7 ms·

Less regulation is needed, no sane landlord is leaving their place empty in hopes of market based rental increases. Regulation creates perverse market incentive

by _3u10 3y ago

Less regulation is needed, no sane landlord is leaving their place empty in hopes of market based rental increases. Regulation creates perverse market incentives like what you see here.

arrosenberg 3y ago
Are you sure? https://www.propublica.org/article/yieldstar-rent-increase-realpage-lawmakers-collusion https://www.propublica.org/article/yieldstar-rent-increase-r...
- gloryjulio 3y ago
  It's likely a troll account. Check the history
  - gruez 3y ago
    Dunno man he looks like just a conservative to me. I'm astonished at how easily people go for the "troll" conclusion when they encounter someone online with wildly different values/beliefs as them.
    - gloryjulio 3y ago
      That's not mutually exclusive...? Is it possible that he just chose the bad takes to provoke reactions? You know there are many shades of political stances regardless whether you are left and right and bad takes can happen anywhere?
      - gruez 3y ago
        If you read my previous comment carefully, you'd see that I'm not claiming that he's a conservative and can't possibly be a troll. I'm only pointing out that it's possible that he's just a conservative, and people are hastily jumping to the "troll" conclusion with seemingly little evidence.
        gloryjulio 3y ago
        Then how do you know I am jumping `hastily jumping to the "troll" conclusion` instead of actually went through his comments and think he is trolling? By trolling I mean the original meaning instead of the malicious one. He might be an average guy who is not believing those extreme takes and just having fun provoking reactions. And I personally believe that that's the case for most of the people Aren't you the one who is hastily jumping to the conclusion by just saying I am hastily jumping into the conclusion?
        gruez 3y ago
        touche ;) Your initial comment was 9 words long and asserted that he was a troll with no justification whatsoever ("Check the history" isn't a justification in the same vein that "do your own research" isn't). While it's possible that you went through his full comment history, pulled out all the stops to do a psychometric profile on him, and concluded that he was acting in bad faith, I find that unlikely given how brief your comment was. So far as I can tell, his comment history might have "bad takes", but they're consistent with mainstream conservative ideology. Unless you want to write off the entire right wing as acting in bad faith for holding their beliefs, I don't think it's reasonable to assume someone expressing conservative beliefs are acting in bad faith. On the other hand, I think most liberals and conservatives would agree that accusing someone of acting in bad faith without the requisite justification, is bad faith behavior and should be called out. Even the bad faith accusation is actually correct, we as a society can't tolerate everyone flinging around unsubstantiated bad faith accusations indiscriminately.
- deleted 3y ago
  [deleted]
- gruez 3y ago
  ...according to the complaint in a lawsuit against realpage.
bruce511 3y ago
As an ex-landlord my instinctive reaction is the same as yours - it would take a lot of increase to cover months of standing empty. On the other hand I'm not in New York and I've no idea what regulations are in play there, so I'm happy to accept the statement at face value. I'd also suggest that Airbnb has a role to play - sometimes short term rents can deliver more return than long term. Holding back stock for this can be significant (it is in Barcelona). Now if the city invited residents to rat out their landlord for this reason, that might have less sympathy than framing it as "public health of other residents". This ostensibly puts the focus on "my health", and if some unpermitted short-term rentals get caught up by accident, well, happy days. Personally I've nothing against Airbnb - provided that it's done within what local bylaws require. "Illegal hotels" though are not really in anyone's interest. Of course all regulations reglate someone. Whether you like regulations or not depends on whether you are being regulated for or against. The sweetspot is a balance , which I agree can be hard to find.
addicted 3y ago
There are many landlords leaving units empty precisely because they’re sane and rational. In some cases becauee of a lack of regulation whereas in others because of over regulation. I personally know a landlord who will almost never rent out the commercial space in their property. Right now not renting it out saves then tax due to the “loss” they declare. But the price at which they’d have to rent the commercial unit to exceed that tax benefit would be high enough to cause a reappraisal of the entire building which would increase the property tax for all the residential units they pay as well, which would mean they’re losing money, or at least making less money, on each unit until they can increase the rent to level which may not be sustained by the market. Another well known non government reason to leave units vacant is if the market value has dropped, leading it out at the lower market value can trigger all sorts of problems for the property owner with the banks who have lent money to them for the property, including the ability for them to recall the money early, change rates, etc since it may trigger clauses regd the appraised value dropping below a certain threshold. These are purely private contracts that provide a very strong incentive for landlords to keep spaces empty rather than lease them out at market value. This tends to be the most common reason for us city storefronts being empty.
- anotherhue 3y ago
  A million times this. A sensible regulation in this field might involve mandatory re-assessments of the property values, so that these games are meaningless to play.
- arcticbull 3y ago
  > There are many landlords leaving units empty precisely because they’re sane and rational. In some cases becauee of a lack of regulation whereas in others because of over regulation. They're just not. It's silly to not offer your vacant unit for lease at record-high rents 'hoping' that one day rents may be even higher. Every month you're vacant you're losing on $3000+. You really think rent growth can outrun missing out on $3000/month, every month? Every month you wait relies on a rent growth rate of ~9% per month just to break even on a 1-year lease if you have no ability to raise rents. I don't know where this theory comes from, but I can't find any data to support it. When the Berkeley city council passed their tax on vacant units their own analysis indicated that about 1128 units in Berkeley were potentially vacant. Of them only 40% are actually vacant, so about 451 units. Of them, a number are actually being renovated, a number are being rented out without informing the city and about 100 of them are in totally derelict buildings that aren't fit for living in. It's all in the council's assessment on page 2. [1] Berkeley has 46,875 units. So that's a worst case of 2.4% vacancy rate - but more realistically we're talking <1%. The only thing to be done is build more homes. [1] https://berkeleyca.gov/sites/default/files/documents/2022-07-26%20Special%20Item%2006%20Placing%20a%20General%20Tax%20Measure.pdf https://berkeleyca.gov/sites/default/files/documents/2022-07...
treyd 3y ago
> no sane landlord is leaving their place empty in hopes of market based rental increases There's plentiful documented cases of this happening. Rent rates for a building influence the average local market rate rents which influence the perspective returns that corporate bonds for landlords / developers in the area. Large scale landlords that hold many units in an area have an interest in not making it seem like rents in an area are decreasing since it limits their credit worthiness. The problem cycles on itself and creates these kinds of perverse incentives on their own due to the financialization of real estate. Meanwhile, units going empty means there's fewer people that can afford to live in an area and the city collects less taxes, limiting the services they're able to provide for the people and businesses that live/operate there.
- deleted 3y ago
  [deleted]
jrflowers 3y ago
You have a good point. Warehousing does not happen, despite what the landlords themselves report
Tiktaalik 3y ago
You'd think that and yet when Vancouver brought in an empty homes tax they raised 115 million over 4 years.
- jeffbee 3y ago
  In other words it had zero significant impact.
  - Tiktaalik 3y ago
    Ideally you'd want to raise 0 and have 0 vacant homes, but they raised a bunch of money and reduced empty homes by 36%.
    - jeffbee 3y ago
      The idea that zero is the optimal number of vacant dwellings is extremely wrong.
      - Tiktaalik 3y ago
        yeah that's true. edit: But like being clear the tax only applied for things that were vacant long term, so like, it was quite possible for apartments to be vacant for "a while" between tenancies and of course there were a number of exemptions as well. So even within the context of this vacancy tax there was a lot of leverage for there to exist vacant apartments. The intent was effectively to kill off pied-a-terres and permanent vacant apartments.

by _3u10 3y ago

Less regulation is needed, no sane landlord is leaving their place empty in hopes of market based rental increases. Regulation creates perverse market incentives like what you see here.

arrosenberg 3y ago

Are you sure? https://www.propublica.org/article/yieldstar-rent-increase-realpage-lawmakers-collusion https://www.propublica.org/article/yieldstar-rent-increase-r...

gloryjulio 3y ago
It's likely a troll account. Check the history
- gruez 3y ago
  Dunno man he looks like just a conservative to me. I'm astonished at how easily people go for the "troll" conclusion when they encounter someone online with wildly different values/beliefs as them.
  - gloryjulio 3y ago
    That's not mutually exclusive...? Is it possible that he just chose the bad takes to provoke reactions? You know there are many shades of political stances regardless whether you are left and right and bad takes can happen anywhere?
    - gruez 3y ago
      If you read my previous comment carefully, you'd see that I'm not claiming that he's a conservative and can't possibly be a troll. I'm only pointing out that it's possible that he's just a conservative, and people are hastily jumping to the "troll" conclusion with seemingly little evidence.
      - gloryjulio 3y ago
        Then how do you know I am jumping `hastily jumping to the "troll" conclusion` instead of actually went through his comments and think he is trolling? By trolling I mean the original meaning instead of the malicious one. He might be an average guy who is not believing those extreme takes and just having fun provoking reactions. And I personally believe that that's the case for most of the people Aren't you the one who is hastily jumping to the conclusion by just saying I am hastily jumping into the conclusion?
        gruez 3y ago
        touche ;) Your initial comment was 9 words long and asserted that he was a troll with no justification whatsoever ("Check the history" isn't a justification in the same vein that "do your own research" isn't). While it's possible that you went through his full comment history, pulled out all the stops to do a psychometric profile on him, and concluded that he was acting in bad faith, I find that unlikely given how brief your comment was. So far as I can tell, his comment history might have "bad takes", but they're consistent with mainstream conservative ideology. Unless you want to write off the entire right wing as acting in bad faith for holding their beliefs, I don't think it's reasonable to assume someone expressing conservative beliefs are acting in bad faith. On the other hand, I think most liberals and conservatives would agree that accusing someone of acting in bad faith without the requisite justification, is bad faith behavior and should be called out. Even the bad faith accusation is actually correct, we as a society can't tolerate everyone flinging around unsubstantiated bad faith accusations indiscriminately.
deleted 3y ago
[deleted]
gruez 3y ago
...according to the complaint in a lawsuit against realpage.

bruce511 3y ago

As an ex-landlord my instinctive reaction is the same as yours - it would take a lot of increase to cover months of standing empty. On the other hand I'm not in New York and I've no idea what regulations are in play there, so I'm happy to accept the statement at face value. I'd also suggest that Airbnb has a role to play - sometimes short term rents can deliver more return than long term. Holding back stock for this can be significant (it is in Barcelona). Now if the city invited residents to rat out their landlord for this reason, that might have less sympathy than framing it as "public health of other residents". This ostensibly puts the focus on "my health", and if some unpermitted short-term rentals get caught up by accident, well, happy days. Personally I've nothing against Airbnb - provided that it's done within what local bylaws require. "Illegal hotels" though are not really in anyone's interest. Of course all regulations reglate someone. Whether you like regulations or not depends on whether you are being regulated for or against. The sweetspot is a balance , which I agree can be hard to find.

addicted 3y ago

There are many landlords leaving units empty precisely because they’re sane and rational. In some cases becauee of a lack of regulation whereas in others because of over regulation. I personally know a landlord who will almost never rent out the commercial space in their property. Right now not renting it out saves then tax due to the “loss” they declare. But the price at which they’d have to rent the commercial unit to exceed that tax benefit would be high enough to cause a reappraisal of the entire building which would increase the property tax for all the residential units they pay as well, which would mean they’re losing money, or at least making less money, on each unit until they can increase the rent to level which may not be sustained by the market. Another well known non government reason to leave units vacant is if the market value has dropped, leading it out at the lower market value can trigger all sorts of problems for the property owner with the banks who have lent money to them for the property, including the ability for them to recall the money early, change rates, etc since it may trigger clauses regd the appraised value dropping below a certain threshold. These are purely private contracts that provide a very strong incentive for landlords to keep spaces empty rather than lease them out at market value. This tends to be the most common reason for us city storefronts being empty.

anotherhue 3y ago
A million times this. A sensible regulation in this field might involve mandatory re-assessments of the property values, so that these games are meaningless to play.
arcticbull 3y ago
> There are many landlords leaving units empty precisely because they’re sane and rational. In some cases becauee of a lack of regulation whereas in others because of over regulation. They're just not. It's silly to not offer your vacant unit for lease at record-high rents 'hoping' that one day rents may be even higher. Every month you're vacant you're losing on $3000+. You really think rent growth can outrun missing out on $3000/month, every month? Every month you wait relies on a rent growth rate of ~9% per month just to break even on a 1-year lease if you have no ability to raise rents. I don't know where this theory comes from, but I can't find any data to support it. When the Berkeley city council passed their tax on vacant units their own analysis indicated that about 1128 units in Berkeley were potentially vacant. Of them only 40% are actually vacant, so about 451 units. Of them, a number are actually being renovated, a number are being rented out without informing the city and about 100 of them are in totally derelict buildings that aren't fit for living in. It's all in the council's assessment on page 2. [1] Berkeley has 46,875 units. So that's a worst case of 2.4% vacancy rate - but more realistically we're talking <1%. The only thing to be done is build more homes. [1] https://berkeleyca.gov/sites/default/files/documents/2022-07-26%20Special%20Item%2006%20Placing%20a%20General%20Tax%20Measure.pdf https://berkeleyca.gov/sites/default/files/documents/2022-07...

treyd 3y ago

> no sane landlord is leaving their place empty in hopes of market based rental increases There's plentiful documented cases of this happening. Rent rates for a building influence the average local market rate rents which influence the perspective returns that corporate bonds for landlords / developers in the area. Large scale landlords that hold many units in an area have an interest in not making it seem like rents in an area are decreasing since it limits their credit worthiness. The problem cycles on itself and creates these kinds of perverse incentives on their own due to the financialization of real estate. Meanwhile, units going empty means there's fewer people that can afford to live in an area and the city collects less taxes, limiting the services they're able to provide for the people and businesses that live/operate there.

deleted 3y ago
[deleted]

jrflowers 3y ago

You have a good point. Warehousing does not happen, despite what the landlords themselves report

Tiktaalik 3y ago

You'd think that and yet when Vancouver brought in an empty homes tax they raised 115 million over 4 years.

jeffbee 3y ago
In other words it had zero significant impact.
- Tiktaalik 3y ago
  Ideally you'd want to raise 0 and have 0 vacant homes, but they raised a bunch of money and reduced empty homes by 36%.
  - jeffbee 3y ago
    The idea that zero is the optimal number of vacant dwellings is extremely wrong.
    - Tiktaalik 3y ago
      yeah that's true. edit: But like being clear the tax only applied for things that were vacant long term, so like, it was quite possible for apartments to be vacant for "a while" between tenancies and of course there were a number of exemptions as well. So even within the context of this vacancy tax there was a lot of leverage for there to exist vacant apartments. The intent was effectively to kill off pied-a-terres and permanent vacant apartments.