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 AndrewGPaul wrote:
It's not as simple as "move to a cheaper area". Firstly you need a job in that cheaper area, which may not be available. Secondly, moving house is a fairly large capital expense; if you're living on the poverty line, you might not be able to afford the time off work to go to interviews, to put down a new deposit, hire a vehicle to move your stuff, etc. It was easy for hunter-gatherers, as they didn't have to worry about money. They did have to worry about the other tribe over the hill who took offense at these incomers.

I know I was being simplistic, but the point remains. If you can't afford to live in the area you live in, you either have to make more money or move to an area that is cheaper. One or the other has to happen. Waiting for the gov't to come in for the rescue is just going to put you further into poverty.

 AndrewGPaul wrote:
It's not as simple as "move to a cheaper area". Firstly you need a job in that cheaper area, which may not be available. Secondly, moving house is a fairly large capital expense; if you're living on the poverty line, you might not be able to afford the time off work to go to interviews, to put down a new deposit, hire a vehicle to move your stuff, etc. It was easy for hunter-gatherers, as they didn't have to worry about money. They did have to worry about the other tribe over the hill who took offense at these incomers.

There's nothing wrong with apartments, per se (even Brutalist ones, done right). What is wrong is when they're thrown up to house the less well-off in their thousands, and then no amenities are provided. The infamous estates in Glasgow and other UK cities were originally designed to have good public transport (by bus) links, have lots of open space, communal recreation areas and shops, and be close to employment. As it turned out, all that stuff is expensive to provide, so ... it wasn't provided. Then you have thousands of people living in cheaply-built, poorly-maintained cramped flats who can't get out of the area because there's no bus, can't afford a car (and don't have anywhere to park one if they did) and have nothing to do. And then the rest of us are surprised when they end up in a life of unemployment and crime.

I think this is a difference in the UK and American mindset- in America it’s the norm to commute via personal vehicle. Driving 1-2 hours one way to a job is fairly typical for a lot of Americans. It’s not uncommon for someone to live in a rural area, and work in the inner city.

No.

Violence has no moral right in a free market.

 Grey Templar wrote:

Prestor Jon wrote:

 Grey Templar wrote:

Prestor Jon wrote:


You guys have it backwards, it's not the rental property owners driving up prices it's the higher prices incentivizing people to invest in rental real estate.

Investing in real estate alone doesn't really jack prices up in and of itself. Its the fact that, instead of renting out apartments normally, the owners are renting out to tourists via short term rental agreements, which is far more lucrative than just having normal tenants.

This causes a shortage of normal rent housing because more and more landlords switch to the more profitable scheme. With a lower supply of housing, the rent prices go up as more individuals are competing for fewer available spaces.

These lucrative business opportunity causes more people to want to invest in apartments, which drives the price of those units up. Its sort of a self-feeding cycle.

Again that’s not the owner’s fault. The first rule of real estate investment is to do your best to get the highest and best use out of the property. If the hospitality market in a city is screwed up enough so that it makes more sense to turn apartments into hotels then you need to correct the hospitality market. The local hotels are losing business and money if people are using rental apartments for short term stays so the hotels need to make a correction and recapture that business. Once that happens the rental market will dictate that returning the apartments to standard rental properties is the best use for them. The owners aren’t creating any problems they are just putting the properties they paid for to the best use dictated by local market conditions.

I don't exactly blame someone for doing the most advantageous thing they can do. I'd probably do it in their situation. The issue is its the cause of skyrocketing rent in certain areas. Which negatively effects everybody who happens to live there.

So yeah, its their fault. In the sense that they are the cause behind it. In the same sense that its the raccoons fault that my trashcan keeps getting knocked over.

No that's still completely wrong and a terrible analogy. The raccoons are the direct cause of your trashcans falling over, the landlords are not the cause of the increase in the value of their properties that makes them worth more rent. Landlords can't magically make their properties worth more simply by raising rents. Price elasticity of demand is a real thing, if you raise the cost of something then fewer people will want to buy it. Raising rents doesn't cause properties to increase in value all it does is create a smaller pool of renters who can afford to rent from you. Even if all the landlords in an area colluded their rents would still be subject to price elasticity and their properties' value would be determined by the market, the amount of housing available to meet the given demand for it. Rent doesn't determine value, value determines rent. Rental properties generate income for the owners via occupancy, so properties that have consistent high occupancy rates generate more income than properties that may have very high rent rates but struggle to achieve full occupancy. Rental properties generate maximum revenue when they are fully occupied so the rent you charge should be the largest amount you can charge that will keep your building at full occupancy as much as possible.

 LordofHats wrote:

Prestor Jon wrote:

If there's a shortage of housing then there is a lack of new housing construction and if new housing isn't being constructed you need to look at your zoning laws and your development/construction costs. Zoning laws can drive up property values which is good for the interests that already own property in the zone but bad for people who want to buy into the zone (guess who politicians favor more because they're a bigger source of donors?). The urban areas people want to be close to, commercial districts where the jobs, shops and restaurants are located are going to have limited residential zones so those residences are always going to be limited and expensive. If a city has a healthy growing economy then land there gains value and commercial properties have higher margins and lower operating costs than residential properties which is why even new mixed use developments typically have less residential space than commercial space.

I think the best way to describe it is a self feeding loop.

Palo Alto is a particularly infamous example, with the city council continually being cited and blamed by local residents for not even trying to address the city housing crisis at the behest of real estate investors who want to keep housing prices as high as possible. Of course there are other factors. Palo Alto is filled with highly desirable jobs, and has some of the highest rated public schooling in the US, so it's not like this is a simple deal where housing prices are simply about housing but I think there's a vicious cycle in housing today that ends up prioritizing maximization of local housing prices at the expense of other factors wherever that happen to be lots of jobs (and thus a reason to live there at all).

Yes the self feeding loop is allowing housing supply to expand very incrementally while the demand for housing grows much faster. Unfortunately self interest and short term thinking is intrinsic to humanity and it consistently holds us back. Palo Alto is a very nice place to live, the established interests in Palo Alto benefit from keeping it a nice place to live that is very exclusive and desirable. Therefore, there are limitations on how much housing can be built, where it can be built, what kind of housing it can be, how many and what type of units can be in a given development, etc. and the developmental cost of approvals, permits and construction is high. The artificial scarcity imposed on the housing market makes existing housing more valuable which makes the current residents happy and makes it very difficult to convince them that decreasing the value of their homes by increasing the supply of housing is worthwhile. The good jobs that are available in Pal Alto have to pay a high salary because the high cost of housing drives up the cost of living in the area. Higher salaries decrease the amount of jobs that employers can offer and the high cost of living minimizes the advantages of earning the higher salary. The housing scarcity in the long term inhibits the growth of the population and the filling of the available jobs which means that while Palo Alto is nice now, it could be even nicer except that they are choosing to limit their growth for the sake of short term gains that benefit the people that already live there. Convincing people to give up a short term gain for a long term gain is very difficult in the best of circumstances and our political system doesn't make it any easier especially in our current condition.

Prestor Jon wrote:
Landlords can't magically make their properties worth more simply by raising rents.

They can if they all decide to do so via collusion in their moonlit super-secret landlord cabal gathering. Muahhahaha.

In the real world, no, not really.

As a landlord, if you want to maximize rent, you need to be willing to have your property sit idle, while you wait for that plum renter. In the mean time, you still have to pay mortgage, taxes, upkeep, etc. on it, forgoing longer term leases that provide income stability. Meanwhile, you have to hope that the other landlords aren't going to undercut you in order to pay their bills. All the while, the cash burns, because the bank doesn't care, and neither does the state - the mortgage and taxes still have to be paid, whether its occupied or not. Now, if demand stays red hot, great! If demand cools, you can be looking at 1,000s of unrecovered cost. Hope you built up a real bankroll to cover the property sitting idle...

https://www.cnbc.com/2018/07/09/the-hottest-housing-market-in-the-country-may-be-headed-for-a-crash.html

The situation is especially critical in the Puget Sound area around Seattle, which has added nearly 55,000 jobs in the last year alone, thanks to hiring at big employers like Amazon, Microsoft and Boeing. Combine the resulting surge in population with a slow pace of construction and you get a classic crunch.

The crazy thing is how the costs of new homes are too high for many first time or lower wage buyers, so they end up trying to outbid each other for the lower cost homes, inflating those costs as well. But I don't see how you can put a cap on a price. The seller has every right to make as much as he can, and in a sellers market, should be able to reap the benefits.

The problem is if wages can't keep up with the costs of living over time then everyone is just on borrowed time until the crap hits the fan. One of the lasting memories I have of the great recession is going down cookie cutter neighborhoods and seeing for sale signs in EVERY YARD. There wasn't much of a difference between each house really, and everyone was trying to get out of their underwater mortgage. Crazy times.

There will be a reckoning when the next recession hits. Peeps will lose their jobs, get their homes foreclosed, and there will be a transfer of wealth. This is actually a normal thing when people buy more than they can afford during tough times. People always buy what they think they can afford based on the time they are buying, which is generally good times. What everyone should be doing, is shopping as if times suck so they are better prepared.

And think about all that's lost in the form of interest on those loans... that's less money to invest and save for retirement. People just don't think long term.

 BuFFo wrote:
No.

Violence has no moral right in a free market.

Of course it does, you cant have a free market without violence.

dyndraig wrote:

 BuFFo wrote:
No.

Violence has no moral right in a free market.

Of course it does, you cant have a free market without violence.

What?

 Cheesecat wrote:

dyndraig wrote:

 BuFFo wrote:
No.

Violence has no moral right in a free market.

Of course it does, you cant have a free market without violence.

What?

I assume he means the threat and/or past acts of violence from those who set the market rules.

jouso wrote:

 Cheesecat wrote:

dyndraig wrote:

 BuFFo wrote:
No.

Violence has no moral right in a free market.

Of course it does, you cant have a free market without violence.

What?

I assume he means the threat and/or past acts of violence from those who set the market rules.

Exactly, if there isn't threats of violence to back up the courts/laws you cease to have a market and you end up with a mad max wasteland.

 JohnHwangDD wrote:

Prestor Jon wrote:
Landlords can't magically make their properties worth more simply by raising rents.

They can if they all decide to do so via collusion in their moonlit super-secret landlord cabal gathering. Muahhahaha.

In the real world, no, not really.

As a landlord, if you want to maximize rent, you need to be willing to have your property sit idle, while you wait for that plum renter. In the mean time, you still have to pay mortgage, taxes, upkeep, etc. on it, forgoing longer term leases that provide income stability. Meanwhile, you have to hope that the other landlords aren't going to undercut you in order to pay their bills. All the while, the cash burns, because the bank doesn't care, and neither does the state - the mortgage and taxes still have to be paid, whether its occupied or not. Now, if demand stays red hot, great! If demand cools, you can be looking at 1,000s of unrecovered cost. Hope you built up a real bankroll to cover the property sitting idle...

In the UK, unoccupied small commercial properties don't have to pay business rates (for shops, etc) or council taxes (for homes.)

This is part of why there are so many unoccupied commercial properties in the UK. Landlords are waiting for the plum renter and it's easier to do so because their costs are lower.

This is a good example of how government can affect the market through regulation.

Price capping the rent might be effective, but levying the taxes would have the same effect of encouraging landlords to reduce the rent while also raising much needed revenue to support the local government's operations of street lighting and cleaning and so on, which the landlords currently benefit from whether they contribute or not.

Well, following up my earlier post about the cost of maintenance on a home, yesterday I came home from work to notice that my sprinkler control panel is shot. So had to order a new one, at $150, and hope thats the only thing wrong with the system. Kinda relieved the panel lasted this long as its the original, but still. I didn't wake up yesterday with the thought, "Hey lets replace the control panel!" I would have preferred to do something else with that money.

And if there is more wrong than the control panel....

These are the sucker punches I am talking about.

 Peregrine wrote:

1) Increase new construction, preferably high-density housing if land is an issue. Much of the housing problem is areas where there simply aren't enough houses to meet demand, so price keeps going up. Flood the market with new construction and prices go down.

2) Heavily tax rental properties. If you make buying a house just to put it back on the market as a rental property a poor investment then those properties are available to buy for legitimate residents. The trick is crafting the tax such that it hits the speculators buying at inflated prices and not apartment complexes or rental companies willing to rent at reasonable rates.

3) Find a way to shift demand geographically. If all the jobs are in one place with too little housing then try to get companies to move elsewhere, or let people work remotely, etc. Decentralize the jobs and you avoid creating centers of demand where available space to put houses is not adequate.

On point one, half of this is happening, without the other half going on. . . What I mean is, there is a flood of new housing going up all the time in my area. Hell, there are 3 areas being graded and prepped for new housing within a 1 mile radius of my house, and there's a bunch more within 5 of me that are mixes of apartments, duplexes, townhomes, etc. With that flood of new housing, here's the problem: the prices aren't going down. They are going up. I bought my 2400 sq ft. house for 250k about 4 years ago. . . Today, I could sell my house for north of 350k easily. And in all that new construction, the builders are offering "starting in the low $300s" and higher. Yes, cost of living in the Tacoma area isn't cheap, but these new houses are, IMO, outstripping even the earning potential of the work in the area.

2. IMO, the corporate run apartment complexes are the worst for "gouging" or inflating prices. Many of those brand new apartments I mention above are in areas where residents literally need a vehicle to do basically any standard living activities (ie, groceries), which is the one mitigating factor I can see for the cost of some apartments. I can understand a much higher rent in a deep downtown apartment, because groceries, food and other "standard" amenities are within walking distance of the apartment. But what I'm seeing/saying here, is that this new construction is nowhere close to those services, which to me, does not justify their high cost.

3. I think there's something also to be said for localities and their build permitting structures. Clearly where I live we are in an area where building is "easily" done, and there's a boom of new housing going in. Contrast this with my home town (where, as I mention in another thread, I have a cousin who is selling a house half the size of mine, for the same cost as what I bought mine at) where there is little to no new construction, but the demand has remained at a relatively steady growth.

With that said on point 3, I think that greater care needs to be done in these build projects. As I said above, there's a ton of new housing going in very close to where I live, but the public infrastructure (and I'll include private business such as grocery stores and other living services in this) are not being updated to accommodate the increased population capacity.

Apartment blocks need to have a retail ground floor, simple as that.

 JohnHwangDD wrote:
Apartment blocks need to have a retail ground floor, simple as that.

This. I've seen areas built like this, with store fronts on ground level and apartments/condos above and it just strikes me as a crazy convenient/efficient way to construct housing and development. I think it should be a standard practice localities should encourage.

The only real issue is that like Ensis Ferrae I find that new development never lowers prices, but only increases them. Every new development that goes up is fancier and more expensive than the last. No one in my area is building housing to be affordable for common people.

To be fair it’s hard to justify making affordable housing for “common people” from a developer point of view. You’re essentially spending the same money to get less back than you would in a higher income area. Unless there were some grants or kickbacks involved from the state or at the federal level it’s just not reasonable to build lower income housing.

And that's why the State needs to build and manage the affordable housing

 Sinful Hero wrote:
To be fair it’s hard to justify making affordable housing for “common people” from a developer point of view. You’re essentially spending the same money to get less back than you would in a higher income area. Unless there were some grants or kickbacks involved from the state or at the federal level it’s just not reasonable to build lower income housing.

Agreed.

 JohnHwangDD wrote:
And that's why the State needs to build and manage the affordable housing

Plus, done right you could probably get a decent source of income.

Thinking about it, I'm almost certain that mixed use dense housing would drive far more profit than lower density housing. If I can have basically 2x to 3x the usable square footage, and so my per-foot price can be basically half. Instead of a 3000 SF McMansion, I could have 6000-9000 SF apartments, 600-900 SF each. The same holds true for condos vs tenement,although slightly less Sure, it's a bigger project, but no way I don't make more money on it.

 KTG17 wrote:
Well, following up my earlier post about the cost of maintenance on a home, yesterday I came home from work to notice that my sprinkler control panel is shot. So had to order a new one, at $150, and hope thats the only thing wrong with the system. Kinda relieved the panel lasted this long as its the original, but still. I didn't wake up yesterday with the thought, "Hey lets replace the control panel!" I would have preferred to do something else with that money.

And if there is more wrong than the control panel....

These are the sucker punches I am talking about.

Up until the last few weeks of relentless sun, I would have had zero sympathy with your position. The grass is (ordinarily) green here, whether you take care of it or not. The trick is getting a house in the first place when the price is driven up by mandatory social housing that you don't quite qualify for if you are working more than min wage, and housing grants that don't really help unless you were earning enough to not need it.

 Crazy_Carnifex wrote:

 JohnHwangDD wrote:
And that's why the State needs to build and manage the affordable housing

Plus, done right you could probably get a decent source of income.

Council housing rents, for instance.

I don't know if this is a problem in other nations, but here in America it's distressingly common for a renter to trash the place they're renting, and the cheaper the apartment is, the more likely it is the renter will trash it. Government-owned apartment housing for the poor (commonly known as The Projects) is usually the literal worst, nastiest, most crime-ridden neighborhood in the whole metropolitan area. Even Section 8 Housing (government rent assistance for poor people renting from a private landlord) usually isn't all that much better.

Note the use of the word 'usually'. Here in Truth or Consequences, the government-owned housing is very well kept up and regularly inspected. Of course, it's also not deep in the worst reaches of the urban combat zone either; it's not even in the poorest section of this little rural town.

 Vulcan wrote:
I don't know if this is a problem in other nations, but here in America it's distressingly common for a renter to trash the place they're renting, and the cheaper the apartment is, the more likely it is the renter will trash it. Government-owned apartment housing for the poor (commonly known as The Projects) is usually the literal worst, nastiest, most crime-ridden neighborhood in the whole metropolitan area. Even Section 8 Housing (government rent assistance for poor people renting from a private landlord) usually isn't all that much better.

Note the use of the word 'usually'. Here in Truth or Consequences, the government-owned housing is very well kept up and regularly inspected. Of course, it's also not deep in the worst reaches of the urban combat zone either; it's not even in the poorest section of this little rural town.

Yeah I think it's a pretty common problem. Put up some densely packed cheap or free housing for people in need and you end up shoving all the down and outers in to one place. Great places to get illegal drugs, get into fights or get stabbed and mugged.

It's not even just the government housing though, it's any densely packed affordable housing. One relatively nice suburb has an area where they threw up a bunch of cheap 1 bedroom apartments and it turned the area in to a bit of a pit within an otherwise nice area. I was thinking of moving in to the area because I know the suburb as a whole is nice, but I opted for a more expensive area after spending a few nights next to night shift workers, unemployed families arguing late at night, people dealing out of their apartments, etc.

Around this area if you are poor and don't want to live in a crap area your only real option is move to the less densely packed suburbs further from the city centre and drive/train it to work.

Life will be interesting when we have far more people than jobs.

AllSeeingSkink wrote:
Life will be interesting when we have far more people than jobs.

In the Chinese sense of the word, I presume.

Interesting. A number of large cities including Barcelona, London and Amsterdam have requested the UN to give some incentive to national governments to do something about housing speculation in large cities as the situation is becoming unlivable for residents, and it's a problem that goes beyond national borders because it's happening everywhere.

Ok, so a few weeks ago it was my sprinkler control panel, yesterday while doing my yard work my powerhead broke. Its been on its way out for a while so wasn't competely surprised.. So I had to stop what I am doing and run to Home Depot for another. The model I want no longer only comes with just the powerhead, but a trimmer extension as well for more money. My trimmer is a POS so getting a new one was on the list of things to do anyway. Both are very nice and it was a pleasure to finish the yardwork. However, I would have been just as happy to have finished it using my old ones. The cost of the new powerhead and trimmer? $200.

So just in July I am at $350 on replacing broken things in my house that you probably wouldn't be thinking about if you rented an apartment or condo. And its things like this that I think buries people in debt owning a home. Its not even necessarily replacing an AC unit, or appliance, but the constant smaller things that add up.

The worst part is that I am in the process of adopting another rescue dog and the $350 would have gone a long way to covering his new bed, toys, and vet visit. :/

Lame!

I read somewhere that a householder should expect to spend 1% of their property's value per year on maintenance and/or savings for big ticket items (new roof, etc.)

The main problem is that most things will not go wrong for years and then multiple things will go wrong all in a very short span of time as they all get old at the same rough rate. It's worse today because we live in a throw-away society where replacement parts are often hard to find; where repair work alone costs a lot of man hours and where some direct order parts are priced so high that - basically - you are better off financially buying a new one than paying to repair the old one (unless you can do the repair work yourself).


That said we've found that auction houses are great way to get hold of cheap household stuff. If you've got a trailer or van its even better because a lot of big household stuff sells for very little because most people won't pay for delivery and can't move it themselves. The fridge we have now cost £30 and works great.
Of course its a bit of a gamble and you can get a lemon *stares at the £20 tv that killed itself* but overall you can make a saving if you are careful and lots of non-electronic stuff is often pretty safe to get (desks, chairs, draws, outdoor tools etc...).

Gumtree and the like are good for secondhand furniture.

Things like a new gas boiler or refitting the bathroom are something you have to think about long term and ideally save up for. But sometimes they happen as an emergency.