New meaning to the phrase "Occupy Wall Street"
September 9, 2015 7:15 PM Subscribe
Wall Street moves in on rental homes
Six Additional Resources on Rentals
- The New Single-Family Home Renters of California, May 2015, Tenants Together.
- The Rise of the Corporate Landlord, July 2014, Right to the City Alliance.
- Renting From Wall Street, July 2014, Right to the City Alliance.
- Meet the New Landlords, Summer/Fall 2014, Center for American Progress.
- When Wall Street Buys Main Street, February 2014, Center for American Progress.
- America’s Rental Housing, 2013, Joint Center for Housing Studies of Harvard University.
In the first article, I can practically feel the clenched teeth every time the author writes "Wall Street", but is this different than rental housing owned by a publicly traded company?
I mean, when I'm supposed to be outraged by stuff like "for the publicly traded landlord, one thing is clear: their investors expect to see a profit from renters", I wonder where these guys have been living where landlords were preforming a public service out of the love in their hearts.
posted by sideshow at 7:34 PM on September 9, 2015 [12 favorites]
I mean, when I'm supposed to be outraged by stuff like "for the publicly traded landlord, one thing is clear: their investors expect to see a profit from renters", I wonder where these guys have been living where landlords were preforming a public service out of the love in their hearts.
posted by sideshow at 7:34 PM on September 9, 2015 [12 favorites]
Nothing says Wall Street like a Maryland company that is owned in large part by the Alaska Permanent Fund and that scarrrry wall street firm Vanguard.
It's a REIT, so most of the beneficial interest will be in pensions and IRAs and foundations.
posted by jpe at 7:39 PM on September 9, 2015 [2 favorites]
It's a REIT, so most of the beneficial interest will be in pensions and IRAs and foundations.
posted by jpe at 7:39 PM on September 9, 2015 [2 favorites]
It's a REIT, so most of the beneficial interest will be in pensions and IRAs and foundations.
So, more pumping money from the younger and relatively poorer to the older and relatively richer.
posted by kandinski at 7:46 PM on September 9, 2015 [7 favorites]
So, more pumping money from the younger and relatively poorer to the older and relatively richer.
posted by kandinski at 7:46 PM on September 9, 2015 [7 favorites]
I loled at the title. The irony.
"Down the road, the only whiff of Wall Street is an innocuous lawn sign.."
PDX shall smell of roses, always.
posted by pos at 7:52 PM on September 9, 2015
"Down the road, the only whiff of Wall Street is an innocuous lawn sign.."
PDX shall smell of roses, always.
posted by pos at 7:52 PM on September 9, 2015
I mean, when I'm supposed to be outraged by stuff like "for the publicly traded landlord, one thing is clear: their investors expect to see a profit from renters", I wonder where these guys have been living where landlords were preforming a public service out of the love in their hearts.
Well, the reality of property ownership is that a standing building loses value and requires constant investment in upkeep. There are costs associated with ownership.
The "myth" we have been fed is that ownership of property should always increase in value, which is only true so long as there is more demand for the property than there is property to own. Hence how you always invest in real estate when the markets are not stable. Seen any stable markets lately?
posted by daq at 7:59 PM on September 9, 2015 [1 favorite]
Well, the reality of property ownership is that a standing building loses value and requires constant investment in upkeep. There are costs associated with ownership.
The "myth" we have been fed is that ownership of property should always increase in value, which is only true so long as there is more demand for the property than there is property to own. Hence how you always invest in real estate when the markets are not stable. Seen any stable markets lately?
posted by daq at 7:59 PM on September 9, 2015 [1 favorite]
Someone, for example, running a single family-owned house and coming over themselves to fix something when it breaks strikes me as different landlord-tenant relationship than the landlord-tenant relationships described in this article.
posted by aniola at 8:13 PM on September 9, 2015 [3 favorites]
posted by aniola at 8:13 PM on September 9, 2015 [3 favorites]
The high fees for maintenance and general crappiness of having to seek that maintenance from distant call centers do sound pretty awful, but this sounds pretty good:
In the last quarter American Homes 4 Rent only increased rents between 2 and 4 percent, while their publicly traded counterparts in the multifamily sector — an arena with which brokers are more familiar — raised rents 9 percent, brokers said on the call.
posted by asperity at 8:13 PM on September 9, 2015 [1 favorite]
In the last quarter American Homes 4 Rent only increased rents between 2 and 4 percent, while their publicly traded counterparts in the multifamily sector — an arena with which brokers are more familiar — raised rents 9 percent, brokers said on the call.
posted by asperity at 8:13 PM on September 9, 2015 [1 favorite]
The high fees for maintenance and general crappiness of having to seek that maintenance from distant call centers do sound pretty awful
So have you tried flushing and unflushing the toilet?
posted by oceanjesse at 8:25 PM on September 9, 2015 [14 favorites]
So have you tried flushing and unflushing the toilet?
posted by oceanjesse at 8:25 PM on September 9, 2015 [14 favorites]
Welcome to Seattle, Portland.
posted by a lungful of dragon at 8:48 PM on September 9, 2015
posted by a lungful of dragon at 8:48 PM on September 9, 2015
Someone, for example, running a single family-owned house and coming over themselves to fix something when it breaks strikes me as different landlord-tenant relationship than the landlord-tenant relationships described in this article.
Different, but not necessarily better. I've had worse success getting deposits back from small landlords than from larger companies, for example.
posted by Dip Flash at 8:59 PM on September 9, 2015 [3 favorites]
Different, but not necessarily better. I've had worse success getting deposits back from small landlords than from larger companies, for example.
posted by Dip Flash at 8:59 PM on September 9, 2015 [3 favorites]
Landlords always expect to make a profit. Having done accounting for both mid-sized local places and individuals who own a few rental properties, though? There's a huge difference between them and large corporations. Landlords may expect to make a profit, but smaller companies and especially individuals who only own a few properties? They're, well, often a bit dumb about all of it. The mid-sized local place that employed me for a period of time was profitable, but mostly by a combination of "complete accident" and "all of the construction being so new it didn't need serious maintenance yet", and there was zero plan for how to handle it once that happened. It is incredibly normal for a person who owns only one or two properties--the usual model is somebody who got the resources to buy a new house but either couldn't sell the old one or didn't want to, and rented it out--to barely break even in cash, and to post a loss once depreciation is factored in. (IRS depreciation not only assumes that values don't always go up, it assumes that everything but the land for that rental house is going to be worth functionally nothing in less than 30 years, which also isn't totally true, mind.)
A large company has more incentive to actually stay in compliance with assorted regulations, which I think is a very good thing, having seen how badly smaller entities will flout them either out of ignorance or the belief that, say, just knowing a couple local bigwigs will keep them out of trouble. But the troubling thing is that these companies are not going to be satisfied with rents that just barely cover expenses. There's going to be upward pressure on the rent from that, and it's just basic economics. If 20 people each own a functionally identical rental house in this neighborhood, everybody's competing, aggressively: if your property is vacant this month, you've lost 100% of your rental income for the month. If suddenly you have two corporations with 10 properties each, you have a much higher tolerance for less-than-100% occupancy, and fewer competitors. There is no way this can happen without it having an impact on rents.
The rental market is a necessary evil because some people aren't ready to put down roots, but in most places in the US, in large part it functions as a way for people with good credit to make a very small amount of profit by leasing out their ability to purchase real estate to people who would otherwise be homeless. That's already exploitative, but it's not nearly as harmful as when it's in the hands of corporations who need to post eternally increasing profit to satisfy investors, institutional or otherwise.
posted by Sequence at 9:13 PM on September 9, 2015 [11 favorites]
A large company has more incentive to actually stay in compliance with assorted regulations, which I think is a very good thing, having seen how badly smaller entities will flout them either out of ignorance or the belief that, say, just knowing a couple local bigwigs will keep them out of trouble. But the troubling thing is that these companies are not going to be satisfied with rents that just barely cover expenses. There's going to be upward pressure on the rent from that, and it's just basic economics. If 20 people each own a functionally identical rental house in this neighborhood, everybody's competing, aggressively: if your property is vacant this month, you've lost 100% of your rental income for the month. If suddenly you have two corporations with 10 properties each, you have a much higher tolerance for less-than-100% occupancy, and fewer competitors. There is no way this can happen without it having an impact on rents.
The rental market is a necessary evil because some people aren't ready to put down roots, but in most places in the US, in large part it functions as a way for people with good credit to make a very small amount of profit by leasing out their ability to purchase real estate to people who would otherwise be homeless. That's already exploitative, but it's not nearly as harmful as when it's in the hands of corporations who need to post eternally increasing profit to satisfy investors, institutional or otherwise.
posted by Sequence at 9:13 PM on September 9, 2015 [11 favorites]
Someone, for example, running a single family-owned house and coming over themselves to fix something when it breaks strikes me as different landlord-tenant relationship than the landlord-tenant relationships described in this article.
I would nearly always pick the landlord who's going to hire a professional to do repairs rather than screw them up with incompetent DIY. I know there are plenty of small-time landlords who do good work on their properties, but it's hard to tell whether you're going to get one of those until you've already signed the lease. And asking questions like, "so, do you actually own any of the correct tools for the job?" is probably not the way to start that landlord-tenant relationship off on the right foot.
What sucks for these tenants is a lot of them did have local landlords who'd see that things were taken care of quickly, but they got saddled with new landlords when the owners were foreclosed on. (Though I do wonder whether landlords who couldn't make mortgage payments would be any good at all at things like getting repairs done or not outright stealing deposits.)
I've had worse success getting deposits back from small landlords than from larger companies, for example.
Yeah. The larger companies have enough experience to understand how wear and tear works and are a lot less likely to ding you inappropriately for the unavoidable damage, IME. The small landlords seem to take things much more personally, as if they think you're going to see some kind of profit on your deposit if you return your apartment somehow better than you found it after years of residence. Nope, that's not how it works, not even in the states that require rental deposits to be placed in interest-bearing escrow accounts (and you get a tiny check every year!)
Also, larger landlords might be more likely to comply properly with laws against housing discrimination. That's certainly dependent on who they've got on the ground interacting with potential tenants, but they've got something to lose if they don't train their employees not to be racist asshats.
Right now I'm renting from a solo landlord I've never met who outsources all contact and maintenance to a professional real estate management company. Best of both worlds, I think, in that I don't have to deal with some landlord creepily up in my business, get the relatively low rent that seems likelier when it's an individual landlord, and have access to professional, local maintenance. Still got a 9% rent hike this year, though. Would love to see rent increases capped lower than that.
posted by asperity at 9:26 PM on September 9, 2015 [1 favorite]
I would nearly always pick the landlord who's going to hire a professional to do repairs rather than screw them up with incompetent DIY. I know there are plenty of small-time landlords who do good work on their properties, but it's hard to tell whether you're going to get one of those until you've already signed the lease. And asking questions like, "so, do you actually own any of the correct tools for the job?" is probably not the way to start that landlord-tenant relationship off on the right foot.
What sucks for these tenants is a lot of them did have local landlords who'd see that things were taken care of quickly, but they got saddled with new landlords when the owners were foreclosed on. (Though I do wonder whether landlords who couldn't make mortgage payments would be any good at all at things like getting repairs done or not outright stealing deposits.)
I've had worse success getting deposits back from small landlords than from larger companies, for example.
Yeah. The larger companies have enough experience to understand how wear and tear works and are a lot less likely to ding you inappropriately for the unavoidable damage, IME. The small landlords seem to take things much more personally, as if they think you're going to see some kind of profit on your deposit if you return your apartment somehow better than you found it after years of residence. Nope, that's not how it works, not even in the states that require rental deposits to be placed in interest-bearing escrow accounts (and you get a tiny check every year!)
Also, larger landlords might be more likely to comply properly with laws against housing discrimination. That's certainly dependent on who they've got on the ground interacting with potential tenants, but they've got something to lose if they don't train their employees not to be racist asshats.
Right now I'm renting from a solo landlord I've never met who outsources all contact and maintenance to a professional real estate management company. Best of both worlds, I think, in that I don't have to deal with some landlord creepily up in my business, get the relatively low rent that seems likelier when it's an individual landlord, and have access to professional, local maintenance. Still got a 9% rent hike this year, though. Would love to see rent increases capped lower than that.
posted by asperity at 9:26 PM on September 9, 2015 [1 favorite]
I would nearly always pick the landlord who's going to hire a professional to do repairs rather than screw them up with incompetent DIY.
OMFG THIS. So I rented a place that seemed okay at first but soon I discovered that the (other side of the country) owner was one of those people who thought that licensed, professional contractors only exist to rip you off. He "knew a guy" who would come over and deal with any maintenance or repairs, presumably on the cheap. The owner hadn't seen the place in years and only when he finally showed up to do a quick inspection prior to listing the place for sale did he believe what we had been telling him since shortly after moving in. Namely that "his guy" had botched so many repairs that the place was unsellable as-is and needed a ton of fixes just to bring things up to code and functional. Stuff was insane, like ceiling fans that literally could not be switched off and stove burners that just didn't work.
posted by LastOfHisKind at 10:08 PM on September 9, 2015 [1 favorite]
OMFG THIS. So I rented a place that seemed okay at first but soon I discovered that the (other side of the country) owner was one of those people who thought that licensed, professional contractors only exist to rip you off. He "knew a guy" who would come over and deal with any maintenance or repairs, presumably on the cheap. The owner hadn't seen the place in years and only when he finally showed up to do a quick inspection prior to listing the place for sale did he believe what we had been telling him since shortly after moving in. Namely that "his guy" had botched so many repairs that the place was unsellable as-is and needed a ton of fixes just to bring things up to code and functional. Stuff was insane, like ceiling fans that literally could not be switched off and stove burners that just didn't work.
posted by LastOfHisKind at 10:08 PM on September 9, 2015 [1 favorite]
I lived in a house where the landlord was absentee with dementia. We sent our checks directly to her bank account. Her sons were uninterested in doing any of the work, but would hire people as needed as well as let us deduce from the cost of our rent any house-related costs. Our rent money was paying for our landlord's assisted living.
Sounds like it's a mixed bag whether you have landlords with one house or stockholders for landlords. In which case, I'd take a smaller entity over a larger one.
posted by aniola at 10:30 PM on September 9, 2015
Sounds like it's a mixed bag whether you have landlords with one house or stockholders for landlords. In which case, I'd take a smaller entity over a larger one.
posted by aniola at 10:30 PM on September 9, 2015
Here's a slightly sensationalist article about how this is panning out for real renters, from City Pages of Minneapolis. Wall Street Storms the Twin Cities
posted by littlewater at 10:41 PM on September 9, 2015
posted by littlewater at 10:41 PM on September 9, 2015
> The high fees for maintenance and general crappiness of having to seek that maintenance from distant call centers do sound pretty awful, but this sounds pretty good...
American Homes 4 Rent moved into my town a couple years ago. When they started their houses cost 15-20% more than everybody else's. So if they haven't been raising rents as quickly as the local landlords and property managers, it's mostly because they've driving the market to catch up to their inflated prices.
posted by at by at 2:37 AM on September 10, 2015 [1 favorite]
American Homes 4 Rent moved into my town a couple years ago. When they started their houses cost 15-20% more than everybody else's. So if they haven't been raising rents as quickly as the local landlords and property managers, it's mostly because they've driving the market to catch up to their inflated prices.
posted by at by at 2:37 AM on September 10, 2015 [1 favorite]
I don't have a problem with a large corporation taking buying and renting out housing. I would have a problem with it if there were a situation where only a handful of corporations had most of the market. Insufficient competition and exactly what the telecom companies are doing with mobile and internet would be happening to rents, which I think demands government intervention.
posted by esprit de l'escalier at 3:38 AM on September 10, 2015
posted by esprit de l'escalier at 3:38 AM on September 10, 2015
The rental market is a necessary evil because some people aren't ready to put down roots, but in most places in the US, in large part it functions as a way for people with good credit to make a very small amount of profit by leasing out their ability to purchase real estate to people who would otherwise be homeless.
There are a lot of people who rent who aren't in the category of "aren't ready to put down roots," and there are a lot of reasons that it can make sense to rent, either emotionally or financially, which is of course part of why we need to make sure there are good, non-exploitative rental options and stop assuming that everyone is just renting temporarily before buying a house.
What you say about a small amount of profit sounds correct to me, though -- I've casually looked into buying a rental a couple of times but each time the math came out in favor of not becoming a landlord. Clearly people can do it and make money, but in the places I have lived that seems to require either inheriting the property, or being able to buy for significantly lower prices.
posted by Dip Flash at 4:56 AM on September 10, 2015 [2 favorites]
There are a lot of people who rent who aren't in the category of "aren't ready to put down roots," and there are a lot of reasons that it can make sense to rent, either emotionally or financially, which is of course part of why we need to make sure there are good, non-exploitative rental options and stop assuming that everyone is just renting temporarily before buying a house.
What you say about a small amount of profit sounds correct to me, though -- I've casually looked into buying a rental a couple of times but each time the math came out in favor of not becoming a landlord. Clearly people can do it and make money, but in the places I have lived that seems to require either inheriting the property, or being able to buy for significantly lower prices.
posted by Dip Flash at 4:56 AM on September 10, 2015 [2 favorites]
So, more pumping money from the younger and relatively poorer to the older and relatively richer.
Financial planners recommend that you start saving for retirement with your first job. So a lot of those REIT investors or IRA savers are probably 24.
posted by theorique at 5:54 AM on September 10, 2015
Financial planners recommend that you start saving for retirement with your first job. So a lot of those REIT investors or IRA savers are probably 24.
posted by theorique at 5:54 AM on September 10, 2015
Yeah. The larger companies have enough experience to understand how wear and tear works and are a lot less likely to ding you inappropriately for the unavoidable damage, IME.
Can confirm this. A recent landlord of mine was a $25B market cap company. With this company, and other larger management companies, renting the apartment, getting repairs and maintenance, and exiting the lease and retrieving the deposit, was all handled in a very business-like, lawyer-like, and professional manner.
posted by theorique at 6:00 AM on September 10, 2015
Can confirm this. A recent landlord of mine was a $25B market cap company. With this company, and other larger management companies, renting the apartment, getting repairs and maintenance, and exiting the lease and retrieving the deposit, was all handled in a very business-like, lawyer-like, and professional manner.
posted by theorique at 6:00 AM on September 10, 2015
So, more pumping money from the younger and relatively poorer to the older and relatively richer.
Who eventually die. Circle of life sort of thing.
posted by IndigoJones at 6:01 AM on September 10, 2015
Who eventually die. Circle of life sort of thing.
posted by IndigoJones at 6:01 AM on September 10, 2015
The metaphor you are searching for is blood-sucking-vampire-squid.
posted by bukvich at 6:12 AM on September 10, 2015
posted by bukvich at 6:12 AM on September 10, 2015
I don't have a problem with a large corporation taking buying and renting out housing.
capitalism works best when it creates new wealth, not just buy up the existing wealth.
this has been its core issue that the rentiers have been trying to hide from the rest of us for a very long time, successfully.
http://homepage.ntlworld.com/janusg/coe/!index.htm
Monopoly the game was of course created to play-out this scenario. It is not a pretty one and, yet, so much -- nearly all -- of the first world has fallen into this dystopic system.
Germany and Japan are about the only two societies where renters aren't utterly pillaged by rentiers. Germany because of state socialism and Japan thanks to lack of zoning limitations increasing supply and their falling youth population reducing demand side (plus past efforts at socialism creating a lot of public housing)
posted by Heywood Mogroot III at 6:24 AM on September 10, 2015 [3 favorites]
capitalism works best when it creates new wealth, not just buy up the existing wealth.
this has been its core issue that the rentiers have been trying to hide from the rest of us for a very long time, successfully.
http://homepage.ntlworld.com/janusg/coe/!index.htm
Monopoly the game was of course created to play-out this scenario. It is not a pretty one and, yet, so much -- nearly all -- of the first world has fallen into this dystopic system.
Germany and Japan are about the only two societies where renters aren't utterly pillaged by rentiers. Germany because of state socialism and Japan thanks to lack of zoning limitations increasing supply and their falling youth population reducing demand side (plus past efforts at socialism creating a lot of public housing)
posted by Heywood Mogroot III at 6:24 AM on September 10, 2015 [3 favorites]
Ten years ago I felt like a voice in the wilderness about 'housing, housing housing'. Now I think its slowly rearing its ugly head into more peoples' views and cognizance.
posted by Heywood Mogroot III at 6:26 AM on September 10, 2015 [1 favorite]
posted by Heywood Mogroot III at 6:26 AM on September 10, 2015 [1 favorite]
In its 2014 annual report, American Homes 4 Rent’s top officials said they hold the line on property maintenance at $450 per home per year. A 2013 reorganization also was intended, in part, to control maintenance and renovation costs.
For reference, $450/year for maintenance on a single-family home is BANANAS. There is no way. The typical rule for homeowners is 1% of house value. For a $235,000 house (as referenced in the article) that is $2,350 per year, which sounds much closer to what you'd need to budget to replace roofs, water heaters, boilers, etc. as they break over time. Or you could use the $1/square foot rule -- they're buying post-1990 3 and 4 bedroom homes, so I'm guessing 2K square foot houses at least, or $2,000 per year.
And those costs are guidelines for homeowners, who are generally pretty conscientious about maintaining their homes. What are the odds that renters are only 25% as expensive as homeowners?
Here's an analysis on whether single-family homes make sense as REITs that makes the same point. (I can't help but wonder if they're counting on the appreciation of the underlying homes, but that assumes that they will be selling the homes and winding down the REIT at some point.)
I know there are plenty of small-time landlords who do good work on their properties, but it's hard to tell whether you're going to get one of those until you've already signed the lease.
Generally I'm able to tell when I walk through the property before leasing. Example: The property where the landlord's DIY stair rail to the basement laundry area was a 1" by 1" piece of unsanded lumber screwed into the wall studs. SKIP.
The other clue I use -- this is gleaned from many years of walking rental housing for work, and it's useful for larger multi-tenant properties -- is seeing what the landlord or property manager does when they come across a piece of trash. Do they ignore it or pick it up? The good ones pick it up. They also call in minor maintenance glitches to their team (burnt-out lightbulbs or other minor things) when they see them.
posted by pie ninja at 6:35 AM on September 10, 2015 [4 favorites]
For reference, $450/year for maintenance on a single-family home is BANANAS. There is no way. The typical rule for homeowners is 1% of house value. For a $235,000 house (as referenced in the article) that is $2,350 per year, which sounds much closer to what you'd need to budget to replace roofs, water heaters, boilers, etc. as they break over time. Or you could use the $1/square foot rule -- they're buying post-1990 3 and 4 bedroom homes, so I'm guessing 2K square foot houses at least, or $2,000 per year.
And those costs are guidelines for homeowners, who are generally pretty conscientious about maintaining their homes. What are the odds that renters are only 25% as expensive as homeowners?
Here's an analysis on whether single-family homes make sense as REITs that makes the same point. (I can't help but wonder if they're counting on the appreciation of the underlying homes, but that assumes that they will be selling the homes and winding down the REIT at some point.)
I know there are plenty of small-time landlords who do good work on their properties, but it's hard to tell whether you're going to get one of those until you've already signed the lease.
Generally I'm able to tell when I walk through the property before leasing. Example: The property where the landlord's DIY stair rail to the basement laundry area was a 1" by 1" piece of unsanded lumber screwed into the wall studs. SKIP.
The other clue I use -- this is gleaned from many years of walking rental housing for work, and it's useful for larger multi-tenant properties -- is seeing what the landlord or property manager does when they come across a piece of trash. Do they ignore it or pick it up? The good ones pick it up. They also call in minor maintenance glitches to their team (burnt-out lightbulbs or other minor things) when they see them.
posted by pie ninja at 6:35 AM on September 10, 2015 [4 favorites]
Financial planners recommend that you start saving for retirement with your first job. So a lot of those REIT investors or IRA savers are probably 24.
Yep, the word of financial planners is fucking gospel in this country! What a weird statement.
posted by Steely-eyed Missile Man at 6:47 AM on September 10, 2015 [2 favorites]
Yep, the word of financial planners is fucking gospel in this country! What a weird statement.
posted by Steely-eyed Missile Man at 6:47 AM on September 10, 2015 [2 favorites]
I laugh at the idea that being a landlord is extending your good credit to the less creditworthy. Most of the places I've looked at recently require a score high enough to buy a house, not to mention criminal background checks and a stellar rental history. Plus up front money to cover a down payment on an FHA loan on a well above median value home in the middle of the country.
The larger the management company, the less credit risk they are willing to take, IME.
posted by wierdo at 6:52 AM on September 10, 2015 [1 favorite]
The larger the management company, the less credit risk they are willing to take, IME.
posted by wierdo at 6:52 AM on September 10, 2015 [1 favorite]
So, more pumping money from the younger and relatively poorer to the older and relatively richer.
Housing is a $2T/yr wealth suck on lower four quintiles who own little to the top quintile who owns nearly all.
It is the largest systemic asymmetry in our economy, similar in scale to health care but the latter comes with tons more jobs so is not quite the parasitical tap on what I call the 'paycheck economy'.
https://research.stlouisfed.org/fred2/graph/?g=1NUt
is per-capita (age 15-64) hours of work required to pay for housing. Housing has doubled in cost since the 1960s by this measure. Something's going to have to change since it is simply too large an imbalance in our so-called economy.
posted by Heywood Mogroot III at 6:56 AM on September 10, 2015 [2 favorites]
Housing is a $2T/yr wealth suck on lower four quintiles who own little to the top quintile who owns nearly all.
It is the largest systemic asymmetry in our economy, similar in scale to health care but the latter comes with tons more jobs so is not quite the parasitical tap on what I call the 'paycheck economy'.
https://research.stlouisfed.org/fred2/graph/?g=1NUt
is per-capita (age 15-64) hours of work required to pay for housing. Housing has doubled in cost since the 1960s by this measure. Something's going to have to change since it is simply too large an imbalance in our so-called economy.
posted by Heywood Mogroot III at 6:56 AM on September 10, 2015 [2 favorites]
Putting something into an IRA vehicle doesn't make it right, or sustainable.
Defenders of the housing imbalance have long gone to the 'widows and orphans' gambit to defend their position.
"But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement."
http://www.wealthandwant.com/docs/Churchill_LPCP.html
posted by Heywood Mogroot III at 7:01 AM on September 10, 2015 [1 favorite]
Defenders of the housing imbalance have long gone to the 'widows and orphans' gambit to defend their position.
"But when we seek to rectify this system, to break down this unnatural and vicious circle, to interrupt this sequence of unsatisfactory reactions, what happens? We are not confronted with any great argument on behalf of the owner. Something else is put forward, and it is always put forward in these cases to shield the actual landowner or the actual capitalist from the logic of the argument or from the force of a Parliamentary movement."
http://www.wealthandwant.com/docs/Churchill_LPCP.html
posted by Heywood Mogroot III at 7:01 AM on September 10, 2015 [1 favorite]
Landlords may expect to make a profit, but smaller companies and especially individuals who only own a few properties? They're, well, often a bit dumb about all of it
And then, after the last individual landlord disappeared, it became clear that treating each other humanely had somehow been tied to keeping concerns small, and local, and being a bit dumb about things the entire time, that within the cracks and gaps of so-called inefficiency lied the beating heart of our humanity the entire time.
posted by tapesonthefloor at 7:02 AM on September 10, 2015 [5 favorites]
And then, after the last individual landlord disappeared, it became clear that treating each other humanely had somehow been tied to keeping concerns small, and local, and being a bit dumb about things the entire time, that within the cracks and gaps of so-called inefficiency lied the beating heart of our humanity the entire time.
posted by tapesonthefloor at 7:02 AM on September 10, 2015 [5 favorites]
I've been renting for, uh...20 years now, I guess. Never wanted to buy a house (hate the responsibility and being tied down to a piece of property). Overall, seeing friends saddled with debt, repairs, mortgages, taxes and having to worry if a property down the street is driving down their values has mostly not made me regret it.
But. Rents have been ticking up in the last year (I'm an obsessive online rental shopper) in my area, probably because there is less housing stock unsold. Which means that what is unsold is less desirable. I'm not a fan of our current neighborhood, and our next place will likely be an apartment instead of a house, because all the houses for rent in our area seem to have lots of strikes against them.
We've only ever dealt with one rental-house property company as opposed to mom-and-pop landlords, and they were complete assholes, so it's hard to judge. Mom-and-pop landlords do all seem to share a delusion that their drunk cousin Ed can fix things, which they then have to re-fix by paying a professional, which is exasperating. But it's not like anyone is going to say "Yay, Wall Street assholes are going to mess with the rental industry!"
posted by emjaybee at 8:22 AM on September 10, 2015
But. Rents have been ticking up in the last year (I'm an obsessive online rental shopper) in my area, probably because there is less housing stock unsold. Which means that what is unsold is less desirable. I'm not a fan of our current neighborhood, and our next place will likely be an apartment instead of a house, because all the houses for rent in our area seem to have lots of strikes against them.
We've only ever dealt with one rental-house property company as opposed to mom-and-pop landlords, and they were complete assholes, so it's hard to judge. Mom-and-pop landlords do all seem to share a delusion that their drunk cousin Ed can fix things, which they then have to re-fix by paying a professional, which is exasperating. But it's not like anyone is going to say "Yay, Wall Street assholes are going to mess with the rental industry!"
posted by emjaybee at 8:22 AM on September 10, 2015
I laugh at the idea that being a landlord is extending your good credit to the less creditworthy. Most of the places I've looked at recently require a score high enough to buy a house, not to mention criminal background checks and a stellar rental history.
Belated, but... you do realize that it's patently ridiculous to claim that this is somehow universal of the rental experience in the US? If that was normal, then a huge chunk of the US population would be homeless. Even most rentals that do credit checks do not by any means limit themselves to people with the credit and income to qualify for a mortgage for the same property. My experience working for a place that was more rigorous than most about credit checks was still that they'd rent to nearly anybody, you'd just increase your chances of having a double deposit. Landlords are of course much pickier in places with very low vacancy rates, but even there, the housing stock for sale in that area is probably also valued accordingly.
If you're looking at high-end rentals, then yes, of course they're going to expect great credit and good income. But it still won't be the same credit and income that it'd take to buy a similar home in the same area.
posted by Sequence at 7:30 PM on September 10, 2015
Belated, but... you do realize that it's patently ridiculous to claim that this is somehow universal of the rental experience in the US? If that was normal, then a huge chunk of the US population would be homeless. Even most rentals that do credit checks do not by any means limit themselves to people with the credit and income to qualify for a mortgage for the same property. My experience working for a place that was more rigorous than most about credit checks was still that they'd rent to nearly anybody, you'd just increase your chances of having a double deposit. Landlords are of course much pickier in places with very low vacancy rates, but even there, the housing stock for sale in that area is probably also valued accordingly.
If you're looking at high-end rentals, then yes, of course they're going to expect great credit and good income. But it still won't be the same credit and income that it'd take to buy a similar home in the same area.
posted by Sequence at 7:30 PM on September 10, 2015
Oh, sure, you can live in rental stock in crappy neighborhoods with less strict requirements, but if you'd like to live even in a middling neighborhood you're talking 3 months rent up front, and yes, a credit score good enough to qualify for at least an FHA loan. And I'm not talking luxury properties.
Believe me, I wish I were. If overly high standards were the issue it would be a relatively easy fix. It's only through finding one of the rare places around here still rented by an individual owner did I manage to find something slightly more reasonable, and then only because we've got ridiculous income to show them. The other option was to keep an hourish commute to work to cut maybe 25% off the cost of housing, and well, doing that for a year has been more than enough, thanks. The drop in gas prices has dropped $100 a month of the cost of doing that, but it's still not sustainable in terms of time, nor is it likely gas will remain so low for more than a few more months, so making long term housing decisions based on that is unwise.
My long term plan is to not live in a large city for that much longer. There are many things that are great about it, but the increased pay does not meet the increased cost of housing, much less anything else. And folks in NYC or the Bay Area have it way worse than I do! I'd much rather live on $40k in a small, but stable, city than $100k here.
posted by wierdo at 6:19 AM on September 11, 2015
Believe me, I wish I were. If overly high standards were the issue it would be a relatively easy fix. It's only through finding one of the rare places around here still rented by an individual owner did I manage to find something slightly more reasonable, and then only because we've got ridiculous income to show them. The other option was to keep an hourish commute to work to cut maybe 25% off the cost of housing, and well, doing that for a year has been more than enough, thanks. The drop in gas prices has dropped $100 a month of the cost of doing that, but it's still not sustainable in terms of time, nor is it likely gas will remain so low for more than a few more months, so making long term housing decisions based on that is unwise.
My long term plan is to not live in a large city for that much longer. There are many things that are great about it, but the increased pay does not meet the increased cost of housing, much less anything else. And folks in NYC or the Bay Area have it way worse than I do! I'd much rather live on $40k in a small, but stable, city than $100k here.
posted by wierdo at 6:19 AM on September 11, 2015
Sequence has the crux of why large corporations moving into the rental market is a problem. A corporation that owns 50 units doesn't care as much about filling the fiftieth unit as an individual landlord and will just let a unit sit empty until there's an applicant with 3-months rent saved up and a credit score above 700.
There are definitely horror stories of individual landlords but most of those stories don't involve the landlord raising the rent by the maximum allowable per-year every single year because as an individual, the loss of rental income from the single unit is a much bigger deal, so if the individual landlord raises the rent too high, theres room to negotiate as they'd rather not have their single rental unit go empty.
Good luck getting a nameless faceless corporation to negotiate down on a rent increase, even during personal times of trouble. The corporation's comptroller sees you as another number on a very large spreadsheet, has probably never met you, and may just as well live two states away.
posted by fragmede at 10:22 AM on September 11, 2015
There are definitely horror stories of individual landlords but most of those stories don't involve the landlord raising the rent by the maximum allowable per-year every single year because as an individual, the loss of rental income from the single unit is a much bigger deal, so if the individual landlord raises the rent too high, theres room to negotiate as they'd rather not have their single rental unit go empty.
Good luck getting a nameless faceless corporation to negotiate down on a rent increase, even during personal times of trouble. The corporation's comptroller sees you as another number on a very large spreadsheet, has probably never met you, and may just as well live two states away.
posted by fragmede at 10:22 AM on September 11, 2015
the landlord raising the rent by the maximum allowable per-year every single year
What is this "maximum allowable"? (I kid. I've lived in a city that had annual rent increase caps before, but that was purely a hippie college-town ordinance, not even state-wide. And now I live in a metro area where there's no regulation of rent increases at all.)
Pretty sure my individual landlord jacked the rent as much as they thought they could get away with this year (9%, with literally no maintenance calls and certainly no upgrades in 12 months), but I know people around here whose individual landlords tried for 25% or more. Some even got their tenants to stay for it, which speaks volumes for how terrible our rental market is right now.
posted by asperity at 11:01 AM on September 11, 2015
What is this "maximum allowable"? (I kid. I've lived in a city that had annual rent increase caps before, but that was purely a hippie college-town ordinance, not even state-wide. And now I live in a metro area where there's no regulation of rent increases at all.)
Pretty sure my individual landlord jacked the rent as much as they thought they could get away with this year (9%, with literally no maintenance calls and certainly no upgrades in 12 months), but I know people around here whose individual landlords tried for 25% or more. Some even got their tenants to stay for it, which speaks volumes for how terrible our rental market is right now.
posted by asperity at 11:01 AM on September 11, 2015
if you'd like to live even in a middling neighborhood you're talking 3 months rent up front
I have never encountered something this extreme, but our current apartment in a pretty small city with nothing much to recommend it other than the reason we are here required a month's rent as a security deposit AND a $500 pet deposit per pet (max 2), PLUS raised the rent on us $25 a month, again per pet. Fucking robbery, and I am really leery about our chances of seeing that $1,000 back from the pet deposit, too. I miss tenant-protecting ordinances.
posted by Steely-eyed Missile Man at 11:24 AM on September 11, 2015 [1 favorite]
I have never encountered something this extreme, but our current apartment in a pretty small city with nothing much to recommend it other than the reason we are here required a month's rent as a security deposit AND a $500 pet deposit per pet (max 2), PLUS raised the rent on us $25 a month, again per pet. Fucking robbery, and I am really leery about our chances of seeing that $1,000 back from the pet deposit, too. I miss tenant-protecting ordinances.
posted by Steely-eyed Missile Man at 11:24 AM on September 11, 2015 [1 favorite]
if you'd like to live even in a middling neighborhood you're talking 3 months rent up front, and yes, a credit score good enough to qualify for at least an FHA loan
I have been renting for the last 10 years (minus two years where I owned a house, but, alas, work took me to the other side of the country). I have never in my life seen requirements like that for an apartment. I have lived in student apartments, middling neighborhoods, and now a "luxury" apartment (literally the cheapest luxury apartment in the area). Shoot, for half the time I was renting I never paid a deposit because there was always a move-in special. I only recently see the credit score being checked, but maybe it was used a few years ago too and I never noticed. My credit score has considerably improved since I began renting and yet there doesn't seem to be a difference in deposit to me.
What I have seen recently that I don't like at all is the option to either pay the full deposit (usually 1 months rent) which will be refundable assuming you don't cause damages or just pay a couple hundred bucks as an insurance policy against damages but it is non-refundable. Just another way that being cash poor hurts you in the long run.
posted by LizBoBiz at 11:42 AM on September 11, 2015
I have been renting for the last 10 years (minus two years where I owned a house, but, alas, work took me to the other side of the country). I have never in my life seen requirements like that for an apartment. I have lived in student apartments, middling neighborhoods, and now a "luxury" apartment (literally the cheapest luxury apartment in the area). Shoot, for half the time I was renting I never paid a deposit because there was always a move-in special. I only recently see the credit score being checked, but maybe it was used a few years ago too and I never noticed. My credit score has considerably improved since I began renting and yet there doesn't seem to be a difference in deposit to me.
What I have seen recently that I don't like at all is the option to either pay the full deposit (usually 1 months rent) which will be refundable assuming you don't cause damages or just pay a couple hundred bucks as an insurance policy against damages but it is non-refundable. Just another way that being cash poor hurts you in the long run.
posted by LizBoBiz at 11:42 AM on September 11, 2015
I have never encountered something this extreme, but our current apartment in a pretty small city with nothing much to recommend it other than the reason we are here required a month's rent as a security deposit AND a $500 pet deposit per pet (max 2), PLUS raised the rent on us $25 a month, again per pet. Fucking robbery, and I am really leery about our chances of seeing that $1,000 back from the pet deposit, too. I miss tenant-protecting ordinances.
The last two apartments I have rented (neither in a super tight market, nor in places with laws favoring tenants) required first, last, and a non-refundable pet fee. Both places did a credit check but I don't know what they were looking for in terms of score or red flags.
And in both cases, it meant being able to write a check for first/last/deposit while still paying rent on the other place, and not getting the old deposit back for months. How someone could do that on minimum wage, I can't imagine.
posted by Dip Flash at 10:14 PM on September 11, 2015
The last two apartments I have rented (neither in a super tight market, nor in places with laws favoring tenants) required first, last, and a non-refundable pet fee. Both places did a credit check but I don't know what they were looking for in terms of score or red flags.
And in both cases, it meant being able to write a check for first/last/deposit while still paying rent on the other place, and not getting the old deposit back for months. How someone could do that on minimum wage, I can't imagine.
posted by Dip Flash at 10:14 PM on September 11, 2015
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