The explanation is that there isn't enough housing to meet demand. That's it. Until there is, prices will keep going up even when building more units.

Landlords wouldn't be buying up a ton of units and renting them out at a profit if there was a glut of inventory, because it would be a terrible investment.

A lot of native New Yorkers live with a lot of family members or roommates, and these are the types of people who are most likely the move out. Meanwhile, the most likely people to move into New York are well paid young professionals who can afford more space.

> In NYC I can tell you that the metropolitan area lost about 500,000 people since 2020, added ~20-30k housing units per year in that same time. The vacancy rate somehow dropped dramatically despite this and rents also rose dramatically. I've >yet to see any good explanation for this

Taking these numbers as given, the obvious explanation is latent demand. A lot of people who used to live five to a 900 sqft. New York apartment are now living 2 or 3 to an apartment instead. Probably the rent dipped briefly before soaring, yeah? People took advantage, and when leases are up, many of those people will presumably consolidate back with their families.

Very similar to the concept of "induced demand" (which is also really latent demand) with regards to highways. Build new lanes, people who were unwilling to drive before use the lanes, traffic delays stay the same (but with higher throughput, and therefore still a net positive, even if the money would've been better spent on trains).

Landlords are not keeping units off the market to drive up prices. There are no landlords who have the pricing power to make that work. There is no landlord that can keep 10% of his inventory off the market to drive up rental prices 11%.

Building more housing now may in fact cause people to reproduce more, which will create more demand for housing... in 20 or 30 years. Well, in 20 or 30 years, we can build some more housing.

And even if we don't... solving the problem for 20 or 30 years is not nothing. It's worth doing.

> Building more large, expensive homes that are gobbled up by investors or people 'parking' money isn't going to help people that need cheap dwellings to actually live in.

Investors that gobbled up properties are renting them to renters (assuming it isn't on airbnb) to pay their holding costs (mortgage, tax, maintenance), since they are by definition investors. They actually increase the pool of property for renters, keeping rent price lower, which fights rental inflation. This does drive up purchase price for the home itself, but that's a separate topic.

Same with people parking money, why would they be leaving the homes empty when they could rent it out for additional cash flow?

It's been demonstrated over and over again that building high end housing does have an impact on the prices of lower end stuff.

It is of course likely to have a greater impact to build lower cost stuff, but blocking a development because you don't like the sort of houses they want to build is more or less stupid (it's not like a developer is going to do a project there is no demand for, and that demand is probably already looking elsewhere near the proposed development...).

That’s not how it works. New housing, even if luxury, provides options for wealthier people to buy who otherwise are forced to bid up the price of older homes and remodel it to their liking. New housing starts an immediate chain reaction where wealthier people vacate older housing in less desired areas for the new homes, thus putting downward price pressure on older homes. Our current problem is that for the last thirty years we have banned most new construction, resulting in a shortage of new homes.

We saw this dynamic play out during the pandemic when news cars were delayed due to supply chain constraints, and the price of used cars shot up.

Maybe there should be an occupancy credit, like a clean energy credit. Empty property holders can buy it from occupied property holders to compensate for the higher property tax burden.

[flagged]

> - Pressure landorders who rented under the suggested price

How did RealPage do this? I'm OOTL.

Yes, but so what. Modern city property rental Markets are open transparent competitive markets.

The idea that NYC was full of landlords who never looked at a listings page, had no idea how much similar apartments were going for, and have suddenly been transformed into rapacious greed monsters by a few phone calls from RealPage sales team is ridiculous.

Assets have gone up like SpaceX rockets since Covid - gold, stocks and of course property. And the top end of the market has the wealthy beneficiaries of that renting this nicest stuff, so the people who used to be there now move one rung down and price out that rung who move down and …

This is just a facet of systemic inflation - it’s not the actions of evil RealPage causing it. Sure they aren’t helping and may have broken laws - but FFS if market price information provision is now collusion Reuters and Bloomberg have got some lawyering up to do

I think we are in basic agreement

>>> while shifting real value from savers and earners over to asset holders. Working as intended, I suppose.

No furlough directly did not receive all of that but the “cost of covid” (the amount spent by government without taxing it back) was on that order. I wish I had a better line accounting of it.

But the basic effect is the same - the owners of assets - the wealthiest in society, get a greater proportion of the “tokens that allocate future resource allocation” (dollars) than previously - and this means they put that money somewhere - and we see that as inflation everywhere.

The solution as I see it is taxing the assets (not a “wealth tax” but more same approaches).

Good stats on this are hard to come by. I am happy to see better figures and happy to wind down from 50T. But the order of magnitude is on the money - if it’s 10T or 30 does it really matter? It’s an unprecedented increase in such a short time - inflation figures have barely caught up - we will be seeing inflation go through the roof for decades to come and central banks trying to use their only lever (interest rates) on something that is a fiscal problem.

So follow my more restrained calculations: statia below gives us a 3TN increase for covid period, UK gov figures have 800BN Sterling which is 1T USD give or take. Then look at 27 European countries - at 500M people spending at the rate of USA gives us 5T, before we even look at Japan and Asia. We have got over 10TN. That’s a boatload in anyone’s momey

US fed balance sheet increases by 3 TN 2020-24 https://www.statista.com/topics/6441/quantitative-easing-in-...

I expect this thread is long dead but paying the money to get through covid was a Good Thing.

The issue is interesting in that afaik, covid caused a massive “pause” in the private economy - the government kept paying its workers as usual, and workers kept paying their rent and so on, but a huge chunk of the economy is discretionary - such as going out to the pub, or shopping for clothes or buying yachts.

And so the government did its best to keep pub workers furloughed and shop workers furloughed, and keep the supply chains turning over.

Which basically meant that the people with most discretion in spending (the rich) stopped spending but the money they would have spent was spent instead by the government- thus the government spent the money the rich would have and then the rich did not spend it.

This transfer of wealth from government to rich does need to be handled

> As the war debt was never repaid

The war debt was, in fact, repaid.

That's true in some markets, but the DOJ complaint highlights some places, like Atlanta, where vacancy rates have gone up, but rents have still climbed higher.

Why would you need to collude for higher rents with RealPage if a shortage of housing was the primary driver of rent increases?

If someone's being that greedy, they can't really use supply and demand to say their hands were tied in terms of controlling rent.

Yes, because it's trying to make your business as legally necessary as a tax. It's to do with regulation, not renting things.

We gotta start with baby steps. You’re not gonna get people on board otherwise.

I guess in this hypothetical, imagine all ownership of the rental units suddenly transferred to the tenant. Would the net effect to the economy be positive or negative?

> For instance, do people who declare their occupation as landlord have some demonstrable income distribution x std deviations above some control group?

Not really. Being a landlord takes a bunch of money to sink into the real estate assets. If you don't put it in there you'd just leave it in a mutual fund or whatever and be making passive income of about the same order. Real Estate is a solid investment choice but it's not *that* much better.

Basically this argument is for the form "being a landlord looks like a working class job but pays better and that's not fair".

But the actual truth on the ground is "being a landlord is just a different way of being wealthy, and you have to fix plumbing on the side instead of working a day job in an office".

I know landlords, and most of them earn less from landlording than the median engineer. They do, however, do a lot less work!

They can be parasites even without being richer.

Merely the fact that a typical landlord works far fewer hours than most other careers. Even a property portfolio of 100 properties probably isn't a full time job if you have managing agents.

It's a problem whether the occupier is a renter or homeowner. The landlord is, in my experience, just going to call a handyman anyway. May as well cut out the middleman as thats something I can do myself.

The modern way is to have a handyman (just like you have a gardner or cleaner). The handyman has a list of gutters to empty, squeaky hinges to oil, HVAC filters to clean, etc.

Keep adding these small tasks to the list, and when the list gets long or something urgent comes up, call the handyman out for a half-day.

Funny the same people that say stuff like this say that the person who can't even clean their own drain should plan their own retirement using a 401K as the vehicle and if they fail at it and starve well that's their fault, there's no way we could have seen it not working out.

And what other way do you recommend to invest your money in order to not get devalued by inflation?

The person living there, obviously.

Move to a place with better tenant laws. Although I'd wager probably all states have the basic laws to protect tenants from what you're saying.

What would probably happen is following. It depends on many things, but assuming it is done near instantly and there aren't side effects.

For some time house values would drop, they will be sold to largest possible buyers. This isn't small buyers but probably banks, since they have lots of capital. Because of price drops, demand will be lessened and house construction industry will experience layoffs.

Many people will be without a house to rent, so banks or large money interests will offer their stockpile of houses under strict terms i.e. rent without renting (timeshare/leasing/house borrowing).

You'll get landlords but with deeper pockets.

Why wouldn't they just convert to owner-occupied apartments?

There's an argument to be made about affordability, but there are a lot of arguments against paying someone else, for which you receive no equity, and they get to keep any price appreciation of the property.

It'd be interesting to see a rental market that banned anything but rent-to-own contracts, where some portion of your monthly rent had to buy equity in the property you occupy. (With standardized terms for disposal, sale, etc)

Why would they be demolished(a debit) when they could be sold(a credit)? 34% of people live in rental housing. If those units flooded the market, it'd be much easier to save up to buy while living with parents or friends.

would they be demolished? or would their prices drop to the point that the people paying the mortgage might be able to afford to actually own the equity?

> Say tomorrow we outlawed being a landlord. Every multi-family and apartment unit would be demolished and turned into SFH, or sold off as condos.

> And everyone would have to live with parents or friends until they could afford a down payment. That sounds like a worse world than the one we live in.

You are using a logical fallacy known as false dichotomy. We have many other possibilities such as commie blocks and even denser privately owned residential housing with fair competition and pricing. Maybe hard to achieve fair pricing but not impossible.