[tptacek]

I'm sure you're writing this in good faith, but it really seems like you're trying to slip out from under the question I asked at the top of this thread. "Suppliers can make money by withholding supply in an inelastic market" is an answer to some other question; my question is: stipulating that they can't rent their properties out, and that supply is consistently increasing, how do they make money? All your specific answers have attempted to define away one or both of the premises of that question.

[grafmax]

Yeah it does seem like we are talking around each other but I will try again to answer your question.

It depends on the circumstances of the market. Imagine an extreme hypothetical example, where one investor owns 90 out of 100 houses. And one new house is built every ten years. That investor has pricing power. They can essentially charge whatever they want even if it’s means some houses they own are empty (withholding supply). So: it depends on how fast new houses enter the market versus how much pricing power the investor possesses.

(In fact YIMBY doesn’t create an endless new supply. The idea is that it deregulates, facilitating a new supply where there wasn’t one before. That doesn’t constitute an endless supply, just a new one-time shift allowing a finite boost of additional supply.)

Another example: consider a speculative bubble. In a speculative bubble an investor can purchase a house, it can stay empty, there can be new supply coming into the market, but the forces of froth can outpace the force of additional supply, for quite some time. If they sell before the bubble pops, they profit.

Both these examples are of investors withholding supply, new supply coming into the market, and still profiting. Whether prices fall comes down to whether the downward force of new supply outstrips other forces that boost prices.

[tptacek]

So what you're saying is that the scenarios you're thinking of where investors hold houses, don't rent them, and still make money all require investors to have monopoly control of the housing market that is maintained regardless of the amount of supply added, and that rather than exploiting inelasticity they exploit irrational speculative bubbles.

OK.

This describes zero investors anywhere in the country. There is no significant market in the US where investors owns even a significant percentage of all houses (the total in California is 19%, and that statistic is dominated by mom-and-pop house speculators that can't buy even two more houses, let alone keep up with continuous added supply).

I'm fine with the idea that we've played this out now. Maybe someone else has a better idea of how investors can beat zoning reform, but for now I'm going to go back to assuming that investors are immaterial to housing scarcity.

[grafmax]

My point with these examples is not that they represent the current investor market, but to provide straightforward examples of how factors other than supply can benefit an investors (since it seemed that this point was hard for us to get on the same page about). Instead my actual argument is that investors don’t need monopolies, just pricing power, which is what an inelastic market gives them.

The 19% stat & the mom-and-pop claim you are referring to is actually misleading for our discussion.

> This study included properties for short-term or long-term rentals, second homes, and vacation retreats but did not follow condos or build-to-rent single-family-home projects.

So it only refers to a subset of the housing market. For a better idea of the pricing power investors have we need to include other kinds of rentals. Also from the article:

> Census Bureau stats show 45% of households live in a place they don’t own, the third-highest share of tenants nationally.

The vast majority of that 45% is multifamily housing, which is typically owned by institutions.

This shows a broader picture of the housing market in California. There is huge institutional ownership of housing. It’s far from implausible that these investors lack pricing power.

[tptacek]

I get that you want to make some other point, but my question was specific. I think we've hashed this out as far as we need to. Thanks!