place comprised mostly of kind people.
Of course a wealth property mogul has snaked his way into the village after seeing an opportunity and now hunts down houses, out pricing local people and young families if possible and then sells the houses to the hedge fund he is working for, or buys them with his own personal wealth with plans to sell it later on at a much higher price than he paid for it to another wealth friend who doesn't even live in the same country.
This guy is actually hoping that his money will also drive up prices after other villagers see they could get more money (potentially) if they'd sell to him. Obviously people are free to choose who they sell to. But what a thing to try do? Essentially encourage the destruction of a community by waving money around. He will even interject on previously arranged deals and offer double the money hoping others can't pay and tempts the seller to take his money.
None of this behavior adds value to the community, it tears it apart, they just take. They use money to bully and create stress for everyone who genuinely would like to live here or start a business. Robbing people the chance to live a relaxed way of life and raise a family without too much financial pressure.
I talk with the guy and funnily enough he told me he'd occasionally "gift a house to a local family" rather than some other rich asshole so he looks like a nice guy and presumably older people fall for his cons and sell their places to him. I've also heard him tell me he has had death threats made against him, so yeah, this is what his behavior drives people too.
My only hope is, people, on average choose community over money, but in the world we live in with inflation etc, I can't blame them if they feel pressured to sell to the highest bidder.
I want finish this rant by saying this, everyone else in this community adds value by farming, running stores, running schools, being doctors, mechanics etc. This person adds nothing, he only takes for his own gain. Encourages others to come in and run businesses her purchased at a cheaper price.
He uses the very things people work hard to produce and which make the village a beautiful place, to sell it to other people. Similar to how Uber and Lyft make money out of the roads people pay for through taxes. It's leeching.
Elora Lee Raymond at Georgia Tech continues to document and research the devastation in Atlanta — evictions of tenants, the resulting increase in deplorable rental options, the destruction of the market for working class homes in Atlanta’s Black communities.
https://www.atlantafed.org/-/media/documents/community-devel...
My neighborhood consists of approximately 10% corporately owned rental homes purchased after the housing crash using money borrowed by said corporation for next to nothing.
These houses are now full of people such as myself who can’t afford to purchase homes, paying ever-increasing rents and never able to scrape together enough capital to buy anything of their own.
Sure looks to me like we’re reinventing feudalism, with serfs paying tribute to their investor lords.
Side note: Land rights are even more important than things like free speech. Also I'm not saying that land rights as a basic right is easy to solve, it is actually very difficult, but for me it a per-requisite to every other 'right'.
If you actually want to do something about it, advocate for zoning reform. People buy SFH because the lack of MFH in some areas makes them a pretty sure bet appreciation-wise. If developers were more free to build duplexes/quads/ADUs or larger, the increased supply would theoretically lower rents in the area and make SFH less attractive as an investment vehicle.
Even if someone gave land to an individual, many would lack the ability to actually have a home constructed without saving for many years simply due to the cost of materials.
The best method we have for distributing a luxury good with limited supply and excess demand is through markets and prices. Every alternative we tried have always lead to a lot of troubles.
Maybe you're referring to the renting vs owning aspect of it that is potentially bad. In which case I would refer you to other countries' housing systems, and look into georgism/the land value tax.
Oh, and separate of the decades that i owned a home, I also ran global web operations and digital products for one of America's largest real estate companies...and i can tell you that there's alot that people would not want to know on "how the sausage gets made". While there are plenty of honorable and good employees and real estate agents, sadly there are still enough shady folks...and its not all their fault...mostly because the industry incentivizes bad behavior...and by bad behavior i don't mean illegal (though of course that happens too), i mean simply unethical behavior. And, with this industry having survived the dotcom boom, the great recession, the pandemic, etc....there's just no way that things will get less shady. More and more parasitic behavior is on the horizon for this industry, so it doesn't surprise me that more startups are yet to come. Or, maybe I've just been too deep in the industry?
A nd, don't even get me started on how foolishly many American towns (and of course American homes) have been designed towards suburbia instead of better, densely (and less resource wasting) approaches like towns in other countries.
Naturally, they look to real estate since real estate is famous for being a "safe" place to park money. And as history usually shows, it's a place where your money will grow as the asset naturally increases in value... "They're not making any more real estate", as the motto goes.
If you stop and imagine a utopia where everyone had approximately the same wealth, give or take a "reasonable" factor of less than 10, then the wealthier people could own one really nice home or more than one not-so-fancy home. With their excess money, they could conceivably own and rent out another property. This would be fine, since the person on the bottom of the scale might not like the only home they could afford, or maybe they don't plan to stay put long; so they could rent a nicer home from the aforementioned wealthy person.
Of course regions which were more attractive to live in (coastal southern California, for example), the homes would be more expensive because there would be more demand. But still, there would be an upper limit on how expensive they could be because there wouldn't be people who could afford mansions. You might still find homeless people in southern Cali, because sleeping in the park by the beach in an ideal climate just might be worth it to some people compared to sleeping in a home in some suburb of Dallas, Texas.
Instead, we are on a clear path toward Corporatocracy. As long as you're a member of the elite in a corporation, you'll be fine. You'll have more than enough money to afford a very nice home... and perhaps even at a below-market price thanks to a corporate benefit, since your corporation may own thousands of homes.
I'm looking toward boats. There are beautiful places in the world where only smallish boats can go (so that keeps out the megayachts), and with some training you can relocate yourself relatively as you please, enjoying different parts of the world. As long as we have workable internet anywhere, which we do have mostly solved now, other needs should be relatively small and easy to manage.
A 40-50 foot sailing catamaran costs $250-750k depending on its age and quality. Figure 10% per year for maintenance, and you're still in the range of a reasonable home price. Plus you never have to live near crappy neighbors if you don't want to.
Entire sectors like healthcare and childcare are being gutted by prohibitive living costs associated with living in a city or close enough to it. The people of the cities don’t have enough essential workers anymore due to them being priced out.
Even private sector employers have to pay the price for the real estate sector cannibalizing economic growth and pushing corps to increase salaries (and the salaries increasingly just falling into the hands of real estate instead of businesses).
Productive business and economic growth is being captured by the non-productive housing sector and land-ownership class.
If taxes on the wealthy would have increased as fast and as comparatively much as rent has for the working classes then the wealthy would be at the barricades.
When was this ever the case? I can't think of a time in human history where housing was seen as a human right
Having said that, I am of course all for making housing more cheaper, and for disrupting the market in general, up to and including stopping the appreciation cycle. If you sell a used car, you will get less money than for a new car; the same should go for housing. The only thing preventing this are policies biased for existing homeowners; these are unnatural and should be repealed.
We need to restructure taxes around real estate and mortgages to encourage single family home ownership and affordable rental units. Then we can let capitalism run wild until people learn to game the new rules.
You can thank the Fed for the 12 glib years - their actions have these side effects.
(Also... they are not the only business that is unethical).
In this sense, having no solution to the cost-of-housing problem, certain individuals have decided to make money by exacerbating the problem.
Until there is deep enlightenment, until our capitalist-centric values change, until we (the majority we) rise up and say enough and are willing to change our own worldview and our own values in support of "enough is enough", these behaviours will continue to be rewarded and idolized (though many of us believe a forced readjustment, possibly catastrophic, is on the immediate horizon).
Low interest rates, zoning laws limiting supply, a shift into urban centers. It's really a perfect storm that pushed housing prices up and just encourage people to speculate. It could have been avoided. More housing could have been built. Government incentives to "get people owning their own homes" could have been better structured to avoid just goosing prices.
People treat houses like investments because, well, they produce returns like investments. If they didn't, people wouldn't look at them that way. You can't blame people for responding to incentives.
The best way to get people to stop buying houses houses as investments is to make them less attractive investments. Everything else will fail. Higher taxes, vacancy taxes, foreigner taxes - it all just encourages fraud, gaming the system, bending the rules. Take a look at Singapore's mess of public housing with built in profits. Every year they roll out some new rule to try and stay on top of it and every year Singaporean's get around the rule because it's just too lucrative not to.
But if you've been around long enough you'll realize it's a problem that will solve itself. Markets correct. People will move where houses are cheaper. Interest rates eventually rise. New houses will get built. New cities will become "desirable" and some old ones won't.
I remember back in 2008 when houses went from "you're a sucker if you don't buy now" to "I'm never owning a house again". It flipped like a light switch when suddenly the gravy train halted. Condo developers in Miami were selling units for $30k and had no buyers.
All this talk of "houses are being treated like a commodity" is just an observation, at a single point of time, at the top of the boom bust cycle. If you take a step back, you realize it's just a blip in time.
It reminds me of the quote from the movie Margin Call: "And it's certainly no different today than its ever been. 1637, 1797, 1819, 37, 57, 84, 1901, 07, 29, 1937, 1974, 1987-Jesus, didn't that fuck up me up good-92, 97, 2000 and whatever we want to call this. It's all just the same thing over and over; we can't help ourselves. And you and I can't control it, or stop it, or even slow it. Or even ever-so-slightly alter it. We just react. And we make a lot money if we get it right. And we get left by the side of the side of the road if we get it wrong. And there have always been and there always will be the same percentage of winners and losers. Happy foxes and sad sacks. Fat cats and starving dogs in this world. Yeah, there may be more of us today than there's ever been. But the percentages-they stay exactly the same."
I had a homeless friend that very much insisted on this. And I happen to agree.
As for degeneration of American capitalism to rentier capitalism, this is also something we need to address. I don't mind e.g. Henry Ford getting filthy rich -- at least he built something.
If the investment vehicle is detached from the people who live in the homes, then I fear we loose touch with the humanity of the occupants. The slum lord is sociopathic. Home real estate investment vehicle yada yada’s will trend systematically in the same direction. A race to the bottom of inhumanities and language similar to real estate listing euphemisms—
‘quaint’ : cramped :: ‘quaint’ : single mother with four kids and drives for snoober.
Tldr, the solution to housing supply issues to to build more housing. Full stop. If there was ample housing, a decision to buy vs rent would be up to the individual, and all of the talk of how to manipulate policy to allow housing to benefit group A/B/C over group D/E/F would go away.
From what I see, your concern here is about people not being able to afford to "buy a house for themselves because corporations are buying them all", and not on the "corporations that rent houses make people homeless" angle.
First, just in case, I'll address the second. Organizations that buy and rent property do not make people (as a population) homeless. Full stop. Unless they are keeping houses vacant for some other reason, if there are 100 houses, an organization buys them and rents them out, 100 families/groups still have homes. The number of housed people is the same.
In fact, you can argue that rented homes actually decrease overall homeless due to people being more willing to have roommates when they rent a property. Getting a 1 year lease with someone you know through a friend of a friend? Totally reasonable. Going halvies on a house with someone you know through a friend of a friend? Absolutely terrible financial decision. I highly suspect that people who own their home are overall less likely to actively go out searching for a roommate (I wish I had a reference on this)
Overall point, if the goal is to reduce homelessness, you need to build more houses. An organization/corporation renting units does not decrease the available supply. Arguments like "Well, organizations do slow remodels that take units off the market. If an owner owned it, they would live in it during a remodel!". The number of houses that affects is so small it's hardly even mentionable.
To the first point, many people are arguing that the way to do this is to make it so that you can't "profit" on owning a home. In the US, owning property is seen as the path to financial freedom. Enacting policy to actively prevent that will drive many people away from even wanting to buy. If there is artificially limited finanicial upside in buying a property, the math has changed and a lot of people may choose to rent instead. But the policy changes have made it way more difficult to find anywhere to rent. You're stuck buying something, being fully responsible for all of the components of it, and then hoping you can sell it when you need to. Realtors love this one trick to force people to buy/sell homes.
Finally, don't forget that the US already subsidizes home ownership to a large degress in the US. Federally backed mortgages that keep rates on 30-yr fixes terms well below a market rate, FHA programs so people can buy a home with 3.5% down (ie, leveraging thsmselves ~30x), property taxes and interest being tax deductible, 250-500k in tax-free capital gains when you sell a primary residence, and being able to use any improvements to increase your tax basis. None of these benefits exist for renters.
As discussed earlier, the main issue with housing is supply. When you have limited supply, and programs that are designed to increase demand, prices are going to go up. Whether there are startups/corporations involved or not.
People want to live where they want to live (near family, jobs, culture etc)
Take NYC for instance. Politicians try to address the NYC housing crisis from a demand/cost perspective. Rent is too high? Let's just screw the property owner and cap the rent. Or let's just raise minimum wage to make it easier for people to live in those properties.
The result in both cases: you didn't have enough housing before, you don't have enough housing now. You give more money to people, rents will just go up. You cap the rent, there's still a huge number of people that can't live where they want and you make it impossible for existing tenants to move (or for new/more development to be built, for that matter)
So, what instead? You want to build more housing in NYC? Great, that should work. But you have to make it cheap. Deregulate construction, get rid of unions, prioritize developer rights over tenant or homeowner rights. What? You don't think these are good things? Okay, but then you'll have to sit back and watch new construction trickle in and result in 'luxury' housing because that's the only way a developer can recoup their enormous land acquisition, regulation and construction costs. So the challenge with housing is that it requires fundamentally difficult decisions. To pretend that you can just spend 100 billion (or even a trillion) and the problem will be solved and people will be happy, is an illusion.
I'm firmly in the YIMBY camp (incidentally, I don't own any property), but I grew up near Detroit (1990's-mid-2000's), which is a city where supply vastly outstripped demand, largely because the population of the city declined consistently for decades [3] (which I'd largely attribute to a vastly overbuilt freeway system that enabled quick commutes from the suburbs, and explicitly racist federal housing policy [4]). There were hundreds of thousands of empty homes that no one wanted to buy, and this had some very undesirable effects. For one, many homes in Detroit have such low prices that banks can't justify the fixed costs (inspections, appraisals, etc) involved in backing a mortgage, so instead, people who can't just pay cash have to either rent or enter into a land contract [5], where the buyer pays the property owner every month and gets ownership after paying the entire contract off but accumulates no equity. Another issue of having hundreds of thousands of empty homes (ie more supply than demand) is crime and arson [6]. Empty homes in Detroit often became drug dens/crack houses/shooting galleries (pick your term), and thousands went up in flames every year, either accidentally started by drug users, recreationally started by bored youths, or intentionally started by community members trying to eliminate a blight from their block. A lot of Detroit's issues stem from the bulk of the tax base moving out of the city boundary greatly hindering Detroit's ability to fund police/firefighters/sanitation/other public service workers, so this may not generalize to other situations where oversupply makes real estate not a commodity [7], but I often feel other YIMBYs are a bit myopic about just building more housing without considering the potential impacts (both in the case of overbuilding in cities and the case where adequately meeting demand in cities/suburbs drains demand from exurbs or, or meeting demand in suburbs drains demand from the city). And lest it seem I'm just some white suburbanite dumping on Detroit, I love Detroit and think it's a great city with great cultural and engineering output, and I will always stop in to Lafayette Coney and John R King books any time I'm back.
TL,DR: I absolutely want everyone to have housing and we should build more and employ methods (like high property taxes) to discourage people from simply holding empty property as stores of value, but I've seen what can happen when real estate is not a commodity, and it can be terrible.
[0] https://archive.curbed.com/2018/4/10/17219786/buying-a-house...
[1] https://www.usinflationcalculator.com/
[2] https://fred.stlouisfed.org/series/MSPUS Note: prices not adjusted for inflation; adjust manually before making any comparisons to other times.
[3] https://en.wikipedia.org/wiki/Demographic_history_of_Detroit...
[4] https://www.huduser.gov/portal/sites/default/files/pdf/Feder...
[5] https://detroitmi.gov/departments/housing-and-revitalization...
[6] https://www.detroitnews.com/story/news/special-reports/2015/...
[7] https://patch.com/michigan/detroit/5-houses-you-can-pick-lit...
So stupid and why thing never change because no on can think their way to a point of action.
Unbelievable many here buy into the quaint notion anyone cares about everyone having a roof over their head the own and can then pay rent through taxes.
If you want your veil of a lie that everyone gets a house they own you have to make it so, not whine about a reality you are way late to discover. Geez.
What you have with institutional investment in real estate, NIMBYism and the treatment of housing as an asset where it becomes a political goal to increase its value (and thus, by definition, reduce its accessibility) is an example of the exploitation of inelastic demand.
People need housing. There are other things they need like food, which has also been commoditized [2]. How about insulin? By having super-expensive insulin in the US you are quite literally profiting off something that people will die without.
Government is what's required here to protect people from predatory hyper-capitalism. It's also why any ideas like anarchism and libertarianism are so stupid.
Debt is built into your existence. Thing slike the commoditization and profit-seeking of inelastic demand are designed to keep you in debt, at work and compliant. It is a systemic problem.
On a personal level, yeah this isn't something I'd want to work on. You also have to live in the world so I don't really blame individuals for doing what they have to go to get by. For those of us who are fortunate to have choices on what not wo work on, yeah I'd hope you'd choose something that isn't designed to profit from human misery.
My one piece of advice is this: if you do choose to do something morally questionable, for your own sake, don't try and rationalize it. Be prepared to say "yeah this thing sucks but a few years of this will make life-changing money" or something like that. Personally, agree or not, I'll respect that as honest (FWIW). Just don't create some contorted rationalization for how it's actually ethical.
[1]: https://en.wikipedia.org/wiki/Austrian_School
[2]: https://theweek.com/articles/492432/did-goldman-sachs-provok...
Is that a basic human right? If you build your roof, are you then required to share it with others? Why can't they build their own? Why should you build one if someone else already has?
Starting with that assumption severely limits the conclusions you can come to, doesn't it?
Why would that be desirable?
Chapter 1: What is Economics?
“The fundamental principles of economics are not hard to understand, but they are easy to forget, especially amid the heady rhetoric of politics and the media.” In Chapter 1 of Basic Economics, Thomas Sowell introduces the concept of economics, scarcity, and productivity:
Economy – a system for the production and distribution of the goods and services we use in everyday life
Economics – the study of the use of scarce resources which have alternative uses
Scarcity – the wants of everyone add up to more than what exists; without scarcity, there would be no need for economics
Productivity – the effectiveness of effort as measured at the rate at which inputs are turned into outputs
Role of Economics – helps us try to make decisions that make the most of the options that we are presented with in life, especially when allocating resources
Chapter 2: The Role of Prices
In Chapter 2 of Basic Economics, Thomas Sowell discusses the importance of prices and shows how resources are allocated:
Market Economy – an economic system in which production and prices are determined by unrestricted competition between individuals and businesses, not central planners
Transactions – the instance of buying or selling between consumers, producers, retailers, landlords, or workers on whatever terms they can mutually agree on
Prices – an amount of money that conveys the terms of the transaction not just to the individuals immediately involved but throughout the entire economic system
Supply – the tendency of producers to supply more at a higher price and less at a lower price; the quantity supplied varies directly with the price
Demand – the tendency of consumers to buy more at a lower price and less at a higher price; the quantity demanded varies indirectly with the price
Link: https://theprocesshacker.com/blog/basic-economics-thomas-sow...