On Rental Housing and Markets
You may know that I also blog over at streets.mn, and I just posted a three-part series on rental housing markets, affordable rental housing and related policy. (Three posts so far, it may grow). It was inspired by things happening in my back yard: a lot of hand-wringing about affordable housing, concerns about luxury buildings forcing up naturally-occurring affordable rents, and what can we do about it all. It’s conceptual enough I think it is useful anywhere.
I start off at my own owner-occupied four-unit apartment building where I explain How I Set Apartment Rents. I moved on to a basic housing market explainer in Housing Markets? Humbug! In the third, I walk through an overview of how big the need for affordable housing is, what current subsidy can — or really cannot — do to address the problem, and offer my thoughts on how to Reduce Affordable Housing Need in Three Steps.
Rental Burden (paying more than 30% of income in rent)
Map credit: Elliot Altbaum
Because the government owns like 93% of the land and we have an inliedrbce amount of red tape that means it takes years from applying to build to laying the first cornerstone, we have a constant housing shortage. Most of what is approved for building in the center is geared for the extremely wealthy and foreign tourists (buy your luxury condo by the beach/in the heart of Jerusalem! We have entire neighbourhoods that are nearly deserted of people 9 months out of the year because the owners are only in them during their vacations here in the peak months). Very little affordable-cost housing has been built for sale or for rent and the thirst of foreign investors has been such that they will pay huge amounts for utterly crap apartments (that they then pay further amounts to renovate). Because some of them do rent out their apartments, they are renting them at prices to cover the cost of their luxury mortgage. That has caused the rest of the landlords to price their rentals in the same range.In 2005 I rented a 70 sq meter 2.5 in north Tel Aviv for U.S. $650 a month. That same apartment today would rent for $1400-1500 at a minimum and only with the landlady having alzheimers. When I had to move from there in 2007, rents had jumped in that two years so the smaller place I moved into started out renting at U.S. $900 and I was paying 1100 when I moved out in 2010 moving because the rent was going to go up even further and I couldn’t afford what I was paying already it rented for $1850 to the people who moved in after me. I’m way the heck out in Bnei Brak and paying $1000 (3500 sheks)! There aren’t enough apartments so the landlords can charge incredibly high prices. The government has not approved any low-cost or affordable cost housing in the center in years. Young couples can no longer afford to rent much less ever dream of buying a home in the current situation.