Searching for apartments in the LA area – there are 558 listings on zillow in westside LA under 2k$. Many are within blocks of each other, lots are units in the same building. With so much inventory, shouldn’t market forces cause some landlord to lower the rent? Does the economic theory of supply and demand not apply for the housing market?
In: Economics
There are about 4 million people in the LA area. If even 0.0001% of the population wants to move to that area that’s all those listings gone. And that’s not accounting for the many more outside LA that want to move there.
Some ideas that come to mind.
If it were 558 individuals, it is a competition. If it was 1 corporation showing 558 lisitings it is not a competition.
Corporate landlords can survive even if a small fraction of competition lowers prices. Soon those will be taken and then they can raise prices as result of scarcity.
TLDR; Greed
Inventory numbers are relative. 558 seems like a lot, but if there are normally, for example, 4,000 its very low.
Try looking at the numbers over time and you’ll get a better idea if there is an inventory shortage or surplus.
Supply and demand absolutely applies to the housing market. The primary driver of housing prices right now is relative lack of supply.
558 listings, but thousands upon thousands of people all competing for those 558 listings. Someone will eventually be willing to pay whatever price it’s at because every other rent in the area is expensive, so why would they lower it? its quite unfortunate.
If no one rents it out over months and the owner is not willing to eat the cost of vacant lots, then yes it will go down. Just because there are a lot of listing doesn’t mean they’re not being snapped up
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