4 ms·

Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell. If prices of luxury units are high enough, y

Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell. If prices of luxury units are high enough, you're talking a significant percentage of units that can just be held while investors still break even or profit. Why lock in a loss or low profit (and, in doing so, hurt the value of your other holdings)?

HDThoreaun 2y ago
Warehousing can work to an extent, but eventually there is enough supply to overpower it. Again, the answer is to just keep building. There's also very little evidence that it is happening. NYC has vacancy rates below 3%, its extremely difficult to get much lower than that.
SoftTalker 2y ago
More supply is more supply. Eventually the strategy breaks.
- underlipton 2y ago
  I'll be happy to see when it does. We're not there. And, anyway, a break of that strategy probably means that inventory gets flooded to the point that you needn't have overbuilt at all.
gruez 2y ago
>Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell. Source this is happening? >Why lock in a loss or low profit (and, in doing so, hurt the value of your other holdings)? Because you have to pay upkeep on those units so they don't fall apart, and repay the bonds you raised to build those luxury condos in the first place?
- underlipton 2y ago
  >Source this is happening? Here is a conservative think-tank using its existence as the premise for arguing against rent control: https://www.aei.org/op-eds/want-to-end-apartment-warehousing-ease-up-on-rent-control-laws%EF%BF%BC/ https://www.aei.org/op-eds/want-to-end-apartment-warehousing... >Because you have to pay upkeep on those units so they don't fall apart, and repay the bonds you raised to build those luxury condos in the first place? If you raise rates on the buyers that do exist, you can cover these expenses.
  - gruez 2y ago
    >Here is a conservative think-tank using its existence as the premise for arguing against rent control: https://www.aei.org/op-eds/want-to-end-apartment-warehousing https://www.aei.org/op-eds/want-to-end-apartment-warehousing... Your claim: "Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell." Their claim: "If it costs more to maintain a unit — and keep it in compliance with housing codes — than rental income justifies, it only makes sense to padlock it. In other words, an anti-warehousing law would force owners to lose money every month — or rent a substandard unit at the risk of being in violation of housing laws." Those aren't exactly the same thing. You're talking about developers/owners refusing to sell a luxury condo, whereas the "conservative think-tank" is talking about landlord refusing to rent a unit below his costs. Besides the difference between selling a unit vs renting it out, there's a huge gap in the middle between "minimum cost to the landlord of having a tenant" and "whatever the market rate for rent is". Even if we assume whatever the "conservative think-tank" said is true, it doesn't apply above that lower bound. >If you raise rates on the buyers that do exist, you can cover these expenses. Are you talking about renters or buyers? Your usage of "rates" imply that you're talking about renting, but "buyers" implies you're talking about buying.
    - underlipton 2y ago
      I don't assume that what they say is true; in fact, I think that they're wrong. It was an example of even the people in whose interests it is to deny that warehousing happens, not denying that it happens. As for the difference between renting and selling, luxury and non-luxury, apparently "supply is supply", so it doesn't matter in the aggregate. The details kind of don't matter, because at market scale, some factor should make "move it or lose it" on empty units the norm. Homes are to live in; if you're not filling them with people who are living in them, something has failed, socioeconomically. It used to be a matter of taking a lower profit in the interests of community stability and vibrancy (which a local landlord or seller would want; many aren't local), but now that everything is hyper-efficient, perhaps the cost of holding unproductive property isn't high enough.

HDThoreaun 2y ago

Warehousing can work to an extent, but eventually there is enough supply to overpower it. Again, the answer is to just keep building. There's also very little evidence that it is happening. NYC has vacancy rates below 3%, its extremely difficult to get much lower than that.

SoftTalker 2y ago

More supply is more supply. Eventually the strategy breaks.

underlipton 2y ago
I'll be happy to see when it does. We're not there. And, anyway, a break of that strategy probably means that inventory gets flooded to the point that you needn't have overbuilt at all.

gruez 2y ago

>Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell. Source this is happening? >Why lock in a loss or low profit (and, in doing so, hurt the value of your other holdings)? Because you have to pay upkeep on those units so they don't fall apart, and repay the bonds you raised to build those luxury condos in the first place?

underlipton 2y ago
>Source this is happening? Here is a conservative think-tank using its existence as the premise for arguing against rent control: https://www.aei.org/op-eds/want-to-end-apartment-warehousing-ease-up-on-rent-control-laws%EF%BF%BC/ https://www.aei.org/op-eds/want-to-end-apartment-warehousing... >Because you have to pay upkeep on those units so they don't fall apart, and repay the bonds you raised to build those luxury condos in the first place? If you raise rates on the buyers that do exist, you can cover these expenses.
- gruez 2y ago
  >Here is a conservative think-tank using its existence as the premise for arguing against rent control: https://www.aei.org/op-eds/want-to-end-apartment-warehousing https://www.aei.org/op-eds/want-to-end-apartment-warehousing... Your claim: "Not if the investors are willing to warehouse units to keep prices high, rather than lower prices in order to sell." Their claim: "If it costs more to maintain a unit — and keep it in compliance with housing codes — than rental income justifies, it only makes sense to padlock it. In other words, an anti-warehousing law would force owners to lose money every month — or rent a substandard unit at the risk of being in violation of housing laws." Those aren't exactly the same thing. You're talking about developers/owners refusing to sell a luxury condo, whereas the "conservative think-tank" is talking about landlord refusing to rent a unit below his costs. Besides the difference between selling a unit vs renting it out, there's a huge gap in the middle between "minimum cost to the landlord of having a tenant" and "whatever the market rate for rent is". Even if we assume whatever the "conservative think-tank" said is true, it doesn't apply above that lower bound. >If you raise rates on the buyers that do exist, you can cover these expenses. Are you talking about renters or buyers? Your usage of "rates" imply that you're talking about renting, but "buyers" implies you're talking about buying.
  - underlipton 2y ago
    I don't assume that what they say is true; in fact, I think that they're wrong. It was an example of even the people in whose interests it is to deny that warehousing happens, not denying that it happens. As for the difference between renting and selling, luxury and non-luxury, apparently "supply is supply", so it doesn't matter in the aggregate. The details kind of don't matter, because at market scale, some factor should make "move it or lose it" on empty units the norm. Homes are to live in; if you're not filling them with people who are living in them, something has failed, socioeconomically. It used to be a matter of taking a lower profit in the interests of community stability and vibrancy (which a local landlord or seller would want; many aren't local), but now that everything is hyper-efficient, perhaps the cost of holding unproductive property isn't high enough.