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No, you should absolutely expect prices to drop, it's extremely well documented. However, landlord advocates spread the counter narrative, of people mistaking

No, you should absolutely expect prices to drop, it's extremely well documented. However, landlord advocates spread the counter narrative, of people mistaking symptom for cause, and unsophisticated public laps it up. People hate to see change and want to blame new buildings for high prices, even though they lower them universally.

fgonzag 3y ago
If vacancy is at 0%, you increase supply and vacancy is still at 0% you should absolutely not expect prices to fall. In fact, you should expect exactly what is happening, the market will reevaluate it's prices upwards until vacancy reaches some positive value. It's economics 101. This software just makes the process hyper efficient, where as normally it'd be far slower as landlords would not have perfect information. The only way to fix this is to drastically incentivize building to the point that supply is higher than demand.
- epistasis 3y ago
  Where is vacancy at 0%? This is pretty much impossible. Mostly agree with your comment though! Vacancy should be up close to 10%, IMHO, with anything below 5% considered a dire crisis that needs immediate fixing.
WillPostForFood 3y ago
it's extremely well documented. Please share. Remember, prices are at the intersection of supply and demand, and moving one curve will inevitably affect the other.
- epistasis 3y ago
  I was going to link to a review of the literature on the local effects of new construction, which reviews the empirical literature showing that any additional demand is more than offset by additional supply, but I'm having trouble finding the PDF. (For global effects, remember that building new housing does not change the global demand for housing, as it does not create new people, so hopefully it's obvious that new housing supply must be a global downward pressure on prices). But this newer paper is far more comprehensive on far more topics. IMHO it's far too charitable to some really bad and research with highly biased and methods (e.g. Damiano) but it still does point out the flaws there. https://furmancenter.org/files/Supply_Skepticism_-_Final.pdf https://furmancenter.org/files/Supply_Skepticism_-_Final.pdf Unfortunately this review does not cover the spate of papers in the 2020s that I was originally thinking of, so I'll see if I can dig that up still.

fgonzag 3y ago

If vacancy is at 0%, you increase supply and vacancy is still at 0% you should absolutely not expect prices to fall. In fact, you should expect exactly what is happening, the market will reevaluate it's prices upwards until vacancy reaches some positive value. It's economics 101. This software just makes the process hyper efficient, where as normally it'd be far slower as landlords would not have perfect information. The only way to fix this is to drastically incentivize building to the point that supply is higher than demand.

epistasis 3y ago
Where is vacancy at 0%? This is pretty much impossible. Mostly agree with your comment though! Vacancy should be up close to 10%, IMHO, with anything below 5% considered a dire crisis that needs immediate fixing.

WillPostForFood 3y ago

it's extremely well documented. Please share. Remember, prices are at the intersection of supply and demand, and moving one curve will inevitably affect the other.

epistasis 3y ago
I was going to link to a review of the literature on the local effects of new construction, which reviews the empirical literature showing that any additional demand is more than offset by additional supply, but I'm having trouble finding the PDF. (For global effects, remember that building new housing does not change the global demand for housing, as it does not create new people, so hopefully it's obvious that new housing supply must be a global downward pressure on prices). But this newer paper is far more comprehensive on far more topics. IMHO it's far too charitable to some really bad and research with highly biased and methods (e.g. Damiano) but it still does point out the flaws there. https://furmancenter.org/files/Supply_Skepticism_-_Final.pdf https://furmancenter.org/files/Supply_Skepticism_-_Final.pdf Unfortunately this review does not cover the spate of papers in the 2020s that I was originally thinking of, so I'll see if I can dig that up still.