That number has climbed faster than inflation for some time and is the largest driver of increased multifamily development costs.
Want cheaper housing? Make it easier to build housing.
"""One night, on my way home from work, I pushed the wrong elevator button and got out on the floor below mine without realizing it. My key wouldn’t fit the lock to what I had assumed was my door, so I turned the knob and stepped, to my astonishment, into a completely empty, totally untouched one-bedroom. I turned around and beelined to the elevator, worried that I’d get busted for trespassing, when I noticed strips of masking tape covering the door frames on all of the other (presumably empty) apartments on the floor.
This was how I became aware of “warehousing,” the practice by which landlords keep unrented apartments off the market to create artificial scarcity. Building owners have always done this, especially in new constructions with lots of virgin inventory, because why give renters the upper hand if they don’t have to?
But they really started doing it during the pandemic. On a 2022 episode of the real-estate-industry podcast Talking Manhattan, Gary Malin, COO of the Corcoran Group, made a surprising claim: “At one point during the downturn, the vacancy rate in the city was close to 25 percent,” he said. “You had owners who were sitting on hundreds if not thousands of empty apartments.”"""
If there are extremely wealthy entities that can afford to soak up enough supply to meaningfully impact market prices, making it easier to build new housing is likely part of the equation, but it may not be the silver bullet. I don't know how many units are held unoccupied, but as someone from Detroit, I'd advise against letting supply get too far ahead of demand (Context: a major housing surplus developed in Detroit as the population dropped from ~2M in 1960 to ~0.6M today, and this surplus destroyed the value of homeowner's equity and lead to abandonment, blight, and massive arson rates).
Now that demand has returned, and vacancy rates have plunged to their normal sub-5% level, rents in the city have hurtled back to their 2020 prices or even higher. [2]
This is exactly what economics would predict of a market system with constrained supply. Demand is almost never as elastic as we recently experienced, and this only serves as further evidence of nonexistent undersupply being the primary cause of high prices. Not "warehousing" or hoarding of vacant housing that already exists somewhere.
[1] https://www.zumper.com/rent-research/new-york-ny
[2] https://www.nyc.gov/site/hpd/news/023-22/hpd-releases-initia...
"""Look, it’s possible that my suspicions are baseless and all of these buildings are full. Maybe their tenants really did come flooding back to New York last year. Maybe some are former couples who broke up during the pandemic and needed twice as many apartments and others are remote workers from Milwaukee or Akron evading city taxes by claiming residency in their old states. Maybe they came without any furniture so they didn’t have to hire movers. Maybe they’re homeschooling their kids, taking Ubers instead of the subway, avoiding restaurants, and abstaining from all other activities that would expose them to public data collectors. Weirder things have happened here. But if you meet any of these people, give them a change-of-address form for me. They’re probably missing some good mail."""
One of the central points of the main article (exemplified by the opening sentences quoted below) is that demand hasn't returned.
"""I was impressed by most of this article in Curbed, which did some actual reporting on the discrepancy between landlords saying rents in New York City were surging "because people came flooding back" and the fact that, according to all data, people did not actually come flooding back. The reporting goes to impressive shoe-leather lengths -- the author even contacts the New York City Water Board for clarification on how much waste they processed in 2021!"""
What we have is a complete lack of top-down management to allocate it efficiently.
If we combined Soviet economics and modern Big Data, we could solve this easily-- mandate that economic engines are sited where housing gluts exist, and assign out housing to optimize things like average commute length.
I think I spotted the challenge.