"You still need to build new housing now to have old housing later." I've been saying this for soooo long so thank you. Tired of seeing new developments in my city (Hamilton) continually getting scraped or reworked because they don't have enough "affordable" units.
Just looking around my area shows this. We have loads of “luxury apartments” from the 80’s which are essentially just normal apartments by today’s standards.
A good halfway solution is to allow more density _on the condition_ that part of it includes below-market units. The developers keep the same profit margin, and now more lower-income families can live there too.
@@HowlingWolf518 That's not a halfway solution, that's literally what he's saying. Between housing and no housing at all, there is an obvious answer. From there, you can debate wether you want a portion to be below-market units, but that means you already go further than the previous ordeal.
@@dzello No, OP and the video are saying we need any kind of housing now, because that means affordable housing a lot later. The problem is that many people don't have the luxury of "a lot later." _I'm_ saying there's a third option: add slightly more density on top of the existing density, or drop costly regulations like mandatory parking, and then that extra profit can go to adding the subsidized units we want. We in Vancouver call that MIRHPP.
Thank you, thank you, thank you for making this video! This hits all of the points that I've been arguing about for awhile. There is nothing more frustrating than an uninformed twitter housing thread. Also another thing to mention to combat the "evil investors" mentality is that often when new housing is built in quantity the housing market becomes less appealing to invest in because its more stable from the availability of new units at market rate. So the solution is literally always to build new housing!
On my local city subreddit, it's unbelievably awful. So many people there massively complain about our housing and accessibility issues, but immediately downvote any attempt or discussion to resolve them. I got banned from there for trying to, in good faith, discuss a real need to revitalize neighborhoods around the city to limit out-of-city access and focus on hub style development. The car-brains are sure strong in my area 🙃
@@موسى_7 I'm in favor of microstates. Competition creates a race to the bottom, where costs to the consumer are concerned, and to the top, where benefits are. With enough competition, it shouldn't matter what the governmental structure looks like. It's also why I'm in favor of a weaker federal government and stronger states rights.
@@S_Roach your idea only works if you limit capital flows and migration. In the real world, small states are competing to the bottom on taxes, leaving them no money left for services. You can just look at what has happened in Europe and the tax competition there. A lack of coordination and cooperation between states favours the most mobile actors, which are undoubtedly the rich.
@@موسى_7 it's not really a problem of democracy, just a problem of how our current democratic systems work. The solution to these "tragedy if the commons" style problems is, as always: a federalized system that allows bad local decisions to be overridden by the greater community when necessary, preferably elected with a proportional voting system.
Restrictive municipal zoning is a huge problem because it distorts everything. For the private market it leads to escalating prices through competition resulting in higher and higher bids. For affordable non-profit seeking models give you longer and longer waitlists. Zoning needs to be adjusted in a significant manner to actually produce some competition and let supply expand towards demand. One of the least intrusive methods would be to turn most commercial zoning into mixed use. Residential on top, commercial on the bottom. Why not let fancy business towers have some floors of high-end residential on top? Why not let malls and strip malls throw residential units above it?
I was actually really happy earlier this year to find out that California eliminated Single Family Home zoning statewide for this very reason. Hopefully, I start to see lots more townhomes, condos, and apartments being built in my area soon as a result. I like your proposal as well for making commercial mixed use. Seems like a no brainer to me honestly.
@@MrEdHasibuan1996 Yeah, because they have a similar problem of low density, the Americas need middle density in the short term because it allows cities to become dense enough. Europe’s problem comes from too many people moving away from the small villages and towards cities. The Americas currently are running into the opposite problem of people running towards suburbs, the middle density in cities would give a nice middle ground before the European problem.
The idea of co-locating high-density residential with malls and other existing retail developments makes great sense. Why am I stuck thinking that very fact will doom the idea...? 🤔 🙄 🤦🏼♂️
As always the elephant in the room is zoning laws and local governments' unwillingness to increase supply. However, I feel like if the market share of owner-occupied housing is falling, that's a problem worth addressing too. A blanket ban on corporate ownership has a lot of obvious issues that most proponents aren't engaging with, but REITS purchasing affordable housing stock and raising rents without improving the units is a documented phenomenon across Canada. A potential mitigation policy to address that issue could come in the form of right-of-first-refusal laws for tenants--what's your take on right-of-first-refusal laws?
Owner occupied or not isn't really the mater for single family homes. Those other units would be rented out or get sold to other user after sometime. Still a big problem in North America and Australia is that not enough purpose build rentals are getting. Buidlings that suit renters. Even more often unit with 2 or 3 bedrooms are missing that fit in between a small apparent and a normal single family home. A huge portion of social housing got destroyed since the 1950s and 1960s.
A whole lot of those units are being rented out alright, but not to regular tenants, but as full-time AirBnB-type rentals - for a much higher rate per month than they'd get renting to a resident. They get the best of both worlds - all the rental income without either the responsibilities of a landlord to their tenants, or dealing with hotel taxes and regulations. This also drives housing prices up in the surrounding area and gentrification.
@@OhTheUrbanity look at any city that's a major tourist destination - San Francisco, New Orleans, Barcelona, etc. - and you'll see entire blocks emptied of residents in favor of unregulated & illegal "AirBnB" hotels.
And it creates issues for remaining resident-owners and long-term tenants. Short term rentals attract problems with parties, noise etc. In a building with a mix of long-term residents (owners and/or tenants) and short terms, it severely negatively impacts quality of life and property values.
I wouldn't say it's a "whole lot", but it is an issue. I own/occupy a duplex. The other flat is rented out on a one year lease to long term tenants. For a while I was thinking of converting the half-finished attic into a short term rental. But I decided against it: - It would take a lot of money to both convert the attic and bring it and its entry up to code. - I would have to fully furnish it, and do (or pay for) the routine household chores. - I'd also have to do (or pay for) cleaning between every renter. - My long term tenants help with yard maintenance and snow removal. Short term tenants won't do that. - Short term tenants have no emotional investment in keeping the place nice. For me, the expense and effort just aren't worth it. And I'm betting a lot of other micro-landlords end up feeling the same way.
@@lizcademy4809 this is you, a human-sized property-owner who actually lives there & has more than a short-term financial interest in the property & everything in & around it. I"m fortunate enough to have a similar landlord. You, & my landlord, & all the other nice people who rent out one or a few units, do not represent what an increasing plurality, if not majority, of tenants (especially in major cities) have to deal with. The downsides you list about converting your attic into a short-term rental are completely irrelevant to corporations with the capital to buy entire city blocks and no interest other than converting that capital into even more profit.
What a great video! I live in new rental apartment housing and yes it does cost almost $2000 a month for 2 bedrooms 2 baths but this is Victoria BC where there is not enough supply and there is high demand. I’m also in an outer suburb not downtown or anything. Recently an article came out that greater Victoria has the lowest fertility rate in all of Canada at 0.95 - not surprising in the least when you consider economic factors here. Affordability is an issue with everything but especially housing, and with a growing shortage of family doctors no less…
Another aspect of super expensive cities like Victoria is that the locals cannot afford to work at entry level service jobs meaning we have to import workers from overseas.
Good video. Only point I would like to make is there most definitely a percentage of renters who would love to buy but just cannot compete with investors/multiple property owners. Conversely of course there are some renters who are by choice and will remain renters no matter what. I would love to know what percentage falls into each category.
Yeah, plus there are plenty of renters who simply aren't in a stage of life to be buying yet. Students are the most obvious example. Ain't nobody buying a home while in uni, not only because lack of money and credit history, but also lack of certainty of what you're gonna do and where you're gonna live long-term.
Renting from private landlords shouldn’t be the only option available to people that don’t want to buy. That group could be better served by housing cooperatives or social housing.
Yeah, that segment was practically a strawman argument. Pretty rare that someone wants to ban anyone from owning more than one home. But it is ridiculous that we let wealthier people push poor people out of the buying market so they can profit off of them. And the "OMG, what if someone wants to move after a few years?!" argument is bizarre. They can either sell their place or rent it out just like the big corporations.
@@richardlinares6314 Selling a home is much more difficult than ending a lease. The general rule is that renting is a better financial deal if you live in a house for less than five years. Realtors, closing costs, etc. really add up. And while the market is hot in big Canadian metros right now, some markets are slower -- a few years back, I saw houses sit on the market for over a year. That's a risk anyone buying a house takes, and it's a bigger risk the shorter you intend to live in a specific property. th-cam.com/video/ChSpkZ0jVxc/w-d-xo.html
Shift the portion of property tax to tax land more than what's on it. The idea is to keep the overall revenue the same, but it means underdeveloped lots pay more taxes and more developed pay mostly based on the value of the land. One of the big problems is empty or under utilized lots. Run down tiny house on a big piece of prime real estate? Currently they pay next to no taxes. Housing complex squeezed in an odd shape lot? They pay lots of taxes. You don't need to go full on land value tax, but the mix needs to be better. We need to encourage people with valuable land to actually develop it where the market demand is there, rather than wait for a the land value to go up. As for hording rental units, the problem is often that the units being horded end up being airbnb's. If you want your town to have more places for tourists to stay build for it. When it comes out of current housing stock it's a problem.
The problem isn't expensive housing. The problem is when expensive housing is almost all that is build over a long time. A 120 m² appartment will never be a thing for the childless minimum wage earner. Same for the suburban desert with buy-only houses etc. Such a think also results in splitted classes, which causes a lot of problems through the politics/policy line. That it is also very damaging to the environment doesn't make it better.
Yes, and there’s a big difference between a “luxury” apartment and a mcmansion, only one of those is versatile in the long run and will eventually become more affordable.
but the thing is huge amounts of luxury apartments aren't luxury. This depends where you live but most 'luxury' apartments in the UK certainly are just apartments (well flats) with modern furnishing and are as small. It's just people call them luxury apartments because they assume everything new is 'luxury' cause they've not re-done their kitchen in 25 years. Developers call them luxury apartments cause you can't justify your extortionate prices and small apartments by calling them 'average apartments'. I've seen people call bog standard student flats 'luxury student flats' because so many people have just this idea new = luxury when actually new = massive land cost and constrained supply in the market and as such high rents.
120 is pretty big for a single or a couple but nobody would complain if they could afford anything around 100 m². Too many apartments though are built for the wealthy and the worker class cant afford the city apartments at 3000-3500 dollars per month.
I love this analysis, thank you! While I largely agree with you on the necessity of new home/apartment construction, I have a specific argument against point #1. Whether #1 helps or hurts housing prices really comes down to whether you're building new housing supply on vacant/under-utilized land, or on land with existing housing stock. When older apartment buildings are demolished to make way for new high end condos, the new supply displaces the old, rather than adding to it. In most big cities facing housing shortages, there really is a need for new housing supply. However, these are the very same cities which tend to demolish old apartments in favor of new luxury condos. This is partially due to a lack of available land. But one of the other big reasons is that many cities facing high housing prices have protectionist zoning policies for single family housing. This means that areas that already align with city plans for high density - AKA places where there are old mixed use and apartment buildings - disproportionally get the shiny new luxury condos. Cities like Toronto and Vancouver have a higher percentage of their land zoned for single family residential than mid-tier cities like Edmonton, Ottawa, Winnipeg, and Calgary, which are all much more affordable cities; although this is no longer true in Vancouver as of 2018, as they dropped single family housing classification altogether to allow multi-unit developments on all lots, with some restrictions. This might be one of the reasons Vancouver's housing market has stopped rising as rapidly as Toronto's. This difference in single family zoning rates is insane when you think about it! New Zealand also is facing high housing prices, and they recently banned single family housing classifications in 5 major cities.
I have the exact same argument you have against point #1! I totally agree, that new market-rate housing is bad for the issues of gentrification and displacement. Take for example Regent Park in Toronto. They demolished the entire social housing community displacing existing home owners, which are then replaced by middle to upper-middle-class residents. Although the demolished social housing units were replaced, they were never increased and now you have an imbalance in a historic low-income community where they get outvoted by a much larger, wealthier, and political savvy middle class.
I still think that people shouldn't be allowed to own too many houses. It's more of a social issue than a housing issue at the moment. More than 50% of housing is owned by less than 5% of households in major cities of France, including Paris. It makes it very unfair because they hoards properties and block people from buying. Buying in Paris isn't a possibility except if you're rich. Even my middle-class friends can't afford to buy in Paris. It's literally a new kind of nobility who just inherits hundreds of apartments. A lot of people rent because they don't have any other choice, and that's unfair. I'm not against renting, but we're in a situation where we are forced to rent by wealthy hoarders who own most of our cities, it's clearly unfair. They also get a much greater power over housing pricing since they own so many of them. I just want their properties to be more equally shared among people.
We care a lot about affordability, and we absolutely think homeownership should be attainable. We just see restrictions on private rentals as having a lot of unintended consequences. Let's say I'm a renter in Paris and the government forces my landlord to sell my apartment. Am I in a place in my life where buying makes sense? Do I have enough money to buy it, including the down-payment? If the answer is "no" to either of those questions, the policy amounts to me being evicted!
@@OhTheUrbanity Of course, but when I see that my friends who are engineers and earn a lot can't buy their own flats, I know there's something wrong. A lot of people in Paris are rich enough to buy in a normal city but they can't in Paris, so instead they buy outside of town and become landlords of suburbs while not being owners of their own homes. I do agree with you, but renting and buying should be options, not forced. And those 5% people owning more than half of the housing are clearly a problem. Edit : we also have rentals being sold as "already rented", so people don't get technically evicted. The lease is still valid, even after selling. But I'm not sure about the details and I should look into it.
I love your channel, but would like to say that I think income inequality and lowering rates of owner-occupied homes is not a good combo. If landlords control too much of the supply of housing, they can increase rents when wages are increasing. Having a certain percentage of of housing regulated to be owner-occupied can be a good way of reducing landlord power. Edit: to be clear, that’s not our current problem by a long shot, but has the potential to be one in the future.
The problem would solve it's self, if they charge to much they will end up with to many empty units while getting undercut by other landlords. So long as construction is allowed to continue this scenario should never happen and people would leave the city if rents became to high such as the video said occurred in southern Ontario. Also I think most people tend to under estimate how expensive that would be to do what you fear in a major city like maybe a government could do it but I don't think any corporation could.
@@canales9178 ever heard of the prisoner's dilemma? With consolidation being so high, it gets more and more easy for corporations and individuals to accomplish the win-win scenario. At some point, the heightened revenue they receive from established payers can be more than what they lose from vacant lots. It's why income inequality is such an important issue (and becoming more and more in the future).
In Switzerland most of the people rent instead of buying, but I wouldn’t say that this is a country with a lot of income inequality or a bad country to live in, quite the contrary actually.
*furlough and put off the affordability problem. affordablity can never be a focus so long as housing is seen as a way to enter into the relationship known as landlordism. "Landlords’ right has its origin in robbery. The landlords, like all other men, love to reap where they never sowed, and demand a rent even for the natural produce of the earth." Adam Smith
I've never really gotten how, after decades of life so many people manage to avoid the basics of how markets work. When food prices go up they get annoyed at the "greedy supermarket owner" and when there is a blind bidding war on a condo they say "ban blind bidding", it just seems like human instinct is really bad at grasping things with supply side solutions.
Heya from southern hemisphere Canada. Southern-hemisphere Vancouver Island...? Anyways, where most cities' median house prices are over $1 million, our most expensive city is the world's 2nd most expensive city, and our urban design is pretty awful with sprawls (yes plural) the size of Tokyo, average houses in very land-wasteful forms (making them the largest in the world), backwards concepts and NIMBYs galore, happiness in decline for the last 9 years (hmm, since the current conservative government got in), declining into a country on the corruption watch list and dodgy free press, being the biggest laggard on climate when we literally have the most and easiest opportunity on the planet to be a renewable superpower, and... and... moreeeee
@@jonathanwilkinson4299 I'm an immigrant, and I have built and helped build several houses. That's the issue with blaming immigration. There is a labour shortage in construction, and we could be bringing in immigrants who actually help build new supply. Scott Aitchison actually is running for the conservatives right now on tweaking immigration policy in that way.
@@PaigeMTL Conservatives love immigration because it lowers wages. We don't have a labor shortage. People have just given up. There is no point in trying anymore cause homeownership is a fantasy at this point. I would prefer to change zoning laws rather than importing cheap foreign labor. Also banning foreigners from owning property except for ones with permanent residency could help. Or it would have a few years ago. Also to be clear I am against anything that would increase the population (within reason) Like if birth rates were rising that would be bad for the housing market in like 20 years. I look at Japan and they have very affordable housing because they have great zoning laws a shrinking population and they aren't bringing in new people. Even in Japan's biggest city property is attainable for average working people. You can't say that about Toronto or Vancouver. Unless you work in STEM. Anyways. I know this can be a touchy subject. But in general with supply and demand increasing the population in any way reduces wages and increases housing prices. I mean you could just look at the labor shortage in construction or pretty much anything. All you have to do is increase wages and advertise and those jobs would be filled without the need for immigration.
My biggest beef with all this is rich investors buying houses or apartments speculatively and leaving them empty as 2nd or 3rd homes. There should be a hefty tax on empty properties.
And there is in Vancouver! It helps, but as you can tell, it is not nearly enough, and most units were occupied anyway, so building more housing is worthwhile regardless.
But it just doens't happen. You are conflating two separate issues. People who have enough money to buy property speculatively also tend to know if you don't rent that property out you are leaving huge wads of cash on the table. It would make you a really bad investor not renting out a property in Vancouver or London or NY where the rents are so ridiculously high. Also literally just sitting and doing nothing is really expensive. There are bills, taxes and loan interest to pay. That way bankruptcy and receivership lies. These houses are almost entirely non-existent for that reason. Second homes are rich people owning more than one property. It's not in use but it's also not occupied constantly. They ned heavy taxes the are a very minor prolem to solve in a city.but
Renters matter. Too true, tenants are human too (shocking revelation, I know). I don't know about the laws in Canada but here in Australia people in rentals usually only have short term leases (12 months maximum and often only 3 months at a time). There's also so many rules to stop you hanging something on the wall etc that its really hard to make a rental a home- of course on the flip side there are a minority of renters who trash properties and/or don't pay their rent (which could be because they can't afford it). The balance is definitely off between tenants and landlords which only compounds issues- I suspect this is likely the case in a lot of places, not just Australia.
I heard horror stories from both sides. I have friends whose few rental properties are routinely/consistently trashed (the damage deposit doesn't even begin to cover it often), or deal with non-payment etc (which often accompanies the trashing of the property). We have Residential Tenancies here that's a government board that deals with disputes, but most rules skew in favour of the tenant. People argue that real estate is an investment and inherently has risk, so there should be no help to landlords. Evicting people goes thru RT board and can take months. I also have friends that are renters that have had horrible landlords, not making basic repairs, not following rules and generally making their lives miserable. They basically force the tenant to go through the RT board, which is a slow process for them too. Most landlords need references (see paragraph above about why), so if you have a dispute with a crummy landlord and they give you no/poor reference, it can be hard to move on to a new place even if you're a good tenant. It's a terrible system..
@@jolenethiessen357 I could have used a reference for my land Lord and I wish that was a regular thing. They are a multi-property owner, I honestly don't know how many but maybe 4+ house all multi-unit? My apartment is in the house they first inherited from their grandparents 20+ years ago and the 1.5 story home has been split into 3 units. There is absolutely no pride in this house now if there ever was. And maybe 5 years ago they hired a property manager to do all of the hands on work, and created a property management account on some website to handle all the finance so I literally never speak to the true land Lord or even interact with them directly to pay. The property manager also does all of the tours for new tenants... So it's hard not to be mad that he got this house for nothing, doesnt work on it, doesn't maintain it, doesn't even cash my cheques but can "defer" my request for a new window screen.
A little pushback on this idea that landlords are fine because they provide housing to renters: I think we can say that landlords provide a needed service, so we shouldn't ban them, and still be willing to examine incentives and talk about if we think the levels are helpful. (should all houses be owned by landlords? none? ok, so let's talk about what percent is good) If a property is bought by an someone who wants to live there instead of an investor (landlord), you may have one less rental property, but you also have one less person needing to rent. In my area, it's absolutely true that investors get incentives like tax breaks that people looking for a home to live in don't get. This drives up prices. It's worth asking how much we should encourage profiting on a basic need. How would we feel if drinking water went up 100-200%, a third of your income, because it's a great profit opportunity?
What you're talking about is a byproduct of lack of housing availability in the area. Investors buying housing don't affect the market any more than someone buying for personal use. Indeed, investors have to be more leery of overspending, as unlike your primary residence, any rental investment must be inexpensive enough to ensure you can make a profit, while also taking into account periods when it may be empty, and the myriad costs involved. And there's always the threat of market corrections and other events that could damage such an investment. The reality is, for your personal home, you can justify any amount of costs, so long as you can literally afford it. Mortgage underwater? No problem, so long as you can afford the payments. Many Toronto homebuyers pre-1987 took a bath after that correction knocked back home prices, which didn't recover 1987 levels until we were well into the new century. But so long as you can make your payments.
Hi James. I see what you are saying, and while I agree supply is part of the issue (particularly supply within a reasonable commute of where people work). I don't think it tells the whole story. I can't agree with your statement about investors not affecting the market. With a limited supply, and an additional buyer with access to more capital and a motivation to outbid, prices are going to go up. In my area investors have access to many tax incentives that aren't available to owner/occupiers, that more than make up for landlord costs. This leads to potential homeowners bidding the maximum any bank would lend them, and usually being outbid by investors. This is more common at the cheaper end of the market, where first home buyers want to buy. With an understandable profit motive, and a financial head start, investor participation has increased a lot, and driven up prices way beyond wage growth or even the cost of supply. It seems like more supply would help this, but I feel like this would also provide more opportunities for profit. If the market is profitable, why wouldn't an investor keep investing to their financial limit? In my area, the financial incentives have been misdirected from the original goal of providing capital to increase supply, and become a pollical football where too many voters are locked in to a specific financial advantage. Again, I agree increased medium/mixed density would help, and I agree landlords provide a worthwhile service. I also think it's worthwhile examining what incentives are in place, and asking ourselves if they meet the community's goals. Do we want more of this activity? Less? In my area, the incentives have long gone beyond being targeted towards outcomes, and just become a pork barrel. I'd like to see the incentives reduced, to the point that some investors leave the market for more profit elsewhere, but not all of them. I understand why a lot of landlords don't like to hear that.
Please make a myth debunking playlist, y'all! You have so many great video essays like this one and the piece on rethinking suburban traffic. Thank you!
One other myths: one is the idea that investor-owned units are being kept empty. This is a pervasive myth and has only ever happened a few times in London and in at least one of those cases, the building was unlivable anyways.
Possibly missing from your last point, I think many of the people making the argument that there are too many non-owner-occupied units might be scared that the units are simply vacant instead of being rented, which would be a detriment to both the buyable supply and the rental supply.
That's a concern many people have, yeah. But the evidence points to vacant investment properties being a few percentage points of the housing stock at best: th-cam.com/video/evYOhpjMql0/w-d-xo.html Even if it was some unrealistically high number like 30%, building more housing is still better than building less. We don't have any strong objections to vacancy taxes though. They seem to have a small but real effect.
People worry about this, but the worry is overblown and doesn't make a whole lot of sense. If you invest in a property, you make substantially less money on it if you aren't renting it out. There's no real incentive to just buy it and leave it vacant unless you're a criminal who is just laundering money. Vancouver introduced a vacancy tax a few years ago to combat these fears of numerous vacant units, and it did almost nothing. The reason is that the vast majority of vacant units are only temporarily vacant, and for a good reason (e.g. they're between rentals, the owner has died, they are being renovated, they're being sold, etc.), not just because some corporation who don't know how money works bought them and did nothing with them.
it is honestly a plain dumb argument. It is just another "supply and demand doesn't apply to housing" argument. If rent prices are so damn high, then why would any moron let it sit vacant provided the demand? I mean rent prices wouldn't even be high without the demand in the first place.
@@krombopulos_michael tax right offs and loans come to mind as reasons to own a lot even if they aren't all full. AirBnB seems to be ignored in the video as it is becoming a problem in cities. People can more in a few days a week than actually renting it for a tenant for a 1-12 months.
@@lopoa126 OtU has addressed ABnB in a few comments for this video, their stance is that while our concerns are valid, ABnB isn't a significant enough problem to warrant worry as of now. My problem is that it will become a significant enough problem in the long term for the reasons you mention if they aren't addressed now. I don't think OtU is being deliberately obtuse or willfully ignorant as far as ABnB is concerned, and I do believe that if we are serious about mixed-use housing, and not just saying 'there should be a mix of housing options' when we really mean 'there should be more of my preferred use of housing', the kind of short-term rental program offered by services like ABnB should be allowed, but we need to have a conversation on how to navigate this field in the same way that we don't allow developers to develop exclusively luxury housing.
Good call making this video. A lot of people get lost in the sauce and go down rabbit holes that end up hurting more than helping. It's good for them to hear the people they look up to tackle the details and set them back on the right track.
Your ThinkPad analogy is flawed. A luxury laptop will lose 80% of its value over three years, which makes the still-usable device an affordable choice for price-conscious users. Those luxury homes are NOT going to lose 80% of their value---ever. In fact, historically they will increase in price faster than inflation. This will make them even more unaffordable in the future than they are now to the majority of would-be purchasers. There may be some benefit to having a healthy supply of upscale homes if it dissuades some upper-middle class buyers from gentrifying older homes/neighborhoods, but otherwise it doesn't help the affordability crisis.
We made an analogy to demonstrate the concept. We're obviously not suggesting that the timescales or numbers are the same. What's the same is the basic idea that restricting new supply (1) immediately increases demand for older units and (2) gradually decreases supply of them, which is bad.
"Buy a used thinkpad!" Computers (and cars) aren't cheap simply because a lot of them are made, but because they constantly depreciate in value due to short product lifespans, and have a constant improvements in performance. Homes aren't built like that. There is no Moores Law of housing, and older homes and flats are often just as well built (and larger) than modern ones. So that wasn't a great example.
The time-frames are different but it is most definitely the case that buildings depreciate. If you wanted to point out a difference you'd have been better off noting that housing has land, although that doesn't change the basic fact: banning or restricting new products drives up the price of old products. www.theatlantic.com/ideas/archive/2022/01/stop-fetishizing-old-homes-new-construction-nice/621012/
Also you didn’t have to destroy an old laptop to build a new. In vancouver we are absolutely tearing down affordable stock to build McMansions and tiny, luxury condos. And yes, even with the empty homes tax, many of them still sit empty years later. All the empty homes tax did was introduce the idea of having your kids each ‘live’ in one of your ‘homes’
I’m a current renter whose building was bought by an investor who has applied to demolish our building and build something bigger. Now us current tenants will be kicked out and have to find a new place to live until the new building is ready. It seems like investors and government don’t care about what happens to tenants who have to leave the demolished buildings to make way for the new ones.
what do you want the government and investors to do? they own the property and will be increasing rental supply with the new development. by not redeveloping the building they will limit supply and keep rents high.
@@TheTroyc1982 according to my Google search they’re building condos where I currently live not rentals, the only rental units mentioned are the ones that will replace ours. At least they say we’ll be permitted to live in the new place if/when it’s built. At this point we have no guaranteed place to live if the demolition is approved and I don’t think new landlords will look at us favourably in our competitive city. People in my area are starting to choose medically assisted suicide since they can’t find an affordable place to live. The government and tax payers pay for this suicide under our public healthcare. Is that really our best offer?? I checked for my own case and we’re not eligible for any support since we have savings. Government support is only for those who are already in severe poverty or homeless, and the support those people get seems to not be enough for many. I guess I wish for preventative measures around homelessness and regulation of landlords/rentals.
My biggest issue with property hoarders is that an owner occupied unit can become a rental, but a rental rarely becomes an owner occupied unit. I like the law that Massachusetts has for their trailer parks. If a trailer park wants to sell to a new owner, then the current tenants get right of first refusal. They still have to pay market value, but they at least have a chance to turn rental units into owner occupied! Personally, I’d jump at the chance to purchase my current apartment as part of a condo HOA!
That's an interesting point, because for a lot of renters it's the opposite - they live in a rented-out condo and they worry about the possibility of getting evicted when the unit is sold and the new owner might want to move in (and for whatever reason it's not practical or desirable for them to buy the unit themselves). It's why many people prefer purpose-built rental buildings where there's no worry about the rental unit being lost to the buying market.
@@OhTheUrbanity I guess different regions have different concerns cause I’ve rarely heard that sentiment around here. Regardless, I think that more options is rarely a bad thing so that’s why I’m all for it. Will it get used every time? No, but I’m sure there will be the occasional instances when it is and I’m into that.
Property investors provide liquidity to the market which is essential for property developers to keep up. Landlords buying housing to convert to rental doesn't just drive up prices for people who want to own. It drives down rents for those who want to rent. There's a real equilibrium there, where if prices for ownership become too high and rents get too low, it makes most sense for the landlord to sell their units.
One huge problem in San Francisco is that so many of the new market-rate condo developments were built on ground that once held an equivalent amount of housing, that was *rent controlled* and thus was lived in by lower-income families often for decades, before being shoved out. In many cases, the amount of housing wasn't increased at all - only the price. And of course this leads to increases in property values in the surrounding area making it even more expensive to build the next thing - and so on and so on.
I strongly suspect that if they went through the cost of tearing down an old building and constructing a new building they would have liked to add more units but weren't allowed by the zoning or politics of famously anti-housing San Francisco. This should be a great opportunity to build taller with many more units so that previous tenants can return with the same rent and lots more people can live there too.
@@OhTheUrbanity nobody among the groups I've been following in San Francisco is "anti-housing", we're just anti-gentrification. Nobody objects to more units or even more floors. And the developers _don't want_ the previous tenants or anyone else paying those same rents, the _only_ want market-rate, and begrudge every single unit they're forced to provide at below market rate & do everything they can to get out of it.
@@OhTheUrbanity the rich in this city _don't want_ working class people living here _at all_ and they say so, in so many words, all the time. "If you make less than $x/year you shouldn't live in San Francisco" they say. Gentrification and displacement is _the goal_ for them.
@@dwc1964 You say that nobody objects to more floors, but it's famously difficult to build new housing there. Our video cited a study showing abnormally low permitting rates (although I believe that covered the Bay Area as a whole). For one random example, SF rejected a 495-unit building with 73 affordable units, "citing concerns about gentrification, shadows and seismic safety". And this was to be built on a parking lot! www.planetizen.com/news/2021/11/115376-san-francisco-supes-reject-proposal-turn-parking-lot-housing
when people complain about new housing for the rich, its not because they dont think the rich should have housing, its because they dont think the rich should be rich while others are poor. people complain about wealthy ppls housing because its the most obvious sign of income inequality. i feel its disengenuous to ignore that and act like ppl are just misunderstanding housing supply when really they're making a much broader point about class.
Victoria is still suffering the effects of the CMHC policies of the 70s and 80s that subsidized home ownership and penalized owning rentals. It wasn't profitable to build new rental properties and it was extremely expensive to buy or sell existing rental properties. The result: almost all new multi-unit construction was owner-occupied condos, existing rental buildings were converted to condos, and rental stock crashed. The rental vacancy rate has routinely been below 1% for decades.
You should talk about REITs and their role in Canada's housing crisis. I would love to always be a renter, but it doesn't make sense when a few companies own the majority of rentals and can just jack up the rent. Similarly, there's the concept of "the housing ladder". Houses appreciate in value so fast that it often doesn't make sense to move around the country trying to get better jobs and more work experience. It makes more sense to just stay put, get on the housing ladder and then diversify your real estate portfolio by leveraging your home equity and buying more homes. I'm a strong proponent of supply-side policy and I love the arguments you have presented. I do think that there is some truth to the demand-side/monetary policy arguments as well.
I think the point about dismissing the affordability concerns of new housing is overstated. While yes, market rate housing units do tend to lower overall costs within a broader region, that does not necessarily lead to what we really want to see, which is housing affordability for residents and avoiding economic displacement. You give Atlanta as an example of high growth, high build but it's worth noting that Atlanta particularly stands out not for dense urban construction (though that does exist here), but in detached single family home construction enabled by the city's geography. And this isn't really as helpful. Atlanta has some of the highest segregation of people by income (and for related reasons by race). This can limit access to economic opportunities for lower income and less specialized skill individuals. Think about it this way, lower income jobs serving high income people will tend to make more than lower income jobs serving other low income individuals. So when new housing construction does not have things like rent control (something made illegal on the state level in Georgia) or affordability requirements, this increases income segregation. Therefore it can make overall affordability actually worse not because of higher housing costs, but by lower incomes for poor residents. We see this play out looking at Atlanta's economic inclusivity and share of people who are rent-burdened. See here: apps.urban.org/features/inclusion/index.html?city=atlanta_GA and compare this to high housing cost cities like San Francisco or New York. Those cities do have affordability problems but New York's share of rent burdened residents isn't much different than Atlanta and San Francisco's is substantially LOWER. Even looking at where many low income residents of SF have been pushed to, Oakland, the difference in rent burdened shares is not substantial. Furthermore, high single family home construction comes with the usual problems of the growth ponzi scheme Strong Towns talks about (too much infrastructure cost per housing unit) and environmental costs as this type of construction leads to car dependent neighborhoods with higher power needs leading to higher carbon emissions. Furthermore, because Atlanta is a sprawling metro the high construction levels primarily serving middle to upper income people further out from the city center can harm tax revenues that maintain infrastructure in poorer areas, further discouraging middle-to-high income people from living more mixed in with poorer folks, worsening the economic situation of poor people and making them more rent burdened even with low rent rises due to even lower income rises. None of this supports NIMBYism of course and part of Atlanta's problem is still the pervasive single family zoned areas of the city that ought to be changed. Indeed given the externality issues of single family homes, good policy may not simply just allow higher density construction but need to create some added penalty to single family construction in order to make sure those seeking that style of housing pay the real cost of their lifestyle. So what the city does highlight is that not all new construction is created equal and that simply looking at housing prices can miss the importance that mixed low and high income can have on lower income resident's opportunities. Finally, I do want to mention that while you are correct that some people really do benefit from rental arrangements that make mobility easier, that's not all or really even most renters. Geographic mobility tends to benefit people with specialized skills sets with frequent changes in jobs and locations willing to pay the highest incomes. This can overcome the disadvantage to wealth retention that comes when a rent gets 0% of the equity their rent creates. For people where wage differentials between areas do not justify frequent moves, or just folks who prefer to not having to abandon and rebuild social circles on a regular basis, market rate rents are a hindrance to long term wealth building. An owner putting part of their housing costs into a mortgage principle or even improvements/maintenance that increases the home value is effectively engaged in investment with a strong likelihood to get that back out at a later date. As with all investing this does come with the risk of loss, but even a total loss of those funds puts the owner no worse than a renter. Renters of course get none of the equity as that simply goes to the landlord. The only case where renting would be a better economic decision for these people living in the same area for the longer term then would be if rental costs were sufficiently lower vs ownership costs that a renter could use the difference with other investing options. Indeed, per this source there is not a single state in the country where, if a person plans to live in an area for 7 years or more, renting would be a better option: smartasset.com/mortgage/lender-reviews#us/7. Which is not an unreasonable time for most Americans (sorry don't know the Canadian stats) to stay in one place, especially after the relatively high movement younger years. www.census.gov/topics/population/migration/guidance/calculating-migration-expectancy.html. So while higher frequency movers can't be totally dismissed, it really does make sense for the majority of conversation to focus on people who do NOT frequently move.
"The only case where renting would be a better economic decision for these people living in the same area for the longer term then would be if rental costs were sufficiently lower vs ownership costs that a renter could use the difference with other investing options. Indeed, per this source there is not a single state in the country where, if a person plans to live in an area for 7 years or more, renting would be a better option" - didn't click, but I have to suspect that this is based on a no-rent-control situation. Because I'm here in my San Francisco Noe Valley 2br that I moved into in 1994 and the only way I'm leaving this place is feet-first... I'm still opposed to the private-ownership model for all the reasons well- and repeatedly-stated by others around here and believe that all rental housing ought to be cooperatively or municipally owned and professionally and accountably managed, but as things are, a rent-controlled apartment with a nice human landlady is a pretty optimal situation.
"Some people really do benefit from rental arrangements that make mobility easier, that's not all or really even most renters." Thank you, thank you, a million billion times thank you. I feel like this conversation is dominated by the 25-35 age demographic who find themselves moving every time a better job opportunity arises. You know, the kinds of people landlords love the most and will rent their space to over a family 95% of the time.
@@dwc1964 Public or cooperative housing is a great way to make non-individually owned housing a benefit to almost everyone. And that study is based on all Americans, the vast majority of which do not enjoy rent controlled situations. Rent control is also a way that landlord extraction can remain low enough that equity in one's home isn't necessary for personal wealth gain. But market rate rents draw money from the productive economy into, literally, the rent seeking economy and academic economists are divided on whether this even is effective at expanding supply in the real world (the econ 101 argument misses so much real world nuance it can safely be ignored).
@@somebonehead Yep, and those frequent movers are less likely to really fight for better long term maintenance (why bother, you're just going to move in a year). Or for organizing their fellow tenants to stand up against bad acts by landlords. So pressures for long term sustainable housing decreases.
@@TheScourge007 the thing that Margaret Thatcher did that caused the most long-term damage to the working class in the UK was not busting the miners' union (that's a close 2nd), but privatizing council housing with "right to buy" (and forbidding councils from using the proceeds to build more council housing!).
Private industry is like moss, it grows where you let it. Sometimes, its secondary effects can be handy, like its ability to appeal to rapidly shifting consumer tastes. The externalities of the profit motive being the sole motivation for production need no introduction. Sounds like what we need to do is introduce more low-cost social housing and set the private market out to play in the park with a short leash to fill in niches in consumer demand that aren't or can't be realized by social housing.
This is such a fantastic video. So many of us know that these are bad arguments instinctually, but you've articulated it so well that I have a section in my YIMBY note taking system with your name on it, and it's full of points you've made in videos like this. Thank you, and keep up the good work.
You had me until Myth 3. I'm not saying we should ban people from owning multiple houses, but there is a legitimate issue in, at least, North America presently with landlords gobbling up all the property and renting them at prices higher than what otherwise would be someone's mortgage. Sure, renting is more flexible, and there will always be a need for that, but there is a serious issue with property hoarding.
If rent prices are very high it is usually because there are not enough rental properties on the market. So the rental property is helping drop rents for renters.
Agreed. There’s a serious issue right now with wealthy investors gobbling up land and houses. Combined with decades of restrictive construction has led to price fixing.
Are you in the US? I suspect that part of the property hoarding problem is connected to the absurdly low interest rates that we have had for the past ten years. When borrowing money to buy rental houses is nearly free, people, businesses, and investors will see housing units as a "Buy."
@@Lucasjamespetersen Yes and no. The absurdly low interest rates in the US and the shifts in desired living arrangements during the pandemic have distorted this connection between price and availability for rental units. When mortgage rates are crazy pants low and prices are rising, people will invest in single family homes. There are at least two families I know personally who were evicted because their landlord wanted to cash out. The sale terminated their lease and the new owners wanted them out so they could renovate and rent for more money. Whenever novice investors enter an overheated market, bad outcomes tend to follow.
@@Lucasjamespetersen Lol, it is? Because all I can see it rent prices rising everywhere -- even with the new developments. We like to pretend that landlords will suddenly stop raising prices if more properties were available, but that isn't what landlords do. They'll keep raising the cost of rent every single year regardless of availability. Keep dreaming.
Exactly. What a novel idea uh? Someone in the 1700's found out that if you increase the supply of something, without changing demand the price will inevitably fall. New York is extraordinarily expensive mostly because the City Council is basically made of large apartment owners who don't want their apartment price to go down. They are literally "fixing" the market.
What are your guys' thoughts on a Land Value Tax with regards to urbanism? You guys always do a really thorough, well-researched job in all your videos, so I'd love to see what kind of content you could produce on LVT.
I think a lot of this is tied to other social issues also. I'd bet that most individual landlords aren't snapping up houses because they love the idea of being landlords, they are doing it because its a path to building wealth and creating a base that you can retire on. If we had better wages, better pensions, and other good investments most people wouldn't even want to be landlords in the first place.
And why are labdlords choosing that rather than forming a union to push up wages? Why aren't pre-landlords fighting for increases in social security? It's a Me Me Me mentality
Great video. To sum it up the solution is to build as much housing as possible. It doesn't matter what type expensive or affordable just build it. If they build too many luxury condos the price for luxury condos will drop and middle class people will move up. Then poor people will move up into the middle class homes.
If you want to add more public/social/co-op housing, we're completely with you. But I genuinely don't think that eliminating private rentals as an option is at all a good idea.
@@OhTheUrbanity I think you made your case well for that argument, it's just that you didn't address the issue from my perspective, that's all :P In the current system, any drastic change will inevitably result in jarring consequences, one way or another, so I think you're right to be wary of it. It's just that drastic changes can't be implemented in a vaccuum, I think.
Should writing comments be the job of private individuals/corporations? I’m trying to live my life by very hard rules and I need to know how things should be.
Suggestion: Do a video on how zoning most of the city for single family actually makes it harder for homebuyers interested in a single family house. There are many want-to-be homebuyers who are shocked at the competition for every house on the market. Many of them will get angry at investment firms buying and renting out houses. But the reality is that zoning most the city for single family means many people who would have rather lived in denser housing had no choice but to get a single family house. Renters that would be happy with an apartment often end up renting rooms in a house because there are so few apartments. The competition exists because there are no alternatives for those who want them.
I have a variation on the "Home hoarders = bad isn't true" thing. (From my limited understanding, feel free to correct me,) In Berlin, you have big conglomerates buying up the housing and driving up prices, instead of actual landlords who own maybe 10 flats. That makes the market uncompetitive, prices have gone up a lot. Thus, there is a movement to transfer the conglomerates into public ownership. Its the opposite extreme end of the spectrum so to say. The sweetspot should be somewhere in the middle
I'm not sure what the numbers in Berlin look like, but in theory it's certainly possible that if a small number of entities controls the market they can engage in anti-competitive behaviour.
I'm pretty hopeless because the people who benefit from the status quo don't want change, and the people who desperately need the status quo to change don't understand basic economics so they support the wrong "solutions".
Um, you are ASSUMING that rentals will be affordable, and, me, in rural BC, rentals are NOT affordable, and the homeless population continues to grow. My husband and I own our condo, and paid a bit lower than the market value was at the time. In the last 2 and a bit years, our condo has gone up 2.5 times in value from when we bought it. Rentals are allowed in our buildings, but the rent prices have gone from $600 for a 2 bed unit to $1200-$1300 a month, plus utilities. NO ONE, and I mean NO ONE, either on income assistance or working poor, can afford to rent here, and NOT be house poor. The rent prices here are slightly lower than Kamloops, the nearest big city to me. There is a chunk of land designated for low income/disabled in our town, but no one wants to touch it. The profits won't show for 10-20 years down the road. As far as "affordable" units, what exactly is that? BC Income Assistance shelter rates for a single person is $375/month. NOTHING is affordable for them, they either have to be house poor, or pool together with others and rent a space for a fixed address. The $375 includes utilities, but not internet... apparently internet is a luxury. /:
What you're describing is essentially trickle down economics - housing (and other stuff) that is currently premium and is accessible only to the wealthy will one day go down in value as the wealthy abandon it and will become affordable. I have some ethical issues with that (poorer people get rich folks' scraps), but putting pride aside, it works only in theory. Trickle down economics work well for stuff like cars and appliances because that stuff goes down in value as it's used. Housing though, being a market highly manipulated by the wealthy, does not lose value. So for premium housing to become affordable one day, we'll need to eliminate real estate market manipulation. Problem is, it's not only the rich developer firms that are manipulating housing. Bank of Canada itself is in on manipulating the inflation with interest rates. Since real estate is directly tied to the people's borrowing power, reducing interest rates makes borrowing more accessible therefore heating up the real estate, whereas higher interest rates discourage borrowing therefore cooling the market. As long as the rates are too low or too high, housing will be a mess. It can start being normal if the interest rates are in the sweet spot between too high and too low and then the real estate would actually start following the regular rules of a capitalist market. But since both the developers and the government on all levels profit from higher cost of housing (developers by upselling it, governement from higher property and building taxes), it's not in their interest to stop manipulating the market. Zoning does play a role, but right now the burning issue is manipulation. Zoning is only secondary to that and wouldn't solve anything by itself. Edit: then there's also the always burning issue of transportation - people that want to live in the city really just want easy access to the city. If they fix suburban zoning making it denser and more mixed, but fail to build in good public transit and car alternatives, people will still not want to live there and would rather live within the public transit reach.
I don't know if I agree totally, while what you're saying is important, when we look at inflation adjusted housing cost increases in Tokyo ( where house building largely kept up) vs London( where zoning new housing is hard to build) we have a 16% increase in housing prices in Tokyo as opposed to over a 400% increase in London in a 20 year time span with comparable population growth. I know this is just one case but I think you underestimate zoning's contribution, it's a the primary way local government inflates property values for wealthy homeowners. As far as transit goes I agree, however if you build density in a car dependent area, you will force that area to adopt meaningful public transit as the car dependent transportation system is overwhelmed. You also need a certain level of density to make public transit sustainable ( both from the tax side and ridership side) for a city government to break even on that investment.
@@mattbalfe2983 I mostly agree with what you say! For Tokyo vs London, I'm not sure if that would affect anything, I haven't done my research, but I knew one thing about Tokyo - it's been incredibly expensive to live in for over a decade now, and that might affect how much their prices can still grow. And with London, I've only visited, but it seems like the city by now is developer up to its boundaries? And fairly dense too, it's pretty walkable as well (although the car culture there is strong). Wouldn't that mean that the supply of their housing is fixed now, unless they demolish and build denser? That could explain their inflation. But again, no research, just piecing things I hear. And the UK economical system is similar to the North American in that it is full of speculation for rich people. As for the zoning/transit, that's where I want to tell about Montreal (where I live). Concerning zoning, housing has become unaffordable in all types of zoning. Myself I can't even afford a house in faraway rural Quebec. Now building even slightly denser housing and smaller roads could solve this problem partially, but it doesn't depend on Montreal. The vast majority of the city is grandfathered into mixed-use high density development. But most new development is being sold as "luxury", starting at $500-600k for a 1-bedroom, which is absolutely bonkers. For example, Griffintown has just recently been redeveloped into very high density housing. But the entire neighborhood was marketed for wealthy people who want to live close to work. It shot the entire area's prices waaaay up. "Luxury" housing has split the real estate market into 2 markets - peasant (affordable) and rich (luxury). The rich market is what's getting its supply, but the peasant market has a very limited supply. Even here in Montreal, the government mandates that a certain percentage of all the developments should be affordable and socialized housing, but so far the developers have been going around that. So lax zoning by itself can't solve the housing affordability crisis, unfortunately. As for the transit forcing its way into car dependent dense areas, you wish! I wish too. Research "REM de l'Est". In summary, it's a sweet light rail system being built in Montreal's South Shore, centre and West. They were gonna build a line into the severely underserved and very car dependent dense east. But the people there organized and protested it citing absolute bologne reasons (including property value, of course). They say just more buses would solve it, but no one takes buses. And even for the original REM being built, the aforementioned Griffintown has argued with the system enough for the station that was meant for them to be pushed out of the neighborhood. And it's also fairly car dependent. The only different is being close to Downtown, they also bike. So unfortunately transit doesn't follow dense development, at least not on the continent where transit has such a stigma. In my slightly totalitarian (lol) opinion, the only way to solve the housing crisis is to solve all the crises. Inflation needs to be capped, housing costs need to be capped, strict rent control, forced temporary recession. It'll cause trouble for big business, big buisiness would cause trouble to the people for a brief period, and then everything would calm down. But I have no power whatsoever and just get to voice my opinion on TH-cam lol
@@SkaN2412 I think the underlying issue is that land values get really expensive at a certain point even with good zoning, transit...etc. Instead of capping house prices I might try an LVT with UBI or something like it.
@@mattbalfe2983 UBI would definitely help in many many ways. But also, decommodification of housing for sure. It's the only tangible product that is constantly going up after purchase, makes no sense. Manipulation...
@@SkaN2412 Houses don't appreciate, a mobile home or tiny house depreciates over time. So does any building in isolation, what is needed is decommodification of land, not houses. A house alone depreciates, land is generally what is responsible for house valuation going up after purchase
Those are some good points. A couple arguments I have though is that rentals appear to be helping concentrate wealth among those that can afford to invest in them...ultimately making renters, who can tend to be less well off or younger, become less capable of finding stable housing and becoming financially stable in the long run. Short term rentals (air bnb etc.) are a good example of this too because additionally they actually do remove housing from the market. A lot of tourism heavy regions have a terrible time finding long term rentals available for residents there, where there was a sufficient amount before. Also many new-build single family homes are wayyyy bigger and more luxurious than most people need. A lot of that space and capital investment used to build those could be better off trying to get some more space- efficient and dense apartments/condos/townhouses built which would cool off the market faster and help stop eating up our farmland and forest! It's not always about what the market or wealthier home owners want. Just because they want and can afford a 6000 Sq ft home, wouldn't that be better used as 4x 1500sq ft homes for 4 families?
That's a zoning problem (and a NIMBY problem,) though. When I was a renter, I chose an area that was farther away from the neighborhood I wanted to be in because the US R1 zoning meant that my desired, walkable/bikeable neighborhood did not have any multifamily housing choices. I am fortunate enough that I own a home in my desired neighborhood now. (We paid a premium for this house and the current banana-pants market has tripled its value.) We would like to add an addition with garage space at ground level and living space above. Our ideal situation is to structure that living space to be easily converted into an accessory apartment. We can't do that without a zoning variance which will send our neighbors into a panic. I'm all for internalizing the externalities of far exurban development back onto a developer. Make them pay for the road improvements that lead to the McMansion subdivision they plan to build. Perhaps level a property tax surcharge to offset the cost of expanding rural school buildings. Even something like different base water and sewer surcharges to maintain far flung utilities makes sense to me. But attempting to manage the real estate market through discouraging large single family houses seems futile and counterproductive. Many of the retiree parents of the kids I grew up with have chosen to build absurdly large homes way out in the county. (The excuse is that they want to fit all the grandkids in at Christmas-time.) I doing so, they have sold their 2,000 sqft houses to young families. A similar phenomenon seems to exist with older folks wanting to downsize into a fancy (and still quite large) condo in a more urbanized areas. I suppose building more 2,000 sqft split level ranchers in subdivisions would have the same effect on supply, but the new houses with young families would be the ones way out in the county without any grocery stores or parks.
"A lot of tourism heavy regions have a terrible time finding long term rentals available for residents there, where there was a sufficient amount before." Too true. Landlords will almost always rent out to short-term renters before long term ones, especially if they can keep increasing the price of rent every time someone moves out.
@@somebonehead Edinburgh is a fantastic example of this. It’s a small city geographically, and already fairly densely built, so “build more houses” is not as simple to do as it is to say. But it’s a real tourist destination, especially in the summer when it hosts one of the world’s largest comedy and theatre festivals. Some landlords in the city will happily leave houses vacant for months on end because it’s so lucrative to rent during the high season that they can make far more in two months through Airbnb than they could charge in a year to a permanent tenant. The city has had to legislate to try to mitigate the problem, but there’s still a massive housing shortage because the profit incentives for landlords are strongly at odds with providing affordable housing to the city residents.
@@paddytheduke I directed OtU to your comment, let them know more about this situation. If you have any specific data about this as well, we would all love to see it.
@@HarryLovesRuth the trend seems to be for newer subdivisions to be built with HOAs that are responsible for communal infrastructure upkeep. This directs maintenance costs directly onto residents while communities keep collecting taxes, but they don't have to pay for the neighborhood infrastructure.
I disagree a little bit on Issue 3. Moving is done pretty frequent in the US or even in Canada compared to europe. Still owning and then selling the home after a few year can actually make a profit particular in time of rising housing prices. In general your argument is still valid.
Moving used to be more frequent in the US but that's slowed down over the recent decades. Most likely due to increased cost of housing (I mean, if it took more and more debt to own over the years, would you be as willing to move?). Not all times will have rising house prices either nor all places (Detroit =/= SF). And rising home prices mainly benefit those who already have homes. It actually doesn't help immigrants who come here with little to no assets or kids who grow up 20-30 years from now.
Where I live (Manitoba), there's a land title tax you have to pay every time you buy property. It can add up to tens of thousands depending on your property price. It makes you think twice about moving!
In Lisbon, there is a mindset that is 100 years old, that rents are high because of gredy landlords. So, there are policies of rent control dating from the 1910's, and discriminative laws against landlords. The 90's were also a time when the government tried to make renting even less desirable by giving cheap credit to build imense suburbs. This means that there are few landlords when compared to other european nations, and no corporations that rent houses. So, the few landlords that exist can charge what they want. The government tries to tackle this with more renting regulations or making evictions extremly hard, wich makes landlords remove their houses from the renting market, renting only to tourists that will allways pay their rent or sell them to wealthy foreigners. Imagine that you are an old person with a relativelly small pension (wich compose the majority of landlords for historical reasons in lisbon), and you have an house that you rent for extra money. Now your renter cant pay rent, you cant evict him, but you still have to pay for the house (and all the taxes/costs related to it), wich could be ruinous for the landlord. So people just dont rent to people that migth lose the ability to pay rent, this includes most nationals. The government also gave up on social housing because of the extremelly bad experience they had with it. With social residencies becoming little hells on their own due to bad local policies. So, by trying to make rents afordable, the government ends up creating social problems. What makes me mad is that, in 2011 the country declared bankrupcy because of the terrible economic policies of the socialist government. A rigth wing government came and was forced to apply austerity by the EU, one of those measures was the liberalization of the renting market, wich ended up with the first time in history were the renting market grew in modern lisbon. Of course, the government became very unpopular because of austerity the EU imposed for saving our asses from the socialist disaster, and the socialist party became popular again, removing all those reforms, wich culminated in the recent contraction of the renting market again.
I disagree with the last point made in this video. While having rental supply is important, there’s a sinister reason why so many people who would like to buy a home are forced into renting. By allowing individual investors and companies to buy up individual homes and convert them into rentals, they are reducing the supply of non-rental homes on the market, therefore increasing prices, and increasing demand for their own rentals because fewer people can now afford a mortgage. We have to remember that homeownership historically has been one of the only ways for working class and middle-class families to build wealth through home equity instead of paying a landlord for life.
It's very true that if multiple property holders always rent their vacant houses it won't be an issue. But is that always (or most of the time) the case?? Especially when it comes to luxury apartments, I've heard some keep them empty for years.
What about a policy that required second and beyond owners of homes to occupy those homes, but allowing first owners to rent them out? That way anyone who wishes to invest in the housing market can only do so by building new supply rather than competing against buyers for existing supply
Housing matter is an important issue at stake as it is a basic need. Would you care to cover this topic on cities with successful housing policies such as Singapore and Vienna? In Singapore the government enforce cooling measures to ensure price of housing remain affordable. It can serve as a model for other cities and countries to follow.
@@SaveMoneySavethePlanet I wish I know how to create videos showcasing solutions of successful implementations of public housing. So perhaps I give a little nugget here. In Singapore, there is 2 categories of housing, public and private. Under public it is called HDB, provides cheap rentals (literally free or $100-$300 a month depending on income, family members), as well as homes for purchase. Variety ranges from 2-5 room flats, maisonette (double floors) etc for citizens and permanent residents only. No foreigners can buy from a public housing market. For a 4 room flat, price ranges from $240k - $600k depending on location (and still considered affordable as our median income is $4800). Prices are regulated by the Government and subsidies are granted for married couples to encourage having families. Payment wise, as citizens, you can choose to have service your mortgage either by bank or via mandatory retirement fund known as CPF (something like ROTH IRA). Mortgage rate by banks in Singapore ranges from 1% to 2+%. But if you choose to pay with your CPF, you pay HDB at a fixed rate of 2.6%. And for those frugal (not bothered with one's status), if you prefer buying a house below your affordability rate (the government provide a "Housing Loan Estimation" or HLE for short calculator for this - depicting your maximum home price allowed based on your current expenditure, income, liabilities etc), you may end up not having to pay mortgage by cash at all, if all is covered through CPF payment. Example (for sake of simplicity), even if I could afford a $500k home, I purchase a $350k home. In Singapore, every month, it is mandatory for us to contribute 20% of our income to our retirement fund CPF, in which our employer will top-up 17%. As my total CPF contribution (20%+17%) is $2000, and my monthly mortgage is $1000, there's no need for me to pay with cash as my monthly CPF contribution is more than enough. Of course there's downsides to this, but I won't cover it as it will be a lengthy explanation. Private housing such as condominiums, landed properties etc, are open to all. A 3 room condo is $1 mil upwards, and all have amenities such as pools, gyms, 24hr security. In times of housing crunch such as current covid situation due to postponement construction of new homes as well as influx of foreigners wanting to settle in Singapore, the government increase stamp buyer duty and additional stamp buyer duties (absd). ABSD applies to purchase of 2nd homes targeted at property investors. Meaning if you already have a property, and wish to buy another one to rent out, you have to fork out additional 17% of the price of property (which recently an increase from previous 15%). Imagine for a $1 mil home you wish to purchase, you have to pay the government $170k to qualify. This is one way to deter overheating property market. On top of this, the government mandated a low total-debt-to-service ratio, making it difficult to secure a mortgage, unless you're filthy rich. Hence, it is pretty unlikely for Singapore to face mass default of mortgage payment crisis etc. I'm sorry if what I've written here is super lengthy and hard to understand. Hope this helps..
As much an new development helps, the fact remains that there are simply way too many unoccupied houses. A system that values keeping a house empty rather than having it be used to meet demand is one with a fundamental flaw. Housing should be a right instead of an investment asset.
Thank you for making this! I've been seeing more and more people make the claim in Vancouver that adding supply won't solve the affordability problem and that such a solution has been debunked... If they bother to defend that statement it is usually with some small study focusing on some obscure outlier. This will be a good video to link people to.
Putting priority 'only' on single family or up market housing like luxury units is still a mistake. If you only build luxury you don't build affordable at the same place.
@@Astromancerguy That's how I feel everyone addresses this conundrum, on *both* sides. If they're not someone making $200k/yr demanding more luxury housing, they're some ardent tankie saying we should all live in commie blocks and like it.
Sure if you "only" build luxury, but there is plenty of room for both. And if you're worried about rising input costs, is your plan really to supress the wages of construction workers?
@@Astromancerguy Wdym, the video mentioned non-market housing too. What it does say is that more market rate housing helps, as building more of it will make it less luxurious.
This idea to "just build housing" never works anywhere around the world. Jakarta has little to no regulations on housing. Thus developers and individuals have been building housing to their hearts content. But unfortunately, housing prices still goes up. Many people now can't live in Jakarta anymore.
One argument I’ve heard is that there are not enough construction workers to being housing fast enough. This could be the primary reason to discourage luxury property development: it takes more labour to build it. My idea (hopefully others’ too) is prefabrication. Build new stock from modules. Yes, it will create tracts of identical housing but if your choices were unimaginative housing or homelessness I think people will go with vanilla. The next crisis coming is energy. Energy for heating/cooling and transportation. We can build to anticipate this: mixed-use, high-density. Build 5-6 stories, bottom two stories for retail and offices. 3-4 stories for residential. Cheaper to heat & cool. Cheaper to provide services to. Less need for cars. Fewer cars means fewer parking lots and slimmer streets so still more room for building.
New luxury condos are only helpful if they aren't replacing older affordable apartment buildings. If they are replacing de-facto affordable housing with much less affordable, they are making things worse and displacing people who then are competing for the remaining amount of relatively affordable housing. If they are replacing single family housing or a parking lot, then yes, they will help affordability in the future when they're no longer new and shiny.
High rising buildings were vilifies by the media. There are countless movies about a hold out hero against evil developers. It's a moral dilemma when both people are right but it affects a large number of people negatively. I think both are right. This is what private home ownership is about.
This is why people should be more focused on vacancy taxes. If it costs an owner to have a vacant house, they're incentivized to either sell or rent. As a plus, you could use the revenue from that tax to directly fund low income housing and "starter homes". In my area we have a whole lot of big houses with 4br/3ba and nearly no small houses with 2br/2ba. As far as I can tell, the reason for this is that the difference in the cost to build is something like $40k, but the bigger house can sell for $100k more. No incentive to build small, so there's no on-ramp to ownership.
I think got a nice example from the car market. We need need full size luxury car as well as smaller hatchbacks or compact size cars that are more fuel efficient and cheaper. For example a Cadillac Escalade for 80K as well as a Toyota camry for 20K. After a few years both cars have lost value but the camry is still cheaper and doesn't cost in insurance, repairs and fuel.
Great Channel! Great videos. I am curious about a more historic way we have dealt with growing families, creating family-community 'compounds' where grandparents, parents, kids, and grandkids can grow into the same family structure. Homes were built larger to accomodate this growth. Longevity limits the size of home and how it can meet the needs of a family. If the birth rate per family becomes too high, then additional structures need to be built. Overpopulation is a reality on our burgeoning planet, regardless, given unsustainable growth and limited resources. It would be helpful to understand how one might address this amidst the call for endless construction to match population growth.
Construction is really tough manual labor that wears out your body over time and that's not a secret. It's actually pretty sensible to avoid it if you want to prolong your long term health imo. If you get hurt, well it's not an accessible job at that point
6:28 partial truth. Some investment properties stay empty - see for e.g. Louise Rossmann and commercial rentals in NYC; renting out a place for cheaper would turn the investment upside down as lower rent means lower value, while staying empty does not. Some are made available to the "short term rent market", which is a politeway of saying tourism oriented occupation via a certain specific company that had a "creative" interpretation of providing statics to municipalities by eliminating outliers.
Do bear in mind that some investor-owned housing is unoccupied, or is used for short-term rentals. The latter seems to have become rather popular, and is hard for regular renters, especially those on low incomes to compete with. There's a reason municipalities have been trying to implement vacant home taxes and rules, taxes and limits on Air B&B. And the presence of those two trends means you can't assume that investor-owned housing is actually housing renters, as opposed to being used as an illegal hotel or as part of a money-laundering operation.
Like China, we gotta just go nuts putting up towers everywhere. Also, for anyone working in a generic industry like medical, move to arctic Fargo ND where there hasn’t been the level of housing inflation.
I think cities need to focus on regulating Air BnB and similar things because that just enables units to sit empty in high-demand areas when there are also empty hotels already available.
A house is not a used laptop. It does not looses value over time. Expensive appartements will remain expensive. High cost of rents is not the problem as you say. Problem is the availability of rents pushing prices to rise.
@@ugowhereiwent A mobile home or mobile tiny house certainly will, there's nothing special that really differentiates it from a normal house if it had wheels, yes any improvement on a piece of land depreciates, the difference is that the land value doesn't because the supply of land is fixed and unless your area dramatically loses population ( in which case large problems are afoot,) demand does for that land will only increase and thus land is an appreciating capital investment. Solution is to heavily tax land rents and redistribute them someway ( whether that is in government programs or UBI.)
@@ugowhereiwent We never remotely suggested that housing follows the exact same trajectory as laptops. We said they're comparable in that hindering the sale of new units will lead to higher prices for older units too.
the problem is that housing works in an exclusively capitalist system, as seen, for instance, in zoning laws. people are upset that homes are expensive, but that's exactly what they're gonna do when they're ready to sell: make prices as high as possible. at a minimum, we need to focus on non-profit at-cost options for housing. rental wouldn't be a scam if there wasn't excess wealth being extracted to the landlord. let people rent at cost. and this wouldn't abolish the private market either. if people want to pay market rates for a fancier rental unit, they can do so. but it would generally disincentivize some of the crazy investment movement in property hoarding. (also, would love to see the gov't invest in volumetric construction to put up a whole bunch of homes quickly and affordably.)
p.s. I'd like to see a law that gives individuals and non-profits first rights to a property rather than a corporation. E.g. maybe something like corporations cannot bid for the first month it's on the market.
I think the best way to mostly do this is implementing an LVT and land dividend, that being said corporate investors flock to things in fixed or limited supply. In this case urban and increasingly suburban housing is arbitrarily fixed by zoning laws. Flooding the housing market tends scare off these investors and as Oh the Urbanity has pointed out, its akin to flooding the stock market.
I'm in favor of banning/disincentivizing one person owning too many property ownership. I think max one person/household should own 2 properties (1 principle, 1 rental). In Taiwan, there's a doctor that owns 91 real estate units -- this truly makes the rich richer. I would prefer 90 more land lords than having 1 landlord owning 91 property
For your last point, I disagree. I think it's better for people to rent to "smaller" landlords instead of large companies. A lot of those large companies are known to be neglectful anyways. Also, a lot of renters don't want to be renters. That's the main issue with the housing market... It makes me feel like you missed the entire point of the issue, or that you perhaps already own a home and are not really on our side, so you're trying to convince us out of something that would be a good thing.
On the contrary, we rent and we don't think eliminating the private rental market or forcing our landlord to sell our home to someone would be good for us. As for individuals vs. companies, that's interesting because very often we hear people say the opposite, that they prefer to rent from companies because it's more consistent and you know they're not going to evict you so that they (or their family member) can move in.
@@OhTheUrbanity Good to know that you are genuinely on our side for this. Important because there is a lot of manipulation out there. When I said neglectful, I meant in terms of fixing issues in housing. I've found landlords who own less homes to be more diligent and responsive at preventing hazards and keeping conditions livable. When I rented from someone who owned many houses, he once turned off the heat in February to save money, and that was after I was told I would have to move out because he was selling it. But with my current landlord, I live with her and it is the only property she owns (and only one of three her family owns). Her family is lighting quick to fix everything. The stories I have heard from others in my community line up with what I'm saying.
Yes I agree, this is my first time on this channel and this video sounded like they are working for the REITs/developers. I live in a REIT building and there are lots of problems and lies.
@@OhTheUrbanity I will also add to what you're hearing. I live in a corporate managed property and it's very well managed because they have maintenance staff on hand to inspect units and fix issues within 24 hours. The people I know who rented from individuals around here had much worse experience because the owners weren't professionals and let things degrade to the point that roaches were prevalent in the property. Public reviews are also open for corporate managed properties which cannot be said for individually owned ones. Those are a crapshoot and harder to look up past experiences for.
@@OhTheUrbanity I think the same, I much prefer renting a purpose-built rental apartment because it feels like a more stable long-term living condition. Also, it feels more like MY home and less like someone else's.
NIMBYism to stop new construction of affordable low income (section 8) housing that will attract crime and also to stop high density zoning causing gentrification risking of being priced out and losing the simple peaceful neighborhood identity.
Society construct how we look at housing for instance nobody would debate that we need food to survive or water to live...theres no real discussion regarding affordability of water because most societies see it as a right a basic human right... so if housing was thought of the same way instead of a personalized commodity or achievement.. housing will be a priority instead of just a discussion.
I usually love your videos, in this one, you make several points that I really don't agree with. Landlords and investors limit housing availability and raise prices, full stop. We need a decomodification of housing and we need it now. Rentals are already too expensive to move out of, I know a lot of people who can't move out of their rental appartment without increasing their rent by 50%. The notion that in this current economic atmosphere rentals increase freedom is kind of ridiculous. For poor people, they turned into traps real fast during the pandemic. Saying that we need landlords and investors because that's where rentals come from is a flagrant lack of imagination on your part and it's disappointing.
My issue here is that you haven't really clarified what alternative you're proposing. We laid out our position - support public/social/co-op housing to increase options for renters, but we think the idea of trying to limit private rentals (in order to move stock to the housing market) is fundamentally anti-renter. Are you arguing that we should in fact ban/limit private rentals? What does that policy look like?
@@OhTheUrbanity I don't have the pretention of laying out a perfect housing policy in a YT comment section. That's not exactly what they are for. That kind of thing take hundreds of pages and it's unrealistic to expect from people who criticize your points. The Gravel Institute has a good video and IRIS also has some fantastic research on housing. Let's hope that's a good enough starting point.
Currently trapped in my rental. Rent increase this summer is more than I can afford yet there is nothing the surrounding states that is the same or lower. $100+ rent increase each year forces people like me to move every few years until we get stuck because there is nothing available. Been looking for since COVID started and my landlord decided month-to-month was better than a year. The last place had cockroaches and mold. What's next...
The laws of supply and demand have not been repealed for housing. The truth is, if there was a LOT more supply coming online, investors could not expect to make a killing because of the housing shortage, and housing would become a LESS appealing speculative investment. It ultimately comes down to the NIMBY's who want to enjoy the benefits of a growing economy, but want their neighborhood to remain exactly as it was the day they moved in.
@@lopoa126 I'm so sorry. I'm in the same situation. Hopefully we can find actual solutions to this mess. The continued comodification of housing is unsustainable. There are housing comities all over the place if you are looking to get involved. :)
I think you make some good points in addressing these arguments. With regard to the issue of renting, however, I think your criticisms are only really applicable to half-measures that disincentivize renting out properties. A more radical approach that almost completely eliminates non-resident ownership nationwide would make it so that the least desirable housing units are free, or close to it, thereby eliminating the need to qualify for a mortgage at all. Obviously this approach doesn't come without a few problems of its own, especially with regard to new construction, where the low price of housing might require any new non-luxury housing to be constructed by governments at a loss. The point I'm trying to make, however, is that while policies that limit rentals might harm renters, that's not necessarily true for policies that eliminate rentals completely.
I dislike your broad strokes approach to individuals/corporations purchasing up property for renters. In our current situation, I feel there is more power for high income individuals/corporations to purchase property for investment rather than for low/mid income to purchase to own singularly (might not be the best phrasing.) You stated that you are renters yourselves, but its possible that wouldn't NEED to be if there were more affordable options, or if you did want to stay renters, that's fine, but others don't have that choice because of the imbalance of power in the housing market. I don't think anyone is arguing to "eliminate" the rental market, rather to restore a balance where there is plenty of rental properties compared to owned properties. Currently ownership is just impossible to a vast majority of Canadians; I think that's where the issue lies. You guys are ok as renters, but there are some people that actually want to own a property. And yeah, maybe that number is higher than it should be, but it is also most definitely far more unattainable then it should be. In addition, the properties that are for rent are, in my opinion, far below an acceptable standard for living. Most people don't want to live in a basement apartment owned by people just looking for an additional income. It would be nice if the majority of rental properties were properly managed and were in a building that was build purposefully for multiple families to live in. But as you guys have shown in multiple videos to date, in Canada, it's either towers or SFH. Towers can be fine, but the SFH dwellings are often poorly maintained basements with no amenities. If there were more properties in this country that were purpose built for multiple families living together where a single owner/corporation managed the property, I would be with you guys on this, but this is not the case. And to further that last point, in many municipalities, there is very little regulation or enforcement on property managers to actually take care of the property, which leads to bug/pest infestations, poor maintenance of amenities like laundry machines, garages falling into disrepair causing damage to personal vehicles, etc. The quality of rental management and the regulation/enforcement of these properties increases the demand for ownership, which should be available, and if not, the quality of rentals should be increased at the very least.
We mentioned that there might be room for policy tweaks (e.g., making it harder to borrow against one property to buy another). But people really do argue for broad bans on corporate ownership of housing and on individuals owning more than one or two properties. That would literally have the effect of eliminating or severely restricting private rental availability. I just think if you want more homes for first time buyers, which I genuinely understand, it’s much more productive to expand the overall supply of housing (as we discussed, even for Toronto condos, ~60% of units are owner-occupied) rather than trying to rearrange the existing housing market to have more buying options and fewer rentals.
@@OhTheUrbanity Expanding the overall supply of housing does no good if the entities who might already have the monopoly that allows them to fix the price of housing is given unrestricted access to that additional housing. It's not like anyone can actually compete with their bids on the housing. Wal-Mart does exactly this, they outbid everyone else for some land and price out competing businesses until they're out of business. Sure it's a bit different from housing, but the idea of an entity using their capital to stomp out any competition to maintain their dominance is consistent between both cases.
We talked about this if in point #4 though. The worst case numbers people point to are 40% of Toronto condos being investor owned, which still leaves 60% as owner-occupied. Given that, can't we expect new construction to result in some significant proportion of owner-occupied units too? On top of this, significant new construction doesn't make investors more interested, it makes them less interested. Investors like scarce things, not abundant things. (Consider: If you dump a bunch of stocks onto the market, that's more likely to scare investors and make them sell.)
Exactly! We need to get rid of supply restrictions supported by homeowners who see their home as an investment and want to limit supply to maintain their "property values".
Strongly disagree with point #3, very very few people "want" to rent, most are into it forced by landlords who have bought out all the property. If we ban large scale home ownership we are effectively decreasing the demand by blocking the highest bidders All mass-landlords do is syphon money from citizens and use it to further cement their monopoly on the market. Severely restricting them is absolutely neccesary the whole idea that housing should be an unregulated market is wrong. Housing is a neccesity and a right, everyone should have acess to affordable housing
We probably want to own at some point, but it doesn't mean we want to own now or that we want to own or current place. And even if we wanted to buy our current place right now, if our landlord was forced to sell it, there's no guarantee we could afford it or be the highest bidder! There's a good chance any policy against "property hoarding" could just mean eviction for us.
Housing may be a necessity, but it's sure as hell not a right. Plus, the housing market is actually restricted as city by-laws dictate what is allowed to be built and how much.
A lot of people like to go on and on about housing prices and miss the bigger picture. Inflation adjusted, the high interest rates of the 80s led to the period with the least affordable monthly payments. Of course housing prices are so high, as long as you can make the monthly payment and secure the down payment, you can and will pay whatever the price. You see similar rapid price increases in other markets which have affordability tied to loans as our modern interest rates plummet. Overall, I'm not convinced there is a crisis at the moment, but if there is one, it won't be from just housing alone. It will be from demographics, changing global orders, shifting resources, and others. A lack of affordable housing won't be a failure of the housing market alone.
Globally, housing supply has just not kept up or even returned to normal levels since the 2008 crash ( particularly in the US.) Zoning and other local government regs that limit basic housing supply do play a very significant role. Interest rates undoubtedly play a role too but the increases in inflation adjusted housing prices between Tokyo from 1995-2015 where housing construction really kept up quite well at a modest 16% compared to London's which went up by 400% in that same time period with similar population growth but added relatively little new housing. It's just an example but basic supply and demand plays a big role.
New luxury housing does become old middle housing... in 20 years... then another 40 years maybe it's almost affordable... We'll be dead by now. The emergancy is too great, this is why we must fight luxury condos. Relying on the housing market to trickle down, is like setting net zero by 2050 targets... by the time we've recieved the benefit, too many people will be homeless and capitalist will have far too much power. Housing isn't just an economy with highs an lows, it's not just a median number... it's how people survive. The new 80 story claridge building in Ottawa isn't going to give a single homeless person a home, or poor person a shorter commute totheir job downtown. It's only going to drive living costs up downtown. If a house had a fire and i crumbling, then sure some steel beams will help it not collapse... but the building needs to be rebuilt... the time for half measures is over.
My old apartment was one of those luxury condos built in the 80s, but with no amenities. My rent was more than a third of my income for a one-bed and I make three figures. I looked at the purchas price and it's because condo fees were constantly rising... LUXURY CONDOS NEVER BECOME AFFORDABLE!
Building new housing now also decreases the demand for and therefore the price of, existing housing. You don't have to wait 50 years for that effect to kick in. That being said at a certain point housing supply won't do much if land values are sky high, in that situation an LVT and land dividend/UBI makes sense ( I would argue it always makes sense, but particularly in this case.)
Gonna push back on point #2--you're absolutely right that housing follows supply and demand, but you can't ignore complexity here, it's not a closed system. If you increase supply, yes, you'll lower prices, but those low prices will then stimulate demand. This is the same thing that happens with roads: if you widen roads to reduce traffic, then driving gets easier and more people choose to drive, which makes the traffic just as bad as it was before you widened the roads. This is called induced demand. (en.wikipedia.org/wiki/Induced_demand) So, if you build a ton of housing in Toronto and manage to lower prices, then all the people that wish they could live in Toronto but can't afford it will start moving to Toronto, driving the prices right back up again, to settle right at the point where the prices are just barely tolerable. What's more, what is considered "tolerable" is based on what you get out of living in a place, and typically a huge factor in what makes it worth it to live in an expensive city is the money you can make by living there. That opportunity is typically connected to the size of the economy (bigger and more dynamic economies have more economic activity), and building more housing brings more people into the city, which creates more jobs and increases the value of living there, which means growing the size of the city itself is also a force for increasing housing prices. My solution? Create new nodes. If we just keep adding housing in Toronto Vancouver and Montreal, then those cities increasingly become the only justifiable places to live, which drives up the demand to live there endlessly. If on the other hand, we manage to recreate what happened in Austin, TX, where a relatively cheap place to live became popular and started attracting tons of new people, that increase in housing prices in Austin correlates to a decrease in prices in all the cities people moved there FROM. And all the new housing people are moving into in Austin was far easier and cheaper to build than trying to do so in an already-overheated market. The real issue is figuring out how to make that happen--but IMO it's a more worthy goal than just endlessly building in the existing large cities until that's all there is.
There are benefits to letting people and companies cluster as they desire though. It increases productivity and access to opportunities. The fact that high productivity cities like San Francisco, San Jose, and New York don't allow enough housing to be built has been found to decrease overall productivity and wealth in the U.S. by a surprising amount: www.aeaweb.org/articles?id=10.1257/mac.20170388 We talk about induced demand and housing in this other video: th-cam.com/video/c7FB_xI-U6w/w-d-xo.html
@@OhTheUrbanity Our two points are not incompatible. I'm not suggesting we should force people to live where they don't prefer, I'm saying creating new beacons of desirability is a more promising path to making people's preferences attainable.
I think the problem with the argument against high cost housing is that it fails to differentiate between the causes of the high price, eg, land value, speculative value, construction cost. Only one of these indicates quality and even then it could be a triple glazed brick terrace with solar panels but if its in the middle of suburbia it still isn't good quality housing. There's no point building expensive housing if after the next crash its going to be abandoned along with the rest of the estate, then it isnt affordable and there was no "trickle down". Additionally the trickle down argument is a bit false as the expensive properties normally gain value, instead it frees up lower value housing stock
Laptops and cars are quite guaranteed to use value over time - quite quickly even. For housing not necessarily, often it‘s the other way around since rents rise and rise. So, why plan in waiting time until overpriced housing gets older (and not even necessarily cheaper)? Why not build new as affordable housing in the first place? There is limited space in cities and towns - why not build directly what is needed when you can?
American here, not sure I believe this because I don't have much faith in the trickle down effect. Although what you've said makes sense, it also contradicts many other things I've heard that also make sense while having a pro-wealthy flavor. Perhaps in Canada it's not as bad, here in the US there's who-knows-how-many of _unoccupied_ apartments for the rich that will never trickle down and never be rented out
property hoarders provide airbnbs not rentals, and by hoarding all the housing they are converting would be homebuyers into renters, which means more competition for rentals
There are about 9,000 Airbnbs in Toronto (one example city I looked up), which corresponds to 0.7% of the housing stock. It's fine if you want to regulate that, it would probably help rents somewhat, but clearly it's not the case that multiple property owners usually put the units on Airbnb.
"You still need to build new housing now to have old housing later." I've been saying this for soooo long so thank you. Tired of seeing new developments in my city (Hamilton) continually getting scraped or reworked because they don't have enough "affordable" units.
Just looking around my area shows this. We have loads of “luxury apartments” from the 80’s which are essentially just normal apartments by today’s standards.
To get affordable housing you sometimes need older housing that isn't that up to date anymore.
A good halfway solution is to allow more density _on the condition_ that part of it includes below-market units. The developers keep the same profit margin, and now more lower-income families can live there too.
@@HowlingWolf518 That's not a halfway solution, that's literally what he's saying. Between housing and no housing at all, there is an obvious answer. From there, you can debate wether you want a portion to be below-market units, but that means you already go further than the previous ordeal.
@@dzello No, OP and the video are saying we need any kind of housing now, because that means affordable housing a lot later. The problem is that many people don't have the luxury of "a lot later."
_I'm_ saying there's a third option: add slightly more density on top of the existing density, or drop costly regulations like mandatory parking, and then that extra profit can go to adding the subsidized units we want. We in Vancouver call that MIRHPP.
Thank you, thank you, thank you for making this video! This hits all of the points that I've been arguing about for awhile. There is nothing more frustrating than an uninformed twitter housing thread.
Also another thing to mention to combat the "evil investors" mentality is that often when new housing is built in quantity the housing market becomes less appealing to invest in because its more stable from the availability of new units at market rate. So the solution is literally always to build new housing!
On my local city subreddit, it's unbelievably awful. So many people there massively complain about our housing and accessibility issues, but immediately downvote any attempt or discussion to resolve them. I got banned from there for trying to, in good faith, discuss a real need to revitalize neighborhoods around the city to limit out-of-city access and focus on hub style development. The car-brains are sure strong in my area 🙃
@@kylenoyes6390 this is the problem of democracy. But what alternative have we? None! Except theocracy I guess.
@@موسى_7 I'm in favor of microstates. Competition creates a race to the bottom, where costs to the consumer are concerned, and to the top, where benefits are. With enough competition, it shouldn't matter what the governmental structure looks like.
It's also why I'm in favor of a weaker federal government and stronger states rights.
@@S_Roach your idea only works if you limit capital flows and migration.
In the real world, small states are competing to the bottom on taxes, leaving them no money left for services. You can just look at what has happened in Europe and the tax competition there. A lack of coordination and cooperation between states favours the most mobile actors, which are undoubtedly the rich.
@@موسى_7 it's not really a problem of democracy, just a problem of how our current democratic systems work.
The solution to these "tragedy if the commons" style problems is, as always: a federalized system that allows bad local decisions to be overridden by the greater community when necessary, preferably elected with a proportional voting system.
Restrictive municipal zoning is a huge problem because it distorts everything. For the private market it leads to escalating prices through competition resulting in higher and higher bids. For affordable non-profit seeking models give you longer and longer waitlists.
Zoning needs to be adjusted in a significant manner to actually produce some competition and let supply expand towards demand. One of the least intrusive methods would be to turn most commercial zoning into mixed use. Residential on top, commercial on the bottom.
Why not let fancy business towers have some floors of high-end residential on top? Why not let malls and strip malls throw residential units above it?
I was actually really happy earlier this year to find out that California eliminated Single Family Home zoning statewide for this very reason.
Hopefully, I start to see lots more townhomes, condos, and apartments being built in my area soon as a result.
I like your proposal as well for making commercial mixed use. Seems like a no brainer to me honestly.
Lets not forget that it makes it harder for local contractors to build and favors large contractors because they can fight all the dumb rules.
Have you heard of the housing crisis in Europe? They have no single family zoning, yet housing prices have gone up through the roof...
@@MrEdHasibuan1996 Yeah, because they have a similar problem of low density, the Americas need middle density in the short term because it allows cities to become dense enough. Europe’s problem comes from too many people moving away from the small villages and towards cities. The Americas currently are running into the opposite problem of people running towards suburbs, the middle density in cities would give a nice middle ground before the European problem.
The idea of co-locating high-density residential with malls and other existing retail developments makes great sense.
Why am I stuck thinking that very fact will doom the idea...? 🤔 🙄 🤦🏼♂️
As always the elephant in the room is zoning laws and local governments' unwillingness to increase supply. However, I feel like if the market share of owner-occupied housing is falling, that's a problem worth addressing too. A blanket ban on corporate ownership has a lot of obvious issues that most proponents aren't engaging with, but REITS purchasing affordable housing stock and raising rents without improving the units is a documented phenomenon across Canada. A potential mitigation policy to address that issue could come in the form of right-of-first-refusal laws for tenants--what's your take on right-of-first-refusal laws?
This comment!
Owner occupied or not isn't really the mater for single family homes.
Those other units would be rented out or get sold to other user after sometime.
Still a big problem in North America and Australia is that not enough purpose build rentals are getting.
Buidlings that suit renters. Even more often unit with 2 or 3 bedrooms are missing that fit in between a small apparent and a normal single family home.
A huge portion of social housing got destroyed since the 1950s and 1960s.
A whole lot of those units are being rented out alright, but not to regular tenants, but as full-time AirBnB-type rentals - for a much higher rate per month than they'd get renting to a resident. They get the best of both worlds - all the rental income without either the responsibilities of a landlord to their tenants, or dealing with hotel taxes and regulations. This also drives housing prices up in the surrounding area and gentrification.
While it's probably not the biggest issue, these criticisms of vacation rentals as harming affordability are valid.
@@OhTheUrbanity look at any city that's a major tourist destination - San Francisco, New Orleans, Barcelona, etc. - and you'll see entire blocks emptied of residents in favor of unregulated & illegal "AirBnB" hotels.
And it creates issues for remaining resident-owners and long-term tenants. Short term rentals attract problems with parties, noise etc. In a building with a mix of long-term residents (owners and/or tenants) and short terms, it severely negatively impacts quality of life and property values.
I wouldn't say it's a "whole lot", but it is an issue.
I own/occupy a duplex. The other flat is rented out on a one year lease to long term tenants. For a while I was thinking of converting the half-finished attic into a short term rental. But I decided against it:
- It would take a lot of money to both convert the attic and bring it and its entry up to code.
- I would have to fully furnish it, and do (or pay for) the routine household chores.
- I'd also have to do (or pay for) cleaning between every renter.
- My long term tenants help with yard maintenance and snow removal. Short term tenants won't do that.
- Short term tenants have no emotional investment in keeping the place nice.
For me, the expense and effort just aren't worth it. And I'm betting a lot of other micro-landlords end up feeling the same way.
@@lizcademy4809 this is you, a human-sized property-owner who actually lives there & has more than a short-term financial interest in the property & everything in & around it. I"m fortunate enough to have a similar landlord.
You, & my landlord, & all the other nice people who rent out one or a few units, do not represent what an increasing plurality, if not majority, of tenants (especially in major cities) have to deal with. The downsides you list about converting your attic into a short-term rental are completely irrelevant to corporations with the capital to buy entire city blocks and no interest other than converting that capital into even more profit.
What a great video! I live in new rental apartment housing and yes it does cost almost $2000 a month for 2 bedrooms 2 baths but this is Victoria BC where there is not enough supply and there is high demand. I’m also in an outer suburb not downtown or anything.
Recently an article came out that greater Victoria has the lowest fertility rate in all of Canada at 0.95 - not surprising in the least when you consider economic factors here. Affordability is an issue with everything but especially housing, and with a growing shortage of family doctors no less…
Another aspect of super expensive cities like Victoria is that the locals cannot afford to work at entry level service jobs meaning we have to import workers from overseas.
Good video. Only point I would like to make is there most definitely a percentage of renters who would love to buy but just cannot compete with investors/multiple property owners.
Conversely of course there are some renters who are by choice and will remain renters no matter what.
I would love to know what percentage falls into each category.
I'm the former, a rent slave trying to free themselves from rent slavery.
Yeah, plus there are plenty of renters who simply aren't in a stage of life to be buying yet. Students are the most obvious example. Ain't nobody buying a home while in uni, not only because lack of money and credit history, but also lack of certainty of what you're gonna do and where you're gonna live long-term.
Renting from private landlords shouldn’t be the only option available to people that don’t want to buy. That group could be better served by housing cooperatives or social housing.
Yeah, that segment was practically a strawman argument. Pretty rare that someone wants to ban anyone from owning more than one home. But it is ridiculous that we let wealthier people push poor people out of the buying market so they can profit off of them.
And the "OMG, what if someone wants to move after a few years?!" argument is bizarre. They can either sell their place or rent it out just like the big corporations.
@@richardlinares6314 Selling a home is much more difficult than ending a lease. The general rule is that renting is a better financial deal if you live in a house for less than five years. Realtors, closing costs, etc. really add up. And while the market is hot in big Canadian metros right now, some markets are slower -- a few years back, I saw houses sit on the market for over a year. That's a risk anyone buying a house takes, and it's a bigger risk the shorter you intend to live in a specific property. th-cam.com/video/ChSpkZ0jVxc/w-d-xo.html
Shift the portion of property tax to tax land more than what's on it. The idea is to keep the overall revenue the same, but it means underdeveloped lots pay more taxes and more developed pay mostly based on the value of the land. One of the big problems is empty or under utilized lots. Run down tiny house on a big piece of prime real estate? Currently they pay next to no taxes. Housing complex squeezed in an odd shape lot? They pay lots of taxes. You don't need to go full on land value tax, but the mix needs to be better. We need to encourage people with valuable land to actually develop it where the market demand is there, rather than wait for a the land value to go up.
As for hording rental units, the problem is often that the units being horded end up being airbnb's. If you want your town to have more places for tourists to stay build for it. When it comes out of current housing stock it's a problem.
The problem isn't expensive housing. The problem is when expensive housing is almost all that is build over a long time. A 120 m² appartment will never be a thing for the childless minimum wage earner. Same for the suburban desert with buy-only houses etc.
Such a think also results in splitted classes, which causes a lot of problems through the politics/policy line. That it is also very damaging to the environment doesn't make it better.
Yes, they know. They talk enough about suburban McMansion zoning in other videos.
Yes, and there’s a big difference between a “luxury” apartment and a mcmansion, only one of those is versatile in the long run and will eventually become more affordable.
but the thing is huge amounts of luxury apartments aren't luxury. This depends where you live but most 'luxury' apartments in the UK certainly are just apartments (well flats) with modern furnishing and are as small. It's just people call them luxury apartments because they assume everything new is 'luxury' cause they've not re-done their kitchen in 25 years. Developers call them luxury apartments cause you can't justify your extortionate prices and small apartments by calling them 'average apartments'.
I've seen people call bog standard student flats 'luxury student flats' because so many people have just this idea new = luxury when actually new = massive land cost and constrained supply in the market and as such high rents.
120 is pretty big for a single or a couple but nobody would complain if they could afford anything around 100 m². Too many apartments though are built for the wealthy and the worker class cant afford the city apartments at 3000-3500 dollars per month.
I love this analysis, thank you!
While I largely agree with you on the necessity of new home/apartment construction, I have a specific argument against point #1. Whether #1 helps or hurts housing prices really comes down to whether you're building new housing supply on vacant/under-utilized land, or on land with existing housing stock. When older apartment buildings are demolished to make way for new high end condos, the new supply displaces the old, rather than adding to it.
In most big cities facing housing shortages, there really is a need for new housing supply. However, these are the very same cities which tend to demolish old apartments in favor of new luxury condos. This is partially due to a lack of available land. But one of the other big reasons is that many cities facing high housing prices have protectionist zoning policies for single family housing. This means that areas that already align with city plans for high density - AKA places where there are old mixed use and apartment buildings - disproportionally get the shiny new luxury condos.
Cities like Toronto and Vancouver have a higher percentage of their land zoned for single family residential than mid-tier cities like Edmonton, Ottawa, Winnipeg, and Calgary, which are all much more affordable cities; although this is no longer true in Vancouver as of 2018, as they dropped single family housing classification altogether to allow multi-unit developments on all lots, with some restrictions. This might be one of the reasons Vancouver's housing market has stopped rising as rapidly as Toronto's.
This difference in single family zoning rates is insane when you think about it! New Zealand also is facing high housing prices, and they recently banned single family housing classifications in 5 major cities.
I have the exact same argument you have against point #1! I totally agree, that new market-rate housing is bad for the issues of gentrification and displacement. Take for example Regent Park in Toronto. They demolished the entire social housing community displacing existing home owners, which are then replaced by middle to upper-middle-class residents. Although the demolished social housing units were replaced, they were never increased and now you have an imbalance in a historic low-income community where they get outvoted by a much larger, wealthier, and political savvy middle class.
Ah yes, finally two of my greatest interests, housing and age old thinkpads, combined 😉
If only you could live in a giant thinkpad?
I still think that people shouldn't be allowed to own too many houses. It's more of a social issue than a housing issue at the moment. More than 50% of housing is owned by less than 5% of households in major cities of France, including Paris. It makes it very unfair because they hoards properties and block people from buying. Buying in Paris isn't a possibility except if you're rich. Even my middle-class friends can't afford to buy in Paris. It's literally a new kind of nobility who just inherits hundreds of apartments. A lot of people rent because they don't have any other choice, and that's unfair. I'm not against renting, but we're in a situation where we are forced to rent by wealthy hoarders who own most of our cities, it's clearly unfair. They also get a much greater power over housing pricing since they own so many of them. I just want their properties to be more equally shared among people.
We care a lot about affordability, and we absolutely think homeownership should be attainable. We just see restrictions on private rentals as having a lot of unintended consequences. Let's say I'm a renter in Paris and the government forces my landlord to sell my apartment. Am I in a place in my life where buying makes sense? Do I have enough money to buy it, including the down-payment? If the answer is "no" to either of those questions, the policy amounts to me being evicted!
@@OhTheUrbanity Of course, but when I see that my friends who are engineers and earn a lot can't buy their own flats, I know there's something wrong. A lot of people in Paris are rich enough to buy in a normal city but they can't in Paris, so instead they buy outside of town and become landlords of suburbs while not being owners of their own homes.
I do agree with you, but renting and buying should be options, not forced. And those 5% people owning more than half of the housing are clearly a problem.
Edit : we also have rentals being sold as "already rented", so people don't get technically evicted. The lease is still valid, even after selling. But I'm not sure about the details and I should look into it.
I love your channel, but would like to say that I think income inequality and lowering rates of owner-occupied homes is not a good combo.
If landlords control too much of the supply of housing, they can increase rents when wages are increasing. Having a certain percentage of of housing regulated to be owner-occupied can be a good way of reducing landlord power.
Edit: to be clear, that’s not our current problem by a long shot, but has the potential to be one in the future.
Yes. If landlords own it all, it may be difficult to buy, unless they are losing money with the buildings they own.
The problem would solve it's self, if they charge to much they will end up with to many empty units while getting undercut by other landlords. So long as construction is allowed to continue this scenario should never happen and people would leave the city if rents became to high such as the video said occurred in southern Ontario. Also I think most people tend to under estimate how expensive that would be to do what you fear in a major city like maybe a government could do it but I don't think any corporation could.
@@canales9178 ever heard of the prisoner's dilemma? With consolidation being so high, it gets more and more easy for corporations and individuals to accomplish the win-win scenario.
At some point, the heightened revenue they receive from established payers can be more than what they lose from vacant lots. It's why income inequality is such an important issue (and becoming more and more in the future).
@@madskittls but the nash equilibrium of the prisoner's dilemma is to cheat. Your point doesn't make sense in that context
In Switzerland most of the people rent instead of buying, but I wouldn’t say that this is a country with a lot of income inequality or a bad country to live in, quite the contrary actually.
A land value tax and major zoning reforms would solve the housing affordability problem.
Georgism intensifies.
*furlough and put off the affordability problem. affordablity can never be a focus so long as housing is seen as a way to enter into the relationship known as landlordism. "Landlords’ right has its origin in robbery. The landlords, like all other men, love to reap where they never sowed, and demand a rent even for the natural produce of the earth." Adam Smith
Add to that proper money supply management would help prevent investment bubbles.
I've never really gotten how, after decades of life so many people manage to avoid the basics of how markets work. When food prices go up they get annoyed at the "greedy supermarket owner" and when there is a blind bidding war on a condo they say "ban blind bidding", it just seems like human instinct is really bad at grasping things with supply side solutions.
Heya from southern hemisphere Canada.
Southern-hemisphere Vancouver Island...?
Anyways, where most cities' median house prices are over $1 million, our most expensive city is the world's 2nd most expensive city, and our urban design is pretty awful with sprawls (yes plural) the size of Tokyo, average houses in very land-wasteful forms (making them the largest in the world), backwards concepts and NIMBYs galore, happiness in decline for the last 9 years (hmm, since the current conservative government got in), declining into a country on the corruption watch list and dodgy free press, being the biggest laggard on climate when we literally have the most and easiest opportunity on the planet to be a renewable superpower, and... and... moreeeee
Hot take. People also don't understand how supply and demand apply to wages and hand wave all suggestions of lowering immigration as being racism.
@@jonathanwilkinson4299 I'm an immigrant, and I have built and helped build several houses. That's the issue with blaming immigration. There is a labour shortage in construction, and we could be bringing in immigrants who actually help build new supply. Scott Aitchison actually is running for the conservatives right now on tweaking immigration policy in that way.
@@PaigeMTL Conservatives love immigration because it lowers wages. We don't have a labor shortage. People have just given up. There is no point in trying anymore cause homeownership is a fantasy at this point. I would prefer to change zoning laws rather than importing cheap foreign labor. Also banning foreigners from owning property except for ones with permanent residency could help. Or it would have a few years ago.
Also to be clear I am against anything that would increase the population (within reason) Like if birth rates were rising that would be bad for the housing market in like 20 years.
I look at Japan and they have very affordable housing because they have great zoning laws a shrinking population and they aren't bringing in new people. Even in Japan's biggest city property is attainable for average working people. You can't say that about Toronto or Vancouver. Unless you work in STEM.
Anyways. I know this can be a touchy subject. But in general with supply and demand increasing the population in any way reduces wages and increases housing prices.
I mean you could just look at the labor shortage in construction or pretty much anything. All you have to do is increase wages and advertise and those jobs would be filled without the need for immigration.
@@jonathanwilkinson4299 "I am against anything that would increase the population" Are you an anti-natalist?
My biggest beef with all this is rich investors buying houses or apartments speculatively and leaving them empty as 2nd or 3rd homes. There should be a hefty tax on empty properties.
And there is in Vancouver! It helps, but as you can tell, it is not nearly enough, and most units were occupied anyway, so building more housing is worthwhile regardless.
But it just doens't happen. You are conflating two separate issues. People who have enough money to buy property speculatively also tend to know if you don't rent that property out you are leaving huge wads of cash on the table. It would make you a really bad investor not renting out a property in Vancouver or London or NY where the rents are so ridiculously high.
Also literally just sitting and doing nothing is really expensive. There are bills, taxes and loan interest to pay. That way bankruptcy and receivership lies.
These houses are almost entirely non-existent for that reason.
Second homes are rich people owning more than one property. It's not in use but it's also not occupied constantly. They ned heavy taxes the are a very minor prolem to solve in a city.but
Renters matter. Too true, tenants are human too (shocking revelation, I know). I don't know about the laws in Canada but here in Australia people in rentals usually only have short term leases (12 months maximum and often only 3 months at a time). There's also so many rules to stop you hanging something on the wall etc that its really hard to make a rental a home- of course on the flip side there are a minority of renters who trash properties and/or don't pay their rent (which could be because they can't afford it). The balance is definitely off between tenants and landlords which only compounds issues- I suspect this is likely the case in a lot of places, not just Australia.
I heard horror stories from both sides. I have friends whose few rental properties are routinely/consistently trashed (the damage deposit doesn't even begin to cover it often), or deal with non-payment etc (which often accompanies the trashing of the property). We have Residential Tenancies here that's a government board that deals with disputes, but most rules skew in favour of the tenant. People argue that real estate is an investment and inherently has risk, so there should be no help to landlords. Evicting people goes thru RT board and can take months.
I also have friends that are renters that have had horrible landlords, not making basic repairs, not following rules and generally making their lives miserable. They basically force the tenant to go through the RT board, which is a slow process for them too. Most landlords need references (see paragraph above about why), so if you have a dispute with a crummy landlord and they give you no/poor reference, it can be hard to move on to a new place even if you're a good tenant.
It's a terrible system..
@@jolenethiessen357 I could have used a reference for my land Lord and I wish that was a regular thing. They are a multi-property owner, I honestly don't know how many but maybe 4+ house all multi-unit? My apartment is in the house they first inherited from their grandparents 20+ years ago and the 1.5 story home has been split into 3 units. There is absolutely no pride in this house now if there ever was. And maybe 5 years ago they hired a property manager to do all of the hands on work, and created a property management account on some website to handle all the finance so I literally never speak to the true land Lord or even interact with them directly to pay. The property manager also does all of the tours for new tenants... So it's hard not to be mad that he got this house for nothing, doesnt work on it, doesn't maintain it, doesn't even cash my cheques but can "defer" my request for a new window screen.
The amount housing construction went down after 08' is astronomical. Housing supply needs to go up anyway possible, except single family homes.
A little pushback on this idea that landlords are fine because they provide housing to renters:
I think we can say that landlords provide a needed service, so we shouldn't ban them, and still be willing to examine incentives and talk about if we think the levels are helpful. (should all houses be owned by landlords? none? ok, so let's talk about what percent is good)
If a property is bought by an someone who wants to live there instead of an investor (landlord), you may have one less rental property, but you also have one less person needing to rent.
In my area, it's absolutely true that investors get incentives like tax breaks that people looking for a home to live in don't get. This drives up prices. It's worth asking how much we should encourage profiting on a basic need. How would we feel if drinking water went up 100-200%, a third of your income, because it's a great profit opportunity?
What you're talking about is a byproduct of lack of housing availability in the area.
Investors buying housing don't affect the market any more than someone buying for personal use.
Indeed, investors have to be more leery of overspending, as unlike your primary residence, any rental investment must be inexpensive enough to ensure you can make a profit, while also taking into account periods when it may be empty, and the myriad costs involved. And there's always the threat of market corrections and other events that could damage such an investment.
The reality is, for your personal home, you can justify any amount of costs, so long as you can literally afford it. Mortgage underwater? No problem, so long as you can afford the payments.
Many Toronto homebuyers pre-1987 took a bath after that correction knocked back home prices, which didn't recover 1987 levels until we were well into the new century. But so long as you can make your payments.
Hi James. I see what you are saying, and while I agree supply is part of the issue (particularly supply within a reasonable commute of where people work). I don't think it tells the whole story.
I can't agree with your statement about investors not affecting the market. With a limited supply, and an additional buyer with access to more capital and a motivation to outbid, prices are going to go up.
In my area investors have access to many tax incentives that aren't available to owner/occupiers, that more than make up for landlord costs. This leads to potential homeowners bidding the maximum any bank would lend them, and usually being outbid by investors. This is more common at the cheaper end of the market, where first home buyers want to buy.
With an understandable profit motive, and a financial head start, investor participation has increased a lot, and driven up prices way beyond wage growth or even the cost of supply.
It seems like more supply would help this, but I feel like this would also provide more opportunities for profit. If the market is profitable, why wouldn't an investor keep investing to their financial limit?
In my area, the financial incentives have been misdirected from the original goal of providing capital to increase supply, and become a pollical football where too many voters are locked in to a specific financial advantage.
Again, I agree increased medium/mixed density would help, and I agree landlords provide a worthwhile service.
I also think it's worthwhile examining what incentives are in place, and asking ourselves if they meet the community's goals.
Do we want more of this activity? Less?
In my area, the incentives have long gone beyond being targeted towards outcomes, and just become a pork barrel.
I'd like to see the incentives reduced, to the point that some investors leave the market for more profit elsewhere, but not all of them. I understand why a lot of landlords don't like to hear that.
Please make a myth debunking playlist, y'all! You have so many great video essays like this one and the piece on rethinking suburban traffic. Thank you!
One other myths: one is the idea that investor-owned units are being kept empty. This is a pervasive myth and has only ever happened a few times in London and in at least one of those cases, the building was unlivable anyways.
Possibly missing from your last point, I think many of the people making the argument that there are too many non-owner-occupied units might be scared that the units are simply vacant instead of being rented, which would be a detriment to both the buyable supply and the rental supply.
That's a concern many people have, yeah. But the evidence points to vacant investment properties being a few percentage points of the housing stock at best: th-cam.com/video/evYOhpjMql0/w-d-xo.html
Even if it was some unrealistically high number like 30%, building more housing is still better than building less.
We don't have any strong objections to vacancy taxes though. They seem to have a small but real effect.
People worry about this, but the worry is overblown and doesn't make a whole lot of sense. If you invest in a property, you make substantially less money on it if you aren't renting it out. There's no real incentive to just buy it and leave it vacant unless you're a criminal who is just laundering money.
Vancouver introduced a vacancy tax a few years ago to combat these fears of numerous vacant units, and it did almost nothing. The reason is that the vast majority of vacant units are only temporarily vacant, and for a good reason (e.g. they're between rentals, the owner has died, they are being renovated, they're being sold, etc.), not just because some corporation who don't know how money works bought them and did nothing with them.
it is honestly a plain dumb argument. It is just another "supply and demand doesn't apply to housing" argument. If rent prices are so damn high, then why would any moron let it sit vacant provided the demand? I mean rent prices wouldn't even be high without the demand in the first place.
@@krombopulos_michael tax right offs and loans come to mind as reasons to own a lot even if they aren't all full. AirBnB seems to be ignored in the video as it is becoming a problem in cities. People can more in a few days a week than actually renting it for a tenant for a 1-12 months.
@@lopoa126 OtU has addressed ABnB in a few comments for this video, their stance is that while our concerns are valid, ABnB isn't a significant enough problem to warrant worry as of now. My problem is that it will become a significant enough problem in the long term for the reasons you mention if they aren't addressed now. I don't think OtU is being deliberately obtuse or willfully ignorant as far as ABnB is concerned, and I do believe that if we are serious about mixed-use housing, and not just saying 'there should be a mix of housing options' when we really mean 'there should be more of my preferred use of housing', the kind of short-term rental program offered by services like ABnB should be allowed, but we need to have a conversation on how to navigate this field in the same way that we don't allow developers to develop exclusively luxury housing.
Good call making this video. A lot of people get lost in the sauce and go down rabbit holes that end up hurting more than helping. It's good for them to hear the people they look up to tackle the details and set them back on the right track.
Your ThinkPad analogy is flawed. A luxury laptop will lose 80% of its value over three years, which makes the still-usable device an affordable choice for price-conscious users. Those luxury homes are NOT going to lose 80% of their value---ever. In fact, historically they will increase in price faster than inflation. This will make them even more unaffordable in the future than they are now to the majority of would-be purchasers. There may be some benefit to having a healthy supply of upscale homes if it dissuades some upper-middle class buyers from gentrifying older homes/neighborhoods, but otherwise it doesn't help the affordability crisis.
We made an analogy to demonstrate the concept. We're obviously not suggesting that the timescales or numbers are the same. What's the same is the basic idea that restricting new supply (1) immediately increases demand for older units and (2) gradually decreases supply of them, which is bad.
"Buy a used thinkpad!"
Computers (and cars) aren't cheap simply because a lot of them are made, but because they constantly depreciate in value due to short product lifespans, and have a constant improvements in performance. Homes aren't built like that. There is no Moores Law of housing, and older homes and flats are often just as well built (and larger) than modern ones.
So that wasn't a great example.
The time-frames are different but it is most definitely the case that buildings depreciate. If you wanted to point out a difference you'd have been better off noting that housing has land, although that doesn't change the basic fact: banning or restricting new products drives up the price of old products.
www.theatlantic.com/ideas/archive/2022/01/stop-fetishizing-old-homes-new-construction-nice/621012/
Also you didn’t have to destroy an old laptop to build a new. In vancouver we are absolutely tearing down affordable stock to build McMansions and tiny, luxury condos. And yes, even with the empty homes tax, many of them still sit empty years later. All the empty homes tax did was introduce the idea of having your kids each ‘live’ in one of your ‘homes’
I’m a current renter whose building was bought by an investor who has applied to demolish our building and build something bigger. Now us current tenants will be kicked out and have to find a new place to live until the new building is ready. It seems like investors and government don’t care about what happens to tenants who have to leave the demolished buildings to make way for the new ones.
what do you want the government and investors to do? they own the property and will be increasing rental supply with the new development. by not redeveloping the building they will limit supply and keep rents high.
@@TheTroyc1982 according to my Google search they’re building condos where I currently live not rentals, the only rental units mentioned are the ones that will replace ours. At least they say we’ll be permitted to live in the new place if/when it’s built. At this point we have no guaranteed place to live if the demolition is approved and I don’t think new landlords will look at us favourably in our competitive city. People in my area are starting to choose medically assisted suicide since they can’t find an affordable place to live. The government and tax payers pay for this suicide under our public healthcare. Is that really our best offer?? I checked for my own case and we’re not eligible for any support since we have savings. Government support is only for those who are already in severe poverty or homeless, and the support those people get seems to not be enough for many. I guess I wish for preventative measures around homelessness and regulation of landlords/rentals.
My biggest issue with property hoarders is that an owner occupied unit can become a rental, but a rental rarely becomes an owner occupied unit.
I like the law that Massachusetts has for their trailer parks. If a trailer park wants to sell to a new owner, then the current tenants get right of first refusal. They still have to pay market value, but they at least have a chance to turn rental units into owner occupied!
Personally, I’d jump at the chance to purchase my current apartment as part of a condo HOA!
@Arron except for the fact that you own the condo/townhome and actually have an asset that you can sell whenever you move…
That's an interesting point, because for a lot of renters it's the opposite - they live in a rented-out condo and they worry about the possibility of getting evicted when the unit is sold and the new owner might want to move in (and for whatever reason it's not practical or desirable for them to buy the unit themselves). It's why many people prefer purpose-built rental buildings where there's no worry about the rental unit being lost to the buying market.
@@OhTheUrbanity I guess different regions have different concerns cause I’ve rarely heard that sentiment around here. Regardless, I think that more options is rarely a bad thing so that’s why I’m all for it.
Will it get used every time? No, but I’m sure there will be the occasional instances when it is and I’m into that.
In NYC, they literally made it almost illegal for a landlord to convert an apartment building to a condo or coop.
Property investors provide liquidity to the market which is essential for property developers to keep up.
Landlords buying housing to convert to rental doesn't just drive up prices for people who want to own. It drives down rents for those who want to rent.
There's a real equilibrium there, where if prices for ownership become too high and rents get too low, it makes most sense for the landlord to sell their units.
One huge problem in San Francisco is that so many of the new market-rate condo developments were built on ground that once held an equivalent amount of housing, that was *rent controlled* and thus was lived in by lower-income families often for decades, before being shoved out. In many cases, the amount of housing wasn't increased at all - only the price. And of course this leads to increases in property values in the surrounding area making it even more expensive to build the next thing - and so on and so on.
I strongly suspect that if they went through the cost of tearing down an old building and constructing a new building they would have liked to add more units but weren't allowed by the zoning or politics of famously anti-housing San Francisco. This should be a great opportunity to build taller with many more units so that previous tenants can return with the same rent and lots more people can live there too.
@@OhTheUrbanity nobody among the groups I've been following in San Francisco is "anti-housing", we're just anti-gentrification. Nobody objects to more units or even more floors. And the developers _don't want_ the previous tenants or anyone else paying those same rents, the _only_ want market-rate, and begrudge every single unit they're forced to provide at below market rate & do everything they can to get out of it.
@@OhTheUrbanity the rich in this city _don't want_ working class people living here _at all_ and they say so, in so many words, all the time. "If you make less than $x/year you shouldn't live in San Francisco" they say. Gentrification and displacement is _the goal_ for them.
@@dwc1964 You say that nobody objects to more floors, but it's famously difficult to build new housing there. Our video cited a study showing abnormally low permitting rates (although I believe that covered the Bay Area as a whole). For one random example, SF rejected a 495-unit building with 73 affordable units, "citing concerns about gentrification, shadows and seismic safety". And this was to be built on a parking lot! www.planetizen.com/news/2021/11/115376-san-francisco-supes-reject-proposal-turn-parking-lot-housing
when people complain about new housing for the rich, its not because they dont think the rich should have housing, its because they dont think the rich should be rich while others are poor. people complain about wealthy ppls housing because its the most obvious sign of income inequality. i feel its disengenuous to ignore that and act like ppl are just misunderstanding housing supply when really they're making a much broader point about class.
Victoria is still suffering the effects of the CMHC policies of the 70s and 80s that subsidized home ownership and penalized owning rentals. It wasn't profitable to build new rental properties and it was extremely expensive to buy or sell existing rental properties. The result: almost all new multi-unit construction was owner-occupied condos, existing rental buildings were converted to condos, and rental stock crashed. The rental vacancy rate has routinely been below 1% for decades.
You should talk about REITs and their role in Canada's housing crisis. I would love to always be a renter, but it doesn't make sense when a few companies own the majority of rentals and can just jack up the rent.
Similarly, there's the concept of "the housing ladder". Houses appreciate in value so fast that it often doesn't make sense to move around the country trying to get better jobs and more work experience. It makes more sense to just stay put, get on the housing ladder and then diversify your real estate portfolio by leveraging your home equity and buying more homes.
I'm a strong proponent of supply-side policy and I love the arguments you have presented. I do think that there is some truth to the demand-side/monetary policy arguments as well.
I think the point about dismissing the affordability concerns of new housing is overstated. While yes, market rate housing units do tend to lower overall costs within a broader region, that does not necessarily lead to what we really want to see, which is housing affordability for residents and avoiding economic displacement. You give Atlanta as an example of high growth, high build but it's worth noting that Atlanta particularly stands out not for dense urban construction (though that does exist here), but in detached single family home construction enabled by the city's geography. And this isn't really as helpful. Atlanta has some of the highest segregation of people by income (and for related reasons by race). This can limit access to economic opportunities for lower income and less specialized skill individuals. Think about it this way, lower income jobs serving high income people will tend to make more than lower income jobs serving other low income individuals. So when new housing construction does not have things like rent control (something made illegal on the state level in Georgia) or affordability requirements, this increases income segregation. Therefore it can make overall affordability actually worse not because of higher housing costs, but by lower incomes for poor residents. We see this play out looking at Atlanta's economic inclusivity and share of people who are rent-burdened. See here: apps.urban.org/features/inclusion/index.html?city=atlanta_GA and compare this to high housing cost cities like San Francisco or New York. Those cities do have affordability problems but New York's share of rent burdened residents isn't much different than Atlanta and San Francisco's is substantially LOWER. Even looking at where many low income residents of SF have been pushed to, Oakland, the difference in rent burdened shares is not substantial.
Furthermore, high single family home construction comes with the usual problems of the growth ponzi scheme Strong Towns talks about (too much infrastructure cost per housing unit) and environmental costs as this type of construction leads to car dependent neighborhoods with higher power needs leading to higher carbon emissions. Furthermore, because Atlanta is a sprawling metro the high construction levels primarily serving middle to upper income people further out from the city center can harm tax revenues that maintain infrastructure in poorer areas, further discouraging middle-to-high income people from living more mixed in with poorer folks, worsening the economic situation of poor people and making them more rent burdened even with low rent rises due to even lower income rises.
None of this supports NIMBYism of course and part of Atlanta's problem is still the pervasive single family zoned areas of the city that ought to be changed. Indeed given the externality issues of single family homes, good policy may not simply just allow higher density construction but need to create some added penalty to single family construction in order to make sure those seeking that style of housing pay the real cost of their lifestyle. So what the city does highlight is that not all new construction is created equal and that simply looking at housing prices can miss the importance that mixed low and high income can have on lower income resident's opportunities.
Finally, I do want to mention that while you are correct that some people really do benefit from rental arrangements that make mobility easier, that's not all or really even most renters. Geographic mobility tends to benefit people with specialized skills sets with frequent changes in jobs and locations willing to pay the highest incomes. This can overcome the disadvantage to wealth retention that comes when a rent gets 0% of the equity their rent creates. For people where wage differentials between areas do not justify frequent moves, or just folks who prefer to not having to abandon and rebuild social circles on a regular basis, market rate rents are a hindrance to long term wealth building. An owner putting part of their housing costs into a mortgage principle or even improvements/maintenance that increases the home value is effectively engaged in investment with a strong likelihood to get that back out at a later date. As with all investing this does come with the risk of loss, but even a total loss of those funds puts the owner no worse than a renter. Renters of course get none of the equity as that simply goes to the landlord. The only case where renting would be a better economic decision for these people living in the same area for the longer term then would be if rental costs were sufficiently lower vs ownership costs that a renter could use the difference with other investing options. Indeed, per this source there is not a single state in the country where, if a person plans to live in an area for 7 years or more, renting would be a better option: smartasset.com/mortgage/lender-reviews#us/7. Which is not an unreasonable time for most Americans (sorry don't know the Canadian stats) to stay in one place, especially after the relatively high movement younger years. www.census.gov/topics/population/migration/guidance/calculating-migration-expectancy.html. So while higher frequency movers can't be totally dismissed, it really does make sense for the majority of conversation to focus on people who do NOT frequently move.
"The only case where renting would be a better economic decision for these people living in the same area for the longer term then would be if rental costs were sufficiently lower vs ownership costs that a renter could use the difference with other investing options. Indeed, per this source there is not a single state in the country where, if a person plans to live in an area for 7 years or more, renting would be a better option" - didn't click, but I have to suspect that this is based on a no-rent-control situation. Because I'm here in my San Francisco Noe Valley 2br that I moved into in 1994 and the only way I'm leaving this place is feet-first...
I'm still opposed to the private-ownership model for all the reasons well- and repeatedly-stated by others around here and believe that all rental housing ought to be cooperatively or municipally owned and professionally and accountably managed, but as things are, a rent-controlled apartment with a nice human landlady is a pretty optimal situation.
"Some people really do benefit from rental arrangements that make mobility easier, that's not all or really even most renters."
Thank you, thank you, a million billion times thank you. I feel like this conversation is dominated by the 25-35 age demographic who find themselves moving every time a better job opportunity arises. You know, the kinds of people landlords love the most and will rent their space to over a family 95% of the time.
@@dwc1964 Public or cooperative housing is a great way to make non-individually owned housing a benefit to almost everyone. And that study is based on all Americans, the vast majority of which do not enjoy rent controlled situations. Rent control is also a way that landlord extraction can remain low enough that equity in one's home isn't necessary for personal wealth gain. But market rate rents draw money from the productive economy into, literally, the rent seeking economy and academic economists are divided on whether this even is effective at expanding supply in the real world (the econ 101 argument misses so much real world nuance it can safely be ignored).
@@somebonehead Yep, and those frequent movers are less likely to really fight for better long term maintenance (why bother, you're just going to move in a year). Or for organizing their fellow tenants to stand up against bad acts by landlords. So pressures for long term sustainable housing decreases.
@@TheScourge007 the thing that Margaret Thatcher did that caused the most long-term damage to the working class in the UK was not busting the miners' union (that's a close 2nd), but privatizing council housing with "right to buy" (and forbidding councils from using the proceeds to build more council housing!).
Private industry is like moss, it grows where you let it.
Sometimes, its secondary effects can be handy, like its ability to appeal to rapidly shifting consumer tastes.
The externalities of the profit motive being the sole motivation for production need no introduction.
Sounds like what we need to do is introduce more low-cost social housing and set the private market out
to play in the park with a short leash to fill in niches in consumer demand that aren't or can't be realized by social housing.
This is such a fantastic video. So many of us know that these are bad arguments instinctually, but you've articulated it so well that I have a section in my YIMBY note taking system with your name on it, and it's full of points you've made in videos like this. Thank you, and keep up the good work.
That’s very cool to hear, glad we could help!
You had me until Myth 3. I'm not saying we should ban people from owning multiple houses, but there is a legitimate issue in, at least, North America presently with landlords gobbling up all the property and renting them at prices higher than what otherwise would be someone's mortgage. Sure, renting is more flexible, and there will always be a need for that, but there is a serious issue with property hoarding.
If rent prices are very high it is usually because there are not enough rental properties on the market. So the rental property is helping drop rents for renters.
Agreed. There’s a serious issue right now with wealthy investors gobbling up land and houses. Combined with decades of restrictive construction has led to price fixing.
Are you in the US? I suspect that part of the property hoarding problem is connected to the absurdly low interest rates that we have had for the past ten years. When borrowing money to buy rental houses is nearly free, people, businesses, and investors will see housing units as a "Buy."
@@Lucasjamespetersen Yes and no. The absurdly low interest rates in the US and the shifts in desired living arrangements during the pandemic have distorted this connection between price and availability for rental units. When mortgage rates are crazy pants low and prices are rising, people will invest in single family homes. There are at least two families I know personally who were evicted because their landlord wanted to cash out. The sale terminated their lease and the new owners wanted them out so they could renovate and rent for more money. Whenever novice investors enter an overheated market, bad outcomes tend to follow.
@@Lucasjamespetersen Lol, it is? Because all I can see it rent prices rising everywhere -- even with the new developments. We like to pretend that landlords will suddenly stop raising prices if more properties were available, but that isn't what landlords do. They'll keep raising the cost of rent every single year regardless of availability. Keep dreaming.
Exactly. What a novel idea uh? Someone in the 1700's found out that if you increase the supply of something, without changing demand the price will inevitably fall.
New York is extraordinarily expensive mostly because the City Council is basically made of large apartment owners who don't want their apartment price to go down. They are literally "fixing" the market.
This is so simple yet still comprehensively covers the main myths.
Thanks so this great video!
Thanks!
A major problem in cities are investment properties that are left vacant, these are the problem as they cut housing stock while inflating pricing.
What are your guys' thoughts on a Land Value Tax with regards to urbanism? You guys always do a really thorough, well-researched job in all your videos, so I'd love to see what kind of content you could produce on LVT.
I think a lot of this is tied to other social issues also. I'd bet that most individual landlords aren't snapping up houses because they love the idea of being landlords, they are doing it because its a path to building wealth and creating a base that you can retire on. If we had better wages, better pensions, and other good investments most people wouldn't even want to be landlords in the first place.
And why are labdlords choosing that rather than forming a union to push up wages? Why aren't pre-landlords fighting for increases in social security? It's a Me Me Me mentality
Great video. To sum it up the solution is to build as much housing as possible. It doesn't matter what type expensive or affordable just build it. If they build too many luxury condos the price for luxury condos will drop and middle class people will move up. Then poor people will move up into the middle class homes.
3. Well, supplying rentable houses shouldn't be the job of private individuals/corporations either.
If you want to add more public/social/co-op housing, we're completely with you. But I genuinely don't think that eliminating private rentals as an option is at all a good idea.
@@OhTheUrbanity I think you made your case well for that argument, it's just that you didn't address the issue from my perspective, that's all :P
In the current system, any drastic change will inevitably result in jarring consequences, one way or another, so I think you're right to be wary of it.
It's just that drastic changes can't be implemented in a vaccuum, I think.
Should writing comments be the job of private individuals/corporations?
I’m trying to live my life by very hard rules and I need to know how things should be.
@@PaigeMTL what
Suggestion: Do a video on how zoning most of the city for single family actually makes it harder for homebuyers interested in a single family house.
There are many want-to-be homebuyers who are shocked at the competition for every house on the market. Many of them will get angry at investment firms buying and renting out houses. But the reality is that zoning most the city for single family means many people who would have rather lived in denser housing had no choice but to get a single family house. Renters that would be happy with an apartment often end up renting rooms in a house because there are so few apartments. The competition exists because there are no alternatives for those who want them.
I have a variation on the "Home hoarders = bad isn't true" thing.
(From my limited understanding, feel free to correct me,) In Berlin, you have big conglomerates buying up the housing and driving up prices, instead of actual landlords who own maybe 10 flats. That makes the market uncompetitive, prices have gone up a lot. Thus, there is a movement to transfer the conglomerates into public ownership.
Its the opposite extreme end of the spectrum so to say. The sweetspot should be somewhere in the middle
I'm not sure what the numbers in Berlin look like, but in theory it's certainly possible that if a small number of entities controls the market they can engage in anti-competitive behaviour.
I'm pretty hopeless because the people who benefit from the status quo don't want change, and the people who desperately need the status quo to change don't understand basic economics so they support the wrong "solutions".
Um, you are ASSUMING that rentals will be affordable, and, me, in rural BC, rentals are NOT affordable, and the homeless population continues to grow. My husband and I own our condo, and paid a bit lower than the market value was at the time. In the last 2 and a bit years, our condo has gone up 2.5 times in value from when we bought it. Rentals are allowed in our buildings, but the rent prices have gone from $600 for a 2 bed unit to $1200-$1300 a month, plus utilities. NO ONE, and I mean NO ONE, either on income assistance or working poor, can afford to rent here, and NOT be house poor. The rent prices here are slightly lower than Kamloops, the nearest big city to me. There is a chunk of land designated for low income/disabled in our town, but no one wants to touch it. The profits won't show for 10-20 years down the road. As far as "affordable" units, what exactly is that? BC Income Assistance shelter rates for a single person is $375/month. NOTHING is affordable for them, they either have to be house poor, or pool together with others and rent a space for a fixed address. The $375 includes utilities, but not internet... apparently internet is a luxury. /:
What you're describing is essentially trickle down economics - housing (and other stuff) that is currently premium and is accessible only to the wealthy will one day go down in value as the wealthy abandon it and will become affordable. I have some ethical issues with that (poorer people get rich folks' scraps), but putting pride aside, it works only in theory.
Trickle down economics work well for stuff like cars and appliances because that stuff goes down in value as it's used. Housing though, being a market highly manipulated by the wealthy, does not lose value. So for premium housing to become affordable one day, we'll need to eliminate real estate market manipulation.
Problem is, it's not only the rich developer firms that are manipulating housing. Bank of Canada itself is in on manipulating the inflation with interest rates. Since real estate is directly tied to the people's borrowing power, reducing interest rates makes borrowing more accessible therefore heating up the real estate, whereas higher interest rates discourage borrowing therefore cooling the market. As long as the rates are too low or too high, housing will be a mess. It can start being normal if the interest rates are in the sweet spot between too high and too low and then the real estate would actually start following the regular rules of a capitalist market.
But since both the developers and the government on all levels profit from higher cost of housing (developers by upselling it, governement from higher property and building taxes), it's not in their interest to stop manipulating the market. Zoning does play a role, but right now the burning issue is manipulation. Zoning is only secondary to that and wouldn't solve anything by itself.
Edit: then there's also the always burning issue of transportation - people that want to live in the city really just want easy access to the city. If they fix suburban zoning making it denser and more mixed, but fail to build in good public transit and car alternatives, people will still not want to live there and would rather live within the public transit reach.
I don't know if I agree totally, while what you're saying is important, when we look at inflation adjusted housing cost increases in Tokyo ( where house building largely kept up) vs London( where zoning new housing is hard to build) we have a 16% increase in housing prices in Tokyo as opposed to over a 400% increase in London in a 20 year time span with comparable population growth. I know this is just one case but I think you underestimate zoning's contribution, it's a the primary way local government inflates property values for wealthy homeowners. As far as transit goes I agree, however if you build density in a car dependent area, you will force that area to adopt meaningful public transit as the car dependent transportation system is overwhelmed. You also need a certain level of density to make public transit sustainable ( both from the tax side and ridership side) for a city government to break even on that investment.
@@mattbalfe2983 I mostly agree with what you say! For Tokyo vs London, I'm not sure if that would affect anything, I haven't done my research, but I knew one thing about Tokyo - it's been incredibly expensive to live in for over a decade now, and that might affect how much their prices can still grow. And with London, I've only visited, but it seems like the city by now is developer up to its boundaries? And fairly dense too, it's pretty walkable as well (although the car culture there is strong). Wouldn't that mean that the supply of their housing is fixed now, unless they demolish and build denser? That could explain their inflation. But again, no research, just piecing things I hear. And the UK economical system is similar to the North American in that it is full of speculation for rich people.
As for the zoning/transit, that's where I want to tell about Montreal (where I live). Concerning zoning, housing has become unaffordable in all types of zoning. Myself I can't even afford a house in faraway rural Quebec. Now building even slightly denser housing and smaller roads could solve this problem partially, but it doesn't depend on Montreal. The vast majority of the city is grandfathered into mixed-use high density development. But most new development is being sold as "luxury", starting at $500-600k for a 1-bedroom, which is absolutely bonkers. For example, Griffintown has just recently been redeveloped into very high density housing. But the entire neighborhood was marketed for wealthy people who want to live close to work. It shot the entire area's prices waaaay up. "Luxury" housing has split the real estate market into 2 markets - peasant (affordable) and rich (luxury). The rich market is what's getting its supply, but the peasant market has a very limited supply. Even here in Montreal, the government mandates that a certain percentage of all the developments should be affordable and socialized housing, but so far the developers have been going around that. So lax zoning by itself can't solve the housing affordability crisis, unfortunately.
As for the transit forcing its way into car dependent dense areas, you wish! I wish too. Research "REM de l'Est". In summary, it's a sweet light rail system being built in Montreal's South Shore, centre and West. They were gonna build a line into the severely underserved and very car dependent dense east. But the people there organized and protested it citing absolute bologne reasons (including property value, of course). They say just more buses would solve it, but no one takes buses. And even for the original REM being built, the aforementioned Griffintown has argued with the system enough for the station that was meant for them to be pushed out of the neighborhood. And it's also fairly car dependent. The only different is being close to Downtown, they also bike. So unfortunately transit doesn't follow dense development, at least not on the continent where transit has such a stigma.
In my slightly totalitarian (lol) opinion, the only way to solve the housing crisis is to solve all the crises. Inflation needs to be capped, housing costs need to be capped, strict rent control, forced temporary recession. It'll cause trouble for big business, big buisiness would cause trouble to the people for a brief period, and then everything would calm down. But I have no power whatsoever and just get to voice my opinion on TH-cam lol
@@SkaN2412 I think the underlying issue is that land values get really expensive at a certain point even with good zoning, transit...etc. Instead of capping house prices I might try an LVT with UBI or something like it.
@@mattbalfe2983 UBI would definitely help in many many ways. But also, decommodification of housing for sure. It's the only tangible product that is constantly going up after purchase, makes no sense. Manipulation...
@@SkaN2412 Houses don't appreciate, a mobile home or tiny house depreciates over time. So does any building in isolation, what is needed is decommodification of land, not houses. A house alone depreciates, land is generally what is responsible for house valuation going up after purchase
Those are some good points. A couple arguments I have though is that rentals appear to be helping concentrate wealth among those that can afford to invest in them...ultimately making renters, who can tend to be less well off or younger, become less capable of finding stable housing and becoming financially stable in the long run. Short term rentals (air bnb etc.) are a good example of this too because additionally they actually do remove housing from the market. A lot of tourism heavy regions have a terrible time finding long term rentals available for residents there, where there was a sufficient amount before. Also many new-build single family homes are wayyyy bigger and more luxurious than most people need. A lot of that space and capital investment used to build those could be better off trying to get some more space- efficient and dense apartments/condos/townhouses built which would cool off the market faster and help stop eating up our farmland and forest! It's not always about what the market or wealthier home owners want. Just because they want and can afford a 6000 Sq ft home, wouldn't that be better used as 4x 1500sq ft homes for 4 families?
That's a zoning problem (and a NIMBY problem,) though. When I was a renter, I chose an area that was farther away from the neighborhood I wanted to be in because the US R1 zoning meant that my desired, walkable/bikeable neighborhood did not have any multifamily housing choices.
I am fortunate enough that I own a home in my desired neighborhood now. (We paid a premium for this house and the current banana-pants market has tripled its value.) We would like to add an addition with garage space at ground level and living space above. Our ideal situation is to structure that living space to be easily converted into an accessory apartment. We can't do that without a zoning variance which will send our neighbors into a panic.
I'm all for internalizing the externalities of far exurban development back onto a developer. Make them pay for the road improvements that lead to the McMansion subdivision they plan to build. Perhaps level a property tax surcharge to offset the cost of expanding rural school buildings. Even something like different base water and sewer surcharges to maintain far flung utilities makes sense to me. But attempting to manage the real estate market through discouraging large single family houses seems futile and counterproductive.
Many of the retiree parents of the kids I grew up with have chosen to build absurdly large homes way out in the county. (The excuse is that they want to fit all the grandkids in at Christmas-time.) I doing so, they have sold their 2,000 sqft houses to young families. A similar phenomenon seems to exist with older folks wanting to downsize into a fancy (and still quite large) condo in a more urbanized areas. I suppose building more 2,000 sqft split level ranchers in subdivisions would have the same effect on supply, but the new houses with young families would be the ones way out in the county without any grocery stores or parks.
"A lot of tourism heavy regions have a terrible time finding long term rentals available for residents there, where there was a sufficient amount before." Too true. Landlords will almost always rent out to short-term renters before long term ones, especially if they can keep increasing the price of rent every time someone moves out.
@@somebonehead Edinburgh is a fantastic example of this. It’s a small city geographically, and already fairly densely built, so “build more houses” is not as simple to do as it is to say.
But it’s a real tourist destination, especially in the summer when it hosts one of the world’s largest comedy and theatre festivals. Some landlords in the city will happily leave houses vacant for months on end because it’s so lucrative to rent during the high season that they can make far more in two months through Airbnb than they could charge in a year to a permanent tenant.
The city has had to legislate to try to mitigate the problem, but there’s still a massive housing shortage because the profit incentives for landlords are strongly at odds with providing affordable housing to the city residents.
@@paddytheduke I directed OtU to your comment, let them know more about this situation. If you have any specific data about this as well, we would all love to see it.
@@HarryLovesRuth the trend seems to be for newer subdivisions to be built with HOAs that are responsible for communal infrastructure upkeep. This directs maintenance costs directly onto residents while communities keep collecting taxes, but they don't have to pay for the neighborhood infrastructure.
Zoning is a problem, but so are road design standards that push everything far away from each other as well.
I disagree a little bit on Issue 3.
Moving is done pretty frequent in the US or even in Canada compared to europe.
Still owning and then selling the home after a few year can actually make a profit particular in time of rising housing prices.
In general your argument is still valid.
Moving used to be more frequent in the US but that's slowed down over the recent decades. Most likely due to increased cost of housing (I mean, if it took more and more debt to own over the years, would you be as willing to move?). Not all times will have rising house prices either nor all places (Detroit =/= SF). And rising home prices mainly benefit those who already have homes. It actually doesn't help immigrants who come here with little to no assets or kids who grow up 20-30 years from now.
The whole point of housing affordability is to not make housing prices rise.
Where I live (Manitoba), there's a land title tax you have to pay every time you buy property. It can add up to tens of thousands depending on your property price. It makes you think twice about moving!
When it comes to rentals, we should really consider creating penalties to make it more expensive to hold on to empty units.
If no one can live on minimum wage, it's NOT affordable!
Since when was minimum wage livable?
In Lisbon, there is a mindset that is 100 years old, that rents are high because of gredy landlords. So, there are policies of rent control dating from the 1910's, and discriminative laws against landlords. The 90's were also a time when the government tried to make renting even less desirable by giving cheap credit to build imense suburbs.
This means that there are few landlords when compared to other european nations, and no corporations that rent houses. So, the few landlords that exist can charge what they want.
The government tries to tackle this with more renting regulations or making evictions extremly hard, wich makes landlords remove their houses from the renting market, renting only to tourists that will allways pay their rent or sell them to wealthy foreigners. Imagine that you are an old person with a relativelly small pension (wich compose the majority of landlords for historical reasons in lisbon), and you have an house that you rent for extra money. Now your renter cant pay rent, you cant evict him, but you still have to pay for the house (and all the taxes/costs related to it), wich could be ruinous for the landlord. So people just dont rent to people that migth lose the ability to pay rent, this includes most nationals.
The government also gave up on social housing because of the extremelly bad experience they had with it. With social residencies becoming little hells on their own due to bad local policies.
So, by trying to make rents afordable, the government ends up creating social problems.
What makes me mad is that, in 2011 the country declared bankrupcy because of the terrible economic policies of the socialist government. A rigth wing government came and was forced to apply austerity by the EU, one of those measures was the liberalization of the renting market, wich ended up with the first time in history were the renting market grew in modern lisbon. Of course, the government became very unpopular because of austerity the EU imposed for saving our asses from the socialist disaster, and the socialist party became popular again, removing all those reforms, wich culminated in the recent contraction of the renting market again.
I disagree with the last point made in this video. While having rental supply is important, there’s a sinister reason why so many people who would like to buy a home are forced into renting. By allowing individual investors and companies to buy up individual homes and convert them into rentals, they are reducing the supply of non-rental homes on the market, therefore increasing prices, and increasing demand for their own rentals because fewer people can now afford a mortgage. We have to remember that homeownership historically has been one of the only ways for working class and middle-class families to build wealth through home equity instead of paying a landlord for life.
It's very true that if multiple property holders always rent their vacant houses it won't be an issue. But is that always (or most of the time) the case?? Especially when it comes to luxury apartments, I've heard some keep them empty for years.
What about a policy that required second and beyond owners of homes to occupy those homes, but allowing first owners to rent them out? That way anyone who wishes to invest in the housing market can only do so by building new supply rather than competing against buyers for existing supply
Housing matter is an important issue at stake as it is a basic need. Would you care to cover this topic on cities with successful housing policies such as Singapore and Vienna? In Singapore the government enforce cooling measures to ensure price of housing remain affordable. It can serve as a model for other cities and countries to follow.
That sounds super interesting! I’d love to hear more about that!
@@SaveMoneySavethePlanet I wish I know how to create videos showcasing solutions of successful implementations of public housing. So perhaps I give a little nugget here.
In Singapore, there is 2 categories of housing, public and private. Under public it is called HDB, provides cheap rentals (literally free or $100-$300 a month depending on income, family members), as well as homes for purchase. Variety ranges from 2-5 room flats, maisonette (double floors) etc for citizens and permanent residents only. No foreigners can buy from a public housing market. For a 4 room flat, price ranges from $240k - $600k depending on location (and still considered affordable as our median income is $4800). Prices are regulated by the Government and subsidies are granted for married couples to encourage having families.
Payment wise, as citizens, you can choose to have service your mortgage either by bank or via mandatory retirement fund known as CPF (something like ROTH IRA). Mortgage rate by banks in Singapore ranges from 1% to 2+%. But if you choose to pay with your CPF, you pay HDB at a fixed rate of 2.6%. And for those frugal (not bothered with one's status), if you prefer buying a house below your affordability rate (the government provide a "Housing Loan Estimation" or HLE for short calculator for this - depicting your maximum home price allowed based on your current expenditure, income, liabilities etc), you may end up not having to pay mortgage by cash at all, if all is covered through CPF payment. Example (for sake of simplicity), even if I could afford a $500k home, I purchase a $350k home. In Singapore, every month, it is mandatory for us to contribute 20% of our income to our retirement fund CPF, in which our employer will top-up 17%. As my total CPF contribution (20%+17%) is $2000, and my monthly mortgage is $1000, there's no need for me to pay with cash as my monthly CPF contribution is more than enough. Of course there's downsides to this, but I won't cover it as it will be a lengthy explanation.
Private housing such as condominiums, landed properties etc, are open to all. A 3 room condo is $1 mil upwards, and all have amenities such as pools, gyms, 24hr security. In times of housing crunch such as current covid situation due to postponement construction of new homes as well as influx of foreigners wanting to settle in Singapore, the government increase stamp buyer duty and additional stamp buyer duties (absd). ABSD applies to purchase of 2nd homes targeted at property investors. Meaning if you already have a property, and wish to buy another one to rent out, you have to fork out additional 17% of the price of property (which recently an increase from previous 15%). Imagine for a $1 mil home you wish to purchase, you have to pay the government $170k to qualify. This is one way to deter overheating property market.
On top of this, the government mandated a low total-debt-to-service ratio, making it difficult to secure a mortgage, unless you're filthy rich. Hence, it is pretty unlikely for Singapore to face mass default of mortgage payment crisis etc. I'm sorry if what I've written here is super lengthy and hard to understand. Hope this helps..
Just a note, Dow's Lake was mislabeled as being in Montreal, other than that, great video!
Thank you!
As much an new development helps, the fact remains that there are simply way too many unoccupied houses. A system that values keeping a house empty rather than having it be used to meet demand is one with a fundamental flaw. Housing should be a right instead of an investment asset.
Thank you for making this! I've been seeing more and more people make the claim in Vancouver that adding supply won't solve the affordability problem and that such a solution has been debunked... If they bother to defend that statement it is usually with some small study focusing on some obscure outlier. This will be a good video to link people to.
Putting priority 'only' on single family or up market housing like luxury units is still a mistake.
If you only build luxury you don't build affordable at the same place.
Exactly. I think someone could easily take away from this video that it's perfectly fine to build exclusively McMansions and maybe some luxury condos.
@@Astromancerguy That's how I feel everyone addresses this conundrum, on *both* sides. If they're not someone making $200k/yr demanding more luxury housing, they're some ardent tankie saying we should all live in commie blocks and like it.
@@somebonehead I hear ya. Missing middle is called missing middle for a reason.
Sure if you "only" build luxury, but there is plenty of room for both.
And if you're worried about rising input costs, is your plan really to supress the wages of construction workers?
@@Astromancerguy Wdym, the video mentioned non-market housing too. What it does say is that more market rate housing helps, as building more of it will make it less luxurious.
This channel is a hidden gem, you humans deserve way more subscribers!
This idea to "just build housing" never works anywhere around the world.
Jakarta has little to no regulations on housing. Thus developers and individuals have been building housing to their hearts content. But unfortunately, housing prices still goes up. Many people now can't live in Jakarta anymore.
"You don't have to build housing" works even less! What do you think of the studies and evidence we present in the video?
Another policy worth thinking about is a land tax and land dividend to all residents.
Because Jakarta is literally sinking.
One argument I’ve heard is that there are not enough construction workers to being housing fast enough. This could be the primary reason to discourage luxury property development: it takes more labour to build it.
My idea (hopefully others’ too) is prefabrication. Build new stock from modules. Yes, it will create tracts of identical housing but if your choices were unimaginative housing or homelessness I think people will go with vanilla.
The next crisis coming is energy. Energy for heating/cooling and transportation. We can build to anticipate this: mixed-use, high-density. Build 5-6 stories, bottom two stories for retail and offices. 3-4 stories for residential. Cheaper to heat & cool. Cheaper to provide services to. Less need for cars. Fewer cars means fewer parking lots and slimmer streets so still more room for building.
New luxury condos are only helpful if they aren't replacing older affordable apartment buildings. If they are replacing de-facto affordable housing with much less affordable, they are making things worse and displacing people who then are competing for the remaining amount of relatively affordable housing.
If they are replacing single family housing or a parking lot, then yes, they will help affordability in the future when they're no longer new and shiny.
This is an informative and interesting video. Would a Land Value Tax (As recommended by Henry George a Century ago) help with housing issues?
High rising buildings were vilifies by the media. There are countless movies about a hold out hero against evil developers.
It's a moral dilemma when both people are right but it affects a large number of people negatively. I think both are right. This is what private home ownership is about.
This is why people should be more focused on vacancy taxes. If it costs an owner to have a vacant house, they're incentivized to either sell or rent. As a plus, you could use the revenue from that tax to directly fund low income housing and "starter homes". In my area we have a whole lot of big houses with 4br/3ba and nearly no small houses with 2br/2ba. As far as I can tell, the reason for this is that the difference in the cost to build is something like $40k, but the bigger house can sell for $100k more. No incentive to build small, so there's no on-ramp to ownership.
I think got a nice example from the car market.
We need need full size luxury car as well as smaller hatchbacks or compact size cars that are more fuel efficient and cheaper. For example a Cadillac Escalade for 80K as well as a Toyota camry for 20K.
After a few years both cars have lost value but the camry is still cheaper and doesn't cost in insurance, repairs and fuel.
Great Channel! Great videos. I am curious about a more historic way we have dealt with growing families, creating family-community 'compounds' where grandparents, parents, kids, and grandkids can grow into the same family structure. Homes were built larger to accomodate this growth. Longevity limits the size of home and how it can meet the needs of a family. If the birth rate per family becomes too high, then additional structures need to be built. Overpopulation is a reality on our burgeoning planet, regardless, given unsustainable growth and limited resources. It would be helpful to understand how one might address this amidst the call for endless construction to match population growth.
Do you think there’s sortve a stigma around being a construction worker that keeps many younger people from seeing it as a good career option?
Personally I’ve heard bad things about harassment and overwork from construction employers/managers, racism, sexism etc.
Construction is really tough manual labor that wears out your body over time and that's not a secret. It's actually pretty sensible to avoid it if you want to prolong your long term health imo. If you get hurt, well it's not an accessible job at that point
6:28 partial truth. Some investment properties stay empty - see for e.g. Louise Rossmann and commercial rentals in NYC; renting out a place for cheaper would turn the investment upside down as lower rent means lower value, while staying empty does not. Some are made available to the "short term rent market", which is a politeway of saying tourism oriented occupation via a certain specific company that had a "creative" interpretation of providing statics to municipalities by eliminating outliers.
Do bear in mind that some investor-owned housing is unoccupied, or is used for short-term rentals. The latter seems to have become rather popular, and is hard for regular renters, especially those on low incomes to compete with. There's a reason municipalities have been trying to implement vacant home taxes and rules, taxes and limits on Air B&B. And the presence of those two trends means you can't assume that investor-owned housing is actually housing renters, as opposed to being used as an illegal hotel or as part of a money-laundering operation.
Thank you for that. I've been joining the SF housing debates and I'll be linking this essay as my response.
Good luck! San Francisco is on a whole other level for NIMBYism.
Like China, we gotta just go nuts putting up towers everywhere.
Also, for anyone working in a generic industry like medical, move to arctic Fargo ND where there hasn’t been the level of housing inflation.
I think cities need to focus on regulating Air BnB and similar things because that just enables units to sit empty in high-demand areas when there are also empty hotels already available.
A house is not a used laptop. It does not looses value over time. Expensive appartements will remain expensive. High cost of rents is not the problem as you say. Problem is the availability of rents pushing prices to rise.
Structures do in fact depreciate. Land works differently of course. Not sure what you mean by the last part.
@@OhTheUrbanity It won't loose 75% of it's value on a 10 year period. Especially if someone lives in it.
@@ugowhereiwent A mobile home or mobile tiny house certainly will, there's nothing special that really differentiates it from a normal house if it had wheels, yes any improvement on a piece of land depreciates, the difference is that the land value doesn't because the supply of land is fixed and unless your area dramatically loses population ( in which case large problems are afoot,) demand does for that land will only increase and thus land is an appreciating capital investment. Solution is to heavily tax land rents and redistribute them someway ( whether that is in government programs or UBI.)
@@ugowhereiwent We never remotely suggested that housing follows the exact same trajectory as laptops. We said they're comparable in that hindering the sale of new units will lead to higher prices for older units too.
the problem is that housing works in an exclusively capitalist system, as seen, for instance, in zoning laws. people are upset that homes are expensive, but that's exactly what they're gonna do when they're ready to sell: make prices as high as possible. at a minimum, we need to focus on non-profit at-cost options for housing. rental wouldn't be a scam if there wasn't excess wealth being extracted to the landlord. let people rent at cost. and this wouldn't abolish the private market either. if people want to pay market rates for a fancier rental unit, they can do so. but it would generally disincentivize some of the crazy investment movement in property hoarding. (also, would love to see the gov't invest in volumetric construction to put up a whole bunch of homes quickly and affordably.)
p.s. I'd like to see a law that gives individuals and non-profits first rights to a property rather than a corporation. E.g. maybe something like corporations cannot bid for the first month it's on the market.
I think the best way to mostly do this is implementing an LVT and land dividend, that being said corporate investors flock to things in fixed or limited supply. In this case urban and increasingly suburban housing is arbitrarily fixed by zoning laws. Flooding the housing market tends scare off these investors and as Oh the Urbanity has pointed out, its akin to flooding the stock market.
I'm in favor of banning/disincentivizing one person owning too many property ownership. I think max one person/household should own 2 properties (1 principle, 1 rental). In Taiwan, there's a doctor that owns 91 real estate units -- this truly makes the rich richer. I would prefer 90 more land lords than having 1 landlord owning 91 property
@ 1:12 -- Archlinux desktop for the win!
For your last point, I disagree. I think it's better for people to rent to "smaller" landlords instead of large companies. A lot of those large companies are known to be neglectful anyways. Also, a lot of renters don't want to be renters. That's the main issue with the housing market... It makes me feel like you missed the entire point of the issue, or that you perhaps already own a home and are not really on our side, so you're trying to convince us out of something that would be a good thing.
On the contrary, we rent and we don't think eliminating the private rental market or forcing our landlord to sell our home to someone would be good for us. As for individuals vs. companies, that's interesting because very often we hear people say the opposite, that they prefer to rent from companies because it's more consistent and you know they're not going to evict you so that they (or their family member) can move in.
@@OhTheUrbanity Good to know that you are genuinely on our side for this. Important because there is a lot of manipulation out there.
When I said neglectful, I meant in terms of fixing issues in housing. I've found landlords who own less homes to be more diligent and responsive at preventing hazards and keeping conditions livable. When I rented from someone who owned many houses, he once turned off the heat in February to save money, and that was after I was told I would have to move out because he was selling it. But with my current landlord, I live with her and it is the only property she owns (and only one of three her family owns). Her family is lighting quick to fix everything. The stories I have heard from others in my community line up with what I'm saying.
Yes I agree, this is my first time on this channel and this video sounded like they are working for the REITs/developers. I live in a REIT building and there are lots of problems and lies.
@@OhTheUrbanity I will also add to what you're hearing. I live in a corporate managed property and it's very well managed because they have maintenance staff on hand to inspect units and fix issues within 24 hours. The people I know who rented from individuals around here had much worse experience because the owners weren't professionals and let things degrade to the point that roaches were prevalent in the property. Public reviews are also open for corporate managed properties which cannot be said for individually owned ones. Those are a crapshoot and harder to look up past experiences for.
@@OhTheUrbanity I think the same, I much prefer renting a purpose-built rental apartment because it feels like a more stable long-term living condition. Also, it feels more like MY home and less like someone else's.
NIMBYism to stop new construction of affordable low income (section 8) housing that will attract crime and also to stop high density zoning causing gentrification risking of being priced out and losing the simple peaceful neighborhood identity.
That was the longest incomplete sentence I've seen in a while. That's not a criticism and it's definitely off-topic, but had to comment. 🤣
landlords are a good source of protein i’ll give them that
Here's your (You)
Society construct how we look at housing for instance nobody would debate that we need food to survive or water to live...theres no real discussion regarding affordability of water because most societies see it as a right a basic human right... so if housing was thought of the same way instead of a personalized commodity or achievement.. housing will be a priority instead of just a discussion.
Which are? In most societies, people who can't afford to live in the capitals live in shacks in the woods.
I usually love your videos, in this one, you make several points that I really don't agree with. Landlords and investors limit housing availability and raise prices, full stop. We need a decomodification of housing and we need it now. Rentals are already too expensive to move out of, I know a lot of people who can't move out of their rental appartment without increasing their rent by 50%. The notion that in this current economic atmosphere rentals increase freedom is kind of ridiculous. For poor people, they turned into traps real fast during the pandemic. Saying that we need landlords and investors because that's where rentals come from is a flagrant lack of imagination on your part and it's disappointing.
My issue here is that you haven't really clarified what alternative you're proposing. We laid out our position - support public/social/co-op housing to increase options for renters, but we think the idea of trying to limit private rentals (in order to move stock to the housing market) is fundamentally anti-renter. Are you arguing that we should in fact ban/limit private rentals? What does that policy look like?
@@OhTheUrbanity I don't have the pretention of laying out a perfect housing policy in a YT comment section. That's not exactly what they are for. That kind of thing take hundreds of pages and it's unrealistic to expect from people who criticize your points. The Gravel Institute has a good video and IRIS also has some fantastic research on housing. Let's hope that's a good enough starting point.
Currently trapped in my rental. Rent increase this summer is more than I can afford yet there is nothing the surrounding states that is the same or lower. $100+ rent increase each year forces people like me to move every few years until we get stuck because there is nothing available. Been looking for since COVID started and my landlord decided month-to-month was better than a year. The last place had cockroaches and mold. What's next...
The laws of supply and demand have not been repealed for housing. The truth is, if there was a LOT more supply coming online, investors could not expect to make a killing because of the housing shortage, and housing would become a LESS appealing speculative investment.
It ultimately comes down to the NIMBY's who want to enjoy the benefits of a growing economy, but want their neighborhood to remain exactly as it was the day they moved in.
@@lopoa126 I'm so sorry. I'm in the same situation. Hopefully we can find actual solutions to this mess. The continued comodification of housing is unsustainable. There are housing comities all over the place if you are looking to get involved. :)
I think you make some good points in addressing these arguments. With regard to the issue of renting, however, I think your criticisms are only really applicable to half-measures that disincentivize renting out properties. A more radical approach that almost completely eliminates non-resident ownership nationwide would make it so that the least desirable housing units are free, or close to it, thereby eliminating the need to qualify for a mortgage at all.
Obviously this approach doesn't come without a few problems of its own, especially with regard to new construction, where the low price of housing might require any new non-luxury housing to be constructed by governments at a loss. The point I'm trying to make, however, is that while policies that limit rentals might harm renters, that's not necessarily true for policies that eliminate rentals completely.
I dislike your broad strokes approach to individuals/corporations purchasing up property for renters. In our current situation, I feel there is more power for high income individuals/corporations to purchase property for investment rather than for low/mid income to purchase to own singularly (might not be the best phrasing.) You stated that you are renters yourselves, but its possible that wouldn't NEED to be if there were more affordable options, or if you did want to stay renters, that's fine, but others don't have that choice because of the imbalance of power in the housing market.
I don't think anyone is arguing to "eliminate" the rental market, rather to restore a balance where there is plenty of rental properties compared to owned properties. Currently ownership is just impossible to a vast majority of Canadians; I think that's where the issue lies. You guys are ok as renters, but there are some people that actually want to own a property. And yeah, maybe that number is higher than it should be, but it is also most definitely far more unattainable then it should be.
In addition, the properties that are for rent are, in my opinion, far below an acceptable standard for living. Most people don't want to live in a basement apartment owned by people just looking for an additional income. It would be nice if the majority of rental properties were properly managed and were in a building that was build purposefully for multiple families to live in. But as you guys have shown in multiple videos to date, in Canada, it's either towers or SFH. Towers can be fine, but the SFH dwellings are often poorly maintained basements with no amenities. If there were more properties in this country that were purpose built for multiple families living together where a single owner/corporation managed the property, I would be with you guys on this, but this is not the case.
And to further that last point, in many municipalities, there is very little regulation or enforcement on property managers to actually take care of the property, which leads to bug/pest infestations, poor maintenance of amenities like laundry machines, garages falling into disrepair causing damage to personal vehicles, etc. The quality of rental management and the regulation/enforcement of these properties increases the demand for ownership, which should be available, and if not, the quality of rentals should be increased at the very least.
We mentioned that there might be room for policy tweaks (e.g., making it harder to borrow against one property to buy another). But people really do argue for broad bans on corporate ownership of housing and on individuals owning more than one or two properties. That would literally have the effect of eliminating or severely restricting private rental availability. I just think if you want more homes for first time buyers, which I genuinely understand, it’s much more productive to expand the overall supply of housing (as we discussed, even for Toronto condos, ~60% of units are owner-occupied) rather than trying to rearrange the existing housing market to have more buying options and fewer rentals.
@@OhTheUrbanity Expanding the overall supply of housing does no good if the entities who might already have the monopoly that allows them to fix the price of housing is given unrestricted access to that additional housing. It's not like anyone can actually compete with their bids on the housing. Wal-Mart does exactly this, they outbid everyone else for some land and price out competing businesses until they're out of business. Sure it's a bit different from housing, but the idea of an entity using their capital to stomp out any competition to maintain their dominance is consistent between both cases.
We talked about this if in point #4 though. The worst case numbers people point to are 40% of Toronto condos being investor owned, which still leaves 60% as owner-occupied. Given that, can't we expect new construction to result in some significant proportion of owner-occupied units too? On top of this, significant new construction doesn't make investors more interested, it makes them less interested. Investors like scarce things, not abundant things. (Consider: If you dump a bunch of stocks onto the market, that's more likely to scare investors and make them sell.)
2:08 important to note that trickle down economics is not a real term and is only made up by critics of supply side economics to make fun of it.
Continuing to look at housing as an investment rather than a necessity will not solve the affordable housing crisis.
Exactly! We need to get rid of supply restrictions supported by homeowners who see their home as an investment and want to limit supply to maintain their "property values".
@@OhTheUrbanity Aka starting to break up the power of homeowner cartel's across the US.
Strongly disagree with point #3, very very few people "want" to rent, most are into it forced by landlords who have bought out all the property. If we ban large scale home ownership we are effectively decreasing the demand by blocking the highest bidders
All mass-landlords do is syphon money from citizens and use it to further cement their monopoly on the market. Severely restricting them is absolutely neccesary
the whole idea that housing should be an unregulated market is wrong. Housing is a neccesity and a right, everyone should have acess to affordable housing
We probably want to own at some point, but it doesn't mean we want to own now or that we want to own or current place. And even if we wanted to buy our current place right now, if our landlord was forced to sell it, there's no guarantee we could afford it or be the highest bidder! There's a good chance any policy against "property hoarding" could just mean eviction for us.
Housing may be a necessity, but it's sure as hell not a right. Plus, the housing market is actually restricted as city by-laws dictate what is allowed to be built and how much.
A lot of people like to go on and on about housing prices and miss the bigger picture. Inflation adjusted, the high interest rates of the 80s led to the period with the least affordable monthly payments. Of course housing prices are so high, as long as you can make the monthly payment and secure the down payment, you can and will pay whatever the price. You see similar rapid price increases in other markets which have affordability tied to loans as our modern interest rates plummet.
Overall, I'm not convinced there is a crisis at the moment, but if there is one, it won't be from just housing alone. It will be from demographics, changing global orders, shifting resources, and others. A lack of affordable housing won't be a failure of the housing market alone.
Globally, housing supply has just not kept up or even returned to normal levels since the 2008 crash ( particularly in the US.) Zoning and other local government regs that limit basic housing supply do play a very significant role. Interest rates undoubtedly play a role too but the increases in inflation adjusted housing prices between Tokyo from 1995-2015 where housing construction really kept up quite well at a modest 16% compared to London's which went up by 400% in that same time period with similar population growth but added relatively little new housing. It's just an example but basic supply and demand plays a big role.
Interesting, now I’m wondering how AirBnB plays into this too
New luxury housing does become old middle housing... in 20 years... then another 40 years maybe it's almost affordable... We'll be dead by now. The emergancy is too great, this is why we must fight luxury condos. Relying on the housing market to trickle down, is like setting net zero by 2050 targets... by the time we've recieved the benefit, too many people will be homeless and capitalist will have far too much power.
Housing isn't just an economy with highs an lows, it's not just a median number... it's how people survive.
The new 80 story claridge building in Ottawa isn't going to give a single homeless person a home, or poor person a shorter commute totheir job downtown. It's only going to drive living costs up downtown.
If a house had a fire and i crumbling, then sure some steel beams will help it not collapse... but the building needs to be rebuilt... the time for half measures is over.
My old apartment was one of those luxury condos built in the 80s, but with no amenities. My rent was more than a third of my income for a one-bed and I make three figures. I looked at the purchas price and it's because condo fees were constantly rising... LUXURY CONDOS NEVER BECOME AFFORDABLE!
Building new housing now also decreases the demand for and therefore the price of, existing housing. You don't have to wait 50 years for that effect to kick in. That being said at a certain point housing supply won't do much if land values are sky high, in that situation an LVT and land dividend/UBI makes sense ( I would argue it always makes sense, but particularly in this case.)
Gonna push back on point #2--you're absolutely right that housing follows supply and demand, but you can't ignore complexity here, it's not a closed system. If you increase supply, yes, you'll lower prices, but those low prices will then stimulate demand. This is the same thing that happens with roads: if you widen roads to reduce traffic, then driving gets easier and more people choose to drive, which makes the traffic just as bad as it was before you widened the roads. This is called induced demand. (en.wikipedia.org/wiki/Induced_demand)
So, if you build a ton of housing in Toronto and manage to lower prices, then all the people that wish they could live in Toronto but can't afford it will start moving to Toronto, driving the prices right back up again, to settle right at the point where the prices are just barely tolerable.
What's more, what is considered "tolerable" is based on what you get out of living in a place, and typically a huge factor in what makes it worth it to live in an expensive city is the money you can make by living there. That opportunity is typically connected to the size of the economy (bigger and more dynamic economies have more economic activity), and building more housing brings more people into the city, which creates more jobs and increases the value of living there, which means growing the size of the city itself is also a force for increasing housing prices.
My solution? Create new nodes. If we just keep adding housing in Toronto Vancouver and Montreal, then those cities increasingly become the only justifiable places to live, which drives up the demand to live there endlessly. If on the other hand, we manage to recreate what happened in Austin, TX, where a relatively cheap place to live became popular and started attracting tons of new people, that increase in housing prices in Austin correlates to a decrease in prices in all the cities people moved there FROM. And all the new housing people are moving into in Austin was far easier and cheaper to build than trying to do so in an already-overheated market.
The real issue is figuring out how to make that happen--but IMO it's a more worthy goal than just endlessly building in the existing large cities until that's all there is.
There are benefits to letting people and companies cluster as they desire though. It increases productivity and access to opportunities. The fact that high productivity cities like San Francisco, San Jose, and New York don't allow enough housing to be built has been found to decrease overall productivity and wealth in the U.S. by a surprising amount: www.aeaweb.org/articles?id=10.1257/mac.20170388
We talk about induced demand and housing in this other video: th-cam.com/video/c7FB_xI-U6w/w-d-xo.html
@@OhTheUrbanity Our two points are not incompatible. I'm not suggesting we should force people to live where they don't prefer, I'm saying creating new beacons of desirability is a more promising path to making people's preferences attainable.
I think the problem with the argument against high cost housing is that it fails to differentiate between the causes of the high price, eg, land value, speculative value, construction cost. Only one of these indicates quality and even then it could be a triple glazed brick terrace with solar panels but if its in the middle of suburbia it still isn't good quality housing. There's no point building expensive housing if after the next crash its going to be abandoned along with the rest of the estate, then it isnt affordable and there was no "trickle down". Additionally the trickle down argument is a bit false as the expensive properties normally gain value, instead it frees up lower value housing stock
Those people posting while drunk - 5:50 are so funny.
Thanks for this video! Walked away having learned quite a few valuable things about housing affordability.
Laptops and cars are quite guaranteed to use value over time - quite quickly even. For housing not necessarily, often it‘s the other way around since rents rise and rise.
So, why plan in waiting time until overpriced housing gets older (and not even necessarily cheaper)? Why not build new as affordable housing in the first place? There is limited space in cities and towns - why not build directly what is needed when you can?
American here, not sure I believe this because I don't have much faith in the trickle down effect. Although what you've said makes sense, it also contradicts many other things I've heard that also make sense while having a pro-wealthy flavor.
Perhaps in Canada it's not as bad, here in the US there's who-knows-how-many of _unoccupied_ apartments for the rich that will never trickle down and never be rented out
property hoarders provide airbnbs not rentals, and by hoarding all the housing they are converting would be homebuyers into renters, which means more competition for rentals
There are about 9,000 Airbnbs in Toronto (one example city I looked up), which corresponds to 0.7% of the housing stock. It's fine if you want to regulate that, it would probably help rents somewhat, but clearly it's not the case that multiple property owners usually put the units on Airbnb.