5 ms·

This effect only works if ownership is concentrated or there is otherwise a mechanism for collusion (the theory of collusion via Realpage is compelling to me).

by paulgb 3y ago

This effect only works if ownership is concentrated or there is otherwise a mechanism for collusion (the theory of collusion via Realpage is compelling to me). In a competitive market, nobody wants to leave _their own_ inventory vacant, because even if it would increase the aggregate revenue in the industry, that revenue will go to their competitors and not themselves.

TylerE 3y ago
Now consider the meteoric rise of Airbnb and ponder for a bit on it. “Vacant” units are more lucrative than occupied ones in some markets these days.
bugglebeetle 3y ago
> This effect only works if ownership is concentrated or there is otherwise a mechanism for collusion This is the current state of all modern economies, so this equates to “it works.”
- paulgb 3y ago
  Maybe in some small-/mid-size housing markets where rentals are not the main form of housing. In a city like NYC, the rental market is way too large for anyone to control it. A good example was during the pandemic when vacancies shot up, rents came way down. Landlords were not “holding the line” at previous prices, presumably because they knew that renters would just go to a competing landlord.
s1artibartfast 3y ago
strong disagree. I own a rental and it is more general than that, even if you are a tiny player in market. 15% depends on your inputs, but zero is never the answer. It isn't specific to apartments either. If you are selling a car and need it gone today, you will have to set the price lower. Same is true with apartments. I could wait 3 months to find someone to rent at 2k/month, or wait 1 month to find a renter at $1800/month, or wait one day at $1500/month. Having an optimal vacancy isnt about monopoly, but the economic transaction cost associated with search [1]. https://en.wikipedia.org/wiki/Search_cost https://en.wikipedia.org/wiki/Search_cost
- nothercastle 3y ago
  You don’t want the 1500 a month tenants as there is too much variance in quality of tenant.

by paulgb 3y ago

TylerE 3y ago

Now consider the meteoric rise of Airbnb and ponder for a bit on it. “Vacant” units are more lucrative than occupied ones in some markets these days.

bugglebeetle 3y ago

> This effect only works if ownership is concentrated or there is otherwise a mechanism for collusion This is the current state of all modern economies, so this equates to “it works.”

paulgb 3y ago
Maybe in some small-/mid-size housing markets where rentals are not the main form of housing. In a city like NYC, the rental market is way too large for anyone to control it. A good example was during the pandemic when vacancies shot up, rents came way down. Landlords were not “holding the line” at previous prices, presumably because they knew that renters would just go to a competing landlord.

s1artibartfast 3y ago

strong disagree. I own a rental and it is more general than that, even if you are a tiny player in market. 15% depends on your inputs, but zero is never the answer. It isn't specific to apartments either. If you are selling a car and need it gone today, you will have to set the price lower. Same is true with apartments. I could wait 3 months to find someone to rent at 2k/month, or wait 1 month to find a renter at $1800/month, or wait one day at $1500/month. Having an optimal vacancy isnt about monopoly, but the economic transaction cost associated with search [1]. https://en.wikipedia.org/wiki/Search_cost https://en.wikipedia.org/wiki/Search_cost

nothercastle 3y ago
You don’t want the 1500 a month tenants as there is too much variance in quality of tenant.