On Housing, and the Upcoming Rental Issue

I want to write a bit about what I perceive as issues with the housing market in the US, but first a hot and very controversial take: rent should be automatically cancelled for renters in months where they have a significant and documented financial hardship. I'll let that simmer, and get back to it; first, though, what's wrong with the housing market.

Housing, like food, water, and basic medical care (and clothing, to a lesser extent) is in most cases a necessity of life in a modern society. You need access to food and water to live, clothing and shelter to protect from the elements, and basic medical care for ailments which would otherwise dramatically shorten the general societal life expectancy (eg: stopping bleeding, setting bones, antibiotics, etc.). These could be considered the "basic essentials" of a modern civilized society, and most countries have figured out ways to make each of them generally available to everyone. This is not without cost, though, and that's what I'm going to be primarily concerned with here.

Housing, in particular, is very expensive in the US. In many areas, the cost of housing vastly exceeds the cost of production of housing, so much so that governments have gone to extraordinary lengths to attempt to "compensate" for this. Rent control, affordable housing measures, housing projects, housing subsidies, and various temporary measures like eviction moratoriums are all examples of government programs intended to work around, in some capacity, this basic societal issue. As with other government efforts, results vary, although in most cases there are significant drawbacks or compromises inherent in each program (from the somewhat ubiquitous "wealth redistribution" effects, to the effective destruction of neighborhoods through heavy-handed demographic manipulation). It would be nice, conceptually, if these programs were not perceived as necessary evils.

So what would that take? To answer that question, we need to understand what the root of the issue is.

To that end, first we must understand if there is enough housing to go around in general, and if the supply can keep pace with the demand. In the US at least, that answer seems to be "yes"; that is, there is both enough current capacity to house everyone, and enough manufacturing capacity to keep up with changes in population (this is helped by the fact that the US is near or below the replacement rate in terms of population growth, due to the country's extreme anti-children economic policies). So basic organic supply is covered.

Next, we need to understand why supply is artificially constrained, if the basic supply is sufficient, but housing is not generally accessible. For this, it's informative to consider the people who own the housing in the US, and why. Broadly speaking, there are two types of residential property owners: people who own and occupy a residence, and people who own a property for investment purposes. The latter group will rent out the properties to people who cannot, or choose not to, purchase a property, and attempt to profit from this passive investment over the long term.

Unfortunately, housing in the US is economically advantaged in terms of an investment, relative to other passive investment options. This has the effect that general investors compete with would-be residents for control of the assets, thereby driving the price higher. Optimally this would not be the case: monopolizing a societally critical asset for profit motive should be discouraged by governmental policy, not encouraged; that's one of many idiotic government policies, of course. There are many ways to fix that, but given the general corrupt and malicious nature of politicians, none of those improvements seem particularly likely.

However, there might be another way to encourage more private ownership of residential property, independent of fixing the asinine profit motives inherent in the current laws, which brings us back to my hot take. If we allow a certain "blanket" rent avoidance circumstance, it would have two immediate effects in the market. First, it would cause landlords to hedge against this scenario, being more selective with tenants and charging higher rent. Second, it would make long-term property holding as an investment more risky, per this possibility. Both of these factors would depress the value of properties as investment assets, relative to properties as owner-occupied units. That effect seems unequivocally a good thing.

That doesn't solve the whole problem, of course, and ignores the fact that like fixing the perverse economic incentives to monopolize property for investment, enacting such a change would involve politicians doing something beneficial for the society (which, admittedly, is very unlikely). We would still, for example, need "baseline" housing for people who would have no expectation of being able to ever pay for such. That said, I think such a change would go a long way toward helping address the issue of affordable housing, at zero cost to taxpayers, and with more efficacy that every other government scheme attempted or ongoing to-date.

That's my opinion.