I hope the people providing my food, utilities, clothing, and bedding are making a sustainable profit. I want them to be around in the future when I need those needs fulfilled.
Yes. You arent just like born into 'fulfilling' a basic human need.
These services, think healthcare, food, and housing, should be public services that are guaranteed not delivered by the market. You cannot look at the market-based solutions to literally any of these objectively and think it is performing well. At least, not if you value human life.
The problem, as always is about the definitions and the power associated with controlling those definitions. Does a fine wine count as food? What about an imported fruit? If the US made it illegal to profit on food I think we'd see rapid regulatory capture that supported some of the worst agri-business behemoths. (e.g. what happens to the local farmers that I prefer to support? They probably need a bigger profit margin than they have already, and can't even hope to compete at scale)
I agree with your intent here, but the devil is in the details.
Maybe a more workable and less authoritarian tack would be that the government plays in the market as a limited profit entity, thereby ensuring that a cartel cannot fully capture the market and endlessly drive prices upwards. Limited profit (capped at some percentage over revenue) is allowed in order to let the entity invest in expansions so that they don't simply end up being 1% of the market that can be ignored by their competitors.
Landlords aren't a cartel in that sense. The way they get together and "fix prices" is by having the government restrict housing density to increase scarcity. A non-profit that has to follow the same zoning rules can't fix that. Whereas if prices are high and you don't prohibit lower density housing from being replaced with higher density housing, there is money in doing that and the market takes care of it for you.
I mean my preferred solution would be zoning reform first, yes. I was just proposing an amendment to OPs policy, I don't think it's politically viable in the US.
In my large US city, a lot of apartments are held by various corporations that collude via third party software to raise and keep prices high. The local building managers have no say in lease pricing. Maybe a small percentage of people are lucky enough to find mom/pop landlords but many are stuck paying whatever the large complexes charge.
Software can't defeat supply and demand unless you have a monopoly.
Suppose the amount rents have to hit before it's profitable to build a new building is $1000/month and right now rents are at $990/month. A cartel representing 70% of the landlords in the city collude to raise rents to $2500/month.
If they're allowed to, builders will keep building new housing until rents are back below $1000, because until that point they can keep making money by doing it. Even if they have to increase the housing stock in the city by the entire 70% and leave the cartel with a bunch of empty buildings.
But if they're not allowed to build, prices go up. And some entity with a profit cap can't do anything about it because they have no path to supplying enough housing to lower the market price.
The supply here is highly constrained, hence my desire (in general) for zoning reform. Of course, there's a lot of opposition to building more housing from the usual suspects.
A public option, then? In the current climate, I'd prefer public options be not-for-profit (well, I'd prefer they exist at all, but of course it was sniped dead during negotiations for the ACA in the case of healthcare), but fair enough.
Honestly I'd be fine with the government profiting if it could be tied back to a mechanism that directly reduces a taxpayer's burden, basically "your tax share is reduced by x because total profit from government-run institutions was y"
It might even work to incentivize lawmakers to legislate in favor of the profit of such institutions in that they could then tell their constituents that they were responsible for their lower tax burden in a given year.
Fair complaint. But one could also complain about the initial post. It does nothing to motivate the claim that housing should not be an investment, so it does in fact appear to be an arbitrary rule that is being put forward.
Guess he is against private ownership of public infrastructure, because of what experience has shown. Invariably, there is persistent underinvestment to increase short-term profit, and once the physical plant is so run down that it plainly can't function any longer, it is renationalized at great loss to the public.
The current model has led to a persistent underinvestment in housing, especially entry-level housing since at least the late 1990's.
OK, but there is still an unstated proposition, that housing is (or should be) public infrastructure. That was not even stated, and if it were stated, there would be very wide disagreement with it.
This style of posting - assuming but not stating a controversial position, but stating as given what follows from it - is real bad news. First, it's essentially a dishonest way of communicating. They state as truth something that is very far from accepted, in the attempt to get people to accept something that they don't, without having to go through the hard work of actually persuading them on the real point of disagreement.
But even if no dishonesty is intended - they think the controversial point is not controversial at all, but rather something that everyone accepts - it's still bad news, because it hides the actual point of disagreement that needs discussed. It results in a "conversation" that is both sides hurling sound bytes at each other, but never actually talking about where the disagreement is. That's not a good conversation, even in general, but it's a terrible conversation for HN.
It’s a terrible post I agree. The other issue is how basic capitalism is constantly under attack despite the overwhelming empirical evidence of it’s remarkable success.
It’s a repeated pattern in history that always ends in darkness for humanity if it gains enough momentum to make changes.
How are we even debating private ownership of property and housing. What an incredible failure of basic education systems. It’s like denying evolution or holding some other profoundly unscientific and un-objective emotional belief.
Hopefully my comment complies with HN guidelines. It’s can be hard to comply we dealing with such absurd proposals and theories.
Unless tinker-bell is real and has fairy dust to build houses and provide basic needs.
Not sure it’s an “occupation” for most. I make less than 5% of my monthly living expenses off my rental property and treat my tenants with the care I’d treat my own family.
I’m not sure a few bad actors taking advantage of people warrants statements like, “Housing should not be an investment ever.”
nice defense, but you realize that edit many landlords are not like that at all.. the court system here in Alameda County California has a backlog of a decade+ for extremely abusive landlords
"A recent report detailing the dismal housing conditions faced by 150,000 people in unincorporated Alameda County estimated that up to one-third of renters could be living in buildings that should legally be deemed uninhabitable. But according to Alameda County’s Healthy Homes Department, the county has millions of dollars from the federal government to address exactly these concerns ..."
A few bad actors? You are the exception to the norm. Beyond that people are working to pay your mortgage increasing your net worth. You may not have much income, but you are getting wealthier.
You say I’m getting wealthier like that’s inherently a bad thing?
But beyond that, I still don’t think banning owning a rental (however that would be enforced anyway) is the solution there. It’s not a realistic suggestion.
But I bought a necessity, ended up moving, and didn’t want to sell in the market conditions I was in. So I rented my house out.
You see how the intent is different? I personally know dozens, maybe hundreds of landlords from various geographical regions in my state, and most of their stories are the same.
But even barring that, I don’t understand where the thinking comes from that those with wealth can’t use it to secure more wealth. I’m not advocating for infinite gains here, but I’ve noticed a non-trivial portion of Hacker News seems to believe that gain is inherently immoral. Like wanting a better life or more for your family is inherently an evil thing. Some folks have more, some folks have less. Those with more should strive to help those with less; but I reject the notion that simply having more than someone else is bad.
Suppose you don't have enough money to buy real estate right now but you have enough to rent an apartment. If you don't want to be homeless, from whom do you acquire a lease?
Buy what? If rent were illegal, there would be far less housing because most people cannot (or will not) save enough capital to create or buy their own.
You need to challenge your assumptions more, why couldn't you just make single family dwellings illegal in high demand areas? And have the state in charge of housing? Unless you mean to argue about current laws and situations, the main point of these discussions
and this post is that they are not working.
The existing problem is that multi-family dwellings are illegal in many high demand areas. Otherwise it would be highly profitable to build them there. If you fix that you don't need to do anything else.
Putting the state in charge of housing is the cause of the existing problem. They become captured by landlords, or favor higher property values because they increase property tax revenues.
What you need is some constitutional restraint on local zoning rules.
Why isn't more regulation the answer? If children misbehave at school we don't give them more freedom. There are widely published opinions that state this just makes landlords richer and housing rarer to further deregulate.
In general competitive pressure makes things better. If you can choose between two things that are similar but one costs less, you can save money. If they cost the same but one is better, you can choose the better one. The easier it is for you to switch, the less the provider can get away with before you do.
Governments have weak competitive pressure. You have to uproot your whole life and move to another jurisdiction. When you vote, you're making a choice about every issue under the sun at once and it's impossible to change your vote on only one issue by itself. You can also easily end up "represented" by the candidate you voted against. As a result they're extremely inefficient by default and should only be used when the alternative is catastrophic.
This is doubly true in markets that could be competitive, because the incumbents have the incentive to use the government to reduce competition so they make more money. The obviously relevant example is zoning rules that restrict housing supply. It's critical to not allow that to happen, or to undo it when it already has.
Trying to cancel it out with even more regulations is just another opportunity for incumbents to sneak in some new way of screwing you. When you screw up a market this badly, people get desperate and angry and start proposing all kinds of aggressive "solutions" because they fail to understand the cause of the problem but want something done about it. The most ridiculous of these are generally filtered out, but the ones that make it through are the ones that don't work or make it worse because those are the ones the incumbents fight the least.
You have to fight the cause of the problem, which is a government captured by land owners imposing rules that make housing more expensive. The solution is to remove those rules.
> There are widely published opinions that state this just makes landlords richer and housing rarer to further deregulate.
One of the main reasons "deregulation" has a bad name is that its purpose is to increase competition and lower prices, which is exactly the thing the incumbents don't want, so instead they propose a "compromise" that prevents exactly the thing you're trying to get.
For example, suppose you have two rules. One says that new housing construction is utterly prohibited, the other says that all rental properties must have working plumbing.
In a competitive market the second rule is inefficient because all it really does is prohibit anyone from offering a storage unit with no plumbing. There would be enough apartments with running water that nobody would have any reason to consider one that didn't.
But in a market where increasing the housing supply is inhibited, there are more tenants than rental units and that allows abusive slumlords to find tenants willing to live under such conditions.
Much "deregulation" is the corruption in which you only remove the second rule and not the first, which of course makes things worse, because the first one is the one that matters and the second one is just an inefficient attempt to mitigate the damage.
Increase the housing supply until rents go down. Accept no substitutes.
Plenty of people do, but zoning rules make it expensive.
Suppose you want to build a 20 story condo. The most efficient thing to do is to find an empty plot of land or a single family home and build it there, but that's prohibited by zoning. 20 story buildings aren't allowed there.
Now what you have to do is find an existing 10 story condo and knock that down, because it's in a place zoned for tall buildings. But that costs a lot more, and you also have to remove all the people who are already living there instead of just buying one house from someone who is already moving. It's so much more expensive than the first thing that it's not profitable, so it doesn't happen without a subsidy. Not only that, even if it does happen, you've now paid to build a 20 story building and only added 10 stories worth of housing.
You're trying to make some kind of libertarian point, I'm talking about what real people are saying is really actually happening and what is needed. https://thehill.com/opinion/congress-blog/3499112-solving-th... ... You're saying that demand isn't high enough for them to justify spending the money? That's exactly my point but you're saying they are beholden to do nothing and blame the government when by your own logic they just want more money.
> You're saying that demand isn't high enough for them to justify spending the money?
What I'm saying is that they passed laws that make increasing supply so outrageously expensive that demand has to remain at outrageously high levels to trigger construction. You can't get to reasonable housing costs that way because construction companies can't sustainably operate at a loss. You have to make it sustainable by not prohibiting construction where it's the most cost effective.
> by your own logic they just want more money.
Of course they want money. They have to pay for land and construction crews. But if you increase their costs by prohibiting them from building on the most cost effective sites, the amount they want before they'll be willing to do it goes up.
Construction companies don't make anything by not building. But they also don't make anything if government regulations increase their costs above real estate prices. So every time you increase their costs with a new regulation, real estate prices go up -- and stay there until you remove the rule that keeps their costs high. (Or something causes demand to go down, which is typically only something bad.)
>The existing problem is that multi-family dwellings are illegal in many high demand areas
This is technically correct but the areas mentioned are the size of a block or a subdivision so it's hardly the limiting factor. You can build high rise apartments in any big city and multi-family anywhere. The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost. It's combined code compliance, materials, labor, and financing. If it costs $300 to build a square foot just in the labor and materials then it comes up at $150K for a tiny 500 sqf 1br and you'd need to rent that for more than $2000 per month to break even on the commercial loan you took. Throw in maintenance, lapses in occupancy and some profit and you are looking at close to $3K for a 500 sqf 1br. Unless it's on Manhattan or on an ocean beach somewhere, it's going to be very hard to find tenants.
It appears that America had ran up its credit card to the limit. Mass produced goods from China are still cheap but the hoses are just expensive, can't ship those in containers from Shenzhen. Playing with zoning is rearranging chairs on the deck of Titanic, it's not going to lower the cost of construction. And yes, adding more housing would lower the price but the problem is that adding housing is held up by the cost mostly and the developers only want to build in very limited prestigious areas where they hope to get tenants/buyers willing to pay their cost. It's not sustainable.
> You can build high rise apartments in any big city and multi-family anywhere.
You can't build them except in the places they already are. Converting existing high density housing to even higher density housing is prohibitively expensive. What you need to do is go to the edge of the high density area where it meets the low density area and convert the low density housing to high density. But that area is only zoned for low density, so you can't.
> The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost.
Who is requiring them to sell below cost? Just build more housing at the market rate as long as the market rate is above your construction costs. If you want a lower market rate, find a way to lower construction costs.
>You can't build them except in the places they already are.
I.e. in all big cities? So are you really arguing that the rent in SF goes up because you cannot build a residential tower in Redding, CA?
> Converting existing high density housing to even higher density housing is prohibitively expensive.
You don't need to convert. You can change zoning on existing lots, it happens all the time.
>Just build more housing at the market rate as long as the market rate is above your construction costs.
But it is not in most places. This is why developers are trying to get into prestigious areas where it's still possible. Nobody prevents you from building a residential tower in the East LA, you just won't be able to sell it. But yes, nobody will let you to build one in Malibu, where you'd be able to move units.
The issue is that as soon as you filled Malibu with commie blocks the area won't be prestigious anymore so somebody will be left holding the bag, developers are desperate enough to enter this game anyways.
Landlords are the reason housing is unaffordable, but in a world without landlords if homeownership is out of reach for a segment of the population there should be public housing to accommodate that need.
> Landlords are the reason housing is unaffordable
Zoning laws are the reason housing is unaffordable. Landlords lobby for zoning laws, but if you have the political power to prohibit renting then presumably you have the political power to reform zoning. Moreover, you should do that anyway, because if all you do is prohibit renting without allowing new housing to be built, you're going to have a bad time.
> if homeownership is out of reach for a segment of the population there should be public housing to accommodate that need.
So if you make 110% of the median income but don't have a downpayment yet the government pays for your housing? Do you get free housing forever as long as you spend everything you make and never save anything up?
What if you have plenty of money but you know you're not going to be somewhere for more than two years and don't want to buy property there?
Demand is outstripping supply because policy makers have left it up to the market to supply the need and the market has failed. The reason supply used to meet demand is that the government didn't just pray to the almighty free hand, it acted with policy to ensure there was housing for everyone.
A large portion of the supply is being held by investors like landlords which restricts the supply. Removing them from the equation would increase supply and decrease prices.
> The reason supply used to meet demand is that the government didn't just pray to the almighty free hand, it acted with policy to ensure there was housing for everyone.
The free market used to work better before it got handcuffed by zoning laws everywhere. If you prohibit the free market from working, don't then mock the free market because it's not working.
> A large portion of the supply is being held by investors like landlords which restricts the supply. Removing them from the equation would increase supply and decrease prices.
True - if you mean landlords who hold but don't allow occupancy.
Demand is outstripping supply because the government prohibits high density housing from being built in existing low density areas and imposes rules that make new construction more expensive.
> A large portion of the supply is being held by investors like landlords which restricts the supply.
Because they expect the value tomorrow will be higher than the value today, because they expect demand to increase over time while the government continues to inhibit new construction. Stop inhibiting new construction and they'll want to sell now before the price comes down. (Which will make the price come down sooner.)
The incentive to not rent existing units is also a predictable consequence of things like rent control and laws that make it hard to evict non-paying tenants. Don't increase the risk of providing a thing and expect that to lower the price.
> Removing them from the equation would increase supply and decrease prices.
As a landlord I’d be interested to understand your proposed mechanism to “remove” me.
Could you also elaborate what happens to my capital and what I should be doing instead with the excess capital my productivity generates over my chosen needs and wants?
You'd have to sell your rental properties. Invest your money in something else. It's not my concern. Your desire for investment vehicles is less important than the public need for housing.
Is there any place on this earth where “public housing” was anything but an unmitigated disaster that was used simply to corral “the have nots” away from “the haves”?
Whatever the solution is, it’s damn sure is not public housing.
There are large tracts of the US that are mostly ethnically homogeneous - most everywhere is not an urban Babel like NYC or SF. Meanwhile, the Habsburg monarchy was the prototype of a multiethnic state, and its capital was everything but uniform.
No, that is not a fair characterization of what I said.
Our diversity is a complexity that is not addressed for in the working model, so it’s not that we shouldn’t try…but we shouldn’t assume that a model that works well in one environment will work well in another, significantly different, environment.
Right. Public housing as practiced in the US throughout the 1950s, 60s, and 70s was rife with racism and classism that caused a lot of problems. That doesn't mean it cannot be done well. It has been done well in other places. The prerequisite for success is the policy makers have to respect the people they're helping. That's all.
For the landloard to make money your rent is higher than what it takes to 'own' the land, usually in the form of a mortgage.
Otherwise its almost always a second (or third) plot that is outrightly owned by the landlord, which means they dont need it and itd be better for you to just be able to buy it.
> For the landloard to make money your rent is higher than what it takes to 'own' the land, usually in the form of a mortgage.
The landlord can make money by investing capital and then getting a return equivalent to the interest you'd pay to the bank to borrow that amount of money.
> Otherwise its almost always a second (or third) plot that is outrightly owned by the landlord, which means they dont need it and itd be better for you to just be able to buy it.
But you can buy it. You just go to the owner and buy it from them.
What are you supposed to do if you can't afford that right now?
There is a difference between building a building that is actually providing housing to a local area and this bullshit where you buy property and just let it sit empty as an investment vehicle. The latter is actively harmful and essentially freeloading off the growth/work of the local community and the former is beneficial.
if you have a vacant unit that you're having trouble filling and you don't want to be taxed, the free market is telling you to lower the price. it's not complicated.
If you've got landlords who would rather leave units vacant rather than renting them out, the free market is also telling you something about your regulations on renting out those units.
I mean they would rather take zero money than some money. Why is that?
Because they think their line of work shouldn't involve any risk.. They don't want to risk filling a unit at a lower price and only being able to raise rate 1-2% per year when if they held off for a year they can charge 15 - 20% more..
If you want to play that game you have to live with the consequences...
I'm totally in favor of a vacancy tax, every city should have them. Dude is like, "People are just leaving to live cheaper elsewhere, we can't fill these units!". Have you tried lowering the rent? Of course not.
But the tax should be weighted. The higher the crime rate, the lower the tax rate.
So now the city has to do something about crime, littering, defecation, intoxication, looting, etc. otherwise they get no money.
But that won't happen ever because the voting criteria in SF is "donkey people good, elephant people bad". The donkey people have no incentive to be competent because they take their vote for granted.
Sounds like a great metric to game though. Undercounting crime is not far fetched at all. Such a metric needs to be maintained independently from the local government (or independently verifiable).
Landlords are surprised when they have to deal with what every other business has to. Supply and Demand, and changing market conditions... He has the supply and not enough demand. Sit on your thumbs or lower your price?
Same with retail space, they wont lower the rent so units remain empty for years...
To make it fair for the small mom/pop owned units, maybe if they have to lower the rent, they should be able to lower the property value (and thus property tax), since its based off rent.
I've seen older units being sold as condos, because the owner just wanted out of the situation.
There already is a "vacancy tax": the landlord is losing money when the property is vacant. They can't do that forever so that "tax" will naturally force them to adapt to the market (lower rents or sell).
Just a few years ago people were being treated like garbage in SF by landlords. Friends were complaining of landlords asking for thousands and looking at you like they are doing you a favor and that you should be thankful to be living in their property.
There are other options that are better than a simple rental such as a lease option or a land contract sale. The renter /purchaser ends up owning the property and the seller/landlord can get rid of his property at a decent price in a falling market.
That's effectively what a mortgage is. But then the "rent" would have to be higher by the amount that buys out the existing owner's principal, which is generally higher than a mortgage payment when you also expect the existing owner to pay to maintain the property in the meantime.
Yes on a lease option the sale happens at the end so seller pays maintenance but on a land contract the sale is up front and seller just finances it so doesn't have to maintain.
So then the tenant has to maintain the property, which increases their costs.
The point is that all of these options are already available, but there are trade offs inherent in them that make them a worse option than renting for many people. If they were actually better, why aren't they doing that now?
As a landlord in SF (talk about bad life choices): if you can't rent out your units, you're charging too much. Simple as that. It's no different than a renter being frustrated because he's looking for a penthouse condo for $100/month.
It might be sad if you ended up in some overly leveraged position, but you did that knowing the risks and expecting to make a lot of money using that leverage. But no one is entitled to risk-free money.
It isn't anything special. Lots of big companies now accept WFH 3 days a week. The other 2 days they arrange company shuttles for those people so it is much easier now.
Your example of $100/month is ridiculous hyperbole. More like $4000 in SF and $2000 in San Jose. If I have to choose between an extra 4h a week driving but saving $500 per week, then I will do it.
Free market principles do not apply well for apartments because of the limits on supplies and services and other externalities so I (like most here) am pretty supportive of legislation managing this. However, the legislative ideas and overall process for coming up with good, fair, and efficient laws in SF is absolutely abysmal. The lawmakers listen to the voters and the voters insist on laws that are just, well, bad. This affects every aspect of life in SF from housing, homelessness, schools, small business, etc.
Later in this interview they get into public schools, and the implications of the lottery system. While this is well-intentioned this is really a terrible policy, I personally moved out of SF largely because of this issue (I have 3 kiddos so private school is not an option).
The example he gives is that despite living a stone's throw away from a high school his child was allocated to a school 1 hour bus ride away. This is really how it works for anyone living near one of the better schools. In addition to it effectively destroying the community aspect of schools where your kids go to school with the neighbors which facilitates neighboring families meeting each other and becoming friends, walking to school together, and so on.
The policy is well intentioned, but ultimately does more harm than good and everyone who is closely involved and knowledgable about the system is completely powerless. The voters just don't care what any experts or those affected say, they just vote on ideology. Quite frankly it feels a lot like the way in which Texas voters could not, evidently, care less about the plight of women with complications in pregnancy.
> In addition to it effectively destroying the community aspect of schools where your kids go to school with the neighbors which facilitates neighboring families meeting each other and becoming friends, walking to school together, and so on.
This is the reason I'm hardcore opposed to bussing. It disrupts the ability of your stereotypical battle axe mothers from riding the schools ass. I'm sure school district goldbricks love that.
Personal view point which may not be universal. It's supposedly a lottery. But my friends with mixed race kids all got accepted to the better schools. And my friends whose kids have Norman Rockwell nature all got accepted to the schools where the district dumps the problematic kids.
Teachers hate it. A kid with a one hour commute got less sleep, and is typically exhausted. This means poor educational performance and behavior problems.
Today I learned The Epoch Times has a YouTube channel!
Summary and background: the Epoch Times host interviews a landlord who’s concerned about the impact of SF’s Proposition M, which imposes a vacancy tax on residential units in multi-family dwellings with three or more units.
The landlord manages a 25-unit building, which his uncle and father acquired decades ago. He blames the WFH phenomenon and crime for people leaving SF for cheaper cities and suburbs. He says he no longer can find people willing to rent his units on his terms on Craigslist or Zillow. He’s also concerned about the cost of implementing seismic retrofitting and complying with fire safety regulations. He’s worried about how long it will take for his building to regain its value: at its peak the building had appreciated and was appraised at “10.5 or 11-million" but his broker now appraises it at “between 6 and 7 million.” He goes on from there to a broader range of complaints about the city’s policies, over-regulation, how things have changed in his time, and how the balance of power seems to have shifted to favor tenants.
As to the residential vacancy tax that theoretically prompted this:
From 2024, after a residential rental unit has been left vacant for 6 months, a tax of between $2,500 and $5,000 (based on the apartment’s size) will apply in the first year, doubling each subsequent vacant year to a maximum of $10,000-$20,000 in the third and subsequent vacant years. Proponents of the vacancy tax mention that they’re particularly concerned about corporate landlords allowing units in rent-controlled buildings to remain vacant.
Single-family homes and duplexes are exempt. The city estimates that 4,000 of the city’s 40,000 vacant units will qualify for the tax in the first year [1]
117 comments
[ 4.5 ms ] story [ 187 ms ] threadHousing should not be an investment ever.
I'm a colossal fan of co-ops and credit unions for this reason.
These services, think healthcare, food, and housing, should be public services that are guaranteed not delivered by the market. You cannot look at the market-based solutions to literally any of these objectively and think it is performing well. At least, not if you value human life.
I agree with your intent here, but the devil is in the details.
In my large US city, a lot of apartments are held by various corporations that collude via third party software to raise and keep prices high. The local building managers have no say in lease pricing. Maybe a small percentage of people are lucky enough to find mom/pop landlords but many are stuck paying whatever the large complexes charge.
Suppose the amount rents have to hit before it's profitable to build a new building is $1000/month and right now rents are at $990/month. A cartel representing 70% of the landlords in the city collude to raise rents to $2500/month.
If they're allowed to, builders will keep building new housing until rents are back below $1000, because until that point they can keep making money by doing it. Even if they have to increase the housing stock in the city by the entire 70% and leave the cartel with a bunch of empty buildings.
But if they're not allowed to build, prices go up. And some entity with a profit cap can't do anything about it because they have no path to supplying enough housing to lower the market price.
Build more housing, that's the only way.
Honestly I'd be fine with the government profiting if it could be tied back to a mechanism that directly reduces a taxpayer's burden, basically "your tax share is reduced by x because total profit from government-run institutions was y"
It might even work to incentivize lawmakers to legislate in favor of the profit of such institutions in that they could then tell their constituents that they were responsible for their lower tax burden in a given year.
The current model has led to a persistent underinvestment in housing, especially entry-level housing since at least the late 1990's.
This style of posting - assuming but not stating a controversial position, but stating as given what follows from it - is real bad news. First, it's essentially a dishonest way of communicating. They state as truth something that is very far from accepted, in the attempt to get people to accept something that they don't, without having to go through the hard work of actually persuading them on the real point of disagreement.
But even if no dishonesty is intended - they think the controversial point is not controversial at all, but rather something that everyone accepts - it's still bad news, because it hides the actual point of disagreement that needs discussed. It results in a "conversation" that is both sides hurling sound bytes at each other, but never actually talking about where the disagreement is. That's not a good conversation, even in general, but it's a terrible conversation for HN.
It’s a repeated pattern in history that always ends in darkness for humanity if it gains enough momentum to make changes.
https://iea.org.uk/publications/socialism-the-failed-idea-th...
How are we even debating private ownership of property and housing. What an incredible failure of basic education systems. It’s like denying evolution or holding some other profoundly unscientific and un-objective emotional belief.
Hopefully my comment complies with HN guidelines. It’s can be hard to comply we dealing with such absurd proposals and theories.
Unless tinker-bell is real and has fairy dust to build houses and provide basic needs.
I’m not sure a few bad actors taking advantage of people warrants statements like, “Housing should not be an investment ever.”
But beyond that, I still don’t think banning owning a rental (however that would be enforced anyway) is the solution there. It’s not a realistic suggestion.
You see how the intent is different? I personally know dozens, maybe hundreds of landlords from various geographical regions in my state, and most of their stories are the same.
But even barring that, I don’t understand where the thinking comes from that those with wealth can’t use it to secure more wealth. I’m not advocating for infinite gains here, but I’ve noticed a non-trivial portion of Hacker News seems to believe that gain is inherently immoral. Like wanting a better life or more for your family is inherently an evil thing. Some folks have more, some folks have less. Those with more should strive to help those with less; but I reject the notion that simply having more than someone else is bad.
I’m glad I own now but it’s really hard to sympathize when so many have been crooks.
Putting the state in charge of housing is the cause of the existing problem. They become captured by landlords, or favor higher property values because they increase property tax revenues.
What you need is some constitutional restraint on local zoning rules.
Governments have weak competitive pressure. You have to uproot your whole life and move to another jurisdiction. When you vote, you're making a choice about every issue under the sun at once and it's impossible to change your vote on only one issue by itself. You can also easily end up "represented" by the candidate you voted against. As a result they're extremely inefficient by default and should only be used when the alternative is catastrophic.
This is doubly true in markets that could be competitive, because the incumbents have the incentive to use the government to reduce competition so they make more money. The obviously relevant example is zoning rules that restrict housing supply. It's critical to not allow that to happen, or to undo it when it already has.
Trying to cancel it out with even more regulations is just another opportunity for incumbents to sneak in some new way of screwing you. When you screw up a market this badly, people get desperate and angry and start proposing all kinds of aggressive "solutions" because they fail to understand the cause of the problem but want something done about it. The most ridiculous of these are generally filtered out, but the ones that make it through are the ones that don't work or make it worse because those are the ones the incumbents fight the least.
You have to fight the cause of the problem, which is a government captured by land owners imposing rules that make housing more expensive. The solution is to remove those rules.
> There are widely published opinions that state this just makes landlords richer and housing rarer to further deregulate.
One of the main reasons "deregulation" has a bad name is that its purpose is to increase competition and lower prices, which is exactly the thing the incumbents don't want, so instead they propose a "compromise" that prevents exactly the thing you're trying to get.
For example, suppose you have two rules. One says that new housing construction is utterly prohibited, the other says that all rental properties must have working plumbing.
In a competitive market the second rule is inefficient because all it really does is prohibit anyone from offering a storage unit with no plumbing. There would be enough apartments with running water that nobody would have any reason to consider one that didn't.
But in a market where increasing the housing supply is inhibited, there are more tenants than rental units and that allows abusive slumlords to find tenants willing to live under such conditions.
Much "deregulation" is the corruption in which you only remove the second rule and not the first, which of course makes things worse, because the first one is the one that matters and the second one is just an inefficient attempt to mitigate the damage.
Increase the housing supply until rents go down. Accept no substitutes.
Suppose you want to build a 20 story condo. The most efficient thing to do is to find an empty plot of land or a single family home and build it there, but that's prohibited by zoning. 20 story buildings aren't allowed there.
Now what you have to do is find an existing 10 story condo and knock that down, because it's in a place zoned for tall buildings. But that costs a lot more, and you also have to remove all the people who are already living there instead of just buying one house from someone who is already moving. It's so much more expensive than the first thing that it's not profitable, so it doesn't happen without a subsidy. Not only that, even if it does happen, you've now paid to build a 20 story building and only added 10 stories worth of housing.
What I'm saying is that they passed laws that make increasing supply so outrageously expensive that demand has to remain at outrageously high levels to trigger construction. You can't get to reasonable housing costs that way because construction companies can't sustainably operate at a loss. You have to make it sustainable by not prohibiting construction where it's the most cost effective.
> by your own logic they just want more money.
Of course they want money. They have to pay for land and construction crews. But if you increase their costs by prohibiting them from building on the most cost effective sites, the amount they want before they'll be willing to do it goes up.
Construction companies don't make anything by not building. But they also don't make anything if government regulations increase their costs above real estate prices. So every time you increase their costs with a new regulation, real estate prices go up -- and stay there until you remove the rule that keeps their costs high. (Or something causes demand to go down, which is typically only something bad.)
This is technically correct but the areas mentioned are the size of a block or a subdivision so it's hardly the limiting factor. You can build high rise apartments in any big city and multi-family anywhere. The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost. It's combined code compliance, materials, labor, and financing. If it costs $300 to build a square foot just in the labor and materials then it comes up at $150K for a tiny 500 sqf 1br and you'd need to rent that for more than $2000 per month to break even on the commercial loan you took. Throw in maintenance, lapses in occupancy and some profit and you are looking at close to $3K for a 500 sqf 1br. Unless it's on Manhattan or on an ocean beach somewhere, it's going to be very hard to find tenants.
It appears that America had ran up its credit card to the limit. Mass produced goods from China are still cheap but the hoses are just expensive, can't ship those in containers from Shenzhen. Playing with zoning is rearranging chairs on the deck of Titanic, it's not going to lower the cost of construction. And yes, adding more housing would lower the price but the problem is that adding housing is held up by the cost mostly and the developers only want to build in very limited prestigious areas where they hope to get tenants/buyers willing to pay their cost. It's not sustainable.
You can't build them except in the places they already are. Converting existing high density housing to even higher density housing is prohibitively expensive. What you need to do is go to the edge of the high density area where it meets the low density area and convert the low density housing to high density. But that area is only zoned for low density, so you can't.
> The reason prices on housing go up is that it costs a lot to build housing and it's pretty hard to secure financing for a housing project which you plan to sell/rent below cost.
Who is requiring them to sell below cost? Just build more housing at the market rate as long as the market rate is above your construction costs. If you want a lower market rate, find a way to lower construction costs.
> If it costs $300 to build a square foot
But what causes that?
I.e. in all big cities? So are you really arguing that the rent in SF goes up because you cannot build a residential tower in Redding, CA?
> Converting existing high density housing to even higher density housing is prohibitively expensive.
You don't need to convert. You can change zoning on existing lots, it happens all the time.
>Just build more housing at the market rate as long as the market rate is above your construction costs.
But it is not in most places. This is why developers are trying to get into prestigious areas where it's still possible. Nobody prevents you from building a residential tower in the East LA, you just won't be able to sell it. But yes, nobody will let you to build one in Malibu, where you'd be able to move units. The issue is that as soon as you filled Malibu with commie blocks the area won't be prestigious anymore so somebody will be left holding the bag, developers are desperate enough to enter this game anyways.
> If it costs $300 to build a square foot
Just read the message, I've explained what.
Because this isn't how things work in civil society.
They can't just decree that all single family homes in San Jose are now illegal and you have to vacate by the end of the month.
Because I've seen Soviet era housing and War on Poverty projects.
Challenge my assumptions? I think the burden is on you to show that somehow next time will be different
Zoning laws are the reason housing is unaffordable. Landlords lobby for zoning laws, but if you have the political power to prohibit renting then presumably you have the political power to reform zoning. Moreover, you should do that anyway, because if all you do is prohibit renting without allowing new housing to be built, you're going to have a bad time.
> if homeownership is out of reach for a segment of the population there should be public housing to accommodate that need.
So if you make 110% of the median income but don't have a downpayment yet the government pays for your housing? Do you get free housing forever as long as you spend everything you make and never save anything up?
What if you have plenty of money but you know you're not going to be somewhere for more than two years and don't want to buy property there?
Added benefit would be less traffic, congestion, and waiting in lines for anything
Housing is unaffordable because demand outstrips supply.
Economic illiterates who blame “greed” making public policy tend to make it even worse.
A large portion of the supply is being held by investors like landlords which restricts the supply. Removing them from the equation would increase supply and decrease prices.
The free market used to work better before it got handcuffed by zoning laws everywhere. If you prohibit the free market from working, don't then mock the free market because it's not working.
> A large portion of the supply is being held by investors like landlords which restricts the supply. Removing them from the equation would increase supply and decrease prices.
True - if you mean landlords who hold but don't allow occupancy.
> A large portion of the supply is being held by investors like landlords which restricts the supply.
Because they expect the value tomorrow will be higher than the value today, because they expect demand to increase over time while the government continues to inhibit new construction. Stop inhibiting new construction and they'll want to sell now before the price comes down. (Which will make the price come down sooner.)
The incentive to not rent existing units is also a predictable consequence of things like rent control and laws that make it hard to evict non-paying tenants. Don't increase the risk of providing a thing and expect that to lower the price.
As a landlord I’d be interested to understand your proposed mechanism to “remove” me.
Could you also elaborate what happens to my capital and what I should be doing instead with the excess capital my productivity generates over my chosen needs and wants?
This attitude is so incredibly economical illiterate that it’s shocking we have HN commentators that don’t understand.
Who I am selling to? at what price? Do you support state confiscation of private capital?
Are factories that produce cereal next?
It’s an embarrassment to western education that educated people have such poor understanding of basic economics.
The real problem we have is exactly what you labeled “economic illiteracy”. This is a serious problem and issue with education systems worldwide.
In the future I hope one day humanity realizes that it’s equivalent in the past to failing to teach reading and writing or denying evolution.
Whatever the solution is, it’s damn sure is not public housing.
Also Sanhedrin 38a: https://www.sefaria.org/Sanhedrin.38a.8
Our diversity is a complexity that is not addressed for in the working model, so it’s not that we shouldn’t try…but we shouldn’t assume that a model that works well in one environment will work well in another, significantly different, environment.
Otherwise its almost always a second (or third) plot that is outrightly owned by the landlord, which means they dont need it and itd be better for you to just be able to buy it.
Also the even better answer is public housing.
The landlord can make money by investing capital and then getting a return equivalent to the interest you'd pay to the bank to borrow that amount of money.
> Otherwise its almost always a second (or third) plot that is outrightly owned by the landlord, which means they dont need it and itd be better for you to just be able to buy it.
But you can buy it. You just go to the owner and buy it from them.
What are you supposed to do if you can't afford that right now?
If you want to screw the people doing that, build enough new housing that prices go down and they lose money on their investment.
I mean they would rather take zero money than some money. Why is that?
If you want to play that game you have to live with the consequences...
So now the city has to do something about crime, littering, defecation, intoxication, looting, etc. otherwise they get no money.
But that won't happen ever because the voting criteria in SF is "donkey people good, elephant people bad". The donkey people have no incentive to be competent because they take their vote for granted.
That would be effectively writing off part of the property value forever. I'd wait for as long as possible to avoid that kind of loss.
To make it fair for the small mom/pop owned units, maybe if they have to lower the rent, they should be able to lower the property value (and thus property tax), since its based off rent.
I've seen older units being sold as condos, because the owner just wanted out of the situation.
There already is a "vacancy tax": the landlord is losing money when the property is vacant. They can't do that forever so that "tax" will naturally force them to adapt to the market (lower rents or sell).
Payback time.
The point is that all of these options are already available, but there are trade offs inherent in them that make them a worse option than renting for many people. If they were actually better, why aren't they doing that now?
It might be sad if you ended up in some overly leveraged position, but you did that knowing the risks and expecting to make a lot of money using that leverage. But no one is entitled to risk-free money.
Your example of $100/month is ridiculous hyperbole. More like $4000 in SF and $2000 in San Jose. If I have to choose between an extra 4h a week driving but saving $500 per week, then I will do it.
Later in this interview they get into public schools, and the implications of the lottery system. While this is well-intentioned this is really a terrible policy, I personally moved out of SF largely because of this issue (I have 3 kiddos so private school is not an option).
The example he gives is that despite living a stone's throw away from a high school his child was allocated to a school 1 hour bus ride away. This is really how it works for anyone living near one of the better schools. In addition to it effectively destroying the community aspect of schools where your kids go to school with the neighbors which facilitates neighboring families meeting each other and becoming friends, walking to school together, and so on.
The policy is well intentioned, but ultimately does more harm than good and everyone who is closely involved and knowledgable about the system is completely powerless. The voters just don't care what any experts or those affected say, they just vote on ideology. Quite frankly it feels a lot like the way in which Texas voters could not, evidently, care less about the plight of women with complications in pregnancy.
This is the reason I'm hardcore opposed to bussing. It disrupts the ability of your stereotypical battle axe mothers from riding the schools ass. I'm sure school district goldbricks love that.
Personal view point which may not be universal. It's supposedly a lottery. But my friends with mixed race kids all got accepted to the better schools. And my friends whose kids have Norman Rockwell nature all got accepted to the schools where the district dumps the problematic kids.
Summary and background: the Epoch Times host interviews a landlord who’s concerned about the impact of SF’s Proposition M, which imposes a vacancy tax on residential units in multi-family dwellings with three or more units.
The landlord manages a 25-unit building, which his uncle and father acquired decades ago. He blames the WFH phenomenon and crime for people leaving SF for cheaper cities and suburbs. He says he no longer can find people willing to rent his units on his terms on Craigslist or Zillow. He’s also concerned about the cost of implementing seismic retrofitting and complying with fire safety regulations. He’s worried about how long it will take for his building to regain its value: at its peak the building had appreciated and was appraised at “10.5 or 11-million" but his broker now appraises it at “between 6 and 7 million.” He goes on from there to a broader range of complaints about the city’s policies, over-regulation, how things have changed in his time, and how the balance of power seems to have shifted to favor tenants.
As to the residential vacancy tax that theoretically prompted this:
From 2024, after a residential rental unit has been left vacant for 6 months, a tax of between $2,500 and $5,000 (based on the apartment’s size) will apply in the first year, doubling each subsequent vacant year to a maximum of $10,000-$20,000 in the third and subsequent vacant years. Proponents of the vacancy tax mention that they’re particularly concerned about corporate landlords allowing units in rent-controlled buildings to remain vacant.
Single-family homes and duplexes are exempt. The city estimates that 4,000 of the city’s 40,000 vacant units will qualify for the tax in the first year [1]
[0] (pdf) Ballot measure text: https://sfelections.sfgov.org/sites/default/files/20220207_E...
[1] https://www.sfgate.com/politics/article/san-francisco-voters...
[1] https://en.wikipedia.org/wiki/The_Epoch_Times