[bsder]

> Vacancies kill returns.

If you are an individual landlord, yes, as you are cash-flow sensitive.

However, a lot of these "landlords" are private equity companies and the complexes have financing agreements.

The issue is that "lower rent" can trigger a "recapitalization" clause on the financing agreement. When that happens, the PE company will have to cough up cash. "Missing" rent, however, is generally allowed to be tacked onto the end of the financing agreement. That creates a perverse incentive if the system is highly leveraged--nobody wants to cough up cash and everybody is willing to kick the can down the road. And the PE companies have enough cash flow from other properties that they can ride this out (until, obviously, they can't and everybody fails simultaneously--but then they'll whine to the government for a bailout ... that's a different rant).

The "solution" is occupancy taxes. An unoccupied residence or commercial spot should have to pay a significant amount of cash if it remains unoccupied for longer than 6 months to a year.

[lazide]

That is my understanding as well - but that is a completely different cause than what is being claimed.

Notably, while individual landlords are much more cash flow sensitive (as in per-unit issues), even big companies will have issues if these problems happen 'at scale'. And those problems will be monstrously large when they happen.

Occupancy taxes will just make the bubble pop that no ones wants to pop, since the issue is dropping rents will trigger defaults due to financing issues because financing is still more expensive than it was, and that isn't going to change anytime soon. And said taxes would trigger high cashflow costs, which would just force companies into bankruptcy ASAP.

Same with the bond issues that took out a bunch of banks last year, and still are causing structural bad debt issues everyone is trying to ignore right now.

[bsder]

> And said taxes would trigger high cashflow costs, which would just force companies into bankruptcy ASAP.

And that's fine.

Those who didn't stick their necks out should be able to buy the distressed assets at discount and force the financing agreements to unwind. Real estate doesn't go away. People still want houses. Businesses making products don't go away. Places to work--maybe not so much.

Unless you allow bad businesses to go bankrupt, you'll wind up like China.

Vacancy taxes force that decision much sooner--before everything goes belly up at scale. The landlord has to decide to rent lower or sell the property.

[lazide]

These generally aren't SFHs - they are large apartment complexes owned by REITs and similar entities.

Entities which are held by retirement funds and 'mom and pop investors'.

Which no normal individual is going to be able to buy.

And when this happens, will result in massive layoffs of normal individuals.

And this is caused by feds raising rates - directly.

Remember '08? Remember who got screwed the most? It wasn't typically the rich.