Wall street pushing working and middle class people out of the housing market

[quote]The cost of rent is really through the roof. Residential rents across the country went up an average of 15% last year – nearly twice the overall inflation rate.

Yet the Biden administration keeps telling us that the economy is doing wonderfully. But for whom?

It helps tremendously if you can find an individual landlord or small family business that rents property; those landlords often make a real effort to take care of their tenants. I live in such a situation right now and am immensely grateful. Fingers crossed there won't be a change of ownership anytime soon!

No wonder that, even though the market has cooled since 2022 and the Fed is increasing interest rates, prices are still going up.

They go woke, you go broke.

Europe has been occupied too

You will own nothing, and you will love it!

I recently moved from a city I lived in for decades. I lived in an historic district (one of eight). In 2016 I started observing this in real-time in my old neighborhood. Looking back at property sales records, I observed that, for example on my street, of the 20 buildings on it, 30% were rentals/duplexes when I moved there. A decade later, it was at 55%. Any home for sale in our neighborhood or other districts would get snatched up quick. Then it's flipped & cleaned, then the local property management companies "manage" them. But it's owned by an LLC five states away. By the time I moved away, my neighborhood (a very dense central working-class district) would have, at most, one or two houses for sale. Absentee landlords sending in guys to work on a building and they would destroy an historic facade, then they get summoned by the Historic Structures Commission (poor guys), the random contractor is stated away by the time this meeting happens, the landlord hires some one-off lawyer in the area to represent him at this meeting. Just on and on with these clown shows.

I am just disgusted by this. It's changing older neighborhoods all across the country. It's bullshit.

Here in Flawduh any town withing 25 miles of the beach has had all the affordable housing bought up and turned into Air B n B and Vrbo short term vacation rentals. Many of these condos and apartments have been bought by out of state corportions.In my small town rents have doubled/tripled in the last year. If you can even find an apartment. Went to my local corner shop store yesterday morning and the inside store was closed only gas pumps working. We were told they can't hire staff to open it. The workforce is being forced out of town due to lack of housing. No one wants to commute from the mainland for a job that pays $12 an hour. We are devolving from a viable city into a boutique resort with a transit population that has to bus it's workforce in and out every day. Of course the Repug legislators in the pocket of developers passed a law absolutely forbidding local ordinances or zoning against the plague of short term rentals. Every weekend we feel as if we are living next to college frat houses and hotels.

Surely this has to crash, right? There has to be some underlying real value -- otherwise, why not just invest in dog poop?

The problem is two-fold. State and local governments largely control construction rules and zoning where it exists. Most of the financing of individual homes is backed by quasi-agencies of the US government: Linda MAE, Fanny MAE, and the FHA. Some of the rules are very worthwhile, like codes that require stronger roofs in Florida, building back from where the waterline's likely to be in 20 years and installing good insulation plus financial requirements that mean the buyer is more likely to be able to keep up the mortgage payments. That and every other higher cost (wages, insurance, permitting, equipment, building materials and on and on) costs more now - a lot more - than it did only a couple of years ago.

The other part is largely NIMBY-ism but also increasingly a reaction to climate change. You can't build in some places now when the tide comes in or the rivers overflow where people built before. Local governments are responsive to people who're already there, making almost any land-use change and/or new construction difficult to impossible in the places people want to live. Do you expect to see public housing tracts in Atherton or Belvedere? And not (there and elsewhere) without reason. Building 1000 units of 2 or 3 bedroom units in your city or town that are affordable, whether purchased or rentals, could add maybe another 1000 kids to the local and in the US, largely locally funded school systems. Make the developer pay a linkage payment to support constructing new schools? Property taxes can only go so high without lowering property values. That means higher rents or prices. Higher mortgage rates add to the costs now but will likely go down sooner than later. Not much else is likely to decrease unless you're in places like the Rust Belt where most of the jobs have left and a lot of the people have, too, meaning housing prices are cheaper, and, as the article notes, places are being bought by hedge-funds and REITs. They're a part of the problem, but hardly all of it.

Prices go up or down depending on economic conditions, but costs other than labor usually don't. Costs may rise slowly or quickly, but since the 1930's they've never gone down.

The new feudalism.

Nobody is going to do anything to stop this.

it's frightening here. Rent has always been high in Burlington but they've gone up at least 25 percent across the board in the past few years and many have gone up by over 50 percent. How can they do that? Because it's a college town and half of the United States moved here during covid. Pay is very low, you are either extremely poor, way lower middle class or rich. that's it.

Look at this. $1500 for a STUDIO by one of the biggest slumlords in Vermont on one of the loudest, crappiest streets in Burlington.

hahaha, whoops

Buy your own home. Live in it. Keep it up. Sell it to someone good. Make a fair but not obscene profit. Fuck the corporations.

R14

Rescue Chick, is that your old place?

Real estate is an interesting investment. It allows for many legal tax breaks. I own two properties and my own home. We got lucky and bought during slow times in the market. But I'm not greedy. My condo is reasonably priced under market because I like helping out the young tenants, giving them a break. The other is used by my partner for his business, it was an equity investment and a way to not to be held hostage by a landlord. Some day when we need funds for our decline we'll sell or rent it. We've owned our house for over 30 years, have a tiny mortgage and low taxes.

We're cash poor but feel ric and are grateful. Real estate can be a great investment if you can get in. I have a friend, a refugee immigrant who came to the US at 18. He's worked hard all his life and in his early 20s bought his first investment condo for a cheap price. We're talking farm work then janitorial work, rising to management. Owns about five now yet keeps working. He's a real hustler. Lives in a nice house house in a crappy area and rents spare rooms to other immigrants. He does not gouge them. He's always working and they look after his house as part of the deal.

I know others who managed to come from hard times to buy a few properties as investments. It's a matter of getting in at a low price and working your butt off.

My feeling about high rents is that it's pure greed on the part of landlords. Apartment building owners and others who own big properties band together and lobby to control growth, allowing them to charge high rents. There are those who want to live in exclusive areas so they protest and scare away investors who could build more lower income housing nearby. From the billionaires to the people who have a couple of rentals, the temptation to gouge and exploit is too great. Add the corporations and the wealthy buying up homes for rentals and investments and you get what we have today.

Also, it's supply and demand. As an old native Californian, in my lifetime I watched my state to go from 11 million in my childhood to 40 million today. People want to live where they want to live and it affects local housing availability and rates. I finally left San Francisco because I could not to afford a house that wasn't a dump. The same thing is happening where I live now. Populations grow and people move around to live in nice places.

I empathize with young people who just want a decent affordable home. That was possible when I was young. Now they have to leave their friends and families to find affordable housing or have roommates. It's an endless struggle.

R17 You sound like a great human being. I love that you like helping out your young tenants. And you have extra room in your home that you welcome others that are starting out. So many now are driven by greed. You set a good example.

Society encourages childbirth to ensure never ending growth of capital value. But the government will never support plans to house and feed all those people. So, this is a part of the built-in life risk for breeders. Have kids, but they may starve and die in filth if they’re bad at exploitation lol. Thankfully many people are giving up on this bizarre logic and choosing not to procreate, thereby hopefully starving the beast in a few centuries, hopefully.

Antinatalism is the only absolute way to prevent suffering on this Earth. Everything else is a pathetic toss-up, and depends on the generosity of the overlords of the age. But of course humanity will continue to breed, dominate, and destroy each other until they recognize this, as we’re unfortunately seeing in the Levant right now.

r16, no, they're selling my old place because they don't want to do the required repairs.

[quote] Surely this has to crash, right?

You’re looking at it backwards. “The market has to crash.” That’s the logical conclusion right?

Except when the tail wags the dog and the market is too powerful. Then society crashes.

In 1980 witnessing the dual trend of Reaganism and Thatcherism, Ridley Scott imagined a dystopian vision of the future in 2019. We are in that world now.

R15 Yes, but if I were to take your advice I'd be homeless because, between the inflated prices and interest rates, I wouldn't be able to afford to purchase a new home with the "fair profit" I'd make from selling my current home. I'm in that trap now.

I read that article when it was first published. Our standard of living peaked in 1973 and has dropped dramatically since then. Many Chinese investors bought up huge numbers of detached single family houses after the financial collapse of 2008/09.

Bottomless disgusting greed. These companies need to be stopped. They are literally destabilizing the functioning of society. Is that a Mary! Or am I correct? And, how can these companies be stopped? Is there a way?

While we’re ejecting them from housing, can we eject them from medical and vet practices, too?

[quote]Buy your own home. Live in it. Keep it up. Sell it to someone good. Make a fair but not obscene profit. Fuck the corporations.

I shudder to think how many people are going to be epically fucked by the dumb home-buying decisions they've made in desperation over the last three years. That's one of the scariest things to me, financially, about unaffordable rentals. It fuels a resentment that makes people think ownership is the only correct option, when it will be far less affordable to many of them in the long run than sucking it up and renting would've been.

[quote] Wall street pushing working and middle class people out of the housing market

It's been happening for the last 40 years, but certainly has accelerated in the last 15 (since the 2008 recession).

[quote] Our standard of living peaked in 1973 and has dropped dramatically since then.

Yes, and the combination of the collapse of so many industrialized companies/the industrial economy in the US, coupled with massive mergers/consolidations in many other industries, really changed our economy and not for the better.

Those changes decimated the middle class.

These articles are years old people. Investors have left RE in droves. House prices ARE coming down with the exception of some markets, but they were so inflated to begin with it's hard to notice. You have to look at the charts. In my town they have come down pretty damatically, especially new construction, although still too high.

Inflation is still raging in services which is the category that includes rents. This is why the Fed is raising interest rates like mortgages,(called quantitive tightening-QT).

This Inflation was caused by the massive amounts of 'free money' that the Fed threw around every year since the financial crisis 2008 (quantitive easing or ZIRP-zero interest rate policy.).

So the central bank is trying to bring inflation back down to 2% but it's proving stubborn, and somehow consumers are still spending on goods and revenge travel. Have you noticed how restaurants are busy even though a hamburger costs seventeen dollars now? I don't know who can afford this bullshit but they need to stop it.

R18, thank you. I don't have extra people living in my home, though. I wasn't clear, it's my friend who rents rooms to immigrants. I met him through work and he is an inspiration. I he's the hardest worker I've met in my life. Positive attitude and creative.

Housing has been weaponized. We get credit the industrial military machine gets the money. Run faster little rabbit. Welcome to Neo Feudalism.

Right, R31.

My father worked for a bank for thirty+plus years but he was not the cliche banker type and in fact had only his GED insofar as education. Banking was an industry he fell into.

One could still fall into a lucrative career in banking in the 1950s. He was often disgusted by the direction the US was taking once Reagan became POTUS. My father worked with estates and trusts and lamented to me that the US was turning into a country that was in the business of creating family dynasties. Inherited wealth is delightful if one has it of course, but many of us are surrounded by oodles of trust fund babies who either got that way or on the path to getting that way because their parents worked at decent jobs for the long haul…a situation that seems quaint in comparison to how employers chew up and spit out employees today. A lot of them try to keep it a secret but you have to wonder when that social media marketing manager you know—the one who is married to a schoolteacher—suddenly lets it slip that she now owns that summer rental she used to go to for two weeks every summer. Then you remember “oh right, her mom died last year…”

We haven’t really seen much yet but as my contemporaries age (I’m 56) it will begin to cascade. Because when you split up a house someone owned for 40 years in a nice neighborhood, as well as a retirement account someone had for 45 years among two or three siblings…it can be a lot. My generation and younger will not be leaving as much to our kids when we croak.