Short Supply + High Demand, Not Landlord Greed, Causes Soaring Rents

Описание: I see a lot of people nowadays, especially young people, poor people, and people in left-leaning subcultures, bashing landlords and pointing to "landlord greed" as a cause of soaring rents.

I explain that landlords have much less control over rents than a lot of people realize, and that it is the free market and supply and demand that drive rents. Landlords have only limited flexibility in setting rents: setting rents higher than the market price will result in vacancies, which can cause a landlord to lose a great deal of money very quickly. Similarly, setting rents too low can cause a landlord to lose money as well, as many of their costs like maintenance and taxes tend to increase with inflation.

I explore how the market price is arrived at, giving the examples of three different cities with very different housing markets: Cleveland, Ohio, Philadelphia, PA, and New York City. I also talk about the rental process both from the perspectives of a renter or tenant, and from the perspective of landlords, as I have seen both sides of the market.

So if landlords have only minimal influence on rental prices, what IS causing soaring rents? And how can we keep rents low?

I argue that a bigger factor than landlord greed is the occupying of large properties by small numbers of people, and I go through a bunch of examples, all of which are common in our society: empty nesters (parents who continue to live alone in a large house even after their kids grow up), retirees, including widows and widowers, many of whom are themselves also empty nesters, often now one person in a large house, and the most extreme example, people who own multiple homes and only live in each for a portion of the year. All of these people are having a much larger effect on soaring rents and soaring housing prices more broadly, than individual landlords.

Another factor, perhaps even bigger in the long-run, is restrictive zoning. I give a selection of some of the ways in which strict zoning reduces supply: single-family housing mandates, parking minimums, caps on the number of unrelated people occupying a single house, and bans on single-room occupancy are only a selection of many different factors.

I call on people to stop blaming and demonizing landlords, and to start targeting two of the bigger factors: under-utilized and unoccupied properties, and restrictive zoning.

There is no one magic solution to the housing crisis, but if we are to improve the situation, we need to have a solid understanding of how the housing market works, including the effect of supply and demand on rent and housing prices.