In defense of squatting
The community utility of squatting in a world of algorithmic landlord collusion
This post is written as a response to this Bloomberg Article describing a rise in real estate squatting in the city of Atlanta and its co-occurrence with a rise in corporate landlordism in the city.
The authors of the Bloomberg article of course viewed squatting as a negative thing. However, squatting has a long tradition and often is a symptom of broader failures of real estate markets. And honestly, in the present case, this sounds like a good thing all around. We could use more squatting, not less. The big corporate landlords are using AI algorithms to algorithmically collude with each other and jack up prices. The squatters are fighting back, using the same technology to find homes that the big corporate landlords are leaving vacant.
I'm a strong advocate for new housing construction of all forms. I firmly believe that ultimately, the best way to lower rental costs is to increase the supply of housing. However, this assumes a free and open housing market, where supply and demand are free to work. With this new collusion software like Realpage, landlords are often encouraged to leave units vacant for longer than they previously may have. The software will coach them on when, statistically, it's better to leave a unit vacant and hold out for a potentially richer tenant in the future. Sometimes it is worth it to simply let a unit go vacant for a few years rather than dropping the price. The collusion software the landlords are all using makes this a lot easier to predict.
I think we should encourage more squatting. This seems to be a problem more for big corporate landlords than small mom-and-pop ones. A couple using a handful of rentals to pay for their retirement can't afford to let a unit sit empty for months or years. They'll rent a unit out even if it means renting it out for less than they would prefer. But these big corporate landlords have deep enough pockets that they can afford to leave units vacant for long periods of time.
I'm reminded here of the concept of adverse possession. People handwring about adverse possession. Sometimes you'll read articles breathlessly stating, "did you know you could have your land stolen right out from under you?" or similar. But adverse possession is part of the law of many states for a very good reason. Adverse possession exists to encourage people not to waste our finite supply of land.
Adverse possession is the concept found in the laws of many states that allows squatters to obtain ownership of properties under certain conditions. Back in the 1800s, a lot of western US states found that speculators were a major barrier to development. Speculators would buy up plots of wild land out west and simply sit on them. They wouldn't move out there. They wouldn't build anything on the land. They wouldn't farm, mine, or work it in any way. They would just sit on it. They would wait until farmers and other people willing to put in real labor would move out there, improve their land, and by doing so, raise the property value of all the property around them. The speculators made their money entirely off of the sweat and labor of people who actually farmed the land while contributing absolutely nothing. They were leeches holding back the development of entire states.
To combat this, many states adopted adverse possession laws. Adverse Possession allows squatters to become landowners, under some very specific circumstances. First, they have to do this for a long time, 7 years is a common length. Second, they have to do so "openly and notoriously." You can't just live in a cave or hide out in the woods behind a rural house. If you want to seize property through adverse possession, you need to be openly operating as the owner of that property would. For instance, if it's a piece of raw land, you would probably have to build a house on that land. If it's a house in a city, you would have to be living there, paying property taxes on the house, have insurance for it, receive mail there, basically everything an owner would do.
Adverse possession is intended to only be applicable in the most egregious cases of absentee landlordism. The principle is, if you care so little about a piece of property, that you don't notice someone openly and brazenly occupying it for SEVEN YEARS, then you probably don't deserve to own that land. You obviously don't need it. If you completely ignore your property for that long, you're not living there. You're not even renting it out. You're just using it for land speculation, the most vile form of property investment.
Now I don't think these Atlanta squatters would qualify for actual adverse possession. But a similar principle applies. These squatters are only becoming more common because the big corporate landlords don't watch their properties as closely as traditional small-scale landlords do. The big corporate landlords are more able to leave homes vacant for months or years, hoping to hold out for higher-paying tenants. Those are vacant units that could be rented out, if the landlords just lowered their prices a bit. But they don't, largely because of esoteric corporate finance reasons that don't apply to small-time retiree landlords.
I see squatting in a similar light. I think squatting is a perfectly natural counter to this kind of irresponsible and greedy behavior these big corporate landlords are demonstrating. Small time landlords are less likely to be able to afford to leave their units vacant for prolonged periods of time. Many don't even list their vacant properties online. If the big corporate landlords want to play these games of collusion and endless rent increases, then hopefully at least squatters can serve as a damper on their greed.
In an ideal world, this would provide enough market pressure on the big corporate landlords to leave the single-family rental market all together, and instead leave that the domain of retirees and small-time landlords. If not that, squatters can at least hopefully lower the profits of big landlords and make them less likely to get into the single-family rental market.
If the landlords are that concerned about squatters, they have options to easily avoid the problem all together. For example, they can raise their rents less often. More reasonable rent increases will mean less people leaving. Next, they can make sure to always have another tenant lined up, even if that means lowering the rent a bit. The big ones have sophisticated enough operations that they could even do it like airlines, with the asking price constantly varying based on the date. Sign a lease a year in advance? Great deal. Sign a lease a month in advance? Crappy deal. Sign up after the previous tenant has already moved out? Amazing deal. If landlords want a unit filled, they can find someone to fill it. The only reason any unit is vacant for any substantial length of time is because the landlords choose to leave it vacant. Finally, there's always the option of just offering a very generous short-term lease to any unit you can't rent out. Have a vacant unit that normally rents for $1500? Offer someone a month-to-month lease for $1200/month. The squatters are only hard to evict because they have a fake year-long lease that doesn't show a short-term end date on it. Your monthly renter has a lease with a reasonable and clear end date on it, and is much more enforceable.
So no, I have zero sympathy for these big corporate landlords. In fact, we should do all we can to encourage more squatters. These properties are only sitting vacant for prolonged periods because of the choices the big corporate landlords have made. No vacant units means no squatters. Avoiding vacant units might require lowering rents or offering amazing deals for units that do become vacant, but that's on the big landlords to decide. Their current practices simply encourage squatting. If they don't want squatters, then they can change their practices. I view squatting very similar to adverse possession. Both are messy but useful processes that encourage landowners to not waste our finite supply of land.