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The rich can buy out the new supply and either use it for things like AirBnB (which then just displaces people who need an actual place to stay) or they sit on

The rich can buy out the new supply and either use it for things like AirBnB (which then just displaces people who need an actual place to stay) or they sit on the property and grow their investment over time because of how limited land is in metro areas. See: Warehousing [1]. Or they just keep those additional units in said building empty, because it would be more of a pain to convert them to residential units when mixed commercial earns easy revenue. The idea that the rich get no profit from sitting on buildings is wrong. [1] https://www.brickunderground.com/rent/why-landlords-leave-apartments-empty https://www.brickunderground.com/rent/why-landlords-leave-ap...

AnthonyMouse 6y ago
> The rich can buy out the new supply and either use it for things like AirBnB (which then just displaces people who need an actual place to stay) This is fine, then you don't need as many hotels and can convert those those to permanent housing. It's not as if there is unlimited demand for short term rentals. > or they sit on the property and grow their investment over time because of how limited land is in metro areas. Which only works because construction is not actually happening, so sitting on the properties is profitable because the value appreciates over time. Build enough that values at least stop increasing and that stops being profitable. Notice also that your article is talking about a vacancy rate of 3.45%. If you increased the housing supply by 50%, do you really think they're going to buy all of it and let it sit vacant? And the best actual reason the article lists for why landlords do this is that their building is rent-controlled and they correspondingly want to convert it to condos and sell it, because that's more profitable, but first they need to get rid of the existing tenants, which implies not replacing them when they leave/die. So the reason the building is half empty for decades is the economic implications of rent control, not some plot by landlords to lose money.
- fzeroracer 6y ago
  The crux of your argument seems to be that property grows in value because there's not enough housing, which seems like a reasonable assumption but is just that. Property grows in value because of its proximity to other things of value, not because of the amount of it on the market. If you were to expand the size of NYC to encompass the entirety of New York, housing inside of NYC is going to be vastly more valuable than housing located on the edges of the state. No amount of construction you do is going to devalue that property, and often you can't build upwards because of the rich property owners (see: NIMBY) choosing to use their financial leverage and property ownership to deny that.
  - epistasis 6y ago
    > Property grows in value because of its proximity to other things of value, not because of the amount of it on the market. This is not an either/or situation, both of these impact the price of property! Calling inadequate supply a reason for high prices "just an assumption" is not borne out by any actual analysis of any market, anywhere, at any point in time. It's not just rich property owners that prevent building up, what you are engaging in here is just as much a reason that we can not provide housing for people, and why there is overcrowding in so many parts of the world.
epistasis 6y ago
> The rich can buy out the new supply and either use it for things like AirBnB (which then just displaces people who need an actual place to stay) or they sit on the property and grow their investment over time because of how limited land is in metro areas This is extremely illogical, because they can do this with existing supply, and do do this with existing supply. You even point out that it's a problem because of existing land. So saying that we shouldn't increase housing because of this, when it only has the potential to reduce this, is absolutely nonsensical. Refusing to act by building more will in fact make the problem you describe worse!

AnthonyMouse 6y ago

> The rich can buy out the new supply and either use it for things like AirBnB (which then just displaces people who need an actual place to stay) This is fine, then you don't need as many hotels and can convert those those to permanent housing. It's not as if there is unlimited demand for short term rentals. > or they sit on the property and grow their investment over time because of how limited land is in metro areas. Which only works because construction is not actually happening, so sitting on the properties is profitable because the value appreciates over time. Build enough that values at least stop increasing and that stops being profitable. Notice also that your article is talking about a vacancy rate of 3.45%. If you increased the housing supply by 50%, do you really think they're going to buy all of it and let it sit vacant? And the best actual reason the article lists for why landlords do this is that their building is rent-controlled and they correspondingly want to convert it to condos and sell it, because that's more profitable, but first they need to get rid of the existing tenants, which implies not replacing them when they leave/die. So the reason the building is half empty for decades is the economic implications of rent control, not some plot by landlords to lose money.

fzeroracer 6y ago
The crux of your argument seems to be that property grows in value because there's not enough housing, which seems like a reasonable assumption but is just that. Property grows in value because of its proximity to other things of value, not because of the amount of it on the market. If you were to expand the size of NYC to encompass the entirety of New York, housing inside of NYC is going to be vastly more valuable than housing located on the edges of the state. No amount of construction you do is going to devalue that property, and often you can't build upwards because of the rich property owners (see: NIMBY) choosing to use their financial leverage and property ownership to deny that.
- epistasis 6y ago
  > Property grows in value because of its proximity to other things of value, not because of the amount of it on the market. This is not an either/or situation, both of these impact the price of property! Calling inadequate supply a reason for high prices "just an assumption" is not borne out by any actual analysis of any market, anywhere, at any point in time. It's not just rich property owners that prevent building up, what you are engaging in here is just as much a reason that we can not provide housing for people, and why there is overcrowding in so many parts of the world.

epistasis 6y ago

> The rich can buy out the new supply and either use it for things like AirBnB (which then just displaces people who need an actual place to stay) or they sit on the property and grow their investment over time because of how limited land is in metro areas This is extremely illogical, because they can do this with existing supply, and do do this with existing supply. You even point out that it's a problem because of existing land. So saying that we shouldn't increase housing because of this, when it only has the potential to reduce this, is absolutely nonsensical. Refusing to act by building more will in fact make the problem you describe worse!