The results were not what I expected, definitely worth a watch. (From the youtube channel Oh The Urbanity)
One year is one lease renewal for renters. How can you possibly draw conclusions this early!? And if you are, how could you not include “landlords are also greedy real-estate investors” in your conclusion? You haven’t banned them!
Thats an important factor too but I think they did touch on that. However it’s just more complicated than getting rid of landlords, providing government run rentals is one way they suggest helping in that regard.
But you’re totally right, I think a longer term study is needed for sure.
Can you post a summary for the video-impaired, OP?
I can try! I wasn’t able to copy the video’s transcript, but here is the initial summary:
There’s a theory of housing that says the problem we’re facing is fundamentally not a lack of homes or restrictions on building and density. Instead, we face a scourge of investors who buy homes not to live in but to rent out, taking away options from aspiring home buyers and forcing them into renting. As one comment on our channel argued, “the investors are the prime cause of this housing crisis let’s stop the gaslighting and verbal gymnastics”. What we really need, then, is to encourage homeownership and clamp down on investors who outbid first-time-homebuyers. “Take out the demand from investors and you have more than enough supply. Which drives costs down.”, according to another commenter on one of our videos. Well, clamping down on investors is exactly what Rotterdam in the Netherlands tried to do — here’s how it turned out.
After a year of this law, several studies came out examining the effects on the housing market. With investors removed from the equation, would house prices fall? The studies found that prices did not drop at all. But it did increase home ownership - however this came at the cost of the reducing the rental market.
So not only did house prices remain high, rental rates also increased significantly due to reduced number of rentals on the market.
It also changed the demographics of the neighbourhood as well. The neighbourhoods became older, wealthier with less diversity and fewer immigrants.
Overall it turns out that the problems of the housing market are more complicated than just banning investors. The only way to really make housing more affordable is to just build more new homes, and to increase the number of new rental buildings combined with government controlled rental buildings. (with stricter rules to keep rents reasonable and protect tenant rights) There may be other ways to too, of course, but it just turns out banning investors didn’t have the desired result and actually made things worse.
I’m sorry if my summary is lacking, no doubt I left out some info and missed stuff. But it’s really worth a watch if you can somehow access their youtube channel, they produce excellent docs examining the housing crisis.
Investor owners are only half the problem. Profit driven developers are more interested in making fewer sales at a higher margin than volume sales for lower margins. This keeps the average home value climbing and less likely for first time buyers to be able to get out of the rental trap.
After a year of this law, several studies came out
One study came out. And a master’s thesis.
Sorry, several generally means two, but I apologize if that made it sound like more, hehe. But you’re 100% right, many more studies are needed after a longer period to see the long term effects.
But I think the main idea was that more and varying interventions are needed to lower the cost of housing (such as building affordable rentals) Its a complex and ingrained problem, and a single step like eliminating investors in such an inflated market is still not going to benefit low income people, and may in fact backfire. But at least other regions can learn from it in their approach.
Thanks, I appreciate it! Not the results I would’ve expected, which makes it all the more interesting.
The threat investor owners pose is proportional directly to the number of investor-owned vacant properties in a city. In some, these vacancies are a real issue… but I don’t think I’ve seen any city where these vacancies represented enough to explain more than 5-10% of the total issue. In most it is far less than that.
Being an investor-owners of a vacant property only makes sense if the market is ALREADY fundamentally inelastic and broken. In a healthy market, the vacant property should be a stable, low-risk, and low-return investment. That is, a weak, boring investment. Ditto for greedy landlords and airbnbs – none of these things are a major issue in a city with a healthy, elastic housing market, but I don’t know of ANY reasonable large city that has such a market. Even in major tourism centers that are majorly impacted by the likes of airbnb… lack of housing, periphery development, and even hotels are CAUSING those airbnbs to be so worthwhile to operate. In a healthy and elastic market, only someone skilled at running that kind of business would be able to succeed while doing it.
Lack of supply, poor development patterns for cities, weakened labor leading to high wealth inequality, lack of civil rights protections for buyers and renters, exclusionary zoning, outdated building codes, regular old greed, lack of alternatives… there are tons and tons of other major contributors.
The narrative that merely slapping down a few pied-à-terre taxes and airbnb bans will be enough to make major progress… anyone who believes that is deluded. The solution needs to be a bottom-up rethinking of development patterns. We need to fundamentally change the way cities grow and develop starting at the most basic units.
We can’t really expect the market to deliver developers that aren’t profit-driven. That means we need direct social housing programs – and those programs are only going to work if they favor local ownership and infill development (preferably by right or with easy, straightforward rules). We need financial paper products administered by local lenders who are willing to work with the complex and tight needs of a small project. We need small, local contractors who now how to build based on the needs of their own communities rather than outsiders who only know how to deliver a product from their catalog. We need things to work basically the full opposite of how they do now.