4 ms·

Isn't the underlying issue often one of accounting? As I understand it, prices cannot drop because the appraisal is tied to the rent, and the financing is tied

Isn't the underlying issue often one of accounting? As I understand it, prices cannot drop because the appraisal is tied to the rent, and the financing is tied to the appraisal, and the overall business is dependant on the financing. As strange as it is, this makes it "cheaper" overall for some properties to remain empty rather than trying to get any, albeit reduced, rent.

kerkeslager 7y ago
That's a problem for businesses that buy up land and build more luxury housing than there is demand for. It isn't a problem for society unless we decide to prop up their harmful business model. So what if their properties go down in value and they can't finance them? Why should we care? If they can't finance the housing, it can go through the normal foreclosure and public sale process and a bunch of high-quality, inexpensive housing will enter the market. The housing market would be fulfilling it's entire reason for existence: to provide housing. That's exactly what I would love to see happen. We as a society need to stop propping up harmful business models like this. If property values readjust and they go bankrupt: good. Americans aren't dumb or lazy: we'll come up with other business models that aren't so destructive. We cannot continue to claim that unfettered capitalism will solve all problems when it clearly is causing some of them, like skyrocketing rents and homelessness. These are actually not difficult problems if we are willing to regulate and tax to fund the solutions.