It’s nuts that the median rent now is 700$ above what I paid for a 450sq ft, two story laneway in 2017, in Vancouver BC a city known for expensive housing.
Edit - median rent in the USA is above this, rent in Vancouver seems stablish actually?
Depends where you are. Living in San Jose I have only seen my rent go down in the last couple years. I was on the fence about staying but the cost of living has improved substantially and so I won’t be leaving any time soon.
So basically.. showing that supply and demand works. Lots of people left SV due to remote jobs and COVID, demand dropped, price went down.
Vancouver is artificially limit housing supply through zoning (like many large cities), keeps price high and gets higher every year with increase in population.
> > Living in San Jose I have only seen my rent go down in the last couple years.
> So basically.. showing that supply and demand works. Lots of people left SV due to remote jobs and COVID, demand dropped, price went down.
It may have worked for him, but rents have still increased in the South Bay over the last couple years-- just less so than the rest of the country. It's still one of the most expensive rental markets. Vacancy rates have fallen, too.
Only SF itself has lower rents than it had before COVID-19 (and fractionally so).
I remember when Vancouver real estate crashed and stagnated in the 90s after the Japanese property bubble burst (asking with the American west coast). It might not come down with respect to inflation, but other things can catch up, especially with a larger bubble in China on the horizon than the one Japan had.
It strikes me as pretty dismissive, heartless even, to refer to people so hard up that they can't afford a roof over their head or stable place to sleep as "hiding behind" COVID-related eviction moratoriums.
A significant number of individuals using this rule use it in bad faith. E.g subletting the place without paying the landlord rent because they cannot be evicted. The landlord will never be paid and take a loss
Many people capable of paying rent declined to do so during the moratorium. Now they’re being evicted, not because their income is too little to afford housing, but because they made a series of truly reckless financial decisions.
Empathy is good, and perhaps we could use more of it, but dismissing someone as “heartless” for questioning the intent of some renters also strikes me as naive.
It's not dismissive because having someone else provide you a free roof over your head is not a birthright in this country. The way things are set up, you are taking that roof from someone else, so you have to pay for it, and if you refuse to do so, you are essentially stealing from the other person/company, who may have circumstances of their own. These weird "moratoriums" were one-off rules where the government has forced an arbitrary group of people to subsidize the living of another group of people, but that model was clearly unsustainable, and once it ran out, predictably all kinds of ugliness ensued.
If you think that's a worthy cause you're welcome to suppport bringing back the homestead act and allow people to build their own roofs on properties they develop and subsequently own.
Landlords are not social security, and should not be expected to subsidize your wants.
I hope that economists study how this correlates to moratoriums on evictions through COVID. It would be really helpful for future policy to get a yea or nay on that being a significant effect.
Moratoriums are a way for governments to spend other peoples money for political gain. Governments will never get tired of this. The job of an economist is to rationalize what the government wants to do anyway. There is also the added benefit that it disproportionately hurts landlords with a few houses and helps the institutional investors who also happen to be donors.
I’m having a hard time making sense of your comment. Moratoriums are a wealth transfer from smaller landlords to tenants and institutional landlords. They cannot last forever as eventually small landlords will run out of wealth.
But sigh, policymakers aren't dummies, and there's gotta be a reason they chose moratorium... my guess is that rental agreements are private contracts not directly reported to the government and therefore impossible to support. There's better reporting on your local coffee shop than your average rental.
IMHO this lack of direct reporting is insane given the $ involved but I'm also not sure how you fix this... let alone in the couple of weeks that the govt had in 2020...
Usually what happens is landlord offers the underwater tenant a cash payment to get them to agree to move out. Ends up cheaper than going through the courts.
This is just supply and demand though, rents will hopefully be on the way down as a result of this.
> rents will hopefully be on the way down as a result of this.
There's a pretty strong upward trend and very low vacancy rates. This will obviously create some vacancy, but I think we're talking about some of the upward pressure being removed, but not necessarily rents falling.
And the landlord charges the next tenant significantly more, if they can, to cover losses from this tenant and the now apparent potential of losses from future tenants covered by evicition moratoriums.
They likely can raise the rents for new tenants, because tenants in process of being evicted (formally or not) may rent a new unit with a longer overlap than usual before relinquishing the new unit, and often there are lengthy repairs necessary on units where the most recent tenant was evicted, keeping that unit off the market for even longer. 'Cash for keys' can often get the unit rentable faster, the departing tenant will leave on a schedule and hopefully take better care during the move, or at least allow for inspection prior to moving out to allow for scheduling of necessary repairs and maintenance.
The tenant, if any of this goes on their credit report (or they have to use the landlord as a reference) even if eviction doesn’t happen, will also find it almost impossible to rent anything else in the near future. If they are evicted, then forget about renting for however long the eviction stays on their record.
Can confirm. I had an uncle a retired minister turned slum lord who told me he could pay the city police a large fee to come out and enforce an eviction or he could offer a tenant to have all their stuff to the curb by 5 o'clock for a hundred and most of them would happily take the hundred. This was about 20 years ago.
As philosophical questions I think it's important to answer:
1. What is the optimal rate of property value growth and why?
2. What is the optimal cost of housing (a multiple of yearly income?) and why?
3. Are people who own property incentivized to keep supply low?
It's a growing trope that "housing can be either affordable or an investment but not both." I think I agree, but everyone has to see that their growing property value is selfish and that it directly harms their children before anything can be done about it. Georgism (https://en.wikipedia.org/wiki/Georgism) gets thrown around a lot, but I haven't wrapped my head around it yet.
The idea that "housing can be either affordable or an investment but not both" is also incorrect.
There is nothing wrong with having profitable housing investments, and that doesn't make it un-affordable, just the same as any other good or service does not become un-affordable just because it is profitable to provide.
As a general principle, something being profitable is a signal that said thing is necessary, and decreasing said profitability will only result in resources being diverted away from providing it. If you think housing is expensive now, you will be very unhappy with how expensive it will get once you make it unattractive to provide it.
The fact of the matter is that the high cost of housing has one primary cause, and it is not due to high profit margins. Indeed the high profit margins are a symptom of the cause.
The cause is a lack of strong property rights that enable property owners to do what they will with their property without anyone else, including the state, being able to tell them "No".
That's it.
It is very simple.
Everywhere you go in the world, you will see that in places where property owners have strong rights to do what they like with their properties, a competitive market forms and prices are subsequently reduced through that competition. You need only compare San Francisco to Tokyo to see this in action.
It is the urge of people like you, who wish to expropriate property owners of their property, either in full by taking their property away from them, or in part by imposing taxes on said property or restrictions on said property and its use, that cause high prices.
And it's inevitable that those high prices arise, after all those things are costs and property owners, investors and society in general will always bear those costs.
If you truly want affordable housing, then you need only do one thing... Nothing.
Tell property owners "We will not tax you, we will not restrict what you can do with your property in any way", and then act according to that.
Alternatively you can keep going on this well trodden path that for millennia has continued to cause the same problems it claims to want to stop.
It’s hard to profit from a home in Tokyo outside of being a developer. That’s a good thing. But you’re implying you can have your cake (affordable housing) and eat it too (profitable housing). Not true. You can have largely affordable with only a few making profits, but not the majority.
It’s less about lack of regulation on the individual level than for developers, which I think is important to distinguish. Both are good, but being able to build more / rebuild easily are more important than say regulations on types of pools.
>It’s hard to profit from a home in Tokyo outside of being a developer.
Why do you believe this? There is a functional rental market in Tokyo and I don't believe it is any less profitable than any other investment on a risk adjusted basis.
The same applies to the home ownership market in Tokyo.
If it were, the market would shrink until risk-adjusted return parity would be achieved.
Lots of evidence. It’s easy to search for profitability of housing and it’s not high there. There’s a massive difference between near market or inflation-level returns and whatever’s been happening in the US.
57 comments
[ 4.7 ms ] story [ 115 ms ] threadEdit - median rent in the USA is above this, rent in Vancouver seems stablish actually?
https://www03.cmhc-schl.gc.ca/hmip-pimh/en/TableMapChart/Tab...
Vancouver is artificially limit housing supply through zoning (like many large cities), keeps price high and gets higher every year with increase in population.
> So basically.. showing that supply and demand works. Lots of people left SV due to remote jobs and COVID, demand dropped, price went down.
It may have worked for him, but rents have still increased in the South Bay over the last couple years-- just less so than the rest of the country. It's still one of the most expensive rental markets. Vacancy rates have fallen, too.
Only SF itself has lower rents than it had before COVID-19 (and fractionally so).
I’m seriously considering learning French and moving to Montreal. Learning a new language is less painful than Vancouver rent
Empathy is good, and perhaps we could use more of it, but dismissing someone as “heartless” for questioning the intent of some renters also strikes me as naive.
Pretty tough being a baby in the US I suppose, gotta learn to walk, talk, and pay the rent.
Landlords are not social security, and should not be expected to subsidize your wants.
But sigh, policymakers aren't dummies, and there's gotta be a reason they chose moratorium... my guess is that rental agreements are private contracts not directly reported to the government and therefore impossible to support. There's better reporting on your local coffee shop than your average rental.
IMHO this lack of direct reporting is insane given the $ involved but I'm also not sure how you fix this... let alone in the couple of weeks that the govt had in 2020...
But expecting private property owners to eat it is absurd
There was no way this was going to be allowed to happen during the worst of covid.
This is just supply and demand though, rents will hopefully be on the way down as a result of this.
There's a pretty strong upward trend and very low vacancy rates. This will obviously create some vacancy, but I think we're talking about some of the upward pressure being removed, but not necessarily rents falling.
And guess the condition tenants like this leave the apartment
They likely can raise the rents for new tenants, because tenants in process of being evicted (formally or not) may rent a new unit with a longer overlap than usual before relinquishing the new unit, and often there are lengthy repairs necessary on units where the most recent tenant was evicted, keeping that unit off the market for even longer. 'Cash for keys' can often get the unit rentable faster, the departing tenant will leave on a schedule and hopefully take better care during the move, or at least allow for inspection prior to moving out to allow for scheduling of necessary repairs and maintenance.
1. What is the optimal rate of property value growth and why?
2. What is the optimal cost of housing (a multiple of yearly income?) and why?
3. Are people who own property incentivized to keep supply low?
It's a growing trope that "housing can be either affordable or an investment but not both." I think I agree, but everyone has to see that their growing property value is selfish and that it directly harms their children before anything can be done about it. Georgism (https://en.wikipedia.org/wiki/Georgism) gets thrown around a lot, but I haven't wrapped my head around it yet.
The idea that "housing can be either affordable or an investment but not both" is also incorrect.
There is nothing wrong with having profitable housing investments, and that doesn't make it un-affordable, just the same as any other good or service does not become un-affordable just because it is profitable to provide.
As a general principle, something being profitable is a signal that said thing is necessary, and decreasing said profitability will only result in resources being diverted away from providing it. If you think housing is expensive now, you will be very unhappy with how expensive it will get once you make it unattractive to provide it.
The fact of the matter is that the high cost of housing has one primary cause, and it is not due to high profit margins. Indeed the high profit margins are a symptom of the cause.
The cause is a lack of strong property rights that enable property owners to do what they will with their property without anyone else, including the state, being able to tell them "No".
That's it.
It is very simple.
Everywhere you go in the world, you will see that in places where property owners have strong rights to do what they like with their properties, a competitive market forms and prices are subsequently reduced through that competition. You need only compare San Francisco to Tokyo to see this in action.
It is the urge of people like you, who wish to expropriate property owners of their property, either in full by taking their property away from them, or in part by imposing taxes on said property or restrictions on said property and its use, that cause high prices.
And it's inevitable that those high prices arise, after all those things are costs and property owners, investors and society in general will always bear those costs.
If you truly want affordable housing, then you need only do one thing... Nothing.
Tell property owners "We will not tax you, we will not restrict what you can do with your property in any way", and then act according to that.
Alternatively you can keep going on this well trodden path that for millennia has continued to cause the same problems it claims to want to stop.
It’s hard to profit from a home in Tokyo outside of being a developer. That’s a good thing. But you’re implying you can have your cake (affordable housing) and eat it too (profitable housing). Not true. You can have largely affordable with only a few making profits, but not the majority.
It’s less about lack of regulation on the individual level than for developers, which I think is important to distinguish. Both are good, but being able to build more / rebuild easily are more important than say regulations on types of pools.
Why do you believe this? There is a functional rental market in Tokyo and I don't believe it is any less profitable than any other investment on a risk adjusted basis.
The same applies to the home ownership market in Tokyo.
If it were, the market would shrink until risk-adjusted return parity would be achieved.