Rents are rising faster than wages across the country

[0] https://www.statista.com/statistics/184902/homeownership-rat....

Even politicians who are struggling with this specific issue themselves refuse to address it. (Members of Congress struggling to afford to maintain housing on $174k salaries, would rather petition for more money, than to make housing more affordable)

In fact, a significant majority of the voters (and non voters by not voting) themselves are likely responsible for voting for local government leaders that intentionally reduce supply of housing.

The root cause being that once someone is on track to owning property or already owns property, they are then incentivized to not want those below them on the socioeconomic ladder near them.

To name a few: making evictions much harder; changing tax law so that mortgage interest isn't fully allowable; aggressive energy efficiency requirements that I don't even see as worth it as an owner occupier; HMO regulations preventing students etc sharing a house; the list goes on.

All of this at a time in which mortgage interest rates (generally only fixed for a few years in the UK) have quadrupled and net immigration is going gangbusters.

There is a pervasive mindset that landlords should be "punished". Well, they have been, and the result is that they're leaving the market - if you can't afford to buy, you're now competing against far more people in a supply restricted market.

Poverty mindset at its' finest.

https://ipropertymanagement.com/research/renters-vs-homeowne...

I've been saying for years that regulation is written for the wealthy.

Someone who will never be able to afford a home doesn't give a fuck if their wiring has an 0.1% chance of going wrong or if their bedroom has a window or whatever. It's better than a tent or a shitty landlord, and it's how most people lived only a couple of generations ago.

A self selecting group of people willing to build their own places taking on their own risks is not a good model for ‘what would happen if we got rid of building and fire codes?’

People who aren’t willing or able to figure out how to build their own house to an adequate safety standard are going to need to rely on being able to do things like buying a house someone else built. Inspection codes protect those people.

And when you factor in people wanting to live in denser groupings like in a town or city… well, how many times did San Francisco burn down before they figured out fire codes?

Having said that, we built a house in California, where the NIMBYs have weaponized code enforcement, and we could have built the same house (to higher quality and lower environmental impact) for about half the price and in half the time if it weren't for the planning commission.

The time mattered a lot, since that meant we paid rent + mortgage interest for an extra year.

To add insult to injury, the building inspectors missed all sorts of obvious problems, and the planning commission approved plans with gaping issues. I don't think they found anything that improved the house itself, but they definitely repeatedly rejected permit applications, and failed inspections for nonsense reasons.

So, in true Monty Python style, we'd have been better off financially if we'd built a house or two that fell over, sank into the swamp, etc.

Some time ago, outside of the US, I rewired my grandpa's old shack once, which was gradually built from whatever he had at hand back then (totally not to any code, like literal twists of copper and aluminium wires, idk how that shit held up for over 60 years), and the local code was mostly a bunch of "do things the right way please, don't do stupid shit"-grade standards that totally made sense to me. Plus some local opinionated defaults (so anyone looking at something wouldn't be caught by surprise). Although, I haven't went through any formal inspections (only unofficial LGTM nod from a friendly certified electrician), just replaced obvious "to scared to live here" hazards with less obvious ones.

But I have no idea about the US codes and how complicated those are.

How does one find these areas?

Pretty short sighted

https://www.businessinsider.com/retired-americans-move-to-it...

printing money funds the cancerous growth of government, so there's no way a major party can focus on that when it causes the monetization of shelter (and other hard, scarce assets)

Reduction of "roommate/quasi-renting" because of tenancy laws. That increases pressure.

Proliferation of AirBNB - that increases pressure.

Everything is increasing pressure, but the number of new dwelling units isn't increasing as fast as needed.

This is the American economy in a nutshell. Wages have been going up faster than inflation for the last year or so, but if you dig into it, it's only for workers who change jobs and union members.

Add to that "investment" in rentals and the like.

it all adds up. I assume it's going to get worse.

https://www.austinmonitor.com/stories/2024/02/austin-apartme...

The only simple broad-stroke answer is that the government is incredibly powerful so violent uprising/revolution by the working class is essentially impossible.

I can speak to the 'mom and pop' landlords. The best you can hope for is that your properties are paid for. If they're leveraged, it's a razor thin margin where are one roof replacement, furnace replacement, or state/local government deciding failure to pay isn't grounds for eviction away from losing money.

https://ipropertymanagement.com/research/housing-starts

Not enough housing means people have to combine houses and pay more.

This problem has been 16 years in the making.

The "older generation" mismanaged the economy for 40 years, and now their children are paying for it.

This is what happens when you base an economy purely off of what equities trade at in two exchanges.

EDIT:

Downvote me all you want, but it's true. I'm 32. I have no debt, a good paying job, no spouse, no kids. I live in the same county my parents did at my age, in a major-ish American metro in the lower Midwest.

I cannot afford the same standard of living they did at my age.

Why? Because of inflation. Why is inflation high? Because we had to print a bunch of money out of nowhere to keep the economy from collapsing during COVID. Why did we have to keep the economy from collapsing during COVID? Because the average American household is living paycheck-to-paycheck and has no emergency savings. They're living paycheck-to-paycheck because the average wage has not kept up with both the costs of living and the value created by labor for the last four decades. The value created by labor went to earnings-per-share on stocks, bonds, and other investment instruments issued by companies. The average person cannot afford to have the returns on such investments factor into their five-to-ten-year financial goals. More and more, they cannot afford to have returns on such investments factor into their 20-30-year financial goals, either.

This shift did not come from nowhere; it came from human behaviors, modalities, and policies. There were people alive and in a majority to make this happen during that period of time.

Given "Florida markets occupy three of the top five spots where rent growth has most dramatically outpaced wage growth since pre-pandemic," and "Houston saw the greatest annual wage growth of any metro — nearly double the national average — and was one of only four markets where wages outperformed rents," it seems like the cause is migration and insufficient new housing [1].

(Counterfactual: "In three areas — San Francisco, Portland, and Austin — rents actually declined from 2022 as market heat began to moderate, while wage growth in those areas continued to climb.")

[1] https://streeteasy.com/blog/rents-grow-faster-than-wages-acr...

Some might say deposit regulation and reform is a driver, but all that really did was set up a scumbag market of fintechs that replaced outrageous renters deposits with slightly less expensive non refundable premiums.

Not that it matters. We are building plenty of apartments you can't afford for other reasons. Paid parking, pet fees, 3 figure application fees, move in fees, and common area fees not to mention Arizona's renter property tax all raise the bar.

Even if you can afford it you'll likely not qualify. Credit, criminal and prior landlord checks all have to come back spotless. You'll need to submit 2 pay stubs after that.

Anything they can do to set the future on fire in order to maximize their returns while they live, they will do. Whether that's bail out failing businesses with government-owned debt that future generations (including their grandkids) have to pay back or destroy the planet and environment.

The only solution is to get younger people to vote or to wait for them to die.

https://www.propublica.org/article/senators-introduce-legisl...

- at the end of each round, "who gets a chair" is determined by a "rent auction"

- after each round, 2 players and 1 chair are added

- auction losers are sent to the local homeless shelter, freeway overpass, or whatever

- Prices are determined by comparables. When home owners sell, and can push prices higher, it pushes all possible future prices for all properties nearby higher simultaneously.

- Corporate interests are buying up real estate, and especially rentals. (public and private equity purchases are 6x higher than they were a decade ago here). Higher rental prices encourage people to leave rentals faster, making people more desperate to buy, increasing their willingness to take on more debt.

- (in a few areas) construction is limited and not keeping up with growth. In most of Midwest US, construction outpaces growth, but since prices are determined by comparables, new construction in an area can be priced at top of the market, resetting those comparables higher too. Paradoxically, even though we do need new housing construction to have housing, our financial system is setup such that new housing construction generally raises all prices for all housing on average -- the "more supply" benefits don't really take effect for about 30 years, when they become normal mid-market units.

- In some areas, new Hotels entrants are escaping basic regulation by lying about who they are. (see AirBnB, Vrbo and similar hotel chains). This removes housing supply, and can't be market corrected by other competitive hotels (since they would have to follow basic hotel regulation, but AirBnB and Vrbo are allowed to break the law)

- Unlike in 2008, corporate interests are willing to just eat massive losses to prevent property prices from falling. And the federal government is willing to extend massive amount of lending to them to allow them to do this almost indefinitely. So even in places where there's a massive supply of empty units, those units aren't making it to the market at any reduced prices because it's too affordable to simply sit on them instead and hope they're eventually able to rent out again at ultra-high pricing. I suspect we'll never see a gentle market reset back to real-world-based numbers like we saw in 2008 for that reason.

Any one of those problems would raise property prices for everyone. But we're dealing with all of them, simultaneously.

Something like this https://ny1.com/nyc/all-boroughs/news/2024/01/05/hedge-fund-... would be a gentle start to attempt to address the above problems, but it remains to be seen if they actually get this through.

https://www.strongtowns.org/journal/2024/2/21-going-after-co...

If you go to local hearings and listen in on city council meetings, you start seeing a pattern of people who "got theirs" trying to stop homes from being built:

https://bendyimby.com/2024/04/16/the-hearing-and-the-housing...

Modern communications + financial tech have converted homes into cash-flowing assets that can be managed at a distance at 1/10th the risk-adjusted cost of 40 years ago.

Home-owning people of the age 55+ do not sell homes when they move, they rent them out and use the cash flow as leverage to buy a new home. This has been happening at least since 2008, but is a secular trend. In my opinion, talk of "not enough housing" is a mind trick to get you to ignore the fact that we actually do have adequate sqft/people in desirable areas, but ownership of that square footage is distributed incredibly unequally.

The % of homes that are lived-in by owners is approaching all-time lows in most high-COL regions in the U.S..

Those people pass their assets on to their children, who often have no ties to the region, and to whom real estate is purely a financial asset to be squeezed for maximum cash flow to subsidize their unearned lifestyles. We live with the consequences: rent that is increasingly unhinged from reality, and allows for dismal savings rates for our youth.

IDK, it's pretty bleak as somebody who wants to be a homeowner in a community that feels like home. I keep suspecting that there'll be a populist anti-landlord policy movement in my urban area (NYC) but outside of maybe 2-3 months during COVID it remains a pretty fringe idea.

It's not difficult. Prices are determined by supply and demand. When local and state governments restrict supply via zoning and other laws, prices go up. If you want prices to go down, increase the supply.

The fact that this stated goal of American policy is out of reach for many means American policy is broken. There are now too many vested interests against new home ownership.

If you ask many current homeowners they will tell you they have debt up to their ears. Their one asset is their home which they will borrow against, reverse mortgage, or sell to fund their retirement. That is they will do everything in their power to prevent their homes from losing value.

This results in fewer people "upgrading" into new construction, which further constricts the "starter home" pool (nobody builds starter homes).

Having been in construction I call tell you a contractor can build two identical houses in the same neighborhood, with the only difference being the contractor is planning on selling one after it is built, while the other a buyer is exists for the house. The second house will costs at least $20,000 more than the first, the only difference being the buyer will upgrade lights, doors, flooring, countertops and so on. All those little $300 upgrades add up.

I remember laughing at that meme 10 years ago. I'm not laughing now anymore. This thing spread globally.

I'd say it's more like they're saying "I cannot afford to raise a kid given the high cost of housing and childcare" period.

> 1) Get the older generation - the Baby Boomers - to work longer and rely on their stock-based savings less.

A couple problems with that: 1) As BBers close to retirement (and able to retire) tend to be in higher level positions delaying retirement blocks advancement for younger people. 2) it's not always their choice when to retire - if you're laid off in your 60s you're unlikely to be able to find another job that was paying anywhere near as well as the one you had. A lot BBers are finding they don't have a lot of choice about when they're going to retire.

> Import labor through immigration

This is the way. Being able to attract immigrants in a demographic environment where your population is aging is a big plus for an economy. Unfortunately large parts of the electorate don't appreciate this.

In practice it's just reasonable, it works in places like Vienna, it doesn't have to be luxurious housing, but it should be relatively ok, cheap to maintain, but also safe to live, with enough space to have children.

Why can't we regulate and subsidize such fundamental stuff? Everyone needs some place to live, some food, some water, some way to move, some basic services and utilities.

What's the reason that some wealthiest countries in the world can't provide even bare minimum for most people? It's only greed of the wealthy. It's too expensive for them to treat us all as humans, with some empathy. They prefer to keep things as it is, so about 2000 people controls about 90% of all capital.