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> 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 na

• 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.
  • falcolas 4y ago
    Demand is not remaining constant. And it currently outstrips supply.
    • s1artibartfast 4y ago
      Demand would still be lower than if JP didn't build the houses. That may be higher than today, but it is lower than an alternate future where we ban building houses.
    • welshwelsh 4y ago
      When demand is greater than supply, then the limited supply goes to the highest bidder. Nothing wrong with that. JP Morgan is building more housing though, which is always a good thing because it increases supply. Governments need to ensure that building more housing remains an accessible and profitable venture.
• prepend 4y ago
  > why would they do anything to lower rents? Why does anyone? To capture market from people who don’t. JPMorgan can squeeze as much profit as possible AND lower rents. Companies will extract as much profit as possible. But this isn’t always a bad thing as it can be quite profitable to service customers in a mutually beneficial way.
  • HWR_14 4y ago
    That doesn't mean they'll lower rents. Far better to have X% empty than lower rents X% for any value X.
    • prepend 4y ago
      I don’t think so. For an individual corporation that owns 4000 houses empty houses are really bad. Perhaps in the short term, they’ll try to hold a price, but will start discounting and adjusting down as homes stay empty. This is pretty simple supply and demand and if you increase the supply, then prices will drop.
      • HWR_14 4y ago
        Total revenue remains constant as long as X=X. Without an increase in total revenue, there is no reason to incur the costs of renting out a unit. So, if I have 4,000 units and I let 100 stay empty to raise rents 8%, I win.
        • prepend 4y ago
          Why not raise rents 8% and rent out all 4,000. Rents aren’t chosen arbitrarily by the landlord. They can’t set to whatever they like, else they’d increase 100%. This is different is a single landlord has a monopoly or there’s a cartel. But in a typical city there might be 500k units for rent. So if a landlord raises rent by 8% on their 4,000 units, then people will likely choose other units that didn’t go up. Not to be dismissive, but this is basic econ101 and any intro text will have lots of examples and evidence of these principles at work.
    • 4y ago
• kennend3 4y ago
  > JP morgan is going to sqeeze as much profit as possible, why would they do anything to lower rents? Thankfully everyone else who is currently in the rental business is NOT donig this already? Speaking of naive, you fail to understand JPM will have to compete with the existing landlords or their units will remain empty.
  • falcolas 4y ago
    The demand for housing outstrips supply. There will be no competition.
    • nostrademons 4y ago
      Then building new homes means that people who were previously homeless now get to rent. At exorbitant prices, yes, but most would say that is better than homelessness.
    • s1artibartfast 4y ago
      There already is. Look around and you won't see any 1 BRs listed for 1M/month rent.
  • rightbyte 4y ago
    Landlords might not want to maximize income by lowering rents since they might have to write down their property values and thus prefer "temporary" vacancies.
• refurb 4y ago
  "This is the most naive take. Walmart is going to sqeeze as much profit as possible, why would they do anything to lower the price of consumer goods?"
  • gremlinsinc 4y ago
    milk and bread fluctuate between 2 and 4 dollars and have since I can remember. housing never goes down. rent has steadily increased from 800 for a 3 bd in my area to 1500 in 6 years. (rural Utah). this isn't apples and oranges comparison. rental markets aren't the same as consumer markets.
    • refurb 4y ago
      The point being lowering prices can sometimes maximize revenue. And sure housing goes down, check out prices after 2008. Condos in Miami could be bought for $30,000. They couldn't give them away.