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Well if that is the case then the price they could charge would be infinite and they would simply keep raising it. Even in a competitive market, specifically t

by gist 10y ago

Well if that is the case then the price they could charge would be infinite and they would simply keep raising it. Even in a competitive market, specifically the ones you have mentioned, the rent charged is based on supply and demand and the competition. If not what prevents them from doubling the rent?

ikeboy 10y ago
To be fair to the original point, one could argue that sticker price of rent is more sticky than the imputed cost, and so this is a sneaky way of raising rent that doesn't reduce demand as much. But that's a more complicated case to make than "kickbacks therefore bad".
- gist 10y ago
  > so this is a sneaky way of raising rent that doesn't reduce demand as much. You could say a similar thing about laundry room charges where there isn't any competition. And also no specific disclosure as well (unless you ask) therefore is that sneaky? What I am saying is non disclosure does not mean "sneaky". But another point is this: If enough buildings are doing this, such that an article like the parent post is being written, it then becomes something that a careful apartment shopper should or would consider when pricing apartments "total cost of rental". You know if you buy an expensive luxury car they don't specifically point out that you will have to pay fees to keep your warranty current (Porsche, Mercedes as two examples). So is that sneaky? After all BMW (as a high end competitor) includes all maintenance.
TeMPOraL 10y ago
> Even in a competitive market, specifically the ones you have mentioned, the rent charged is based on supply and demand and the competition. If not what prevents them from doubling the rent? Because doubling the rent would be enough to get the people to desperately search for someone else. But getting them move in and then slowly raising the rent is a common practice. Sure there is competition in this market, but given that a) demand is much bigger than supply, b) switching costs for tenants are extremely high, and c) it's not a competition in which a landlord can actually get out of business (even if they cut their rates by half, it would still be profitable to rent out the apartments), the competitiveness matters very little, and landlords are in no hurry to fight against each other - they're more likely to cooperate instead. The prices aren't set on the level competition demands - they're limited to what people can afford at all.

by gist 10y ago

ikeboy 10y ago

To be fair to the original point, one could argue that sticker price of rent is more sticky than the imputed cost, and so this is a sneaky way of raising rent that doesn't reduce demand as much. But that's a more complicated case to make than "kickbacks therefore bad".

gist 10y ago
> so this is a sneaky way of raising rent that doesn't reduce demand as much. You could say a similar thing about laundry room charges where there isn't any competition. And also no specific disclosure as well (unless you ask) therefore is that sneaky? What I am saying is non disclosure does not mean "sneaky". But another point is this: If enough buildings are doing this, such that an article like the parent post is being written, it then becomes something that a careful apartment shopper should or would consider when pricing apartments "total cost of rental". You know if you buy an expensive luxury car they don't specifically point out that you will have to pay fees to keep your warranty current (Porsche, Mercedes as two examples). So is that sneaky? After all BMW (as a high end competitor) includes all maintenance.

TeMPOraL 10y ago

> Even in a competitive market, specifically the ones you have mentioned, the rent charged is based on supply and demand and the competition. If not what prevents them from doubling the rent? Because doubling the rent would be enough to get the people to desperately search for someone else. But getting them move in and then slowly raising the rent is a common practice. Sure there is competition in this market, but given that a) demand is much bigger than supply, b) switching costs for tenants are extremely high, and c) it's not a competition in which a landlord can actually get out of business (even if they cut their rates by half, it would still be profitable to rent out the apartments), the competitiveness matters very little, and landlords are in no hurry to fight against each other - they're more likely to cooperate instead. The prices aren't set on the level competition demands - they're limited to what people can afford at all.