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Comment by ryanwaggoner | Hacker News Reader

The difference is, I’ve been on both sides. I’ve never owned my own residence, always rented. If you had bills to pay for rental properties that you bought, you might understand my side a little more. But maybe not. It kind of sounds like you’re just upset about rent being too high (me too!) and think individual market sellers should charge well below market rates to “do something”.

Sometimes I do that, actually. I have a tenant who has lived in my building since I bought it and I’ve never raised his rent. It’s substantially below market rate but he’s older and a model tenant so I just leave him be.

But your approach doesn’t make sense at a broad level. The cost of tech labor is too high for many startups. Do you negotiate a lower salary to try and do your part to lower the market rate?

But again, I’m irredeemable so not sure why I’m bothering to respond :)

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>Do you negotiate a lower salary?

Arguably, no. With a salary you are negotiating the value of your productivity against the profit margin of the business.

The stake of the business owner is closer to that of the landlord, who is involved in arbitrage in a system where 'liquidity' (in this case finding another job or home) is difficult, expensive and rare. Prime conditions for rent-seeking behaviour (which is bad).

Now, you as a person may be redeemable ;) but in general, the actions of landlords as a whole use the actual roof over people's heads as bargaining chips to further their un-productive wealth. Which is not to say that landlords cannot be productive in their provision of housing. Just that in general in places like the US, or AU (where I am), this is not the case.

And the thing is, I would surely do the same thing if I had the opportunity to buy up a few rental properties and squeeze the tenants for a few bucks. I would like to think I would at least have the decency to feel a little bad about it.

Which is not to say that landlords cannot be productive in their provision of housing. Just that in general in places like the US, or AU (where I am), this is not the case.

Can you expand upon this? What would that look like, and what are the indications that US and AU landlords aren’t productive?

Well in the UK for instance they have housing coops which exist solely for the purpose of their tenants. Also tenants have greater protections like right of abode, which encourage a longer term view for both tenants and landlords. Basically for a landlord to be productive and not rent-seeking, there has to be some level of symbiosis to the arrangement.

I think this is easier to understand with commercial rents. In my local street a half-dozen or so shops have been closed in the past two months, and sit empty due to excessive rent increases. The landlords have forced an un-productive arrangement due to their rent-seeking.

You can apply this same idea to housing, but instead of a business closing, a tenant is strained to the point they make un-productive life decisions, or to the point they cannot pay rent (or cannot see the point of paying rent).

But in this case there is a much greater supply of new tenants than new businesses to fill the void, so you never see the issue illustrated as graphically.

Housing co-ops exist in the US too. (Famously, in New York, but there's one up the street from me in Seattle too.)

I believe the parent means "productive" in the sense that the higher rents charged are justified by capital improvements and/or the rising costs of being a landlord. That's not the case for the markets cited; landlords are charging more simply because they can.

This is "unproductive" in the sense that it causes negative economic activity. A person becoming homeless usually ends up not contributing to the economy. A person who has to move to a smaller home in a more remote area has less money to spend, and likely has a longer commute, which wastes money.

> Sometimes I do that, actually. I have a tenant who has lived in my building since I bought it and I’ve never raised his rent. It’s substantially below market rate but he’s older and a model tenant so I just leave him be.

That's super great, and I absolutely agree with and love that sort of behavior on the part of landlords.

> Do you negotiate a lower salary to try and do your part to lower the market rate?

This doesn't make much sense from a power imbalance perspective. Both a landlord and an employer have an outsized portion of the power here: the landlord gets to decide whether or not a tenant has a home or is homeless, and the employer gets to decide whether or not an employee has a job. The renter & employee in these situations are the ones who stand to lose the most, and don't have much power or recourse to fix the situation.

It doesn't make sense to me to ask a potential employee to negotiate a lower salary; they're hurting themselves pretty heavily by doing so (and, hilariously, making it so they can't afford their rent and can't pay you, the landlord, what you feel you're due), and asking for a modestly higher salary does not hurt the company that much. On the other hand, a landlord deciding not to raise rent doesn't hurt the landlord much at all[0], and it means a ton to the tenant.

> It kind of sounds like you’re just upset about rent being too high (me too!) and think individual market sellers should charge well below market rates to “do something”.

At the end of the day I will always vote for tenants not being homeless over landlords being able to increase their (already positive) profit margins. Property ownership is not some no-strings-attached right that lets you do whatever you want; it's ownership of a scarce public resource, and it's in the public interest to keep people in homes and not out on the streets, and to have a healthy, functioning economy that everyone has the spare cash to participate in.

[0] This is assuming a market where the costs of being a landlord aren't going up much (at least nowhere near at the same rate as rents are/had been), which is the case we're talking about here. The potential rent increase is driven solely by demand, not by any increase in intrinsic value that the landlord or property is providing.

On the contrary, I'm not a landlord precisely because I understand that game, and I prefer a nice game of chess.

People who don't empathize with you aren't always misinformed. Sometimes there are fundamental moral incongruities.

There are apt analogies of "the system is fucked and I'm just working in it" throughout US history.

Ah, but I’d argue that you are playing that game, because it’s just incredibly basic supply and demand. So whether you have a job or provide jobs or own or rent or buy things at the store or sell things online, you’re playing this game too. And you only get to play your side because someone else plays the other side. Seems pretty morally incongruent to call them irredeemable for voluntarily selling or buying from you, doesn’t it?

Edit: for example, if you’ve rented or bought, you’ve contributed to the demand that makes the market price go up. If you were a landlord, at least you’d be helping provide supply that keeps the price in check :)

Not all markets are as susceptible to rent seeking as the... rental... market.

Distinguishing between rental markets and less pathological applications of market mechanisms is not exactly novel economic doctrine. And in fact, you'll have a hard time finding a tradition of economics without its own giant calling out landlords.

> If you were a landlord, at least you’d be helping provide supply that keeps the price in check

Landlords don't provide supply. Homebuilders do. It's pretty rare that those are one in the same in a market like SF.

If there were no landlords to buy and then lease those properties, the rental market would not exist. Just like Ford builds cars, but they don’t create the car rental supply. Enterprise, Hertz, etc do. The cars are the capital asset being rented, not the supply side of the rental market.

I don't think you understand what "supply" means.

I'm not saying landlords don't fulfill a valuable part in the housing puzzle, but saying landlords "supply" housing is absurd.

I didn't say that. I said they supply rental housing, which is a distinction. And that's 100% true. Landlords 100% supply rental housing. To claim otherwise is absurd.

So, where do you live that isn't contributing to gentrification or increasing housing costs? In a tent under a freeway?

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