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Key phrase is “as high as they can”. When supply goes up their ability to charge high rents goes down. They do not have the power to defy economics and charge a

Key phrase is “as high as they can”. When supply goes up their ability to charge high rents goes down. They do not have the power to defy economics and charge arbitrarily high rents as supply tends to infinity. More supply pushes rents down even if all the excess supply is acquired by investors.

toomuchtodo 3y ago
"When supply goes up." When will supply velocity exceed the rate at which investors (institutional and otherwise) can acquire real estate? Please be specific if this is your argument. https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST https://www.mortgagenewsdaily.com/data/housing-completions https://www.mortgagenewsdaily.com/data/housing-completions https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage https://www.fanniemae.com/research-and-insights/perspectives... https://www.fanniemae.com/media/45106/display https://www.fanniemae.com/media/45106/display
- maxerickson 3y ago
  Isn't that the wrong question? Presumably unrestrained builders would be happy to sell to anyone, so you need the build rate where it is not profitable to invest in properties, not the build rate where it is impossible for investment to buy all properties. And then it's logical that the one is lower than the other.
- esoterica 3y ago
  It does not need to exceed the rate at which investors acquire supply, because the homes investors buy are not removed from the market, they are just rented out, and increasing the rental supply will drive rents down.
jjav 3y ago
> They do not have the power to defy economics and charge arbitrarily high rents as supply tends to infinity. Housing supply will never trend to infinity. Ok I realize you exaggerate and probably meant to some very large number. Even that is quite wishful thinking since housing is expensive to build and takes time and people (who are in short supply, tried hiring a house building crew lately?) > More supply pushes rents down even if all the excess supply is acquired by investors. Can you name a few US cities where this has worked out that way?

toomuchtodo 3y ago

"When supply goes up." When will supply velocity exceed the rate at which investors (institutional and otherwise) can acquire real estate? Please be specific if this is your argument. https://fred.stlouisfed.org/series/HOUST https://fred.stlouisfed.org/series/HOUST https://www.mortgagenewsdaily.com/data/housing-completions https://www.mortgagenewsdaily.com/data/housing-completions https://www.fanniemae.com/research-and-insights/perspectives/us-housing-shortage https://www.fanniemae.com/research-and-insights/perspectives... https://www.fanniemae.com/media/45106/display https://www.fanniemae.com/media/45106/display

maxerickson 3y ago
Isn't that the wrong question? Presumably unrestrained builders would be happy to sell to anyone, so you need the build rate where it is not profitable to invest in properties, not the build rate where it is impossible for investment to buy all properties. And then it's logical that the one is lower than the other.
esoterica 3y ago
It does not need to exceed the rate at which investors acquire supply, because the homes investors buy are not removed from the market, they are just rented out, and increasing the rental supply will drive rents down.

jjav 3y ago

> They do not have the power to defy economics and charge arbitrarily high rents as supply tends to infinity. Housing supply will never trend to infinity. Ok I realize you exaggerate and probably meant to some very large number. Even that is quite wishful thinking since housing is expensive to build and takes time and people (who are in short supply, tried hiring a house building crew lately?) > More supply pushes rents down even if all the excess supply is acquired by investors. Can you name a few US cities where this has worked out that way?