Yeah, everyone loves to blame zoning, though in practice, developers are only really enthusiastic about building as long as prices are high and rising. When that stops, they walk away. Plus, there's never enough to meet demand: as long as people are moving into the area because there's money to be made there, and money keeps flowing in, there will always be more demand than supply.
And, I would wager that there's a correlation between those who say there should be no limits on building, and those who are unwilling to pay for public infrastructure (schools, roads, transit systems, water and electric supply, etc.) needed to support the increased population.
Tokyo has consistently grown faster than any other first world megacity for over 30 years now, feeding off of its status as pretty much the only place in the country that hasn't had stagnated economic growth. And despite this growth (housing units growing at >2% per year every year, compared to 0.3% for Seattle which is one of the fastest growth rates of any city in the US), housing prices have remained flat for 30 years now. Developers don't 'walk away' because prices are low...they are forced to compete to survive and they deal with the low prices.
The problem really is supply, and japanese zoning is objectively better for housing costs. Anybody who thinks that it is impossible for supply to keep up with boom time demand has no idea how much housing that developers are willing to build if we just fucking let them.
Tokyo also has decent transportation from the suburbs. The area available in the suburbs grows proportionally to the square of the radius. If people can commute to some city from 80 km away as efficiently as people elsewhere travel to another city from 20 km away, that effectively creates sixteen times the available area for the same convenience with regard to work proximity.
Thank you for voicing this view, it seems at odds with the conclusion of the gp (which is interesting too, and the consensus here at HN when this sort of issue comes up).
I've been thinking about this for a while, and I would really like to see the evidence for your view. What are the cities that have begun to suffer for lack of zoning (in this context, or otherwise)? Is this a modern problem? Is there a textbook example?
Google suggests Houston has a lack of zoning; interesting, but clearly it has been able to grow via sprawl.
High-density housing has been going up throughout the area because the population is skyrocketing. It's true that single-family homes are in short supply and sell quickly, but they can't build enough single-family homes to keep pace with the demand; there simply isn't space, especially in the city. Wallingford is a desirable neighborhood and rents are going to increase there. That's just reality. These tenants had been insulated from the last decade of market pressures, but there are plenty of apartments available.
I do sympathize with their situation. Being priced out of your home and having to quickly find a new place and move is incredibly stressful and can be personally devastating if you've grown attached to where you live, your neighbors, etc. And I do think legally limiting the rate of rent increase each year (as a percentage of overall rent) is a reasonable compromise. Unfortunately, with Amazon and other tech companies importing thousands and thousands of young men with six-figure salaries, housing prices in general will only continue to increase.
> Unfortunately, with Amazon and other tech companies importing thousands and thousands of young men with six-figure salaries, housing prices in general will only continue to increase.
Indeed.
The only problem is that people with six-figure salaries rely on the services of people who don't have six-figure salaries, and those people also require proximity to their own non-six-figure jobs.
Oh, like teachers for their kids, police officers, supermarket cashiers, you name it.
Free lunch! The home hoarding rentier class have been engorging themselves on the biggest free lunch going for a generation. Funded with borrowed into existence free money, and protected from market forces on the downside using money taken from the very people they're pricing out, in the form of state funded intervention and negative real interest rates.
What about someone who's primary assets are a couple of houses that (s)he rents out? Should (s)he be restricted from getting a market rate income on those houses?
I disagree pretty strongly that the "rentiers" are protected from market forces. If we look at the case of people who really are in the "rentier class", who are heavily leveraged, they are taking a fairly big risk here that the economy and housing prices are going to stay high, and many are risking bankruptcy should we suffer a reversal.
I have to side with the parent poster. The state essentially subsidized the "rentiers". I don't see how this is different from former communist countries doling out lucrative enterprises to private individuals. You might say what was done in capitalist countries (i.e. insane regime of low interests/hidden debasement of currency) wasn't corrupt because of free markets. I call BS on this. A poor person does not have access to said markets (downpayments are the hurdle). Take Toronto as an example. Pretty much most people who bought detached houses prior to 2005 are millionaires. The rich people at the time bought a bunch of houses. How is this not a gift from the state? If you happen to be a schmuck who came in later on or have poor parents, well ... sorry ... that's the way it is.
No one forces anyone to live anywhere. You don't have to pay the rent. Move somewhere else, buy in an inexpensive area, etc. The mortgage interest tax deduction is a handout but otherwise the government isn't propping up anyone, and there are government programs that help first time home buyers into houses with 0% down (which I think is a big mistake). On the NPR program On Point last week, a guy called in complaining that he couldn't find anything in Nashville for under $400k, and the guest responded that the average home in Nashville was around $200k. People need to realize that you don't get to live in the most desirable places just because you want to. No one has the right to live someplace, you need to pay for it, and if you can't pay then go somewhere else.
I disagree. The dirty rich will horde tens and even hundreds of apartments (or acres upon acres of land) in strategic places (with insider knowledge) and then with lobbying of various kinds make these places more and more desirable by bringing developments to these areas only or by concentrating various services in these areas only. So your point that no one forces someone to live in somewhere is wrong.
The dirty rich: the people who are avoiding big taxes (in excess of multiples of a year's worth of minimum wage) and/or bending/pressuring the system (through lobbying) to change such that they don't have to pay taxes (with various loopholes set in place).
That's roughly captures the essence of my idea of dirty-rich.
These dirty-rich grab most or all of the strategically important spaces and then make more money off the rents.
I have very good idea of what I am talking and FYI I am not a communist with bias against all rich people. In fact, I am a strong opponent of communism. But I also oppose the dirty-rich in capitalist nations.
The problem is a lot of people are tied to a certain goegraphical area.
The person might be old, and needs the assistance of Very hard to cultivate true friends, or family.
The person might not be the most economically viable specimen? The person might have a hard time doing manual labor? The person might be one of the millions that should qualify for dissabliity, but doesn't.
The person is so close to being homless, this magical move to mystical cheaper part of the country might be the last straw?
"I'll spend my last $1000 on moving my belongings across the country. Hopefully I'll find an apartment that doesn't require a security deposit, first and last, and perfect credit? I hope my heating bill won't be high? I hope that minimum wage job is waiting?" A lot of hope? No wonder we have such a problem with Homelessness?
(My last move was 6 grand)
It's not so easy to up and move when you don't have a nest egg, or a job that doesn't moves well, or a retirement, or helpful friends/family.
I'm tired of debating housing.
I know a lot of you hate rent control--fine, I kinda get it in certain markets.
A lot of you blame prop 13 in California--I think that's just blame becuse you ran out of reasons.
Good luck building high density housing.
Good luck trying to ease restrictions on adding on to existing residential homes. I got a ticket because I parked on the street last night.
Good luck making it harder for foreigners to buy our land.(Right as we speak their are foreigners, for instance Chinese buying our land with a phone call.)
So back to, "No one forces anyone to live anywhere."
No they don't--Slick. What are these people suppose to do?
Forget about living off the lands, like our Frontieer forefathers did. Camping for free--where? Hunting, and fishing without a paying money? Those days are long gone.
We are tied into living a certain modern way. A way where pretty much everything costs money. Any deviants will be fined, and punished.
What are poor people, people on fixed incomes, people who don't have marketable skills, people without fancy degrees, and oh, so helpful parents, at opportune times suppose to do?
That's right move to the Midwest, and hope Wallmart is hiring?
And why do you think people in these mystical low rent areas are moving to high rent areas? It's not the beautiful beaches/mountians. It's the hope of a job, and a better life. Not even a better job--a shit job that's becomming harder to get.
"Hay--l'll join the sharing economy? "I'll spend my last wad on a 2008 four door vechicle, and live in it?"
Yea, I got mad. I know too many people whom are basically homeless. A large percentage of them are former Programmers.
I don't see a solution. I think we need to open up large sectors of land across the United States that a person, or family could camp for free. Kinda like Kibbutzes?
I also side with this. Unless USA imposes a very strict and very low limit on "the space that can be owned" by individual or corporations it will head for collapse the way communist countries did in the past. The kind of plundering that is going on by the rentiers (with the tacit support from the state) is very dangerous to the nation. It seems the dirty rich will undo this great nation finally. The free market based democracy should win for the betterment of the humanity as it is the best type of civilization that has come into existence yet. But the corrupt dirty rich are destroying it and I am sure as hell the vicious communist/corrupt socialists will take undue advantage of this situation to create social unrest (e.g. the occupy movement) that may threaten the very existence of the free market based democracy.
> What about someone who's primary assets are a couple of houses that (s)he rents out? Should (s)he be restricted from getting a market rate income on those houses?
They should not be restricted from getting a market rate, but they _should_ be paying a much higher land tax for their non-primary residences.
Same way big trucks and other industrial vehicles should probably be paying additional taxes for the roads, since they are responsible for most of the wear and tear.
Oh dear, what a headline.
What about the 'free lunch' that landlords already enjoy in the form of rent, just by owning property. Or should that be "im-property".
I got the impression that the headline was sarcastic, given that it is a direct quote from one of the landlords.
Anyway, there was a better quote in the article where a landlord said he is being vilified by the public for doing the "right thing business-wise". My opinion: he should be. As a former renter in an expensive area, it is really tough to swallow that a rate hike is nothing more than a money-grab. As a former landlord, if the rent covers my mortgage and expenses, it is a far better business decision to keep a steady-paying, no-trouble-causing tenant than it is to price them out of the area and lose that customer loyalty, and to have to spend time and money looking for new tenants. And most importantly, as a human being I just can't do this to people. But then again, I have a heart when it comes to this kind of stuff, and having been burned by a tenant because of my abundant good will, I sold my property and don't rent anymore - I just can't handle being cold and ruthless and "businessy" to people who depend on me for a roof over their head.
The submitted title ("Free lunch is over for tenants: $1,000 hikes hit some older Seattle rentals") didn't include the quotation marks of the original, which mirkules rightly points out make a big difference.
But we'll just take the free lunch bit out of the title here.
Are the rent increases part of the inflation indexes ? I ask because Fed seems hell bent on stoking up inflation and I don't see why this shouldn't be part of it.
Yes, but home prices are not. If they were, my guess is we'd see a different story (especially regionally). Someone used to do a shadow inflation index .. when energy prices were excluded from the numbers. Forget the details.
Housing articles appear on HN quite frequently and the comments are usually quite devisive. The same people that deride owning property as a terribly illiquid investment also complain about instability with regards to rent. Yes a 30 year mortgage may cost you interest expense and yes your down payment is locked up in an illiquid asset buy one of the main things you get is stability in your cost of housing. Your 20 year old self may be fine with moving here or there,telecommuting, etc..buy your 60 year old self on fixed income may be in another boat being forced to move from a community you have been in for 30 years. Buy land...it's the only thing they aren't making more of. Take a RE investment class, learn about valuations, figure out a place where you want to live. As hard as it is to do now...IMAGINE YOUR LIFE AT 60 OR 70. Set yourself up to be in control of your life then and make the immediate gratification sacrifices now.
> Yes a 30 year mortgage may cost you interest expense and yes your down payment is locked up in an illiquid asset buy one of the main things you get is stability in your cost of housing.
A $1000 mortgage, even if variable rate, isn't suddenly going to jump to $2000. I suppose it could happen if this is early in the mortgage (most of the payment is interest and the interest rate suddenly doubles). Unlike rent, interest rates don't go monotonically up, though; they go up and down. Unless it's already at zero, interest has room to go down, too. A mortgage gets cheaper when the interest rate goes down. Won't happen with rent, except in some god forsaken town that is shrinking. (The company closes the mine, and everyone leaves or whatever, and the remaining people practically have to be paid to stay.)
That is to say, a mortgage can get cheaper even if you're living in a desirable place where values are appreciating, because the interest rate is linked to national and global finance which isn't related to the real estate dynamics of your particular neck of the woods. Rents will never get cheaper in a place like that.
I'm not very familiar with the situation, but could these fast rising prices have anything to do with the recent bump in minimum wage in Seattle to $15? It doesn't mention it in the article.
Seems like two sides of the same coin. Demand outstripped supply because of the influx of tech workers and foreign investors. If not for that, the city wouldn't need more housing supply.
How would recently increasing the minimum wage cause apartment rents to go up by $1000/mo? What do you think? Could it? What would be the mechanism responsible for the connection?
160 hours a month * ($15 new minimum - $7.25 federal minimum) = $1240 increase in monthly income.
You usually need 3x income to qualify for an apartment, so I would expect people to qualify for $400/month higher rent, changing to $800/month from $400/month on minimum wage.
If people on minimum wage rent a 3-bedroom as roommates, it could cause the price of a 3-bedroom to raise up to $1200 or a 2-bedroom by $800 if 100% of candidate tenants were roommates on minimum wage.
The effect would realistically be lower. The article mentions people on fixed incomes like social security, which of course are going to be priced out. It also wouldn't matter for people who already made $15/hour, unless their incomes increased at the same time.
You could tell which is which by looking at rent for mobile homes. You usually rent the land there and park a mobile home on it that you own. If the cause is minimum wage increasing, I would expect to see the land rent for trailer parks increase. If the cause is techie yuppies moving into the neighborhood, I would expect the trailer parks to be bought out by investors and developed.
Since these rent hikes usually occur when a property changes ownership, we should encourage landlords to offer their tenants a first right of refusal to purchase. At least it would prime every tenant's mind that the rental terms might change one day.
I recently told one of my tenants that I'd be selling the property next year and would give her first rights. She now keeps the front yard clean (the city had filed past complaints), she is saving money to prepare, and she has hope. Simply put, she is a better citizen.
People need encouragement to think long term. It is human nature to not consider risks when things haven't been a problem in the past. Nearly everyone now wears a seat belt and a helmet, but a few decades ago even the smartest people didn't bother until they were strongly and repeatedly encouraged to do so.
Well, I have a practice of never raising the rent on a tenant in good standing. By why would anyone give a landlord the benefit of the doubt. A cynical mixed-context response is so much easier than contemplating solutions to a complex problem.
Perhaps many landlords initially want to do the right thing. But after years of hearing "landlord" used as a slur they just say, fuck it, and act indifferently towards their tenant.
