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Governments are also somewhat immune from market forces. Who sets the rent? Does the government set them low to be "affordable?" Is it so low that they government operates the housing at a loss? If operating at a loss, taxpayers will be forced to subsidize the housing.
Well that may well be the case.
ie: the taxpayer has to subsidise the housing.
but what is so wrong with this anyway, after all , much of our tax money is spent on all sorts of things that do not make profits?
You have developers who build properties. This usually directly employes anywhere from 50 - 300 people who tend to build the property. Contrary to popular belief Mexicans are the major profiteers in this scenario. The GC bids out the project for x dollars after receiving bids from x number of sub contractors for each trade (plumbers, electricians, carpenters, roofers, gutter installers, landscapers, window installers, etc, etc, etc) who bids out the job to spec for the GC. Once the job is accepted by the developer monies are paid out to the GC who then pays money to the subs who then find or hire workers. All of these roles do the best they can to maximize profits by hiring the lowest wage workers they can and buy the largest stock needed for the job all at the same time so they can get the best price.
Anyways, the point is there are anywhere from 50 - 500 people or so usually involved in the whole direct building of the property.
Indirectly there may be upwards of 10,000 for the same property. Someone has to make the materials for the construction. That means industries from lumber, fasteners, pipe, pipe fittings, electrical wiring, electrical fixtures, HVAC, water heaters, drywall, insulation, roofing, motors, concrete, asphalt, mining of ores, etc etc etc all collaborate to provide the materials to build the property and each industry has many workers that are required to supply such materials for each and every job. An HVAC system alone employes people who make the sheet metal, electrical wiring, circuit boards, valves, compressors, copper, oil, capacitors, contactors fan motors, aluminum and copper coils, rubber insulators, zip ties, insulation, fire dampers, duct board, etc (I'm probably leaving something out I'm sure of it).
Anyways, then you have the revenue brought in from the developer who bought the property and paid taxes, secured a loan and paid the loan officer/s, paid the civil engineers, the accountants, the real estate agents, etc etc who all pay taxes on their income. Then you have the yearly property taxes and all of the sales taxes from all of the goods that are bought to keep the property up and running.
Anyways, as you can see it's far more complex than many people even think is possible. Milton Friedman had a great show in the 80's called "Free to Choose" where he went into detail about the 1,000's of people it takes just to bring you a simple #2 pencil. People like the rubber company, the paint company, the graphite mfg, the pencil mfg, the metal band around the pencil etc etc etc.
Maybe you should take a look Home Page - NMHC and get yourself familiarized with what you're interested in before making assumptions or taking a wild guess about something. Multi-family housing is as much of an industry as anything else is.
ok, so it is not really socialised housing then, it seems.
what about housing projects - I though they were govt. owned?
are there any places which are?
Yes, Section 8 is socialized housing. The government pays the landlord a portion of the rent -- with tax money collected from all of us (who pay taxes).
Some housing projects are owned by cities, but I think it's a fairly small percentage. The government cannot administer ANYTHING cheaper than private industry can. There's just no incentive to do so.
Let's see, I pay taxes, hire a CPA, hire plumbers, electricians, handymen, painters, housekeepers, pest control service, pay HOA fees, buy new furnaces, appliances, miscellaneous repair services, etc. I go out to eat with my hard-earned money, I purchase things. I use RE agents once in awhile. I buy advertising, insurance, carpets. I play the stock market and pay taxes on capital gains and dividends. I am providing nice places to live.
- Signed me, Lipstick Capitalist.
Conventional wisdom says that homeowners are much better for the economy than landlords, because it is believed that homeowners put a lot more improvements into their properties than do landlords. Homeowners often pimp out their homes and spend big bucks at places like Home Depot, while landlords often skate by with as little maintenance as is necessary.
And the economics of landlording does not justify pimping out your property, except in the luxury segment of the rental market, which is a very small part of the generally downscale rental market. Something like 80 percent of all renters are in the bottom half of income, and most of the other 20 percent are temporary renters who will buy homes as soon as they have a down payment saved up or they fix their credit; rents generally cannot be raised sufficiently to justify putting as much money into a rental property as a homeowner would.
I suggest you do a little research on Chicago's Robert Taylor Homes housing projects and similar projects done throughout the country. They do not have a successful reputation for improving the quality of life for people of modest means or helping to rise them out of poverty.
Actually, public housing - a New Deal program - was a decent place for working class people to live until the end of the 1960s.
Public housing used to have MINIMUM income standards which kept out the welfare class. In the '60s, a welfare rights group organized and lobbied Congress. The 1969 Brooke Amendment (Edward Brooke was a black Republican senator from Massachusetts) eliminated minimum income standards, opening the door to welfare recipients. As welfare recipients moved in, the working class moved out, and the turnover was rapid, allowing the virtual takeover of public housing by the welfare class.
Ok, I get the picture here - there is a maintenance trade associated with housing.
but, in the private sector, this would only happen to any large degree in areas/properties in which the tenants had the means to pay.
If we had large areas of subsidised social housing, then could the government not be a job provider here - for those on lower incomes?
Who maintains the Project 8 style housing schemes anyway?
No it could not. The cost to build and maintain it would be a huge burden on the taxpayers, that's all of us working. See the tenants would pay either nothing and live for free or pay only a few dollars towards what the government would charge per apartment. The last thing this Country or any other Country nees is to have all multidwellings government owned and run. I is more of a crutch than a help since there are by far way to many people milking the system.
Quote:
Originally Posted by freemkt
Conventional wisdom says that homeowners are much better for the economy than landlords, because it is believed that homeowners put a lot more improvements into their properties than do landlords. Homeowners often pimp out their homes and spend big bucks at places like Home Depot, while landlords often skate by with as little maintenance as is necessary.
And the economics of landlording does not justify pimping out your property, except in the luxury segment of the rental market, which is a very small part of the generally downscale rental market. Something like 80 percent of all renters are in the bottom half of income, and most of the other 20 percent are temporary renters who will buy homes as soon as they have a down payment saved up or they fix their credit; rents generally cannot be raised sufficiently to justify putting as much money into a rental property as a homeowner would.
Sorry but your conventional wisdom has no wisdom when comparing the two and saying homeowners are better for the economy. A single family homeowner can't even begin to compare to what a landlord of a multidwelling has to purchase, pay for repairs. Too much regulation prevents landlords from upgrading. There's no regulation on repairs and buying new appliances when the old one's break down and stop working. The landlord you are speaking of is what is known as slum lord. I noticed where there is no rent control the apartments are much nicer and aren't constantly infested with bugs but that can also depend on the tenants they rent to.
Last edited by Lolipopbubbles; 07-28-2012 at 08:45 PM..
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