Only a factor if there is a significant number of vacant properties that need to be filled with people, which is not the case in places like SF and NYC.
Well if that is the case then the price they could charge would be infinite and they would simply keep raising it.
Even in a competitive market, specifically the ones you have mentioned, the rent charged is based on supply and demand and the competition. If not what prevents them from doubling the rent?
To be fair to the original point, one could argue that sticker price of rent is more sticky than the imputed cost, and so this is a sneaky way of raising rent that doesn't reduce demand as much.
But that's a more complicated case to make than "kickbacks therefore bad".
> so this is a sneaky way of raising rent that doesn't reduce demand as much.
You could say a similar thing about laundry room charges where there isn't any competition. And also no specific disclosure as well (unless you ask) therefore is that sneaky? What I am saying is non disclosure does not mean "sneaky".
But another point is this: If enough buildings are doing this, such that an article like the parent post is being written, it then becomes something that a careful apartment shopper should or would consider when pricing apartments "total cost of rental".
You know if you buy an expensive luxury car they don't specifically point out that you will have to pay fees to keep your warranty current (Porsche, Mercedes as two examples). So is that sneaky? After all BMW (as a high end competitor) includes all maintenance.
> Even in a competitive market, specifically the ones you have mentioned, the rent charged is based on supply and demand and the competition. If not what prevents them from doubling the rent?
Because doubling the rent would be enough to get the people to desperately search for someone else. But getting them move in and then slowly raising the rent is a common practice.
Sure there is competition in this market, but given that a) demand is much bigger than supply, b) switching costs for tenants are extremely high, and c) it's not a competition in which a landlord can actually get out of business (even if they cut their rates by half, it would still be profitable to rent out the apartments), the competitiveness matters very little, and landlords are in no hurry to fight against each other - they're more likely to cooperate instead. The prices aren't set on the level competition demands - they're limited to what people can afford at all.
1. Then why isn't there competition yet? This points towards a more complex model being needed.
2. I mentioned stickiness in https://news.ycombinator.com/item?id=11989391. But it makes the analysis more complicated, and the comments I was responding to were not at that level. Remember, I started by responding to a comment saying "There's no incentive for that profit to be passed on as reduced rates for the tenants.", which is a simplistic model.
I'm not saying the simple model is correct, I'm saying that you need a model which accounts for the things the simple model has. You can account for more things, and I did, but without doing that you aren't justified in complaining.
