One of the side effects of our misguided monetary policy in recent decades is the spike in home ‘values’. Housing is one of the most common inflation hedges this side of gold. It gives investors a relatively safe place to park their resources, and put them to work.
But it’s not just big institutional investors who act as landlords. Almost 9 in 10 such homes are owned by those who can count their entire portfolio on one hand.
So while federal lawmakers bemoan the ‘affordability’ crisis that they arguably created, state and local lawmakers are left to deal with it. Too often though, they make things worse.
Last week the San Antonio City Council banned landlords who own five or more rental homes from declining to rent to veterans for the express reason that they use a federal housing voucher as partial payment.
This is another example of government showing insufficient understanding, much less respect for, the supply side of the economic equation. This tendency has even penetrated our cultural lexicon.
When my financial literacy class discussed “unearned” income recently, returns from rentals was included with investments in stocks, bonds and the like. I felt the need to clarify the term.
Speaking from experience, landlords are ‘on’ 24/7, dealing the tenant concerns, neighborhood/HoA issues, etc. Plus, when tenants move out, the clock starts ticking.
The condition of the property must be assessed, cleanup is needed, and repairs might be necessary. Then there’s marketing, sifting through prospective new tenants, and signing an agreement.
If I got that knocked-out in 4-6 weeks, I was content. Considering I had a full-time job, was raising four daughters, and teaching at night, I considered that timeframe a win. That is not “unearned.”
Insert government meddling, and you introduce a new, unique headache into the process.
When I started renting, my realtor brought up the possibility of accepting section 8 vouchers. “It’s a steady income,” he said. I declined, but not because I’m uncharitable. Once when a tenant’s husband left, I lowered her rent for the remainder of the lease.
I declined section 8 because I didn’t want to deal with potential bureaucratic hassle, like the inspection headaches laid out by a local landlord. Sidewalk problems that are the “city’s responsibility.” Repairs to floors devoid of any actual problems.
I just wanted to convert the house I used to live in into a rental that could eventually help pay for my daughters’ college. Landlords like the author on the other hand, are trying to help others in the community of lesser means, people who could use a hand-up.
Aren’t citizens like her the same ones whose virtues are extolled by politicians, aiding citizens that those pols claim to care for? This issue presents one of the clearest contrasts between the private sector and the public sector.
On the one hand, you have people serving a market demand, in this case with altruistic intentions, and with their own resources.
On the other hand, you have politicians who promise ‘affordable’ housing on the campaign trail, put citizens on the hook for a staggering amount of debt that their property taxes finance, and then kneecap those who are already doing the work.
There was an alternative proposal on the table. The City would have cut $500 checks to landlords who “rent to any residents using vouchers.” But even that has unintended consequences.
Anyone who has watched for example, student debt balloon, or child-care costs soar, has seen that when providers know a government subsidy is coming, the price of that good/service tends to rise in its wake.
Some say that good policy requires a better understanding of the industry. Ideally, that’s true. However, that knowledge usually resides within the people already in that space. Good policy would more than likely require them to give that up and move into government.
Society would lose out as a result.
What we need in government are citizens who possess a sense of humility, who have respect for those who are contributing positively. We need those who will push back on veterans’ affairs demagoguery that inevitably occurs during local elections.
Small-time landlords have proven not only able to navigate the ups and downs, ebbs and flows of the market. They’ve also weathered needlessly obstructive government policy obstacles.
If they exit the market, either big investment houses would be more likely to gobble up their assets, or the government would. If you think things can’t get worse, just wait until that happens.
