Yes. That may be true, but the rents remain unaffordable. The only way around this is to repeal the Faircloth amendment, and build new Public Housing - to be made available to anybody who wants as a percentage of their annual income (not a $ amount, but rather as an income adjustment)
This doesn't seem as useful an analysis without the period of time over which it might occur or what kind of area this was tracked over - why vacancy rates were raising, for example, is an important angle to consider: like the loss of work in the area.
And that's just one aspect: we haven't even gotten to how simply building more houses - even where there are already jobs - increases the demand on inputs to build those houses, interest rates go up as the market signals "more demand" ending up in more expensive houses anyways. /1
I wouldn't even call it a "Paradox" it's just "The Fuck Barrel" - as soon as you start building homes it increases the price of homes. When you stop building homes "the demand for new homes is high" increasing the "Value" of current homes.
The only seeming solution is to build excess homes at loss
The government would need to be willing to manage that housing instead of shopping it off to the nearest for-profit corporation. Sir we live in a Capitalism, that isn't going to happen unless the housing is a work camp
Which rapidly seems like it might become a reality and then rent won't worry me
Someone making Federal minimum wage makes about $15k/yr. That person can afford about $380/month (30% of income). I can find a room for rent in Dallas for $460 so it's not outside the realm of possibility.
Or does the policy prescription advocated for here just take for granted that these people will never be able to afford housing and we don’t really need to care about them?
you don't provide a link or source for this figure
I think it fair to distrust anyone who doesn't provide a source for data
but more importantly, to get a consistent robust decline in rates you need vacancy rates of close to 15%
at least, that is how I read the huge amount of scatter in the data
Pretty clear that when vacancy exceeds about 15% rents fall, and when it’s under 10% they rise. Genuinely curious what accounts for the wide distribution in the data between 10% and 15%.
I think you're letting the highest few data points throw off your sense of the actual variance in that range. Excise the 4 highest values and it would look perfectly consistent at a glance.
second homes usually are vacation homes not in areas where you need more housing. I don't think this helps you as much as it pisses people off
Commercial ownership of residences is not inherently bad because not everyone can or wants to buy/own and like other business *can* work better at scale
The best additional tax to introduce would be a land value tax, which would shift property taxes to be much less about the physical value of the building and almost solely about the land and its value due to location (aka, a tax on the potential rent)
I have absolutely no data points to determine "usually" I'm going off dozens of videos on purchasing properties to turn them into airbnbs. That takes it out of the housing pool and makes the prices for everyone else go up. People not being able to buy is the center of this conversation.
The problem is that like multiple cities have banned airBnB (namely, NYC) and it did jack diddily squat in terms of reducing rent growth! same deal as with residents, you have to build hotel capacity to where there's vacancy in terms of tourism.
That doesn't add vacancies. It just shuffles around the owners of the already-occupied homes. The data is clear that more vacancies ➡️ lower rent. Easiest way to get more vacancies: allow many more homes to be built, everywhere.
The person that has two homes that can't afford the taxes on the second won't sell? Making it economically unprofitable to rent an entire house out for short term rentals won't force people to sell? Stopping companies from buying up houses and apartments to rent won't create vacancies?
If a company is already renting a house to someone and you force that company to sell the already-existing house, you haven't added a vacancy. You've just changed the renter to a buyer, or else you've evicted the old renter and imported a new buyer.
Your math is correct, of course but it will make more home owners and keep the constant stream of wealth flowing from the almost demolished middle class straight to the hands of the rich, which also needs to be addressed.
That goal may or may not an important one to pursue, but in hyper-expensive cities like mine (LA), that goal's way less important than throttling rents. Which is done by jacking up the vacancy rate. Which is done by legalizing much much more housing construction.
So you'd rather pass a bunch of laws messing around with the market in ways that could discourage new building, instead of just making it legal to build dense in more places?
No, it doesn't have to be either or. For sure more units need to be built too. But building more units that are out of the reach of the people that need housing doesn't make much sense to me.
I get that. Truly, I do. Problem is, when housing for rich people is NOT built, the rich people don't disappear. They just grab the already-existing housing for middle class folks. And THEY grab the housing for working class folks. And THEY force the lowest rung of folks out onto the street.
It actually does, because building more luxury housing means that wealthier people will move to those places, freeing up older housing and making it more affordable. I'm not speculating, there's a bunch of research providing this happens. More housing lowers prices, period.
Not banning, just making the taxes exponentially higher for the owner with each property they purchase to the point they can't make money off the property because of the tax burden.
in the netherlands they tried this in some neighbourhoods and the outcomes what you expect - the people who can afford to buy are richer, older, and less likely to be immigrants https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4480261
It appears there was a complete ban there. My idea is to not ban rentals. It is to ban multiple rentals by the same individual or comp. Hopefully it would act as a drag on people with millions in passive income buying up all the available buy2liv properties and rent them out to people wanting to buy
Costar has measurements on the vacancy rates and asking rents of a bunch of apartment complexes in their internal data.
Each dot is the market average of a pair of asking rent growths and vacancy rates. Not clear to me what a market is — I’d eyeball it’s smaller than an MSA though
I don't understand why articles like this never mention fully 40-50% of rent is pass through county property taxes. Much of the reason rents are so high is valuations are high, and most counties view property taxes as their own personal piggy banks.
1) looks like the correlation coefficient is effectively zero until vacancy rates hit 10%. A lot of empty housing sitting around as a solution
2) seems 2 data points at 15% vacancy are doing some heavy lifting for the correlation
3) 0-4% rent decline still doesn't make housing affordable for most
I seriously read "vacancy" as "vaccination" because I was just looking at RFK stuff, and was completely confused looking for the satire before catching my mistake.
That's literally what the graph says, if there are not many empty homes then housing prices go up so the only way to alleviate that pent up demand is to build more homes for people to live in
A lot of the empty houses in the U.S are decrepit and unlivable, unfortunately, and in the Rust Belt. It would be great for someone to fix them up, but they aren't in areas where renters are hurting the most.
I actually have seen that study! "The Census Bureau notes that the largest category of vacant housing in the United States is classified as “seasonal, recreational, or occasional use.” That's why AK, Maine, FL are high on the list. They have high levels of second-homeownership.
When you go to the bank and wanna take money out, what would you do if the bank said well we have to wait for someone else to give the money back first, we don’t have any in stock right now.
When rents are lower, we see less homelessness. When we build enough homes to create a lot of empty ones, rents fall. So increasing the number of empty homes by building more will decrease homelessness.
Things that are true can seem counterintuitive, which is why the scientific method is so important. It allows us to collect data so we can discern what is actually true from what we think should be true. In this case, plenty of data tells us vacancy & homelessness are inversely correlated.
That's a blob with a bunch of outliers. There are variables shared on both axes, such as the fact that vacancies bring in no rent, so that the outliers are lower rent than the mainstream is not surprising. There is a more robust finding. Building above market rate raises the market rate.
Comments
The only seeming solution is to build excess homes at loss
Which rapidly seems like it might become a reality and then rent won't worry me
I think it fair to distrust anyone who doesn't provide a source for data
but more importantly, to get a consistent robust decline in rates you need vacancy rates of close to 15%
at least, that is how I read the huge amount of scatter in the data
Commercial ownership of residences is not inherently bad because not everyone can or wants to buy/own and like other business *can* work better at scale
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4480261
Each dot is the market average of a pair of asking rent growths and vacancy rates. Not clear to me what a market is — I’d eyeball it’s smaller than an MSA though
There's an enormous amount of empty property in London (largely owned by opaque offshore corporations)
2) seems 2 data points at 15% vacancy are doing some heavy lifting for the correlation
3) 0-4% rent decline still doesn't make housing affordable for most
https://www.forbes.com/sites/brendarichardson/2022/03/07/16-million-homes-lie-empty-and-these-states-are-the-vacancy-hot-spots/
This also promotes the mindset that housing is a place to live and not an investment vehicle, which is the real reason rent is so expensive