The only reason costs of houses are so high in the first place is because they are lucrative investment objects, along with the fact that the most important part of city (and rural) planning, building homes, is largely left to private companies. You are assuming houses would be just as inaffordable without landlords, which is a problem of the current paradigm and not the one proposed.
A couple of years ago, my boss’ father (who founded the company and still worked there on and off) and I had a chat over lunch. I’m not sure how the topic of house prices came up, but he mentioned that when he and his wife bought their house, a car cost more than a house, so you knew that someone was really well off if they had two cars in the driveway.
I think that’s the first time I’ve actually gotten my mind blown. The idea that a car could cost more than a house just didn’t compute, and it still doesn’t quite sit with me.
Of course, the general standard of houses decline the further back in time you go, but houses were a lot cheaper back in the days. Below is a figure of housing prices in Norway relative to wages at the time (mirroring the situation almost everywhere in the west):
Factoring in the increased production capabilities over the same period of time, the construction cost of houses are not that much higher. If we designed our communities better and had a better system for utilizing the increased labour power, we could have much more affordable housing and more beautiful and well functioning societies.
Do not let it sit right with you. This future was stolen from you.
Yeah, it is terrible :-( On average anyone who simply had grandparents living in Oslo has 1 000 000 NOK (about 100 000 USD) higher net worth than those that did not due to this increase.
I was born in Stockholm to a single mother. Honestly not sure how we could afford to live in that 2½ roomer, I think the rent was about 5k when we moved away back in 2003? Right now I live in a small town and my rent is almost 11k for a 3-roomer. Stockholm isn’t even on the radar for me.
When I say Stockholm I also mean Stockholm, not the suburbs; we lived right by Zinken in Södermalm. Like, this is literally the same block and it’s 22k. I’m doing quite alright for myself, and my income is around 28k after taxes.
Another thing that really fucks me off is the fact that since a couple of years back we’ve been urged to not have too large salary increases because that’d contribute to the inflation. Meanwhile, landlords are making more money than they ever have, they’re circumventing the established system for negotiating rent increases, and increasing it many times more than done in the past 20 years!
When the bubble popped back in 2009 the rent increases were on average around 3%, there are cases where you only saw about a 1% increase and now we’ve gotten a 4-5% rent increase two years in a row. Last year my rent increase was on 6%! Sure there are places where it’s way worse; my sister’s boyfriend got slapped with a spontaneous rent increase of 150%, and she herself got her rent increased from $1200 to $3500 when her landlord sold the duplex; but we have a system in Sweden where this kind of thing shouldn’t happen.
The way I see it; if you can’t afford to keep the properties, sell them back to the government and let the public landlord deal with them instead.
A reason, sure. The only reason though? I suppose that many builders going bust in the 2008 crash, inevitably slowing down supply growth compared to population, while anything that resembles a shortage causes prices to go way up because housing is kinda needed… That’s all a coincidence?
Of course not the sole reason in a strict sense. In many places, there are also tendencies of centralization that increases the pressure of housing in cities and some cities are subjected to geography that does not allow them to expand blindly. Ultimately however, the problem is one of failed politics. With sufficient planning, we could solve all of this.
Landlords and private real estate companies, often the same entities, do propagate and amplify this problem. Removing them is a step in the right direction. Short term it would crash the housing market, which is great for anyone not speculating in housing. Long term it would allow for and necessitate publicly planned housing based on actual needs instead of profitability for people that never needed the house in the first place.
Solving it is also quite easy: Raise taxation on any homes owned by someone not inhabiting it by an additional 100 % or so for each unit. Buy back some housing to be able to provide free housing for those unable to get even a subsidized home for themselves. Then treat housing as an actual need and human right, similar to food, electricity and other infrastructure.
That would be good for almost everyone and also actually good for the economy, if you give a crap about it.
The only reason costs of houses are so high in the first place is because they are lucrative investment objects, along with the fact that the most important part of city (and rural) planning, building homes, is largely left to private companies. You are assuming houses would be just as inaffordable without landlords, which is a problem of the current paradigm and not the one proposed.
A couple of years ago, my boss’ father (who founded the company and still worked there on and off) and I had a chat over lunch. I’m not sure how the topic of house prices came up, but he mentioned that when he and his wife bought their house, a car cost more than a house, so you knew that someone was really well off if they had two cars in the driveway.
I think that’s the first time I’ve actually gotten my mind blown. The idea that a car could cost more than a house just didn’t compute, and it still doesn’t quite sit with me.
Of course, the general standard of houses decline the further back in time you go, but houses were a lot cheaper back in the days. Below is a figure of housing prices in Norway relative to wages at the time (mirroring the situation almost everywhere in the west):
Factoring in the increased production capabilities over the same period of time, the construction cost of houses are not that much higher. If we designed our communities better and had a better system for utilizing the increased labour power, we could have much more affordable housing and more beautiful and well functioning societies.
Do not let it sit right with you. This future was stolen from you.
Gods, and that’s Oslo too. I couldn’t imagine even renting there today.
Yeah, it is terrible :-( On average anyone who simply had grandparents living in Oslo has 1 000 000 NOK (about 100 000 USD) higher net worth than those that did not due to this increase.
I can believe that.
I was born in Stockholm to a single mother. Honestly not sure how we could afford to live in that 2½ roomer, I think the rent was about 5k when we moved away back in 2003? Right now I live in a small town and my rent is almost 11k for a 3-roomer. Stockholm isn’t even on the radar for me.
When I say Stockholm I also mean Stockholm, not the suburbs; we lived right by Zinken in Södermalm. Like, this is literally the same block and it’s 22k. I’m doing quite alright for myself, and my income is around 28k after taxes.
Another thing that really fucks me off is the fact that since a couple of years back we’ve been urged to not have too large salary increases because that’d contribute to the inflation. Meanwhile, landlords are making more money than they ever have, they’re circumventing the established system for negotiating rent increases, and increasing it many times more than done in the past 20 years!
This is a graph, taken from this article on Hem & Hyra, a news outlet operated by the tenants union.
When the bubble popped back in 2009 the rent increases were on average around 3%, there are cases where you only saw about a 1% increase and now we’ve gotten a 4-5% rent increase two years in a row. Last year my rent increase was on 6%! Sure there are places where it’s way worse; my sister’s boyfriend got slapped with a spontaneous rent increase of 150%, and she herself got her rent increased from $1200 to $3500 when her landlord sold the duplex; but we have a system in Sweden where this kind of thing shouldn’t happen.
The way I see it; if you can’t afford to keep the properties, sell them back to the government and let the public landlord deal with them instead.
Wonder when and where. Sounds exceptional, though I ain’t much of an economic historian.
Sweden. He’s about 80 now I believe, so if we assume he bought his house around his 30s that’d be around late 60s to early/mid 70s?
A reason, sure. The only reason though? I suppose that many builders going bust in the 2008 crash, inevitably slowing down supply growth compared to population, while anything that resembles a shortage causes prices to go way up because housing is kinda needed… That’s all a coincidence?
Of course not the sole reason in a strict sense. In many places, there are also tendencies of centralization that increases the pressure of housing in cities and some cities are subjected to geography that does not allow them to expand blindly. Ultimately however, the problem is one of failed politics. With sufficient planning, we could solve all of this.
Landlords and private real estate companies, often the same entities, do propagate and amplify this problem. Removing them is a step in the right direction. Short term it would crash the housing market, which is great for anyone not speculating in housing. Long term it would allow for and necessitate publicly planned housing based on actual needs instead of profitability for people that never needed the house in the first place.
Solving it is also quite easy: Raise taxation on any homes owned by someone not inhabiting it by an additional 100 % or so for each unit. Buy back some housing to be able to provide free housing for those unable to get even a subsidized home for themselves. Then treat housing as an actual need and human right, similar to food, electricity and other infrastructure.
That would be good for almost everyone and also actually good for the economy, if you give a crap about it.