Why rents are still rising too fast

https://www.economist.com/finance-and-economics/2025/03/16/why-rents-are-still-rising-too-fast

by jcartw • 1 year ago

27 80 1 year ago

economist.com

dkdbejwi383• 1 year ago

not enough housing, too many landlords.

falcor842• 1 year ago

Isn't the issue about there being too few landlords?

I recall growing up in a time when it seemed that pretty much anyone in the middle class could become a landlord as a venue of investment, and many would. But nowadays, at least where I live, it seems that very few people choose that, and the ones who do make it almost a second job, with multiple places they rent out. And at the same time, it seems that more and more properties are owned by firms.

TFA briefly mentions regulatory barriers to becoming a landlord; I wonder if that could be a significant part of the issue.

jltsiren2• 1 year ago

I think the ease of becoming a landlord was a big part of the problem. Or at least how it started. If middle class households buying rental properties can outbid lower middle class households trying to buy a home, the lower middle class household will often be stuck renting in the long term. And if it makes financial sense for a middle class household to become a landlord, rich individuals and institutional investors will eventually notice it and outbid them.

Market-rate rentals should be the exception, not the norm. Some of them are necessary to house people who have recently moved in the area, especially if they don't expect to stay in the long term. But because market-rate rental units largely displace owner-occupied units, having too many of them is bad for the society.

tonyedgecombe• 1 year ago

Both types of landlord have their own problems.

Personally I’d prefer the state to own more properties.

gruez5• 1 year ago

too many landlords.

Unless you want "buy" (as opposed to "rent") to be the only option for housing, you need landlords. If there's going to be landlords, you want more of them, because more supply translates to lower prices for consumers. Nobody complains about there being too many farmers, for instance.

swagasaurus-rex5• 1 year ago

I'd like to buy. My father bought his first house when he was 23. He came from poverty and had a middle-class job.

I'm ten years older than he was and I still can't afford a house.

charlie902• 1 year ago

All else equal, more supply of landlords means less supply of housing. So you are just shifting demand from buying to renting. I wouldn't expect prices to lower.

toomuchtodo• 1 year ago

https://archive.today/26uEh

mistrial9• 1 year ago

a single individual woman in California who inherited her family rental units business in Southern California declared on her IRS returns seventy thousand dollars a month personal income, for the year of 2019. The number of apartment complexes is about a dozen, of varying sizes. It is not clear that she has any real duties on a given week, living far away from the location with no contact details.

pavel_lishin6• 1 year ago

Is that from the article?

living far away from the location with no contact details.

To be fair, if I was renting apartments, I would 100% never give tenants my contact information, and have them deal with some sort of management company. I'd rather pay someone else to receive the "oh shit, the pipes burst" phone call at 3am.

__loam• 1 year ago

The joyous nature of rent seeking. Best to completely alienate yourself from the people who enable your carefree lifestyle.

tetromino_• 1 year ago

I have never understood that attitude. Isn't the ability to deal with broken pipes literally part of your job as a landlord? It's like buying a restaurant when you don't like to cook and don't like to process orders - why would you do that? If you don't like your business's business and want to outsource your core competencies, maybe invest in an index fund instead...

swagasaurus-rex5• 1 year ago

What value do you provide then?

If you can outsource all of the effort to other businesses, but you still make a profit, then you're essentially just a tax on top of the service.

gruez5• 1 year ago

It is not clear that she has any real duties on a given week, living far away from the location with no contact details.

That's... how investing works? The average S&P 500 investor is probably making even more money than that lady (in percentage terms), with even less work. If you're a landlord you have to deal the hassle of finding renters and fixing stuff, or hiring a management company who take a significant cut. If you're an S&P 500 investor on the other hand you pay vanguard 0.03% and they handle everything for you.

charlie902• 1 year ago

The stock market investor makes money off of other stock market investors playing the game. Landlords are making money off of real working people.

betaby5• 1 year ago

Population is still rising to fast.

https://www.census.gov/popclock/

17:53:01 UTC One birth every 9 seconds One death every 10 seconds One international migrant (net) every 23 seconds Net gain of one person every 19 seconds

gruez5• 1 year ago

Population is still rising to fast.

Says who? Malthusianism was canceled decades ago. Housing might be scarce, but that's due to political factors, not some sort of resource limitation. There's plenty of land to build with in the US.

betaby5• 1 year ago

Says who?

The link provided, from the USA gov. You may check other sources as well.

There's plenty of land to build with in the US.

And within Canada or France. But here we are.

_fat_santa• 1 year ago

I really don't understand the anti-landlord sentiment. Folks seem to get this idea that your average landlord has no costs, takes on no risk, and just sails away with the rent they collect every month and spend it on a lavish vacation.

Newsflash but buying property introduces significant costs, complexity and risk. By renting you simply choose to pay a monthly fee to a business that will provide you that same property but will take on all that risk instead of you.

kardos• 1 year ago

Things like this juice the anti-landlord sentiment: https://www.propublica.org/article/justice-department-sues-l...

claudiulodro• 1 year ago

By renting you simply choose to pay a monthly fee to a business that will provide you that same property but will take on all that risk instead of you.

I think the issue is that for many people it's not much of a choice since they can't afford to buy housing. It's pay a landlord or be homeless, and some form of shelter is necessary for humans.

knuckleheads• 1 year ago

I ask sincerely, have you ever had a bad landlord? Because if you had, you would understand why some people would hate them. Many people do not have the choice to buy a home and so must rent, and often they have to deal with terrible people.

javagram• 1 year ago

So they would rather be homeless? In a market without landlords, everyone who couldn’t afford to buy a home would have to live in their car or camp on the street.

taurath4• 1 year ago

The idea is that the person pockets a portion of the money that you make, where if you had the capital you’d be able to pocket the money. As rent increases, a mortgage doesn’t, and rent hasn’t decreased anywhere in a while, so the gap keeps getting larger. There are advantages to renting, but the “choice” of renting vs buying is a privilege afforded to fewer and fewer. There used to be starter homes, but there is a massive difference nowadays between those who own property and those who don’t, and it’s gotten increasingly more difficult over the last 30 years to buy into property on most peoples incomes. This functionally means that property ownership is often the line between economic classes.

Not to mention the corporate landlords who algorithmically raise rents as much as possible while providing as little maintenance as possible.

s1artibartfast4• 1 year ago

All of those problems go away if you have sufficient supply of new housing.

wingspar• 1 year ago

As a reluctant one unit landlord (was underwater when we had to buy a bigger place for growing family) I’ve seen my insurance costs triple, property taxes double, and association fees go up 50%.

Then there’s the repairs… And the property management company fees.

It’s not like the mortgage is the only expense a landlord has.

ineptech2• 1 year ago

Landlords are easy to hate in the way that people complain about Microsoft or their power utility or whatever, but the specific meme you're talking about (that they take no risk and live extravagantly without contributing anything) seems to have gotten very prominent relatively recently.

Some of the specific complaints are wrong (landlords do take risk and some of them don't make much money) but the general sentiment is fair, in the sense that they get more return for less risk than they used to historically. It seems like an unavoidable response to rising inequality caused by capital getting most of the productivity gains over the last 40-odd years.

betaby5• 1 year ago

The USA have added about 2 million people the last year.

That about the size of Houston, TX.

The USA are not building at the rate one city of Houston per year.

Source https://www.worldometers.info/world-population/us-population...

the_gipsy3• 1 year ago

Build one city of Houston where? That's the issue. There are plenty of empty housings, the problem is it's not where people want/need to live.

betaby5• 1 year ago

That's just a comparison to understand the amount of new housing needed per year. Every year.

s1artibartfast4• 1 year ago

This is a situation where beatings will continue until morale improves.

There is near infinite room for housing. As long as people keep living in and moving to expensive cities, jobs will continue to concentrate there.

Companies follow the talent, and talent follows the companies. The feedback will continue until one party blinks.

sn9• 1 year ago

Right. The supply isn't increasing where demand exists.

falcor842• 1 year ago

This is probably an ignorant question, but what's stopping states in the US from developing new planned cities? I can see myself moving to a place that's somewhat remote, if I had good reason to believe that I'm getting in on the ground floor of a new >1M population city with public transport planned from the get-go.

... the only problem is that I don't actually see myself believing such a promise, especially given the current disdain for public investments.

redfern314• 1 year ago

I was under the impression it was more of a distribution problem than a quantity problem? This chart suggests we're building on the order of 1.5 million units of housing per year, which (unless all of those people are occupying a single unit each) should be sufficient in aggregate to keep up with population growth: https://fred.stlouisfed.org/series/ETOTALUSQ176N

But people are moving to the cities, which is exactly where we're not building.

parpfish• 1 year ago

five years ago, i was hopeful that widespread WFH would result in a great geographic population redistribution that would alleviate housing competition in popular cities and revitalize smaller impoverished communities by bringing in good-paying (remote) jobs.

i guess not.

pavel_lishin6• 1 year ago

Some people did move out to those smaller communities, but plenty of people like living in dense urban areas, and would prefer to continue living there - just cutting out the daily commute to elsewhere.

ConspiracyFact• 1 year ago

When did the establishment start referring to developed nations as the “rich world”? That reeks of the kind of globalist elitism that conspiracy theorists go on about. Many an undeveloped nation is undeveloped because of the people who live there and their culture. They should not be considered some sort of baseline.

Why rents are still rising too fast

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