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All these schemes can only really be effective if housing supply is insufficient to meet demand. If there is plenty of supply it’s very hard to price fix a mark

by api 2y ago

All these schemes can only really be effective if housing supply is insufficient to meet demand. If there is plenty of supply it’s very hard to price fix a market. The cartels and PE investors are investing in NIMBYism. It’s a bet that resistance to construction will continue to keep supply artificially constrained, forcing prices up. If that resistance is removed these investments will underperform.

nsoldiac 2y ago
I think the cartel protects itself from an abundance of supply, that's part of the problem. If supply is high it should naturally translate to landlords cutting prices to compete. Instead, a cartel can coordinate to keep prices high or withhold listings to artificially constraint supply. That should keep rents high even during an abundance of supply. I read somewhere they're accused of doing exactly that.
- SoftTalker 2y ago
  Yes but at some point the fixed costs of a vacant property are going to outweigh the extra income earned from higher rents on occupied properties. A vacant property still has to be insured, maintained, heated/cooled, taxes paid, mortgage or commercial loans paid. So if the supply is high enough that landlords can't afford to hold enough of them vacant to maintain high rents, they will eventually have to rent more of them.
- BurningFrog 2y ago
  Empirically, a cartel of 2 can be quite stable With 3 or 4 members it gets harder, and with 5 or more someone will soon undercut the others. In secret or publicly. The landlord cartel theory requires landlords both to have unselfish solidarity with other landlords, and be selfishly greedy against renters.
  - nottorp 2y ago
    Apparently this application that we're talking about eliminates the inefficiencies in maintaining a cartel with a multitude of members.
diob 2y ago
That's a really big if.
deleted 2y ago
[deleted]
crooked-v 2y ago
More broadly, the only reason housing is an attractive investment (rather than just the required capital for the day-to-day business of being a landlord) is that, because there's not enough housing, prices keep going up year-by-year fast enough to outpace any and all expenses.
zer0x4d 2y ago
That's the case when there is a market where demand is dynamic and a person can simply refuse to buy (decreasing demand) if the prices are too high. Milk is like this. But in rental market, the demand is not dynamic. You HAVE to get an apartment to live in once your lease is up. If 80% of the complexes around you are on this and on top of that the independents also set their pricing based on the market controlled by the majority, then they can charge you whatever they want. You HAVE to buy and you HAVE to get it with the price dictated by them. There is absolutely no supply and demand in this at play.

by api 2y ago

nsoldiac 2y ago

I think the cartel protects itself from an abundance of supply, that's part of the problem. If supply is high it should naturally translate to landlords cutting prices to compete. Instead, a cartel can coordinate to keep prices high or withhold listings to artificially constraint supply. That should keep rents high even during an abundance of supply. I read somewhere they're accused of doing exactly that.

SoftTalker 2y ago
Yes but at some point the fixed costs of a vacant property are going to outweigh the extra income earned from higher rents on occupied properties. A vacant property still has to be insured, maintained, heated/cooled, taxes paid, mortgage or commercial loans paid. So if the supply is high enough that landlords can't afford to hold enough of them vacant to maintain high rents, they will eventually have to rent more of them.
BurningFrog 2y ago
Empirically, a cartel of 2 can be quite stable With 3 or 4 members it gets harder, and with 5 or more someone will soon undercut the others. In secret or publicly. The landlord cartel theory requires landlords both to have unselfish solidarity with other landlords, and be selfishly greedy against renters.
- nottorp 2y ago
  Apparently this application that we're talking about eliminates the inefficiencies in maintaining a cartel with a multitude of members.

diob 2y ago

That's a really big if.

deleted 2y ago

[deleted]

crooked-v 2y ago

More broadly, the only reason housing is an attractive investment (rather than just the required capital for the day-to-day business of being a landlord) is that, because there's not enough housing, prices keep going up year-by-year fast enough to outpace any and all expenses.

zer0x4d 2y ago

That's the case when there is a market where demand is dynamic and a person can simply refuse to buy (decreasing demand) if the prices are too high. Milk is like this. But in rental market, the demand is not dynamic. You HAVE to get an apartment to live in once your lease is up. If 80% of the complexes around you are on this and on top of that the independents also set their pricing based on the market controlled by the majority, then they can charge you whatever they want. You HAVE to buy and you HAVE to get it with the price dictated by them. There is absolutely no supply and demand in this at play.