My point is that that's not the choice they're faced with. If they lower the rent for an unit just a bit below market rate for an equivalent unit, shouldn't we expect all of their units to sell? In other words, isn't Z usually negative?
> If they lower the rent for an unit just a bit below market rate for an equivalent unit, shouldn't we expect all of their units to sell?
No, clearly not. Housing isn't a commodity and moving is a pain. If I offered you $10/month in a rent reduction (or off the mortgage if you own) to move across the street to an identical home, would you? How about saving $10/month in return for increasing your commute by 10 minutes a day?
Obviously, both of those become worth it at some level of savings. And decreasing rent by 0.05% to double the units occupied is worth it (probably). But there's a huge overlap in the middle where it's not clear what the effects will be, and that's where the real world is.
It's not a question of whether someone who is already settled would up and move at the drop of a hat, but whether someone who is already in the market for an apartment would choose to rent a cheaper equivalent unit.
It's definitely true that things are more complicated in the real world, but that fact doesn't have-wave us into "Z is non-negative" territory.
If Z is negative, it's certainly not worth taking the deal. My point was it wasn't worth JPM taking the deal for positive Zs (up to some value). If Z is zero or negative, it obviously isn't worth taking the deal.
That is, not only is Y=X a bad deal, but Y=X+Z is a bad deal for a good deal of positive Zs. Up to Zmax which is a positive value. For all values of Z < Zmax (including negative Zs) it's bad for JPM
