4 ms·

In a free market, prices are set by supply and demand. If you decided to raise rent $300/mo and the landlord next door chose to not raise them, your tenants wil

In a free market, prices are set by supply and demand. If you decided to raise rent $300/mo and the landlord next door chose to not raise them, your tenants will move. Obviously, if you live in a city without a free market in housing resulting in an artificially reduced supply (e.g. San Francisco), your strategy will work. Or, if you and all the landlords in the area collude (forming a cartel), you can also make this work, assuming you can avoid legal action.

setr 4y ago
If every landlord knows every tenant suddenly has more money, they should all be raising their rent. And they will compete in doing so, and the renters will compete for space/price, and because they all have more money they can/will bid higher. You don’t need collusion for prices to increase with UBI, you just need supply and demand to do its thing
- gamegoblin 4y ago
  If there is ample supply in the housing market, as there is in a non-artificially constrained housing market, every landlord is incentivized to just slightly undercut his fellow landlords, and supply and demand will do its thing. Your example of "bidding higher" doesn't make sense when there is ample supply. My family in Arkansas is always mystified when I tell them that people bid up house prices here on the West Coast. In Arkansas, houses typically sell for 0-10% less than the list price, with no bidding wars. But that is because there is ample supply. To your point, it is possible that the increased purchasing power does shift people's marginal propensity to consume housing. i.e. if you give people $1000/mo extra, they want to buy more housing (more space, better location, more luxury, etc). But that is a different situation, because now the consumer is getting something for their money, rather than the rent being raised on what they were already getting.
  - Eddy_Viscosity2 4y ago
    > as there is in a non-artificially constrained housing market Where is this glorious housing market you speak of? I would love to see it!
    - HDThoreaun 4y ago
      Chicago. Plenty of housing here
    - gamegoblin 4y ago
      I mention in my comment that I am from Arkansas, which has among the cheapest housing in the nation. My 1940s, 1500 sqft house in Seattle would probably have been considered a teardown in Arkansas, or have cost < $50K. Go checkout redfin there if you want to be a little depressed about West Coast prices. Check out when you can get for the median SF house ($1.3M). Gated mediterranean style 8000 sqft mansion on land with pool on a golf course / lake in the middle of the city: https://www.redfin.com/AR/North-Little-Rock/5-Edenwood-Ln-72116/home/81372459 https://www.redfin.com/AR/North-Little-Rock/5-Edenwood-Ln-72... Southern style 7300 sqft mansion in the middle of the city for far below SF median https://www.redfin.com/AR/North-Little-Rock/18-Heritage-Park-Cir-72116/home/81373838 https://www.redfin.com/AR/North-Little-Rock/18-Heritage-Park... Obviously, the downside is you are in Arkansas and not SF! I moved to Seattle for a reason. The BBQ there is quite good, though, and I miss it.
  - annoyingnoob 4y ago
    > it is possible that the increased purchasing power does shift people's marginal propensity to consume housing. i.e. if you give people $1000/mo extra, they want to buy more housing Giving people money drives inflation by driving demand. When demand increases rent goes up. People may want to buy more/better housing but they will find that $1000/month does not go as far as it did before UBI.
- Eddy_Viscosity2 4y ago
  This is what will create the disincentive to work. If you knew that working harder would get you extra money, but that some shithead landlord would see that and just raise your rent to take it from you, why work harder?
annoyingnoob 4y ago
I own your building and three more near by. Me and my slumlord buddies all use the same Landlord Revenue Management software and it told us all that the market will bear a $300/month increase across the board. We'll paint the outside and freshen up the landscape.
- gamegoblin 4y ago
  Yes, my comment mentions that if you engage in cartel behavior you can make this work, assuming you don't get into legal trouble. There is an ongoing lawsuit about this: https://www.reuters.com/legal/litigation/fight-is-control-realpage-antitrust-litigation-2023-01-10/ https://www.reuters.com/legal/litigation/fight-is-control-re... https://www.propublica.org/article/yieldstar-rent-increase-realpage-lawmakers-collusion https://www.propublica.org/article/yieldstar-rent-increase-r...
  - annoyingnoob 4y ago
    You realize I'm presenting a hypothetical scenario and I'm not even a landlord, right? I was just playing into your scenario there, but that is not required. I suspect every property owner or manager has a different tolerance for empty units. If I can over-charge for most of the building then I can let a unit sit empty rather than lower the rent, this only works for so long. When people can spend more they will and anyone in a rent-seeking business is going to see UBI as money on the table.

setr 4y ago

If every landlord knows every tenant suddenly has more money, they should all be raising their rent. And they will compete in doing so, and the renters will compete for space/price, and because they all have more money they can/will bid higher. You don’t need collusion for prices to increase with UBI, you just need supply and demand to do its thing

gamegoblin 4y ago
If there is ample supply in the housing market, as there is in a non-artificially constrained housing market, every landlord is incentivized to just slightly undercut his fellow landlords, and supply and demand will do its thing. Your example of "bidding higher" doesn't make sense when there is ample supply. My family in Arkansas is always mystified when I tell them that people bid up house prices here on the West Coast. In Arkansas, houses typically sell for 0-10% less than the list price, with no bidding wars. But that is because there is ample supply. To your point, it is possible that the increased purchasing power does shift people's marginal propensity to consume housing. i.e. if you give people $1000/mo extra, they want to buy more housing (more space, better location, more luxury, etc). But that is a different situation, because now the consumer is getting something for their money, rather than the rent being raised on what they were already getting.
- Eddy_Viscosity2 4y ago
  > as there is in a non-artificially constrained housing market Where is this glorious housing market you speak of? I would love to see it!
  - HDThoreaun 4y ago
    Chicago. Plenty of housing here
  - gamegoblin 4y ago
    I mention in my comment that I am from Arkansas, which has among the cheapest housing in the nation. My 1940s, 1500 sqft house in Seattle would probably have been considered a teardown in Arkansas, or have cost < $50K. Go checkout redfin there if you want to be a little depressed about West Coast prices. Check out when you can get for the median SF house ($1.3M). Gated mediterranean style 8000 sqft mansion on land with pool on a golf course / lake in the middle of the city: https://www.redfin.com/AR/North-Little-Rock/5-Edenwood-Ln-72116/home/81372459 https://www.redfin.com/AR/North-Little-Rock/5-Edenwood-Ln-72... Southern style 7300 sqft mansion in the middle of the city for far below SF median https://www.redfin.com/AR/North-Little-Rock/18-Heritage-Park-Cir-72116/home/81373838 https://www.redfin.com/AR/North-Little-Rock/18-Heritage-Park... Obviously, the downside is you are in Arkansas and not SF! I moved to Seattle for a reason. The BBQ there is quite good, though, and I miss it.
- annoyingnoob 4y ago
  > it is possible that the increased purchasing power does shift people's marginal propensity to consume housing. i.e. if you give people $1000/mo extra, they want to buy more housing Giving people money drives inflation by driving demand. When demand increases rent goes up. People may want to buy more/better housing but they will find that $1000/month does not go as far as it did before UBI.
Eddy_Viscosity2 4y ago
This is what will create the disincentive to work. If you knew that working harder would get you extra money, but that some shithead landlord would see that and just raise your rent to take it from you, why work harder?

annoyingnoob 4y ago

I own your building and three more near by. Me and my slumlord buddies all use the same Landlord Revenue Management software and it told us all that the market will bear a $300/month increase across the board. We'll paint the outside and freshen up the landscape.

gamegoblin 4y ago
Yes, my comment mentions that if you engage in cartel behavior you can make this work, assuming you don't get into legal trouble. There is an ongoing lawsuit about this: https://www.reuters.com/legal/litigation/fight-is-control-realpage-antitrust-litigation-2023-01-10/ https://www.reuters.com/legal/litigation/fight-is-control-re... https://www.propublica.org/article/yieldstar-rent-increase-realpage-lawmakers-collusion https://www.propublica.org/article/yieldstar-rent-increase-r...
- annoyingnoob 4y ago
  You realize I'm presenting a hypothetical scenario and I'm not even a landlord, right? I was just playing into your scenario there, but that is not required. I suspect every property owner or manager has a different tolerance for empty units. If I can over-charge for most of the building then I can let a unit sit empty rather than lower the rent, this only works for so long. When people can spend more they will and anyone in a rent-seeking business is going to see UBI as money on the table.