The Biden administration announced new steps Friday to ensure access to affordable housing, launching a slew of resources to convert high-vacancy commercial buildings to residential use.
The problem though isn’t a lack of housing, we actually have plenty for everyone. The problem is corporations buying up homes to rent them and in the process jacking up home prices.
If all these newly made homes are left to the tender mercies of the market there won’t be a slew of new homeowners. Just more rentals.
Houses in the middle of Nebraska do not meaningfully help the housing market of New York City or San Francisco. Sure, I could go and buy a house in my hometown in bumfuck rural Missouri, but I don’t want to live in a homophobic conservative hellhole, so housing stock there isn’t really relevant to me in any way.
And if you look at a city like Seattle, where there actually has been meaningful construction, the pressure on renters has been way lower. Straight from the horses mouth:
The rise in vacancies across Seattle is directly linked to the rate of newly constructed apartments, according to Capital Economics, and it’s increased from 5.2% at the end of 2019 to 7% by midyear 2023. Already, Seattle’s asking rent growth rate is at -2% and could fall further. With that, the city’s apartment values will fall, and average annual total returns could become negative by 2027, meaning those properties are losing value as an asset and investment.
Here’s a London-based investment firm complaining about how housing in Seattle is becoming a bad investment due to increasing supply.
Not to mention, more rentals isn’t a bad thing! More rental units means fewer competition for each individual unit and ultimately cheaper rents. If you have 1000 people wanting to move to a city but there are only 500 open apartments, only the richest 500 people get to move. If you have 1200 open apartments, those landlords have to find a price that’ll get them a tenant or they’ll completely miss out on rents.
I completely agree with the sentiment that housing shouldn’t be treated as a productive investment asset, but the real question worth asking is why the market is so slanted towards landlords that housing can even serve as a productive asset in the first place. If you look at places like the Soviet Union or Communist China, they managed to house everyone easily because they build a metric fuckton of housing everywhere, so the questions of determining who gets housing and who gets to starve on the streets didn’t even apply.
It’s a supply issue. Essentially every economist agrees that it’s a supply issue. Evidence has shown time and time again that increasing supply lowers rent pressures. This is not a controversial question.
As of the last time a city government report was made on this just two years ago, over 61,000 homes were vacant in San Francisco. In answer to anyone who would write that off to pandemic effects, the number a few years before was around 40,000 homes sitting uninhabited. In San Francisco. Just sitting around being some well-off person or corporation’s investment, empty.
From some data I could find, the average one bedroom rent in January 2020 was $3050. From the same source, it’s currently around $2900. That 2020 number adjusted for inflation is $3600. So, rents seem to have both nominally and truly fallen.
I’d assume it’s largely due to lower demand because of remote work, since SF surely hasn’t been building anything. Thanks for the good example that increased vacancy does indeed lead to lower rents.
Edit: You guys are going to win the downvote war, you always do. But are you really winning? You’re trying to get your cashflow on, I get it, but is it really worth it? I think you may want to think about your life choices if part of your job is chasing around people like me on Lemmy, lol.
We study the city-wide effects of new, centrally-located market-rate housing supply using geo-coded total population register data from the Helsinki Metropolitan Area. The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. Market-rate supply is likely to improve affordability outside the sub-markets where new construction occurs and to benefit low-income people.
Turns out there may be a meaningful difference between randomly cutting taxes from businesses and building a bunch of new housing.
Seattleite here. We also focused on supply side housing issues. We passed a ballot initiative last year that allows the city to establish its own housing developer which will compete with capital to build public housing.
It’s a supply side issue AND a capitalist greed issue. Don’t listen to this person.
I’m in agreement. Also in Seattle. The median house price in Seattle is over $800,000. Down a whopping 2%. This means you’d have to make over 200k a year to afford your mortgage. How many more apartment units will trickle this down the other 50% or 75% to make it affordable to everyone? People need to be realistic. Bans on for-profit home ownership need to be part of the mix here, not just more supply.
I could see a private ownership of an actual person being allowed 2 homes in Seattle. Corporations and any lateral, upwards, or subsidiary companies attached to the same board can only own up to 5 units or something for airbnb type situations. Anything over that, they have to register as a hotel and follow hotel rules.
China seems to be having some of their own real estate issues and are maybe pulling out of the US, some of our rent decreases might be because of that too. A little of it might take care of itself? Just a guess, but I hope we continue to look at everything. No one can afford to live in Seattle doing the low level jobs, so stop complaining about the lack of workers you shitty person at the grocery checkout. We were becoming San Francisco and I don’t think anyone wants that.
One to four units can only be privately owned, 5 to 8 units can only be owned by a registered company, more than that must be run as a non profit (ideally a state corporation).
People are only allowed to own one property in a 50km radius (meaning that if you own a 4 unit you pretty much have to live in it unless you live in the next city over).
I’m not sure how you would do the non-profit since a lot of corporations already own high rises with “luxury” apartments. Are you saying they would be grandfathered in?
Not everyone wants to own, even when housing was affordable there was still a bit more than 30% renting.
At the point we’re at there’s more competition to own because renting is so expensive that it’s way more logical to purchase, flood the rental market to crash prices there and people won’t buy at a ridiculous price, they’ll simply rent instead, lowering pressure in the whole market.
Disagree with what you’re saying though there is some truth in what you’re saying:
We’re low on supply on housing in major business areas, because we haven’t kept up with house manufacturing for like 20+ years. If we just allow developers to build what they like, yeah they’ll mainly aim for luxury apartments/condos which only the rich will be able to afford. There will be strong resistance from the landlords to drop the property/rent value since the property is constructed to be more luxurious, so we’d need a ton of those luxury homes before medium and low income homes get built or become available (through price drops). That’s why, governments need to require some low income/median income offered units to help house more people with these new units until supply catches up or some other way to ensure that lower income people (non-rich) are able to afford homes.
Overall, making more homes is the ultimate solution to our low supply problem, we can argue of better ways to make more homes, get more average/median people housed, and decrease living costs, while we make new homes. Otherwise, we’ll be here arguing about what to do, and letting the problem continue to fester instead of refining imperfect solutions.
That’s why, governments need to require some low income/median income offered units to help house more people with these new units until supply catches up or some other way to ensure that lower income people (non-rich) are able to afford homes.
But they don’t, they want to make money too. Tell me specifically how the developers and “luxury” home creators are trying to make that happen. I’ll give you a hint, they’re not which is why trickle down housingTM doesn’t work. Developers are great at getting the laws to work in their favor by using cash.
First, take care of corporations buying apartment buildings and homes for short term rentals, then we can talk about supply.
I’ve said this before, but Seattle actually had all of the rental corporations using one rental service that chose the prices for the rentals. Meaning, they were price fixing our rental market.
If you’re a tourist market like Seattle, the corporations buying up apartment buildings for airbnb’s is also a huge problem.
Yup. This shit needs to be illegal nationwide. They literally encourage vacancies in order to keep pricing going upward and coordinate pricing in order to keep profits maximized. It’s gross and these fucks should be vilified.
There are quite literally millions of properties in the US removed from the housing market entirely in the form of short-term rentals. Can’t buy them, can’t get a lease as a tenant. It’s definitely adding to supply issues, and there’s a chance it craters property values if there’s a recession because people will vacation less and then the ‘gig’ property is no longer a gig but either a huge pile of money doing nothing or mortgage causing huge losses
I agree that its short term rentals but I don’t think it’s the mom & pop places that are a problem. There are tons of apartment buildings in Seattle owned by corporations that are used for short term rentals only. Hawaii tried to get around that by requiring licenses and month long leases unless you live on the property or something. I don’t know if it’s working or not for them since it’s been awhile since I’ve checked. I’m guessing Airbnb just words it to get around the laws.
I agree, I just rattled off about the cause and effect in the eyes of the mom & pop places, and the mom & pop folks might become victims if they’re late to the party and some shit does hit the fan which causes bigger names to start unloading entire portfolios of properties. But what can someone even do in that scenario, if they bought a property to host 6 months ago and suddenly there is a deluge of houses on the market and no one is renting their place? They practically have to dump it or short sell and eat the losses
I guess it would depend on where they bought it. If it was in Seattle? People would buy them in a heartbeat and then there would be a shit ton of rentals on the market which would then make the long term rentals go down. Most people eventually want a house and a yard if they have a family and/or pets. The “luxury” apartment game is for young people for the most part. They could also rent it out until the market stabilizes.
Location is a major issue. A lot of empty housing stock is in places no one wants to live in anymore. There is a lack of housing in high demand areas. There’s no silver bullet, but converting commercial real estate in those high demand areas is ideal to add useful housing.
But yes, corporations sucking up residential real estate needs to be tackled just the same.
To say nothing of the massive expense of remodeling those commercial properties to actually work as residential. When it comes to the big multistory buildings in the larger cities that need it most, the plumbing alone would be a nightmare, along with splitting up all the electric service so individual usage can be metered. And then you have to gut and rebuild the interiors to split everything up and still have proper fire code compliance.
I love the idea and I hope it gains traction but logistically and financially there are some tall hurdles to overcome to implement this properly.
I’ve said for a while that vacancy taxes should be extremely painful. Like 10% of the land/structure value per month, increasing 2% every month after that.
They’re gonna need to because ‘Hey corporate land owner, were gonna make all this residentia’ is gonna scare a lot of rich people. Which would be fine if we didn’t run a market economy that collapsed if rich people get scared.
deleted by creator
The problem though isn’t a lack of housing, we actually have plenty for everyone. The problem is corporations buying up homes to rent them and in the process jacking up home prices.
If all these newly made homes are left to the tender mercies of the market there won’t be a slew of new homeowners. Just more rentals.
Houses in the middle of Nebraska do not meaningfully help the housing market of New York City or San Francisco. Sure, I could go and buy a house in my hometown in bumfuck rural Missouri, but I don’t want to live in a homophobic conservative hellhole, so housing stock there isn’t really relevant to me in any way.
And if you look at a city like Seattle, where there actually has been meaningful construction, the pressure on renters has been way lower. Straight from the horses mouth:
https://fortune.com/2023/10/24/how-much-seattle-west-coast-apartment-worth-landlords-rents-capital-economics-forecast/amp/
Here’s a London-based investment firm complaining about how housing in Seattle is becoming a bad investment due to increasing supply.
Not to mention, more rentals isn’t a bad thing! More rental units means fewer competition for each individual unit and ultimately cheaper rents. If you have 1000 people wanting to move to a city but there are only 500 open apartments, only the richest 500 people get to move. If you have 1200 open apartments, those landlords have to find a price that’ll get them a tenant or they’ll completely miss out on rents.
I completely agree with the sentiment that housing shouldn’t be treated as a productive investment asset, but the real question worth asking is why the market is so slanted towards landlords that housing can even serve as a productive asset in the first place. If you look at places like the Soviet Union or Communist China, they managed to house everyone easily because they build a metric fuckton of housing everywhere, so the questions of determining who gets housing and who gets to starve on the streets didn’t even apply.
It’s a supply issue. Essentially every economist agrees that it’s a supply issue. Evidence has shown time and time again that increasing supply lowers rent pressures. This is not a controversial question.
That’s amazing news about Seattle. It’s my dream to be able to afford to live there again one day
As of the last time a city government report was made on this just two years ago, over 61,000 homes were vacant in San Francisco. In answer to anyone who would write that off to pandemic effects, the number a few years before was around 40,000 homes sitting uninhabited. In San Francisco. Just sitting around being some well-off person or corporation’s investment, empty.
From some data I could find, the average one bedroom rent in January 2020 was $3050. From the same source, it’s currently around $2900. That 2020 number adjusted for inflation is $3600. So, rents seem to have both nominally and truly fallen.
I’d assume it’s largely due to lower demand because of remote work, since SF surely hasn’t been building anything. Thanks for the good example that increased vacancy does indeed lead to lower rents.
Trickle down housing doesn’t work. The end.
Edit: You guys are going to win the downvote war, you always do. But are you really winning? You’re trying to get your cashflow on, I get it, but is it really worth it? I think you may want to think about your life choices if part of your job is chasing around people like me on Lemmy, lol.
I know you don’t care about evidence, but for anyone reading who does, here’s a study from Helsinki.
https://ideas.repec.org/p/fer/wpaper/146.html
Turns out there may be a meaningful difference between randomly cutting taxes from businesses and building a bunch of new housing.
Dude, I live in Seattle, I live in the evidence. The only reason rent went down in Seattle is because they busted the price fixers.
https://www.propublica.org/article/yieldstar-realpage-rent-doj-investigation-antitrust
Seattleite here. We also focused on supply side housing issues. We passed a ballot initiative last year that allows the city to establish its own housing developer which will compete with capital to build public housing.
It’s a supply side issue AND a capitalist greed issue. Don’t listen to this person.
Did they also take away the ability to buy your way out of providing affordable housing?
I don’t know, I’m not on the city council so I don’t have all the details. I would hope they do approach that issue though if they haven’t already
The paper came out before that investigation was opened, so unless the paper is wrong, you’re probably wrong.
On Helsinki? An old world town that has way different living standards and free healthcare?
I’m in agreement. Also in Seattle. The median house price in Seattle is over $800,000. Down a whopping 2%. This means you’d have to make over 200k a year to afford your mortgage. How many more apartment units will trickle this down the other 50% or 75% to make it affordable to everyone? People need to be realistic. Bans on for-profit home ownership need to be part of the mix here, not just more supply.
I could see a private ownership of an actual person being allowed 2 homes in Seattle. Corporations and any lateral, upwards, or subsidiary companies attached to the same board can only own up to 5 units or something for airbnb type situations. Anything over that, they have to register as a hotel and follow hotel rules.
China seems to be having some of their own real estate issues and are maybe pulling out of the US, some of our rent decreases might be because of that too. A little of it might take care of itself? Just a guess, but I hope we continue to look at everything. No one can afford to live in Seattle doing the low level jobs, so stop complaining about the lack of workers you shitty person at the grocery checkout. We were becoming San Francisco and I don’t think anyone wants that.
I’ve got similar ideas!
One to four units can only be privately owned, 5 to 8 units can only be owned by a registered company, more than that must be run as a non profit (ideally a state corporation).
People are only allowed to own one property in a 50km radius (meaning that if you own a 4 unit you pretty much have to live in it unless you live in the next city over).
I’m not sure how you would do the non-profit since a lot of corporations already own high rises with “luxury” apartments. Are you saying they would be grandfathered in?
If it’s rental then it’s non profit, they can convert them to condos if they don’t agree.
Not everyone wants to own, even when housing was affordable there was still a bit more than 30% renting.
At the point we’re at there’s more competition to own because renting is so expensive that it’s way more logical to purchase, flood the rental market to crash prices there and people won’t buy at a ridiculous price, they’ll simply rent instead, lowering pressure in the whole market.
It’s one of the many ways to lower prices!
Disagree with what you’re saying though there is some truth in what you’re saying: We’re low on supply on housing in major business areas, because we haven’t kept up with house manufacturing for like 20+ years. If we just allow developers to build what they like, yeah they’ll mainly aim for luxury apartments/condos which only the rich will be able to afford. There will be strong resistance from the landlords to drop the property/rent value since the property is constructed to be more luxurious, so we’d need a ton of those luxury homes before medium and low income homes get built or become available (through price drops). That’s why, governments need to require some low income/median income offered units to help house more people with these new units until supply catches up or some other way to ensure that lower income people (non-rich) are able to afford homes.
Overall, making more homes is the ultimate solution to our low supply problem, we can argue of better ways to make more homes, get more average/median people housed, and decrease living costs, while we make new homes. Otherwise, we’ll be here arguing about what to do, and letting the problem continue to fester instead of refining imperfect solutions.
But they don’t, they want to make money too. Tell me specifically how the developers and “luxury” home creators are trying to make that happen. I’ll give you a hint, they’re not which is why trickle down housing TM doesn’t work. Developers are great at getting the laws to work in their favor by using cash.
First, take care of corporations buying apartment buildings and homes for short term rentals, then we can talk about supply.
Well it is both, suburban hell doesn’t scale up, it’s meant to be exclusionary.
I’ve said this before, but Seattle actually had all of the rental corporations using one rental service that chose the prices for the rentals. Meaning, they were price fixing our rental market.
If you’re a tourist market like Seattle, the corporations buying up apartment buildings for airbnb’s is also a huge problem.
https://www.seattletimes.com/business/real-estate/new-lawsuit-alleges-price-fixing-at-seattle-area-apartment-buildings/
Yup. This shit needs to be illegal nationwide. They literally encourage vacancies in order to keep pricing going upward and coordinate pricing in order to keep profits maximized. It’s gross and these fucks should be vilified.
There are quite literally millions of properties in the US removed from the housing market entirely in the form of short-term rentals. Can’t buy them, can’t get a lease as a tenant. It’s definitely adding to supply issues, and there’s a chance it craters property values if there’s a recession because people will vacation less and then the ‘gig’ property is no longer a gig but either a huge pile of money doing nothing or mortgage causing huge losses
I agree that its short term rentals but I don’t think it’s the mom & pop places that are a problem. There are tons of apartment buildings in Seattle owned by corporations that are used for short term rentals only. Hawaii tried to get around that by requiring licenses and month long leases unless you live on the property or something. I don’t know if it’s working or not for them since it’s been awhile since I’ve checked. I’m guessing Airbnb just words it to get around the laws.
I agree, I just rattled off about the cause and effect in the eyes of the mom & pop places, and the mom & pop folks might become victims if they’re late to the party and some shit does hit the fan which causes bigger names to start unloading entire portfolios of properties. But what can someone even do in that scenario, if they bought a property to host 6 months ago and suddenly there is a deluge of houses on the market and no one is renting their place? They practically have to dump it or short sell and eat the losses
I guess it would depend on where they bought it. If it was in Seattle? People would buy them in a heartbeat and then there would be a shit ton of rentals on the market which would then make the long term rentals go down. Most people eventually want a house and a yard if they have a family and/or pets. The “luxury” apartment game is for young people for the most part. They could also rent it out until the market stabilizes.
Location is a major issue. A lot of empty housing stock is in places no one wants to live in anymore. There is a lack of housing in high demand areas. There’s no silver bullet, but converting commercial real estate in those high demand areas is ideal to add useful housing.
But yes, corporations sucking up residential real estate needs to be tackled just the same.
To say nothing of the massive expense of remodeling those commercial properties to actually work as residential. When it comes to the big multistory buildings in the larger cities that need it most, the plumbing alone would be a nightmare, along with splitting up all the electric service so individual usage can be metered. And then you have to gut and rebuild the interiors to split everything up and still have proper fire code compliance.
I love the idea and I hope it gains traction but logistically and financially there are some tall hurdles to overcome to implement this properly.
It’s like diamonds but you need them to live.
I hope they work on fucking the investment property market as well.
I’ve said for a while that vacancy taxes should be extremely painful. Like 10% of the land/structure value per month, increasing 2% every month after that.
They’re gonna need to because ‘Hey corporate land owner, were gonna make all this residentia’ is gonna scare a lot of rich people. Which would be fine if we didn’t run a market economy that collapsed if rich people get scared.
Fine you won’t return to the office from WFH, we’ll make the office the home, checkmate employee!