You either do not understand a shred of economics or you seek to deceive and subvert your readers. Corporate landlords who turn single family homes into rental properties do not create housing opportunities but rather increase demand, throttle supply and mechanically collude to raise housing costs.
Thanks for highlighting the CT bill - I forwarded it to my state rep asking her to be against it and offering to support her with information on how to address housing supply.
Corporate landlords in the commercial sphere favor net leases as investment vehicles because there are fewer things in a net lease for the landlord to look after. Given that riding herd on a SFR portfolio is much harder than with apartments due to the geographic dispersion involved, perhaps it's best to understand renting a house from a megacorp as a net-ish sort of lease, where the residents are at least partly responsible for fixing broken stuff? (Not that this sort of netting doesn't happen with mom-and-pop landlords in the SFR space for that matter, negotiating over maintenance has been a normal part of renting from a mom-and-pop outfit in my observation as well!)
There is plenty of evidence/theory to show your generalisation is just wrong. A good example is the entire country of Australia. Here our tax laws favour mum and dad landlords against corporate ownership (build to rent) so vast majority of rental properties are owned by them. And having rented for most of my adult life (by choice, this is not a woe is me story) across about 11 seperate properties and 3 cities, every single one owned by some random individual or couple, i can tell you that my experience was characterised by 0 proactive maintenance, repairs, updates whatever you want to call it, 0 care and generally 0 fu(ks given for my welfare or wellbeing. Not ideal, but I'm not paying for counselling services. Landlords care about one thing. A rent paying tenant (preferably who doesn't trash the place). They want a market return on their asset. That's it. And without it, NO ONE WILL INVEST IN RENTAL HOUSING. Landlords aren't in it for the altruism. I'm 100% sure there are shit corporate landlords, and I'm 100% sure there are shit mum and dad landlords. It's got little to do with being corporate, per se.
Capital controls are obviously counterproductive. In all markets, including housing. But to insist that the only solution is higher density (“city-building had been part of the human experience for millennia before we outlawed it in the 20th century with zoning rules against multi-family dwellings…”) is retrograde, too.
Cities have thrived for millennia because of the economics of agglomeration. And agglomeration was an enormous positive for humanity because, in the absence of technology, direct person-to-person interaction was the only way for individuals to cooperate with others. Spoken and written language were the earliest technologies which facilitated cooperation. So, too, were the printing press and postal systems. But these served mostly to increase the returns to agglomeration.
Cities are not utopian paradises. Human beings did not evolve living together in high-density cities like Mumbai or Manhattan. But the payoff in increased productivity and living standards made it an easy decision for billions of the world’s people to leave the farm.
It was only in the 20th Century with the advent of the Second Industrial Revolution that technologies emerged which could challenge city-building agglomeration. And only in the early 21st century have these technologies matured to the point where the returns to agglomeration no longer vastly outweigh the costs of living in large cities. It’s no surprise that the areas now experiencing the highest housing inflation are not Los Angeles, Chicago or New York City but suburban Florida and Texas.
Capital controls are one small part of a constellation of popular impediments to well-functioning housing markets. The incessant demands of Progressive planners and their government co-conspirators for higher density, infill and transit-oriented development, along with the intentional destruction of intact single-family neighborhoods, are poised to push many large American cities into unrecoverable “doom loops.” Meanwhile, there is renewed opposition to new development, especially in the relatively low-density environments where people want to live today. Whether this opposition is in the name of the preservation or conservation of open spaces or existing communities or against “urban sprawl,” the combined result is always the same: less housing at higher prices.
Sadly, most people instinctively abhor free markets. This is especially true of our expert class, which views markets as a direct challenge to their power. So things are likely to get worse. Until something breaks.
“The payoff in increased productivity and living standards made it an easy decision for billions of the world’s people to leave the farm.”
Every decision is a compromise. And almost every decision is impacted by external factors. When those factors change, people oftentimes make different decisions.
It's also probably true that some minority of people actually prefer to live in dense cities, such as the ultra-wealthy.
The main benefit of dense urban centers is for residents with lower incomes. Density is mostly an inferior good (a good that people pay more for when they have less money). In a roundabout way, that's the political reason American made it illegal to build them.
From Wikipedia, “Zoning is a method in which a 𝘮𝘶𝘯𝘪𝘤𝘪𝘱𝘢𝘭𝘪𝘵𝘺 or other tier of 𝘨𝘰𝘷𝘦𝘳𝘯𝘮𝘦𝘯𝘵 divides land into ‘zones,’ each of which has a set of 𝘳𝘦𝘨𝘶𝘭𝘢𝘵𝘪𝘰𝘯𝘴 for new development that differs from other zones...”
If the government is controlling something, then the market isn't.
We are working on 3 in Texas totalling 800 houses. The Texas bill will kill those projects.
They would be professionally managed by a large 3rd party group.
The rent rates are substantially less than the payment on a comparable single family house. Additionally, the current requirement for down-payments prevents many from ownership.
Unlike most apartments the units all have 3-4 bedrooms and yards.
These units are one of the few structures built for families that many can afford.
Do you have a read on the bill? Is it just for attention? Does it have any chance of getting a vote or passing? Do you think it has any effect now on market decisions about new projects?
Texas legislators won’t start voting on bills till April. This is the first time this has come up in a stand alone bill. Most likely it will fail to move in committee. That being said it might come back up in three years. I really doubt it would ever pass Texas is very pro business.
I leave it to the economists, planners and folks with expertise (e.g., Matt Inglesias who noted this article) why an inability to build housing at scale means that corporations replacing homeowners and pursing a rental rather than ownership market is a good thing inherently.
Is this outlook based on a concept that only private equity or hedge funds have the liquidity or some efficiency concepts or whatever the economic upside, I’m not seeing it, but that’s not in my wheelhouse.
What I do see as a downside is homeowners being replaced by renters and gigantic corporations who are hoovering up cheap to them assets because the bulk of wage earners can no longer afford them. The housing stock will become dilapidated compared to private ownership (remember the quip about no one ever washed a rental car).
I see a continued draining or real and social capital from the working classes (I include everyone in this who doesn’t put “investor” as his occupation on his 1040). Maybe in the short run chopping up SFH into rental apartments may keep folks at the bottom from becoming homeless as a quick fix, but overall having Blackstone in the housing market as your new landlord doesn’t look like progress to me.
And all of this has little to do with blasting NIMBYs.
The large scale single family rental market shouldn’t exist. It isn’t my preference. It only exists because the federal government cracked down too hard on mortgages in 2008 and created about 20 million households who now must be renters. That’s why they are renters. Corporate buyers are the result of that, not the cause.
The mortgage problem isn’t going to be fixed anytime soon. I wish it could be. And the zoning problem that prevents apartment construction isn’t going to be solved anytime soon. I wish it could be.
Given that, banning corporate homeownership is literally homelessness policy because the shortage is already bad enough to create homelessness, and this would stop the last legal form of housing from expanding.
In the aftermath of the 2008 financial crisis, it was wildly more popular to believe evil & greedy bankers were at fault than incompetent government bureaucrats who were just trying to make housing “more just.”
No. They can't. Some can. But, mortgages originated to all scores under about 760 were basically permanently cut in half in 2008.
Nobody knows because it all seemed to be part of a correction from the subprime boom, but it was a separate event and swung very far in the other direction.
I am retired and about 2 years ago took a part time government job with the Bureau of Labor Statistics gathering data to track rental data. Almost without exception when I had to get rental costs from large corporate landlords who rented out individual homes there was no way to contact them, trace ownership, and the tenants could not either. They were simply squeezing all the money they could get out them and fixing nothing. If there is not regulation of some kind there is usually abuse. Greed is not a virtue and if there is no one to contact the local authorities can not regulate them in terms of fraud, negligence etc. This banning of corporate landlords does not seem to be a good idea but something needs to be done.
Yeah. I knew a girl whose husband was in this market, and he was a piece of shit person who openly talked of this being the business model. Corporate ownership doesn’t have to be this bad, but it often is.
Sorry, what? Not only is this difficult to read, but it's got some far-out points that won't hold up in the long run. Builders will still build; they just have to build for pre-bought homes sold to individuals instead of whole blocks going to corporations.
Why is it better for every family to rent a home instead of buy? Small time landlords snatching up housing is part of the problem. If you want to be a landlord, push for infill and build a small property or MIL-suite on your existing lot, don't outbid a first-time homebuyer looking for a start.
The whole article has the stink of "Won't somebody think of the shareholders?!" vibe. Corporate landlords are the scum of the earth, and nobody I know who rents has ever preferred dealing with a property management company over small-time landlords.
Personally, I'd prefer we start a vacancy tax aimed at corporation owned homes. There are 16-million vacant homes in America while less than a million are on the market at any given time.
All of the bills are 100% Partisan and all filed and supported by Democrats. The odds of passing 0% odds that this type of law will hurt their career 100%
tl,dr: blowing it up by shutting all the pressure valves is the least bad option at this point.
Not saying that in jest, and yes there will be millions of people harmed. The harm to low income Americans, who will not be able to afford to live in a home is a structural reality that has been baked in by actions and policies over not decades, but a century.
My fam owned land and ‘a home’ near Plymouth, RI for nearly 400 years, my dad and uncle sold the last of what had been the farmland after seven attempts by federal and local governments over 60 years to claim the land under eminent domain. A cottage on Narragansett Bay, where my great grandparents watched the America’s cup was seized by the feds in the 40s and used in what is now a Coast Guard station. My little sis has been a homeowner since shortly after she got out of grad school, with a nice place on the water that was just recently renovated. I’m the first long-term non homeowner in my family in…not even sure how many generations. My parents, grandparents, and further back were small-scale landlords.
I rent two homes, one in Houston and one in Taipei. The first and only time I’ve owned a home ended in 2015, I’d taken a mortgage in Seattle, “purchasing” a SFH from the government 18 months after JP Morgan foreclosed on it. For 80% of the time that I owned that home, I rented it out with a small yield. When I sold it, most of the profit from that sale was invested into my current startup. The company is now worth 700x the cap gain on the home sale (though my stake is diluted over four rounds of external fundraising, so my IRR at the moment is quite a bit less than 700x). I withdrew all funds from my 401(k) in 2015, and used them to live on in 2015-2016. Owned zero cars and zero bicycles at that point, married with 2 kids. In 2017 and 2018 I missed rent nine times by more than 2 months, but caught up eventually. After 2019 my rental payments have been more stable, saved just a tiny bit, and in the last 3 years I’ve invested in art rather than buy a home. The art portfolio IRR is 150%, small but growing quickly. In Q4 last year I bought another $70k in the primary art market. If I sold all the art (in theory possible, auctions are fickle), I could put a down payment on the minimally spec’d type of home that I’d actually be interested in purchasing. But I’m not. I will definitely own a home and acreage “to the horizon” again like my family had in centuries past, but not yet.
Last backstories I’ll mention:
A. After my dad retired from his real job, he was the head of construction for a regional property developer that built about 3000 units near the campuses of the large football schools in the southern US. I learned vicariously through him what a cluster-f property management is.
B. Ironically for not being a homeowner, I was on the planning and zoning commission for the town where I went to grad school.
All the above is to say that I’m not simply a pundit when it comes to housing policy.
There are two bad options that are within the Overton window at the moment:
1. Leave or force, federally, legal room for one scalable path 1M+ within 2–3 years: owner-operator residential home developers. Build then hold and rent.
2. Allow people in locales across the US to block or choose not to block large scale owner-operator residential home developers. Which will lead by a large to nearly all locales blocking to one degree or another this form of residential development.
Allowing the first option to proceed would cement that form of non-ownership dwelling as a primary, if not the primary model in the US. Things that hyperscale tend to dominate overall. Even advocates don’t really want to see that happen.
Allowing the second path to unfold is called liberty. It’s painful, harmful, and will be frustrating to watch. But as the author says, shutting off all the relief valves is gonna lead to an explosion. That pressure in the system, however, is not primarily of our creating, it is the result of cumulative actions going back generations.
Personal ownership of homes is the way forward. The obstacles to that path need to be blown up. It may take something just sort of a literal revolution (not the figurative kind) to go against a century of stare decisis for property law, regs, HOAs, banking norms, and most of the financial-legal infrastructure we rely on today for leasing, mortgaging, and in those very rare cases actually purchasing and holding title to a home.
> Personal ownership of homes is the way forward. The obstacles to that path need to be blown up.
This fails to acknowledge a very tough question for homeownership advocates: do you want people owning the _space_ (i.e. 3-D volume) they live _in_, or also the _land_ they live _on_? Because only one of these is compatible with the densities necessary to make high-frequency rapid transit (think "six-minute subway", with full grade separation, automation, and well-designed transfers and network planning) and large-scale primarily-foot-traffic shopping (i.e. department stores and malls that _aren't_ attached to massive parking structures, never mind being surrounded by moats of surface car storage) possible, and it certainly isn't the second one!
Alternatively: would you consider owning a cash-purchased condo or co-op unit sufficient, or would you not be happy until you had title to the land under your feet?
Regarding the opposition to apartments for families, the opposition often starts because new families equals new school enrollments and new school costs. School costs are mostly borne by property taxes payers. Property taxes on apartments usually do not cover the cost of schools if the apartments generate new pupils. Therefore, the other taxpayers in town have to pay higher taxes to cover the added school expenses, hence the opposition. Yet, we rarely talk about the connection between the self-interest of the current taxpayers for lower taxes, the need for affordable housing for families and the disconnect between the two.
The Trump types are pushing for larger families. But they never discuss the disincentives we have in the system for building housing for families.
It’s time to discuss alternatives to funding schools primarily through property taxes. The system not only creates a substantial disincentive for new family housing, it also discriminates against poorer towns that do not have a large tax base and have a large population of households who do not have the means for paying higher taxes.
Linking school funding to property taxes incentivizes large lot zoning for McMansions and for the development of family-unfriendly 1-2 bedroom multifamily housing. These development types limit the number of school children generated, while maximizing the property taxes for residential development.
The development and tax incentives need to support the development of more modestly priced rental and for-sale housing. School costs need to be spread over a wider tax base than just local property owners. The property tax funding system is anti-family.
Or just tax property correctly between single and multifamily. Not that right-sizing taxes is an easy sell, especially in places where it’s needed the most like CA
I feel that. But let's not go hopeless, despite some of the nimby brainrot seeping through in the comments section. Those bills are partisan bills started by democrats except in Utah. Half are in states with majority GOP legislatures. Also, not every democrat is a complete idiot - some you could even call YIMBY. The guy running the show for next 4+ years is an infamous landlord with habit of naming buildings after himself and the 2nd in command's company sells solar roof shingles. Exactly what are the probabilities of any of these going anywhere?
A lot of people will agree with you about the 2nd & 3rd and disagree with you about the first, and we end up with nothing. That's how it's been going.
When these laws get passed, that will be the actual case. There are about 1.5 million apartments and single-family homes each year that can survive the opposition, and nothing beyond that will get built if these laws get passed.
You are a lone voice because your position is untenable. Hedge fund ownership of homes doesn’t increase supply, it just increases cost.
You either do not understand a shred of economics or you seek to deceive and subvert your readers. Corporate landlords who turn single family homes into rental properties do not create housing opportunities but rather increase demand, throttle supply and mechanically collude to raise housing costs.
There aren't any heffalumps and woozles. Those are actually your footprints.
Thanks for highlighting the CT bill - I forwarded it to my state rep asking her to be against it and offering to support her with information on how to address housing supply.
Going to put this here real quicklike:
Corporate landlords in the commercial sphere favor net leases as investment vehicles because there are fewer things in a net lease for the landlord to look after. Given that riding herd on a SFR portfolio is much harder than with apartments due to the geographic dispersion involved, perhaps it's best to understand renting a house from a megacorp as a net-ish sort of lease, where the residents are at least partly responsible for fixing broken stuff? (Not that this sort of netting doesn't happen with mom-and-pop landlords in the SFR space for that matter, negotiating over maintenance has been a normal part of renting from a mom-and-pop outfit in my observation as well!)
sad
There is plenty of evidence/theory to show your generalisation is just wrong. A good example is the entire country of Australia. Here our tax laws favour mum and dad landlords against corporate ownership (build to rent) so vast majority of rental properties are owned by them. And having rented for most of my adult life (by choice, this is not a woe is me story) across about 11 seperate properties and 3 cities, every single one owned by some random individual or couple, i can tell you that my experience was characterised by 0 proactive maintenance, repairs, updates whatever you want to call it, 0 care and generally 0 fu(ks given for my welfare or wellbeing. Not ideal, but I'm not paying for counselling services. Landlords care about one thing. A rent paying tenant (preferably who doesn't trash the place). They want a market return on their asset. That's it. And without it, NO ONE WILL INVEST IN RENTAL HOUSING. Landlords aren't in it for the altruism. I'm 100% sure there are shit corporate landlords, and I'm 100% sure there are shit mum and dad landlords. It's got little to do with being corporate, per se.
Capital controls are obviously counterproductive. In all markets, including housing. But to insist that the only solution is higher density (“city-building had been part of the human experience for millennia before we outlawed it in the 20th century with zoning rules against multi-family dwellings…”) is retrograde, too.
Cities have thrived for millennia because of the economics of agglomeration. And agglomeration was an enormous positive for humanity because, in the absence of technology, direct person-to-person interaction was the only way for individuals to cooperate with others. Spoken and written language were the earliest technologies which facilitated cooperation. So, too, were the printing press and postal systems. But these served mostly to increase the returns to agglomeration.
Cities are not utopian paradises. Human beings did not evolve living together in high-density cities like Mumbai or Manhattan. But the payoff in increased productivity and living standards made it an easy decision for billions of the world’s people to leave the farm.
It was only in the 20th Century with the advent of the Second Industrial Revolution that technologies emerged which could challenge city-building agglomeration. And only in the early 21st century have these technologies matured to the point where the returns to agglomeration no longer vastly outweigh the costs of living in large cities. It’s no surprise that the areas now experiencing the highest housing inflation are not Los Angeles, Chicago or New York City but suburban Florida and Texas.
Capital controls are one small part of a constellation of popular impediments to well-functioning housing markets. The incessant demands of Progressive planners and their government co-conspirators for higher density, infill and transit-oriented development, along with the intentional destruction of intact single-family neighborhoods, are poised to push many large American cities into unrecoverable “doom loops.” Meanwhile, there is renewed opposition to new development, especially in the relatively low-density environments where people want to live today. Whether this opposition is in the name of the preservation or conservation of open spaces or existing communities or against “urban sprawl,” the combined result is always the same: less housing at higher prices.
Sadly, most people instinctively abhor free markets. This is especially true of our expert class, which views markets as a direct challenge to their power. So things are likely to get worse. Until something breaks.
Legalising density still needs market demand for density to happen.
If people didn't want to live in cities (as you suggest), then even if cities were legalised, people wouldn't move there.
“The payoff in increased productivity and living standards made it an easy decision for billions of the world’s people to leave the farm.”
Every decision is a compromise. And almost every decision is impacted by external factors. When those factors change, people oftentimes make different decisions.
It's also probably true that some minority of people actually prefer to live in dense cities, such as the ultra-wealthy.
The main benefit of dense urban centers is for residents with lower incomes. Density is mostly an inferior good (a good that people pay more for when they have less money). In a roundabout way, that's the political reason American made it illegal to build them.
Seems odd to characterize upzoning as anti-market.
From Wikipedia, “Zoning is a method in which a 𝘮𝘶𝘯𝘪𝘤𝘪𝘱𝘢𝘭𝘪𝘵𝘺 or other tier of 𝘨𝘰𝘷𝘦𝘳𝘯𝘮𝘦𝘯𝘵 divides land into ‘zones,’ each of which has a set of 𝘳𝘦𝘨𝘶𝘭𝘢𝘵𝘪𝘰𝘯𝘴 for new development that differs from other zones...”
If the government is controlling something, then the market isn't.
We are working on 3 in Texas totalling 800 houses. The Texas bill will kill those projects.
They would be professionally managed by a large 3rd party group.
The rent rates are substantially less than the payment on a comparable single family house. Additionally, the current requirement for down-payments prevents many from ownership.
Unlike most apartments the units all have 3-4 bedrooms and yards.
These units are one of the few structures built for families that many can afford.
Do you have a read on the bill? Is it just for attention? Does it have any chance of getting a vote or passing? Do you think it has any effect now on market decisions about new projects?
Kevin,
Not sure on the bill, yet.
We're checking.
More in a day or so.
Texas legislators won’t start voting on bills till April. This is the first time this has come up in a stand alone bill. Most likely it will fail to move in committee. That being said it might come back up in three years. I really doubt it would ever pass Texas is very pro business.
Checking back in
I leave it to the economists, planners and folks with expertise (e.g., Matt Inglesias who noted this article) why an inability to build housing at scale means that corporations replacing homeowners and pursing a rental rather than ownership market is a good thing inherently.
Is this outlook based on a concept that only private equity or hedge funds have the liquidity or some efficiency concepts or whatever the economic upside, I’m not seeing it, but that’s not in my wheelhouse.
What I do see as a downside is homeowners being replaced by renters and gigantic corporations who are hoovering up cheap to them assets because the bulk of wage earners can no longer afford them. The housing stock will become dilapidated compared to private ownership (remember the quip about no one ever washed a rental car).
I see a continued draining or real and social capital from the working classes (I include everyone in this who doesn’t put “investor” as his occupation on his 1040). Maybe in the short run chopping up SFH into rental apartments may keep folks at the bottom from becoming homeless as a quick fix, but overall having Blackstone in the housing market as your new landlord doesn’t look like progress to me.
And all of this has little to do with blasting NIMBYs.
The large scale single family rental market shouldn’t exist. It isn’t my preference. It only exists because the federal government cracked down too hard on mortgages in 2008 and created about 20 million households who now must be renters. That’s why they are renters. Corporate buyers are the result of that, not the cause.
The mortgage problem isn’t going to be fixed anytime soon. I wish it could be. And the zoning problem that prevents apartment construction isn’t going to be solved anytime soon. I wish it could be.
Given that, banning corporate homeownership is literally homelessness policy because the shortage is already bad enough to create homelessness, and this would stop the last legal form of housing from expanding.
In the aftermath of the 2008 financial crisis, it was wildly more popular to believe evil & greedy bankers were at fault than incompetent government bureaucrats who were just trying to make housing “more just.”
Are you saying underwriting standards are a bad thing?
Reasonable underwriting standards are a good thing. Making them too tight can cause just as many problems as making them too loose.
Sure, but are they too tight? A family with a 720 credit score can surely get a traditional mortgage.
No. They can't. Some can. But, mortgages originated to all scores under about 760 were basically permanently cut in half in 2008.
Nobody knows because it all seemed to be part of a correction from the subprime boom, but it was a separate event and swung very far in the other direction.
That’s bad, though below 700 I would say is too low
I am retired and about 2 years ago took a part time government job with the Bureau of Labor Statistics gathering data to track rental data. Almost without exception when I had to get rental costs from large corporate landlords who rented out individual homes there was no way to contact them, trace ownership, and the tenants could not either. They were simply squeezing all the money they could get out them and fixing nothing. If there is not regulation of some kind there is usually abuse. Greed is not a virtue and if there is no one to contact the local authorities can not regulate them in terms of fraud, negligence etc. This banning of corporate landlords does not seem to be a good idea but something needs to be done.
Something needs to be done. This is something. So we must do it.
Yeah. I knew a girl whose husband was in this market, and he was a piece of shit person who openly talked of this being the business model. Corporate ownership doesn’t have to be this bad, but it often is.
Sorry, what? Not only is this difficult to read, but it's got some far-out points that won't hold up in the long run. Builders will still build; they just have to build for pre-bought homes sold to individuals instead of whole blocks going to corporations.
Why is it better for every family to rent a home instead of buy? Small time landlords snatching up housing is part of the problem. If you want to be a landlord, push for infill and build a small property or MIL-suite on your existing lot, don't outbid a first-time homebuyer looking for a start.
The whole article has the stink of "Won't somebody think of the shareholders?!" vibe. Corporate landlords are the scum of the earth, and nobody I know who rents has ever preferred dealing with a property management company over small-time landlords.
Personally, I'd prefer we start a vacancy tax aimed at corporation owned homes. There are 16-million vacant homes in America while less than a million are on the market at any given time.
I mean, it depends. At a decent apartment complex it’s often easier to get stuff fixed than from a mom and pop. But then there are slumlords.
All of the bills are 100% Partisan and all filed and supported by Democrats. The odds of passing 0% odds that this type of law will hurt their career 100%
tl,dr: blowing it up by shutting all the pressure valves is the least bad option at this point.
Not saying that in jest, and yes there will be millions of people harmed. The harm to low income Americans, who will not be able to afford to live in a home is a structural reality that has been baked in by actions and policies over not decades, but a century.
My fam owned land and ‘a home’ near Plymouth, RI for nearly 400 years, my dad and uncle sold the last of what had been the farmland after seven attempts by federal and local governments over 60 years to claim the land under eminent domain. A cottage on Narragansett Bay, where my great grandparents watched the America’s cup was seized by the feds in the 40s and used in what is now a Coast Guard station. My little sis has been a homeowner since shortly after she got out of grad school, with a nice place on the water that was just recently renovated. I’m the first long-term non homeowner in my family in…not even sure how many generations. My parents, grandparents, and further back were small-scale landlords.
I rent two homes, one in Houston and one in Taipei. The first and only time I’ve owned a home ended in 2015, I’d taken a mortgage in Seattle, “purchasing” a SFH from the government 18 months after JP Morgan foreclosed on it. For 80% of the time that I owned that home, I rented it out with a small yield. When I sold it, most of the profit from that sale was invested into my current startup. The company is now worth 700x the cap gain on the home sale (though my stake is diluted over four rounds of external fundraising, so my IRR at the moment is quite a bit less than 700x). I withdrew all funds from my 401(k) in 2015, and used them to live on in 2015-2016. Owned zero cars and zero bicycles at that point, married with 2 kids. In 2017 and 2018 I missed rent nine times by more than 2 months, but caught up eventually. After 2019 my rental payments have been more stable, saved just a tiny bit, and in the last 3 years I’ve invested in art rather than buy a home. The art portfolio IRR is 150%, small but growing quickly. In Q4 last year I bought another $70k in the primary art market. If I sold all the art (in theory possible, auctions are fickle), I could put a down payment on the minimally spec’d type of home that I’d actually be interested in purchasing. But I’m not. I will definitely own a home and acreage “to the horizon” again like my family had in centuries past, but not yet.
Last backstories I’ll mention:
A. After my dad retired from his real job, he was the head of construction for a regional property developer that built about 3000 units near the campuses of the large football schools in the southern US. I learned vicariously through him what a cluster-f property management is.
B. Ironically for not being a homeowner, I was on the planning and zoning commission for the town where I went to grad school.
All the above is to say that I’m not simply a pundit when it comes to housing policy.
There are two bad options that are within the Overton window at the moment:
1. Leave or force, federally, legal room for one scalable path 1M+ within 2–3 years: owner-operator residential home developers. Build then hold and rent.
2. Allow people in locales across the US to block or choose not to block large scale owner-operator residential home developers. Which will lead by a large to nearly all locales blocking to one degree or another this form of residential development.
Allowing the first option to proceed would cement that form of non-ownership dwelling as a primary, if not the primary model in the US. Things that hyperscale tend to dominate overall. Even advocates don’t really want to see that happen.
Allowing the second path to unfold is called liberty. It’s painful, harmful, and will be frustrating to watch. But as the author says, shutting off all the relief valves is gonna lead to an explosion. That pressure in the system, however, is not primarily of our creating, it is the result of cumulative actions going back generations.
Personal ownership of homes is the way forward. The obstacles to that path need to be blown up. It may take something just sort of a literal revolution (not the figurative kind) to go against a century of stare decisis for property law, regs, HOAs, banking norms, and most of the financial-legal infrastructure we rely on today for leasing, mortgaging, and in those very rare cases actually purchasing and holding title to a home.
> Personal ownership of homes is the way forward. The obstacles to that path need to be blown up.
This fails to acknowledge a very tough question for homeownership advocates: do you want people owning the _space_ (i.e. 3-D volume) they live _in_, or also the _land_ they live _on_? Because only one of these is compatible with the densities necessary to make high-frequency rapid transit (think "six-minute subway", with full grade separation, automation, and well-designed transfers and network planning) and large-scale primarily-foot-traffic shopping (i.e. department stores and malls that _aren't_ attached to massive parking structures, never mind being surrounded by moats of surface car storage) possible, and it certainly isn't the second one!
Alternatively: would you consider owning a cash-purchased condo or co-op unit sufficient, or would you not be happy until you had title to the land under your feet?
Regarding the opposition to apartments for families, the opposition often starts because new families equals new school enrollments and new school costs. School costs are mostly borne by property taxes payers. Property taxes on apartments usually do not cover the cost of schools if the apartments generate new pupils. Therefore, the other taxpayers in town have to pay higher taxes to cover the added school expenses, hence the opposition. Yet, we rarely talk about the connection between the self-interest of the current taxpayers for lower taxes, the need for affordable housing for families and the disconnect between the two.
The Trump types are pushing for larger families. But they never discuss the disincentives we have in the system for building housing for families.
It’s time to discuss alternatives to funding schools primarily through property taxes. The system not only creates a substantial disincentive for new family housing, it also discriminates against poorer towns that do not have a large tax base and have a large population of households who do not have the means for paying higher taxes.
Linking school funding to property taxes incentivizes large lot zoning for McMansions and for the development of family-unfriendly 1-2 bedroom multifamily housing. These development types limit the number of school children generated, while maximizing the property taxes for residential development.
The development and tax incentives need to support the development of more modestly priced rental and for-sale housing. School costs need to be spread over a wider tax base than just local property owners. The property tax funding system is anti-family.
Or just tax property correctly between single and multifamily. Not that right-sizing taxes is an easy sell, especially in places where it’s needed the most like CA
Land Value Tax would be best.
But mixing up schooling and property taxes (or schooling and government in the first place) leads to all kinds of weirdness.
I feel that. But let's not go hopeless, despite some of the nimby brainrot seeping through in the comments section. Those bills are partisan bills started by democrats except in Utah. Half are in states with majority GOP legislatures. Also, not every democrat is a complete idiot - some you could even call YIMBY. The guy running the show for next 4+ years is an infamous landlord with habit of naming buildings after himself and the 2nd in command's company sells solar roof shingles. Exactly what are the probabilities of any of these going anywhere?
What we need are "middle" housing types, neither apartments nor simgle-family.
A lot of people will agree with you about the 2nd & 3rd and disagree with you about the first, and we end up with nothing. That's how it's been going.
When these laws get passed, that will be the actual case. There are about 1.5 million apartments and single-family homes each year that can survive the opposition, and nothing beyond that will get built if these laws get passed.