Why Your Skyrocketing Rent Is Bad for the Economy

[xchrom]

http://www.theatlanticcities.com/housing/2013/03/why-your-skyrocketing-rent-bad-economy/5069/



Michael Lind is in the midst of a three-part series over at Salon on the rise of rentier capitalism in America, with some pretty unambiguous headlines (yesterday: “Private sector parasites”; today: “How rich ‘moochers’ hurt America”). His premise is that the true “takers” in America are not the impoverished families on food stamps or the retired workers using medicare. They are, among other people, the landlords who've been sitting comfortably on the other end of the astronomical uptick in rent prices we've been wringing our hands over here, here, here and here.

Last spring, The New York Times reported that rents in Manhattan had reached an all-time high. By September, our own Richard Florida noted that it had become cheaper to own a home than to rent one in every one of the country's 100 largest metros. Earlier this year, it appeared as if the average rent for an apartment in San Francisco had finally leveled off... at $2,741 a month.

We've thought a lot about what all of these numbers mean for families and young professionals who would like to move into (or stay within) increasingly unaffordable major metros. But Lind's writing puts a whole different perspective on the problem: What about all of the landlords who are now depositing this windfall, and without lifting a finger or remodeling a bathroom to get it?

While productive capitalists — “industrialists,” to use the old-fashioned term — need to be active and entrepreneurial in order to keep ahead of the competition, “rentiers” (the term for people whose income comes from rents, rather than profits) can enjoy a perpetual stream of income even if they are completely passive.

[NutmegYankee]

1. Holy crap!

Earlier this year, it appeared as if the average rent for an apartment in San Francisco had finally leveled off... at $2,741 a month

I pay less than that for my mortgage, taxes, and utilities and I live in the Northeast!

[Newest Reality]

2. While landlords

do have potential expenses and disasters, they are in a leveraged position to have or acquire liquid wealth.

They build equity and can, eventually end-up with a paid-off property. They can also choose to slumlord in certain areas and accrue income by sucking it out without putting much back into the property which them leads to gentrification and, again can lead to a profit if a renewal phase sweeps through an area and pushes out the poor.

The only real wealth is liquid. While a mortgage can give certain tax benefits, you have no true wealth when everything you have is based on dept and servitude sans significant savings.

While there are benefits to renting, (when rents are fair and affordable) one of the few liquid assets available to average people is a house that they have eventually paid-off and own. Now, that is not a very viable or secure investment, especially in the context of a medical care system that induces bankruptcy and the eventual loss of property that would have gone to heirs. The wealthy often create trust funds, (like mini-corporations) that protect their liquid wealth, amongst many other safe harbors for the privileged.

So, now, as home ownership becomes less accessible, affordable and financially viable, the rentiers are in another growing sweet spot, just as major corporations are with salaries and wages. Demand for jobs is high and in an employer's market, productivity rises while the pay stays stagnant and we add more part-time, low-paying service-sector jobs and call that meaningful. Housing is also a necessity and so, it is a double-whammy and here we go again with the exploitation of profit hitting us where it really, really hurts.

And, of course, there are the many other aspects of renting life to us as has been mentioned in various articles, lately. I won't go into anarchism, but there is a factor where one challenges the essential rights of those who claim to have power and ownership. While that may seem absurd, it is interesting to investigate the structure of how this works and who originally acquired what, when, and by what means, e.g., land grabs from indigenous cultures, here and abroad where people claim they own what they took from someone else. The same applies to resources.

[woo me with science]

3. K&R

[ChoppinBroccoli]

4. The Rent Is Too Damn High