Hacker News Reader

Comment by Manuel_D | Hacker News Reader

Lots of people want to blame rising prices on price fixing, when there really is growing demand without commensurate increases of supply. They want a silver bullet to bring down prices, without tackling the underlying problems.

> That being said, I price my rental properties against what similar square footage gets at nearby apartments... Sooo if they are going up my rent is going up as well, and I bet most landlords do this.

This is essentially what RealPage does. It just automates calculating "what similar square footage gets at nearby apartments". It probably does other stuff like puts a premium on corner units or those with south facing windows.

View on HN

I agree that the underlying issue is a lack of supply. However, if a landlord is commanding a 30% profit margin on a non-luxury apartment then I think they are contributing to the problem (to be clear, I'm not insinuating anyone in this thread is doing this). I think the only objective way to tell if it's priced too high is by the profit margin, but of course even that can be inflated if e.g. a developer took a huge margin on it before selling it to a new owner.

As to what an "ethical and not terrible for society" profit margin would be is above my pay grade, but I would estimate 15%. It also probably depends on how easily you can make money on the stock market as well.

You know what gets developers excited about building? Someone getting consistent 30% profit margins.

Now, government just has to get out of the way and let housing be built.

> You know what gets developers excited about building? Someone getting consistent 30% profit margins.

It's super subdued excitement.

> Now, government just has to get out of the way and let housing be built.

Homeowner voting blocs aren't commonly considered to be government.

Business arent charities. Almost every one is trying to maximize profits.

Landlords also aren’t businesses. They’re a class of parasitic rentiers who siphon off wealth from economic activity around them and use corrupt means to prevent competition (mostly bribing politicians to constrain supply).

> However, if a landlord is commanding a 30% profit margin

Landlords of properties paying 7%+ interest have negative profit margin and can't compete with 2-3% interest rates.

By some landlords having a 30% profit margin, other landlords can have a positive ROI (increasing rental supply)

> Lots of people want to blame rising prices on price fixing, when there really is growing demand without commensurate increases of supply. They want a silver bullet to bring down prices, without tackling the underlying problems.

Yup. The underlying problem is a single word: supply.

Build more supply, the prices come down. But of course, developers know that. They don't want the prices to come down, so they don't build supply.

Developers don't build supply because most US cities have made it de facto illegal to do so.

For the most extreme case, check out San Francisco, where as of June the city had permitted a grand total of 16 housing units. What developer is even going to bother trying under conditions like that?

No, many of these building are way under 80% utilization.

Can you reference where that figure is from? Because what I can find, SF has a single-digit vacancy rate: https://nainorcal.com/san-francisco-market-report-march-2023...

How many of those non-vacancies are corporate held air-bnbs where they can make more money for providing almost no service? Hint: it's not a handful. Landlords strategicly take units off the market in ways like airbnb to convince cities that their rents (and profits) are just.

Reply on news.ycombinator.com