what would happen if we pegged rent? (1 Viewer)

guidomerkinsrules

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so rule of thumb seems to be that rent should be 25% of gross salary

what would happen if we pegged that? made it so that rent was "controlled" at 25%? (the % isn't important, but more the idea of 'fixing' it)

i think i can anticipate some of the "why nots" but I'm interested to hear the arguments pro/con
 
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guidomerkinsrules

guidomerkinsrules

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There is govt housing with rent pegged at % of income. Why take private housing out of the free market?
1st response would be to avoid ghettoization, which as has been amply demonstrated is a huge drain on the social fabric for everyone
(there could perhaps be was that owners could be compensated but also not allowed to gouge)
 

LOONEY

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I understand where you coming from Guido , dont they do something like this in NewYork with rent control apartments. Im not sure if this would work in rural areas but i can see your point for larger urban locations. the only thing i worry about is how it effects private homes . My parents own one rental property and have been thinking about buying a second. They are in their late 60's and use the income to help supplement what they receive from retirement, but most of the income is used to keep the property up and for property taxes. So my worry is how it would effect their income as property owners.
 

Krodwhodat

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To be brutally honest its because people don't want to live around scum and crime and are willing to pay more. I live in a golf course gated community that has the highest per square foot price in southeastern La. And probably all of Louisiana. The dues to live in here are pretty high. It's high so that we can maintain our value and prices. There are about 4 or 5 house in here for rent or lease and they get between $3000 and $5000 a month for them based on size. If they were told that they can only charge $1500 for them then they would lose money in the deal. We have talked about building condos in here and the price would be in the $3000 to $4000 a month range.



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mb504

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1st response would be to avoid ghettoization, which as has been amply demonstrated is a huge drain on the social fabric for everyone
(there could perhaps be was that owners could be compensated but also not allowed to gouge)
How would you avoid ghettoization? Why wouldn't your rent controls just centralize poverty in the areas subject to those controls just as they are now? How would your idea differ from, say, the existing federal Section 8 program, which provides government subsidized rents based on the renter's income to private owners, where Section 8 homes already tend to be grouped together in ghettos?
 

The Mongoose

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I live in a golf course gated community that has the highest per square foot price in southeastern La. And probably all of Louisiana.
I'd be very surprised if this were true. I could be wrong, but I'd bet on Uptown New Orleans as having the highest psf price, if you don't count the residential stuff in the quarter.
 

Krodwhodat

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I'd be very surprised if this were true. I could be wrong, but I'd bet on Uptown New Orleans as having the highest psf price, if you don't count the residential stuff in the quarter.


Maybe but I speaking of subdivision. I'm sure that house on St Charles ae up there but we are getting between $275 and $300 a SF. Lot on course going for $550k and water one just went for $2.2m. That's just lots.


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Saint_Ward

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Take someone making $30k a year and someone else making $100k/yr.


What's the incentive to rent a unit out for $625 vs $2080?


Actually, as much as I complain about rent/housing, if you took just my gross wages and forced me to pay 25%, I'd be paying more. Net is a different story.
 

mb504

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Maybe but I speaking of subdivision. I'm sure that house on St Charles ae up there but we are getting between $275 and $300 a SF. Lot on course going for $550k and water one just went for $2.2m. That's just lots.
I found three baby possums in my kitchen a couple of days ago that came in through a hole in 150 year old barge board under my sink, and my house would still sell for between $275 and $300 a SF.

Prices on the east bank of Orleans Parish in general are out of control. Hence Guido's interest in discussing rent controls.
 

Krodwhodat

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I found three baby possums in my kitchen a couple of days ago that came in through a hole in 150 year old barge board under my sink, and my house would still sell for between $275 and $300 a SF.



Prices on the east bank of Orleans Parish in general are out of control. Hence Guido's interest in discussing rent controls.


My info came from a New Orleans real estate magazine so maybe they were just exaggerating.


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superchuck500

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I understand where you coming from Guido , dont they do something like this in NewYork with rent control apartments. Im not sure if this would work in rural areas but i can see your point for larger urban locations. the only thing i worry about is how it effects private homes . My parents own one rental property and have been thinking about buying a second. They are in their late 60's and use the income to help supplement what they receive from retirement, but most of the income is used to keep the property up and for property taxes. So my worry is how it would effect their income as property owners.
I think that classic "rent controls" limit the increases that can be imposed on upon the rent - but all through the lens of whatever the rent was/is. I don't think they are related to the income of the lessee.

But I think Ward has the right idea. The same residence would rent at different amounts depending on the income of the applicant. And that presents a host of problems, the most obvious of which being the disincentive of the landlord to rent to someone that he can't charge as much as someone else.
 

superchuck500

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How would you avoid ghettoization? Why wouldn't your rent controls just centralize poverty in the areas subject to those controls just as they are now? How would your idea differ from, say, the existing federal Section 8 program, which provides government subsidized rents based on the renter's income to private owners, where Section 8 homes already tend to be grouped together in ghettos?
Agreed.

I think the more modern approach is to use vouchers instead of direct support of the housing itself. So a typical Section 8 household would get a voucher to use anywhere (and the family could supplement the voucher to pay higher rent if desired).
 

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