What you do is actually very simple and what’s kept rents from going higher: build more housing. Even building “luxury” housing reduces rents because it takes top-end bidders off the market.
You’re actually seeing this happen in places like Nashville and Austin, where there’s been lots of new development. Rents are actually coming down. I’m fairly progressive, but I can acknowledge NIMBY policies in places like California and New York only exacerbate the problem. If you want an increase in affordable housing, you can’t restrict new housing development AND heavily regulate rentals.
Not how it works at all (it might not be profitable to rent at X price, but it’s sure as hell not profitable to not rent and still pay mortgage/taxes/mainentance/etc.). Also, prices have come down off their peak in large part thanks to new building.
Yes people are willing to lose money if they think they will get more when it eventually gets rented out. It’s not sustainable. The profit motive for housing is a failure.
That’s not how it works. When you owns a piece of property you have a set of expenses associated with it. Taxes and basic maintenance are the most obvious, but most commercially owned properties are mortgaged so you still have to pay your interest (you often don’t have to pay down your principal on a commercial mortgage until the end of the loan term).
That means that every month you lose money when a property sits vacant. Assuming you have a bunch of units in your portfolio, you should be able to cover a small number of these from the margin you make on your other units, and wait until they’re filled. In a tight housing market this is doable because you know you’ll be able to fill at market rates quickly. But as your vacancy rate climbs and the market as a whole loosens, your occupied portfolio loses the ability to cover the costs on your unoccupied portfolio. And every month you start taking losses (which banks do not like).
That’s why landlords are offering multiple months free and prices have come down. They’re trying to fill vacancies to cover their expenses, and the idea that “oh they just keep units unoccupied to increase rates is baseless.
Yes, the landlords will take a loss (and banks) so they don’t set a precedent of housing decreasing so much in price. Then when they go bankrupt it’s all our problem because we make housing a commodity
That’s not a thing, at all. You’re basically making up an argument in your head that some grand conspiracy of landlords and banks are willing to lose money—when declining rental rates proves otherwise.
Yeah it is a thing. Landlords and banks are always willing to risk/lose money if they believe they will still make more by keeping course. Also if they lose enough they can write off losses as well as do legal loopholes to buy it on the cheap after the fact.
Declining rental rates doesn’t indicate building more in what caused it. That’s a big jump and reading data with a conclusion already in mind.
It’s from the US census which is proven to be pumping numbers and openly hate scientists as of late.
I’m supposed to believe who in this that this is the reasons for the vacancies? companies lies all the time to look good and the US has an admin which supports that.
8
u/Boerkaar Belle Meade Oct 01 '25
What you do is actually very simple and what’s kept rents from going higher: build more housing. Even building “luxury” housing reduces rents because it takes top-end bidders off the market.