Corporate rental housing should not be allowed. Free markets are not fair enough to make sure everyone is properly housed, and once enough of it is owned they will price gouge. There are plenty of other places for companies to make money.
In my opinion, housing is the final frontier for this. If housing is bought up by corporates and rented back, we are both feet into corporate dystopia. Land should be between citizens and the states that write the titles.
Interfering in the market always makes the outcome worse because it increases costs for both buyers and sellers.
Crazy real estate prices are caused by NIMBYs blocking new builds - heavy interfering.
Check out this graph of new builds in the States. Zoom out to max. Note how it’s basically flat with some ups and downs. It should go up exponentially with the population. https://tradingeconomics.com/united-states/housing-starts
I don't disagree with your point about nimbyism, but I don't think that proves allowing corporations to buy those same finite assets up would be any better. Then you just have the same asset bubble but instead controlled by a corporation with even less interest in affordability or maintaining a community.
Corporations will deploy massed capital in pursuit of higher profit. If we stop all meddling in the housing market, this will result in much more new housing being built.
We need millions of new units. The capital for that can come from individuals or corporations, but corporations are just a way to pool capital and seems like a quicker and more effective approach.
No corporation in any industry has ever cared about community and affordability. And yet these things have emerged multiple times wherever sane, free markets exist.
A non-regulated market cannot be a free market on any decent time scale. Without ensuring fairness by government bad actors will capture the market, externalize costs, and work against the public interest.
Are you saying that regulation (market interference) is universally bad?
I live in an apartment unit in a 25 story tower. I rent it from a corporation that owns it. Would that still be allowed in your plan? Would the restrictions on who can own housing only apply to single family homes?
Apartments are an interesting example, but ultimately no different to individual homes. The unit being inside a larger building only changes your agreements with fellow apartment owners. As a renter you aren't really concerned with any of that. When a developer builds a tower, they sell all the units to individuals or companies. In my variant, companies couldn't own them and so only individuals could buy the apartments.
The dream would be that individual ownership is cheaper, but maybe if the prices were lower building towers wouldn't be lucrative to developers. I am sure there are a bunch of edge cases like that.
One of the reasons that I currently rent an apartment instead of owning a single family home is that I want someone else to handle maintenance. Maintenance issues involve more than just "agreements with fellow apartment owners". There are common areas, common equipment such as elevators, trash chute, pool, gym, and common services such as security guards, maintenance staff, and concierge. In condos, this is managed by the homeowners association. Proposing that apartment buildings such not be owned by corporations, but instead that only condominiums should exist, with associated homeowners associations, is to propose a less liquid housing market.
I have owned single family homes and condos and rented apartments and condos. There are good reasons for all of these choices. Those proposing to allow fewer choices are not convincing me that they have thought it through.
Perhaps that homeowners association stays as the developer, and we write laws and regulations that keep the developer beholden to certain standards of maintenance and safe living standards. Perhaps competition will arise between developers who advertise certain levels of amenities and service. The basic minimum can be run by a government housing corporation that sets the baseline standard of living for all other developers to measure themselves against.
The possibilities here are endless. We don't have to keep living the way we do in the USA.
We could structure taxes, regulatory fees, and the like to make it so that building + selling + maintaining towers > owning the tower + renting it out.
Large buildings require lots of maintenance and specialized management skills. Laws can be updated so that individual apartment owners have similar rights to SFH owners who own both land and structure (a 3D model of land ownership?) Developers could be compelled to provide maintenance service but allowed to collect a small fee in exchange.
Society is a construct, so we can really just construct this however which way we want. Only our imaginations limit us.
> In my opinion, housing is the final frontier for this. If housing is bought up by corporates and rented back, we are both feet into corporate dystopia. Land should be between citizens and the states that write the titles.
All land should be owned by the public. To use it you would rent it for the market value, that money would be distributed to the citizens as a basic income. As the land becomes more valuable (society shifts to urbanization and cities become more valued), the cost of that land increases, but so does the basic income.
That's what happens now, except the people benefiting from the cost of the land isn't the public, but the land owner.
On the other hand, if a new power plant is opened up, land value reduces, and the land occupier pays less. Currently they just lose out, hence the NIMBY problem.
My understanding is US property taxes are higher if you build property on them. a vacant 1000 square foot lot will attract less tax than the neighbouring 1000 square foot plot with a house on. Is that not right?
So improvements which shouldn't be taxed are taxed. The land owner of an empty acre pays far less tax than the land owner of an acre with 40 people living there. That's wrong.
The 40 people living on that acre demand more local government services (schools, libraries, fire/police protection, etc.) which are paid for with property taxes (in general) than the empty acre does.
Corporate food production should not be allowed. Free markets are not fair enough to make sure everyone is properly fed, and once enough of it is owned they will price gouge. There are plenty of other places for companies to make money.
You are aware that food riots routinely bring down governments, which is why there is government policy that keeps the price of food affordable. (It also brought us consolidation and rural depopulation, but that's the price you pay.)
The thing that's really worrying is this - real estate is inherently unproductive. Investment capital ought to be steered into areas that yield technological progress, not into the equivalent of gold stored inside a mattress.
That's the real reason that policy that keeps housing affordable is needed. It's not only good social policy but also good technological policy.
Housing as a speculative investment is absolute lunacy and entirely unfair to upcoming generations. I agree this is not where investment funds should be going. It’s doing nothing but cause mass financial struggle to younger generations to enrich older generations—but what else is new. The incentives need to change to shut down NIMBYism and foreign/corporate investment in housing in a constrained market.
The people making housing a speculative investment aren't the investment firms, they are just along for the ride. It's your average middle to upper middle class homeowners that refuse to allow new housing to be built
If you think there is no difference between the food industry and real estate, then I am afraid that is a failing of your own deductions.
The issue I forsee is deep pockets cornering specific markets and dictating the price to people who haven't got as much flexibility. Corporate scale slum lords, in other words. It is already happening with private real estate investors.
Anyone can ship in and sell potatoes, I can even buy them online. The market forces work because I have so much flexibility. Not everyone can move, nor should they have to move just because money moves in. People live in communities not investment potfolios.
>Anyone can ship in and sell potatoes, I can even buy them online. The market forces work because I have so much flexibility. Not everyone can move, nor should they have to move just because money moves in.
But within a given city you have a choice of hundreds, or even thousands of landlords? Any specific building might only be owned by one landlord, but you don't exactly have to move to the other side of a city to get away from that landlord.
That's no guarantee either, especially with increasing consolidation of land under larger corporate umbrellas. I recently moved away from Columbus after getting on the bad side of an investment group that seems to own nearly all of the publicly-listed apartments in the area within my price bracket, and are still actively buying up more. Said bracket is fairly low, granted, but it's all I can afford on even a decent full-time income, especially with other expenses spiking as of late.
Columbus has recently found itself to be the new largest city and center of economic growth in the state, and changed rapidly and radically over the past couple of decades. As a result, it's nowhere near as seasoned and well-established as many other major metros, and the massive influx of new monied interests into the area quickly cornered their respective markets.
Moving back to the Cleveland area, which was quite the boom town a century ago but has infamously been in near-perpetual decline ever since (with many residents, like I had, migrating to Columbus), has much healthier competition in the rental market.
Perhaps in a few decades as new assets are built and today's ones slosh around the economy, Columbus will have healthier, more diverse competition and see your point ring true. It's certainly healthy in other sectors—one of my favorite things about living there was the great wealth of hole-in-the-wall bodegas, ethnic grocers, restaurants, and food trucks around me that meant even on my last dime I could always try new cuisines—but at least for those of us for whom even a high five-figure income is a distant dream, options are very limited.
Hey man, I agree 100% on the point you're making. BUT if you're reading hacker news in your spare time for fun, you can definitely find a remote gig that pays a comfortable six figure income and elevates you to membership in the class of people putting the squeeze on middle America. I don't know you or your situation, so I can't provide any real advice, but I can say with absolute certainty that something is out there for you
So I'd like to think. In reality my skills don't exist on paper save for basic helldesk work, and even that's been a crapshoot. Loving the positivity, though.
Should probably throw more work into networking and portfolio pieces in between shifts.
Is this supposed to be a snarky retort to the idea that housing should not be owned by a corporation? Food production in America today is already heavily subsidized by the state[1], and despite these subsidies, and despite America's immense food production and exports, there are still people going hungry in every city.
So what individual do you think can afford to build $1 billion in rental homes? The parent poster is incorrect about what JP Morgan is doing. This will increase supply not decrease it.
Traditional property developers don't usually hold onto the properties they build, they sell them off. Even skyscrapers sell off their apartments and commercial sections. Maybe some don't now, but I think that might reflect a shift from building being most profitable to renting being most profitable. In that case, eventually a renting-developer would lose incetive to build more as not to dilute their rental margins.
And the people buying them also have profit incentives. Whether JPM is doing it to profit from rentals directly or with the expectation that some future buyer won’t make a difference.
But it’s illogical by any standard economic model that any supplier will not build more units if they see it can bring in more money. Either they build more or someone else does.
It's not an issue right now though. I look around and I see thousands of apartments and condos for rent from different entities- many of them small renters. There are also tons of houses for sale.
Why aren't they all corporate owned yet? I think a lot of renting is not profitable but if all you need is a place to live that's no problem. Perhaps I'm a bit ignorant here?
The worry is that during a recession, when real estate assets are cheap, corporations might buy up the assets in order to rent them back or sell them for profit. It is just a worry at this point, but this rumbling from JPM is not confidence inspiring.
I have been a renter my entire adult life, and over the decades have plowed several hundred thousand dollars into the pockets of the various landlords I’ve rented from. The total maintenance done during all my tenancy is:
1. A broken seal on a washing machine was replaced
2. A leaky toilet was repaired
3. A broken kitchen drawer was replaced
I don’t believe my case is particularly uncommon. In ~20 years of renting, ~$500k of rent paid, the total maintenance done on the units I’ve rented probably cost under $100. Toss in the most expensive paint and cleaning regimen after I’ve vacated, and let’s call it a cool $1,000. If the value landlords are providing is “maintaining properties”, their margins here are colossal.
- Property taxes
- Hazard insurance
- Debt service
- Some utilities (water, trash, sometimes even electricity and HVAC, depending on your rental agreement)
- Maintenance and repair of exterior and common spaces
- Repairs and updates after you move out, and before you move in (assuming you have not been in the same apartment for 20 years)
Yes of course you're paying for these things via rent. But the owner's margin is probably much smaller than your math would suggest.
The value provided to you in the owner's margin includes:
- Someone to call if *anything* goes wrong. (Oven broken? faucet dripping? window stuck? Disposal burned out? All problems have one simple solution: Call this number.)
- Flexibility of movement. Want to move at the end of your lease? No problem. (Need to sell to move? That will be a long and/or exhausting process, and will cost you 6% of the property sale price!)
- The security of knowing that you will never be hit by surprise maintenance costs. $30K for a new roof? $20K for a new furnace? $250K for a seismic retrofit? Never going to be your problem.
- The ability to live where you want to! In many locations, there are no apartment-equivalent units for sale.
Some property owners are terrible to do business with, and in some markets/neighborhoods only terrible owners are easily found (there's a reason for this! See also hiring, dating, etc).
But as an exchange of cash for services, the equation is more balanced than you might realize.
You, yourself, might not have had any maintenance required, but you're also somewhat subsidizing anyone else in your complex who might.
In exchange for a fraction of what the real maintenance cost of a large repair will be, you get peace of mind that you will never be actually responsible for fixing it or footing the whole bill. The landlord gets to collect profits but one day will have to fix a major problem (and this is guaranteed -- houses wear down over time) that will require them to dip into said profits.
And then you have risk. There are levels of damage that will render the unit or units uninhabitable, wiping out possible years if not decades of gains. The margin is to (theoretically) protect against that.
Not saying this is the perfect system, and definitely greed has inflated these margins while reducing the value of services rendered, but this is the core idea behind it.
Depends on how you rent. I went through and calculated my total housing expenses for the last 15 years- they’re about $120,000; in my area that’s a (minimal) down payment. It’s less than a year of salary.
I’ve had all appliances replaced, a new roof (and a new ceiling when this leaked), the parking lot resurfaced twice, and a new water heater, endless bits and bobs (sink disposal, all new light switches, door knobs, fully new shower enclosure and faucets). Maintenance shovels snow, cleans up leaves, and de-ices. I have never mowed a lawn, shoveled snow nor done any physical labor at all- I’m still in good shape, there’s a gym and pool on premises.
My apartment is small, that’s why it’s inexpensive. But I won’t have kids and don’t need >1 bedroom. Already married for the whole time as well. Depends on how one wants to live their life.
Landlords virtually always hire maintenance companies to maintain the property - and you're paying for it via your rent. You could hire the same maintenance companies if you owned it yourself.
If you don’t personally have $200K burning a hole in your pocket, or you might want to move out next year, getting underwritten and committing to a mortgage in your place is a valuable service.
I don't disagree. I think we would benefit from a survey that shows how many people actually want to be renting. Since property is so expensive, thanks to how lucrative of an investment property has become, individuals are struggling to buy since they are competing with deeper pockets. I argue this isn't a free market, it's a market slowly being cornered by investors. Not a problem for say, fancy watches. A big problem for a core living utility.
So, yes, housing is artificially scarce because of "anti-development and NIMBY forces". But there are other forces at work, particularly good old market forces.
Corpos that compete with me when I am buying housing for my family can go suck a big fat dick.
Market forces exist whether you like it or not. If you design policy pretending that they don't, the market just spills over to a closed system of exchanging political favors, AKA corruption.
And with that every single house around also increases in price, because house prices are often dictated by what comparable houses recently sold for. As if they weren't already expensive enough. Besides, I don't think lack of profit prospects is currently a bottleneck for house building. There seems to be tons of regulations and control to what is allowable to be built. And from, there it doesn't matter that building a house would be 20% profit, if it's illegal to do so.
JPM decided it was more profitable to buy single family homes instead of apartment complexes. I'm not sure it's as simple as "more apartments = more money".
