4 ms·

If the majority of owners don't wish to personally utilize their property and instead choose to extract rent from it, what exactly are the renters supposed to b

If the majority of owners don't wish to personally utilize their property and instead choose to extract rent from it, what exactly are the renters supposed to buy? Owners can apparently force renters to bleed ever more money, but renters can't force a squatting owner to sell, they just have to accept it or, as this letter exemplifies, GTFO.

AnthonyMouse 12y ago
> If the majority of owners don't wish to personally utilize their property, and to extract rent from it, what exactly are the renters supposed to buy? If you offer to pay at least as much for the building as the landlord would expect to make from renting it out then any rational landlord will sell you the building. > Owners can apparently force renters to bleed ever more money If they raise the rent significantly above what typical apartments go for in the area then the tenant will move out and they'll have to spend money to find a new tenant and go without rent in the meantime. Rental housing is one of the most efficient markets in existence. Landlords have nothing to gain by gouging tenants who will only move across the street to keep paying what they are now, which is why that rarely if ever happens. But when the local market price of housing changes, adjusting rents to meet the market is completely reasonable and natural.
- jsprogrammer 12y ago
  >any rational landlord That's a large assumption. >If you offer to pay at least as much for the building as the landlord would expect to make from renting it out Over what time period? >Landlords have nothing to gain by gouging tenants who will only move across the street to keep paying what they are now, Where in SF is that possible? Do you know of any documented cases? >is completely reasonable and natural. Exactly the justification used for so many horrors.
- barrkel 12y ago
  Rental housing can't be particularly efficient because neither renters nor landlords are fungible, and there's loads of information asymmetry. IME (London) what typically happens is you get a bit gouged for rent when you first move in to a place, then, as the landlord gains trust in you as a tenant, the rent is "sticky" - it doesn't go up very quickly. You can use the risk of a new tenant as a negotiation lever to keep rent down.
- mmarx 12y ago
  > If you offer to pay at least as much for the building as the landlord would expect to make from renting it out then any rational landlord will sell you the building. Which rational tenant would pay the same amount he'd pay as rent to buy the property, when that incurs additional costs (property tax, for example)?
- simoncion 12y ago
  Rental housing (like garbage collection) is only efficient when there is more than enough housing (or memory) available to meet demand (of tenants, or of the garbage collection machinery). In obscenely undersupplied cities like SF, rents become absurdly high very, very fast. Case in point. In 1998 (At about the height of the Dot Com bubble) a one-bedroom apartment in my building rented out for ~$500/month. In 2010 (While the real-estate market was still recovering from its enormous collapse) that same apartment rented out for ~$1500/month. That's a 3X increase in "market price" of a good from the height of a superheated bubble to shortly after the collapse of another one. SF's rental market is seriously fucked by undersupply.
  - AnthonyMouse 12y ago
    > In obscenely undersupplied cities like SF, rents become absurdly high very, very fast. That's what an efficient market is supposed to do. The high price then encourages the construction of more housing. There isn't enough supply because of rent control and other regulations that discourage or outright prohibit the construction of new or higher density housing. The market is doing exactly what an efficient market is supposed to do under those conditions: Increase the price until demand at that price no longer exceeds the artificially constrained supply.
    - simoncion 12y ago
      Rent control isn't the source of the undersupply in SF. Restrictions on new construction (both legal and social) are the source of the undersupply in the city. Do you live in SF? If you did, you would know that in the few new residential buildings that have been constructed, rents are somewhere between $3000 and $4000 per bedroom. What developer could possibly refuse that income? Do you think that rent control is driving rents in newly construction apartments that high? Likewise, do you think that -with rental rates like that- developers are failing to build new stock because of existing rent controlled stock in SF? As an aside, if you didn't know how rent control works in SF, here's a quick intro. Buildings built before 1979 and rented as residential housing are covered by rent control. No other buildings -unless (as is happening in Trinity Place on Market Street) the landlord enters into a special agreement with his tenants- are covered by rent control. This means that new construction is NOT covered by rent control. Because new construction is not covered by the rent control ordinances, in a market with extreme undersupply, like SF's, there is no economic reason for a developer not to build new housing stock. Have you been enlightened? :)

AnthonyMouse 12y ago

> If the majority of owners don't wish to personally utilize their property, and to extract rent from it, what exactly are the renters supposed to buy? If you offer to pay at least as much for the building as the landlord would expect to make from renting it out then any rational landlord will sell you the building. > Owners can apparently force renters to bleed ever more money If they raise the rent significantly above what typical apartments go for in the area then the tenant will move out and they'll have to spend money to find a new tenant and go without rent in the meantime. Rental housing is one of the most efficient markets in existence. Landlords have nothing to gain by gouging tenants who will only move across the street to keep paying what they are now, which is why that rarely if ever happens. But when the local market price of housing changes, adjusting rents to meet the market is completely reasonable and natural.

jsprogrammer 12y ago
>any rational landlord That's a large assumption. >If you offer to pay at least as much for the building as the landlord would expect to make from renting it out Over what time period? >Landlords have nothing to gain by gouging tenants who will only move across the street to keep paying what they are now, Where in SF is that possible? Do you know of any documented cases? >is completely reasonable and natural. Exactly the justification used for so many horrors.
barrkel 12y ago
Rental housing can't be particularly efficient because neither renters nor landlords are fungible, and there's loads of information asymmetry. IME (London) what typically happens is you get a bit gouged for rent when you first move in to a place, then, as the landlord gains trust in you as a tenant, the rent is "sticky" - it doesn't go up very quickly. You can use the risk of a new tenant as a negotiation lever to keep rent down.
mmarx 12y ago
> If you offer to pay at least as much for the building as the landlord would expect to make from renting it out then any rational landlord will sell you the building. Which rational tenant would pay the same amount he'd pay as rent to buy the property, when that incurs additional costs (property tax, for example)?
simoncion 12y ago
Rental housing (like garbage collection) is only efficient when there is more than enough housing (or memory) available to meet demand (of tenants, or of the garbage collection machinery). In obscenely undersupplied cities like SF, rents become absurdly high very, very fast. Case in point. In 1998 (At about the height of the Dot Com bubble) a one-bedroom apartment in my building rented out for ~$500/month. In 2010 (While the real-estate market was still recovering from its enormous collapse) that same apartment rented out for ~$1500/month. That's a 3X increase in "market price" of a good from the height of a superheated bubble to shortly after the collapse of another one. SF's rental market is seriously fucked by undersupply.
- AnthonyMouse 12y ago
  > In obscenely undersupplied cities like SF, rents become absurdly high very, very fast. That's what an efficient market is supposed to do. The high price then encourages the construction of more housing. There isn't enough supply because of rent control and other regulations that discourage or outright prohibit the construction of new or higher density housing. The market is doing exactly what an efficient market is supposed to do under those conditions: Increase the price until demand at that price no longer exceeds the artificially constrained supply.
  - simoncion 12y ago
    Rent control isn't the source of the undersupply in SF. Restrictions on new construction (both legal and social) are the source of the undersupply in the city. Do you live in SF? If you did, you would know that in the few new residential buildings that have been constructed, rents are somewhere between $3000 and $4000 per bedroom. What developer could possibly refuse that income? Do you think that rent control is driving rents in newly construction apartments that high? Likewise, do you think that -with rental rates like that- developers are failing to build new stock because of existing rent controlled stock in SF? As an aside, if you didn't know how rent control works in SF, here's a quick intro. Buildings built before 1979 and rented as residential housing are covered by rent control. No other buildings -unless (as is happening in Trinity Place on Market Street) the landlord enters into a special agreement with his tenants- are covered by rent control. This means that new construction is NOT covered by rent control. Because new construction is not covered by the rent control ordinances, in a market with extreme undersupply, like SF's, there is no economic reason for a developer not to build new housing stock. Have you been enlightened? :)