Tuesday, July 29, 2014

The Rent Is Too Damn High (The Squeeze Continues...)

"Who owns what you do? Who owns what you use?"
(The Gang Of Four, "Of The Instant")

It's no secret that housing costs are out of whack. Ever since the housing meltdown in 2008, more Americans rent than ever (around 43 million, according to a study by Harvard University's Joint Center for Housing Studies). However, escaping the foreclosure trap just means falling into a different trap -- the gap between what you can afford, and what the landlord squeezes from your wallet.

According to CNN, one in three Americans now pay 30 percent or more of their median monthly incomes for rent. (This figure assumes a market with a three-bedroom house, something that's only a distant dream for me, and most of the folks I know.) In cities like Baltimore, Brooklyn, Miami and Philadelphia, the figure is more like 50 percent.

The financial pros quoted in the article have a knack for understatement, as Capital One's managing vice president of community development, Laura Bailey, demonstrates: "When they get affordable housing, their lives can take an entirely different, more productive path."  Uh, can we say: "Well, duh?"

Rent is too high, way too high.  Funny how the wages remain flat and are sinking down but rent goes higher.  At least where we live, it's not too bad, just small increases...but you have wonder where all this misplaced money is going. --The Squawker

"Greed knows no boundaries, Greed does not feel
I'll be damned if I die for a profiting deal"
(The Pogues, "The Bastard Landlord")

Thanks for putting this issue on the old blogger's radar, Squawker, I'll take it from here...to me, what's even more interesting than CNN's May 2014 story is the discussion below it.  It's always worth reading the comments below any news story of note, if only to see what the Haves really think of the Have-Nots

"I'm a landlord. I charge as much as I possibly can. I want to make a profit. Supply and demand. If a potential tenant can't afford my rates, there a cheaper apartments elsewhere. When my vacancies become a problem, I lower rents. Don't whine that rent is too high...and then rent the place. Go live somewhere else. Maybe with more roommates." 

Sounds like the figure in the Pogues song, doesn't it? Comically so...to top it all off, he identifies himself as "American" -- though I suspect he probably shops regularly at big box stores where all those cheap Chinese-made goods are always available. Thankfully, though, he gets a proper slap-down from the next commenter, cman:

"Yea, you seem like a complete tool. The problem Mr. American (I'm assuming your a man, because such di**ish comments suggest you have the requisite genitalia), is that people cannot go live somewhere else. These high rents are city-wide phenomenon (and indeed its becoming a national trend). People cannot simply pack up, take their families and jobs with them and move to rural Alabama where you can buy a nice home for as much as you can get a decent condo in Maryland. The jobs market is terrible, and social mobility is not an option for most."
"Second, people ARE living with more roommates, for much longer (Millennials). That same demographic then gets chided by the older generations for being lazy slackers -living in parents basements, sharing apartments with friends, when their parents owned their first home at that point in their lives. This is mainly due to economic circumstances brought about by the negligence of prior generations and has nothing to do with current youngsters."
Of course, the latter paragraph speaks to a different problem, as Matthew Yglesias notes in his book, The Rent's Too Damn High (What To Do About It, And Why It Matters More Than You Think):

"The housing cost problem is largely obscured by the predominance of owner-occupied housing among middle-aged middle-class people who think of expensive housing as 'wealth' and investment profits. That perception is a mistake...If you own a home and the price of buying a house rises faster than the price of renting one, then you can make money by selling your home and moving to a new place. But as we'll see, this is a telltale sign of a bubble rather than a strategy for national wealth creation."

This phenomenon comes with unique twists in cities like San Francisco, where only A-list techies seem to have no problem affording the Golden Gate City's infamously steep rents, as Chandler Properties vice president, Samantha Chandler Duvall, informs SFGate.com: "The people coming into the city to apply for our apartments are making huge salaries -- all six digits," she says. "It's insane. I'm the first to admit it."

Mind you, this isn't a new problem, as Tony Sanchez cheerfully explains in
Up & Down WIth The Rolling Stones (1978) in recounting the response from his A-list employer, Keith Richards, to a legal order that barred him from entering France for two years:

"'Now, at last, I can stop paying that grand [$2,400] a week rent for that bloody house. It's cost me more than a hundred grand already [$240,000] just to keep it going so the cops wouldn't try to extradite me.' He earned something like $25,000 a week. Using the old rule-of-thumb that rent shouldn't exceed more than a quarter of your salary, I guess Keith could afford Nellcote." 

So there you have it, boys and girls...while the political classes twiddle their thumbs, and hope that the problem goes away, you'll either have to brush up on your computer skills, or take up the guitar and hope that you can string together three chords to write The Great Lost Hit Record.  There's just one small matter, though...Keith's already got a 50-year head start.  --The Reckoner

Links To Go (Read 'Em And Weep, Then Hide Your Wallet):
CNN Money (One In Three Americans Spending Too Much On Rent):

Joint Center For Housing Studies (Rental Housing Affordability):

National Housing Conference/Center For Housing Policy

SFGate.com: One-third Rule Not Always Feasible In Bay Area Rental Market

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