How come rents for high-end real estate in Paris are vastly higher than in London? Sales prices on the other hand are vastly lower.
Are the prices so high because people in Paris are willing to pay much higher rents more people in London? Or are they so high because renting in Paris is super risky for the landlord due to aggressive tenant protections?
So to be clear, are rents in Paris vastly higher in general, or just for "high-end real estate"? If just the latter, then great, sounds like the policies are working.
Oh, rents in Paris are sky high regardless. Renting is also super difficult because landlords are terrified of tenants.
It’s just easier to compare the high-end of the market because offering is similar and concentrated in central areas, whereas lower-end real estate is scattered across lots of very different areas.
It's whatever maximum renters are willing to pay, combined with whatever minimum property owners are willing to accept and the availability of alternatives.
Applying a cost increase across the board, in a way where everyone knows it was across the board, will reset the market floor. If California (just as an example) can out and said "There will be a flat $200/month tax on all home rentals" you can be damn sure that every available property would align to +$200 over the course of a year or two.
The maximum that renters are willing to pay is a function of the availability of cheaper alternatives, and a tax on rental units increases rents across the board and removes cheaper alternatives, increasing the amount that people are willing to pay. This is literal Econ 101, supply and demand curve stuff.
> That would be true if rent was a percentage on top of cost. But it is not, it is whatever maximum renters are willing to pay.
Not exactly, rent price is either the max renters are willing to pay, or, a small percentage on top of ownership costs, whichever is higher.
In the case of the latter, if nobody shows up willing to pay the higher price then the rental unit is removed from the market. It won't make the price go down because the owner won't rent it out at a loss.
The main way if you look at it is investors willing to run on empty - buying houses and then failing to rent them at the amounts they're trying to get, where they sit empty for some time before the investor goes belly up.
So in this case the investor is taking a few hundred thousand dollar loss so the building can then be sold for a loss and rented at a price that makes market rent make sense?
I feel restrictive zoning is a much bigger issue than empty unsustainable houses.
Honestly it would make owning a single family home more expensive and a rental cheaper. Since the rental is closer to maximizing the land's utility. Georgists never mention this. You'd also eliminate things like rent control and need to standardize zoning.
