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.
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.
> The second option's cost to landlords is largely defined by accounting/tax rules
The cost is having empty properties, which require insurance, maintenance costs, property taxes, likely mortgages of their own to pay, all of which cost money and which are by far the biggest costs to letting things sit unused.
And the fact in this case is there simply isn’t all these mythical properties sitting unused; simply look at current housing and rental stats.
I'm not talking about repricing specifically? I'm talking about how differently the housing market would behave if there was enough housing to go around.
Landlords have a 3rd option: They can sell the unit, because their unit no longer commands high prices due to housing supply meeting demand, and their capital is best used elsewhere.
If they are underwater and cannot sell above break-even, their bank will eventually do it for them.
As a commercial property, both their loan and sale price are contingent on the rental price.
So again, a disincentive to ever decrease rent (and thus demonstrate the market is softer and therefore you property is worth less).
Versus claiming it still commands higher rent (and is temporarily unrented) and thus more valuable.
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.