Comment by flimsypremise

Comment by flimsypremise 7 hours ago

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, yet you'll still see people advocate for building more housing as the solution.

Simply using the rental vacancy rate as a proxy for supply and demand does not work, since there are lots of factors that can affect vacancies. One of then, as outlined in the article, is landlords keep units off the market to drive up prices.

ProfessorLayton 7 hours ago

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.

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ethbr1 7 hours ago

Or, accounting and tax law makes it less painful to keep units vacant than reprice them at lower rents.
Which is a thing we could change via something like Vancouver's vacancy tax.
Make it more in landlords' interest to reprice units lower, if the market has excess inventory.

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- ProfessorLayton 7 hours ago
  
  The market will dictate lower prices if there's excess inventory. If landlords are hoarding units and keeping them empty instead of lowering rental prices, that indicates a lack of available inventory.
  
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  ethbr1 6 hours ago
  
  That's not how repricing works.
  If a landlord is unable to rent a unit at a desired price, because the rental market has moved lower, then they have two options.
  They can decrease the price.
  Or they can not offer the unit for rent (or continue listing it at the higher price).
  The second option's cost to landlords is largely defined by accounting/tax rules, in regards to how painful the vacancy will be to them.
  Thus, vacancy can be made more or less painful by changing accounting/tax rules.
  
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benreesman 3 hours ago

This meme has got to go: there is little if any evidence to suggest that markets are functioning either in the specific case of housing in high COL areas in the United States or frankly most times anyone trots out the Milton Friedman trope on HN.
Markets fail, they get captured, they get distorted by accounting treatments, they generate cartels. They get technologically disrupted by new forms of cartel pricing that blow past existing regulations(e.g. TFA).
Capitalism sounds dope, I hope I live to see it. But the idea that supply and demand in the Econ 101 formulation is anything to do with the lot of say a person renting a flat in 2024 is silly and borders on insulting.

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- tptacek 5 minutes ago
  
  Capitalism sounds dope, I hope I live to see it. But the idea that supply and demand in the Econ 101 formulation is anything to do with the lot of say a person renting a flat in 2024 is silly and borders on insulting.
  It's really unclear to me why you think this is the case. The median cost of a house in the Chicagoland suburb I live in is north of $470k, and that's not because of technological disruption or cartel pricing, but rather because we've outlawed anything but single-family housing on lots, something we did deliberately back in 1923 and 1947 with the express purpose of preserving and increasing home values for people who lived there at the time and keeping Black families out.
  "Markets" didn't "fail" or "get captured" and no hedge fund engineered this situation; people who lived here voted for this outcome.
  
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- zeroCalories 3 hours ago
  
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Aunche 7 hours ago

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.

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JamesBarney 7 hours ago

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%.

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HarryHirsch 7 hours ago

There is, however, in any market a small number of big players, all politically connected, who will conspire against newcomers building new units. A couple years ago stories about that "historic laundromat" in SF were making the rounds, that is very typical.

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