Hacker News Reader

Comment by Jasper_ | Hacker News Reader

The supply was fine before multi-home owners and property management companies took up most of it and jacked up the prices. Increasing the supply would only increase the wealth of the homeowners, it won't lower prices.

Increasing the supply means building new buildings, and that often means building huge lots of five-over-ones, priced as luxury apartments in a growing market. The people building the new supply expect to make a profit, and in a market with growing prices, they aren't selling for less than what they think they can get out of it.

We see this in big cities where vacancies are at an all-time high (aka a lot more supply), but prices aren't going down.

View on HN

I do real estate for a living and this opinion is like a zombie that never dies no matter how many times it is proven wrong.

You are putting forward that landlords acted collectively to increase the price of realestate. This is obviously wrong. The price of homes is determined by the market. It doesn’t matter who owns those homes, they are worth what the market says they are. Landlords do not control the market and even if they banded together in a conspiracy to increase the price of homes, they couldn’t because the vast majority of homes are owned by regular people.

The high price of housing is caused by a shortage. If you don’t believe me then watch the 60 minutes segment about it. There’s no conspiracy. If there weren’t landlords building new stock it would be even worse. It’s so ironic that the hive mind spits in the face of the only people building new housing; the only people making the problem better.

Nice try.

Landlords and homeowners and the finance industry don't control the market... they just form a political bloc that controls zoning and taxes and transportation infrastructure and central finance, and these knobs in turn control the market. For some reason, they always vote for policies that pump their holdings. Can't imagine why. These policies do create problems, though, and it's not only reasonable to attribute the problems back to the people who voted for them, it's unreasonable to do anything else.

"It's just the market!" is on par with "Look, a squirrel!" in terms of critical thinking.

Again, landlords aren’t a big enough group or coordinated enough to do anything. There’s no landlord lobby. Homeowners are a different story. It’s them who stop us from building more. But yea, it’s just the market and there’s no conspiracy and landlords are the last people to blame. Your comment on my cognitive abilities is a petty insult and is not allowed on this platform.

"You don't need a formal conspiracy when interests converge."

The landlords don't need to conspire - they know what's good for them and the politicians either own property themselves or are connected enough to landlords to help them out.

None of these parties have an immediate interest in the lower class affording housing or maintaining the community fabric in the long term - especially the faceless incorporated ones.

Blackrock doesn’t have any lobbyists? Apartment consortiums don’t have lobbyists?

Homeowners outnumber them and local politicians listen to them more than to some far away group of people in NYC. Really it is quite simple, homeowners vote in tax cuts for themselves which also apply to landlords.

Why would homeowners vote tax cuts for landlords as well? I wish that the politicians listened to the citizens. You have a very naive take on politicians and how they are motivated. Think campaign donations and hobnobbing for a cushy job when they leave office —- that’s what motivates politicians.

There are luxury condos right where I live that are sold by a property management company. They are unoccupied, and have been unoccupied for months. The prices have not gone down.

There's no super strong market force to push the price of a house down, while there is a large market force to keep it valued where it is or make it go higher.

Respectfully, this doesn't prove that the law of supply and demand no longer applies. Any individual seller may choose not to decrease their prices -- but if they do it long enough, they run out of money and are forced to sell.

It's also difficult to tease out the effect of general price inflation. If house prices stay stagnant but currency is devauled, prices are decreasing in real terms.

Some places have tax breaks for unoccupied property rentals. Instead of lowering prices they leave them high and break even on the losses (or close enough such that they weather the short term until demand at their preferred price is reached)

What are the odds these are used to park (questionably acquired) assets by wealthy foreigners?

Months is way too short a timeline to say anything. There is no market force that says these houses must sell right now today and so like literally every other asset they’re being held until in the expectation that offers will come in that meet the asking price.

But eventually the vacant apartments will get rented out because they're costing their owners money (in taxes, mortgages, maintenance) and not bringing any in, and you can't spend more than you make forever.

Rents go down when landlords go bankrupt.

That's what happened in 2009-2010. It took about 4 years after peak homebuilding, and 2.5 years after peak home prices, and about 12-18 months after the financial crisis started. Real estate tends to lag financial markets by about that time period. But it does happen - eventually markets respond to supply and demand, and firms that try to buck the trend get swept out of the market.

> But eventually the vacant apartments will get rented out because they're costing their owners money

Owners make money leaving properties vacant all the time. In fact, in many markets capital gains have been much more significant than rental income for a long time now.

Not in a down market. Everybody's a genius in a bull market, where you make money just because your assets went up in value. In a bear market, where your assets go down in value, anyone without cash flow goes bankrupt.

A 13 year old would have made money in real estate over the last 5 years. One could have literally selected a property at random and made money, even one that was trashed.

In a lot of cities and countries you pay less taxes if your property is considered unsuited for rental or is just an empty plot of land. There is an incredible financial incentive to avoid providing housing as much as possible.

Be careful with vacancy numbers. Some sources seem to include houses that should not be considered part of the housing supply.

There are people who own vacant houses that they have zero interest in renting, and are not looking to sell. This could be a vacation home for a billionaire that they seldom get around to visiting, but want to have ready for them, and just have staff check in periodically. Renting it when not in use may be uninteresting (have to lock up their belongings, arrange some form of management company, have insurance concerns (if somebody realizes they are renting from a billionaire, they might get "hurt", hoping for a big quick payday) etc.)

Similarly there are vacant houses own by speculators that have zero interest in renting out the unit, and are not currently looking to sell, since the market isn't right yet.

This is among many other scenarios where vacant does not mean available to rent or purchase (well at least not at anything close to market rates. Some of these people may reconsider if offered way above market rates, but that generally only happens if a property is uniquely valuable to just that one buyer.)

I think all of those cases should be reported as vacancies. Those are shelters going unused, that other people could be using. And I think they're relevant to the current discussion because those unused homes are taking up the extra supply, increasing price

> We see this in big cities where vacancies are at an all-time high (aka a lot more supply), but prices aren't going down.

Where?

Reply on news.ycombinator.com