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For a property owning corporation, it might not be the best thing. However, in a free market, there wouldn't be anything they could do about it. Competition

by brc 12y ago

For a property owning corporation, it might not be the best thing. However, in a free market, there wouldn't be anything they could do about it. Competition is supposed to reduce the profits of any industry over time. Barriers to new construction is of course the problem. If you had to fill out a lot of paperwork and get government permission to build a tractor, and there was a shortage of tractors, the solution wouldn't be to give farmers more cash to procure a tractor, nor try and control the price of tractors, nor pass laws restricting use of tractors. The solution would be to build more tractors. With enough tractors, it woudotn even matter if the occasional farmer kept one in the barn unused. I don't know how people develop this blindspot with housing - if the prices are going up too much it is because demand is exceeding supply. Everyone is reluctant to say the lack of supply is an issue, and I don't know why.

seanmcdirmid 12y ago
In an unrestricted free market, someone would just buy up all the property in a constrained space to corner the market. That has definitely happened before in robber baron days. And honestly, if I wanted to live in a cess pool like Houston, I would move there. Houses are cheap enough (comparatively) but it is a huge icky sprawl.
- icebraining 12y ago
  That has definitely happened before in robber baron days. I'm curious, has it really happened at a city level? Seems to me that it would get prohibitively expensive, since other owners would see the massive demand and push up the prices, but that's really just a supposition.
  - seanmcdirmid 12y ago
    You do it when no when is looking (hence robber baron). Best to start when the land is cheap, and when you are going to build infrastructure to increase the value of the property. So the railroads with tracks and stations, amusement park operators (Disney World...), or it could be a factory with lots of jobs in a depressed area.
    - icebraining 12y ago
      You said they would "buy up all the property in a constrained space to corner the market". I don't see how your examples apply. What constrained space did Disney World take over? What market did they corner?
  - waltdisney 12y ago
    It worked for Walt Disney in Florida.
    - deleted 12y ago
      [deleted]
    - icebraining 12y ago
      What constrained space did they buy? Which market did they corner?
    - brc 12y ago
      Not really. Walt Disney bought up a pile of unwanted swamp and made a company town. It doesn't even go close to 'cornering the market'. They just own a big chunk of land.
  - brc 12y ago
    No. There isn't anyone with enough money. Just to by a simple suburban street takes millions and millions. Even someone with the cash resources of Apple could maybe get one or two suburbs of San Francisco before the prices started rising fast and they priced themselves out. Cornering a market happens periodically in small markets like commodity futures or stocks in a single company - and usually only for a brief period. You could make the argument that you could 'buy' a government by buying all the available currency. Technically it's true but practically it's not. Who would want to own a monopoly in real estate anyway? People and businesses are sticky, but not stuck. If the rents got out of hand they'd just move.
- escherize 12y ago
  This buy-up argument is impossible in a free market. Let's say there are 10 people renting apartments that a monopolist plans to buy out, and each of their properties are 'worth' $1, meaning you could reasonably expect to pay $10 for one property. They also rent out their appartments for $1 each. What happens when the monopolist starts buying properties? He buys a few, and they notice he's going for a monopoly. They will raise their prices, because they know it will be worth it for the monopolist to pay $20 or even $30 to aquire their properties. Let's say, through a miracle, the monopolist endures these exponentially growing raised prices, buys 9 of the 10 properties, and raises rates to $3 to cover the losses he's had to put into buying his last couple of properties. Well, the 10th would be able to rent his land out at nearly the same price as the monopolist, say $2.50. But notice that the 10th property owner didn't have to over-pay for his land, so he will is making way more profits than monopolist, which would price his property out of the range of the monopolist.
  - seanmcdirmid 12y ago
    > Let's say there are 10 people renting apartments that a monopolist plans to buy out You aren't making sense. The monopolist doesn't buy "10 apartments", they just buy the entire building since those 10 people are "renting." You only have to buy from the person who owns the building; even in an non-free market renters have no ownership rights. > Well, the 10th would be able to rent his land out at nearly the same price as the monopolist, say $2.50. But notice that the 10th property owner didn't have to over-pay for his land, so he will is making way more profits than monopolist, which would price his property out of the range of the monopolist. When did the 10th renter become a property owner? And anyways, the monopolist doesn't corner the market directly; they use inside information to buy cheap, and have excess capital to take advantage of market opportunities. How many old west movies are premised on some rich guy trying to buy up all the land in town because they know the railroad is coming through? Those are actually based on "true stories." The late 1800s was full of that.
    - icebraining 12y ago
      And anyways, the monopolist doesn't corner the market directly; they use inside information to buy cheap, and have excess capital to take advantage of market opportunities. How many old west movies are premised on some rich guy trying to buy up all the land in town because they know the railroad is coming through? In what way does that apply to SF?
- brc 12y ago
  No, they wouldn't. They couldn't. Nobody has enough money. Besides, you can you have a constrained space in a free market? I'm dissapointed this type of thinking still pops up. The whole point of this article is to discuss increases in supply.

by brc 12y ago

seanmcdirmid 12y ago

In an unrestricted free market, someone would just buy up all the property in a constrained space to corner the market. That has definitely happened before in robber baron days. And honestly, if I wanted to live in a cess pool like Houston, I would move there. Houses are cheap enough (comparatively) but it is a huge icky sprawl.

icebraining 12y ago
That has definitely happened before in robber baron days. I'm curious, has it really happened at a city level? Seems to me that it would get prohibitively expensive, since other owners would see the massive demand and push up the prices, but that's really just a supposition.
- seanmcdirmid 12y ago
  You do it when no when is looking (hence robber baron). Best to start when the land is cheap, and when you are going to build infrastructure to increase the value of the property. So the railroads with tracks and stations, amusement park operators (Disney World...), or it could be a factory with lots of jobs in a depressed area.
  - icebraining 12y ago
    You said they would "buy up all the property in a constrained space to corner the market". I don't see how your examples apply. What constrained space did Disney World take over? What market did they corner?
- waltdisney 12y ago
  It worked for Walt Disney in Florida.
  - deleted 12y ago
    [deleted]
  - icebraining 12y ago
    What constrained space did they buy? Which market did they corner?
  - brc 12y ago
    Not really. Walt Disney bought up a pile of unwanted swamp and made a company town. It doesn't even go close to 'cornering the market'. They just own a big chunk of land.
- brc 12y ago
  No. There isn't anyone with enough money. Just to by a simple suburban street takes millions and millions. Even someone with the cash resources of Apple could maybe get one or two suburbs of San Francisco before the prices started rising fast and they priced themselves out. Cornering a market happens periodically in small markets like commodity futures or stocks in a single company - and usually only for a brief period. You could make the argument that you could 'buy' a government by buying all the available currency. Technically it's true but practically it's not. Who would want to own a monopoly in real estate anyway? People and businesses are sticky, but not stuck. If the rents got out of hand they'd just move.
escherize 12y ago
This buy-up argument is impossible in a free market. Let's say there are 10 people renting apartments that a monopolist plans to buy out, and each of their properties are 'worth' $1, meaning you could reasonably expect to pay $10 for one property. They also rent out their appartments for $1 each. What happens when the monopolist starts buying properties? He buys a few, and they notice he's going for a monopoly. They will raise their prices, because they know it will be worth it for the monopolist to pay $20 or even $30 to aquire their properties. Let's say, through a miracle, the monopolist endures these exponentially growing raised prices, buys 9 of the 10 properties, and raises rates to $3 to cover the losses he's had to put into buying his last couple of properties. Well, the 10th would be able to rent his land out at nearly the same price as the monopolist, say $2.50. But notice that the 10th property owner didn't have to over-pay for his land, so he will is making way more profits than monopolist, which would price his property out of the range of the monopolist.
- seanmcdirmid 12y ago
  > Let's say there are 10 people renting apartments that a monopolist plans to buy out You aren't making sense. The monopolist doesn't buy "10 apartments", they just buy the entire building since those 10 people are "renting." You only have to buy from the person who owns the building; even in an non-free market renters have no ownership rights. > Well, the 10th would be able to rent his land out at nearly the same price as the monopolist, say $2.50. But notice that the 10th property owner didn't have to over-pay for his land, so he will is making way more profits than monopolist, which would price his property out of the range of the monopolist. When did the 10th renter become a property owner? And anyways, the monopolist doesn't corner the market directly; they use inside information to buy cheap, and have excess capital to take advantage of market opportunities. How many old west movies are premised on some rich guy trying to buy up all the land in town because they know the railroad is coming through? Those are actually based on "true stories." The late 1800s was full of that.
  - icebraining 12y ago
    And anyways, the monopolist doesn't corner the market directly; they use inside information to buy cheap, and have excess capital to take advantage of market opportunities. How many old west movies are premised on some rich guy trying to buy up all the land in town because they know the railroad is coming through? In what way does that apply to SF?
brc 12y ago
No, they wouldn't. They couldn't. Nobody has enough money. Besides, you can you have a constrained space in a free market? I'm dissapointed this type of thinking still pops up. The whole point of this article is to discuss increases in supply.