On this planet that we call Earth, there are only two kinds of people: owners and renters. There are various reasons for renting: young folks are typically not yet financially ready for ownership; they lack the proper credit history; and, most importantly, they have yet to accumulate the necessary wealth needed to provide a sufficient down payment. Another reason for renting, often not included, is the mobility that comes with it. It is orders of magnitude easier for renters to pick up and leave when compared to the much deeper commitment of ownership—which we call “putting down roots.”
Meanwhile, political demagogues have worked assiduously at programming the tenant population to think of themselves as victims. Their votes are easily harvested by imposing further restrictions on those wicked landlords. “Housing is a human right” has become sort of a mantra in our dystopian inner cities.
Consequently, tightening the screws on landlords compels the investor class to seek more favorable environments. Localities with strict rent and eviction controls are also burdened with severe housing shortages. The magical utopia of Berkeley, California, was perhaps the leading edge in this process. Before a court ruling mandated rent decontrol on vacant units, university students were strapped with long commutes since they couldn’t find any housing close to campus. It seems that affluent alumni held onto their rent-controlled apartments long after they moved to the suburbs. Why? To use for cheap storage or to house their teen-aged offspring. As something is made to be cheaper, it also becomes available for uses of lower value.
Going beyond local politics, in the same warped mindset as taxing unrealized capital gains and outlawing gas cooking stoves, the Bidenoids are floating the trial balloon of a national renter’s Bill of Rights. The social justice warriors are, of course, ecstatic. But there’s a catch. Using government as a weapon against rapacious, capitalistic, fat-cat landlords can only work in particularly blue, urban cores. The national situation, however, is that almost two-thirds of American households are owner-occupied. This is not a recent phenomenon, but rather a persistent reality.
Both renters and owners are subject to pretty much the same housing market conditions — it’s just that owners have much less year-to-year cost of living variability since their housing cost was set at the time of purchase. Nonetheless, supply and demand remain paramount. Demand is largely the result of local economic conditions, a.k.a. job creation. Supply is both the result of new construction and proper maintenance of existing structures. A builder once told me that the U.S. loses about a million housing units per year, due to fire, termites, obsolescence, and other forms of depreciation. During the ’08 recession, we were building at significantly less than the replacement rate, which inevitably led to a housing shortage.
Other factors have also contributed to the expense and difficulty of locating places for us to live. Hereabouts in Oakland, CA, the up-front costs for planning and permitting tend to run about $50,000 for building a new single-family residence (SFR). Add to this the price of a vacant lot. And then the building has to be designed and actually constructed. Also, most of the desirable vacant lots have already been built on, so what is left (a.k.a. tertiary sites) are more expensive and less appealing. As a way of compensation, builders are looking for functionally obsolete structures in decent locations — to tear down and replace, often with multi-unit buildings. Then there’s the construction of accessory dwelling units (ADUs) as a less conspicuous way of in-filling. These were a big deal during WW2, when many new residents arrived for war-related occupations.
It is quite unlikely that today’s Congress would buy into nationalized rent and eviction control… let alone would today’s Supreme Court uphold its legality. The corporate news media, however, is already starting to liken the Renter’s Bill of Rights to Lincoln’s Emancipation Proclamation. There is also a fair amount of guilty middle class leftist homeowners who are prone to be sympathetic to such nonsense.
Bottom line: The enemies of prosperous civilization are compelled to oversimplify the real problems we face. Rather than resolution, the problems become exacerbated.
Image: Free image, Pixabay license, no attribution required.