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Could Rentals Kill the Economy

Could Rentals Kill the Economy

Greed is good.  The rich get richer.

We’ve all heard these expressions but are they right?

Landlords are so excited that the economy is coming back, more people are working and homes are harder to buy because mortgages are strangling the market.

Since there are no more option arms and no docs, people have to qualify for loans. Even without the CFPB overregulations, the housing market is exactly what it would be without the idiocracy of paperwork and restrictions imposed by the government agency.

So, the supply and demand features of rentals have been rearranged.  Everyone needs to live somewhere.  But the $750 a month rental that they had is now $1000.  Why, because they can.

But, if you take $250 out of people’s accounts that they have to spend on rent, that leave $250 less to spend on basic goods and services.  The landlord’s $250 does not go towards less basics but towards either improving the property, savings or a new car.

The $250 times the many, many people that can’t provide adequately leads to a lot of people to beg for increased wages.  And if the owner of the company gives it, it will be passed on to the consumer.

The problem?  You either shut too many people down that will need government assistance causing higher taxes or inflation that will cause interest rates to rise and a slowdown in the general economy.

When anyone raises prices, it is a gamble.  What they don’t usually look at is the effect on the overall economy.  Maybe major companies do, but landlord don’t.

Solution?  Loosen mortgage guidelines back to reality.  Stop all the crazy regulation that was born from the option arms and no docs because they do not exist anymore so that more people can buy homes.

All the CFPB had to do is ban those loans and their job would have been done.

Tenants can sign long term leases so they don’t get jacked after a year.  This makes easier for landlords and tenants to plan.

 

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