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What's wrong with legally limiting artificial price hikes to prevent people from abusing Demand > Supply for the sake of their greed? [Edit] To clarify, they s

What's wrong with legally limiting artificial price hikes to prevent people from abusing Demand > Supply for the sake of their greed? [Edit] To clarify, they seem to be "artificial" price hikes because they don't in any way necessary to cover costs. People realize they can charge more and get more money, so they simply do. That's inherently avaricious and unethical. Sure, maybe prices work themselves out, so that price goes down when supply goes up, but this seems to only be because suppliers can no longer get away with a higher price, because their competition is now selling it at a lower price. So I think it's far more ethical for a government to limit those kind of price hikes, which mainly just hurt the consumer, than to allow these abuses to continue in the name of "freedom".

piker 7y ago
What's "artificial" about the price increases?
ThomPete 7y ago
So basically creating an artificial demand stop is the solution to creating the "artificial" price increase?
- jacquesm 7y ago
  The simplistic version of demand based economics do not take into account speculators who buy rental properties and do not rent them out to reduce supply and to help increase the price of the properties they are flipping.
  - ThomPete 7y ago
    Doesn't change that both are artificial.
rwj 7y ago
Are you asking in the short term or the long term?
coryrc 7y ago
Paul Krugman tries to help you understand: https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...
ziziyO 7y ago
Why is greed so bad here? The problem isn’t greed it’s the demand in the face of the lack of supply. Make other places more attractive or increase the supply available in this location.
- wander_homer 7y ago
  > Why is greed so bad here? The problem isn’t greed it’s the demand in the face of the lack of supply. Greed is bad in this situation because you can make more money of luxury apartments than those suitable for people who are somewhere between the poverty line and upper middle class. Hence new apartments in major cities tend to be more and more expensive to satisfy the demand of wealthier people. Greed is also bad when existing apartments are made much more expensive, thereby forcing senior citizens who have been living there for decades and who are barely able to afford the rent to basically leave town, family and friends.
  - mamon 7y ago
    Upper middle class are usually not homeless, right now they occupy some pool of apartments in cities anyway. By building more luxury apartments you encourage them to move, thus leaving their old apartment behind, either by putting it on sale, or renting it out. Think of this like a domino effect: those earning $10M per year buy luxury residence, leaving their old house for those earning $1M, who in turn leave their own houses to those earning $500K, who leave their apartments for those earning $200k, and so on, and so on. In the end everybody benefits from new housing being built, even if it's only luxury housing. Also, increasing supply keeps prices down, thus decreasing profitability of buying houses as investment, causing larger share of apartments to be bought by people who actually plan to live in them. EDIT: yes, this effect might not work as described if is limited to just one city, because there might be a lot of people wanting to move from elswhere. Or more precisely: it will work, eventually, but it would require much more housing to be built to meet the demand.
    - kaybe 7y ago
      I don't think they're going to move that easily. Rent has been going so much it is eating a larger income share than before for many of them too. So what that leaves you with is disproportionate increase of demand and prices for smaller cheaper units.
andys627 7y ago
The market works this out "automatically" when supply is greater than demand. If there are too many dwelling units then landlords will compete with eachother for tenants by lowering prices relative to eachother.
- q3k 7y ago
  In the meantime while we wait for this to happen, people will keep getting evicted due to rising rent. How long do we wait? When can we expect results?
vtail 7y ago
You are using emotionally charged words ("artificial", "abuse", "greed"), which makes a bit hard to have a constructive argument, but let me try :). One way to think about prices is as a signal. When greedy landlords raise prices, they send two signals: (1) To other landlords and wanna-be-landlords, saying it's an attractive market which would justify new construction or cleaning up your spare bedroom and putting it on the market, both increasing supply, and (2) to current and future renters, making it more economical for them to move elsewhere and thus save on their rent, thus reducing demand.
- rolltiide 7y ago
  remember, gentrification is typically used as a pejorative good point in that it undermines constructive argument
- sdegutis 7y ago
  I just edited the comment to clarify what I meant by those words. And they should be used because they are accurate in this context. Although I did convert "greed" to "avarice" in my clarification since I think it's more accurate here.
gumby 7y ago
Doesn't that discourage people from building more housing, which is what would actually bring the price down?

piker 7y ago

What's "artificial" about the price increases?

ThomPete 7y ago

So basically creating an artificial demand stop is the solution to creating the "artificial" price increase?

jacquesm 7y ago
The simplistic version of demand based economics do not take into account speculators who buy rental properties and do not rent them out to reduce supply and to help increase the price of the properties they are flipping.
- ThomPete 7y ago
  Doesn't change that both are artificial.

rwj 7y ago

Are you asking in the short term or the long term?

coryrc 7y ago

Paul Krugman tries to help you understand: https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...

ziziyO 7y ago

Why is greed so bad here? The problem isn’t greed it’s the demand in the face of the lack of supply. Make other places more attractive or increase the supply available in this location.

wander_homer 7y ago
> Why is greed so bad here? The problem isn’t greed it’s the demand in the face of the lack of supply. Greed is bad in this situation because you can make more money of luxury apartments than those suitable for people who are somewhere between the poverty line and upper middle class. Hence new apartments in major cities tend to be more and more expensive to satisfy the demand of wealthier people. Greed is also bad when existing apartments are made much more expensive, thereby forcing senior citizens who have been living there for decades and who are barely able to afford the rent to basically leave town, family and friends.
- mamon 7y ago
  Upper middle class are usually not homeless, right now they occupy some pool of apartments in cities anyway. By building more luxury apartments you encourage them to move, thus leaving their old apartment behind, either by putting it on sale, or renting it out. Think of this like a domino effect: those earning $10M per year buy luxury residence, leaving their old house for those earning $1M, who in turn leave their own houses to those earning $500K, who leave their apartments for those earning $200k, and so on, and so on. In the end everybody benefits from new housing being built, even if it's only luxury housing. Also, increasing supply keeps prices down, thus decreasing profitability of buying houses as investment, causing larger share of apartments to be bought by people who actually plan to live in them. EDIT: yes, this effect might not work as described if is limited to just one city, because there might be a lot of people wanting to move from elswhere. Or more precisely: it will work, eventually, but it would require much more housing to be built to meet the demand.
  - kaybe 7y ago
    I don't think they're going to move that easily. Rent has been going so much it is eating a larger income share than before for many of them too. So what that leaves you with is disproportionate increase of demand and prices for smaller cheaper units.

andys627 7y ago

The market works this out "automatically" when supply is greater than demand. If there are too many dwelling units then landlords will compete with eachother for tenants by lowering prices relative to eachother.

q3k 7y ago
In the meantime while we wait for this to happen, people will keep getting evicted due to rising rent. How long do we wait? When can we expect results?

vtail 7y ago

You are using emotionally charged words ("artificial", "abuse", "greed"), which makes a bit hard to have a constructive argument, but let me try :). One way to think about prices is as a signal. When greedy landlords raise prices, they send two signals: (1) To other landlords and wanna-be-landlords, saying it's an attractive market which would justify new construction or cleaning up your spare bedroom and putting it on the market, both increasing supply, and (2) to current and future renters, making it more economical for them to move elsewhere and thus save on their rent, thus reducing demand.

rolltiide 7y ago
remember, gentrification is typically used as a pejorative good point in that it undermines constructive argument
sdegutis 7y ago
I just edited the comment to clarify what I meant by those words. And they should be used because they are accurate in this context. Although I did convert "greed" to "avarice" in my clarification since I think it's more accurate here.

gumby 7y ago

Doesn't that discourage people from building more housing, which is what would actually bring the price down?