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" I mean, if you owned an apartment that could rent for $3000/mo, then keeping it empty is a direct reduction of your income by $3000/mo." That depends on the
by neilwilson 8y ago
" I mean, if you owned an apartment that could rent for $3000/mo, then keeping it empty is a direct reduction of your income by $3000/mo."
That depends on the secondary capital effects of the reduction in supply. If you keep that and several other apartments empty in an area then you force up the rents and capital prices on the ones you do let out.
Just like De Beers drip feeding diamonds onto the market, or the Saudis drip feeding oil.
- JamesBarney 8y agoThis is just a description of a normal Monopoly which I think is pretty rare in housing because I never hear about it.
- jplayer01 8y agoDon't need a monopoly if owners collectively behave this way, and they largely do (as we see in places like London or Berlin) because it ensures rising rent and thus increasing profit and property value.
- enoch_r 8y agoThis is a pretty classic prisoner's dilemma. Anyone who defects earns $3k more a month and has no appreciable affect on the rent for any other units they may own. Unless landlords are very unusually scrupulous, the resulting equilibrium won't look like a monopoly.
- chii 8y agoi dont think there is monopoly in the housing rental market for this to compare with de beers. It's more likely that the tenants could potentially damage the property and will require maintenance to the owner, and the rent isn't worth it vs the property's natural capital gain. Esp. if the property was rent controlled. Property prices (and thus rental prices) needs to float at a market rate - any artificial control will just distort it in such a way that it doesn't really make it more beneficial. If housing affordability is the issue, that's a matter of government policy problem (from zoning, to taxing capital gains too lax).