In the economy, every middleman eats a part of the gains. If you have private landlords buying up houses constructed by the city, that then rent them out to poor people, you make up completely unnecessary middlemen. cutting them out saves a lot of the cost, i predict. especially in cities, where people typically rent. maybe it wouldn’t work in rural areas.
I assume you’re responding specifically to my modified proposal.
Middle men do take a cut but they also provide a service. I own my home and it’s a huge PITA dealing with maintenance. It’s not just the cost, I need to do the research on regulations, incentives, materials, contractors. I also take on a ton of liquidity risk; when I rented I could leave on 1 months notice, there’s no way I could sell my house that fast unless I wanted to sell at a huge discount. Look at any homeowner forum and you’ll see that everyone is surprised at the extra work and costs that they never had to think about as renters.
Of course, there’s the question of if that cut is worth the benefit.
I proffer 2 claims:
If the government is willing to supply an indefinite stream of houses, at cost, consumers (residents) will never be forced to pay for a middle man unless they believe they’re getting their money worth. Ie it will be nearly impossible for middle men to “gouge” renters because it will be too easy for them to leave. (for some extra nerd flavor you can check out Akerlof’s “Market for Lemons”, it lays out the game theory for why consumers won’t overpay if they think they’re getting ripped off)
Given that they know they won’t be able to over charge, rational landlords will just avoid bidding on properties that they can’t profit from. Basic economic theory also says that the irrational ones will lose money and eventually go out of business and the government construction policy guarantees that consumers can wait out that market inefficiency period.
i think you’re giving too much credit to the efficiency of the free market.
essentially, once people rent their homes from private landlords, they’ll be comfortable and have a tendency to stay, even if they could get cheaper rates elsewhere. landlords use that fact to systematically overcharge.
In the economy, every middleman eats a part of the gains. If you have private landlords buying up houses constructed by the city, that then rent them out to poor people, you make up completely unnecessary middlemen. cutting them out saves a lot of the cost, i predict. especially in cities, where people typically rent. maybe it wouldn’t work in rural areas.
I assume you’re responding specifically to my modified proposal.
Middle men do take a cut but they also provide a service. I own my home and it’s a huge PITA dealing with maintenance. It’s not just the cost, I need to do the research on regulations, incentives, materials, contractors. I also take on a ton of liquidity risk; when I rented I could leave on 1 months notice, there’s no way I could sell my house that fast unless I wanted to sell at a huge discount. Look at any homeowner forum and you’ll see that everyone is surprised at the extra work and costs that they never had to think about as renters.
Of course, there’s the question of if that cut is worth the benefit.
I proffer 2 claims:
i think you’re giving too much credit to the efficiency of the free market.
essentially, once people rent their homes from private landlords, they’ll be comfortable and have a tendency to stay, even if they could get cheaper rates elsewhere. landlords use that fact to systematically overcharge.