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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However, again I think price controls are fine, but pegging based on salary is bad. Also, I think new homes need to be built in the 'non-luxury' category more than they are.
in my initial fantasy, a neighborhood could only have a discreet numbers of rents at specified levels (x # of homes at $1000, x # at 1500, etc)
in the hopes that not only would the rent squeeze be alleviated but the resultant problems of disparity of public education, healthy food accessibility, et al would tilt toward an equilibrium
 

Saint_Ward

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in my initial fantasy, a neighborhood could only have a discreet numbers of rents at specified levels (x # of homes at $1000, x # at 1500, etc)
in the hopes that not only would the rent squeeze be alleviated but the resultant problems of disparity of public education, healthy food accessibility, et al would tilt toward an equilibrium
So, basically forcing a mixed income neighborhood like HUD tries on occasion?
 

Madmarsha

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Is this about something else?
 

DaveXA

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I don’t think this is exactly the thread I was thinking of
But it’s in the ballpark
(I do miss BHM, though)

Housing is getting absurd here. It's always been high, but run of the mill townhouses here start at 500k and go up from there. The neighborhood I'm renting in, a townhouse was under contract in a week and listed at $774k last month. That one is in nice condition. Another one across the street with a dated interior is listing at $665k. Single family homes that are in good condition start at 600k and the average home price is probably close to a million. The same home that can be had in say Lafayette would cost around 250k. It's been going up quick, and people are often offering list or above list prices. The thing is, I haven't seen many homes sit for very long. Usually a week or two at most. Some will be on the market longer if they're asking stupid prices, but most are actually trying to sell and striking the iron while it's hot. Feels like prices are going up significantly. Certainly 20-30% higher over the last 5 years or so.

We'd love to buy right now but just not in a position to yet. Maybe another year or so.
 
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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
I agree that housing is a problem. But I have a feeling that your plan would completely screw the middle class.

I think what would happen is that fewer people would rent out their house...they’d just sell.

But I’m with you that ghettos are a problem. Some cities that decentralized public housing (such as Madison), with good results. The biggest gripe is that resources are usually centralized, so things such as transportation can be a problem. Perhaps pegging transportation costs could get around that.
 
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To add, to me, the only real solution is for these altruistic billionaire investors to invest in decent housing (heck, it doesn't even have to be built cheaply, because they can afford the loss, or use it as a tax write off as charity, I'm sure). Basically set it up similar to Habitat for Humanity, but perhaps with less volunteering required. Have an ownership time requirement before you can consider selling the house or whatever. Allow people who qualify (all via this investor person, or via the charity) to purchase homes for an amount based on income (and I'd honestly go under 25% of monthly, especially since many are paid bi weekly, and you have to wait 6 months to catch up, since you only get paid for 4 weeks a month for a while).

Side Note, Section 8 makes you pay 30-40% of your income, but without looking, I'd assume that's after taxes (and not counting EITC if you get it).

So, two things happen. You drastically increase or improve the number of low income homes that most builders or investors don't want to touch right now (unless they're going for section 8 vouchers). So, you are relaxing the strain on the "tier 2 market" for middle class buyers. Some middle to lower middle class could potentially qualify for some of these homes (there could be tiers). It's all my pipe dream anyway.

And secondly, you decrease the bottom end of pricing relaxing some of the false supply side price increase. I say false, because so many over priced units sit empty and either people over pay to squeeze in there or it inflates other properties near by that were a bit cheaper. e.g. if you like a neighborhood and see a series of houses all for $400k, and there is one gem for $300k, you might find yourself in a bidding war with a few others for that cheaper home, now it's $375k and you strain to buy it.

The more I think of all this stuff, the more I realize I need to move out of a metro area. An Engineer and a social worker can't hack it here, I guess.
You're in South Florida right? Move up to Jacksonville! Not as many tourists...so it keeps our prices down. Great job market. You can still very easily get to some nice beaches. Fernandina Beach and St. Augustine are both amazing beaches. Jax Beach is great for surfing...which is all I use it for anyway. You can get to Orlando in a few hours.
 

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I don’t think this is exactly the thread I was thinking of
But it’s in the ballpark
(I do miss BHM, though)

Well, when the Fed prints a butt load of money and keeps interest rates near zero, people are going to look for more solid places to put wealth. Real-estate is usually one of those places.

Oh, I have seen a lot of speculation that prices will crash again with so many people out there not paying mortgages. That can't last forever. Foreclosures will spike eventually or, even worse, the government just nationalizes housing.
 

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You're in South Florida right? Move up to Jacksonville! Not as many tourists...so it keeps our prices down. Great job market. You can still very easily get to some nice beaches. Fernandina Beach and St. Augustine are both amazing beaches. Jax Beach is great for surfing...which is all I use it for anyway. You can get to Orlando in a few hours.
I've thought about it multiple times.

We actually had a few move up there, we have a small satellite office up there. The problem is, my work, requires me to be here. Or I'd have to find a new gig.
 

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I don’t think this is exactly the thread I was thinking of
But it’s in the ballpark
(I do miss BHM, though)

Yeah, this is somewhat old news. This is what has been happening since the last economic crash of 2007-2009. We had a whole discussion somewhere about how people like Sean Hannity have become landlords.. he has a collection of Shell Companies (like, 20 of them) and has gobbled up over 870 homes in the last decade (from an article in 2018). That's just one guy. That's insane. And he's not doing it to help the problem. In some cases, he's done it to try to get HUD money.

Anyway, looking back at this almost 5 year old thread, it seems like my view point is more solidified. Not enough housing has been built. The housing that has been built has been 'luxury' units, and the rents and sale prices have been marching upwards and upwards to a very unsustainable point.

2013 was the last good year to buy a home down here. I'm kicking myself.
 
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Yeah, this is somewhat old news. This is what has been happening since the last economic crash of 2007-2009. We had a whole discussion somewhere about how people like Sean Hannity have become landlords.. he has a collection of Shell Companies (like, 20 of them) and has gobbled up over 870 homes in the last decade (from an article in 2018). That's just one guy. That's insane. And he's not doing it to help the problem. In some cases, he's done it to try to get HUD money.

Anyway, looking back at this almost 5 year old thread, it seems like my view point is more solidified. Not enough housing has been built. The housing that has been built has been 'luxury' units, and the rents and sale prices have been marching upwards and upwards to a very unsustainable point.

2013 was the last good year to buy a home down here. I'm kicking myself.
Economics is definitely not my forte. How we can be having a housing boom right now in what most people consider a recession makes you scratch your head. My house's value has gone up 15-20% in two years. The interest rates have dropped SIGNIFICANTLY. Makes you nervous, but how can you NOT take advantage of these rates? Likely drawing more people in to buy. There could be slew of foreclosures within the next 5 years. Could be another 2008 all over again.
 

DaveXA

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Yeah, this is somewhat old news. This is what has been happening since the last economic crash of 2007-2009. We had a whole discussion somewhere about how people like Sean Hannity have become landlords.. he has a collection of Shell Companies (like, 20 of them) and has gobbled up over 870 homes in the last decade (from an article in 2018). That's just one guy. That's insane. And he's not doing it to help the problem. In some cases, he's done it to try to get HUD money.

Anyway, looking back at this almost 5 year old thread, it seems like my view point is more solidified. Not enough housing has been built. The housing that has been built has been 'luxury' units, and the rents and sale prices have been marching upwards and upwards to a very unsustainable point.

2013 was the last good year to buy a home down here. I'm kicking myself.
Tbh, I was thinking with the rent moratorium extended yet again, I'm not sure we're out of the woods yet. I saw an article stating that like 20% of renters had missed their rent payments in February. That's just scary. Once that moratorium goes away, a lot of people are going to be in a pickle. I'm wondering what that's going to look like. Don't know how long they can keep kicking that can down the road.
 

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Economics is definitely not my forte. How we can be having a housing boom right now in what most people consider a recession makes you scratch your head. My house's value has gone up 15-20% in two years. The interest rates have dropped SIGNIFICANTLY. Makes you nervous, but how can you NOT take advantage of these rates? Likely drawing more people in to buy. There could be slew of foreclosures within the next 5 years. Could be another 2008 all over again.
In my area, we have Apple moving in (more than before), Tesla setting up, and all kinds of people emigrating from states where $80k/ year is poor and small houses cost $500k+. The average budget of home buyers here is an absurd $800k.

My house has, supposedly, doubled in value in the 10 years we've owned it ... 50% of that has been in the last 6-12 months. People are putting their houses up for sale and getting dozens of offers, many sight unseen, for much more than the original asking price.

I don't know about the rest of the country.
 

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