This is part 3 of a series on rent.
In the previous post we looked at two objections to the characterization of rent as an asymmetrical, exploitative transaction. There are more of course, and the next is perhaps the most common:
“But the tenant enters the contract willingly”
Does he indeed? It’s true that no one puts a gun to a tenant’s head to force him to sign a contract. On the other hand, he may have no other options.
The first possibility: roughing it
One way out would be to forgo housing altogether. But housing is not like an ice cream sundae after dinner. It is a necessity, not a luxury. Although there are and have always been nomadic societies where people do not live in permanent structures at all, in the modern western societies where I (and probably you, if you’re reading this) live, a durable, permanent shelter is a deeply embedded part of our culture, tied in with too many other aspects of life, so for most of us homelessness is not an acceptable option.
The second possibility: staying put
Some people have the option to continue living with their parents, or other relatives, instead of venturing off on their own after high school/army/college. Part of the housing crisis is surely due to more people remaining single longer and wishing to live independently, whereas in another era they would have been forming new households in pairs, when they married.
Remaining with family, when possible, isn’t necessarily a bad option. This isn’t the place to get into the “decline of the family” topic, but there are certainly benefits to multigenerational and extended family living arrangements. Families can come back together towards the end of life as well: two of my great-great-aunts shared an apartment in Brooklyn in their old age (one had never married, and the other was widowed), next door to my great-grandfather (their brother-in-law).
Nonetheless, for many this option is either impossible or very undesirable. Some family situations are uncomfortable, abusive, or stifling. There may just not be enough space, especially for someone starting their own family. And some people need to relocate to other cities, states, or countries where they have no relatives to take them in.
The third possibility: buying a home
The remaining option is to own your own home. But while rent is expensive in the long run, purchasing is expensive at the outset. One needs a down payment in order to secure a mortgage, the mortgage itself adds significantly to the cost, and the cost is high to begin with. The costs are much greater than they need to be though, and tragically, rent itself is one of the causes.
Imagine an island with 100 houses available, and 100 families in need of a home. And say this island had a law that each family could only own one house. No one’s got an extra home to rent out, and the island is isolated, so there aren’t any outsiders to sell to. What would happen? The wealthier families might bid up the prices on the grandest palazzi, while the sellers would offer discounts and installment plans on the more modest bungalows, until everything was sold and everyone owned something.
Now let’s strike out the one-house rule. What then? The wealthiest families would start buying up additional homes. Say 10 families came to own 40 houses between them. 90 families would remain, with only 60 houses available for purchase. This would have two consequences:
- Since the demand is greater than the supply, prices would rise as more people compete to purchase the same properties.
- No matter what, 30 families would be shut out from purchasing a house, forced to rent instead from the buyers who shut them out.
Of course, in the real world things are never so simple. Real estate is dynamic. New homes would be built. Some people seeking homes would give up and move in with family. Some would leave town for cheaper areas. Both suppliers and buyers can act with some flexibility.
But it is crucial to remember that houses are neither quickly produced nor fungible. While a bakery can respond to a sudden clamoring for croissants by baking more of them the next day, houses take quite a long time to plan, approve, and construct. And even then, a new house built an hour and a half away (at rush hour, say) from your workplace is not equivalent to the one ten minutes away that was snatched up by a speculator. Neither is a new house in a bland, low-density, car-dependent development on the outskirts of town interchangeable with one in the vibrant core of a city. Market responsiveness in this domain is sluggish and limited. New housing stock is also open to the same rapacity as old housing stock, and the more desirable new properties are, the more speculators and exploiters will be drawn to them.
The bottom line?
Buying up additional properties, whether they’re rented out or sit idle, lowers the supply of houses available to purchase, reducing options and causing prices to rise. Although this is mitigated by other factors, it is always part of the equation. Thus, not only are tenants pushed into renting due to high costs they cannot pay at the time, the landlords they “willingly” submit to are one of the causes of their predicament.
Rent by a thousand cuts
Once corralled into the rental market, home-seekers continue to have their options whittled away. Since landlords still have absolute say over their properties, they feel they might as well take it upon themselves to direct the goings-on within, as if they were the ones living there. List of demands range from lax to draconian. Landlords ban or limit subletting (i.e., renting out the space, the very activity they are engaged in). They ban smoking, particular cleaning products, sticky tack. They forbid pets, or require a fee or deposit for them.
Once when I was looking for an apartment in Tzfat, a landlady told me I wouldn’t be able to bring a cat there. Why not? A cat had once jumped on her, she explained, and she was afraid of them. I asked her why that was relevant, since the cat would be living with me, not with her, and she would never even see it (except perhaps through a window). She had no answer, but neither would she budge. She had simply internalized the idea that once she was in a position to own an a second apartment, it became her prerogative to circumscribe the lifestyle of another human being, who would pay off her mortgage but use the space at her leisure.
No doubt she reasoned she was was only placing limits on the space, not on me, because I could always choose a different apartment to live in. But the more landlords impose these limitations, the less accurate that justification is. One or two tyrannical landlords can be avoided. But if they own half the rental apartments, half of apartment-seekers will not be able to avoid living under their rule.
When tenants face a shrinking pool of available homes under a looming deadline, they have to make compromises and pick the best of the worst, paying a real estate agent fee on one property to escape a pet ban on another, or settling for a poor location that adds to their commute time rather than a convenient one where they can’t smoke or make any noise after 8 PM. There are also trade-offs when buying, but the point here is that rent adds additional, idiosyncratic restrictions to the mix.
We don’t make choices in a vacuum. Like sour-faced Calvin in the cartoon above, we are all hemmed in by external forces, and the actions we take are not necessarily what we would elected if the selection had been broader. When renters excluded from purchasing a home choose the least bad, or the only option they have, “willing” is not the appropriate word to describe that choice.