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Landlords are price takers because supply is fixed in the short to medium term. Demand is what sets prices in the rental market as landlords look to find the te
by HDThoreaun 3y ago
Landlords are price takers because supply is fixed in the short to medium term. Demand is what sets prices in the rental market as landlords look to find the tenant that will pay the most for their unit. Because of this property taxes are not passed to tenants, unless you think about second order effects that change the supply of housing available for rent.
- dragonwriter 3y ago> Landlords are price takers because supply is fixed in the short to medium term. Quantity supplied is not fixed in even the short term, landlords choose whether to let vacant units or remove them from the market, e.g., for upgrades that might improve their relative position in the market when re-let but prevent letting them immediately, based on market conditions including adequacy of price. There's a limit to how high quantity supplied can be in the short term, but underneath that cap it has the usual slope direction of a supply curve.
- HDThoreaun 3y agoSure but at least in my area vacancy rate is sub 4%. The structural minimum is 3% so there really aren't any landlords just leaving units vacant. Surely some will choose to sell when taxes increase but rental supply is pretty stable after property taxes are up a solid 50% so that seems to be minor.