In Los Angeles, on Iowa farms, rents mean hardship
Higher land rents squeeze tenants and farmers
When incomes are low and commodities high, land is scarce. We trim, blend, and append two 2012 articles from (1) Los Angeles Times, Mar 3, on home site costs by M. Dickerson, and (2) Des Moines Register, Mar 3, on farmland costs by D. Piller.
by Marla Dickerson and by Dan Piller
The rent is too darn high for many Angelenos
Housing affordability has long concerned would-be home buyers in Southern California. But L.A.’s renters are struggling too. More than 60% of Angelenos who rent their dwellings are considered "rent burdened," meaning they pay more than 30% of their income in rent.
That’s according to the Economic Roundtable, a nonprofit research group, which just released a report on the state of L.A.’s rental market. There isn’t much good news in it for the 62% of Los Angeles residents who rent their dwellings.
Here are some of the findings, which are based largely on census data:
*One in five rental units in Los Angeles was overcrowded in 2010.
*Average rent plus utilities in 2010 was $1,256, up 28% since 2000. Meanwhile, incomes of renter households declined 3.6% over the same time period, adjusted for inflation.
*Fully one-third of L.A.’s renters are "severely" rent burdened, meaning that they pay more than half their income in rent. That figure was 24% in 2000.
*Growth in rental units is lagging behind L.A.’s population growth.
Rising demand for rental property is outpacing supply in much of the country. Blame the housing meltdown. Millions of Americans have been forced into the rental market after they lost their homes to foreclosure. Others can’t qualify for a mortgage because credit standards have toughened. Still others aren’t convinced that the housing market has hit bottom yet. They're waiting for prices to fall further before jumping in.
Landlords are loving it. U.S. apartment vacancies hit a 10-year low of 5.2% in the fourth quarter of 2011. Rents are rising in most major cities, including Los Angeles. Asking rents averaged $1,382 in the third quarter of 2011, up 1.2% from the same period a year earlier.
Renters have it even tougher in San Francisco and New York City; rents in Manhattan are up 9% to 10% over the last year.
Lots of renters out there agree with perennial New York political candidate Jimmy McMillan. To paraphrase the mustachioed gadfly: "The rent is too darn high."
To see the whole article, click here .
JJS: Actually, rent is never too high, it’s only too concentrated, funneled into the bank accounts of too few people.
Higher land rent costs squeeze farmers
The traditional March 1 moving day for farm renters passed last week, and while relatively few families actually move onto new land as in past generations, the rents they pay definitely moved up.
Statewide, rents have gone up on average at least $100 per acre from the $148-per-acre average in 2007. During the same period, farmland prices tracked the 45 percent rise.
In the higher-yielding counties in the northern half of Iowa, rents in the $350-$400 range are not uncommon this spring. Iowa State University economist Chad Hart said, “That’s squeezing it a little tight.”
While huge prices for farmland sales have captured headlines and national attention, cash rents play a more immediate role in Iowa’s farm economy because they cover 55 percent of Iowa’s 24,000 cultivated acres.
Rents are -- along with costs for fertilizer, diesel fuel, and seeds -- a major component of farm input costs that this year are expected to rise enough to take some of the edge off what has been two straight years of record incomes for farmers. Input costs follow the commodity prices up. Farmers have always seen it that way.
Farm rents vary widely, in part because many are still done among relatives and friends and without the same high-pressure atmosphere at the public auctions where most farmland is now sold.
Also, most Iowa farmers today work both their own land and adjacent acres rented from another owner.
Iowa State University doesn’t publish its annual survey of rents until May because “we don’t want to set the market,” Iowa State University Extension economist Mike Duffy said.
Farmers and their landlords still are reluctant to talk publicly about their rents, except for the widespread acknowledgment that rents are higher.
The market is sending a warning signal: Last week the December contract for corn traded at $5.67 per bushel, about $1 per bushel less than what farmers can get now on the futures board for May delivery of their 2011 crop.
The U.S. Department of Agriculture created the drop-off for the 2012 crop price when it said that it expects farmers to plant a record 94 million acres of corn this year nationwide (the largest since 1944).
To see the whole article, click here .
JJS: Interesting. Nobody wants to talk about the value of farmland, yet economists say that markets operate most efficiently when buyers and sellers know as much as possible. So by being secretive, people in the agri-biz make agri-decisions less than optimal. Can that be good for farmland?
Knowledge aside, how much farmers must pay to lease land can always be affordable. How? Make it so they don’t pay rent to an individual owner but to one’s community -- to one’s county or state or region -- and then have the government pay back some or all of the recovered rents to local residents in equitable shares.
Farmland is not as dear as downtown land or prime resource land such as sites for windmills or oil derricks so many farmers could pay in “land dues” that are much less than the “rent dividends” that they'd get back. There you have it: affordable farmland always and the geonomic way to turn the curse of steep rent into a blessing of rent-shares for all residents.
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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