This fundamentally misunderstands the way that the market works.
If you have 1000 people trying to rent a 1br apartment, and there are 500 1br apartments on the market, then yeah, the price is going to go up, because there’s more demand than supply. But supply is constrained by outside factors, like zoning, and neighborhoods that don’t want to ruin their “character” be someone building high-density housing next to their cute, retro bungalow. Sure, you can build your apartment complex out in BFE, but no one wants to rent a place out in BFE because now they can’t get to their job in a reasonable amount of time, and have to drive rather than take public transit (or walk, ride a bike, etc.). Plus, that creates sprawl.
If you really want more housing, blaming landlords–including corporate landlords–isn’t going to fix it. Blame the cities that won’t allow proper high density housing, blame the NIMBYs.
I don’t know where people think that more housing comes from; someone has to put up the money. I’m fine with it being the state, but someone has to front the money in the first place.
You can, for instance, buy land and build your own home. But if you do that, you’re likely going to end up paying prices that are very comparable–or much, much higher!–to the prices you would pay to get the mass-produced homes from one of a few companies that are building massive sprawl. Those companies have economies of scale working on their side; they have limited floor plans, and have more control over the cost inputs, because they can negotiate bulk pricing. If you break up the ‘cartels’, then you’re suddenly dealing with much, much more custom homebuilding.
(FWIW, I’m currently looking into custom homebuilding, so I’ve got a pretty decent idea on what some of the costs will be for even a fairly modest home where all I really want is a shell that’s stub plumbed and has a breaker box.)
You have it all wrong. Housing is expensive because investment firms are allowed to buy up entire neighborhoods thus slashing supply.
Building new homes doesn’t change the equation as these same investment firms are buying up new homes as well.
They control the market because they own the majority of it. They prop up home prices and rental prices. They’ll sit on empty homes just to maintain said control.
If you want anything to change the first step is stopping companies from investing in homes.
It can’t possibly be the price fixing cartels the DOJ is currently going after. It’s nebulous market forces that we just can’t do anything about. (/s)
And in places there’s actually a shortage, government built buildings that rent at cost and offer rent to buy would solve it. But we’re too busy congratulating wall street for making the line go up while ignoring rising homelessness, even while stuff is getting built.
The price-fixing cartels refers to rent specifically, rather than sales. And yes, there is a shortage of units for sale, and that is due largely to market forces. For instance, if I have a house right now that I still have 25 years of mortgage on, my mortgage is probably at a very low rate. Selling that home and buying a new one would mean a new mortgage, at a higher rate, which means bigger monthly payments. This is a problem that older people are running into right now; their homes are too big now that their kids are gone, but they can’t afford the new mortgage rates.
Even without rental software suggesting market values for landlords, it’s very easy to look at comparables in your general area to set your own rates close to what other people have their at. Similarly, if you list a property at $X, and get 200 queries in a single day, you are likely to set your prices higher because you know that you’re listing lower than average. (I sold a car like that; I got 50+ inquiries in just a few hours, because I’d set the price lower than market rate.)
And in places there’s actually a shortage
…Which actually is most places.
IIRC, the gov’t is restricted right now, and can’t build more without a change in the law. And sure, let’s change that. But you’re also going to need to change local zoning restrictions that prevent high density housing from going into certain residential areas.
OP very clearly referenced landlords. And no, this is not just checking competitor prices. It’s literally an app landlords can collude on. They all give their pricing and vacancy data and the app tells each one how many units to keep vacant to make the market price go up. It’s literally a pricing cartel and literally illegal.
This fundamentally misunderstands the way that the market works.
If you have 1000 people trying to rent a 1br apartment, and there are 500 1br apartments on the market, then yeah, the price is going to go up, because there’s more demand than supply. But supply is constrained by outside factors, like zoning, and neighborhoods that don’t want to ruin their “character” be someone building high-density housing next to their cute, retro bungalow. Sure, you can build your apartment complex out in BFE, but no one wants to rent a place out in BFE because now they can’t get to their job in a reasonable amount of time, and have to drive rather than take public transit (or walk, ride a bike, etc.). Plus, that creates sprawl.
If you really want more housing, blaming landlords–including corporate landlords–isn’t going to fix it. Blame the cities that won’t allow proper high density housing, blame the NIMBYs.
I don’t know where people think that more housing comes from; someone has to put up the money. I’m fine with it being the state, but someone has to front the money in the first place.
How the Homebuilder Cartel Drives High Housing Prices
It’s really not that simple.
You can, for instance, buy land and build your own home. But if you do that, you’re likely going to end up paying prices that are very comparable–or much, much higher!–to the prices you would pay to get the mass-produced homes from one of a few companies that are building massive sprawl. Those companies have economies of scale working on their side; they have limited floor plans, and have more control over the cost inputs, because they can negotiate bulk pricing. If you break up the ‘cartels’, then you’re suddenly dealing with much, much more custom homebuilding.
(FWIW, I’m currently looking into custom homebuilding, so I’ve got a pretty decent idea on what some of the costs will be for even a fairly modest home where all I really want is a shell that’s stub plumbed and has a breaker box.)
You have it all wrong. Housing is expensive because investment firms are allowed to buy up entire neighborhoods thus slashing supply.
Building new homes doesn’t change the equation as these same investment firms are buying up new homes as well.
They control the market because they own the majority of it. They prop up home prices and rental prices. They’ll sit on empty homes just to maintain said control.
If you want anything to change the first step is stopping companies from investing in homes.
Any other fight is pointless.
It can’t possibly be the price fixing cartels the DOJ is currently going after. It’s nebulous market forces that we just can’t do anything about. (/s)
And in places there’s actually a shortage, government built buildings that rent at cost and offer rent to buy would solve it. But we’re too busy congratulating wall street for making the line go up while ignoring rising homelessness, even while stuff is getting built.
The price-fixing cartels refers to rent specifically, rather than sales. And yes, there is a shortage of units for sale, and that is due largely to market forces. For instance, if I have a house right now that I still have 25 years of mortgage on, my mortgage is probably at a very low rate. Selling that home and buying a new one would mean a new mortgage, at a higher rate, which means bigger monthly payments. This is a problem that older people are running into right now; their homes are too big now that their kids are gone, but they can’t afford the new mortgage rates.
Even without rental software suggesting market values for landlords, it’s very easy to look at comparables in your general area to set your own rates close to what other people have their at. Similarly, if you list a property at $X, and get 200 queries in a single day, you are likely to set your prices higher because you know that you’re listing lower than average. (I sold a car like that; I got 50+ inquiries in just a few hours, because I’d set the price lower than market rate.)
…Which actually is most places.
IIRC, the gov’t is restricted right now, and can’t build more without a change in the law. And sure, let’s change that. But you’re also going to need to change local zoning restrictions that prevent high density housing from going into certain residential areas.
OP very clearly referenced landlords. And no, this is not just checking competitor prices. It’s literally an app landlords can collude on. They all give their pricing and vacancy data and the app tells each one how many units to keep vacant to make the market price go up. It’s literally a pricing cartel and literally illegal.
The answer was always greed.