tptacek is asking how investors buying properties to rent them out, which clearly leads to increased rental supply, then somehow supposedly leads to higher, not lower, rents.
tptacek is asking how investors buying properties to rent them out, which clearly leads to increased rental supply, then somehow supposedly leads to higher, not lower, rents.
Increased rental supply at the cost of decreased home ownership.
There is already price manipulation with rental properties. If a cartel is in control of enough of the supply they can set their prices as high as the market can afford. There is already a nationwide shortage of affordable housing in desirable places with jobs and the idea ITT is that it will only get worse as the investment class are the only people that can afford desirable property.
> they can set their prices as high as the market can afford.
which is the correct price - because you dont need a cartel to set the price at as high as the market can afford; each individual landlord chooses to price their rental at the highest profit they can, with the lowest chance of a vacancy.
A cartel makes it possible to set the price _higher_ than the market can afford. Which is why a cartel is illegal.
Recognizing your frustration with reality's failure to adhere to the academic: the fact is that rent rates for corporate-owned units generally don't go down. At least, not in recent history. In the rare cases where cartel behavior doesn't work to cement rates, and owners have to respond somehow to market conditions in order to avoid cash-flow disruption, they will offer "specials" that lower the out-of-pocket cost, but not the on-paper rental rate, for a unit. Your oft-found "1 month free"-type deals (that are actually a monthly bill credit for the initial lease term). Upon renewal, your increase is based on that paper rate, not what you were actually paying.
Recent history has been corporate rents not decreasing amid tight supply, the question being asked repeatedly (and repeatedly not answered) in this thread is “how exactly would landlords continue seeking high rents if housing were no longer scarce?” The only answer so far has been “by buying up the supply and renting it out” which completely ignores the obvious fact that renting out housing may reduce the supply of purchasable properties, but increases the supply of rental properties. There is no reason to assume collusion among a set of landlords would be enough to keep rental prices high if supply is no longer tight. So how exactly would landlords continue seeking be able to keep prices high if supply continues to increase?
> “how exactly would landlords continue seeking high rents if housing were no longer scarce?”
I think land lords wont lease out at marker rate due to that would lower the book value of the house which would make the banks call in loans.
Like, bank and land lords have some sort of understanding which in practice is some sort of price fixing and market collusion via proxy.
Not a direct response but just a follow up question. I'm curious how much surplus supply folks think there needs to be in such a scenario. We've seen that landlords are willing to hold units vacant in order to keep their property values up and avoid renting out at a lower price. At what point does thw math say that should collapse? 10% vacancy? 15%? 30%?