Imperialism is Capitalism

[KrazyHorse]

2. I'm saying that the landlord can, in theory, raise the rent anywhere up to the point where (rent in a new place) + (cost of moving) = 0.01 + (cost of new rent).

Yes, but the cost of the increased rent minus the cost of rent in new place is something you pay longer than one year!

You can't simply amortize the transaction costs over a year and then amortize the same amount every year.

[KrazyHorse]

My rent, for example, is $850. Rent for the vacant apartment across the hall is $775, equal to what my rent was initially 5 years ago. I'm aware of that, and still do not choose to move (though I certainly will mention this when the lease comes up for renewal if they try to raise it again). It's worth $75/mo to me not to have to move all my stuff (though I have a lot of stuff, probably close to a metric ton of books for example).

Then you're frigging crazy (especially if you plan to stay longer than a year). Unless you believe that the landlord is going to completely close the rent gap a year from now then you will continue to pay an supernormal rent for longer than a year. Even if it's only a year then you're paying 900$ to avoid moving. How long do you really think it would take to move across the hallway? Certainly less than 8 hours. Add in a couple of hours annoyance to switch utilities. Is your time worth 90$ an hour?

[KrazyHorse]

They do it $50 at a time - making the individual year decision harder, and also making it less likely for the individual to realize the entire increase.

Again, we're down to relying on people's stupidity and laziness.

[Arrian]

Originally posted by KrazyHorse

Not arguing with you. Just making things clear.

The complex was run by a management company (those are supposed to be evil, right?). This, in my book, was a good thing overall. Need something fixed? Done right away, while I was at work, no problems. Cheap rent. They liked me b/c I paid said cheap rent, on time.

The only annoyance was the ban on halogen lamps b/c of some incident at a complex they owned up in Mass. Some idiot burned down their apartment & got themselves and some kids killed. Bah.

-Arrian

[snoopy369]

Which is why he doesn't spring it all in one year.

Cost of moving: $2000
Cost of inc. rent: $600 ($2000 in somewhat over 3 years)

You clearly decide not to move in most cases. However, then they make the same move next year; again, same decision. Then again the next year... eventually, you decide to make the move, but in most cases it will be quite late and the landlord will get significantly more than the cost of moving out of you.

Again, you're being a physicist here. Perfect information does not exist, and people do not always make the rational decision even WITH perfect information.

[snoopy369]

Originally posted by KrazyHorse


Then you're frigging crazy (especially if you plan to stay longer than a year). Unless you believe that the landlord is going to completely close the rent gap a year from now then you will continue to pay an supernormal rent for longer than a year. Even if it's only a year then you're paying 900$ to avoid moving. How long do you really think it would take to move across the hallway? Certainly less than 8 hours. Add in a couple of hours annoyance to switch utilities. Is your time worth 90$ an hour?

It certainly would take more than 8 hours to move across the hallway. I live with my girlfriend, and we have a LOT of stuff to move. My guess would be 12-15 hours, at least.

(We do plan to stay only one more year, by the way, so the $900 is about right at this point. I'd probably move otherwise, out of the building entirely.)

[snoopy369]

Originally posted by KrazyHorse

They do it $50 at a time - making the individual year decision harder, and also making it less likely for the individual to realize the entire increase.

Again, we're down to relying on people's stupidity and laziness.

Which is what the entire science of economics revolves around

[Arrian]

Over 8 hours to move across the hall? WTF?

Now I get avoiding the hassle. I'm lazy too and it sometimes costs me money. But seriously, 8+ hours to move across the hall?

-Arrian

[snoopy369]

I probably need to get rid of some of my stuff, don't I.

Ah well... eventually I can have a huge eBay sale

[Kidlicious]

Originally posted by KrazyHorse


No, it means that some people place greater value on their time/annoyance than others do.

I find it amusing that you ask me what my argument is when I've laid it out clearly. I've shown that in the case of housing rentals the transaction costs to a tenant in moving are only a small percentage of the base costs. This means that the landlord can at most capture a rent which is a small percentage higher than the equilibrium price given no transaction costs.

In other words, you're whining about a quite minor effect.

Dufus.

I'm not trying to argue with you about transaction costs. I think it's better if you think about what it be like if there were an equilibrium rent instead of just an average rent like there is. Rent would be quite a bit cheaper. The difference isn't just transaction costs.

My point is that if companies were as efficient as they are today, but prices represented only the cost of actually making the products that those prices would be much lower. Most of the cost of a good is the cost of maintaining volume and monopoly power.

I don't think your argument has much to do with the point I was trying to make.

[KrazyHorse]

a) Cost of moving 2000$ = ridiculous. Absolutely silly. Seriously. Unless you have a full-sized house this is stupid for a local move. A 2BR apartment takes 2 guys ~4 hours to move. I've done this multiple times. Add in a truck and a few extra hours of inconvenience.

b) After two years you're now paying 100$ extra a month (compared to prevailing rates, which I'm assuming from what you're saying haven't changed). Now it's only 18 months additional rent. And now you know that they are going to raise your rent 50$ again next year. So if you have any brains in your head you tell them that you're planning to move because you've found a better place somewhere else for cheaper. Either they let you move, or because they know that it costs them as much as it would cost you to move, they cancel your rent increase.

I have never had a landlord stick to a rent increase. A simple phone call telling them that I was going to move because of the price was always enough to get them to cancel the increase.

The decision chain is generally longer for large, corporate managed buildings, but large buildings are also generally a rip-off so I've never rented an apartment in one.

[snoopy369]

Stairs matter a lot... I have looked into it, it would cost about $1500 to $2000 to move using a reputable company. Move out, drive, move in, all told. Further, there are other costs (such as the 'cost' to dealing with a new location, etc.) I include in that.

I certainly agree with you that the smart thing would be to move (or object to the rent increase), I'm just saying that it's not a common thing to do. If you make assumptions based on complete information and rational decisionmaking, you will end up with grossly mistaken conclusions compared to the real world. That is what economics tells us... and why the trained economists are calling you out on your BS.

[KrazyHorse]

Originally posted by snoopy369

It certainly would take more than 8 hours to move across the hallway. I live with my girlfriend, and we have a LOT of stuff to move. My guess would be 12-15 hours, at least.

Are you in ****ing horrible shape or something?

The last time I moved, I brought with me:

A kitchen table&4 chairs, 200 DVDs and DVD racks, 2 TVs, 3 game consoles, a large TV stand, a desktop computer, a computer table, an office chair, a queen sized bed (with boxspring&mattress), 4 bookshelves worth of books, a full set of plates, cups, glasses, utensils etc, assorted crap (5-6 big boxes worth) and a full bureau+closet's worth of clothes.

Total time to move this **** = 3 hours. By myself. Add an hour in to actually drive and rent the truck, cost of truck (~60-70$ IIRC) moving supplies (30$ for boxes, tape) and changing utilities (actually a huge hassle; getting cable took ~4 hours of my time due to **** Comcast service). Maybe 8 hours total, 100$ in direct costs.

I didn't move a couch or an actual bureau. With another man's help that would be ~1 extra hour.

[Kidlicious]

Originally posted by Arrian




The complex was run by a management company (those are supposed to be evil, right?). This, in my book, was a good thing overall. Need something fixed? Done right away, while I was at work, no problems. Cheap rent. They liked me b/c I paid said cheap rent, on time.

The only annoyance was the ban on halogen lamps b/c of some incident at a complex they owned up in Mass. Some idiot burned down their apartment & got themselves and some kids killed. Bah.

-Arrian

Management companies are more efficient and effective. No argument about that. I doubt if rent will be cheaper than otherwise though. A management company is more likely to raise rents when they can than the small individual landlord. Rent is a reflection of what someone is willing and able to pay. It's not likely that your rent will decrease because the company you rent from is more efficient.

[KrazyHorse]

Plus it's good for your soul to actually do some physical labour now and then. That night I sat in my new house and drank a twelve-pack of beer, then faded gently off to sleep.