Sure less owners is bad for competition, but more supply itself creates competition in a sense.
Let's say theres 100 apartments in the entire town, and they are all owned by the same company.
Next let's say they build 50 more apartments and theres now 1000 apartments still all owned by the same company.
Given the number of apartments has increased, renters now have more power to negotiate as the owners have more units they need to fill.
This is why Tesla for example is dropping prices as they produce more cars and they have inventory vs when they had 6-12 month backlog & scalpers were flipping used vehicles for more than new in 2021-2022.
When supply is severely constrained, you end up with bidding wars for the finite goods.
> Let's say theres 100 apartments in the entire town, and they are all owned by the same company. Next let's say they build 50 more apartments and theres now 1000 apartments still all owned by the same company. Given the number of apartments has increased, renters now have more power to negotiate as the owners have more units they need to fill.
Unfortunately, that's not what is happening on the ground. In my town, they've built hundreds of units over the past years and rent has gone up. The building facing mine was newly built and I went there to see if I can score some deal and they did not budge at all. Half the building was kept empty for about a year, until the new generations of tech workers moved to the area to occupy them.
It's a numbers game but not the way you think. It's often more lucrative to lose money in the short term but still keep rent expensive for the future. This is why owners are being sued right now for price fixing by using Realpage. See https://mynorthwest.com/3719431/property-owners-accused-of-p...
I think a lot of people mistake cause & effect.
What if the housing is being built because they expect rent to go up?
If supply went up say 5% and rent went up 10%, what do people think would have happened in the 0% supply increase mirror universe?
People can't just make you spend money.
US has been underbuilding housing, especially in blue coastal cities, for generations. The last 25 years has seen a big move back to these cities where everything is getting bid up. And then the surrounding burbs, commuter built, secondary cities, etc follow suit.
You're talking hypothetical, I'm talking factual and historical. There's no 'what ifs' here. There was price fixing and the courts are going to decide the magnitude. What you're saying is not false, it actually makes it worse, making already scarce housing even more inaccessible. It's actually quite amazing to see homeless people on the streets, service workers commuting hours/week, first responders not being able to afford living locally and at the same time more than half the newly built apartments empty just to help keep the price up.
They can just run a cartel [1].
I don’t understand why anyone thinks things like housing can have any competition when housing is not a commodity but a necessity and the margins are rather thin with little to no space for efficiency and innovation, and private equity can just buy apartments and houses.
> In one neighborhood in Seattle, ProPublica found, 70% of apartments were overseen by just 10 property managers, every single one of which used pricing software sold by RealPage.
Property managers <> owners.
RE investment is very hands on, and people hiring property managers to deal with it on their behalf. The idea that the top 10 own 70% of the market is not a shock.
You could probably do this "top 10 own 70% of __ market" for literally anything.
I think you skipped the last clause of the sentence you're referencing (and forgot to look at the source). The real point is that one software vendor effectively controls all the pricing.
A REIT is the worst. One in my town is demanding a 20% rent increase. And also asking for tax breaks. Half the tenants will have to move and their tax money is going to the company forcing them out. The people in the building are in well paying jobs like IT professions not low income or elderly (but they are also facing the same thing).
I have never seen more supply of apartments make existing rents go down.
I had a friend's rent go up 25% in one year in an area that has seen a huge amount of apartment buildings go up. That's not rational. The companies that own these apartment buildings care about nothing more than more money and know that they'll be able to find someone to pay the exhorbant prices.
That is not necessarily the only conclusion that supports that, but it is one. A lot of urban designers just think that building apartment buildings will help with the demand problem in the same way that people think building highways alleviates congestion, which perhaps surprisingly urban designers know that that doesn't work for highways. And I see no evidence, at least in big metropolitan areas like Boston with a huge amount of attraction, that building supply does anything to ease demand. If anything, it increases it.
I would argue that demand in major cities will never go down. In particular, the greater Boston area has more than 500,000 college students. Many of those graduate and stay and work in the area and many more graduates move into the greater Boston area to work. It's a big area with lots of growing fields with a lot of professional people moving into. Demand is simply not going to go down for apartments, and the demand for housing shows no signs of slowing either.
A bit of my point was that landlords siphon off money from society knowing how important housing is to people and will charge the absolute maximum they can get away with. It's predatory.
You absolutely could build your way out of highway traffic given sufficient lanes. However, given the constraints of land and how density inefficient cars are, you'd have to build double or even triple (etc) decker highways all over the place, which is totally economically infeasible.
Meanwhile, you can build a shitton of lanes out in the exurbs, sure, but then all the cars on your thirty lane highway have to go somewhere when they get into the city and land is a lot more scarce.
What is the alternative to building more housing in a world where demand exceeds supply, we've been underbuilding in blue rich coastal cities for generations, and young people need places to live?
That's because companies only build new housing in booming areas. Plus, it's incredibly rare to get a large amount of housing "at once" in a metropolitan area, such that you could see the effects.
IIRC, there are studies that show that places that built more housing had smaller price increases than economically comparable places that built less housing.
You didn't live in the world where the extra supply of apartments didn't exist. Maybe the rents didn't go down, but you don't know how high they would have gotten.
Positive effects can exist even if they don't singlehandedly flip a decades long trend.
Same in New York City where I live. A major reason is that the demand curve is effectively vertical - people here who would like to buy a home to live in are not competing just with other residents but with a global investor class who want to park capital in NYC property (and expect an appreciation rate that far exceeds inflation).
Under what conditions or reality will supply ever outpace demand in big cities like Boston or New York? I don't think it's physically, realistically, or pragmatically possible.
Well it happened to Commercial RE because of COVID, which was seemingly unthinkable. So now we want to convert some to residential.
What other unthinkable future could lead to a change in net migration out of urban areas rather than into urban areas? Happened ~1950->1990s. Flipped 2000-2020s. Could flip back? Who knows!
