Two indicators for lowering the rent

Episode Summary

Executive Summary: The episode examines two housing-policy myths and realities: first, whether corporate landlords are a major cause of high housing costs, and second, whether reviving single-room occupancy housing could reduce homelessness. It concludes that institutional investors are a small national force that may raise prices slightly but also expand supply, while the loss of very cheap shared housing helped fuel homelessness and could be part of the solution if responsibly rebuilt.

Main Topics: Corporate landlords and housing affordability (Priority: 5/5): The show investigates claims that institutional investors are driving up home prices and rents. Experts argue their national market share is tiny, so they are not the main cause of affordability problems. Build-to-rent and housing supply (Priority: 5/5): Large investors often finance and build new single-family homes specifically for rent, which can increase supply. Restricting them could reduce new construction and worsen affordability. Investor behavior and neighborhood effects (Priority: 4/5): Research suggests institutional buyers often purchase distressed homes, renovate them, and sometimes affect neighborhood conditions, though their effects are mixed and context-dependent. Historical rise and fall of SROs (Priority: 5/5): The episode traces how single-room occupancy housing once provided extremely cheap urban housing, then was sharply reduced by regulation, redevelopment, and anti-boarding-house policy. SROs, homelessness, and policy reversal (Priority: 5/5): The loss of SROs is presented as a major contributor to homelessness, and the episode explores whether zoning and policy changes could revive this housing type. Tradeoffs in ultra-affordable housing (Priority: 4/5): While SROs and rental homes can improve access for low-income people, they also come with quality, aging, health, and management challenges that make policy design crucial.

Key Arguments: Institutional investors are blamed politically, but they account for less than 1% of home purchases nationally, so they are not the primary driver of high housing prices. The bigger housing-cost drivers are low construction and low interest rates, not corporate ownership. Corporate landlords can increase rental supply by buying distressed homes, renovating them, and financing build-to-rent developments. Banning or heavily restricting institutional investors could backfire by reducing new housing construction and making affordability worse. Corporate ownership may have mixed neighborhood effects; one study found higher crime rates when corporate landlords bought a larger share of houses in a neighborhood. However, renting in better neighborhoods can benefit low-income families and children, especially through access to better schools and social networks. SROs were once a widespread, extremely cheap form of housing and provided independent living for many people who would otherwise face shelters or homelessness. Urban renewal, stricter housing codes, and class/race biases helped eliminate about a million SRO rooms, likely worsening homelessness. Reviving some form of shared or single-room housing could meaningfully expand ultra-affordable housing supply, but it must account for health, privacy, and aging-related challenges.

Data Points: Institutional investors' share of home purchases nationally: less than 1% - Used to argue corporate landlords are not the main cause of housing unaffordability Renters as a share of American families: about one-third - Explains why rental-market effects matter broadly Denial rate on home improvement loans for homeowners: over 40% - Supports the claim that large investors can more easily finance renovations Share of new houses built specifically to rent in 2024: about 1 in 12 - Illustrates the scale of build-to-rent construction Crime increase where corporate landlords bought more houses: 2% property crime, 4% violent crime, 7% drug crime - Stephen Billings' research on neighborhood effects Number of SRO units in New York in the 1950s: more than 200,000 - Shows how common boarding-house housing once was Share of New York City's rental stock in SROs in the 1950s: more than 10% - Demonstrates SRO prevalence Estimated cost of low-end SROs in today's dollars: roughly $100 a month - Inflation-adjusted estimate of ultra-cheap boarding-house housing Boarding-house rooms eliminated or converted in the 1970s: a million rooms - Highlights scale of housing loss Potential additional rooms today if SRO growth had matched other housing: 2.5 million more rooms - Rebecca Baird-Remba's estimate of missed housing supply Age of Vera Hill: 77 - Resident of Euclid Hall, illustrating who benefits from supportive SRO-style housing Length of Vera Hill's residency: 15 years - Shows stability of supportive housing Number of properties operated by Westside Federation for Senior and Supportive Housing: 22 - Describes scale of the nonprofit provider

Pivotal Quotes: "The fact that corporate investors can take all of them feels unfair." — Amanda Cantrell: Her reaction while searching for a rental home in Tennessee "These are homes that probably would not otherwise be built." — Stephen Billings: On why build-to-rent housing may add supply rather than simply displace buyers "One thing that was very clear is that they had encouraged the destruction of this extremely cheap form of housing." — Rebecca Baird-Remba: On how policy choices helped eliminate SROs and contribute to homelessness

Implications: Policymakers should be cautious about targeting institutional landlords broadly. Limiting build-to-rent could reduce supply, while carefully legalizing and supporting SRO-style housing may expand ultra-cheap options and help address homelessness.