Half of US tenants can’t afford to pay their rent. Here’s what’s ahead

https://www.yahoo.com/finance/news/half-us-tenants-t-afford-210439455.html

Anna Bahney, CNN

 

"But an increase in the construction of multiple-unit buildings has boosted the supply of apartments, which is slowly beginning to rein in runaway rents." - from the article.

Around here, I'd like something that would "rein in runaway landlords."

 

Yeah? There seems to be a new 100-unit building going up on every available inch of land in the run-down neighbourhood I live in.
Small units, jam-packed together. Prices in the stratosphere. No solution.

 

They would probably rise - but not be dragged up TWICE as fast as before, by the very existence of the new high-rent buildings in the area. Slumlord see - slumlord do. Yep. Like monkeys.

All Toronto money behind the new projects. They can do them cheaper here. Remote landlords, Toronto rents. Higher profits.

 

People choose to pay higher rent because it is the best (only?) option for them and if they don't someone else will. One thing that gives me "pause" is speculative investment in life necessities; food, water, shelter, etc. but it is a very small list, things that we have needed since the beginning of time not things we "need" to operate in the modern world, unless there is overlap to supply of those life necessities. As it relates to housing, outside (out of local area/country/continent) speculation, specifically corporations, are doing harm to local communities throughout the world. In my small community corporations were buying up almost every house that hit the market to turn into Air BnBs making it where families that have lived here for thousands of years couldn't remain due to the lack of availability and high cost of housing. It literally erodes the fabric of a community when the valuable workers and community members we need year round can't afford to live here because a corporation is profiting for a few months in the summer. The local assembly put a new ordinance in place that seems to have limited the outside investment but only time will tell.

 

Other corporations buy up hundreds of houses - entire developments sometimes -- and release them piecemeal, 15-20 units at a time.
Scarcity drives up prices and a huge amount of money has been made by the time all are re-sold. And a lot of money is plowed back in for subsequent purchases elsewhere. A perpetual profit machine. No individual can get a fair deal.

 

In Russia, they simply would say to people that they have houses that are too large and give portions of it to new tenants.

 

Well, yeah - but I guess you have to live with some uh- possibilities when the State is your landlord. At least rents are reasonable.
45 percent of Russians pay between 5 and 15 thousand roubles a month. Average salary is 100K roubles a month.

In some of the former Soviet Republics, rent is even cheaper. I've heard of State rentals in some at iabout 4% to 8% of average income. Of course, somewhere like downtown Baku, in Azerbaijan can be more. WAY more, sometimes.

 

Russia right now has a housing bubble. To placate war weary citizens, the Government doled out billions in cheap loans for houses.
Result? Spiraling house prices. About 65% of Russians live in apartments, 31% in private houses and 4% in dormitories.

 

I believe what Lerner was talking about occurs this way. The Government rents you a space for a certain number of individuals. If the number of occupants goes below that - they can move more tenants in, up to the max. So borrow the neighbour's kids when the inspectors come to count.

 

IMO a lot of this comes down to greed. A friend of mine owns three rental houses, they are not in a great neighborhood and he bought them like 25 years ago. He makes occasional repairs and keeps them maintained, but he has tenants that have been there for more than 10 years. He has only raised their rent maybe twice in all that time - and each time was something like an extra $40 a month. He has been told he could get more than twice the rent he's charging for those places, and even that may be an understatement. But his response is always..."why?" - he knows the tenants, he hasn't had to put a lot of money into updating the properties with new bathrooms and kitchens and all that to wow new renters, and they have provided a steady, reliable if not by many counts "modest" monthly income (yes, even a tidy profit!) for decades. He's always told me that the only reason to raise the rent would be greed - he's getting what he needs out of the properties, they've helped set him up for retirement, and the rent is so low, his tenants don't want to move. In his mind it is a win-win situation - affordable rent in a well maintained property, long term tenants, few surprises, and a steady income. It's too bad people feel they need to make such a ridiculous profit margin all the time. It isn't sustainable.

 

Indeed. My take: It ALL does.

 

Hypothetical question

What if your gov comes and takes your property and gives it away to others?

You think it's impossible?

 

Well - they do that here. The legal process is called expropriation. They usually offer good money. You can fight it in court -- and if you lose, you at least get paid well enough...

But what you're talking about, Lerner? Maybe it's possible in the US -- I'm not sure of ANYTHING there any more. Frankly, I'm dead scared of a country I used to enjoy visiting. 2001 changed everything. ...And then it got worse. And worse. And worse.

 

We have that here. It's called eminent domain. The only thing I'm not sure about is if the amount of money offered in exchange is good. I wouldn't be surprised if it was a low ball offer. I have relatives who sold some of their land to the state for an exit and road off the interstate. I don't know how much they were paid, but the road was named after them and the other person who sold some land for the project.

 

Eminent domain reimburses the owner with fair market value, at least here in California. If the owner feels that they are being low balled then they can bring a lawsuit. This is based on state law though so I'm not familiar with how it works in other states.

 

It does the same here. Sometimes people get better than market, even. I've seen it. And yes - you go to court if you don't like the offer, or even, sometimes if you don't want to sell, regardless of money. It's called expropriation. Here's a bit:

"In Ontario, expropriation is governed by the Expropriations Act, which sets out both the rights of the government and private landowners. However, additional provincial legislation such as the Planning Act, Municipal Act, and environmental legislation may be applicable depending on the circumstances."

Whole thing here: https://willisbusinesslaw.com/blog/business-law/a-primer-on-municipal-expropriations-in-ontario/#:

 

Hm. Actually I think the various communist governments did pay compensation but in a communist state money doesn't really mean anything.