In an abstract economy 101 sense that is true.
In a more concrete real world sense, the price is set by the landlord. Neither the supply nor the demand curve force the landlord to increase rent.
The price is set by the landlord based on what people are willing to pay. What people are willing to pay is based on what is available in the market.
This is all just supply and demand. If a landlord has an empty home for rent, and there are no other homes for rent nearby, they can charge whatever anybody is willing to pay. If there are 3 empty homes right nearby, they will need to price it in line with the others.
So, the “we” that could lower prices by building more would have to be the state or some public entity that is less profit focused, not private landlords.
Or the local/state governments need to create zones for lower/middle income homes or apartments. Or in some way they need to encourage developers to build these homes.
Capitalism alone gives us the current situation. Having a government that can counterbalance this will make it work.
The price is set by the landlord based on what people are willing to pay.
What people are willing to pay sets the upper limit of what he can charge. He is not forced to set the price at this upper limit. No amount of demand forces him to increase the price beyond cost + enough profit to live off.
Or the local/state governments need to create zones for lower/middle income homes or apartments. Or in some way they need to encourage developers to build these homes.
I’m not sure how zoning in the US works. How exactly does this reduce construction costs or increase return on investment without high rents? What incentive does this give profit oriented investors to invest in affordable housing instead of other investment options?
He is not forced to set the price at this upper limit.
It’s no different than any other product you could buy in a store. Supply and demand ultimately determines the price. Charging what it is worth is no more greedy than any other aspect of capitalism. And as I said originally, maybe there are bigger issues than just “greedy landlords” that are causing the prices to go up so much, in this case unchecked capitalism.
Zoning is just one example. Part of the problem is that someone that just bought a million dollar home doesn’t want multi family homes built across the street. That will decrease the value of their house. Zoning plays into this. There’s plenty more state/local governments can do, but are not doing.
It’s interesting that when talking about the people building homes, you totally get the profit driven mentality. Why should we expect investors to build homes that would give them less profit? Exactly, and why would you expect landlords to charge less than what the home is worth? Why would Nike charge $50 for those shoes when they can charge $200 and still sell out immediately?
There’s lots to consider and saying “greedy landlords” is the problem just ignores the entire reality.
To be clear, I am making one statement in this discussion and that is that the price is being set higher than it needs to be.
By stating that int he discussion about Landlord greed, it can be inferred that I equate this with greed.
It’s no different than any other product you could buy in a store.
Saying that other businesses operate similarly does not refute my point. As you yourself pointed out, at best your argument is that all “capitalism is greed”.
It’s interesting that when talking about the people building homes, you totally get the profit driven mentality.
I never pretended not to “get” it. I’m just claiming that it’s greedy.
The way I see it there are two ways to counter my argument:
Either show that landlords have no choice and must demand the prices they do.
Or argue that wanting more than you need (usually to the detriment of others) is not greed. In that case I would be very interested where greed actually starts.
Ok, and my entire point, that started this discussion, is that greedy landlords might not be the problem. Maybe there are bigger issues at play causing these prices to be so high.
Fact is, the supply of homes is just as much to blame for high rent prices as greedy landlords. If the landlords charged less than what the home is worth, you would never be able to find a place to live near where you want/need as everything would be sold out. Maybe you’ve fixed one problem but didn’t fix the actual problem.
Fact is, the supply of homes is just as much to blame for high rent prices as greedy landlords.
Again, supply and demand only determine how much a landlord can charge, they do not force them to raise prices.
If anything, supply not matching demand enables more greedy behavior.
If the landlords charged less than what the home is worth, you would never be able to find a place to live near where you want/need as everything would be sold out.
Only if you assume that only local landlords rent out cheaply while all others continue to raise rents. Besides that there are always factors why certain locations are more popular than others.
You’re generally right that insufficient housing is a supply problem but housing is not like other goods that can just be substituted.
If the price of steak goes up, I can just stop eating steak but if the price of housing rises, just becoming homeless is not a reasonable option.
And sure, if the rent in the place you want to move to is too high then maybe don’t move there.
But if the rent in the place you already live in rises then what? Just move out, away from your home, away from friends and family, away from your job?
So yes, more housing supply might be the solution* but it still is no argument that greed is not the problem.
Why did the landlords charge $300 20 years ago when they could have charged $500? Were they just less greedy? Or was the supply of homes appropriate for the number of people?
People have always been greedy. They’re not more greedy today than they were 20 years ago. Is it a problem? Yes. It will always be a problem. But there are other issues at play that need to be recognized or nothing will ever be solved.
Why did the landlords charge $300 20 years ago when they could have charged $500? Or was the supply of homes appropriate for the number of people?
Yes supply and demand limit how much they can charge. I’ve already conceded as much 8 hours ago.
People have always been greedy. […] Is it a problem? Yes.
So that feels like an appropriate answer to your question from yesterday
Is it greedy landlords? Or is there a bigger issue at play, and landlords are the scapegoat?
I think you summarized it nicely, including your comment on the nature of capitalism.
It is not a coincidence, that basically all early criticism of capitalism is centered around landlords. Even Adam Smith criticized the “rentier”.
Look, I agree with you. We need more housing supply. It reduces landlords ability to raise rents.
But it does not change the underlying issue that landlords are greedy and will charge as much as they can get away with.
The price is set by the landlord based on what people are willing to pay. What people are willing to pay is based on what is available in the market.
This is all just supply and demand. If a landlord has an empty home for rent, and there are no other homes for rent nearby, they can charge whatever anybody is willing to pay. If there are 3 empty homes right nearby, they will need to price it in line with the others.
Or the local/state governments need to create zones for lower/middle income homes or apartments. Or in some way they need to encourage developers to build these homes.
Capitalism alone gives us the current situation. Having a government that can counterbalance this will make it work.
What people are willing to pay sets the upper limit of what he can charge. He is not forced to set the price at this upper limit. No amount of demand forces him to increase the price beyond cost + enough profit to live off.
I’m not sure how zoning in the US works. How exactly does this reduce construction costs or increase return on investment without high rents? What incentive does this give profit oriented investors to invest in affordable housing instead of other investment options?
It’s no different than any other product you could buy in a store. Supply and demand ultimately determines the price. Charging what it is worth is no more greedy than any other aspect of capitalism. And as I said originally, maybe there are bigger issues than just “greedy landlords” that are causing the prices to go up so much, in this case unchecked capitalism.
Zoning is just one example. Part of the problem is that someone that just bought a million dollar home doesn’t want multi family homes built across the street. That will decrease the value of their house. Zoning plays into this. There’s plenty more state/local governments can do, but are not doing.
It’s interesting that when talking about the people building homes, you totally get the profit driven mentality. Why should we expect investors to build homes that would give them less profit? Exactly, and why would you expect landlords to charge less than what the home is worth? Why would Nike charge $50 for those shoes when they can charge $200 and still sell out immediately?
There’s lots to consider and saying “greedy landlords” is the problem just ignores the entire reality.
To be clear, I am making one statement in this discussion and that is that the price is being set higher than it needs to be.
By stating that int he discussion about Landlord greed, it can be inferred that I equate this with greed.
Saying that other businesses operate similarly does not refute my point. As you yourself pointed out, at best your argument is that all “capitalism is greed”.
I never pretended not to “get” it. I’m just claiming that it’s greedy.
The way I see it there are two ways to counter my argument:
Either show that landlords have no choice and must demand the prices they do.
Or argue that wanting more than you need (usually to the detriment of others) is not greed. In that case I would be very interested where greed actually starts.
Ok, and my entire point, that started this discussion, is that greedy landlords might not be the problem. Maybe there are bigger issues at play causing these prices to be so high.
Fact is, the supply of homes is just as much to blame for high rent prices as greedy landlords. If the landlords charged less than what the home is worth, you would never be able to find a place to live near where you want/need as everything would be sold out. Maybe you’ve fixed one problem but didn’t fix the actual problem.
Again, supply and demand only determine how much a landlord can charge, they do not force them to raise prices.
If anything, supply not matching demand enables more greedy behavior.
Only if you assume that only local landlords rent out cheaply while all others continue to raise rents. Besides that there are always factors why certain locations are more popular than others.
You’re generally right that insufficient housing is a supply problem but housing is not like other goods that can just be substituted.
If the price of steak goes up, I can just stop eating steak but if the price of housing rises, just becoming homeless is not a reasonable option.
And sure, if the rent in the place you want to move to is too high then maybe don’t move there.
But if the rent in the place you already live in rises then what? Just move out, away from your home, away from friends and family, away from your job?
So yes, more housing supply might be the solution* but it still is no argument that greed is not the problem.
*with all the previous caveats
Why did the landlords charge $300 20 years ago when they could have charged $500? Were they just less greedy? Or was the supply of homes appropriate for the number of people?
People have always been greedy. They’re not more greedy today than they were 20 years ago. Is it a problem? Yes. It will always be a problem. But there are other issues at play that need to be recognized or nothing will ever be solved.
Yes supply and demand limit how much they can charge. I’ve already conceded as much 8 hours ago.
So that feels like an appropriate answer to your question from yesterday
I think you summarized it nicely, including your comment on the nature of capitalism. It is not a coincidence, that basically all early criticism of capitalism is centered around landlords. Even Adam Smith criticized the “rentier”.
Look, I agree with you. We need more housing supply. It reduces landlords ability to raise rents.
But it does not change the underlying issue that landlords are greedy and will charge as much as they can get away with.