4 ms·
If the market cost of renting a unit drops below the landlords' cost to maintain the unit, the renter doesn't go "oh well, that's a shame, I guess I will pay th
by arrosenberg 4y ago
If the market cost of renting a unit drops below the landlords' cost to maintain the unit, the renter doesn't go "oh well, that's a shame, I guess I will pay the higher amount."
The landlord either eats the loss or gets out of the game. Since vacancy is the worst possible outcome for a landlord, they can't just hold their units off the market to get the price they want.
- nomel 4y agoI see. The dynamics are much more complicated than I, naively, thought.
- mikeyouse 4y agoIt's often easier to think about the reverse situation -- imagine there's an error at the bank and the property owner's mortgage goes poof and his cost of operating the rental is cut in half -- do you think he'd lower the rent for his tenants? Of course not. It's not a perfect market, rents are sticky, landlords don't profit maximize all of the time (e.g. they might keep the rent the same for several years for good tenants), but in general landlords will charge the highest amount they can charge at all times regardless of what their cost basis looks like.