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No...I honestly think there is an ethical dilemma/conflict of interest on the wealthy city officials, community members, and liberals who claim to care about affordable housing, but refuse to reform racist single-family housing zoning because they fear their own property values decreasing...it's a classic case of the Have's vs the Have-Nots.
As someone else said, as long as the landlord is taking care of tenants and the building and running things well, I see no ethical issue. Welcome to capitalism.
Entirely agree that the onus for the housing crisis lies entirely on the government. You can't expect landlords and developers to bear the cost of affordable housing in a free market just because their business happens to be one that impacts everyone. Nobody is at the grocery store protesting the fact that their grocery bill is up 15% from last year, are they?
When municipal governments won't implement proper tax incentives to encourage affordable housing (note that I didn't say "can't", there are many places that have done this well), it's hard to feel guilty for operating your business to the best of your ability. My company and any other with a brain will happy supply more affordable housing if there are economic incentives there to do it.
Toronto is a great example of an absolute failure on a government level in terms of encouraging affordable housing. They drone on and on about the need for it, but then go and institute inclusionary zoning, requiring any new development in key areas to include a certain percentage of units as affordable with no benefit to the builder. Beyond that, they then go and announce a proposed 48% increase in development charges which are already the highest in the country. If the latter change goes through, builders will be running for the hills and the crisis will only get worse. As it is, you already can't build rental in Toronto right now so the only option is condo.
The issue is supply and people who think otherwise are foolish.
I mean, name a country that has sufficient affordable housing? I think that's the issue, you can easily shovel the blame on the government basically saying, well they haven't given me a reason not to continue to crank rent until I drain as much as I can, but nobody has figured it out. Any high growth/dense city has insanely expensive costs.
It's easy to tell people to just move, but as rent increases, mobility also decreases. The ethical dilemma is whether you feel fine with taking part in making the dilemma worse or not. If your answer is well, not my problem or my responsibility, that's fine I'm not trying to make a stand for anything just curious to have the conversation given the current MF climate.
Blaming "government" is just an easy scapegoat for the real problem, which is people. People are selfish, and government is just an agglomeration of people's desires (the obvious corruption and self-dealing of politicians notwithstanding). Homeowners aren't interested in new construction which will ease supply and drive prices downwards. Middle class renters don't want to see economic diversity in their neighborhoods for fear of impacting school districts (or, depending on whether your neighbors are card carrying Klansmen like T30Alumnus, just straight up don't want to see minorities move in). Most people are NIMBYs in some way or other, and this extends (in my experience) to low income communities as well.
The only way out of the housing crisis is to build. And while it's easy to say "government isn't making that possible," that's silly - communities and people are putting that pressure on government, and the blame should fall there, not on the middleman who is implementing the will of the voters. Blaming government has been the expedient but stupid solution for decades, and it hasn't solved anything, because "government" isn't some independent entity but a reflection of public will. Blaming people, and either ignoring their selfish opinions or changing their minds, is the right call, even if it isn't as politically palatable and entails a more difficult solution.
So what we are getting into is just politics and ideology...do you believe in more government or less? More social programs? Higher taxes on the "rich?" There is nothing unique about this topic and it is certainly not unique to real estate..it's just that real estate is receiving the most attention because people can't afford it...but let's expand the scope of your position to other necessary goods such as food and water. I would argue that food and water are more essential to living than housing and I think most would agree. With today's inflation, food and water are becoming less and less affordable...should grocery chains be held responsible for the rising cost of food? When inflation increases their costs should they eat the cost rather than increasing their prices to consumers? Should the government pass "Affordable Groceries" legislation and require that grocery stores offer 10% of their groceries be priced at 100% AMI? If your answer to any of these question is "Yes," then my response is "to what end?" Should grocery stores offer 10% affordable groceries? 50%? 100%? Should they voluntarily act as a "soup kitchen" and offer free meals to everyone? I wonder how long that will last...
Real estate is actually worse than this example...not only are there affordable housing legislation that requires developers to provide affordable housing units, but they also have legislation that severely limits the supply of developable land. We get hit on both ends...the government/public creates a housing crisis by limiting developable land through racist zoning regulations, height restrictions, setbacks, use restrictions, and in some cases ridiculous building code requirements and then when housing becomes too expensive, they force developers to provide affordable housing...Please look at the zoning map of any city and you will see that it is overwhelmingly single-family zoned...can you please provide me with a valid argument as to why these zones can't be zoned for duplexes? Triplexes? 20 units? 50 units? If we no longer had single family zones and could build apartment buildings on every tract of land, I promise you...there would no longer be a housing crisis. Do you know what the argument against this is in my city? "We don't want to look like NYC," "An apartment building won't match the neighborhood context," "That (decrepit) single family house is 100 years old...it's history," the list goes on...So the reason so many people cannot afford to live in my city (and I suspect many others) is essentially because apartment buildings are too big and tall...I don't know about you, but this doesn't seem like a very good reason as to why people should not be able to afford housing..
You ask if I "take any fault" for the housing being unaffordable and my answer to that is it's irrelevant. Whether I take fault or not doesn't change anything. Let's say I do take fault and keep all my properties at some arbitrary affordable price..let's say 100% AMI..will the thousands of other developers do the same? I doubt it. If you rely on people's "good intentions" to run this economy and ultimately society, you're going to be very disappointed. So instead I rely on capitalism and the invisible hand. If we could provide enough supply of housing that a house/condo unit dropped to $200,000 (arbitrary number for the purposes of this discussion), nobody would be complaining about unaffordable housing anymore. Generally speaking, my observation is that whatever the government touches turns to shit and I especially see this for housing and real estate because I have more knowledge in this area.
FYI as Ozymandia already noted, when I say "Government," I am really referring to voters, particularly homeowners because homeowners are the ones who essentially lobby local government against development
Lmao ethics and real estate. That’s a good one. Real estate douchebags are as slimy as it gets. Little greasy weasels that couldn’t get legitimate investing jobs and like juice the fuck out of a non-discretionary commodity. Gonna laugh when they all start crying after the rug pull happens
Ah yes, that's right I forgot that traditional PE and hedge funds, and especially investment banking, have historically been known for their upstanding ethical and moral values.
How silly of me to forget.
I'm an owner at One57 - spend long and hard thinking about this dilemma as my tenant has been enduring significant adversity. Their pet poodle was diagnosed with anxiety so they had to get a new pet to accompany them.
Only made sense to get a ring tailed lemur. Thing is w/ a lemur, the carry costs come out to about 2k/month and the little rat costs 15k to begin w/.
Only ended up raising their rent on the 1bd/1bath unit they have from 12k/month to 15k/month.
Thoughts? I thought it was fair in lieu of circumstances.
I'm coming into this late so haven't read most of the comments but I believe in these two contradictory thoughts
So how do we encourage both more supply, but reduce demand in the hottest areas to create more equal balance?
I'm not a gigabrain on exactly what the federal gov't can do, but we need to ask the right questions that get us closer to a solution, than arguing endlessly in a circle about the merits of X Y or Z. I never see the top of increasing the demand in other markets via the fed gov't, but these ideas should be proposed and debated