6 ms·

In this case, JPMorgan’s partnership is building new homes, not buying up existing ones. So it should work to reduce the cost of housing.

thinkingkong 4y ago
Almost everyone has taken an econ101 class but it will not reduce the cost of housing. At all. When large corporate interests control this many resources they keep the price pinned. Simultaneously the cost of building new property has gone up especially now that the materials and the demand for housing is collectively understood. Add in inflation. The price of housing will never be reduced.
- cscurmudgeon 4y ago
  You have a contradiction, basic Econ tells us it will reduce prices. https://www.sfchronicle.com/opinion/openforum/article/Yes-the-laws-of-supply-and-demand-still-apply-in-15817844.php https://www.sfchronicle.com/opinion/openforum/article/Yes-th... https://www.investopedia.com/ask/answers/040215/how-does-law-supply-and-demand-affect-housing-market.asp https://www.investopedia.com/ask/answers/040215/how-does-law... Edit: And downvoted, follow the Science^TM except Economics, in that case follow randos
- huitzitziltzin 4y ago
  Since I have taken Econ 101 and taught it, it’s worth pointing out that literally no one thinks this is how housing markets work. You can draw a set of supply and demand curves which keep prices the same under a supply increase, but not bc “large corporate interests keep prices pinned.” More important is that that special case is not relevant to housing markets. There is also relevant empirical work on this issue. Increase supply and prices will fall. I’d bet you a billion dollars on that outcome.
  - tedd4u 4y ago
    Not an expert here but one thing I've noticed is that large / corporate landlords prefer to let a property sit empty rather than reduce the rent as supply/demand theory would indicate. My understanding is that this is because there are special tax benefits like you can write off the loss to lower your tax burden. How does this factor in?
5350-uiop-1130 4y ago
> reduce the cost of housing yes, because JP is investing in a depreciating asset, lmao.
- cscurmudgeon 4y ago
  So laws of supply and demand don’t work because “lmao”? Edit: Folks blaming Capitalism, Sauron, etc., but none will open up a spare room vin their home for the homeless for free (due to "reasons"), lmao.
  - hacktehplanet 4y ago
    The laws of supply and demand only says that an increase in supply will decrease price if everything else remains the same. Since that isn't the reality in housing markets there is nothing in the laws of supply and demand saying prices can't increase more by building more than they otherwise would have.
    - prox 4y ago
      Would it be possible to crowdfund housing projects? I have seen some examples in europe where you buy into a housing with your savings. Development is complete done through collective desires of the fund.
      - cscurmudgeon 4y ago
        Nah, that is too much more work than blaming Capitalism lmao.
      - nirvdrum 4y ago
        Not to be glib, but isn't that the role of government? Society crowd-funds projects with taxes. I appreciate that a smaller group could have finer control over decisions, but that might be a hard sell.
    - mediascreen 4y ago
      So, you are saying that increasing the supply of housing in this case actually would cause an increase in prices? How would that work? I agree that there is no guarantee that building housing lowers prices, other causes (like increases in demand) may cause prices to go up (and the increased supply would lower the upward pressure). But I have a hard time to understand how increased supply would not have a downward effect on prices.
grugagag 4y ago
> In this case, JPMorgan’s partnership is building new homes, not buying up existing ones. So it should work to reduce the cost of housing. This is the most naive take. JP morgan is going to sqeeze as much profit as possible, why would they do anything to lower rents?
- cscurmudgeon 4y ago
  They won’t do it out of altruism, if the market forces them to lower rents, they will have to do that. Everyone in this thread is acting as though anyone building new houses is Sauron and that any action will make house prices and rents always go up.
  - nirvdrum 4y ago
    I think the problem is they'll have a highly concentrated group of units and can essentially price fix them. They won't be competing with themselves. And landlords love to raise prices when others do under the guise of "market rate". If you have a captive audience (e.g., surrounding a college), there's nothing renters can do about it other than move farther away. Being single-family homes complicates the issue, too. We're not talking about high-density units, so the growing housing supply is fairly constrained. I don't see it being enough competition to lead to a pricing war. Meanwhile, it's taking away land that could have been used for home ownership, which will likely raise the value of other single-family homes in the area, movin home ownership even further out of reach for many. I get that not everyone wants to own a home, but it's nice to have the option. If you're laying down roots, you can lock in a fixed-rate mortgage and have an asset. When renting from a megalandlord you're subject to the whims of quarterly earnings and your one year lease might not afford much protection. I think you're also discounting the cost and hassle of having to move when JP Morgan raises prices above the competition. It's very unlikely people will exit en masse, causing the landlord to adjust the rental price back down. You might be fine with all of that, but ridiculing people because they're uneasy with the situation is not helping the discussion at all.
- simplicio 4y ago
  They'll lower rents in order to maximize profit. Number of units goes up, demand stays constant, the price will need to come down or they're stuck with empty units that generate negative profit.
nerdchum 4y ago
The highest a landlord lord can raise rents is all of a tenants disposable income. After that there's diminishing returns. You are correct.
- iso1631 4y ago
  Because demand outweighs supply that's what tends to happen. The more people get paid, the more housing prices increase to capture that. If supply was able to grow to meet demand, then that would put downward pressure on prices, but it isn't allowed to grow, and everyone other than the lord of the land suffers.
  - nerdchum 4y ago
    Still a finite supply of land though in metro areas with good economies. So even wth unlimited growth you would hit a wall at some point in these metro areas where jobs are plentiful. But would at least buy a hundred years or so for other cities around the country to develop solid economies so I'm all for it.
    - nilsbunger 4y ago
      In most metro areas, zoning is the limiter, not land. You could quickly double the housing supply if you allow townhomes, duplexes, and small apartment buildings in areas currently captive to single family homes.
      - deleted 4y ago
        [deleted]
      - loandbehold 4y ago
        It's popular opinion expressed here that single family zoning is the only thing limiting supply. I'm not sure it's correct. There's a limited amount of construction capacity in every given area. Limited amount of construction labor (construction workers, engineers, managers), construction equipment and materials. It's not easy to scale it up. Upzoning is not a panacea.
mikhailt 4y ago
Where do you see this? The article says: > The first installment will include a purchase of 250 homes in three communities around the Atlanta metropolitan area.

thinkingkong 4y ago

Almost everyone has taken an econ101 class but it will not reduce the cost of housing. At all. When large corporate interests control this many resources they keep the price pinned. Simultaneously the cost of building new property has gone up especially now that the materials and the demand for housing is collectively understood. Add in inflation. The price of housing will never be reduced.

cscurmudgeon 4y ago
You have a contradiction, basic Econ tells us it will reduce prices. https://www.sfchronicle.com/opinion/openforum/article/Yes-the-laws-of-supply-and-demand-still-apply-in-15817844.php https://www.sfchronicle.com/opinion/openforum/article/Yes-th... https://www.investopedia.com/ask/answers/040215/how-does-law-supply-and-demand-affect-housing-market.asp https://www.investopedia.com/ask/answers/040215/how-does-law... Edit: And downvoted, follow the Science^TM except Economics, in that case follow randos
huitzitziltzin 4y ago
Since I have taken Econ 101 and taught it, it’s worth pointing out that literally no one thinks this is how housing markets work. You can draw a set of supply and demand curves which keep prices the same under a supply increase, but not bc “large corporate interests keep prices pinned.” More important is that that special case is not relevant to housing markets. There is also relevant empirical work on this issue. Increase supply and prices will fall. I’d bet you a billion dollars on that outcome.
- tedd4u 4y ago
  Not an expert here but one thing I've noticed is that large / corporate landlords prefer to let a property sit empty rather than reduce the rent as supply/demand theory would indicate. My understanding is that this is because there are special tax benefits like you can write off the loss to lower your tax burden. How does this factor in?

5350-uiop-1130 4y ago

> reduce the cost of housing yes, because JP is investing in a depreciating asset, lmao.

cscurmudgeon 4y ago
So laws of supply and demand don’t work because “lmao”? Edit: Folks blaming Capitalism, Sauron, etc., but none will open up a spare room vin their home for the homeless for free (due to "reasons"), lmao.
- hacktehplanet 4y ago
  The laws of supply and demand only says that an increase in supply will decrease price if everything else remains the same. Since that isn't the reality in housing markets there is nothing in the laws of supply and demand saying prices can't increase more by building more than they otherwise would have.
  - prox 4y ago
    Would it be possible to crowdfund housing projects? I have seen some examples in europe where you buy into a housing with your savings. Development is complete done through collective desires of the fund.
    - cscurmudgeon 4y ago
      Nah, that is too much more work than blaming Capitalism lmao.
    - nirvdrum 4y ago
      Not to be glib, but isn't that the role of government? Society crowd-funds projects with taxes. I appreciate that a smaller group could have finer control over decisions, but that might be a hard sell.
  - mediascreen 4y ago
    So, you are saying that increasing the supply of housing in this case actually would cause an increase in prices? How would that work? I agree that there is no guarantee that building housing lowers prices, other causes (like increases in demand) may cause prices to go up (and the increased supply would lower the upward pressure). But I have a hard time to understand how increased supply would not have a downward effect on prices.

grugagag 4y ago

> In this case, JPMorgan’s partnership is building new homes, not buying up existing ones. So it should work to reduce the cost of housing. This is the most naive take. JP morgan is going to sqeeze as much profit as possible, why would they do anything to lower rents?

cscurmudgeon 4y ago
They won’t do it out of altruism, if the market forces them to lower rents, they will have to do that. Everyone in this thread is acting as though anyone building new houses is Sauron and that any action will make house prices and rents always go up.
- nirvdrum 4y ago
  I think the problem is they'll have a highly concentrated group of units and can essentially price fix them. They won't be competing with themselves. And landlords love to raise prices when others do under the guise of "market rate". If you have a captive audience (e.g., surrounding a college), there's nothing renters can do about it other than move farther away. Being single-family homes complicates the issue, too. We're not talking about high-density units, so the growing housing supply is fairly constrained. I don't see it being enough competition to lead to a pricing war. Meanwhile, it's taking away land that could have been used for home ownership, which will likely raise the value of other single-family homes in the area, movin home ownership even further out of reach for many. I get that not everyone wants to own a home, but it's nice to have the option. If you're laying down roots, you can lock in a fixed-rate mortgage and have an asset. When renting from a megalandlord you're subject to the whims of quarterly earnings and your one year lease might not afford much protection. I think you're also discounting the cost and hassle of having to move when JP Morgan raises prices above the competition. It's very unlikely people will exit en masse, causing the landlord to adjust the rental price back down. You might be fine with all of that, but ridiculing people because they're uneasy with the situation is not helping the discussion at all.
simplicio 4y ago
They'll lower rents in order to maximize profit. Number of units goes up, demand stays constant, the price will need to come down or they're stuck with empty units that generate negative profit.

nerdchum 4y ago

The highest a landlord lord can raise rents is all of a tenants disposable income. After that there's diminishing returns. You are correct.

iso1631 4y ago
Because demand outweighs supply that's what tends to happen. The more people get paid, the more housing prices increase to capture that. If supply was able to grow to meet demand, then that would put downward pressure on prices, but it isn't allowed to grow, and everyone other than the lord of the land suffers.
- nerdchum 4y ago
  Still a finite supply of land though in metro areas with good economies. So even wth unlimited growth you would hit a wall at some point in these metro areas where jobs are plentiful. But would at least buy a hundred years or so for other cities around the country to develop solid economies so I'm all for it.
  - nilsbunger 4y ago
    In most metro areas, zoning is the limiter, not land. You could quickly double the housing supply if you allow townhomes, duplexes, and small apartment buildings in areas currently captive to single family homes.
    - deleted 4y ago
      [deleted]
    - loandbehold 4y ago
      It's popular opinion expressed here that single family zoning is the only thing limiting supply. I'm not sure it's correct. There's a limited amount of construction capacity in every given area. Limited amount of construction labor (construction workers, engineers, managers), construction equipment and materials. It's not easy to scale it up. Upzoning is not a panacea.

mikhailt 4y ago

Where do you see this? The article says: > The first installment will include a purchase of 250 homes in three communities around the Atlanta metropolitan area.