> Rent is a function of supply and demand
Is there really a market dynamic in rent pricing anymore? I thought that algorithmic collusion had eliminated the need for landlords to compete on price.
Is there really a market dynamic in rent pricing anymore? I thought that algorithmic collusion had eliminated the need for landlords to compete on price.
What sustains 'algorithmic collusion' in a non-market-clearing situation when landlords ultimately just want to rent their property out?
To put it another way, why would a property owner who has a vacant house leave it unrented in order to benefit other property owners at his own expense?
Well, that and non-enforcement of antitrust which is a big part of many of our current economic problems.
Massive corporate landlords like Greystar and Morgan Properties own so much of the market they can do a lot of pricing damage even without colluding with others (but of course they do that too).
The government, society, municipalities in the US do not build housing. They allow it to be built. Housing is built by developers, who are businesses that insist on making a profit.
So lets say you are one of the only couple of companies that can build a new 100 unit apartment in an area with tight housing supply. Great, you love money, you will look to invest in a development to capture some of that market and make money.
Do you build 100 cheap units for $X and make 5% profit over your planned ROI term, or do you build 100 absurdly upmarket units for $X + 10% dollars and make 10% profit over the same ROI term?
You already know the answer. The normal response is that "All new build is good and will lower price" but no, the rich people buying McMansions and $3000 per month condos in states they haven't ever been to can just absorb far more supply than actual local workers. And, well, they are so fucking rich compared to the average person that they can simply not care about how many of these properties they own, so there isn't downward pressure on them to sell off some of those locations.
The rich are just too rich and can easily outbid the rest of us forever for anything. They are so rich and their marginal value of a dollar is so low that they can happily buy up expensive housing basically for shits and giggles and sit on it and forget they even have it. They own ten properties they never visit. Because they can literally own a property just because they might some day want to visit.
Developers have mostly decided to only serve that clientele because they are so goddamned profitable, because they will negotiate less, will happily pay for box checking features meant to increase the price (like really really bad smart home implementations that they never even experience because they never go to that home). The rich guy who hired my dad to be his general contractor doesn't care what my dad charges and doesn't look at the bill, so my dad abandoned his plan to build 10 houses and instead just lives a relaxing life off of that man's excess, because why the fuck would you do a hundred times the work for less money?
That's one of the reason income inequality on it's own is so bad. Money doesn't work in a linear way, so having 2X the dollars as the next guy is more than 2X as "powerful". The uber rich can just own everything and you have no hope of outbidding or competing. You simply have no other choice than finding what little scraps they ignore.
Capitalism optimizes for best profit per effort. In a society where a tiny percent own the majority of all resources, why would you ever fight for the scraps the little guys have?
Profitable businesses in Portland are being forcibly evicted to be replaced with brand new hotels meant for Executives to visit once a year, all over the area, because providing any service to the uberwealthy is just that much more profitable than providing very necessary service to the average person. It doesn't matter how desperate normal people get, they can't afford to outbid the uberwealthy.