Everyone should have a guarantee of quality housing. There’s no question that we have the resources to do it, but there’s currently a huge, politically entrenched parasitic class of people who make money off of owning other people’s homes. I’ll put in the obligatory “not all landlords” here – I believe a majority of landlords are “small”, just renting out part of the home they themselves live in, and things like that. The problem is that a majority of renters have to deal with the big landlords – the ones who own dozens or even hundreds of homes. Having a housing market of the kind that we do means that landlords’ right to profit is treated as more important than anyone’s right to shelter. When you include homes that are kept deliberately vacant, the wealth of landlords comes at the cost of the death of poor people. The presence of good landlords who do their best by their tenants doesn’t change that broader dynamic.
This is also an entirely solvable problem. We could make high-quality public housing that doesn’t have a stigma attached to it, but the people in power would rather have people die on the street. That is not an exaggeration, it is the literal truth. Multimillionaires and multibillionaires actively want people dying on the streets. They generally won’t say it directly, but that is the intended outcome of their efforts to use austerity to curb inflation – they want more poverty and desperation, because it makes people easier to control.
And they know that that means more people dying on the street. That’s an intended outcome.
As usual, Cody’s Showdy does a good job digging into this subject, as well as the extremely racist history of housing and home ownership in the United States. He also goes more into solutions, like the public housing I said we could be doing, so here – have Some More News!
I’m committing the cardinal error of commenting before watching the video, but…
It’s obvious what the problem is in the UK – the ready availability of credit in the form of mortgages.
I can for some reason vividly remember a particular mortgage advert from TV in the 1980s, where a building society talked up the idea that you could borrow “up to three times your salary”. Median UK pay today is £33k. This would suggest that if mortgage offers were at the level they were in the 80s, the average person could afford to borrow £100k. Assume they’ve saved enough for a 10% deposit, and that equates to being able to afford a house costing £110k.
Meanwhile, the average UK house price is £316k. So how come anyone can ever afford to buy a house? How come houses are selling at all? Answers:
1. they can’t, that’s why there’s a crisis, duh
2. there are a few who can, but they’re hanging around in their parents houses for years or decades while they save a bigger portion of deposit
3. when they go for a mortgage, they’re being offered a larger salary multiplier and longer repayment periods, because the actuarial fact is that people going for a mortgage today are less likely to drop dead in their fifties than borrowers of the 80s were, AND there’s no regulation stopping them.
4. the tax and borrowing regimes AND tv property shows have for some time encourage “buy to let” – people who wouldn’t in previous generations have considered being landlords taking advantage of a long period of low interest rates to snap up cheap properties, do them up and rent them out. And once you’ve done one, you do another, and another, and another, until you’ve got a little empire going. My ex’s brother, a joiner by trade, effectively retired before he was 30 simply by repeatedly buying cheap knackered terraced houses, doing them up himself and renting them out. Once a tenant was in place, he could get another mortgage fairly easily AND THAT’S THE PROBLEM. Last I heard he bought a house in an auction for £100k in cash. He’s worked hard to get there, and I don’t begrudge him a bit of it… but that’s however many houses off the market for the foreseeable future. I don’t blame him – I blame the people who set up the financial regime that made that plan realistic. I’d do it myself, but my DIY skills are… well, I don’t quite change a plug with a hammer, but not far off.
We briefly got the memo that subprime lending was a bad idea, but even that seems to be coming back by the back door. Ultimately, the rich will profit and the poor will suffer. My DIY skills are good enough to fashion a tumbril – who’s with me?
Tegan and I spent a while trying to buy a home, and then later a houseboat with the money that we ended up spending to move to Europe.
For the boat, we just couldn’t find a bank that would give us a loan, and for the homes, rich people like our then-landlord kept buying homes for more than the asking price so they could either rent or flip them.
In the end, I’m glad we left the U.S., but it’s not like we’ve got any better of a shot of owning our home on this side of the pond.
Having spent more than a year housing in the San Francisco peninsula area, I can tell you that there is another aspect that you’re overlooking regarding home prices, and that is zoning laws. You have these local city governments that willingly and knowingly zoned too much land for business and not enough zoned land for residential to have the workers for that local business. Further, these local city governments fight tooth and nail against any and all new housing, especially dense housing, because it would lower their personal property values. I think we need to move these sorts of zoning decisions in part to the State government.
@Gerrard – who would you say has influence over those laws and those politicians? Possibly the people rich enough to own dozens of homes?
I’m sure the people who are rich enough to own dozens of homes are a huge part of the problem, but even the single home owners band together with the rich to protect their property values via zoning laws. And regardless, I think you should touch on zoning laws moreso.
There are a lot of trend helping to increase prices. A few that com immediately to mind:
Wealth concentration. I f you happen to have a billion or two rattling around you can simply buy, often quite indiscriminately, houses. Used to be if you held them too long you could see you ROI get eaten up by property taxes and other expenses. Most of those concerns were calmed by changes in the tax code that makes most of those expenses tax deductible. That allows homes to be held, usually unoccupied, long term and used as tax havens, collateral, and trade tokens.
Speculative building and overestimates of demand for high-end homes. You take out a loan to build an apartment block. A condition of the loan is you sell, lease, rent a percentage of the apartments and generally show you can a set amount of cost per square foot. Nobody wants it at that price. You can’t let it go for less because that will violate the conditions of the loan. End result is the building remains empty. Sometimes for years,
The difference between a luxury house or apartment and a low-cost unit is a few thousand in amenities and decorations. Build a low-cost unit and you have a basic, but suitable, structure. Add wood floors, crown moldings, coffer ceilings, marble countertops, and high end plumbing fixtures and you can easily double the profit margin. Builders and IC are in it for the money so they don’t build low-cost units.
In most jurisdictions the definition of residence has changed. Into the late 50s you could still claim residence in a group living situation that included little more than a mailbox, a bed. and a bath down the hall, These were rented by the week, or night. The association of these places with alcoholics, bums, day labor, drug abuse, prostitution, and casual sex caused cities to disallow the form and drive them out. As late as the middle 70s you could still find a $10 room for a night. $5 to $7 if they had spare rooms and they liked the cut of your jib. About $50 got you a week. The rooms where I stayed were clean but sparse. There were a lot of rules. No alcohol or drug use – naturally. No visitors. No cooking.