The Soviet Union had chronic housing shortages. Multiple families would live squeezed together in one small apartment. The waiting list to get your own took years and years.
It's kind of funny how Chinese communists tried to build enough concrete prefabs not only for people to be housed but also for people who want to invest and it backfired spectacularly.
The investor class is simply insatiable and you can't just satisfy the demand because it's always growing beyond all reason.
You need to curb investors interest in real estate.
Ok, I have an idea, lets stop printing new money directly into the housing market through the federal reserve. Without it, there is no guarentee that a house will appreciate, in fact most homes would be considered depreciating assets. The cost of homes would plung 80, maybe 90%, and housing would be radically more affordable. Id be totally hosed, but I would find that a reasonable compromise.
> Ok, I have an idea, lets stop printing new money directly into the housing market through the federal reserve.
So basically ban buying residential real estate on credit. That's a start.
It would have interesting sideffects. One of them would showing clearly to the masses how unaffordable houses actually already are.
Unfortunately rents would go up in the short term from increased demand from people who'd otherwise get a loan. So the rich people would keep buying them raising the prices till the new equilibrium is reached.
Eventually rents would settle at how much people who rent can pay without starving and house prices would settle at whatever's the price of whatever asset that yields similar returns.
I don't think it would be at 10% of today's prices
Specialization, how much time out of my day do I have to worry about the price, if I am dealing with the city trying to get the water fixed, or repaving the driveway, or handling customer complaints? It can be more efficient to pay a modest sum to arrive at the right result, or, more profitable to actively watch the market and adjust pricing, but that costs time/money, so itd better be worth it.
I find the pernicious belief that prices could be fixed in the market itself more dangerous than the dumbest price fixing scheme of all time. Let it play out, so we can all remember that price fixing doesnt work, and we might actually see some good come from this story.
Price fixing absolutely works for the parties fixing the price, assuming they have a dominant enough position, at least for some significant time. Look at OPEC - do you seriously believe they would be richer if they competed instead of agreeing on prices/supply?
Monopolies can extract massive wealth from a market, they perfectly optimize profit as long as they are not exceedingly incompetent. Price fixing is just a less organized monopoly.
The problem is that they do this at the cost of all other market participants. But markets can't correct for powerful enough monopolies or cartels. Only outside intervention (riots, government intervention, disruption of the whole sector) can dissolve a monopoly. There is no example in history of a monopoly losing its position in a market without this, since they can always just buy out incumbent competitors.
Why would you compare landlords to OPEC? One organization has the backing of several militaries, including ours, defending their market position by threat of war. If you try to sidestep them you could end up like iraq.
Price fixing in the market doesnt work, because rival landlords cant call the government to airstrike their competitors when they get undercut.
As long as demand exists for the product, cartel members make more money than regular market actors. Defectors can make even more money, but that behavior is going to either be irrelevant (if the defector is too small to Mather), or it will be punished - not by armies, but by other coercive measures. Bribing to return, denying access to other services, bad mouthing, even vandalism or illegal violence. The advantage of the cartel is too large to be allowed to dissolve.
And again, we don't have to guess. Cartels need to be broken up from the outside, they just don't dissolve naturally. This is basic economics, and a well understood weakness of markets. The idea that monopolies and cartels are too weak to resist in a market is not born out by either economic theory nor history.
> As long as demand exists for the product, cartel members make more money than regular market actors. Defectors can make even more money
These two are completely contradictory statements. "Regular market actors" are the same as "defectors." Fracking companies, for example would not be able to exist without OPEC driving up the price of oil because it would be too expensive.
Buyers are also market actors. Also, suppliers who haven't been part of the cartel don't have access to their pricing strategy, and so can't profit as much. Defectors know exactly for some time, and can use that information to beat the market and the cartel in the short term.
Except, setting higher prices doesnt discouage competition, it encourages it. It makes it far more profitable to undercut anyone foolish enough to buy into this strategy.
"just" is doing a lot of work there. If the cartel model is profitable, then those taking part have the incentive and resources to buy up property in the areas that they operate in themselves.
At least where I live, there are landlords who operate reasonably (reasonable rents, with safe and maintained properties, that respond quickly to issues), but there's so much demand relative to supply that it doesn't really affect the ones who are just trying to extract maximum profit.
And yet, property is for sale everywhere, go check zillow. You might not like the price, I imagine anybody looking to buy property to rent out probably has similar feelings; ultimately though, if they are using this "price fixing" algorithm, then it should be easy enough to out compete them by just lowering prices.
That doesn't make any sense. There is a dramatic under-supply of housing, there will be no "out-competing". They're going to rent all of their apartments, the price-fixers and the non-price-fixers. They'd just be leaving money on the table, not "out-competing". They're not going to magically acquire a bunch of new non-existent housing to grow their market share. I implore you to move beyond econ 101 thinking.
Please ignore this fool, they are clearly a dogmatic libertarian type, not someone who thinks in complexity. He even cited Econ 101 as a source lol.
As long as there are financial speculators, price bubbles will happen. A massive recession can clear out speculators and burst price bubbles, whom will have in the meantime, fleeced the public for billions, as will as made many be homeless.
In commodities markets, the CFTC has different rules about what speculators can do vs real market participants (real producers and consumers). There are very few rules/laws that disincentivize real estate speculation and many forces that incentivize it. These algorithms are additional tools that help speculators maximize profit.
Housing has very limited supply and very inelastic demand. Prices will not come down unless there is another 2008 style recession. Speculators will continue to pile in and fleece renters maximally.
You might say well that’s just business, but the algorithmic price collusion is really not my biggest issue. I think there’s a different moral question we should ask. What is the number of single family properties a single company should own in a given market. Should they be allowed to own 100%? My silly libertarian friend would say why not? The market will correct. A stronger thinker would probably see that a legal limit probably makes sense.
Start with an insult, that will signal to others that you are intellectually superior without having to ever demonstrate an iota of actual economic reasoning.
If you want to know where bubbles came from, you should have just asked, its called monetary policy and is set by the federal reserve; sure, there was the great tulip mania of - no one gives a fuck it was a short lived commodity bubble that would look miniscule accounting for any amount of inflation you are willing to admit; today, the "bubble" is called debt, the purchasing power of your dollar must decrease, because the very existence of dollars necessarily implies there is a corresponding debt with interest, it turns out to that a pretty significant amount of the money being printed is being injected intravenously into the housing sector unlike the median wage, and you guys are always mystified that housing costs so much money, incentives matter.
If you want to regard this in a moral context, name your world religion and I will agree this second to obey their economic practices. There are many immoral philosphical ideas regarding economics that many regard as moral; religion is no exception, but I find that conceptually grounded in principles that have worked for thousands of years to keep people ethically bound despite ethnic differences and geographical seperation. There is far less to fear from islamic lending practices than whatever people "feel is right" in the heat of the moment.
Which is why I would guess the intermediary controls the letting prices, if the data were available to the landlord they would be able to undercut and thus push the market down, this is the problem, abstracting the pricing to a third party that has complete information makes a cartel by default.
You think invading countries is a plausible way to stop people from cyberattacking the united states? How many people would you say youll have to kill?
You might think about geopolitics a bit too much if you reach for article 5 because of cyber crime, maybe a bit too much wargaming in your head, things are kind of tense these days and I dont think invading a country would be an appropriate or mature response.
