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How would that work in a real estate market? How could you convince landlords to lower prices?

singlow 4y ago
By not renting from them. A vacant house will pressure the rent downward. But this only works if there is a free market. If the regulations are limiting supply, prices will continue to go up.
mnd999 4y ago
Excess supply. But that will never happen. Low availability keeps prices high with no need to worry about things like quality. There is therefore no incentive to build to increase supply. When a market is this dysfunctional, state intervention is the only way forward. Build publicly owned housing and rent it affordably. This probably won’t happen either, because so many in government are also landlords. Edit: Wow, so many downvotes for advocating public housing.
- cmiles74 4y ago
  It's worth pointing out that the software will recommend leaving apartments empty for the sake of keeping rents high. This is briefly mentioned in the article, but implies that we would need a lot of excess supply to make a difference in areas dominated by a small number of companies utilizing this product.
  - luckylion 4y ago
    Once additional supply is added, all the dynamics change though. The cartel can restrict their own supply at the price of profits, but cartel members will see that investors who are not part of the cartel enjoy the same high rents while having much higher utilization because they don't need to keep flats empty. The only way for the cartel to ensure that doesn't happen is to either make sure every (new) landlord becomes a member, or make sure there can be no new landlords. So far, they've use the latter option, and that's most likely because the first one is hard: if the cartel controls the market and keeps the prices high, new investors have no incentive to join, they'll make more money if they don't.
prasadjoglekar 4y ago
Make empty apartments untenable. Not by passing a law but just raising interest rates so that money locked in an illiquid asset is worse off than cash in a bank. Prices are set on the margin, you need a few landlords to start to feel capital pressure to drop rents.
- gwright 4y ago
  > Not by passing a law but just raising interest rates Yeah, I can't imagine there would be any unintended consequences to that. In what world does raising the cost of providing housing cause landlords to reduce rents? More likely it causes landlords to stop renting. See the consequences of the rent control regulations in NYC, for example.
  - testTED 4y ago
    Doesn't that drop investor and institutional demand for housing investment leading to more affordable prices for "actual" homeowners?
changoplatanero 4y ago
It's easy to convince them to lower their prices when its in their self interest to do so. Collectively the landlords benefit from holding empty inventory and raising the prices but individually they can benefit from breaking the cartel and filling their inventory.

By not renting from them. A vacant house will pressure the rent downward. But this only works if there is a free market. If the regulations are limiting supply, prices will continue to go up.

mnd999 4y ago

Excess supply. But that will never happen. Low availability keeps prices high with no need to worry about things like quality. There is therefore no incentive to build to increase supply. When a market is this dysfunctional, state intervention is the only way forward. Build publicly owned housing and rent it affordably. This probably won’t happen either, because so many in government are also landlords. Edit: Wow, so many downvotes for advocating public housing.

cmiles74 4y ago
It's worth pointing out that the software will recommend leaving apartments empty for the sake of keeping rents high. This is briefly mentioned in the article, but implies that we would need a lot of excess supply to make a difference in areas dominated by a small number of companies utilizing this product.
- luckylion 4y ago
  Once additional supply is added, all the dynamics change though. The cartel can restrict their own supply at the price of profits, but cartel members will see that investors who are not part of the cartel enjoy the same high rents while having much higher utilization because they don't need to keep flats empty. The only way for the cartel to ensure that doesn't happen is to either make sure every (new) landlord becomes a member, or make sure there can be no new landlords. So far, they've use the latter option, and that's most likely because the first one is hard: if the cartel controls the market and keeps the prices high, new investors have no incentive to join, they'll make more money if they don't.

prasadjoglekar 4y ago

Make empty apartments untenable. Not by passing a law but just raising interest rates so that money locked in an illiquid asset is worse off than cash in a bank. Prices are set on the margin, you need a few landlords to start to feel capital pressure to drop rents.

gwright 4y ago
> Not by passing a law but just raising interest rates Yeah, I can't imagine there would be any unintended consequences to that. In what world does raising the cost of providing housing cause landlords to reduce rents? More likely it causes landlords to stop renting. See the consequences of the rent control regulations in NYC, for example.
- testTED 4y ago
  Doesn't that drop investor and institutional demand for housing investment leading to more affordable prices for "actual" homeowners?

changoplatanero 4y ago

It's easy to convince them to lower their prices when its in their self interest to do so. Collectively the landlords benefit from holding empty inventory and raising the prices but individually they can benefit from breaking the cartel and filling their inventory.