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If a building is built to be rented out, does the builder typically rent out the place? No, it will be someone who buys the building, typically with large amou
by candybar 6y ago
If a building is built to be rented out, does the builder typically rent out the place? No, it will be someone who buys the building, typically with large amounts of borrowed money, who will then rent out the place. Builders build (often also with borrowed money) because they can then sell the building to someone who can buy. This is all part of the economy.
And you're certainly misusing the term "systemic risk" here - a small-time landlord borrowing money to buy a rental does not in any sense contribute to any kind of systemic risk. They are taking on personal risk in the hope of generating a return on their investment.
- sudosysgen 6y agoThe case that was mentioned in the OP is of someone who is renting out only one floor that they bought. Besides, the main cost in building in NYC is land prices - in the long term the builder isn't worse off by decreased land prices, and neither are renters, while people who want to buy a house are much ahead.
- candybar 6y agoI have no idea what your point is. You could make the same point for just about everything. Starting a restaurant doesn't help anyone because you're just buying food ingredients, labor and real estate and turning that input into food and anyone can do that so you're not increasing the supply of food. Investing money in the stock market certainly doesn't help anyone since you're just buying existing securities that were already issued. The economy as a whole is full of things that aren't that important independently that you could make a convoluted argument against, even those things often add up to a functioning economy with a robust system for price discovery.