Pay the landlord, and landlord gets the money and tenant gets evicted. Pay the tenant and the rent gets paid and no one gets evicted.

We saw this with the 2009 mortgate crisis - banks got bailed out and evicted homeowners. Had we paid the homeowners, I suspect most would have just brought their mortage current.

Not if the tenant isn't being required to pay rent. 2 years of government money in the name of COVID assistance and rent help...but nothing that actually meant it went to paying rent. Some tenants simply bought more stuff or saved it while the landlords are still going without rent payments.

Is there a data source for this claim?

There’s many examples of exactly this happening. Here’s one: https://www.npr.org/2021/10/22/1046154251/they-refused-to-pa...

The tenants no doubt received direct stimulus payments and never paid a dime of it in rent. There’s a reason why section 8 et al are paid directly to the landlords.

One anecdote from one website is not a data set that generalizes onto a population.

I never said it’s a dataset. It’s one of many examples of people receiving stimulus checks and not paying their landlords.

Hell, it’s the rationale thing to do anyway. If there’s a rent moratorium, you’re getting checks from the government, and you don’t have a particular large security deposit, why wouldn’t you skimp on the rent?

The landlord cannot evict you. Cannot call the police. Cannot really do anything. In fact, the landlords only chance of getting paid is to cajole you into signing up for rent forbearance.

Every newspaper for the past 2 years. The government was THROWING money at people.

And most of those stories were business owners who used the money on themselves, let the business fold, and walked away. Not what's being argued here.

The population received a significant sum of money but I haven’t seen a data set or statistic indicating people buying discretionary goods rather than paying rent.

I suspect that the real issue for landlords was the eviction moratorium which made it possible for some tenants to fall 4-5 months behind and forced landlords to live with it.

I suspect the rent moratorium spooked most small time owners from rentingtheir properties, so they sold and cashed out. Ideally those homes would have been sold to new owners, but it turns out big property management companies were waiting, flush with new COVID cash, and bought up those properties and increased rent. So we saw the markets percentage of home ownership go down, and rent go up.

Land lords still exist in a competitive market and can't arbitrarily raise rents without collusion.

One way to alleviate this problem is to have a harsher tax on vacant properties to punish using housing as a store of value and creating artificial scarcity in the market, e.g. like how the DeBeers corporation made diamonds artificially scarce and scammed the world for the past century selling a shiny rock.

The thought-out version of this is called Georgism. It proposes a (close to) 100% tax on the unimproved value of land. Economists agree the tax can't be passed on to renters, for reasons I can't articulate.

https://astralcodexten.substack.com/p/your-book-review-progr...

How do you define and evaluate unimproved value?

I'm assuming by that they mean the value of the land.

And if it's done similar to an appraisal they see what market price is for a sale (which combines the value of the building + land). Then they can estimate how much it would cost to rebuild that building if it were completely destroyed. That's the value of the improvements. The remainder is the amount someone implicitly paid for the land.

This is not great because suppose it cost relatively little to physically build a house but you sold it for a huge amount because it's in some chic architectural style that hasn't arrived yet in this city. So your house was in a crazy seller market and unexpectedly sold for crazy tons. Now you are being seriously penalized for your boldness.

And what are we talking about 0.0001% of all homes ever built? Even less?

Someone can always come up with a contrived example to find a short coming in a rule or law. That doesn't make the law not sound or wise.

"Speeding shouldn't be illegal. What if there is a tornado behind you and you need to rush to get away from it, but you go faster than the speed limit to save your life? See, we can't have laws for speeding."

No, because the tax is only on the price someone would pay for the lot.

Restating the definition does not magically conjure a sensible strategy for arriving at that value.

So far, our comments have boiled down to "Yes you can assess unimproved value of improved land", and "No, you can't, there is no way to get that number separate from the value of improvements."

So I'm going to try to say something different.

1. Here is the article that convinces me it is very possible to assess land separate from improvements. It details several strategies for doing so. Also properties are assessed in these ways already in many places. https://astralcodexten.substack.com/p/does-georgism-work-par...

2. Accuracy of assessment does not need to be super high for this idea to work. You just need an assessment with the intent of assessing unimproved land. The tax does not need to be literally 100% of unimproved land value, it just has to be a high percentage. Let's say there is a +/- 30% accuracy of unimproved land value assessment. We can have a 70% tax on that assessed value. Some people would in actuality be taxed at 97.5% of land value, and some people at 52.5% of land value. Perhaps the unfairness of this discrepancy is a true downside. However, one could argue the same about property taxes now.

You can’t and that’s why such a program is popular with politicians.

The bigger issue is with vacant properties being used as cash stores.

> You can't

Sure you can. Unimproved value of the land is simply the value of the lot as a whole minus the value of building that sits atop (well, improvements aren't always buildings, but that's a simple example). You can approximate it by comparing it against the transaction prices of nearby lots that aren't improved, or by taking the construction cost out of the purchase price of the lot.

> is popular with politicians

Land value tax in general isn't that popular around the world, and Henry George's version of it, where all tax is replaced with just a land value tax, even less so. As far as I'm aware, there is literally no jurisdiction in the world whose sole tax revenue is from LVT. Economists and idealists like land value tax; politicians, who derive a lot of power from the wealthy landowning class (who in turn would be the most hurt by LVT), not so much.

> The bigger issue is with vacant properties being used as cash stores.

Land value tax would be an excellent way to curb real estate speculation.

So a unit that abuts the el should have the same per acre value as a unit a block and a half away?

Clearly you need comps to figure it out. It is certainly possible especially in the data driven world we have today.

How did that work out for Zillow?

What would the unit cost if it were an empty lot? That is the tax.

Until you get the capability of temporarily creating a parallel universe and rolling it back, It's an unanswerable question, that's the point. Also you are confusing cost for price.

Denmark must be capable of creating parallel universes then.

https://en.wikipedia.org/wiki/Taxation_in_Denmark#Land_value...

That’s no more true under LVT than it is today.

> Land lords still exist in a competitive market and can't arbitrarily raise rents without collusion.

Well...kind of. It's pretty bad in a lot of places. There aren't enough homes in the places people want to live.

There's a delicate balance of property owners using their power to prevent new construction and densification in an attempt to keep their property values high by preventing competition and going too far where you destroy your local economy because the people who actually do the work can't afford to live there.

This is the same problem as with overfishing.

Huh?

https://www.penguinrandomhouse.com/books/585765/golden-gates... is a pretty good look at what's going on.

See: California housing crisis today.

What good is it to build rental properties that will only be used for AirBNB? You’ve ruined even more of the environment just to enrich a landlord.

It has nothing to do with supply - there are more houses now than can be occupied in the US. It has everything to do with misusing the supply we have.

It is everything to do with supply. Location. Location. Location. People want to live in certain places. If there isn't enough housing there, prices go up. Building lots of housing in small places is not bad for the environment. It is much better for the environment than sprawl.

Vacant housing in Cyanide Springs, Oklahoma is useless to people who want to be near jobs in Palo Alto.

It has everything to do with the supply of housing and how it's been severely constrained over the years.

And what about when you’ve exhausted every square inch of land to shove more housing on? Then the city isn’t worth anything to anyone and you move on to the next city to ruin.

At some point, enough is enough and you have to accept that there’s no room for more housing without ruining the city. You could focus on reclaiming AirBNBs and vacant housing and you might be able to make a dent in the problem.

Just announce that your city is full and tell everyone to move on. Ruining the city will make landlords money and everyone unhappy.

> And what about when you’ve exhausted every square inch of land to shove more housing on? Then the city isn’t worth anything to anyone and you move on to the next city to ruin.

So Manhattan isn't worth anything to anyone? Funny, I thought it was one of the most valuable and productive places in the country and there were still swarms of people wanting to live there.

The city I lived in, in Italy has like twice as many people as the place I live in the US, in a slightly smaller footprint.

This is accomplished by some clever technology the Italians use: they are able to stack dwelling units on top of one another.

In many ways, it was a more pleasant place to live, since I could walk or bike to so many places.

I consider high-density housing to be a separate conversation. I entirely agree that high-density housing should be encouraged and would largely solve this issue (assuming apartments can't rent out as AirBNBs like they do so frequently now). However, I don't want "we need more supply" to justify building more housing when we have enough developed land as-is to build high-density housing with ease.

They don't need to collude, they just need a public price signal - which advertised rent prices signal. As a landlord, it's something like a prisoners dilemma, only there is a much lower disincentive for breaking away to raise your price.

Landlords in collusion? What kind of landlords, like mom and pop? My small apartment complex raised my rent 25%. Is this collusion?

"can't arbitrarily raise rents without collusion."

???

There's no need for 'collusion' - term is 'inflation' - which will 100% happen when we start printing money at that scale.

It's unavoidable, almost by definition.

Housing costs are already skyrocketing and this is moving into rents already, at least largely in part because of of massive Fed Stimulus. In the short run it might be better to just give some cheques to people, but not over any period of time.

"term is 'inflation' - which will 100% happen when we start printing money at that scale."

So you get 0% inflation when we give money to the rich and bail out the banks, but as soon and you give a hobo $50 the entire economy crumbles and inflation spikes, right? Very conveneint ideology

I didn't remotely imply any of that.

You fabricated a bunch of ideas which have nothing to do with what I said.

'Very convenient fabrication'.

--> If you put a lot more dollars into the real economy by direct distribution, then rents will go up via systematic collusion. Most of that money handed out will be captured by landlords.

That has nothing to do with with what may or may not happen if you concentrate money in the financial sector via whatever means.

If you give a lot of money to the rich, I would expect to see inflation in the stock market. Coincidentally, the stock market has far, far outpaced inflation for probably at least 20 years now.

Not to mention the rents going up to make up the lost money for all those who didn't pay rent the last 2 years.

That's exactly what happened with student housing subsidies in NZ. Labour were elected and fulfilled a campaign promise by raising the housing allowance by $150 pw. Rents in Wellington rose $150 pw at the same time.

This is a bad example. Students are tied geographically to their respective campuses. With a UBI, individuals would be incentivized to relocate to lower cost of living areas to stretch their UBI farther.

The fact that housing is in such tight demand in certain areas is not an argument against UBI. To solve that problem we need to build more houses.

Do you have a link to a more in depth article?

Hm, government commissioned research says this isn't happening. I may be forced to eat my words.

https://www.motu.nz/assets/Documents/our-work/population-and...

That said: "Larger rent increases were observed among those who received larger increases in accommodation payments."

Only if you have no rent control and allow property owners to take as much as they are able to off the table short of starving their tenants.

Or only if you prevent supply from meeting demand.

When I was a landlord I found it very difficult to even cover the mortgage, let alone cover association dues and maintenance. I would try to raise the rent a little in between tenants, and it would greatly reduce interest in the listing.

Why should the rent cover your mortgage?

Likely NOT the landlord's personal domicile's mortgage, but the mortgage on the rental property itself. Landlords with mortgages on their rental property can go upside down on their notes too.

If you can't bear any risk of losing money perhaps you should buy money market funds instead of real estate at 20x leverage.

I bought a house just before the financial crisis and a decade later needed to move but I was underwater. I didn’t have enough money to sell it so I rented it out.

how did this not break your mortgage agreement? most private mortgages have a clause that states the mortgaged property will be your primary residence. specifically. it is to prevent private mortgages being obtained for rental properties.

Shrug. It never came up. I was all squared away with a good legal document for the lease, verified renters insurance, all that. Never even occurred to me the bank might take issue with it. Oh well, no harm done.

Why wouldn't it?

We're talking about a mortgage on the rental property itself not on the landlord's personal residence.

> We're talking about a mortgage on the rental property itself not on the landlord's personal residence.

Yes. Everyone in this conversation understands that. There's no relation between the amount and terms on your mortgage for your rental property and the market price to rent a given unit.

If I take a 20 year mortgage does that mean I should charge more rent than if I took 30 years because my payment is higher? Should I drop rent by half when I'm done paying my mortgage since I no longer have a payment? It's nonsensical.

There's especially no reason to expect that rent should cover 100% of the principal fraction of your mortgage payment. Taxes, maintenance, interest, etc. are pure costs which are understandably passed on to tenants. The principal fraction of a mortgage payment is not a cost, it is building your equity.

If rent is covering all costs and "only" 50% of the principal fraction of your mortgage payment you're still making a profit. Because you're paying, let's say, $1000 of the mortgage payment with your own money, but you're getting a $2000 increase in equity.

Indeed - it is increadible that so many people just assume rent should basically buy another person a house by default.

If the increase in equity should be satisfactory, that's an argument for just letting everyone live in the place for free. I mean, you're coming out ahead.

I know other landlords with multiple units. If they don't think something will be an income producing property, they won't buy.

My point is that you charge market price. Because that's how markets work.

Price to rent ratio varies very widely between different markets. If you don't want to buy in a market with a high price to rent ratio that's fine. There's simply no rule that guarantees a price to rent ratio such that rent covers all costs plus the full payment on a 30 year mortgage in all markets at all times.

Because that's how it normally works? Why would any renter pay that much? If they have that much disposable income each month, they could just buy instead of renting.

You aren't aware that plenty of people rent houses?

By renting instead of buying, you don't incur any of the costs or headaches associated with with home ownership or repair. There are also plenty of people who are only living in one place for a limited period of time, and additionally, plenty of corporations will rent out homes in decent locations if their employees need to be there for extended projects.

I am aware; I was a renter until a couple of years ago. I have rented houses in the East Bay (Alameda, CA) and Seattle, and in each case, my rent was 70%-80% of what the monthly payment on a 30 year mortgage on the same house would have been. The same was true of apartments I rented in Manhattan.

Maybe it doesn't work that way in other markets, but you'd have to be nuts as a renter to pay enough to cover your landlord's mortgage.

Let me assure you then, that in most markets, you will pay far more than the cost of a 30 year mortgage plus taxes and insurance for renting a house. You're subsidizing the cost of vacancies and also paying for some of the maintenance.

A 3 bedroom, 2 bath home in a decent but inexpensive part of the DFW where I live will run you $2K per month. These prices will skyrocket as rental prices catch up to the mortgage market. But just for comparison, 2 years ago that same house would have been on the market for about $220K and would have had a monthly mortgage of about $1200 a month on a 15 year loan or $800 or so on a 30 year loan.

In my neighborhood now, people rent for considerably more than they would pay per month if they bought here. They want to live here but nothing is for sale. It’s large single family homes. Renters tend to be people who have frequent job transfers and people who are having custom homes built nearby.

Also I’ve never rented anything for less than what I could own something comparable. Maybe you can in some markets. But generally I expect to pay more monthly. It’s a trade off for avoiding everything that comes with home ownership. Down payments, maintenance, and the overall commitment. It’s hard to just pick up and move when you have to go through the process of selling, making contingent offers on another place, multiple closings, all that.

What markets have you rented in?

I have been a renter in NYC, Seattle, and the Bay Area; every single time, I looked up how much the property last sold for and calculated how much a mortgage on it would cost me per month. My rent was normally 70%-80% of the expected payment on a 30 year mortgage.

I was never paying below-market-rate rent, either! Maybe it doesn't work out this way if you're renting in an area with lower average property values?

Obviously there is no rule that it should. I know plenty of people that kept their old house (and mortgage) when moving and tried to rent it out to build some equity and make money.

Because people who buy a place would like to reasonably be able to pay something that takes 30 years or similar to pay with the rent itself.

That is a reason why you invest in the first place.

That's a pretty arbitrary measure though - you're making "free" money either way to pay towards that mortgage while retaining the whole value of the asset while it is gradually purchased. Whether you've got enough to cover mortgage or not doesn't necessarily flip a binary switch making it a good investment or not.

Property ownership is a market barred from entry by a high buy in cost to account for some risk - but the risk is rather minimal and most properties are going to be value accruing over time. We can observe this by looking at how cheap general property insurance tends to be (unless you're in a really risky area - i.e. building a house in a flood plain).

> That's a pretty arbitrary measure though

It is, but I think I would find reasonable getting a mortgage if it does not impose a load on my finance by having it rented.

It sounds like the bank was doing to you what people are complaining about landlords doing to tenants.

I think it was simply a function of renters in my area having other options at the price point.

The amount of rent people are paying is exorbitant if it covers the mortgage for owning the property.

Normally, rent on a property is significantly less than the monthly payment on a 30-year mortgage on the same property. Where were you renting out spaces where people were willing to tolerate rent that high?

Where does this "normally" occur? A house in my neighborhood would rent for over $3000 a month and cost about $1600 a month in mortgage / insurance / taxes, and that's been my experience when looking at any property anywhere in my entire city.

Manhattan, Seattle, the Bay Area. I haven't rented anywhere other than that, so I don't know how it works outside of those markets (which are admittedly unique as far as market fundamentals go).

I paid $1400/month for rent on a place in Alameda, CA. The last recorded sale of the property was for ~$400,000 a couple years before I moved in. That mortgage would be ~$2400/month given average interest rates at the time.

That's crazy comparative to most places I've lived. $1400 will get you a 2 bedroom apartment in a run down complex in the DFW area. Right now, $2350 gets you into a doublewide in Alameda.

That's the trickle-up economics in action! I'd prefer that.

I've always been a fan of picturing it as "rising tide economics".

UBI would likely cool the housing market since people would have the resources to try cheaper places.

Alternatively, UBI would provide a new income stream to literally everyone, increasing everyone's purchasing power. In a pure supply/demand scenario, the equilibrium price of essentially anything will increase accordingly, i.e. inflation.

It's a fair point that UBI would result in some shift in market dynamic. But ultimately, most people will still want to get a job to supplement the UBI income, and high demand areas will remain high demand.

Inflation isn't that simple. Sure, if you print a huge wad of money and give it out to everyone (ie. increase the money supply) then you'll get inflation, but that's not generally how UBI proponents intend it to work. The other side of it is increasing taxes on the other end of the progressive spectrum to compensate, leaving the money supply (ideally) largely unchanged.

Anyways, it'd still be better than quantitative easing, the current approach to keeping the economy running now that they can't lower reserve ratios or interest rates anymore, wherein (roughly) the government prints money to shove into the stock market so people who are already rich keep getting richer.

This is an important point too.

Traditionally, humans have to live where they can find a flow of capital via the jobs available. If every human has a baseline flow of capital attached to them specifically, regardless of where they live, it potentially opens up a ton of possibility in where people can live, because they can do less well paying jobs but still live a good life.

It is also worth comparing this to the current status quo. About ~17% of working age adults in West Virginia are receiving disability benefits[1] vs about 8% for California and New York.

The reasons for this are complex, but in short it is likely due to a mixture of cost of living (disability benefits go farther in LOC areas), economic opportunity (disability is "more attractive" when job opportunities are scare), and demographics (older, more blue collar, etc...). But regardless of how or why these discrepancies exist, we have essentially created a system which incentives our population to self-sort geographically based on their ability to contribute economically. That is of course problematic in and of itself, but this also means we have a real life pseudo "UBI experiment" that we can evaluate. And if you look at the data, nearly all of the states with high disability percentages are low cost of living states, particularly when it comes to housing prices.

So anyone who complains about how UBI would increase housing costs needs to first account for the fact that large swaths of the working age population are already receiving benefits similar in level to a UBI (disability is about $1600/mo). And despite the higher concentration of beneficiaries in areas like WV, we haven't seen much of any impact in real estate or local inflation. If anything we have seen the opposite.

[1] https://www.mathematica.org/dataviz/state-disability-maps

Those people get a house for the month. That’s what it subsidizes. Landlord gets theirs one way or another.

This ignores competition between landlords though. If I get a UBI to supplement my income, maybe I can take that job in the smaller town instead of working in the big city. That spreads real estate demand over a much larger area.

I'm still not sure whether or not UBI will be a success, but there are some reasonable arguments in its favor.