4 ms·

I mostly agree, but they're actively pushing rental property owners to let units sit empty for extended periods of time while they wait for higher prices. There

I mostly agree, but they're actively pushing rental property owners to let units sit empty for extended periods of time while they wait for higher prices. There are a shocking number of high end apartments in cities like SF and NYC that are sitting empty while everyone else is struggling to find an affordable place to live.

Spooky23 4y ago
This is where I think inflation and higher rates will be good for the US. The ridiculously low cost of holding assets are making it too cheap to hold and do nothing. Tax policy is a big part of this, but won’t change for many years.
- lupire 4y ago
  Inflation doesn't help. Higher rates lower inflation, making housing more affordable for wage earners.
  - formerkrogemp 4y ago
    Higher rates reduce affordability in the short term because housing prices aren't falling correspondingly.
bombcar 4y ago
This has been common in the commercial sector for decades - and in the commercially managed residential sector (think large apartment complexes). All this is doing is bringing it to smaller apartments and single family rentals. I still feel that if you correctly account for costs and back out appreciation, being a single family home landlord ain’t worth it.
londons_explore 4y ago
They sit empty because an empty apartment is still going up in value. If you rent it out, there will be wear and tear (ie. after 5 years it'll need a full refurb), and you run the risk of having tenants stuck in your property if laws change and suddenly you aren't allowed to evict them. Often the capital appreciation is so much greater in value than the rental income (after management, maintenance, etc) that it isn't worth risking the capital income for a tiny bit of rental income.
- SantalBlush 4y ago
  Right. In other words, the notion that developing more residential properties will bring prices down is nonsense.
  - xboxnolifes 4y ago
    A lot of the increase in value is because there isn't more residential property.
  - llampx 4y ago
    What? If there was enough supply this wouldn't happen.
    - SantalBlush 4y ago
      The supply is being restricted, even among existing buildings. It's trivially true that more buildings will reduce the price, but you'd need to build many more than would be otherwise necessary to bring a significant price decrease because they will continue to restrict the supply by letting existing units sit vacant. In other words, building more properties isn't the main problem here.
      - llampx 4y ago
        More supply is the answer, though. Possibly along with land value tax or vacancy rules. Eg, in Germany if an apartment is owned by a company as opposed to a private person, it is not allowed to stay vacant for no good reason. Cashflow is the lifeblood of a business. The era of cheap money is over. If a company wants to sit on their real estate while other companies are building and filling up their units, they can do so at their own peril. If you haven't noticed with the markets' movements, unrealized gains aren't worth anything.
- lupire 4y ago
  They are going up in value because there isn't enough housing and there are too many rich people and because the property / land value tax is too low.
idontpost 4y ago
pandaman 4y ago
Being shocked by empty apartments on the rental market is like being shocked by stocked shelves in a grocery store in my view. Do you think a market without inventory is better somehow?
- formerkrogemp 4y ago
  No I think empty inventory is deplorable when so many are homeless or being price gouged on money increasingly needed for food and meds.
  - pandaman 4y ago
    It's not "empty inventory" it's just inventory. Rental market deals in empty apartments, nobody rents apartments with tenants inside. If there had not been empty apartments nobody would be able to move and any freed apartment would be snatched at much higher price than you observe now. Even when the inventory simply drops (the number of empty rentals decreases but still above zero) you see things like dozens of people on the same showing, forced to apply immediately.
    - ryan_lane 4y ago
      Most cities don't count apartments that are vacant less than x months as a vacancy, specifically because of what you're describing. Yes, apartments need to be empty, and folks move out and new folks move in, that usually happens within a couple months of the units being vacant. Some percentage of vacancy is also a healthy stat for a city, because it shows they're keeping up with growth. The issue here is that there are units being held as vacant for long periods of time, in a saturated market, to drive prices up, and a central algorithm is being used by a large percentage of the market, that allows them to do this in a coordinated manner. This is effectively textbook collusion, obfuscated by technology. People should be losing their real estate licenses over this, and honestly, folks should be reporting any company using this service to the real estate commission in their state for collusion, because this is normally something real estate commissions take seriously.

Spooky23 4y ago

This is where I think inflation and higher rates will be good for the US. The ridiculously low cost of holding assets are making it too cheap to hold and do nothing. Tax policy is a big part of this, but won’t change for many years.

lupire 4y ago
Inflation doesn't help. Higher rates lower inflation, making housing more affordable for wage earners.
- formerkrogemp 4y ago
  Higher rates reduce affordability in the short term because housing prices aren't falling correspondingly.

bombcar 4y ago

This has been common in the commercial sector for decades - and in the commercially managed residential sector (think large apartment complexes). All this is doing is bringing it to smaller apartments and single family rentals. I still feel that if you correctly account for costs and back out appreciation, being a single family home landlord ain’t worth it.

londons_explore 4y ago

They sit empty because an empty apartment is still going up in value. If you rent it out, there will be wear and tear (ie. after 5 years it'll need a full refurb), and you run the risk of having tenants stuck in your property if laws change and suddenly you aren't allowed to evict them. Often the capital appreciation is so much greater in value than the rental income (after management, maintenance, etc) that it isn't worth risking the capital income for a tiny bit of rental income.

SantalBlush 4y ago
Right. In other words, the notion that developing more residential properties will bring prices down is nonsense.
- xboxnolifes 4y ago
  A lot of the increase in value is because there isn't more residential property.
- llampx 4y ago
  What? If there was enough supply this wouldn't happen.
  - SantalBlush 4y ago
    The supply is being restricted, even among existing buildings. It's trivially true that more buildings will reduce the price, but you'd need to build many more than would be otherwise necessary to bring a significant price decrease because they will continue to restrict the supply by letting existing units sit vacant. In other words, building more properties isn't the main problem here.
    - llampx 4y ago
      More supply is the answer, though. Possibly along with land value tax or vacancy rules. Eg, in Germany if an apartment is owned by a company as opposed to a private person, it is not allowed to stay vacant for no good reason. Cashflow is the lifeblood of a business. The era of cheap money is over. If a company wants to sit on their real estate while other companies are building and filling up their units, they can do so at their own peril. If you haven't noticed with the markets' movements, unrealized gains aren't worth anything.
lupire 4y ago
They are going up in value because there isn't enough housing and there are too many rich people and because the property / land value tax is too low.

idontpost 4y ago

pandaman 4y ago

Being shocked by empty apartments on the rental market is like being shocked by stocked shelves in a grocery store in my view. Do you think a market without inventory is better somehow?

formerkrogemp 4y ago
No I think empty inventory is deplorable when so many are homeless or being price gouged on money increasingly needed for food and meds.
- pandaman 4y ago
  It's not "empty inventory" it's just inventory. Rental market deals in empty apartments, nobody rents apartments with tenants inside. If there had not been empty apartments nobody would be able to move and any freed apartment would be snatched at much higher price than you observe now. Even when the inventory simply drops (the number of empty rentals decreases but still above zero) you see things like dozens of people on the same showing, forced to apply immediately.
  - ryan_lane 4y ago
    Most cities don't count apartments that are vacant less than x months as a vacancy, specifically because of what you're describing. Yes, apartments need to be empty, and folks move out and new folks move in, that usually happens within a couple months of the units being vacant. Some percentage of vacancy is also a healthy stat for a city, because it shows they're keeping up with growth. The issue here is that there are units being held as vacant for long periods of time, in a saturated market, to drive prices up, and a central algorithm is being used by a large percentage of the market, that allows them to do this in a coordinated manner. This is effectively textbook collusion, obfuscated by technology. People should be losing their real estate licenses over this, and honestly, folks should be reporting any company using this service to the real estate commission in their state for collusion, because this is normally something real estate commissions take seriously.