>You don't choose to make umbrellas for the umbrella market, and just keep churning out umbrellas, perpetually disappointed by the fine weather.
You do if people keep buying them, irrespective of the weather.
You've misread my comment. I'm not saying that the landlords create the market; simply that the landlords chose a market that requires less capital outlay, and also with full knowledge that the market is not typically upwardly mobile.
In other words, it's fairly rare that landlords buy mobile parks with the intent of later upgrading their customers to upscale condominiums.
If a landlord is about to chose a market that requires less capital outlay it's because there is an unfilled need in that market. Without the lower cost housing the tenants will only have fewer options, potentially more expensive ones at that.
If all of the needs are filled and somebody else decides to target the market then they have to find a way to disrupt it, in this case that probably means figuring out how to reduce costs and charge less.
Except your fantasy of a free real estate market doesn't exist. FED policies, by their own admission, serve to artificially drive up real estate prices, which punish the poorest, who don't own property and are forced to rent. This is a direct subsidy to property owners with the size of the subsidy equal to the amount of property owned. These FED efforts (MBS purchasing, ZIRP, suspension of MTM, QE1-3) to prop up housing also inflate equity and bond markets, further subsidizing the wealthy (while those in poverty who own no stocks or bonds fall further behind).
Not sure about the Fed, but plenty of UK politicians own buy to let property, so hardly a free market when they have such vested interests in keeping prices high.
We've gotten off track. I'm not arguing whether the market exists or how basic economics in a perfect market work.
If you look back at my original comment it's WRT the assertion that these landlords would love to upgrade their properties and charge higher rents. I was simply saying that's largely untrue. These landlords are aware of the market dynamics/demographic when choosing to invest and have little-to-no desire to "upgrade for higher margins".
They would have that desire if all their tenants were suddenly wealthy enough to pay those rents, was my point. Which speaks to the broader point that these landlords are not working to keep these people in poverty.
All of those tenants suddenly becoming wealthy enough to pay higher rents is a magical hypothetical that undermines the basis of this discussion. Someone else on this thread said it succinctly:
"If this market were wealthier it wouldn't exist"
That is exactly right.
The landlord would be more likely to wait for them to move elsewhere and just await more customers for their current offering as long as the market was there. This, rather than outlay the capital to upgrade the place; else the landlord would have likelier invested in a more upscale offering to begin with.
Likewise, depending on the degree of increased wealth, the tenants may well prefer to move. Slums and trailer parks generally don't have a tendency to just "happen" in otherwise affluent areas. With increased options, renters would likely desire better surroundings, schools, ownership, etc. vs new granite countertops in their double-wides.
Of course for this same reason, landlords don't want to risk upgrading beyond what can be recovered in a reasonable time by rents that the market will bear. No amount of upgrades is going to make more affluent buyers with other options move to a mobile park.
People are suggesting here that the landlord would upgrade because it's economically rational to collect higher rent, while simultaneously ignoring much of the actual economic reality here.
Again, I'm not claiming that the landlords create the market. But they are under no delusion when they invest.
You do if people keep buying them, irrespective of the weather.
You've misread my comment. I'm not saying that the landlords create the market; simply that the landlords chose a market that requires less capital outlay, and also with full knowledge that the market is not typically upwardly mobile.
In other words, it's fairly rare that landlords buy mobile parks with the intent of later upgrading their customers to upscale condominiums.