That’s…actually a really good idea. Commercial real estate is always claimed to be tanking thanks to corporate work from home initiatives. So, turning into offices into homes can relatively immediately expand the supply of housing as opposed to the much costlier investment of developing houses from the ground up.
The problem though isn’t a lack of housing, we actually have plenty for everyone. The problem is corporations buying up homes to rent them and in the process jacking up home prices.
If all these newly made homes are left to the tender mercies of the market there won’t be a slew of new homeowners. Just more rentals.
Houses in the middle of Nebraska do not meaningfully help the housing market of New York City or San Francisco. Sure, I could go and buy a house in my hometown in bumfuck rural Missouri, but I don’t want to live in a homophobic conservative hellhole, so housing stock there isn’t really relevant to me in any way.
And if you look at a city like Seattle, where there actually has been meaningful construction, the pressure on renters has been way lower. Straight from the horses mouth:
The rise in vacancies across Seattle is directly linked to the rate of newly constructed apartments, according to Capital Economics, and it’s increased from 5.2% at the end of 2019 to 7% by midyear 2023. Already, Seattle’s asking rent growth rate is at -2% and could fall further. With that, the city’s apartment values will fall, and average annual total returns could become negative by 2027, meaning those properties are losing value as an asset and investment.
Here’s a London-based investment firm complaining about how housing in Seattle is becoming a bad investment due to increasing supply.
Not to mention, more rentals isn’t a bad thing! More rental units means fewer competition for each individual unit and ultimately cheaper rents. If you have 1000 people wanting to move to a city but there are only 500 open apartments, only the richest 500 people get to move. If you have 1200 open apartments, those landlords have to find a price that’ll get them a tenant or they’ll completely miss out on rents.
I completely agree with the sentiment that housing shouldn’t be treated as a productive investment asset, but the real question worth asking is why the market is so slanted towards landlords that housing can even serve as a productive asset in the first place. If you look at places like the Soviet Union or Communist China, they managed to house everyone easily because they build a metric fuckton of housing everywhere, so the questions of determining who gets housing and who gets to starve on the streets didn’t even apply.
It’s a supply issue. Essentially every economist agrees that it’s a supply issue. Evidence has shown time and time again that increasing supply lowers rent pressures. This is not a controversial question.
As of the last time a city government report was made on this just two years ago, over 61,000 homes were vacant in San Francisco. In answer to anyone who would write that off to pandemic effects, the number a few years before was around 40,000 homes sitting uninhabited. In San Francisco. Just sitting around being some well-off person or corporation’s investment, empty.
Yup. This shit needs to be illegal nationwide. They literally encourage vacancies in order to keep pricing going upward and coordinate pricing in order to keep profits maximized. It’s gross and these fucks should be vilified.
Location is a major issue. A lot of empty housing stock is in places no one wants to live in anymore. There is a lack of housing in high demand areas. There’s no silver bullet, but converting commercial real estate in those high demand areas is ideal to add useful housing.
But yes, corporations sucking up residential real estate needs to be tackled just the same.
To say nothing of the massive expense of remodeling those commercial properties to actually work as residential. When it comes to the big multistory buildings in the larger cities that need it most, the plumbing alone would be a nightmare, along with splitting up all the electric service so individual usage can be metered. And then you have to gut and rebuild the interiors to split everything up and still have proper fire code compliance.
I love the idea and I hope it gains traction but logistically and financially there are some tall hurdles to overcome to implement this properly.
